UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

10-K

(Mark One)

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2019~~

2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to


Commission File Number	Exact name of registrants as specified in their charters	I.R.S. Employer Identification Number
001-08489
~~001-08489~~	DOMINION ENERGY, INC.	54-1229715
000-55337
~~000-55337~~	~~VIRGINIA~~ Virginia ELECTRIC AND POWER COMPANY	54-0418825

~~001-37591~~	~~DOMINION ENERGY GAS HOLDINGS, LLC~~	~~46-3639580~~

	~~VIRGINIA~~ Virginia (~~State~~State or other jurisdiction of incorporation or organization)

	120 TREDEGAR STREET RICHMOND, ~~VIRGINIA~~Virginia (Address of principal executive offices)	23219 (Zip Code)

	(804) 819-2000 (Registrants’ telephone number)

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


Registrant	Trading Symbol	~~Trading~~ ~~Symbol~~	Title of Each Class	Name of Each Exchange on Which Registered
DOMINION ENERGY, INC.	D	D	Common Stock, no par value	New York Stock Exchange
	DRUA	~~DRUA~~	2016 Series A 5.25% Enhanced Junior Subordinated Notes	New York Stock Exchange
~~DOMINION ENERGY GAS~~ ~~HOLDINGS, LLC~~	DCUE	~~DCUE~~	2019 Series A Corporate Units ~~2014 Series C 4.6% Senior Notes~~	New York Stock Exchange ~~New York Stock Exchange~~

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

VIRGINIA ELECTRIC AND POWER COMPANY

Common Stock, no par value

~~DOMINION ENERGY GAS HOLDINGS, LLC~~

~~Limited Liability Company Membership Interests~~

Indicate by check mark whether the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.

Dominion Energy, Inc. Yes

☒

☐

Virginia Electric and Power Company Yes

☒

☐

~~Dominion Energy Gas Holdings, LLC Yes~~

☒

☐

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Dominion Energy, Inc. Yes

☐

☒

Virginia Electric and Power Company Yes

☐

☒

~~Dominion Energy Gas Holdings, LLC Yes~~

☐

☒

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.

Dominion Energy, Inc. Yes

☒

☐

Virginia Electric and Power Company Yes

☒

☐

~~Dominion Energy Gas Holdings, LLC Yes~~

☒

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation

S-T

(§ (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Dominion Energy, Inc. Yes

☒

☐

Virginia Electric and Power Company Yes

☒

☐

~~Dominion Energy Gas Holdings, LLC Yes~~

☒

☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a

non-accelerated

filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”

~~“non-accelerated~~

“non-accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule

12b-2

of the Exchange Act.

Dominion Energy, Inc.


Large accelerated filer ☒	☒	Accelerated filer ☐	☐	Emerging growth company	☐
Non-accelerated filer ☐	☐	Smaller reporting company	☐
						~~Emerging growth company ☐~~

Virginia Electric and Power Company


Large accelerated filer ☐	☐	Accelerated filer ☐	☐	Emerging growth company	☐
Non-accelerated filer ☒	☒	Smaller reporting company	☐
						~~Emerging growth company ☐~~

~~Dominion Energy Gas Holdings, LLC~~


~~Large accelerated filer~~ ☐	~~Accelerated filer~~ ☐	~~Non-accelerated filer~~ ☒	~~Smaller reporting company ☐~~
			~~Emerging growth company ☐~~

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

Dominion Energy, Inc. Yes ☒ No ☐ Virginia Electric and Power Company Yes ☐ No ☒

Indicate by check mark whether the registrant is a shell company (as defined by Rule

12b-2

of the Act).

Dominion Energy, Inc. Yes

☐

☒

Virginia Electric and Power Company Yes

☐

☒

~~Dominion Energy Gas Holdings, LLC Yes~~

☐

☒

The aggregate market value of Dominion Energy, Inc. common stock held by

non-affiliates

of Dominion Energy was approximately ~~$62.0~~$68.0 billion based on the closing price of Dominion Energy’s common stock as reported on the New York Stock Exchange as of the last day of Dominion Energy’s most recently completed second fiscal quarter. Dominion Energy is the sole holder of Virginia Electric and Power Company common stock. At February ~~14, 2020,~~12, 2021, Dominion Energy had ~~838,000,325~~805,648,140 shares of common stock outstanding and Virginia Power had 274,723 shares of common stock outstanding. ~~Dominion Energy Questar Corporation, a wholly-owned subsidiary of Dominion Energy, Inc., holds all of the membership interests of Dominion Energy Gas Holdings, LLC.~~

DOCUMENT INCORPORATED BY REFERENCE

Portions of Dominion Energy’s ~~2020~~2021 Proxy Statement are incorporated by reference in Part III.

This combined Form

10-K

represents separate filings by Dominion Energy, Inc., and Virginia Electric and Power ~~Company and Dominion Energy Gas Holdings, LLC.~~Company. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Virginia Electric and Power Company ~~and Dominion Energy Gas Holdings, LLC make~~makes no representations as to the information relating to Dominion Energy, Inc.’s other operations.

VIRGINIA ELECTRIC AND POWER COMPANY ~~AND DOMINION ENERGY GAS HOLDINGS, LLC MEET~~MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND (b) OF FORM

10-K

AND ~~ARE~~IS FILING THIS FORM

10-K

UNDER THE REDUCED DISCLOSURE FORMAT.

Dominion Energy, Inc., and Virginia Electric and

Power Company ~~and Dominion Energy Gas Holdings, LLC~~


Item Number		Page Number
	Glossary of Terms	3

Part I
1.	Business	10
1A.	Risk Factors	36
1B.	Unresolved Staff Comments	44
2.	Properties	45
3.	Legal Proceedings	50
4.	Mine Safety Disclosures	50
	Information about our Executive Officers	51

Part II
5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	53
6.	Selected Financial Data	54
7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	55
7A.	Quantitative and Qualitative Disclosures About Market Risk	83
8.	Financial Statements and Supplementary Data	85
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	223
9A.	Controls and Procedures	223
9B.	Other Information	226

Part III
10.	Directors, Executive Officers and Corporate Governance	227
11.	Executive Compensation	227
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	227
13.	Certain Relationships and Related Transactions, and Director Independence	227
14.	Principal Accountant Fees and Services	228

Part IV
15.	Exhibits and Financial Statement Schedules	229
16.	Form 10-K Summary	236

Item
Number

Page
Number

Glossary of Terms

3

Part I

1.

Business

8
1A.

Risk Factors

28
1B.

Unresolved Staff Comments

36
2.

Properties

37
3.

Legal Proceedings

42
4.

Mine Safety Disclosures

42

Information about our Executive Officers

43

Part II

5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

44
6.

Selected Financial Data

45
7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

46
7A.

Quantitative and Qualitative Disclosures About Market Risk

66
8.

Financial Statements and Supplementary Data

69
9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

196
9A.

Controls and Procedures

196
9B.

Other Information

199

Part III

10.

Directors, Executive Officers and Corporate Governance

200
11.

Executive Compensation

200
12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

200
13.

Certain Relationships and Related Transactions, and Director Independence

200
14.

Principal Accountant Fees and Services

201

Part IV

15.

Exhibits and Financial Statement Schedules

202
16.

Form 10-K Summary

209


2

Glossary of Terms

The following abbreviations or acronyms used in this Form

10-K

are defined below:


Abbreviation or Acronym		Definition
2016 Equity Units		Dominion Energy’s 2016 Series A Equity Units issued in August 2016, initially in the form of 2016 Series A Corporate Units, consisting of a stock purchase contract and a 1/40 interest in RSNs issued by Dominion Energy
2019 BLS Industry Average OSHA Recordable Rate		An average of the OSHA Recordable Rate for 2019 published by the Bureau of Labor Statistics for electric power generation, transmission and distribution (NAICS code 2211) and natural gas distribution (NAICS code 2212)
2019 Equity Units		Dominion Energy’s 2019 Series A Equity Units issued in June 2019, initially in the form of 2019 Series A Corporate Units, consisting of a stock purchase contract and a 1/10 interest in a share of the Series A Preferred Stock
2017 Tax Reform Act		An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (previously known as The Tax Cuts and Jobs Act) enacted on December 22, 2017
~~2020~~ 2021 Proxy Statement		Dominion Energy ~~2020~~2021 Proxy Statement, File No. 001-08489
~~ABO~~ 2021 Triennial Review		Virginia Commission review of Virginia Power’s earned return on base rate generation and distribution services for the four successive 12-month test periods beginning January 1, 2017 and ending December 31, 2020
ABO		Accumulated benefit obligation
ACE Rule		Affordable Clean Energy Rule
AFUDC		Allowance for funds used during construction
Align RNG		Align RNG, LLC, a joint venture between Dominion Energy and Smithfield Foods, Inc.
~~AMI~~ Altavista		Altavista biomass power station
AMI		Advanced Metering Infrastructure
AOCI		Accumulated other comprehensive income (loss)
ARO		Asset retirement obligation
Atlantic Coast Pipeline		Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy and Duke ~~and Southern~~ Energy
Atlantic Coast Pipeline Project		An A previously proposed approximately 600-mile natural gas pipeline running from West Virginia through Virginia to North Carolina which ~~will be~~would have been owned by Dominion Energy and Duke ~~and Southern to be constructed and operated by DETI~~ Energy
BACT		Best available control technology
bcf		Billion cubic feet
bcfe		Billion cubic feet equivalent
Bear Garden		A 590 MW combined-cycle, natural gas-fired power station in Buckingham County, Virginia
BHE		The legal entity, Berkshire Hathaway Energy Company, one or more of its consolidated subsidiaries (including Dominion Energy Gas, Dominion Energy Midstream and Cove Point effective November 1, 2020), or the entirety of Berkshire Hathaway Energy Company and its consolidated subsidiaries
Blue Racer		Blue Racer Midstream, LLC, a joint venture between Caiman Energy II, LLC and FR BR Holdings, LLC effective December 2018
BP		BP Wind Energy North America Inc.
Brookfield		Brookfield Super-Core Infrastructure Partners, an infrastructure fund managed by Brookfield Asset Management Inc.
Brunswick County		A 1,376 MW combined-cycle, natural gas-fired power station in Brunswick County, Virginia
CAA		Clean Air Act
~~CAISO~~ CARES Act		~~California ISO~~ Coronavirus Aid, Relief and Economic Security Act, enacted on March 27, 2020
~~CAO~~ CAISO		California ISO
CAO		Chief Accounting Officer
CCR		Coal combustion residual
~~CEA~~ CCRO		Customer credit reinvestment offset
CEA		Commodity Exchange Act
CEO		Chief Executive Officer
CEP		Capital Expenditure Program, as established by House Bill 95, Ohio legislation enacted in 2011, deployed by East Ohio to recover certain costs associated with capital investment
CERCLA		Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as Superfund

Abbreviation or Acronym		Definition
CFO		Chief Financial Officer
CGN Committee		Compensation, Governance and Nominating Committee of Dominion Energy’s Board of Directors
~~CNG~~ CH₄		Methane
CNG		Consolidated Natural Gas Company
CO ₂		Carbon dioxide
Colonial Trail West		A 142 MW utility-scale solar power station located in Surry County, Virginia
Companies		Dominion Energy and Virginia Power, ~~and Dominion Energy Gas,~~ collectively
Contracted ~~Generation~~ Assets		Contracted ~~Generation~~Assets operating segment
COO		Chief Operating Officer
Cooling degree days		Units measuring the extent to which the average daily temperature is greater than 65 degrees Fahrenheit, or 75 degrees Fahrenheit in DESC’s service territory, calculated as the difference between 65 or 75 degrees, as applicable, and the average temperature for that day
Cove Point		Cove Point LNG, LP (formerly known as Dominion Energy Cove Point LNG, LP LP)
Cove Point LNG Facility		An LNG import/export and storage facility, including the Liquefaction Facility, located on the Chesapeake Bay in Lusby, Maryland
~~Cove Point Pipeline~~ CPCN		~~A 136 mile natural gas pipeline that connects the Cove Point LNG Facility to interstate natural gas pipelines~~
~~CPCN~~		Certificate of Public Convenience and Necessity
CWA		Clean Water Act
DCP		The legal entity, ~~Dominion Cove Point,~~CPMLP Holding Company, LLC (formerly known as Dominion Cove Point, ~~Inc.)~~LLC), one or more of its consolidated subsidiaries (including Dominion Energy Midstream), or the entirety of ~~Dominion Cove Point,~~CPMLP Holding Company, LLC and its consolidated subsidiaries


DECGS					3


~~Abbreviation or Acronym~~		~~Definition~~
~~DECG~~		~~Dominion Energy~~ Carolina Gas ~~Transmission, LLC~~
~~DECGS~~		Services, Inc. (formerly known as Dominion Energy Carolina Gas Services, Inc. )
DEQPS		Dominion Energy Questar Pipeline Services, Inc.
DES		Dominion Energy Services, Inc.
DESC		The legal entity, Dominion Energy South Carolina, Inc. ~~(formerly known as South Carolina Electric & Gas Company)~~, one or more of its consolidated entities or operating segment, or the entirety of Dominion Energy South Carolina, Inc. and its consolidated entities
DETI		Eastern Gas Transmission and Storage, Inc. (formerly known as Dominion Energy Transmission, Inc. )
DGI		Dominion Generation, Inc.
DGP		Eastern Gathering and Processing, Inc. (formerly known as Dominion Gathering and Processing, Inc. )
DMLPHCII		~~Dominion~~ Eastern MLP Holding Company II, LLC (formerly known as Dominion MLP Holding Company II, ~~Inc.)~~ LLC)
Dodd-Frank Act		The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
DOE		U.S. Department of Energy
Dominion Energy		The legal entity, Dominion Energy, Inc., one or more of its consolidated subsidiaries (other than Virginia ~~Power and Dominion Energy Gas)~~Power) or operating segments, or the entirety of Dominion Energy, Inc. and its consolidated subsidiaries
Dominion Energy Direct ^®		A dividend reinvestment and open enrollment direct stock purchase plan
Dominion Energy Gas		The legal entity, Eastern Energy Gas Holdings, LLC (formerly known as Dominion Energy Gas Holdings, ~~LLC,~~LLC), one or more of its consolidated subsidiaries ~~or operating segment,~~(consisting of DETI, DCP, DMLPHCII and Dominion Iroquois), or the entirety of ~~Dominion~~Eastern Energy Gas Holdings, LLC and its consolidated subsidiaries
Dominion Energy Gas Restructuring		The acquisition of DCP and DMLPHCII from, and the disposition of East Ohio and DGP to, Dominion Energy by Dominion Energy Gas on November 6, 2019
Dominion Energy Midstream		The legal entity, Northeast Midstream Partners, LP (formerly known as Dominion Energy Midstream Partners, ~~LP,~~LP), one or more of its consolidated subsidiaries, or the entirety of ~~Dominion Energy~~Northeast Midstream Partners, LP and its consolidated subsidiaries
Dominion Energy Questar		The legal entity, Dominion Energy Questar Corporation, one or more of its consolidated subsidiaries (other than Dominion Energy Gas, effective November 2019), or the entirety of Dominion Energy Questar Corporation and its consolidated subsidiaries
Dominion Energy Questar Combination		Dominion Energy’s acquisition of Dominion Energy Questar completed on September 16, 2016 pursuant to the terms of the agreement and plan of merger entered on January 31, 2016
Dominion Energy Questar Pipeline		The legal entity, Dominion Energy Questar Pipeline, LLC, one or more of its consolidated subsidiaries (including its 50% noncontrolling interest in White River Hub), or the entirety of Dominion Energy Questar Pipeline, LLC and its consolidated subsidiaries
Dominion Energy South Carolina		Dominion Energy South Carolina operating segment

Abbreviation or Acronym		Definition
Dominion Energy Virginia		Dominion Energy Virginia operating segment
~~DSM~~ Dominion Iroquois		~~Demand-side management~~ The legal entity Iroquois Inc. (formerly known as Dominion Iroquois Inc.), one or more of its consolidated subsidiaries, or the entirety of Iroquois, Inc. and its consolidated subsidiaries, which held a 50% noncontrolling interest in Iroquois
~~Dth~~ DSM		~~Dekatherm~~ Demand-side management
~~Duke~~ Dth		Dekatherm
Duke Energy		The legal entity, Duke Energy Corporation, one or more of its consolidated subsidiaries, or the entirety of Duke Energy Corporation and its consolidated subsidiaries
Eagle Solar		Eagle Solar, LLC, a wholly-owned subsidiary of DGI
East Ohio		The East Ohio Gas Company, doing business as Dominion Energy Ohio
Eastern Market Access Project		Project to provide 150,000 Dths/day of transportation service to help meet demand for natural gas for Washington Gas Light Company, a local gas utility serving customers in D.C., Virginia and Maryland
Energy Choice		Program authorized by the Ohio Commission which provides energy customers with the ability to shop for energy options from a group of suppliers certified by the Ohio Commission
EPA		U.S. Environmental Protection Agency
EPACT		Energy Policy Act of 2005
EPS		Earnings per share
ERISA		Employee Retirement Income Security Act of 1974
ESA Excess Tax Benefits		Endangered Species Act Benefits of tax deductions in excess of the compensation cost recognized for stock-based compensation
~~Export Customers~~ Fairless		~~ST Cove Point, LLC, a joint venture of Sumitomo Corporation and Tokyo Gas Co., LTD., and GAIL Global (USA) LNG, LLC~~
~~Fairless~~		Fairless power station
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FILOT		Fee in lieu of taxes
Fitch		Fitch Ratings Ltd.
Fountain Creek Solar		A proposed 80 MW utility-scale solar power station located in Greensville County, Virginia
Four Brothers		Four Brothers Solar, LLC, a limited liability company owned by Dominion Energy and Four Brothers Holdings, LLC, a subsidiary of GIP effective August 2018
Fowler Ridge		Fowler I Holdings LLC, a wind-turbine facility ~~joint venture with BP~~ in Benton County, Indiana
FTRs		Financial transmission rights
GAAP		U.S. generally accepted accounting principles
Gal		Gallon
Gas Distribution		Gas Distribution operating segment
~~Gas Transmission & Storage~~ GENCO		~~Gas Transmission & Storage operating segment~~


4


~~Abbreviation or Acronym~~		~~Definition~~
~~GENCO~~		South Carolina Generating Company, Inc.
GHG		Greenhouse gas
GIP		The legal entity, Global Infrastructure Partners, one or more of its consolidated subsidiaries, ~~(including, effective August 2018, Four Brothers Holdings, LLC, Granite Mountain Renewables, LLC and Iron Springs Renewables, LLC) or operating segments,~~ or the entirety of Global Infrastructure Partners and its consolidated subsidiaries
Granite Mountain		Granite Mountain Holdings, LLC, a limited liability company owned by Dominion Energy and Granite Mountain Renewables, LLC, a subsidiary of GIP effective August 2018
Grassfield Solar		A proposed 20 MW utility-scale solar power station in Chesapeake, Virginia
Green Mountain		Green Mountain Power Corporation
~~GreenHat~~		~~GreenHat Energy, LLC~~
Greensville County		A 1,588 MW combined-cycle, natural gas-fired power station in Greensville County, Virginia
~~GTSA~~ GT&S Transaction		The sale by Dominion Energy to BHE of Dominion Energy Gas, DGP, DECGS, Eastern Energy Field Services, Inc. (formerly known as Dominion Energy Field Services, Inc.) and Modular LNG Holdings, Inc. (formerly known as Dominion Modular LNG Holdings, Inc.) (which holds a 50% noncontrolling interest in JAX LNG) pursuant to a purchase and sale agreement entered into on July 3, 2020, which was completed on November 1, 2020
GTSA		Virginia Grid Transformation and Security Act of 2018
GW		Gigawatt
Heating degree days		Units measuring the extent to which the average daily temperature is less than 65 degrees Fahrenheit, or 60 degrees Fahrenheit in DESC’s service territory, calculated as the difference between 65 or 60 degrees, as applicable, and the average temperature for that day
Hope		Hope Gas, Inc., doing business as Dominion Energy West Virginia
Hopewell		Polyester biomass power station

Abbreviation or Acronym		Definition
Idaho Commission		Idaho Public Utilities Commission
~~IRCA~~		~~Intercompany revolving credit agreement~~
Iron Springs		Iron Springs Holdings, LLC, a limited liability company owned by Dominion Energy and Iron Springs Renewables, LLC, a subsidiary of GIP effective August 2018
Iroquois		Iroquois Gas Transmission System, L.P.
IRS		Internal Revenue Service
ISO		Independent system operator
ISO-NE		ISO New England
JAX LNG		JAX LNG, LLC, an LNG supplier in Florida serving the marine and LNG markets
Jones Act		The Coastwise Merchandise Statute (commonly known as the Jones Act) 46 U.S.C. §55102 regulating U.S. maritime commerce
July 2016 hybrids		Dominion Energy’s 2016 Series A Enhanced Junior Subordinated Notes due 2076
June 2006 hybrids		Dominion Energy’s 2006 Series A Enhanced Junior Subordinated Notes due 2066
Kewaunee		Kewaunee nuclear power station
kV		Kilovolt
LIBOR		London Interbank Offered Rate
LIFO		Last-in-first-out inventory method
Liquefaction Facility		A natural gas export/liquefaction facility at the Cove Point LNG Facility
LNG		Liquefied natural gas
LTIP		Long-term incentive program
Manchester		Manchester power station
Massachusetts Municipal		Massachusetts Municipal Wholesale Electric Company
MATS		Utility Mercury and Air Toxics Standard Rule
mcf		Thousand cubic feet
mcfe		Thousand cubic feet equivalent
MD&A		Management’s Discussion and Analysis of Financial Condition and Results of Operations
MGD		Million gallons a day
Millstone		Millstone nuclear power station
Millstone 2019 power purchase agreements		Power purchase agreements with Eversource Energy and The United Illuminating Company for Millstone to provide nine million MWh per year of electricity for ten years
Moody’s		Moody’s Investors Service
Mtpa		Million metric tons per annum
MW		Megawatt
MWh		Megawatt hour
N₂O		Nitrous oxide
Natural Gas Rate Stabilization Act		Legislation effective February 2005 designed to improve and maintain natural gas service infrastructure to meet the needs of customers in South Carolina
NAV		Net asset value
~~NedPower~~ NEIL		~~NedPower Mount Storm LLC, a wind-turbine facility joint venture between Dominion Energy and Shell WindEnergy, Inc. in Grant County, West Virginia~~
~~NEIL~~		Nuclear Electric Insurance Limited
NERC		North American Electric Reliability Corporation
NG NGL		~~Collectively, North East Transmission Co., Inc. and National Grid IGTS Corp.~~
~~NGL~~		Natural gas liquid
~~NJNR~~		~~NJNR Pipeline Company~~
NND Project		V.C. Summer Units 2 and 3 nuclear development project under which DESC and Santee Cooper undertook to construct two Westinghouse AP1000 Advanced Passive Safety Nuclear Units in Jenkinsville, South Carolina
Norge Solar		A proposed 20 MW utility-scale solar power station located in James City County, Virginia
North Anna		North Anna nuclear power station
North Carolina Commission		North Carolina Utilities Commission
NO _X		Nitrogen oxide
NRC		U.S. Nuclear Regulatory Commission


NRG					5


~~Abbreviation or Acronym~~		~~Definition~~
~~NRG~~		The legal entity, NRG Energy, Inc., one or more of its consolidated subsidiaries (including, effective November 2016 through August 2018, Four Brothers Holdings, LLC, Granite Mountain Renewables, LLC and Iron Springs Renewables, LLC) or operating segments, or the entirety of NRG Energy, Inc. and its consolidated subsidiaries
NSPS		New Source Performance Standards
~~NYSE~~ NWP 12		A nationwide permit from the Army Corps of Engineers authorizing activities required for the construction, maintenance, repair and removal of utility lines, including electric transmission, gas pipelines, water and communications conduit and associate facilities in waters of the U.S.

Abbreviation or Acronym		Definition
NYSE		New York Stock Exchange
October 2014 hybrids		Dominion Energy’s 2014 Series A Enhanced Junior Subordinated Notes due 2054
ODEC		Old Dominion Electric Cooperative
Ohio Commission		Public Utilities Commission of Ohio
Order 1000		Order issued by FERC adopting requirements for electric transmission planning, cost allocation and development
~~PHMSA~~ OSHA Recordable Rate		Number of recordable cases, as defined by the Occupational Health and Safety Administration, a division of the U.S. Department of Labor, for every 100 employees over the course of a year
Otter Creek Solar		A proposed 60 MW utility-scale solar power station located in Mecklenburg County, Virginia
PHMSA		Pipeline and Hazardous Materials Safety Administration
PIR		Pipeline Infrastructure Replacement program deployed by East Ohio
PJM		PJM Interconnection, L.L.C.
~~ppb~~ PREP		~~Parts-per-billion~~
~~Predecessor~~	~~Dominion Energy as the predecessor for accounting purposes for the period of Dominion Energy’s ownership of DCP and DMLPHCII until the completion of the Dominion Energy Gas Restructuring~~
~~PREP~~	Pipeline Replacement and Expansion Program, a program of replacing, upgrading and expanding natural gas utility infrastructure deployed by Hope
PSD		Prevention of significant deterioration
PSNC		Public Service Company of North Carolina, Incorporated, doing business as Dominion Energy North Carolina
PURA		Connecticut’s Public Utility Regulatory Authority
Q-Pipe Transaction		The proposed sale by Dominion Energy to BHE of Dominion Energy Questar Pipeline, DEQPS and QPC Holding Company, LLC (including its subsidiary Questar Southern Trails Pipeline Company), pursuant to a purchase and sale agreement entered into on October 5, 2020
Questar Gas		Questar Gas Company, doing business as Dominion Energy Utah, Dominion Energy Wyoming and Dominion Energy Idaho
RCC		Replacement Capital Covenant
Regulation Act	Legislation effective July 1, 2007, that amended the Virginia Electric Utility Restructuring Act and fuel factor statute, which legislation is also known as the Virginia Electric Utility Regulation Act, as amended in 2015 and 2018
RGGI	Regional Greenhouse Gas Initiative
RICO	Racketeer Influenced and Corrupt Organizations Act
Rider B	A rate adjustment clause associated with the recovery of costs related to the conversion of three of Virginia Power’s coal-fired power stations to biomass
Rider BW	A rate adjustment clause associated with the recovery of costs related to Brunswick County
Rider CE	A rate adjustment clause associated with the recovery of the costs related to certain renewable generation facilities in Virginia
Rider E	A rate adjustment clause associated with the recovery of costs related to certain capital projects at Virginia Power’s electric generating stations to comply with federal and state environmental laws and regulations
Rider GV	A rate adjustment clause associated with the recovery of costs related to Greensville County
Rider R	A rate adjustment clause associated with the recovery of costs related to Bear Garden
Rider RGGI	A rate adjustment clause associated with the recovery of costs related to the purchase of allowances through the RGGI market-based trading program for CO₂
Rider RPS	A rate adjustment clause associated with the recovery of costs related to the mandatory renewable portfolio standard program established by the VCEA
Rider S	A rate adjustment clause associated with the recovery of costs related to the Virginia City Hybrid Energy Center
Rider T1	A rate adjustment clause to recover the difference between revenues produced from transmission rates included in base rates, and the new total revenue requirement developed annually for the rate years effective September 1
Rider U	A rate adjustment clause associated with the recovery of costs of new underground distribution facilities
Rider US-2	A rate adjustment clause associated with the recovery of costs related to Woodland Solar, Scott Solar and Whitehouse Solar
Rider US-3	A rate adjustment clause associated with the recovery of costs related to Colonial Trail West and Spring Grove 1
Rider US-4	A rate adjustment clause associated with the recovery of costs related to Sadler Solar

Abbreviation or Acronym		Definition
Rider W	A rate adjustment clause associated with the recovery of costs related to Warren County
Riders C1A, C2A, C3A and ~~C3A~~ C4A	Rate adjustment clauses associated with the recovery of costs related to certain DSM programs approved in DSM cases
ROE	Return on equity
ROIC	Return on invested capital
RSN	Remarketable subordinated note
RTEP	Regional transmission expansion plan
RTO	Regional transmission organization
Sadler Solar	An approximately 100 MW proposed utility-scale solar power station located in Greensville County, Virginia
SAFSTOR	A method of nuclear decommissioning, as defined by the NRC, in which a nuclear facility is placed and maintained in a condition that allows the facility to be safely stored and subsequently decontaminated to levels that permit release for unrestricted use
SAIDI	System Average Interruption Duration Index, metric used to measure electric service reliability
Santee Cooper	South Carolina Public Service Authority
SBL Holdco	SBL Holdco, LLC, a wholly-owned subsidiary of DGI
SCANA	The legal entity, SCANA Corporation, one or more of its consolidated subsidiaries, or the entirety of SCANA Corporation and its consolidated subsidiaries


6


~~Abbreviation or Acronym~~		~~Definition~~
SCANA Combination		Dominion Energy’s acquisition of SCANA completed on January 1, 2019 pursuant to the terms of the agreement and plan of merger entered on January 2, 2018 between Dominion Energy and SCANA
SCANA Merger Approval Order		Final order issued by the South Carolina Commission on December 21, 2018 setting forth its approval of the SCANA Combination
SCDHEC		South Carolina Department of Health and Environmental Control
SCDOR		South Carolina Department of Revenue
Scott Solar		A 17 MW utility-scale solar power station in Powhatan County, Virginia
SEC		U.S. Securities and Exchange Commission
SEMI		SCANA Energy Marketing, Inc.
September 2006 hybrids		Dominion Energy’s 2006 Series B Enhanced Junior Subordinated Notes due 2066
SERC		Southeast Electric Reliability Council
Series A Preferred Stock		Dominion Energy’s 1.75% Series A Cumulative Perpetual Convertible Preferred Stock, without par value, with a liquidation preference of $1,000 per share
Series B Preferred Stock		Dominion Energy’s 4.65% Series B Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000 per share
SO 2 SF₆		Sulfur ~~dioxide~~ hexafluoride
SO₂		Sulfur dioxide
South Carolina Commission		Public Service Commission of South Carolina
~~Southern~~ Southampton		Southampton biomass power station
Southern		The legal entity, The Southern Company, one or more of its consolidated subsidiaries, or the entirety of The Southern Company and its consolidated subsidiaries
Spring Grove 1		~~An approximately~~ A 98 MW ~~proposed~~ utility-scale solar power station located in Surry County, Virginia
Standard & Poor’s		Standard & Poor’s Ratings Services, a division of the McGraw-Hill Companies, Inc.
Summer		V.C. Summer nuclear power station
~~SunEdison~~ Supply Header Project		~~The legal entity, SunEdison, Inc., one or more~~ A project previously intended for DETI to provide approximately 1,500,000 Dths of ~~its consolidated subsidiaries, or~~firm transportation service to various customer in connection with the ~~entirety of SunEdison, Inc. and its consolidated subsidiaries~~ Atlantic Coast Pipeline Project
Surry		Surry nuclear power station
Sycamore Solar		A proposed 42 MW utility-scale solar power station located in Pittsylvania County, Virginia
Terra Nova Renewable Partners		A partnership comprised primarily of institutional investors advised by J.P. Morgan Asset Management—Global Real Assets
Three Cedars		Granite Mountain and Iron Springs, collectively
~~TransCanada~~ TSR		~~The legal entity, TransCanada Corporation, one or more of its consolidated subsidiaries or operating segments, or the entirety of TransCanada Corporation and its consolidated subsidiaries~~
~~TSR~~		Total shareholder return
Utah Commission		Utah Public Service Commission
~~VDEQ~~ VCEA		Virginia Clean Economy Act of 2020
VDEQ		Virginia Department of Environmental Quality
VEBA		Voluntary Employees’ Beneficiary Association

Abbreviation or Acronym		Definition
VIE	Variable interest entity
Virginia City Hybrid Energy Center	A 610 MW baseload carbon-capture compatible, clean coal powered electric generation facility in Wise County, Virginia
Virginia Commission	Virginia State Corporation Commission
Virginia Power	The legal entity, Virginia Electric and Power Company, one or more of its consolidated subsidiaries or operating segment, or the entirety of Virginia Electric and Power Company and its consolidated subsidiaries
VOC	Volatile organic compounds
Warren County	A 1,350 MW combined-cycle, natural gas-fired power station in Warren County, Virginia
WECTEC	WECTEC Global Project Services, Inc. (formerly known as Stone & Webster, Inc.), a wholly-owned subsidiary of Westinghouse
West Virginia Commission	Public Service Commission of West Virginia
Westinghouse	Westinghouse Electric Company LLC
Wexpro	The legal entity, Wexpro Company, one or more of its consolidated subsidiaries, or the entirety of Wexpro Company and its consolidated subsidiaries
Wexpro Agreement	An agreement which sets forth the rights of Questar Gas to receive certain benefits from Wexpro’s operations, including cost-of-service gas
Wexpro II Agreement	An agreement with the states of Utah and Wyoming modeled after the Wexpro Agreement that allows for the addition of properties under the cost-of-service methodology for the benefit of Questar Gas customers
Whitehouse Solar	A 20 MW utility-scale solar power station in Louisa County, Virginia
White River Hub	White River Hub, LLC
Woodland Solar	A 19 MW utility-scale solar power station in Isle of Wight County, Virginia
Wrangler	Wrangler Retail Gas Holdings, LLC, a partnership between Dominion Energy and Interstate Gas Supply, Inc.
Wyoming Commission	Wyoming Public Service Commission


						7

Part I

Item 1. Business

~~General~~

GENERAL

Dominion Energy

, headquartered in Richmond, Virginia and incorporated in Virginia in 1983, is one of the nation’s largest producers and ~~transporters~~distributors of energy. Dominion Energy’s strategy is to be a leading sustainable provider of electricity, natural gas and related services to customers primarily in the eastern and Rocky Mountain regions of the U.S. As of December 31, ~~2019,~~2020, Dominion Energy’s portfolio of assets includes approximately ~~30,700 MW~~30.2 GW of electric generating capacity, ~~10,400~~10,500 miles of electric transmission lines, ~~85,000~~85,600 miles of electric distribution lines ~~14,600~~and 94,200 miles of ~~natural~~gas distribution mains and related service facilities, which are supported by 6,200 miles of gas transmission, gathering and storage ~~pipelines and 103,400~~pipeline. In addition, Dominion Energy owns approximately 2,400 miles of gas ~~distribution~~transmission, gathering and storage pipeline ~~exclusive of service lines.~~through entities under agreement to be sold to BHE. As of December 31, ~~2019,~~2020, Dominion Energy operates in 16 states and serves more than 7 million ~~utility~~customers.

Dominion Energy continues to focus on expanding and ~~retail energy customers~~improving its regulated and ~~operates one of the nation’s largest underground~~long-term contracted electric and natural gas utility businesses while transitioning to a cleaner energy future. Its growth capital expenditure plan for 2021 through 2025 includes a focus on upgrading the electric system in Virginia through investments in additional renewable generation facilities, strategic undergrounding and energy conservation programs. Renewable generation facilities are expected to include significant investments in utility-scale solar and offshore wind projects. In addition, Dominion Energy is currently seeking license extensions for its regulated nuclear power stations in Virginia. Other drivers for the growth capital plan include renewable natural gas initiatives and the replacement and modernization of gas distribution pipeline. Dominion Energy also plans to continue upgrading its gas and electric transmission and distribution networks while also meeting environmental requirements and standards set by various regulatory bodies.

Dominion Energy has continued its transition to a more state-regulated earnings mix as evidenced by its capital investments in regulated infrastructure, the SCANA and Dominion Energy Questar Combinations, the partially completed sale of substantially all of its gas transmission and storage ~~systems, with~~operations to BHE and the divestiture of interests in certain nonregulated generating facilities and natural gas gathering and processing investments. Dominion Energy expects approximately ~~1 trillion cubic feet~~90% of ~~storage capacity.~~

earnings from its primary operating segments to come from state-regulated electric and natural gas utility businesses. Dominion Energy’s nonregulated operations consist of primarily long-term contracted electric generation operations and its investment in Cove Point. Dominion Energy’s operations are conducted through various subsidiaries, including Virginia Power.

In January 2019, Dominion Energy completed the SCANA Combination in a

stock-for-stock

merger valued at $13.4 billion. SCANA, which operates as a wholly-owned subsidiary of Dominion Energy, is primarily engaged in the generation, transmission and distribution of electricity in the central, southern and southwestern portions of South Carolina and in the distribution of natural gas in North Carolina and South Carolina. DESC, a wholly-owned subsidiary of SCANA, is consolidated by Dominion Energy and remains an SEC registrant. However, its Form

10-K

is filed separately and is not combined herein.

Dominion Energy continues to focus on expanding and improving its regulated and long-term contracted electric and natural gas businesses while transitioning to a cleaner energy future. The $26 billion growth capital plan for 2019 through 2023 includes a focus on upgrading the electric system in Virginia through investments in additional renewable generation facilities, strategic undergrounding and energy conservation programs. Renewable generation facilities are expected to include investments in utility-scale solar and offshore wind projects. In addition, Dominion Energy is currently seeking, or intends to seek, license extensions for its regulated nuclear power stations in Virginia. Other drivers for the growth capital expenditure plan include agriculture-waste-to-energy initiatives, the replacement of gas distribution pipeline, the construction of infrastructure to handle the increase in natural gas production from the Marcellus and Utica Shale formations, including investing in Atlantic Coast Pipeline which is focused on constructing an approximately

~~600-mile~~

natural gas pipeline running from West Virginia through Virginia to North Carolina, to increase natural gas supplies in the region. Dominion Energy also plans to continue upgrading its gas and electric transmission and distribution networks while also meeting environmental requirements and standards set by various regulatory bodies.

Over the past decade, Dominion Energy has transitioned to a more regulated, less volatile earnings mix as evidenced by its capital investments in regulated infrastructure, including the SCANA Combination and Dominion Energy Questar Combination, and in infrastructure with output sold under long-term purchase agreements, as well as the divestiture of interests in certain merchant generating facilities and natural gas gathering and processing investments. Dominion Energy expects approximately 95% of

earnings from its primary operating segments to come from regulated and long-term contracted businesses. Dominion Energy’s nonregulated operations include merchant generation and natural gas retail energy marketing operations. Dominion Energy’s operations are conducted through various subsidiaries, including

Virginia Power ~~and Dominion Energy Gas.~~

~~Virginia Power~~

, headquartered in Richmond, Virginia and incorporated in Virginia in 1909 as a Virginia public service corporation, is a wholly-owned subsidiary of Dominion Energy and a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and North Carolina. In Virginia, Virginia Power conducts business under the name “Dominion Energy Virginia” and primarily serves retail customers. In North Carolina, it conducts business under the name “Dominion Energy North Carolina” and serves retail customers located in the northeastern region of the state, excluding certain municipalities. In addition, Virginia Power sells and transmits electricity at wholesale prices to rural electric cooperatives, municipalities and into wholesale electricity markets. All of Virginia Power’s stock is owned by Dominion Energy.

~~Dominion Energy Gas,~~

~~a limited liability company formed in September 2013,~~

is a wholly-owned subsidiary of Dominion Energy and a holding company. Following the Dominion Energy Gas Restructuring, Dominion Energy Gas serves as the intermediate parent company for Dominion Energy’s FERC-regulated interstate natural gas transmission pipeline and underground storage systems in the eastern and Rocky Mountain regions of the U.S., as well as for the Cove Point LNG Facility. Dominion Energy Gas’ principal operating subsidiaries include DETI, DECG, Dominion Energy Questar Pipeline and a controlling 75% interest in Cove Point. In addition, Dominion Energy Gas holds a 50% noncontrolling partnership interest in Iroquois, a FERC-regulated interstate natural gas pipeline. All of Dominion Energy Gas’ membership interests are owned by Dominion Energy.

Amounts and information disclosed for Dominion Energy are inclusive of Virginia Power, ~~and/or Dominion Energy Gas,~~ where applicable.

~~Employees~~

At December 31, 2019, Dominion Energy had approximately 19,100 full-time employees, of which approximately 5,400 are subject to collective bargaining agreements, including approximately 6,000 full-time employees at Virginia Power, of which approximately 2,500 are subject to collective bargaining agreements and approximately 1,400 full-time employees at Dominion Energy Gas, of which approximately 700 are subject to collective bargaining agreements.

~~Where You Can Find More Information About The Companies~~

WHERE YOU CAN FIND MORE INFORMATION ABOUT THE COMPANIES

The Companies file their annual, quarterly and current reports, proxy statements and other information with the SEC. Their SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov.

The Companies make their SEC filings, ~~available, free of charge,~~ including the annual report on Form

10-K,

quarterly


8

reports on Form

10-Q,

current reports on Form

8-K

and any amendments to those reports, available, free of charge, through Dominion Energy’s website, http://www.dominionenergy.com, as soon as reasonably practicable after filing or furnishing the material to the SEC. We also make available on the “Investors” page of our website additional information which may be important to investors, such as investor presentations, earnings release kits and other materials and presentations. Information contained on Dominion Energy’s website, including but not limited to reports mentioned in

Environmental Strategy

, is not incorporated by reference in this report.

~~Acquisitions and Dispositions~~

ACQUISITIONS AND DISPOSITIONS

The following ~~are significant~~ acquisitions and divestitures ~~by the Companies during~~within the last ~~five years.~~

~~Pending~~ three years are considered significant to the Companies.

Gas Transmission and Storage Operations

Sales to BHE

In November 2020, Dominion Energy completed the GT&S Transaction with BHE for approximately $2.7 billion in cash proceeds and the assumption by BHE of approximately $5.3 billion of related long-term debt.

In October 2020, Dominion Energy entered into an agreement for the Q-Pipe Transaction with BHE for $1.3 billion in cash consideration and the assumption by BHE of approximately $430 million of related long-term debt. This transaction is expected to close in early 2021, contingent on clearance or approval under the Hart-Scott-Rodino Act and other customary closing and regulatory conditions.

See Note 3 to the Consolidated Financial Statements for additional information.

Acquisition of Interest in Atlantic Coast Pipeline and Pivotal LNG, Inc.

In ~~February~~March 2020, Dominion Energy ~~entered into agreements with~~completed the acquisition from Southern to acquire its 5% membership interest in Atlantic Coast Pipeline and its 100% ownership interest in Pivotal LNG, Inc., for ~~approximately $175~~$184 million in aggregate, plus certain purchase price adjustments. See Note 9 to the Consolidated Financial Statements for additional ~~information.~~

~~Acquisition~~information, including the cancellation of ~~SCANA~~

~~In January 2019, Dominion Energy~~the Atlantic Coast Pipeline Project. Pivotal LNG, Inc. was included within the GT&S Transaction and ~~SCANA completed a~~

~~stock-for-stock~~

~~merger valued at $13.4 billion, inclusive of SCANA’s outstanding debt, which totaled $6.9 billion at closing. SCANA operates as a wholly-owned subsidiary of Dominion Energy. See Note 3~~sold to ~~the Consolidated Financial Statements for additional information.~~

BHE in November 2020.

Purchase of Dominion Energy Midstream Units

In January 2019, Dominion Energy acquired all outstanding partnership interests of Dominion Energy Midstream not owned by Dominion Energy through the issuance of 22.5 million shares of Dominion Energy common stock. See Note 20 to the Consolidated Financial Statements for additional information.

Dominion Energy ~~Gas Restructuring~~

InMidstream was included within the GT&S Transaction and sold to BHE in November 2019, Dominion Energy Gas finalized a restructuring whereby Dominion Energy’s wholly-owned subsidiaries, DCP and DMLPHCII, were contributed to Dominion Energy Gas. In addition, Dominion Energy Gas’ wholly-owned subsidiaries, East Ohio and DGP, were distributed to Dominion Energy. This restructuring was accounted for by Dominion Energy Gas as a reorganization of entities under common control. See Note 3 to the Consolidated Financial Statements for additional information.

2020.

Sale of Interest in Cove Point

In December 2019, Dominion Energy completed the sale of a 25% noncontrolling interest in Cove Point to Brookfield in exchange for cash consideration of $2.1 billion, subject to working capital adjustments. See Note 3 to the Consolidated Financial Statements for additional information.

~~Acquisition of Interest~~

In addition, a 25% controlling interest in ~~Wrangler~~

Cove Point was included within the GT&S Transaction and sold to BHE in November 2020.

SCANA

In ~~December~~January 2019, Dominion Energy ~~acquired~~and SCANA completed a ~~20% noncontrolling interest in Wrangler,~~stock-for-stock merger valued at $13.4 billion, inclusive of SCANA’s outstanding debt, which totaled $6.9 billion at closing. SCANA operates as a ~~partnership with Interstate Gas Supply, Inc., along with $301 million in cash as part~~wholly-owned subsidiary of ~~its initial contribution of certain retail energy marketing operations.~~Dominion Energy. See Note 93 to the Consolidated Financial Statements for additional information.

Electric Generation Facilities

Acquisition of Virginia Power Solar Projects

In 2020, Virginia Power entered into and completed the acquisition of various solar development projects in Virginia. These projects are expected to cost a total of approximately $580 million once constructed, including initial acquisition costs, and generate approximately 282 MW.

In 2019, Virginia Power entered into agreements to acquire various solar development projects in Virginia, with the acquisitions completed in 2019 and 2020. These projects are expected to cost a total of approximately $765 million once constructed, including initial acquisition costs, and generate approximately 448 MW combined.

In 2018, Virginia Power entered into agreements to acquire various solar development projects in North Carolina and Virginia. These projects closed in 2019 with a total cost of $297 million, including initial acquisition costs, and generate 175 MW combined.

See Notes 10 and 13 to the Consolidated Financial Statements for additional information.

Acquisition of Nonregulated Solar Projects

In 2020, Dominion Energy entered into agreements and completed the acquisition of various nonregulated solar projects in Ohio, South Carolina and Virginia with one project expected to close in 2022. These projects are expected to cost a total of approximately $730 million once constructed, including the initial acquisition cost, and generate approximately 398 MW combined.

In 2019, Dominion Energy completed the acquisition of various nonregulated solar projects in North Carolina, South Carolina and Virginia. These projects cost $415 million to construct, including the initial acquisition cost, and generate approximately 242 MW combined.

See Note 10 to the Consolidated Financial Statements for additional information.

Sale of Certain ~~Merchant~~Nonregulated Generation Facilities

In December 2018, Dominion Energy completed the sale of Fairless and Manchester for total consideration of $1.2 billion, subject to customary closing adjustments. See Note 10 to the Consolidated Financial Statements for additional information.

Equity Method Investments

Acquisition of Interest in Wrangler

In December 2019, Dominion Energy acquired a 20% noncontrolling interest in Wrangler along with $301 million in cash as part of its initial contribution of certain retail energy marketing operations. In November 2020, Dominion Energy completed the second contribution consisting of certain retail energy natural gas contracts, receiving $74 million in cash and maintaining its 20% noncontrolling interest in Wrangler. See Note 9 to the Consolidated Financial Statements for additional information.

Sale of Interest in Blue Racer

In December 2018, Dominion Energy completed the sale of its 50% limited partner interest in Blue Racer for total consideration of $1.2 billion. In addition, the purchaser agreed to pay additional consideration contingent upon the achievement of certain financial performance milestones of Blue Racer from 2019 through 2021. See Note 9 to the Consolidated Financial Statements for additional information.

~~Acquisition~~

HUMAN CAPITAL

One of Dominion ~~Energy Questar~~

~~In September 2016, Dominion Energy completed the Dominion Energy Questar Combination for total consideration of $4.4 billion~~Energy's greatest strengths is its employees and Dominion Energy ~~Questar became~~is committed to providing them with a ~~wholly-owned subsidiary~~safe, diverse and inclusive workplace. The ability to attract, develop and retain a diverse workforce is integral to the long-term success of Dominion Energy.

~~Acquisition of Wholly-Owned Merchant Solar Projects~~

~~In 2019,~~At December 31, 2020, Dominion Energy ~~completed~~had approximately 17,300 full-time employees, of which approximately 4,700 are subject to collective bargaining agreements, including approximately 6,000 full-time employees at Virginia Power, of which approximately 2,500 are subject to collective bargaining agreements.

Safety is the ~~acquisition~~highest priority of ~~various merchant solar projects in North Carolina, South Carolina~~Dominion Energy’s five core values with the fundamental goal to send every employee home safe and ~~Virginia. These projects are expected to cost a total of approximately $425 million once constructed, including the initial acquisition cost, and generate approximately 241 MW combined.~~

~~Throughout 2017,~~sound every day. In 2020, Dominion Energy ~~completed the acquisition~~experienced an OSHA Recordable Rate of ~~various merchant solar projects~~0.41 compared to 0.62 in ~~California, North Carolina and Virginia~~2019. These rates reflect Dominion Energy’s dedication to safety when compared to a 2019 BLS Industry Average OSHA Recordable Rate of 2.05. As evidence of Dominion Energy’s commitment to safety, annual incentive plans for ~~$356 million. The projects cost $541 million to construct, including the initial acquisition cost, and generate 259 MW.~~

~~Throughout 2016,~~all employees, except as restricted by any collective bargaining agreements, include a safety performance measure. Furthermore, Dominion Energy ~~completed~~has been proactive in protecting its workforce during the ~~acquisition of various merchant solar projects in North Carolina, South Carolina~~global COVID-19 pandemic by establishing safety protocols, including requirements to wear face coverings and ~~Virginia~~maintain physical distancing as well as new procedures for ~~$32 million. The projects cost $421 million to construct, including the initial acquisition cost,~~enhanced cleaning and ~~generate 221 MW.~~

~~Throughout 2015,~~temperature screening. Dominion Energy ~~completed~~also facilitated telecommuting for many employees and expanded paid time off and other benefits to help employees cope with disruptions caused by the ~~acquisition~~pandemic.

Dominion Energy works to recruit, retain and develop the careers of talented individuals who reflect the communities it serves. To cultivate this diversified workforce, Dominion Energy focuses on workforce diversity and inclusion while fostering an environment where employees can utilize their unique strengths, skills, personalities and life experiences. In October 2020, Dominion Energy announced its commitment to increase workforce diversity by 1% annually until it achieves at least 40% diverse representation. During 2020, Dominion Energy increased diverse representation within its workforce from 33.2% to 34.6%. For the purposes of measuring diversity, Dominion Energy includes non-minority female, minority male, minority female and undeclared female. In 2020 and 2019, the percentage of new hires that are diverse was 50% and 45%, respectively. Dominion Energy sponsors eight employee resource groups to support and reinforce its culture of inclusiveness by enabling employees with shared interests and backgrounds to work together to create community, provide networking opportunities and encourage professional development. The employee resource groups are aligned to support various ~~merchant solar projects~~forms of diversity and inclusion, including gender, sexual orientation, gender identity and expression, race, veteran status, age, ability and cultural heritage. To further advance these initiatives, annual incentive plans for all employees, except as restricted by any collective bargaining agreements, include a performance measure for participation in ~~California~~diversity and ~~Virginia~~inclusion training.

Dominion Energy attracts and retains its employees by offering competitive compensation and benefits packages, including healthcare, retirement, paid time off, parental leave and other benefits. Dominion Energy also offers a variety of training and development opportunities for ~~$381 million. The projects cost $588 million~~all employees with the goal to ~~construct,~~provide a consistent and progressive approach to training that engages the workforce and fosters a culture of learning. To this end, Dominion Energy offers continuous learning opportunities including tuition assistance programs, professional development resources, access to a career center and a self-guided training program for independent learning as well as leadership development programs. These resources and programs are designed not only to engage and retain talented employees but also to allow Dominion Energy to meet the ~~initial acquisition cost, and generate 182 MW.~~

~~See Note 3 and Note 10 to the Consolidated Financial Statements for additional information.~~

~~Acquisition~~needs of ~~Virginia Power Solar Projects~~

~~In 2019, Virginia Power entered into agreements to acquire various solar development projects~~its customers in ~~Virginia. Four of these projects closed in 2019 and the fifth closed in January 2020~~an ever-changing industry with a ~~total expected cost of approximately $765 million once constructed, including initial acquisition costs, and will generate approximately 448 MW combined.~~

~~In 2018, Virginia Power entered into agreements to acquire various solar development projects~~skilled workforce.

OPERATING SEGMENTS

Beginning in ~~North Carolina and Virginia. These projects closed in 2019 with a total cost of $297 million, including initial acquisition costs, and generate 175 MW combined.~~

In 2017, Virginia Power entered into agreements to acquire various solar development projects in North Carolina. The projects closed in 2018 and 2019 with a total cost of $282 million, including initial acquisition costs, and generate 155 MW combined.

~~See Note 10 to the Consolidated Financial Statements for additional information.~~

~~Sale of Certain Retail Energy Marketing Assets~~

~~In October 2017,~~September 2020, Dominion Energy ~~entered into an agreement to sell certain assets associated with~~manages its ~~nonregulated retail energy marketing~~daily operations for total consideration of $143 million, subject to customary approvals and certain adjustments. In December 2017, the first phase of the agreement closed for $79 million. In October 2018, the second phase of the agreement closed for $63 million. Pursuant to the agreement, Dominion Energy entered into a commission agreement with the buyer upon the first closing in December 2017, under which the buyer will pay a commission in connection with the right to use Dominion Energy’s brand in marketing materials and other services over a

~~ten-year~~

~~term. See Note 10 to the Consolidated Financial Statements for additional information.~~

~~Assignment of Tower Rental Portfolio~~

Virginia Power rents space on certain of its electric transmission towers to various wireless carriers for communications antennas and other equipment. In March 2017, Virginia Power sold its rental portfolio to Vertical Bridge Towers II, LLC for $91 million in cash. See Note 10 to the Consolidated Financial Statements for additional information.

~~Acquisition of Non-Wholly-Owned Merchant Solar Projects~~

In 2015, Dominion Energy acquired 50% of the units in Four Brothers and Three Cedars from SunEdison for $107 million. In November 2016, NRG acquired the 50% of units in Four Brothers and Three Cedars previously held by SunEdison. In August 2018, NRG’s ownership in Four Brothers and Three Cedars was transferred to GIP. The facilities began commercial operations in the third quarter of 2016, with generating capacity of 530 MW, at a cost of $1.1 billion.

~~Sale of Interest in Merchant Solar Projects~~

In September 2015, Dominion Energy signed an agreement to sell a noncontrolling interest (consisting of 33% of the equity interests) in all of its then wholly-owned merchant solar projects, 24 solar projects totaling 425 MW, to SunEdison. In December 2015, the sale of interest in 15 of the solar projects closed for $184 million with the sale of interest in the remaining projects completed in January 2016 for $117 million. Upon closing, SunEdison sold its interest in these projects to Terra Nova Renewable Partners.

~~Dominion Energy Midstream Acquisition of Interest in Iroquois~~

In September 2015, Dominion Energy Midstream acquired from NG and NJNR a 25.93% noncontrolling partnership interest in Iroquois. The investment was recorded at $216 million based on the value of Dominion Energy Midstream’s common units at closing. The common units issued to NG and NJNR have been reflected as noncontrolling interest in Dominion Energy and Dominion Energy Gas’ Consolidated Financial Statements.

~~Acquisition of DECG~~

~~In January 2015, Dominion Energy completed the acquisition of 100% of the equity interests of DECG from SCANA for $497 million in cash, as adjusted for working capital.~~

~~Assignments of Shale Development Rights~~

In December 2013, Dominion Energy Gas closed on agreements with natural gas producers to convey over time approximately 100,000 acres of Marcellus Shale development rights underneath several natural gas storage fields. The agreements provided for payments to Dominion Energy Gas, subject to customary adjustments, of up to approximately $200 million over a period of nine years, and an overriding royalty interest in gas produced from that acreage. In March 2015, Dominion Energy Gas and a natural gas producer closed on an amendment to a December 2013 agreement, which included the immediate conveyance of approximately 9,000 acres of Marcellus Shale development rights and a

~~two-year~~

extension of the term of the original agreement. The conveyance of development rights resulted in the recognition of $43 million of previously deferred revenue. In April 2016, Dominion Energy Gas and the natural gas producer closed on an amendment to the agreement, which included the immediate conveyance of a 32% partial interest in the remaining approximately 70,000 acres. This conveyance resulted in the recognition of the remaining $35 million of previously deferred revenue. In August 2017, Dominion Energy Gas and a natural gas producer signed an amendment to the agreement, which included the finalization of contractual matters on previous conveyances, the conveyance of Dominion Energy Gas’ remaining 68% interest in approximately 70,000 acres and the elimination of Dominion Energy Gas’ overriding royalty interest in gas produced from all acreage. As a result of this amendment, Dominion Energy Gas received total consideration of $130 million, with $65 million received in November 2017 and $65 million received in September 2018 in connection with the final conveyance.

In March 2015, Dominion Energy Gas conveyed to a natural gas producer approximately 11,000 acres of Marcellus Shale development rights underneath one of its natural gas storage fields and received proceeds of $27 million and an overriding royalty interest in gas produced from the acreage.

In September 2015, Dominion Energy Gas closed on an agreement with a natural gas producer to convey approximately 16,000 acres of Utica and Point Pleasant Shale development rights underneath one of its natural gas storage fields. The agreement provided for a payment to Dominion Energy Gas, subject to customary adjustments, of $52 million and an overriding royalty interest in gas produced from the acreage.

In November 2014, Dominion Energy Gas closed on an agreement with a natural gas producer to convey over time approximately 24,000 acres of Marcellus Shale development rights underneath one of its natural gas storage fields. The agreement provided for payments to Dominion Energy Gas, subject to customary adjustments, of approximately $120 million over a period ofthrough four years, and an overriding royalty interest in gas produced from the acreage. In January 2018, Dominion Energy Gas and the natural gas producer closed on an amendment to the agreement, which included the conveyance of Dominion Energy Gas’ remaining 50% interest in approximately 18,000 acres and the elimination of Dominion Energy Gas’ overriding royalty interest in gas produced from all acreage for proceeds of $28 million.


10

~~See Note 10 to the Consolidated Financial Statements for additional information on certain of these sales of Marcellus and Utica acreage.~~

~~Operating Segments~~

~~In December 2019, Dominion Energy strategically realigned its segments which resulted in the formation of five~~ primary operating segments: Dominion Energy Virginia, ~~Gas Transmission & Storage,~~ Gas Distribution, Dominion Energy South Carolina and Contracted ~~Generation.~~Assets. See Note 26 to the Consolidated Financial Statements for a summary description of operations within each of the four primary operating segments. Dominion Energy also reports a Corporate and Other segment, which includes its corporate, service companies and other functions (including unallocated debt)~~. In addition,~~ as well as nonregulated retail energy marketing operations, including Dominion Energy’s noncontrolling interest in Wrangler. Corporate and Other includes specific items attributable to Dominion Energy’s ~~other~~ operating segments that are not included in profit measures evaluated by executive management in assessing the operating segments’ performance or in allocating resources.

In addition, Corporate and Other includes the net impact of discontinued operations consisting of Dominion Energy’s gas transmission and storage operations as discussed in Note 3 to the Consolidated Financial Statements and its equity investment in Atlantic Coast Pipeline as discussed in Note 9 to the Consolidated Financial Statements.

Virginia Power manages its daily operations through its primary operating segment: Dominion Energy Virginia. It also reports a Corporate and Other segment that primarily includes specific items attributable to its operating segments that are not included in profit measures evaluated by executive management in assessing the segment’s performance or in allocating resources.

Dominion Energy Gas manages its daily operations through its primary operating segment: Gas Transmission & Storage. It also reports a Corporate and Other segment that primarily includes specific items attributable to its operating segment that are not included in profit measures evaluated by executive management in assessing the segment’s performance or in allocating resources and the effect of certain items recorded at Dominion Energy Gas as a result of Dominion Energy’s basis in the net assets contributed.

While daily operations are managed through the operating segments previously discussed, assets remain wholly-owned by the Companies and their respective legal subsidiaries.

~~A description of the operations included in the Companies’ primary operating segments is as follows:~~

Primary Operating
Segment

~~Description of Operations~~

Dominion
Energy

Virginia
Power

Dominion
Energy Gas

~~Dominion Energy Virginia~~

~~Regulated electric distribution~~

~~Regulated electric transmission~~

~~Regulated electric generation fleet~~

~~(1)~~

~~Gas Transmission & Storage~~

~~Regulated gas transmission and storage~~

~~(2)~~

~~LNG terminalling and storage~~

~~Nonregulated retail energy marketing~~

~~Gas Distribution~~

~~Regulated gas distribution and storage~~

~~(3)~~

~~Dominion Energy South Carolina~~

~~Regulated electric distribution~~

~~Regulated electric transmission~~

~~Regulated electric generation fleet~~

~~Regulated gas distribution and storage~~

~~Contracted Generation~~

~~Merchant electric generation fleet~~

~~(1)~~

~~Includes Virginia Power’s nonjurisdictional generation operations.~~

~~(2)~~

~~Includes gathering and processing activities.~~

~~(3)~~

~~Includes Wexpro’s natural gas development and production operations.~~

~~Dominion Energy Virginia~~

DOMINION ENERGY VIRGINIA

The Dominion Energy Virginia Operating Segment is substantially composed of Virginia Power’s regulated electric transmission, distribution (including customer service) and generation (regulated electric utility and its related energy supply) operations, which serve approximately ~~2.6~~2.7 million residential, commercial, industrial and governmental customers in Virginia and North Carolina.

Virginia Power’s growth capital plan includes spending approximately ~~$16~~$24 billion from ~~2019~~2021 through ~~2023~~2025 to upgrade or add new transmission lines, distribution lines, substations, and other facilities, as well as maintain existing and construct new generation capacity to meet its renewable generation targets and growing electricity demand within its service territory in order to maintain reliability and regulatory compliance. The proposed infrastructure projects and investment commitments are intended to address both continued customer growth and increases in electricity consumption which are primarily driven by new and larger data center customers, as well as support its Subsequent License Renewal projects as it is seeking

20-year

license extensions for the regulated nuclear fleet in Virginia. See Properties and Environmental Strategy for additional information on this and other utility projects.

Virginia Power has also created a

ten-year

plan to transform its electric grid into a smarter, stronger and greener grid. This plan will address the structural limitations of Virginia Power’s distribution grid in a systematic manner in order to recognize and

accommodate fundamental changes and requirements in the energy industry. The objective is to address both customer and system needs by (i) achieving even higher levels of reliability and resiliency against natural and

man-made

threats, (ii) leveraging technology to enhance the customer experience and improve the operation of the system and (iii) safely and effectively integrating new utility-scale renewable generation and storage as well as customer–level distributed energy resources such as rooftop solar and battery storage. In 2019 ~~the~~and 2020, the Virginia Commission approved ~~a portion~~portions of this plan.

Revenue provided by electric distribution and generation operations is based primarily on rates established by the Virginia and North Carolina Commissions. Approximately ~~84%~~82% of revenue comes from serving Virginia jurisdictional customers. Base rates for the Virginia jurisdiction are set using a modified

cost-of-service

rate model, and are generally designed to allow an opportunity to recover the cost of providing utility service and earn a reasonable return on investments used to provide that service. Variability in earnings is driven primarily by changes in rates, weather, customer growth and other factors impacting consumption such as the economy and energy conservation, in addition to operating and maintenance expenditures. Electric operations continue to focus on improving service and experience levels while striving to reduce costs and link investments to operational results. SAIDI performance results, excluding major events, were ~~138~~146 minutes for the three-year average ending ~~2019,~~2020, up from the previous three-year average of ~~134~~138 minutes. This increase is primarily due to increased storm activity.

Earnings may reflect variations in the timing or nature of expenses as compared to those contemplated in current rates, such as labor and benefit costs, capacity expenses, the timing, duration and costs of scheduled and unscheduled outages as well as ~~the customer’s~~certain customers’ ability to choose a generation service provider. The cost of fuel and purchased power is generally collected through fuel cost-recovery mechanisms established by regulators and does not materially impact net income. The cost of new generation facilities is generally recovered through ~~rate adjustment clauses~~riders in Virginia. Variability in earnings from ~~rate adjustment clauses~~riders reflects changes in the authorized ROE and the carrying amount of these facilities, which are largely driven by the timing and amount of capital investments, as well as depreciation. See Note 13 to the Consolidated Financial Statements for additional information.

Revenue provided by Virginia Power’s electric transmission operations is based primarily on rates approved by FERC. The profitability of this business is dependent on its ability, through the rates it is permitted to charge, to recover costs and earn a reasonable ROIC. Variability in earnings primarily results from changes in rates and the timing of property additions, retirements and depreciation.

Virginia Power is a member of PJM, an RTO, and its electric transmission facilities are integrated into PJM wholesale electricity markets. Consistent with the increased authority given to NERC by EPACT, Virginia ~~Power’s electric transmission operations are~~Power is committed to meeting NERC standards, modernizing its infrastructure and maintaining superior system ~~reliability.~~

reliability with respect to its electric transmission operations.

Competition

There is no competition for electric distribution service within Virginia Power’s service territory in Virginia and North Carolina

and no such competition is currently permitted. Historically, since its electric transmission facilities are integrated into PJM and electric transmission services are administered by PJM, there was no competition in relation to transmission service provided to customers within the PJM region. However, competition from

non-incumbent

PJM transmission owners for development, construction and ownership of certain transmission facilities in Virginia Power’s service territory is permitted pursuant to Order 1000, subject to state and local siting and permitting approvals. This could result in additional competition to build and own transmission infrastructure in Virginia Power’s service area in the future and could allow Dominion Energy to seek opportunities to build and own facilities in other service territories. Additionally, there is some competition for Virginia Power’s generation operations for Virginia jurisdictional electric utility customers that meet certain size requirements or that ~~seek to purchase 100% renewable~~currently are purchasing energy from competitive ~~suppliers.~~suppliers deemed to be 100% renewable by the Virginia Commission. See

Electric

under

State Regulations

Regulation

for more information. Currently, North Carolina does not offer retail choice to electric customers.

Virginia Power’s

non-jurisdictional

operations are not currently subject to significant competition as the output from these facilities is primarily sold under long-term power purchase agreements with terms generally ranging from 16 to 25 years. However, in the future, such operations may compete with other power generation facilities to serve certain large-scale customers after the power purchase agreements expire.

Regulation

Virginia Power’s electric distribution and generation operations, including the rates it may charge to jurisdictional customers, as well as wholesale electric transmission rates, tariffs and terms of service, are subject to regulation by the Virginia and North Carolina Commissions as well as ~~FERC,~~FERC, the NRC, the EPA, the DOE and the Army Corps of ~~Engineers.~~ Engineers.See

State Regulations

and

Federal Regulations

Regulation, Future Issues and Other Matters

in Item 77. MD&A and Notes 13 and 23 to the Consolidated Financial Statements for additional information.

Properties

For a description of existing facilities see Item 2. Properties.

Virginia Power is developing, financing and constructing new generation capacity as well as seeking license extensions on zero carbon generation facilities to meet its renewable generation targets and growing electricity demand within its service territory. Significant projects under construction or development are set forth below:

•

Virginia Power plans to acquire or construct several solar facilities, including facilities currently under development, totaling approximately 2.2 GW of expected generating capacity and approximately $4.1 billion of investments. See Notes 10 and 13 to the Consolidated Financial Statements for more information.

•	Virginia Power has submitted applications with the NRC for 20-year extensions of its operating licenses at North Anna and Surry. See Nuclear Decommissioning below for more information on these facilities.

•	Virginia Power continues to consider the construction of a third nuclear unit at a site located at North Anna. See Future Issues and Other Matters in Item 7 for more information on this project.

•	Virginia Power is considering the construction of an approximately $2 billion hydroelectric pumped storage facility in Southwest Virginia.

•	Virginia Power has announced an approximately $400 million project to replace approximately 1,250 diesel buses with electric buses at school districts in Virginia by 2026.

•

In November 2018, Virginia Power received approval from the Virginia Commission for its petition seeking a prudency determination as provided in the GTSA with respect to the Coastal Virginia Offshore Wind Pilot project, consisting of two 6 MW wind turbine generators located 27 miles off the coast of Virginia Beach, Virginia in federal waters, and for a CPCN for the generation tie line connecting the generators to shore. This project was placed into service in January 2021 at a cost of approximately $300 million.

•

In September 2019, Virginia Power filed applications with PJM for the Coastal Virginia Offshore Wind Commercial project to interconnect 2,640 MW of wind energy off the coast of Virginia adjacent to the Coastal Virginia Offshore Wind Pilot project. The project is expected to be placed in service by the end of 2026 with total cost of the project estimated at approximately $8 billion.

•	Virginia Power is considering the construction of simple cycle combustion turbines in Virginia for reliability purposes with an expected total cost of approximately $750 million.

Virginia Power continues to invest in transmission projects that are a part of PJM’s RTEP process which focus on reliability improvements and replacement of aging infrastructure. The projects that have been authorized by PJM ~~authorized the following material reliability projects (including Virginia Power’s estimated cost):~~

~~Mt.~~

~~Storm-to-Valley~~

~~($290 million);~~

~~Gainesville-to-Haymarket~~

~~($170 million);~~

~~Idylwood~~

~~-to-Tysons~~

~~($125 million);~~

~~Glebe substation and North Potomac Yard terminal station underground ($125 million);~~

~~Remington/Gordonsville/Pratts Area Improvement (including~~

~~Remington-to-Gordonsville,~~

~~and new Gordonsville substation transformer) ($115 million);~~

~~Idylwood substation ($105 million);~~

~~Harmony~~

~~Village-to-White~~

~~Stone ($105 million);~~

~~Elmont-to-Ladysmith ($90 million);~~

~~Lanexa-to-Northern Neck ($90 million);~~

~~Loudoun-to-Ox~~

~~($70 million);~~

~~Mt. Storm substation ($70 million);~~

~~Bristers-to-Chancellor~~

~~($65 million); and~~

~~Dooms-to-Valley~~

~~($65 million).~~


12

are expected to result in capital expenditures of approximately $1.5 billion from 2021 through 2025.

Virginia Power is investing in transmission substation physical security and expects to invest an additional ~~$125~~$110 million to ~~$175~~$160 million through ~~2024~~2025 to strengthen its electrical system to better protect critical equipment, enhance its spare equipment process and create multiple levels of security.

Virginia legislation provides for the recovery of costs, subject to approval by the Virginia Commission, for Virginia Power to move approximately 4,000 miles of electric distribution lines underground. The program is designed to reduce restoration outage time by moving Virginia Power’s most outage-prone overhead distribution lines underground, has an annual investment cap of approximately $175 million and is expected to be completed by 2028. The Virginia Commission has approved four phases of the program encompassing approximately 1,350 miles of converted lines and $545 million in capital spending (with $523 million recoverable through Rider U).

Virginia Power is developing, financing and constructing new generation capacity to meet growing electricity demand within its service territory. Significant projects under construction or development are set forth below:

~~Virginia Power plans to acquire or construct certain solar facilities in Virginia and North Carolina. See Notes 10 and 13 to the Consolidated Financial Statements for more information.~~

~~Virginia Power continues to consider the construction of a third nuclear unit at a site located at North Anna. See~~

~~Future Issues and Other Matters~~

~~in Item 7 for more information on this project.~~

~~Virginia Power is considering the construction of an approximately $2 billion hydroelectric pumped storage facility in Southwest Virginia.~~

~~Virginia Power has announced an approximately $400 million project to replace approximately 1,500 diesel buses with electric buses at school districts in Virginia by 2025.~~

In November 2018, Virginia Power received approval from the Virginia Commission for its petition seeking a prudency determination as provided in the GTSA with respect to the proposed Coastal Virginia Offshore Wind Pilot project, consisting of two 6 MW wind turbine generators located approximately 27 miles off the coast of Virginia Beach, Virginia in federal waters, and for a CPCN, for the generation tie line connecting the generators to shore. This project is expected to cost approximately $300 million and to be placed into service by the end of 2020.

In September 2019, Virginia Power filed an application with PJM for the Coastal Virginia Offshore Wind Commercial project to interconnect 2,640 MW of wind energy between 2024 and 2026 off the coast of Virginia as an expansion of the Coastal Virginia Offshore Wind Pilot project, expected to increase the total cost of the project by up to approximately $8 billion.

~~Virginia Power is considering the construction of simple cycle combustion turbines in Virginia. These projects are expected to be placed in service beginning 2023.~~

See Note 13 to the Consolidated Financial Statements for more information.

Sources of Energy Supply

Virginia Power uses a variety of fuels to power its electric generation fleet and purchases power for utility system load requirements and to satisfy physical forward sale requirements. Some of these agreements have fixed commitments and are included as

contractual obligations in

Future Cash

Payments for Contractual Obligations and Planned Capital Expenditures

in Item 7. MD&A.

Presented below is a summary of Virginia Power’s actual system output by energy source:

Source

2019

2018

2017

Natural gas

41
%
33
%
32
%
Nuclear
(1)

29

29

32

Purchased power, net

17

19

14

Coal
(2)

8

13

17

Renewable/hydro
(3)

5

5

5

Oil

—

1

—

Total

100
%
100
%
100
%

Source	2020			2019			2018
Natural gas		48	%		41	%		33	%
Nuclear⁽¹⁾		32			29			29
Purchased power, net		7			17			19
Coal⁽²⁾		9			8			13
Renewable and Hydro⁽³⁾		4			5			5
Other		—			—			1
Total		100	%		100	%		100	%

~~(1)~~

(1)

Excludes ODEC’s 11.6% undivided ownership interest in North Anna.

~~(2)~~

(2)

Excludes ODEC’s 50.0% undivided ownership interest in the Clover power station.

~~(3)~~

(3)

Includes solar and biomass.

Nuclear Fuel

—Virginia Power primarily utilizes 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 which are dependent on the market environment. 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 optimal cost and inventory levels.

Fossil Fuel

—Virginia Power primarily utilizes natural gas and coal in its fossil fuel plants. All recent fossil fuel plant construction involves natural gas generation.

Virginia Power’s natural gas and oil supply is obtained from various sources including purchases from major and independent producers in the

Mid-Continent

and Gulf Coast regions, purchases from local producers in the Appalachian area and Marcellus and Utica regions, purchases from gas marketers and withdrawals from underground storage fields owned by ~~Dominion Energy or~~ third parties. Virginia Power manages a portfolio of natural gas transportation contracts (capacity) that provides for reliable natural gas deliveries to its gas turbine fleet, while minimizing costs.

Virginia Power’s coal supply is obtained through long-term contracts and short-term spot agreements from domestic suppliers.

Biomass—

Virginia Power’s biomass supply is obtained through long-term contracts and short-term spot agreements from local suppliers.

Purchased Power

—Virginia Power purchases electricity from the PJM spot market and through power purchase agreements with other suppliers to provide for utility system load requirements.

Seasonality

Virginia Power’s earnings vary seasonally as a result of the impact of changes in temperature, the impact of storms and other catastrophic weather events, and the availability of alternative sources for heating on demand by residential and commercial customers. Generally, the demand for electricity peaks during the summer and winter months to meet cooling and heating needs, respectively. An increase in heating degree days for Virginia Power’s electric utility-related operations does not produce the same increase in revenue as an increase in cooling degree days, due to seasonal pricing differentials and because alternative heating sources are more readily available.

Nuclear Decommissioning

Virginia Power has a total of four licensed, operating nuclear reactors at Surry and North Anna in Virginia.

Decommissioning involves the decontamination and removal of radioactive contaminants from a nuclear power station once operations have ceased, in accordance with standards established by the NRC. Amounts collected from ratepayers are placed into trusts and are invested to fund the expected future costs of decommissioning the Surry and North Anna units.

Virginia Power believes that the decommissioning funds and their expected earnings for the Surry and North Anna units will be sufficient to cover expected decommissioning costs, particularly when combined with future ratepayer collections and contributions to these decommissioning trusts, if such future collections and contributions are required. This reflects the long-term investment horizon, since the units will not be decommissioned for decades, and a positive long-term outlook for trust fund investment returns. Virginia

Power will continue to monitor these trusts to ensure they meet the NRC minimum financial assurance requirements, which may include, if needed, the use of parent company guarantees, surety bonding or other financial instruments recognized by the NRC.

The estimated cost to decommission Virginia Power’s four nuclear units is reflected in the table below and is primarily based upon site-specific studies completed in 2019. These cost studies are generally completed every four to five years. The current cost estimates assume decommissioning activities will begin shortly after cessation of operations, which will occur when the operating licenses expire.

Under the current operating licenses, Virginia Power is scheduled to decommission the Surry and North Anna units during the period 2032 to 2078. NRC regulations allow licensees to apply for extension of an operating license in up to

20-year

increments. In ~~2019,~~2018, Virginia Power applied for renewal of its operating licenses for an additional 20 years for the two nuclear units at Surry. Under these renewal applications, the two nuclear units will be allowed to generate electricity through 2052 and 2053, if approved. Virginia Power ~~expects to submit~~also submitted a license ~~extension~~renewal application for the two units at North Anna in 2020. Under these renewal applications, the two nuclear units will be allowed to generate electricity through 2058 and 2060, if approved. Between the four units, Virginia Power estimates that it could spend approximately $3 billion to $4 billion over the next several years on ~~the relicensing process.~~capital improvements. The existing regulatory framework in Virginia provides rate recovery mechanisms for such costs. ~~The most recent site-specific study completed for Surry and North Anna was performed in 2019.~~

The estimated decommissioning costs, funds in trust and current license expiration dates for Surry and North Anna are shown in the following table:

NRC license expiration year

Most
recent
cost
estimate
(2019
dollars)
(1)

Funds in
trusts at
December 31,
2019

2019
contributions
to trusts

(dollars in millions)

Surry

Unit 1

2032

$   803

$  815

$  —

Unit 2

2033

794

803

—

North Anna

Unit 1
(2)

2038

720

651

—

Unit 2
(2)

2040

724

612

—

Total

$3,041

$2,881

$—

	NRC license expiration year	Most recent cost estimate (2020 dollars)⁽¹⁾		Funds in trusts at December 31, 2020⁽²⁾
(dollars in millions)
Surry
Unit 1	2032	$	818	$	905
Unit 2	2033		809		892
North Anna
Unit 1⁽³⁾	2038		733		722
Unit 2⁽³⁾	2040		737		678
Total		$	3,097	$	3,197

(1)

The cost estimates shown above reflect reductions for the expected future recovery of certain spent fuel costs based on Virginia Power’s contracts with the DOE for disposal of spent nuclear fuel consistent with the reductions reflected in Virginia Power’s nuclear decommissioning AROs and includes the expectation that

20-year

license extensions are approved for all units.

(2)	Virginia Power did not make any contributions to its nuclear decommissioning trust funds during 2020.

(3)	North Anna is jointly owned by Virginia Power (88.4%) and ODEC (11.6%). However, Virginia Power is responsible for 89.26% of the decommissioning obligation. Amounts reflect 89.26% of the decommissioning cost for both of North Anna’s units.

Also see Notes 9, 14 and 23 to the Consolidated Financial Statements for further information about nuclear decommissioning trust investments, AROs and nuclear decommissioning, respectively.

~~Gas Transmission & Storage~~

The Gas Transmission & Storage Operating Segment of Dominion Energy Gas includes FERC regulated interstate natural gas transmission pipeline and underground storage systems in the eastern and Rocky Mountain regions of the U.S. (primarily through DETI, DECG and Dominion Energy Questar Pipeline), LNG import/export and storage (through its 75% controlling interest in Cove Point) as well as a 50% noncontrolling partnership interest in Iroquois. See

~~Investments~~

~~below for additional information regarding the Iroquois investment.~~

The Gas Transmission & Storage Operating Segment of Dominion Energy also includes nonregulated retail natural gas marketing, development of renewable natural gas and LNG infrastructure and its investments in Atlantic Coast Pipeline, Align RNG and Wrangler. See

~~Investments~~

~~below for additional information regarding the Atlantic Coast Pipeline, Align RNG and Wrangler investments.~~

Gas Transmission & Storage’s growth capital plan includes spending approximately $4 billion from 2019 through 2023 to upgrade existing or add new infrastructure to meet growing energy needs within its service territory and maintain reliability. Demand for natural gas is expected to continue to grow as initiatives to transition to gas from more carbon-intensive fuels are implemented. This plan includes Dominion Energy’s portion of spending for the Atlantic Coast Pipeline Project.

~~Earnings for the~~

~~Gas Transmission & Storage Operating Segment of Dominion Energy and Dominion Energy Gas~~

primarily result from rates established by FERC. Approximately 94% of Dominion Energy Gas’ transmission capacity is subscribed including 91% under long-term contracts (two years or greater) and 3% on a

~~year-to-year~~

basis. Dominion Energy Gas’ storage services are 100% subscribed with long-term contracts. Revenues derived from Dominion Energy Gas’ pipeline operations are primarily from reservation charges for firm transportation and storage services as provided for in their FERC-approved tariffs. The profitability of these businesses is dependent on their ability, through the rates they are permitted to charge, to recover costs and earn a reasonable return on their capital investments.

~~Additionally, Dominion Energy Gas receives revenue from firm~~

~~fee-based~~

contractual arrangements, including negotiated rates, for certain LNG storage and terminalling services. The Liquefaction Facility has a firm contracted capacity for LNG loading onto ships of approximately 4.6 Mtpa (0.66 bcfe/day)


14

under normal operating conditions and after accounting for maintenance downtime. Variability in earnings results from changes in operating and maintenance expenditures, as well as changes in rates and the demand for services, which are dependent on weather, changes in commodity prices and the economy.

Dominion Energy’s retail energy marketing operations compete in nonregulated energy markets. Dominion Energy has a large concentration of natural gas customers in markets where utilities have a long-standing commitment to customer choice.

~~Competition~~

~~Gas Transmission & Storage Operating Segment—Dominion Energy and Dominion Energy Gas~~

Dominion Energy Gas’ natural gas transmission operations compete with domestic and Canadian pipeline companies. Dominion Energy Gas also competes with gas marketers seeking to provide or arrange transportation, storage and other services. Alternative fuel sources, such as oil or coal, provide another level of competition. Although competition is based primarily on price, the array of services that can be provided to customers is also an important factor. The combination of capacity rights held on certain long-line pipelines, a large storage capability and the availability of numerous receipt and delivery points along its own pipeline system enable Dominion Energy Gas to tailor its services to meet the needs of individual customers.

Dominion Energy Gas’ pipeline systems generate a substantial portion of their revenue from long-term firm contracts for transportation services and are therefore insulated from competitive factors during the terms of the contracts. When these long-term contracts expire, Dominion Energy Gas’ pipeline system will face competitive pressures from similar facilities that serve the eastern and Rocky Mountain regions in terms of location, rates, terms of service, and flexibility and reliability of service.

Cove Point’s gas transportation, LNG import and storage operations, as well as the Liquefaction Facility’s capacity, are contracted primarily under long-term fixed reservation fee agreements. However, in the future Cove Point may compete with other independent terminal operators as well as major oil and gas companies on the basis of terminal location, services provided and price. Competition from terminal operators primarily comes from refiners and distribution companies with marketing and trading arms. In addition, the Liquefaction Facility may face competition on a global scale as international customers explore other options to meet their energy needs.

~~Gas Transmission & Storage Operating Segment—Dominion Energy~~

Dominion Energy’s retail energy marketing operations compete against incumbent utilities and other energy marketers in nonregulated energy markets for natural gas, and provides service to approximately 380,000 customer accounts in five states. The heaviest concentration of customers in these markets is located in states where utilities have the advantage of long-standing commitment to customer choice, primarily Ohio and Pennsylvania.

~~Regulation~~

~~Gas Transmission & Storage Operating Segment—Dominion Energy and Dominion Energy Gas~~

~~Dominion Energy Gas’ natural gas transmission and storage operations, as well as its LNG import and storage operations are regulated primarily by FERC.~~

~~See~~

~~Federal Regulations~~

~~Regulation~~

~~for more information.~~

~~Properties~~

~~For a description of existing facilities see Item 2.~~

~~Properties~~

~~The~~

~~following significant projects are under construction or development to better serve customers or expand its service offerings.~~

~~Gas Transmission & Storage Operating Segment—Dominion Energy and Dominion Energy Gas~~

In August 2018, DETI executed a binding precedent agreement with a customer for the West Loop project. The project is expected to cost approximately $95 million and provide 150,000 Dths per day of firm transportation service from Pennsylvania to Ohio for delivery to a proposed combined-cycle, natural

~~gas-fired~~

electric power generation facility to be located in Columbiana County, Ohio. In December 2018, DETI filed an application to request FERC authorization to construct, operate and maintain the project facilities, which are expected to be in service by the end of 2021.

In December 2014, DETI entered into a precedent agreement with Atlantic Coast Pipeline for the Supply Header project, a project to provide approximately 1,500,000 Dths per day of firm transportation service to various customers. Atlantic Coast Pipeline has continued to experience delays in obtaining permits necessary for construction and delays in construction due to judicial actions. As a result, project cost estimates are $725 million to $775 million, excluding financing costs. Project construction is expected to be completed by the end of 2021 with

~~in-service~~

~~in early 2022.~~

~~Gas Transmission & Storage Operating Segment—Dominion Energy~~

In November 2019, Dominion Energy entered into an arrangement with Vanguard Renewables to convert methane from U.S. dairy farms into clean, renewable natural gas that can heat homes, power businesses and fuel vehicles. Under this arrangement, Dominion Energy will own the projects and market the renewable natural gas, and Vanguard Renewables will design, develop and operate the projects. Dominion Energy plans to invest $200 million into this project through 2024.

~~Investments~~

~~Gas Transmission & Storage Operating Segment—Dominion Energy and Dominion Energy Gas~~

~~Iroquois—~~

In September 2015, Dominion Energy, through Dominion Energy Midstream, acquired an additional 25.93% interest in Iroquois. In November 2019, following completion of the Dominion Energy Gas Restructuring, this 25.93% investment was transferred to Dominion Energy Gas which now holds a 50% interest in Iroquois, with TransCanada holding the remaining 50% interest. Iroquois owns and operates a

~~416-mile~~

~~FERC regulated interstate natural gas pipeline providing service to local gas distribution companies, electric utilities and electric power generators, as well as marketers and other~~

~~end-users,~~

~~through interconnecting pipelines and exchanges. Iroquois’ pipeline extends from the U.S.-Canadian border at Waddington, New York~~

through the state of Connecticut to South Commack, Long Island, New York and continuing on from Northport, Long Island, New York through the Long Island Sound to Hunts Point, Bronx, New York. In January 2020, Iroquois filed an application with FERC to expand certain existing compression stations in New York and Connecticut. The project is expected to cost approximately $275 million and be placed in service by the end of 2023. See Note 9 to the Consolidated Financial Statements for further information about Dominion Energy’s equity method investment in Iroquois.

~~Gas Transmission & Storage Operating Segment—Dominion Energy~~

~~Atlantic Coast Pipeline~~

—In September 2014, Dominion Energy, along with Duke and Southern, announced the formation of Atlantic Coast Pipeline. The Atlantic Coast Pipeline partnership agreement includes provisions to allow Dominion Energy an option to purchase additional ownership interest in Atlantic Coast Pipeline to maintain a leading ownership percentage. The members hold the following membership interests: Dominion Energy, 48%; Duke, 47%; and Southern, 5%. In February 2020, Dominion Energy entered an agreement to acquire Southern’s 5% membership interest. Atlantic Coast Pipeline is focused on constructing an approximately

~~600-mile~~

natural gas pipeline running from West Virginia through Virginia to North Carolina. Atlantic Coast Pipeline has executed agreements with customers for a substantial majority of the capacity of the Atlantic Coast Pipeline Project. See Future Issues and Other Matters in Item 7 for information on estimated project costs and

~~in-service~~

~~date and Note 9 to the Consolidated Financial Statements for further information about Dominion Energy’s equity method investment in Atlantic Coast Pipeline.~~

~~Align RNG~~

—In November 2018, Dominion Energy announced the formation of Align RNG, an equal partnership with Smithfield Foods, Inc. As announced in October 2019, Align RNG expects to invest $500 million to develop assets to capture methane from hog farms across Virginia, North Carolina, Utah, Arizona and California and convert it into pipeline quality natural gas.

~~Wrangler~~

—In September 2019, Dominion Energy, announced the formation of Wrangler, a nonregulated natural gas retail energy marketing business serving Georgia and other southeastern states in the U.S. Wrangler was created in partnership with Interstate Gas Supply, Inc., with Dominion Energy contributing its nonregulated retail energy marketing operations and Interstate Gas Supply, Inc. contributing cash. Dominion Energy has a 20% noncontrolling ownership interest in Wrangler. See Note 9 to the Consolidated Financial Statements for further information about Dominion Energy’s equity method investment in Wrangler.

~~Sources of Energy Supply~~

Dominion Energy and Dominion Energy Gas’ large underground natural gas storage network and the location of their pipeline systems are a significant link between the country’s major interstate gas pipelines and large markets in the eastern and Rocky Mountain regions of the U.S. Dominion Energy and Dominion Energy Gas’ pipelines are part of an interconnected gas transmission system, which provides access to supplies nationwide for local distribution companies, marketers, power generators and industrial and commercial customers.

Dominion Energy and Dominion Energy Gas’ underground storage facilities play an important part in balancing gas supply with consumer demand and are essential to serving the eastern and Rocky Mountain regions. In addition, storage capacity is an important element in the effective management of both gas supply and pipeline transmission capacity.

~~The supply of gas to serve Dominion Energy’s retail energy marketing customers is procured through Dominion Energy’s energy marketing group and market wholesalers.~~

~~Seasonality~~

~~Due to the nature of Dominion Energy and Dominion Energy Gas’ gas transmission and storage operations, seasonal fluctuations do not have a material impact on earnings.~~

The earnings of Dominion Energy’s retail energy marketing operations, however vary seasonally as a result of the impact of changes in temperature. Generally, the demand for gas peaks during the winter months to meet heating needs.

~~Gas Distribution~~

GAS DISTRIBUTION

The Gas Distribution Operating Segment of Dominion Energy

includes Dominion Energy’s regulated natural gas sales, transportation, gathering, storage and distribution operations in Ohio, West Virginia, North Carolina, Utah, southwestern Wyoming and southeastern Idaho (through East Ohio, Hope, PSNC and Questar Gas) which collectively serve approximately ~~3.0~~3.1 million residential, commercial and industrial customers.

The Gas Distribution Operating Segment also includes nonregulated renewable natural gas facilities in operation and under development, including Dominion Energy’s investment in Align RNG. See Investments below for additional information regarding the Align RNG investment.

Gas Distribution’s growth capital plan includes spending approximately $4$5 billion from ~~2019~~2021 through ~~2023~~ 2025 to upgrade existing or add new infrastructure to meet growing energy needs and retain reliability within its service territory ~~and maintain reliability.~~as well as investments in renewable natural gas infrastructure projects outside its service territory. Planned capital spending is driven by infrastructure needs from a growing customer base in states with expanding economies, replacing aging assets for reliability, safety and ~~safety~~sustainability and meeting demands for natural gas to support the transition from more carbon intensive fuels.

Earnings for the Gas Distribution Operating Segment of Dominion Energy

primarily result from rates established by the Ohio, West Virginia, North Carolina, Utah, Wyoming and Idaho Commissions. The profitability of these businesses is dependent on their ability,

through the rates they are permitted to charge, to recover costs and earn a reasonable return on their capital investments. Variability in earnings primarily results from changes in operating and maintenance expenditures, as well as changes in rates and the economy.

Competition

Questar Gas and Hope do not currently face direct competition from other distributors of natural gas for residential and commercial customers in their service territories as state regulations in Utah, Wyoming and Idaho for Questar Gas, and West Virginia for Hope, do not allow customers to choose their provider at this time. See

State Regulations

Regulation

for additional information.

~~In Ohio, there has been no legislation enacted to require supplier choice for natural gas distribution consumers. However,~~

East Ohio ~~has offered~~offers an Energy Choice program, under which residential customers are encouraged to ~~residential~~purchase gas directly from retail suppliers or through a community aggregation program and ~~commercial customers since October 2000.~~have it delivered by East ~~Ohio has since taken various steps approved by the Ohio Commission toward exiting the merchant function, including restructuring its~~


16

commodity service and placing Energy Choice-eligible customers in a direct retail relationship with participating suppliers. Further, in April 2013, East Ohio fully exited the merchant function for its nonresidential customers, which are now required to choose a retail supplier or be assigned to one at a monthly variable rate set by the supplier.Ohio. At December 31, ~~2019,~~2020, approximately 1.1 million of East Ohio’s 1.2 million Ohio customers were participating in the Energy Choice program.

Competition in PSNC’s natural gas distribution operations is generally based on price and convenience. Large commercial and industrial customers often have the ability to switch from natural gas to an alternate fuel, such as propane or fuel oil. Natural gas competes with these alternate fuels based on price. As a result, any significant disparity between supply and demand, either of natural gas or of alternate fuels, and due either to production or delivery disruptions or other factors, will affect price and the ability to retain large commercial and industrial customers.

In all of Dominion Energy’s gas service territories, electric utilities offer electricity as a rival energy source and compete for the space heating, water heating and cooking markets. The principal means to compete against alternative fuels is lower prices, and natural gas historically has maintained its price advantage in the residential and commercial markets. Competition for heating as well as general household and small commercial energy needs generally occurs at the initial installation phase when the customer or builder makes the decision as to which types of equipment to install, as a result customers tend to use their chosen energy source for the life of the equipment.

Regulation

Gas Distribution’s operations, including the rates that it may charge customers, are regulated by the Ohio, West Virginia, North Carolina, Utah, Wyoming and Idaho Commissions as well as PHMSA and the U.S. Department of Transportation. See

Federal Regulations and State Regulations

Regulation

for more information.

Properties

For a description of existing facilities see Item 2.

Properties

Dominion Energy has the following significant projects under construction or development to better serve utility customers or expand its service offerings within its utility service ~~territory.~~

territory as well as to support its strategy to achieve net zero emissions.

East ~~Ohio~~

—Ohio—In 2008, East Ohio began PIR, aimed at replacing approximately 25% of its pipeline system. In September 2016, the Ohio Commission approved a stipulation filed jointly by East Ohio and the Staff of the Ohio Commission to continue the PIR program and associated cost recovery for another five-year term beginning in 2017, and to permit East Ohio to increase its annual capital expenditures to $200 million by 2018 with a 3% increase per year thereafter subject to the annual cost recovery rate increase caps proposed by East Ohio. In December 2020, East Ohio filed an application with the Ohio Commission to extend the PIR program for an additional five years with continuation of 3% increases per year. See Note 13 into the Consolidated Financial Statements for further information.

In 2011, East Ohio began CEP which enables East Ohio to defer depreciation expense, property tax expense and carrying costs on capital investments not covered by its PIR program to expand, upgrade or replace its pipeline system and information technology systems as well as investments necessary to comply with the Ohio Commission or other government regulation. See Note 13 to the Consolidated Financial Statements for further information.

Questar Gas

—In 2010, Questar Gas began replacing aging high pressure infrastructure under a cost-tracking mechanism that allows it to place into rate base and earn a return on capital expenditures associated with a multi-year natural gas infrastructure-replacement program upon the completion of each project. ~~At that time,~~As part of the ~~commission-allowed annual spending in the replacement program was approximately $55 million.~~

~~In its 2014 Utah general~~2019 base rate case, Questar Gas received approval to include intermediate high pressure infrastructure in the replacement program and increase the annual spending limit to approximately $65 million, adjusted annually using a gross domestic product inflation factor. At that time, 420 miles of high pressure pipe and 70 miles of intermediate high pressure pipe were identified to be replaced in the program over a

~~17-year~~

~~period. Questar Gas has spent an average of $68 million each year through 2019 under this program. The program is evaluated in each Utah general rate case. In February 2020,~~ the Utah Commission approved ~~the 2020~~an annual spending ~~limit~~budget of $72 million for the ~~infrastructure~~ replacement program, to be ~~$72 million,~~ adjusted annually ~~thereafter using a gross domestic product inflation factor.~~

~~In April 2019, Questar Gas filed a request with the Utah Commission~~ for

~~pre-approval~~

~~to construct an LNG storage facility with a liquefaction rate of 8.2 million cubic feet per day. In October 2019, the Utah Commission granted~~

~~pre-approval~~

~~to construct the LNG storage facility.~~

inflation.

In 2018, legislation became effective in Utah which is designed to spur economic growth in rural communities without natural gas service. The legislation allows Questar Gas to spend up to $50 million over three years, and up to $125 million over five years, for

expansion of distribution facilities to bring natural gas to residential and commercial customers in rural parts of Utah, ~~subject to~~as approved by the Utah ~~Commission approval.~~Commission. See Note 13 to Consolidated Financial Statements for more information.

The Utah Commission has provided approval for Questar Gas to construct an LNG storage facility with a liquefaction rate of 8.2 million cubic feet per day. The project is expected to cost approximately $200 million, excluding financing costs, and is anticipated to be placed into service in late 2022.

PSNC

—The North Carolina Commission has authorized PSNC to use a tracker mechanism to recover the incurred capital investment and associated costs of complying with federal standards for pipeline integrity and safety requirements that are not in current base rates. Projected integrity management ~~plant~~plan investment, excluding the costs associated with the 2020 project noted below, for the period ~~2020~~2021 to ~~2022 for which recovery is expected is approximately $95 million.~~

In 2018, PSNC began constructing a high-pressure distribution pipeline that will span 35 miles and will provide enhanced safety to the corresponding service area. The project is expected to cost approximately $80 million, excluding financing costs, and is anticipated to be placed into service by mid-2020. This project2023 is expected to be ~~recovered through the pipeline integrity tracker mechanism described above.~~

approximately $111 million.

During 2019, ~~PSNC~~construction began ~~the construction of approximately~~on 38 miles of transmission pipeline between Franklinton, North Carolina and Clayton, North Carolina, which will provide the capacity necessary to support the growing natural gas demand in PSNC’s service territory. The project is expected to cost approximately ~~$165~~$155 million, excluding financing costs, and is anticipated to be placed into service in 2021.

During 2020, construction began on 11 miles of transmission pipeline in Buncombe County, NC. After an analysis was performed under the integrity management program, the new transmission line was deemed necessary to offset the capacity losses on the existing line due to lower pressure being utilized in order to meet federal safety requirements. The project is expected to cost approximately $55 million and is anticipated to be placed into service in late 2021.

Non-Utility Renewable Natural Gas—In December 2019, Dominion Energy announced the formation of a nationwide partnership with Vanguard Renewables in collaboration with the Dairy Farmers of America to capture methane from dairy farms and convert it into pipeline quality natural gas. Dominion Energy expects to invest $200 million to develop the related assets. During 2020, construction began of a renewable natural gas facility in Greeley, Colorado, expected to cost approximately $70 million, excluding financing costs, and to be placed in service in late 2022.

Investments

Align RNG—In November 2018, Dominion Energy announced the formation of Align RNG, an equal partnership with Smithfield Foods, Inc. Align RNG expects to invest $500 million to develop assets to capture methane from swine farms across Virginia, North Carolina, Utah, Arizona and California and convert it into pipeline quality natural gas. In July 2020, Align RNG placed its first project, located in Milford, UT, in service and the project produced 11,200 Dths of renewable natural gas through December 31, 2020.

Sources of Energy Supply

Dominion Energy’s natural gas supply is obtained from various sources including purchases from major and independent producers in the

Mid-Continent

and Gulf Coast regions, local producers in the Appalachian area, gas marketers and, for Questar Gas specifically, from Wexpro and other producers in the Rocky Mountain region. Wexpro’s gas development and production operations serve over half of Questar Gas’ gas supply requirements in accordance with the Wexpro Agreement and the Wexpro II Agreement, comprehensive agreements with the states of Utah and Wyoming.

Seasonality

Gas Distribution’s business earnings vary seasonally as a result of the impact of changes in temperature on demand by residential and commercial customers for gas to meet heating needs. Historically, the majority of these earnings have been generated during the heating season which is generally from November to March; however, implementation of rate mechanisms for transportation services for East Ohio, and gas sales for Questar Gas and PSNC have reduced the earnings impact of weather-related fluctuations.

~~Dominion Energy South Carolina~~

DOMINION ENERGY SOUTH CAROLINA

The Dominion Energy South Carolina Operating Segment is comprised of DESC’s generation, transmission and distribution of electricity to approximately ~~740,000~~758,000 customers in the central, southern and southwestern portions of South Carolina and the distribution of natural gas to approximately ~~390,000~~405,000 residential, commercial and industrial customers in South Carolina.

DESC’s growth capital plan includes spending approximately $2 billion from ~~2019~~2021 through ~~2023~~ 2025 to upgrade existing or add new infrastructure to meet growing energy needs within its service territory and maintain reliability.

Revenue provided by DESC’s electric distribution operations is based primarily on rates established by the South Carolina Commission. Variability in earnings is driven primarily by changes in rates, weather, customer growth and other factors impacting consumption such as the economy and energy conservation, in addition to operating and maintenance expenditures.

DESC’s electric transmission operations serve its electric distribution operations as well as certain wholesale customers. Revenue provided by such electric transmission operations is based on a FERC-approved formula rate mechanism under DESC’s open access transmission tariff or based on retail rates established by the South Carolina Commission.

Revenue provided by DESC’s electric generation operations is primarily derived from the sale of electricity generated by its utility generation assets and is based on rates established by the South Carolina Commission. Variability in earnings may arise when revenues are impacted by factors not reflected in current rates, such as the impact of weather, customer demand or the timing and nature of expenses or outages.

Electric operations continue to focus on improving service and experience levels while striving to reduce costs and link investments to operational results. SAIDI performance results, excluding major events, were 87 minutes for the three-year average ending 2020, compared to the previous three-year average of 85 minutes.

Revenue provided by DESC’s natural gas distribution operations primarily results from rates established by the South Carolina Commission. Variability in earnings results from changes in operating and maintenance expenditures, as well as changes in rates and the demand for services, the availability and prices of alternative fuels and the economy.

DESC is a member of the Virginia-Carolinas Reliability Group, one of several geographic divisions within the SERC. The SERC is one of seven regional entities with delegated authority from NERC for the purpose of proposing and enforcing reliability standards approved by NERC.

Competition

There is no competition for electric distribution or generation service within DESC’s retail electric service territory in South Carolina and no such competition is currently permitted. However, competition from third-party owners for development, construction and ownership of certain transmission facilities in DESC’s service territory is permitted pursuant to Order 1000,

subject to state and local siting and permitting approvals. This could result in additional competition to build and own transmission infrastructure in DESC’s service area in the future.

Competition in DESC’s natural gas distribution operations is generally based on price and convenience. Large commercial and industrial customers often have the ability to switch from natural gas to an alternate fuel, such as propane or fuel oil. Natural gas competes with these alternate fuels based on price. As a result, any significant disparity between supply and demand, either of natural gas or of alternate fuels, and due either to production or delivery disruptions or other factors, will affect price and the ability to retain large commercial and industrial customers.

Regulation

DESC’s electric distribution service, including the rates it may charge to jurisdictional customers, is subject to regulation by the South Carolina Commission. DESC’s electric generation operations are subject to regulation by the South Carolina Commission, FERC, the NRC, the EPA, the DOE and various other federal, state and local authorities. DESC’s electric transmission service is primarily regulated by FERC and the DOE. DESC’s gas distribution operations are subject to regulation by the South Carolina Commission, as well as PHMSA, the U.S. Department of Transportation and the South Carolina Office of Regulatory Staff for enforcement of federal and state pipeline safety requirements. See

State Regulations

and

Federal Regulations

Regulation

for more information.

Properties

For a description of existing facilities see Item 2. Properties.

DESC has the following significant projects under construction or development to better serve customers or expand its service offerings within its service territory:

In ~~2019,~~2020, DESC began ~~an initiative to~~the upgrade of its electric and gas systems to an AMI whereby ~~over a million~~ smart meters will be installed throughout its service area. DESC has completed the installation of over 132,000 of the planned 1.1 million smart meters. This project is estimated to cost approximately $140 million and will be completed in March 2023.

In 2020, DESC continued several electric transmission projects in connection with two new nuclear plants under development by ~~2023.~~Southern. These transmission projects are required to be in place prior to these plants beginning operations to maintain reliability.

These projects, costing approximately $75 million in aggregate, will go into service in phases through 2022. The first phase of approximately six miles was completed in November 2020 with another phase of approximately 13 miles scheduled to be completed in early 2021.

Sources of Energy Supply

DESC uses a variety of fuels to power its electric generation fleet and purchases power for utility system load requirements. Presented below is a summary of DESC’s actual system output by energy source:

Source

2019

2018
(1)

Natural gas

46
%
37
%
Coal

27

35

Nuclear
(2)

23

20

Renewable/hydro
(3)

4

8

Total

100
%
100
%

Source	2020			2019			2018⁽¹⁾
Natural gas		47	%		46	%		37	%
Coal		22			27			35
Nuclear⁽²⁾		20			23			20
Renewable and Hydro⁽³⁾		11			4			8
Total		100	%		100	%		100	%

(1)	Dominion Energy did not acquire DESC until January 2019. These amounts represent data obtained as part of the due diligence performed by Dominion Energy prior to the SCANA Combination.

(2)	Excludes Santee Cooper’s 33.3% undivided ownership interest in Summer.

(3)	Includes solar.

Natural gas

—DESC purchases natural gas under contracts with producers and marketers on both a short-term and long-term basis at market-based prices. The gas is delivered to


18

South Carolina through firm transportation agreements with various counterparties, which expire between 2021 and 2084.

Coal

—DESC primarily obtains coal through short-term and long-term contracts with suppliers located in eastern Kentucky, Tennessee, Virginia and West Virginia. These contracts provide for approximately 2.1 million tons annually. These contracts will expire at various times ~~through 2020.~~throughout 2021 and 2022. Spot market purchases may occur when needed or when prices are believed to be favorable.

Nuclear

—DESC primarily utilizes long-term contracts to support its nuclear fuel requirements. DESC, for itself and as agent for Santee Cooper, and Westinghouse are parties to a fuel alliance agreement and contracts for fuel fabrication and related services. Under these contracts, DESC supplies enriched products to Westinghouse, who in turn supplies nuclear fuel assemblies for Summer. Westinghouse is DESC’s exclusive provider of such fuel assemblies on a cost-plus basis. The fuel assemblies to be delivered under the contracts are expected to supply the nuclear fuel requirements through 2033.

In addition, DESC has contracts covering its nuclear fuel needs for uranium, conversion services and enrichment services. These contracts have varying expiration dates through 2024. DESC believes that it will be able to renew these contracts as they expire or enter into similar contractual arrangements with other suppliers of nuclear fuel materials and services and that sufficient capacity for nuclear fuel supplies and processing exists to allow for normal operations of its nuclear generating unit. 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 optimal fuel and inventory levels.

Seasonality

DESC’s electric distribution and transmission business earnings vary seasonally as a result of the impact of changes in temperature, the impact of storms and other catastrophic weather events and the availability of alternative sources for heating on demand by residential and commercial customers. Generally, the demand for electricity peaks during the summer and winter months to meet cooling and heating needs, respectively. An increase in heating degree days does not produce the same increase in revenue as an increase in cooling degree days, due to seasonal pricing differentials and because alternative heating sources are more readily available.

DESC’s gas distribution and storage business earnings vary seasonally as a result of the impact of changes in temperature on demand by residential and commercial customers for gas to meet heating needs. The majority of these earnings are generated during the heating season, which is generally from November to March; however, South Carolina has certain rate mechanisms designed to reduce the impact of weather-related fluctuations.

Nuclear Decommissioning

DESC has a

two-thirds

interest in one licensed, operating nuclear reactor at Summer in South Carolina.

DESC believes that the decommissioning funds and their expected earnings will be sufficient to cover expected decommissioning costs, particularly when combined with future ratepayer collections and contributions to this trust. DESC will continue to monitor this trust to ensure that it meets the NRC minimum financial assurance requirements, which may include, if needed, the use of Dominion Energy guarantees, surety bonding or other financial instruments recognized by the NRC.

The estimated cost to DESC to decommission its 66.7% ownership in Summer is ~~$646 million (stated~~reflected in ~~2019 dollars), which~~the table below and is primarily based upon site-specific studies completed in ~~2016.~~2020. These cost studies are generally completed every four to five years. Santee Cooper is responsible for the remaining decommissioning costs, proportionate with its 33.3% ownership in Summer. The cost estimates assume decommissioning activities will begin shortly after cessation of operations, which will occur when the operating license expires. The cost estimate reflects reductions for the expected future recovery of certain spent nuclear fuel costs based on DESC’s contracts with the DOE for disposal of spent nuclear fuel consistent with the reductions reflected in DESC’s nuclear decommissioning ARO. At December 31, 2019, DESC had $214 million in a trust for its proportionate share of these decommissioning activities.

~~The current operating license for Summer expires in 2042.~~ NRC regulations allow licensees to apply for extension of an operating license in up to

20-year

increments. DESC is considering an operating license renewal for Summer.

The estimated decommissioning costs, funds in trust and current license expiration dates for Summer are shown in the following table:

	NRC license expiration year	Most recent cost estimate (2020 dollars)⁽¹⁾		Funds in trusts at December 31, 2020⁽²⁾
(dollars in millions)
Summer – Unit 1	2042	$	744	$	238

(1)

The cost estimates shown above reflect reductions for the expected future recovery of certain spent fuel costs based on DESC’s contracts with the DOE for disposal of spent nuclear fuel consistent with the reductions reflected in DESC’s nuclear decommissioning AROs and includes the expectation that a 20-year license extension is obtained.

~~Contracted Generation~~

(2)

Excludes any funds held in trust by Santee Cooper. DESC made contributions of $3 million to its nuclear decommissioning trust funds during 2020.

CONTRACTED ASSETS

The Contracted ~~Generation~~Assets Operating Segment includes the operations of Millstone, and associated energy marketing and price risk activities, ~~and~~ Dominion Energy’s nonregulated long-term contracted renewable electric generation fleet ~~as well as a~~and Dominion Energy’s 50% noncontrolling ~~partnership~~ interest in ~~Fowler Ridge.~~

Cove Point.

Contracted ~~Generation’s~~Asset’s growth capital plan includes spending ~~less than $1~~$2 billion from ~~2019~~2021 through ~~2023~~2025 to expand its renewable generation fleet.

The Contracted

~~Generation~~Assets Operating Segment derives its earnings primarily from Dominion Energy’s ~~merchant~~nonregulated generation assets, ~~as well as from~~including associated capacity and ancillary ~~services.~~services, and from its noncontrolling interest in Cove Point. Variability in earnings provided by Millstone relates to changes in market-based prices received for electricity and capacity as well as the timing, duration and costs of scheduled and unscheduled outages. Approximately half of Millstone’s output is sold under the Millstone 2019 power purchase agreements, which commenced in October ~~2019 following approval by PURA in~~ 2019. Market-based prices for electricity are largely dependent on commodity prices and the demand for electricity. Capacity prices are dependent upon resource requirements in relation to the supply available (both existing and new) in the forward capacity auctions, which are held approximately three years in advance of the associated delivery year. Dominion Energy manages the electric price volatility of Millstone by hedging a substantial portion of its expected near-term energy sales not subject to the Millstone 2019 power purchase agreements with derivative instruments.

Dominion Energy’s ~~merchant~~nonregulated generation fleet includes numerous renewable generation facilities, including solar generation ~~and wind facilities~~ in operation or development in ~~nine~~ten states, including Virginia. The output of these facilities is ~~primarily~~ sold under long-term power purchase agreements with terms generally ranging from 15 to 25 years. Variability in earnings provided by these assets relates to changes in

irradiance levels ~~and wind speeds~~ due to changes in weather. See Notes 3 and 10 to the Consolidated Financial Statements for additional information regarding certain solar projects.

Competition

Contracted ~~Generation’s~~Asset’s renewable generation projects are not currently subject to significant competition as the output from these facilities is primarily sold under long-term power purchase agreements with terms generally ranging from 15 to 25 years. However, in the future, such operations may compete with other power generation facilities to serve certain large-scale customers after the power purchase agreements expire. Competition for the ~~merchant~~nonregulated fleet is impacted by electricity and fuel prices, new market entrants, construction by others of generating assets and transmission capacity, technological advances in power generation, the actions of environmental and other regulatory authorities and other factors. These competitive factors may negatively impact the ~~merchant~~nonregulated fleet’s ability to profit from the sale of electricity and related products and services.

Millstone is dependent on its ability to operate in a competitive environment and does not have a predetermined rate structure that provides for an ROIC. Millstone operates within a functioning RTO and primarily compete on the basis of price. Competitors include other generating assets bidding to operate within the RTO. Millstone competes in the wholesale market with other generators to sell a variety of products including energy, capacity and ancillary services. It is difficult to compare various types of generation given the wide range of fuels, fuel procurement strategies, efficiencies and operating characteristics of the fleet within any given RTO. However, Dominion Energy applies its expertise in operations, dispatch and risk management to maximize the degree to which ~~its nonrenewable merchant fleet~~Millstone is competitive compared to similar assets within the region.

Regulation

~~Dominion Energy’s contracted~~

Contracted Assets’ generation fleet is subject to regulation by the NRC, the EPA, the DOE, the Army Corps of Engineers and other federal, state and local authorities. See

Regulation, Future Issues and Other Matters

in Item 7, MD&A and Notes 13 and 23 to the Consolidated Financial Statements for more information.

Properties

For a listing of facilities, see Item 2. Properties.

Dominion Energy plans to acquire or construct certain solar facilities in the

~~Mid-Atlantic.~~

Mid-Atlantic and Midwest. See Note 10 to the Consolidated Financial Statements for more information.

Investments

Contracted Assets includes Dominion Energy’s 50% noncontrolling interest in Cove Point. Cove Point’s gas transportation, LNG import and storage operations, as well as the Liquefaction Facility’s capacity, are contracted primarily under long-term fixed reservation fee agreements. The Liquefaction Facility has a firm contracted capacity for LNG loading onto ships of approximately 4.6 Mtpa (0.66 bcfe/day) under normal operating conditions and after accounting for maintenance downtime. In addition to the operations of the Liquefaction Facility, Cove Point receives revenue from firm fee-based contractual arrangements, including negotiated rates, for its pipeline operations and certain LNG storage and terminalling services as provided for in FERC-approved tariffs. Variability in earnings results from changes in operating and maintenance expenditures, as well as for its FERC-regulated operations any changes in rates and the demand for services.

See Item 2. Properties for a description of Cove Point’s physical assets.

See Note 9 to the Consolidated Financial Statements for further information about Dominion Energy’s equity method investment in ~~Fowler Ridge.~~Cove Point.

Sources of Energy Supply

Contracted ~~Generation’s~~Asset’s renewable fleet utilizes solar ~~and wind~~ energy to power its electric generation while Millstone utilizes nuclear fuel, which is acquired primarily through a series of 5-year contracts, to power its electric generation. In addition, Dominion Energy occasionally purchases electricity from the

ISO-NE

spot market to satisfy physical forward sale requirements, as described below. Some of these agreements have fixed commitments and are included as contractual obligations in

Future Cash

Payments for Contractual Obligations and Planned Capital Expenditures

in Item 7. MD&A.

~~Nuclear Fuel~~

—Millstone primarily utilizes 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 which are dependent on the market environment. 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 optimal cost and inventory levels.

Seasonality

Sales of electricity for Contracted ~~Generation typically vary seasonally~~Assets are subject to seasonal variation as a result of the ~~weather.~~

weather, partially mitigated by the Millstone 2019 power purchase agreements.

Nuclear Decommissioning

Dominion Energy has two licensed, operating nuclear reactors at Millstone in Connecticut. A third Millstone unit ceased operations before Dominion Energy acquired the power station. In May 2013, Dominion Energy ceased operations at its single Kewaunee unit in Wisconsin and commenced decommissioning activities using the SAFSTOR methodology. The planned decommissioning completion date is 2073, which is within the NRC allowed

60-year

window.

As part of Dominion Energy’s acquisition of both Millstone and Kewaunee, it acquired decommissioning funds for the related units. Any funds remaining in Kewaunee’s trust after decommissioning is completed are required to be refunded to Wisconsin ratepayers. Dominion Energy believes that the amounts currently available in the decommissioning trusts and their expected earnings will be sufficient to cover expected decommissioning costs for the Millstone and Kewaunee units. Dominion Energy will continue to monitor these trusts to ensure they meet the NRC minimum financial assurance requirements, which may include, if needed, the use of parent company guarantees, surety bonding or other financial instruments recognized by the NRC. The most recent site-specific studies completed for Millstone and for Kewaunee were performed in 2019 and 2018, respectively.


20

The estimated decommissioning costs, funds in trust and current license expiration dates for Millstone and Kewaunee are shown in the following table:

NRC
license
expiration
year

Most
recent
cost
estimate
(2019
dollars)
(1)

Funds in
trusts at
December 31,
2019

2019
contributions
to trusts

(dollars in millions)

Millstone

Unit 1
(2)

N/A
$
450

$   622

$  —

Unit 2

2035

653

828

—

Unit 3
(3)

2045

741

813

—

Kewaunee

Unit 1
(4)

N/A

573

834

—

Total
$
2,417

$3,097

$  —

	NRC license expiration year	Most recent cost estimate (2020 dollars)⁽¹⁾		Funds in trusts at December 31, 2020⁽²⁾
(dollars in millions)
Millstone
Unit 1⁽³⁾	N/A	$	459	$	698
Unit 2	2035		666		940
Unit 3⁽⁴⁾	2045		756		917
Kewaunee
Unit 1⁽⁵⁾	N/A		584		910
Total		$	2,465	$	3,465

~~(1)~~

(1)

The cost estimates shown above reflect reductions for the expected future recovery of certain spent fuel costs based on Dominion Energy’s contracts with the DOE for disposal of spent nuclear fuel consistent with the reductions reflected in Dominion Energy’s nuclear decommissioning AROs.

~~(2)~~

(2)

Dominion Energy did not make any contributions to its nuclear decommissioning trust funds related to Millstone or Kewaunee during 2020.

(3)

Unit 1 permanently ceased operations in 1998, before Dominion Energy’s acquisition of Millstone.

~~(3)~~

(4)

Millstone Unit 3 is jointly owned by Dominion Energy Nuclear Connecticut, Inc., with a 6.53% undivided interest in Unit 3 owned by Massachusetts Municipal and Green Mountain. Decommissioning cost is shown at Dominion Energy’s ownership percentage. At December 31, ~~2019,~~2020, the minority owners held ~~$49~~$55 million of trust funds related to Millstone Unit 3 that are not reflected in the table above.

~~(4)~~

(5)

Permanently ceased operations in 2013.

Also see Notes 14 and 23 to the Consolidated Financial Statements for further information about AROs and nuclear decommissioning, respectively, and Note 9 to the Consolidated Financial Statements for information about nuclear decommissioning trust investments.

~~Corporate and Other~~

CORPORATE AND OTHER

Corporate and Other Segment-Virginia Power ~~and Dominion Energy Gas~~

Virginia ~~Power and Dominion Energy Gas’~~Power’s Corporate and Other ~~segments~~segment primarily ~~include~~includes certain specific items attributable to ~~their~~its operating segments that are not included in profit measures evaluated by executive management in assessing the ~~segments’~~segment’s performance or in allocating resources.

Corporate and Other Segment-Dominion Energy

Dominion Energy’s Corporate and Other segment includes its corporate, service company and other functions (including unallocated debt)~~. In addition,~~ as well as nonregulated retail energy marketing operations, including Dominion Energy’s noncontrolling interest in Wrangler. Corporate and Other includes specific items attributable to Dominion Energy’s operating segments that are not included in profit measures evaluated by executive management in assessing the segments’ performance or in allocating resources.

~~Regulation~~

Dominion Energy owns a 20% noncontrolling interest in Wrangler, which was formed in September 2019. Wrangler’s operations, contributed by Dominion Energy in 2020 and 2019, consist of nonregulated natural gas retail energy marketing business serving customers in Ohio and Georgia as well as other southeastern states in the U.S. Dominion Energy expects to contribute its remaining retail energy marketing operations, primarily serving customers in Pennsylvania, to Wrangler by the end of 2021.

Dominion Energy owns a 53% noncontrolling interest in Atlantic Coast Pipeline. In July 2020, as a result of the continued permitting delays, growing legal uncertainties and the need to incur significant capital expenditures to maintain project timing before such uncertainties could be resolved, Dominion Energy and Duke Energy announced the cancellation of the Atlantic Coast Pipeline Project.

Dominion Energy Questar Pipeline provides gas transportation and storage services in the Rocky Mountain region of the U.S. These operations are currently presented in held-for-sale and discontinued operations effective July 2020 until closing of the Q-Pipe Transaction with BHE, which is expected in early 2021.

See Notes 3 and 9 to the Consolidated Financial Statements for more information.

REGULATION

The Companies are subject to regulation by various federal, state and local authorities, including the state commissions of Virginia, North Carolina, South Carolina, Ohio, West Virginia, ~~Georgia,~~ Utah, Wyoming and Idaho, SEC, FERC, EPA, DOE, PHMSA, NRC, Army Corps of Engineers and the U.S. Department of Transportation.

State Regulations

Electric

Virginia Power and DESC’s electric utility retail services are subject to regulation by the Virginia and North Carolina Commissions and the South Carolina Commission, respectively.

Virginia Power and DESC hold CPCNs which authorize them to maintain and operate their electric facilities already in operation and to sell electricity to customers. However, Virginia Power and DESC may not construct generating facilities or large capacity transmission lines without the prior approval of various state and federal government agencies. In addition, the Virginia Commission and the North Carolina Commission regulate Virginia Power’s and the South Carolina Commission regulates DESC’s transactions with affiliates and transfers of certain facilities. The Virginia, North Carolina and South Carolina Commissions also regulate the issuance of certain securities.

Electric Regulation in Virginia

The Regulation Act provides for a

cost-of-service

rate model and permits Virginia Power to seek recovery of costs for new generation projects, including pumped hydroelectricity generation and storage facilities as well as extensions of operating licenses of nuclear power generation facilities, FERC-approved transmission costs, underground distribution lines, certain environmental compliance, conservation and energy efficiency programs and renewable energy facilities and programs through stand-alone ~~rate adjustment clauses,~~riders, and also contains statutory provisions directing Virginia Power to file annual fuel cost recovery cases with the Virginia Commission. ~~As amended, it provides for enhanced returns on capital expenditures on specific newly-proposed generation projects.~~

In March 2018, the GTSA reinstated base rate reviews on a triennial basis other than the ~~first review, which will be a quadrennial review, occurring for Virginia Power in~~ 2021 ~~for the four successive~~

~~12-month~~

~~test periods beginning January 1, 2017 and ending December 31, 2020.~~

Triennial Review. In the triennial review proceedings, earnings that are more than 70 basis points above the utility’s authorized ROE that might have been refunded to customers and served as the basis for a reduction in future rates, may be reduced by Virginia Commission-approved investment amounts in qualifying solar or wind generation facilities or electric distribution grid transformation projects that Virginia Power elects

to include as a ~~customer credit reinvestment offset.~~CCRO. The legislation declares that electric distribution grid transformation projects are in the public interest and provides that Virginia Power may seek to recover the costs of such projects through a ~~rate adjustment clause~~rider if not the subject of a ~~customer credit reinvestment offset.~~CCRO. Any costs that are the subject of a ~~customer credit reinvestment offset~~CCRO may not be recovered in base rates for the service life of the projects and may not be included in base rates in future triennial review proceedings. In any triennial review in which the Virginia Commission determines that the utility’s earnings are more than 70 basis points above its authorized ROE, base rates are subject to reduction prospectively and customer refunds would be due unless the total ~~customer credit reinvestment offset~~CCRO elected by the utility equals or exceeds the amount of earnings in excess of the 70 basis points. In the 2021 ~~review,~~Triennial Review, any such rate reduction is limited to $50 million.

~~See~~

~~Future Issues~~

In April 2020, the VCEA replaced Virginia’s voluntary renewable energy portfolio standard for Virginia Power with a mandatory program setting annual renewable energy portfolio standard requirements based on the percentage of total electric energy sold by Virginia Power, excluding existing nuclear generation and ~~Other Matters~~

certain new carbon-free resources, reaching 100% by the end of 2045. The VCEA includes related requirements concerning deployment of wind, solar and energy storage resources, as well as provides for certain measures to increase net-metering, including an allocation for low-income customers, incentivizes energy efficiency programs and directs Virginia to participate in ~~Item 7. MD&A and~~a carbon trading program.

See Note 13 to the Consolidated Financial Statements for additional information.

Electric Regulation in North Carolina

Virginia Power’s retail electric base rates in North Carolina are regulated on a

cost-of-service/~~rate-of~~

~~-return~~

rate-of-return basis subject to North Carolina statutes and the rules and procedures of the North Carolina Commission. North Carolina base rates are set by a process that allows Virginia Power to recover its operating costs and an ROIC. If retail electric earnings exceed the authorized ROE established by the North Carolina Commission, retail electric rates may be subject to review and possible reduction by the North Carolina Commission, which may decrease Virginia Power’s future earnings. Additionally, if the North Carolina Commission does not allow recovery of costs incurred in providing service on a timely basis, Virginia Power’s future earnings could be negatively impacted. Fuel rates are subject to revision under annual fuel cost adjustment proceedings.

Virginia Power’s transmission service rates in North Carolina are regulated by the North Carolina Commission as part of Virginia Power’s bundled retail service to North Carolina customers. See Note 13 to the Consolidated Financial Statements for additional information.

Electric Regulation in South Carolina

DESC’s retail electric base rates in South Carolina are regulated on a

cost-of-service/~~rate-of~~

~~-return~~

rate-of-return basis subject to South Carolina statutes and the rules and procedures of the South Carolina Commission. South Carolina base rates are set by a process that allows DESC to recover its operating costs and an ROIC. If retail electric earnings exceed the authorized ROE established by the South Carolina Commission, retail electric rates may be subject to review and possible reduction, which may decrease DESC’s future earnings. Additionally, if the South Carolina Commission does not allow recovery of costs incurred in providing service on a timely basis, DESC’s future earnings could be negatively impacted. Fuel costs are reviewed annually by the South Carolina Commission, as required by statute, and fuel rates are subject to revision in these annual fuel proceedings.

DESC offers to its retail electric customers several DSM programs designed to assist customers in reducing their demand for electricity and improving their energy efficiency. DESC submits annual filings to the South Carolina Commissionrelated to these programs. As actual DSM program costs are incurred, they are deferred as regulatory assets and recovered through a rider approved by the South Carolina Commission. The rider also provides for recovery of any net lost revenues and for a shared savings incentive.

~~In connection~~

Pursuant to the SCANA Merger Approval Order, DESC is recovering capital costs and a return on capital cost rate base related to the NND Project over a 20-year period through a capital cost rider. The capital cost rider also provides for the return to retail electric customers of certain amounts associated with the ~~SCANA Combination, DESC agreed not~~NND Project. Revenue from the capital cost rider component of retail electric rates will continue to ~~file a general~~decline over the 20-year period as capital cost rate case with the South Carolina Commission with a requested rate effective date earlier than January 2021. Rate adjustments are permitted prior to 2021 for fuel and environmental costs, DSM costs and other rates routinely adjusted on an annual or biennial basis.

base is reduced.

See Notes 3 and 13 to the Consolidated Financial Statements for additional information.

Gas

Questar Gas and Wexpro’s natural gas development, production, transportation, and distribution services, including the rates it may charge its customers, are regulated by the state commissions of Utah, Wyoming and Idaho. East Ohio’s natural gas distribution services, including the rates it may charge its customers, are regulated by the Ohio Commission. Hope’s natural gas distribution services, including the rates it may charge its customers, are regulated by the West Virginia Commission. DESC and PSNC’s natural

gas distribution services, including the rates they may charge their customers, are regulated by the South Carolina Commission and North Carolina Commission, respectively.

Gas Regulation in Utah, Wyoming and Idaho

Questar Gas is subject to regulation of rates and other aspects of its business by the Utah, Wyoming and Idaho Commissions. The Idaho Commission has contracted with the Utah Commission for rate oversight of Questar Gas’ operations in a small area of southeastern Idaho. When necessary, Questar Gas seeks general base rate increases to recover increased operating costs and a fair return on rate base investments. Base rates are set based on the

cost-of-service

by rate class. Base rates for Questar Gas are designed primarily based on rate design methodology in which the majority of operating costs are recovered through volumetric charges. The volumetric charges for the residential and small commercial customers in Utah and Wyoming are subject to revenue decoupling and adjusted for changes in usage per customer.

~~In addition to general rate increases,~~

Questar Gas makes routine separate filings with the Utah and Wyoming Commissions to reflect changes in the costs of purchased gas. ~~The majority~~A large portion of these purchased gas costs are subject to rate recovery through the Wexpro Agreement and Wexpro II Agreement. Costs that are expected to be recovered in future rates are deferred as regulatory assets. The purchased gas recovery filings generally cover a prospective twelve-month period. Approved increases or decreases in gas cost recovery rates result in increases or decreases in revenues with corresponding increases or decreases in net purchased gas cost expenses.

The Utah ~~and Wyoming Commissions have also~~Commission has approved ~~several stand-alone~~a standalone cost recovery ~~mechanisms~~mechanism to recover specified costs and a return for infrastructure projects between general base rate cases.

See Note 13 to the Consolidated Financial Statements for additional information.

Gas Regulation in Ohio

East Ohio is subject to regulation of rates and other aspects of its business by the Ohio Commission. When necessary, East Ohio seeks general base rate increases to recover increased operating costs and a fair return on rate base investments. Base rates are set based on the

cost-of-service

by rate class. A straight-fixed-variable rate design, in which the majority of operating costs are recovered through a monthly charge rather than a volumetric charge, is utilized to establish rates for a majority of East Ohio’s customers pursuant to a 2008 rate case settlement.

~~In addition to general base rate increases,~~

East Ohio makes routine filings with the Ohio Commission to reflect changes in the costs of gas purchased for operational balancing on its system. These purchased gas costs are subject to rate recovery through a


22

mechanism that ensures dollar for dollar recovery of prudently incurred costs. Costs that are expected to be recovered in future rates are deferred as regulatory assets. The rider filings cover unrecovered gas costs plus prospective annual demand costs. Increases or decreases in gas cost rider rates result in increases or decreases in revenues with corresponding increases or decreases in net purchased gas cost expenses.

The Ohio Commission has also approved several stand-alone cost recovery mechanisms to recover specified costs and a return for infrastructure, information technology and integrity or compliance-related projects between general base rate cases.

See Note 13 to the Consolidated Financial Statements for additional information.

Gas Regulation in West Virginia

Hope is subject to regulation of rates and other aspects of its business by the West Virginia Commission. When necessary, Hope seeks general base rate increases to recover increased operating costs and a fair return on rate base investments. Base rates are set based on the

cost-of-service

by rate class. Base rates for Hope are designed primarily based on rate design methodology in which the majority of operating costs are recovered through volumetric charges.

~~In addition to general rate increases,~~

Hope makes routine separate filings with the West Virginia Commission to reflect changes in the costs of purchased gas. The majority of these purchased gas costs are subject to rate recovery through a mechanism that ensures dollar for dollar recovery of prudently incurred costs. Costs that are expected to be recovered in future rates are deferred as regulatory assets. The purchased gas cost recovery filings generally cover a prospective twelve-month period. Approved increases or decreases in gas cost recovery rates result in increases or decreases in revenues with corresponding increases or decreases in net purchased gas cost expenses.

The West Virginia Commission has also approved a stand-alone cost recovery mechanism to recover specified costs and a return for infrastructure projects between general base rate cases.

See Note 13 to the Consolidated Financial Statements for additional information.

Gas Regulation in North Carolina

PSNC is subject to regulation of rates and other aspects of its business by the North Carolina Commission. When necessary, PSNC seeks general base rate increases to recover increased operating costs and a fair return on rate base investments. Base rates are set based on the

cost-of-service

by rate class. Base rates for PSNC are designed primarily based on rate design methodology in which the majority of operating costs are recovered through volumetric charges. The volumetric charges for the residential and commercial customers are subject to revenue decoupling and adjusted for changes in usage per ~~customer.~~

~~In addition to general rate increases,~~ customer.

PSNC makes routine separate filings with the North Carolina Commission to reflect changes in the costs of purchased gas. PSNC’s purchased gas adjustment allows it to recover from customers all prudently incurred gas costs, including transportation costs, and certain related uncollectible expenses. Costs that are expected to be recovered in future rates are deferred as regulatory assets. The purchased gas recovery filings are made periodically to reflect prospective costs and recovery. Approved increases or decreases in

gas cost recovery rates result in increases or decreases in revenues with corresponding increases or decreases in net purchased gas cost expenses.

The North Carolina Commission has also approved a stand-alone cost recovery mechanism to recover specified capital costs and a return for pipeline integrity management infrastructure projects between general base rate cases.

In connection with the SCANA Combination, PSNC agreed not to file an application for a general rate case with the North Carolina Commission ~~with a requested rate effective date earlier than November~~before April 2021 other than for rate adjustments as described above.

See ~~Notes 3 and~~Note 13 to the Consolidated Financial Statements for additional information.

Gas Regulation in South Carolina

DESC is subject to regulation of rates and other aspects of its natural gas distribution service by the South Carolina Commission. DESC provides retail natural gas service to customers in areas in which it has received authorization from the South Carolina Commission and in municipalities in which it holds a franchise. DESC’s base rates can be adjusted annually, pursuant to the Natural Gas Rate Stabilization Act, for recovery of costs related to natural gas infrastructure. Base rates are set based on the

cost-of-service

by rate class approved by the South Carolina Commission in the latest general rate case. Base rates for DESC are based primarily on a rate design methodology in which the majority of operating costs are recovered through volumetric charges. DESC also utilizes a weather normalization adjustment to adjust its base rates during the winter billing months for residential and commercial customers to mitigate the effects of unusually cold or warm weather.

~~In addition,~~

DESC’s natural gas tariffs include a purchased gas adjustment that provides for the recovery of prudently incurred gas costs, including transportation costs. DESC is authorized to adjust its purchased gas rates monthly and makes routine filings with the South Carolina Commission to provide notification of changes in these rates. Costs that are under or over recovered are deferred as regulatory assets or liabilities, respectively, and considered in subsequent purchased gas adjustments. The purchased gas adjustment filings generally cover a prospective twelve-month period. Increases or decreases in purchased gas costs can result in corresponding changes in purchased gas adjustment rates and the revenue generated by those rates. The South Carolina Commission reviews DESC’s gas purchasing policies and practices, including its administration of the purchased gas adjustment, annually.

See ~~Notes 3 and~~Note 13 to the Consolidated Financial Statements for additional information.

~~Status of Competitive Retail Gas Services~~

~~Ohio has considered legislation regarding a competitive deregulation of natural gas sales at the retail level.~~

Since October 2000, East Ohio has offered the Energy Choice program, under which residential and commercial customers are encouraged to purchase gas directly from retail suppliers or through a community aggregation program. In October 2006, East Ohio restructured its commodity service by entering into gas purchase contracts with selected suppliers at a fixed price above the New York Mercantile Exchange

~~month-end~~

~~settlement and passing that gas cost to customers under the Standard Service~~

Offer program. Starting in April 2009, East Ohio buys natural gas under the Standard Service Offer program for customers not eligible to participate in the Energy Choice program and certain transitional customers only and places Energy Choice-eligible customers in a direct retail relationship with selected suppliers, which is designated on the customers’ bills.

In January 2013, the Ohio Commission granted East Ohio’s motion to fully exit the merchant function for its nonresidential customers, beginning in April 2013, which requires those customers to choose a retail supplier or be assigned to one at a monthly variable rate set by the supplier. At December 31, 2019, approximately 1.1 million of East Ohio’s 1.2 million customers were participating in the Energy Choice program. Subject to the Ohio Commission’s approval, East Ohio may eventually exit the gas merchant function in Ohio entirely and have all customers select an alternate gas supplier. East Ohio continues to be the provider of last resort in the event of default by a supplier. Large industrial customers in Ohio also source their own natural gas supplies.

Federal Regulations

Federal Energy Regulatory Commission

Electric

Under the Federal Power Act, FERC regulates wholesale sales and transmission of electricity in interstate commerce by public utilities. Virginia Power purchases and, under its market-based rate authority, sells electricity in the PJM wholesale market and sells electricity to wholesale purchasers in Virginia and North Carolina. Dominion Energy’s ~~merchant~~nonregulated generators sell electricity in the PJM, CAISO and

ISO-NE

wholesale markets, and to wholesale purchasers in the states of Virginia, North Carolina, Indiana, Ohio, Connecticut, Tennessee, Georgia, California, South Carolina and Utah, under Dominion Energy’s market-based sales tariffs

authorized by FERC or pursuant to FERC authority to sell as a qualified facility. DESC may make wholesale sales at market-based rates outside its balancing authority pursuant to its market-based sales tariff authorized by FERC. In addition, Virginia Power and DESC have FERC ~~approval of~~approved tariffs to sell wholesale power at capped rates based on their respective embedded cost of generation. These cost-based sales tariffs could be used to sell to loads within or outside Virginia Power and DESC’s respective service territories. Any such sales ~~would be~~are voluntary.

~~Dominion Energy, Virginia Power and DESC~~

The Companies are subject to FERC’s Standards of Conduct that govern conduct between transmission function employees of interstate gas and electricity transmission providers and the marketing function employees of their affiliates. The rule defines the scope of transmission and marketing-related functions that are covered by the standards and is designed to prevent transmission providers from giving their affiliates undue preferences.

~~Dominion Energy, Virginia Power and DESC~~

The Companies are also subject to FERC’s affiliate restrictions that (1) prohibit power sales between ~~merchant~~nonregulated plants and utility plants without first receiving FERC authorization, (2) require the ~~merchant~~nonregulated and utility plants to conduct their wholesale power sales operations separately, and (3) prohibit utilities from sharing market information with ~~merchant~~nonregulated plant operating personnel. The rules are designed to prohibit utilities from giving the ~~merchant~~nonregulated plants a competitive advantage.

EPACT included provisions to create an Electric Reliability Organization, which is required to promulgate mandatory reliability standards governing the operation of the bulk power system in the U.S. FERC has certified NERC as the Electric Reliability Organization and also issued an initial order approving many reliability standards that went into effect in 2007. Entities that violate standards will be subject to fines of up to ~~$1.2~~$1.3 million per day, per violation and can also be assessed

non-monetary

penalties, depending upon the nature and severity of the violation.

~~Dominion Energy, Virginia Power and DESC~~

The Companies plan and operate their facilities in compliance with approved NERC reliability requirements. ~~Dominion Energy and Virginia Power~~The Companies’ employees participate on various NERC committees, track the development and implementation of standards, and maintain proper compliance registration with NERC’s regional organizations. ~~Dominion Energy, Virginia Power and DESC~~The Companies anticipate incurring additional compliance expenditures over the next several years because of the implementation of new cybersecurity programs. In addition, NERC has redefined critical assets which expanded the number of assets subject to NERC reliability standards, including cybersecurity assets. NERC continues to develop additional requirements specifically regarding supply chain standards and control centers that impact the bulk electric system. While ~~Dominion Energy Virginia Power and DESC~~the Companies expect to incur additional compliance costs in connection with NERC requirements and initiatives, such expenses are not expected to significantly affect results of operations.

In April 2008, FERC granted an application for Virginia Power’s electric transmission operations to establish a forward-looking formula rate mechanism that updates transmission rates on an annual basis and approved an ROE effective as of January 1, 2008. The formula rate is designed to recover the expected revenue requirement for each calendar year and is updated based on actual costs. The FERC-approved formula method, which is based on projected costs, allows Virginia Power to earn a current return on its growing investment in electric transmission infrastructure.

In October 2011, FERC issued an order approving the settlement of DESC’s formula rate that updates transmission rates on an annual basis, including its ROE. The formula rate is designed to recover the expected revenue requirement for the calendar year and is updated annually based on actual costs. This FERC accepted formula rate enables DESC to earn a return on its investment in electric transmission infrastructure.

Gas

FERC regulates the transportation and sale for resale of natural gas in interstate commerce under the Natural Gas Act of 1938 and the Natural Gas Policy Act of 1978, as amended. Under the Natural Gas Act, FERC has authority over rates, terms and conditions of services performed by Dominion Energy Questar Pipeline, DETI, DECG, Iroquois and certain services performed by Cove Point. The operation of the Cove Point LNG Facility, including associated natural gas pipelines, the Liquefaction Facility and the import and export of LNG are also regulated by FERC.

Pipeline.

Dominion ~~Energy and Dominion Energy Gas’~~Energy’s remaining interstate gas transmission and storage activities, which are currently classified as held for sale, are conducted on an open access basis, in accordance with certificates, tariffs and service agreements on file with FERC and FERC regulations.


24

Dominion Energy ~~and Dominion Energy Gas operate~~operates in compliance with FERC standards of conduct, which prohibit the sharing of certain

non-public

transmission information or customer specific data by its interstate gas transmission and storage companies with

non-transmission

function employees. Pursuant to these standards of conduct, Dominion Energy ~~and Dominion Energy Gas~~ also ~~make~~makes certain informational postings available on Dominion Energy’s website.

See Note 133 to the Consolidated Financial Statements for ~~additional~~a discussion of the Q-Pipe Transaction.

Nuclear Regulatory Commission

All aspects of the operation and maintenance of the Companies’ nuclear power stations 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 Companies’ nuclear generating units. See Note 23 to the Consolidated Financial Statements for further information.

~~Safety Regulations~~

The NRC also requires the Companies to decontaminate their nuclear facilities once operations cease. This process is referred to as decommissioning, and the Companies are required by the NRC to be financially prepared. For information on decommissioning trusts, see Dominion Energy ~~and~~ Virginia-Nuclear Decommissioning, Dominion Energy ~~Gas are~~South Carolina-Nuclear Decommissioning, and Contracted Assets-Nuclear Decommissioning above and Notes 3 and 9 to the Consolidated Financial Statements. See Note 23 to the Consolidated Financial Statements for information on spent nuclear fuel.

Safety Regulations

Dominion Energy is also subject to the Pipeline Safety Improvement Act of 2002 and the Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011, which mandate inspections of interstate and intrastate natural gas transmission and storage pipelines, particularly those located in areas of high-density population. Dominion Energy ~~and Dominion Energy Gas have~~has evaluated ~~their~~its natural gas transmission and storage properties, as required by the U.S. Department of Transportation regulations under these Acts, and ~~have~~has implemented a program of identification, testing and potential remediation activities. These activities are ongoing.

The Companies are subject to a number of federal and state laws and regulations, including Occupational Safety and Health Administration, and comparable state statutes, whose purpose is to protect the health and safety of workers. The Companies have an internal safety, health and security program designed to monitor and enforce compliance with worker safety requirements, which is routinely reviewed and considered for improvement. The Companies believe that they are in material compliance with all applicable laws and regulations related to worker health and safety. Notwithstanding these preventive measures, incidents may occur that are outside of the Companies’ control.

Environmental Regulations

Each of the Companies’ operating segments is subject to substantial laws, regulations and compliance costs with respect to environmental matters. In addition to imposing continuing compliance obligations, these laws and regulations authorize the imposition of significant penalties for noncompliance, including fines, injunctive relief and other sanctions. The cost of complying with applicable environmental laws, regulations and rules is ~~expected to be~~ material to the Companies. If compliance expenditures and associated operating costs are not recoverable from customers through regulated rates (in regulated businesses) or market prices (in unregulated businesses), those costs could adversely affect future results of operations and cash flows. The Companies have applied for or obtained the necessary environmental permits for the construction and operation of their facilities. Many of these permits are subject to reissuance and continuing review. For a discussion of significant aspects of these matters, including current and planned capital expenditures relating to environmental compliance required to be discussed in this Item, see

Environmental Matters

Future Issues and Other Matters

in Item 7. MD&A. Additional information can also be found in ~~Item 3. Legal Proceedings and~~ Note 23 to the Consolidated Financial Statements.

Global Climate Change

The Companies support a federal climate change program that would provide a consistent, economy-wide approach to addressing this issue. Regardless of federal action, the Companies are reducing their GHG emissions while meeting the growing needs of their customers. In 2020, Virginia enacted the VCEA which addresses climate change matters such as the reduction of GHG emissions and renewable energy portfolio standards. Dominion Energy’s CEO and executive operational leadership within each operating segment ~~CEOs~~ are responsible for compliance with the laws and regulations governing environmental matters, including GHG emissions, and Dominion Energy’s Board of Directors receives periodic updates on these matters. See

State Regulations—Electric—Electric Regulation in Virginia above, Environmental Strategy

below

, Environmental Matters

Future Issues and Other Matters

in Item 7. MD&A and Note 23 to the Consolidated Financial Statements for information on climate change legislation and regulation.

Air

The CAA is a comprehensive program utilizing a broad range of regulatory tools to protect and preserve the nation’s air quality. Regulated emissions include, but are not limited to, carbon, methane, VOC, NO

, other GHGs, mercury, other toxic metals, hydrogen chloride, SO

₂

and particulate matter. At a minimum, delegated states are required to establish regulatory programs to address all requirements of the CAA. However, states may choose to develop regulatory programs that are more restrictive. Many of the Companies’ facilities are subject to the CAA’s permitting and other requirements.

Water

The CWA is a comprehensive program requiring a broad range of regulatory tools including a permit program to authorize and regulate discharges to surface waters with strong enforcement mechanisms. The CWA and analogous state laws impose restrictions and strict controls regarding discharges of effluent into surface waters and require permits to be obtained from the EPA or the analogous state agency for those discharges. Containment berms and similar structures may be required to help prevent accidental releases. Dominion Energy must comply with applicable CWA requirements at its current and former operating facilities. Stormwater related to construction activities is also regulated under the CWA and by state and local stormwater management and erosion and sediment control laws. From time to time, Dominion Energy’s projects and operations may impact tidal and

non-tidal

wetlands. In these instances, Dominion Energy must obtain authorization from the appropriate federal, state and local agencies prior to impacting wetlands. The authorizing agency may impose significant direct or indirect mitigation costs to compensate for such impacts to wetlands.

Waste and Chemical Management

Dominion Energy is subject to various federal and state laws and implementing regulations governing the management, storage, treatment, reuse and disposal of waste materials and hazardous substances, including the Resource Conservation and Recovery Act of 1976, CERCLA, the Emergency Planning and Community

Right-to-Know

Act of 1986 and the Toxic Substances Control Act of 1976. Dominion Energy’s operations and construction activities, including activities associated with oil and gas production and gas storage wells, generate waste. Across Dominion Energy, completion water is disposed at commercial disposal

facilities. Produced water is either hauled for disposal, evaporated or injected into company and third-party owned underground injection wells. Wells drilled in

tight-gas-sand

and shale reservoirs require hydraulic-fracture stimulation to achieve economic production rates and recoverable reserves. The majority of Wexpro’s current and future production and reserve potential is derived from reservoirs that require hydraulic-fracture stimulation to be commercially viable. Currently, all well construction activities, including hydraulic-fracture stimulation and management and disposal of hydraulic fracturing fluids, are regulated by federal and state agencies that review and approve all aspects of

gas-

and

oil-well

design and operation.

Protected Species

The ESA and analogous state laws prohibit activities that can result in harm to specific species of plants and animals, as well as impacts to the habitat on which those species depend. In addition to ESA programs, the Migratory Bird Treaty Act of 1918 and Bald and Golden Eagle Protection Act establish broader prohibitions on harm to protected birds. Many of the Companies’ facilities are subject to requirements of the ESA, Migratory Bird Treaty Act of 1918 and Bald and Golden Eagle Protection Act. The ESA and Bald and Golden Eagle Protection Act require potentially lengthy coordination with the state and federal agencies to ensure potentially affected species are protected. Ultimately, the suite of species protections may restrict company activities to certain times of year, project modifications may be necessary to avoid harm, or a permit may be needed for unavoidable taking of the species. The authorizing agency may impose mitigation requirements and costs to compensate for harm of a protected species or habitat loss. These requirements and time of year restrictions can result in adverse impacts on project plans and schedules such that the Companies’ businesses may be materially affected.

Other Regulations

Other significant environmental regulations to which the Companies are subject include federal and state laws protecting graves, sacred sites, historic sites and cultural resources, including those of American Indian tribal nations and tribal communities. These can result in compliance and mitigation costs as well as potential adverse effects on project plans and schedules such that the Companies’ businesses may be materially affected.

~~Nuclear Regulatory Commission~~

~~All aspects~~

ENVIRONMENTALSTRATEGY

Dominion Energy has set a goal to achieve net zero emissions by 2050. This goal covers carbon and methane emissions from both electric generation and natural gas operations. As part of the ~~operation and maintenance of~~net zero commitment, Dominion Energy has specifically committed to cut methane emissions from its natural gas infrastructure operations by 65% by 2030 and ~~Virginia Power’s nuclear power stations are regulated~~ by ~~the NRC. Operating licenses issued~~80% by ~~the NRC are subject~~2040, in each case relative 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~~2010 emissions.

To reach net zero emissions, 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~~near term Dominion Energy is seeking extension of the licenses of its zero-carbon nuclear fleet in Virginia, rapidly expanding wind and ~~Virginia Power’s nuclear generating units. See Note 23~~solar generation, investing in carbon-beneficial renewable natural gas, expanding its industry-leading methane emissions-reduction programs, and using low-carbon natural gas to support the ~~Consolidated Financial Statements for further information.~~

integration of wind and solar generation facilities into the grid. The strategy to meet these objectives consists of three major elements which will significantly reduce GHG emissions:

•	Clean energy diversity;

•	Innovation and energy infrastructure modernization; and

~~The NRC also requires~~

•	Conservation and energy efficiency.

Over the long term, Dominion Energy’s ability to achieve net zero emissions will require supportive legislative and regulatory policies, advancements in technology, and broader investments across the economy. Dominion Energy will pursue solutions, including pilot programs, of technologies such as large-scale battery storage, carbon capture and ~~Virginia Power to decontaminate their nuclear facilities once operations cease. This process is referred to as decommissioning,~~storage, small modular reactors and hydrogen if and when they become technologically and economically feasible.

Environmental Justice

Dominion Energy ~~and Virginia Power are required by the NRC to be financially prepared. For information on decommissioning trusts, see~~

~~Dominion Energy Virginia-Nuclear Decommissioning~~

~~Dominion Energy South Carolina-Nuclear Decommissioning,~~

~~and~~

~~Contracted Generation-Nuclear Decommissioning~~

~~above and Notes 3 and 9 to the Consolidated Financial Statements. See Notes 3 and 23 to the Consolidated Financial Statements for information on spent nuclear fuel.~~

~~Environmental Strategy~~

The Companies’ environmental strategy is a component of the overall long-term strategic planning overseen by the CEO and Board of Directors, including oversight by the sustainability and corporate responsibility board committee which was formed in 2018. The Companies are committed to ongoing industry leadership, delivering safe, reliable, clean and affordable energy while fully complying with all applicable environmental laws and regulations. Additionally, the Companies seekseeks to build partnerships and engage with local communities, stakeholders and customers on environmental issues important to them, including environmental justice considerations such as fair treatment, inclusive involvement and effective communication. ~~The Companies believe~~Dominion Energy commits to increase inclusiveness of its stakeholder engagement on decisions regarding the siting and operation of energy infrastructure. Dominion Energy strives to include to all people and communities, regardless of race, color, national origin, or income to ensure a diversity of views in ~~being transparent about their~~our public engagement process.

Transparency

As part of its broader commitment to transparency, Dominion Energy increased its disclosures around carbon and methane emissions. Dominion Energy discloses its environmental commitments, policies ~~including the Environmental Justice Policy adopted in 2018,~~ and initiatives ~~which have been disclosed~~ in a Sustainability &and Corporate Responsibility Report as well as a Climate Report ~~and~~in addition to other reports included on Dominion Energy’s dedicated Environmental, Social and Governance website. The Companies are dedicated to meeting their customers’ growing energy needs with innovative, sustainable solutions. The Companies are pursuing initiatives intended to reduce the GHG footprint of their customers and energy end-users, including a school bus electrification program in Virginia and two renewable natural gas partnerships in the agricultural sector. It is the Companies’ belief that sustainable solutions should strive to balance the interdependent goals of environmental stewardship and economic effects. The integrated strategy to meet these objectives consists of three major elements:

~~Reduction of GHG emissions;~~

Clean Energy ~~infrastructure modernization, including natural gas and electric operations; and~~

~~Conservation and energy efficiency.~~

~~Reduction of GHG Emissions~~

~~The Companies’ integrated strategy has resulted in a reduction in GHG emissions and emission intensity.~~Diversity

To achieve its net zero commitment, Dominion Energy ~~has committed~~is pursuing a diverse mix of cleaner, more efficient and lower-emitting methods of generating and delivering energy, while advancing aggressive voluntary measures to ~~cut methane emissions by 65% by 2030 and by 80% by 2040, in each case relative to 2010 emissions. Dominion Energy has further committed to achieve net zero carbon and methane~~continue dramatically reducing emissions from ~~its electric~~traditional generation and ~~natural gas infrastructure operations by 2050.~~

delivery.

Over the past two decades, Dominion Energy has changed the ~~Companies have made changes~~fuel mix it uses to generate electricity, as well as improved the ~~generation mix and to~~systems that make up its natural gas operations, ~~which have significantly improved environmental performance. For example,~~


26

~~Dominion Energy has reduced both its carbon~~to achieve a cleaner future. In addition to reducing GHG emissions, ~~and its carbon intensity while generating electricity with an increasingly clean portfolio. From 2000 through 2018,~~ Dominion Energy’s ~~carbon intensity decreased by 53%. This~~environmental strategy has also resulted in measurable reductions of other air pollutants such as NO

, SO

₂

and mercury and reduced the amount of coal ash generated and the amount of water withdrawn. ~~The principal components of the~~Dominion Energy achieved GHG and other air pollutant reductions by implementing an integrated environmental strategy ~~include initiatives~~ that ~~address~~addresses electric energy production and delivery ~~natural gas storage, transmission and delivery~~ and energy management.

~~See~~

~~Operating Segments~~

~~for more information on certain~~ As part of this strategy, Dominion Energy has retired, or committed to retire, several of its fossil fuel electric generating facilities, including those powered by coal, oil and gas with the ~~projects described above.~~

~~Cleaner Generation~~

replacement of this capacity coming from the development of renewable energy facilities.

Renewable energy is an important component of a diverse and reliable energy mix. Dominion Energy ~~has nearly 3,200 MW of solar generating capacity in operation or under development in nine states, including offtake agreements for Virginia Power’s utility customers. Dominion Energy~~ continues to add utility-scale solar capacity and currently has the ~~fourth~~third largest utility-owned solar fleet in the U.S. ~~Backed by nearly $2~~with 2.2 GW in operations across 10 states as of December 31, 2020. Dominion Energy also has approximately 2.5 GW of solar generating capacity under development, including agreements for acquisitions of projects, for facilities expected to commence commercial operations in 2021 through 2025 in Virginia, South Carolina and Ohio, representing approximately $4.7 billion of ~~investment from 2018 through 2020,~~investment. Dominion Energy ~~has grown~~expects to continue to make

significant investments in solar generation to achieve its ~~solar fleet in~~target of 13.4 GW generating capacity in-service by the end of 2035. In addition, Dominion Energy is pursuing offshore wind with the 2.6 GW Coastal Virginia ~~and North Carolina~~Offshore Wind Commercial project, expected to ~~about 2,400 MW~~be placed in service ~~in construction or under development.~~

~~The~~by the end of 2026, along with the Coastal Virginia Offshore Wind Pilot project which achieved commercial operation in January 2021.

Dominion Energy is ~~a 12 MW offshore wind demonstration project that~~pursuing renewable natural gas through its investment in Align RNG, which is ~~currently under construction~~developing projects to capture and ~~will be commercially available before~~convert methane emissions from swine farms, and Vanguard Renewables in collaboration with the ~~end~~Dairy Farmers of ~~2020. The Coastal Virginia Offshore Wind Commercial project is a 2,640 MW offshore wind project that was announced in September 2019 with construction beginning in 2024~~America to develop projects to capture and ~~an anticipated completion in 2026.~~

convert methane emissions from dairy farms across the U.S. Preservation of ~~the Companies’~~Dominion Energy’s existing carbon-free baseload nuclear generation is also an important component of Dominion Energy’s GHG emissions reduction strategy. Accordingly, Virginia Power has commenced the process to extend the operating licenses for its four nuclear units at Surry and North Anna.

See

Operating Segments

and Item 2. Properties for additional ~~information, including~~information.

Innovation and Energy Infrastructure Modernization

One of the pillars of Dominion Energy’s ~~merchant solar properties.~~

~~GHG Emissions~~

~~Since 2000, Dominion Energy~~net zero strategy is a focus on innovation as way to advance technology and ~~Virginia Power have tracked the emissions of their electric generation fleet, which employs a mix of fuel~~sustainability. This includes investing in and ~~renewable energy sources. Comparing annual year 2018 to annual year 2000, the entire electric generating fleet (based on ownership percentage) reduced its average CO~~

emissions rate per MWh of energy produced from electric generation by approximately 53%. Comparing annual year 2018 to annual year 2000, the regulated electric generating fleet (based on ownership percentage) reduced its average CO

~~emissions rate per MWh of energy produced from electric generation by approximately 39%. Dominion Energy~~building upon previously proven technology, including large-scale battery storage, hydrogen, advanced nuclear technology and ~~Virginia Power’s 2019 emission data is not yet available. Emissions data disclosed herein excludes the operations acquired in the SCANA Combination.~~

~~Dominion Energy also develops a comprehensive GHG inventory annually. For Dominion Energy and Virginia Power’s electric generation operations, direct CO~~

equivalent emissions (based on ownership percentage) were 27.8 million metric tons and 24.6 million metric tons, respectively, in 2018, compared to 30.1 million metric tons and 26.5 million metric tons,

~~respectively, in 2017. The corresponding~~ carbon ~~intensity rates for~~capture technology. Further, Dominion Energy’s ~~electric generation operations were 0.276 metric tons CO~~

~~equivalent emissions per net MWh in 2018 and 0.295 metric tons CO~~

~~equivalent emissions per net MWh in 2017.~~

~~For regulated electric transmission and distribution operations, direct CO~~

~~equivalent emissions for 2018 were 39,900 metric tons, compared to 37,841 metric tons in 2017.~~

Dominion Energy’s natural gas companies have been reporting GHG emissions to the EPA since 2011 under the GHG Reporting Program. In January 2016, the GHG Reporting Program was expanded to also include GHG inputs and emissions associated with natural gas gathering and boosting sources and transmission pipeline blowdowns for facilities that exceed 25,000 metric tons per year of CO

~~equivalent emissions. The sources within these new facilities were not previously covered under the rule and the first reports for these new sources were submitted to the EPA by March 31, 2017.~~

~~Dominion Energy’s GHG inventory follows all methodologies specified in the EPA Mandatory Greenhouse Gas Reporting Rule, 40 Code of Federal Regulations Part 98 for calculating emissions. Total CO~~

equivalent emissions reported for Dominion Energy’s natural gas assets, as estimated in Dominion Energy’s corporate inventory, were 4.14 million metric tons in 2018. This estimate includes emissions reported under the GHG Reporting Program, as well as other emissions not required to be reported under the federal program. The 2018 corporate GHG inventory emission estimate includes Dominion Energy Questar Pipeline, Questar Gas and Wexpro Company for the entire calendar year. Dominion Energy’s 2018 methane emissions reported under Subpart W of the Greenhouse Gas Reporting Rule are as follows:


~~Subpart W Segment~~	Subpart W Total CH 4 ~~Emissions~~ ~~(mcf CH~~ 4 )

~~Distribution~~		~~1,839,577~~
~~Production~~		~~736,188~~
~~Transmission pipelines~~		~~403,164~~
~~Transmission compressor stations~~		~~219,011~~
~~Gathering and boosting~~		~~219,056~~
~~Storage~~		~~88,973~~
~~LNG import/export~~		~~4,331~~
~~Processing~~		~~1,880~~

~~Methane Emissions~~

In July 2015, the EPA announced the next generation of its voluntary Natural Gas STAR Program, the Natural Gas STAR Methane Challenge Program. The program covers the entire natural gas sector from production to distribution, with more emphasis on transparency and increased reporting for both annual emissions and reductions achieved through implementation measures. Dominion Energy is a member of the Methane Challenge program and East Ohio, Hope, DETI and Questar Gas were founding partners. Dominion Energy is a member of the EPA’s voluntary Natural Gas STAR program. Dominion Energy joined the One Future Coalition and participated in the 2018 and 2019 progress reports. One Future is an

~~industry-led~~

group and member companies pledge to limit methane emissions to below 1% of gas throughput across the entire natural gas value chain. The entities acquired in the SCANA Combination are expected to join the voluntary methane programs in 2020.

~~Dominion Energy and Dominion Energy Gas do not expect the costs related to these programs to have a material impact on their results of operations, financial condition and/or cash flows.~~

~~Energy Infrastructure Modernization~~

~~Dominion Energy’s investment~~growth capital plan from ~~2019~~2021 through ~~2023~~2025 includes a focus on upgrading the electric system in Virginia through investments in additional renewable generation facilities, smart meters, customer information platform, intelligent grid devices and associated control systems, physical and cyber security investments, strategic undergrounding and energy conservation programs. Dominion Energy also plans to upgrade its gas and electric transmission and distribution networks and meet environmental requirements and standards set by various regulatory bodies. These enhancements are aimed at meeting Dominion Energy’s continued goal of providing safe, reliable service ~~to address~~while addressing increasing electricity consumption and ~~make~~making Dominion Energy’s system more responsive to customers’ desire to more efficiently manage their energy consumption ~~and~~as well as more adaptive to renewable generation resources and battery technologies. ~~See~~

~~Operating Segments~~

~~for additional information.~~

~~The Companies have~~

Dominion Energy has also implemented infrastructure improvements and improved operational practices to reduce the GHG emissions ~~from their~~for its natural gas facilities. Dominion Energy ~~and Dominion Energy Gas, in connection with the investment plan, are~~is also pursuing the construction or upgrade of regulated infrastructure in ~~their~~its natural gas businesses. ~~The Companies have~~Dominion Energy has made voluntary commitments as part of the ~~EPA~~EPA’s Natural Gas STAR Methane Challenge Program to continue to reduce methane emissions as part of these improvements.Dominion Energy is also a member of the EPA’s voluntary Natural Gas STAR Program, which the entities acquired in the SCANA Combination are expected to join in 2021. In addition, Dominion Energy is a member of the One Future Coalition, an industry group with members pledging to limit methane emissions to below 1% of gas throughput across the entire natural gas value chain.

See

Operating Segments

for additional ~~information, including natural gas infrastructure projects.~~

information.

Conservation and Energy Efficiency

Conservation and load management play a significant role in meeting the growing demand for electricity and natural gas, while also helping to reduce the environmental footprint of Dominion Energy’s customers. ~~The Companies offer~~Dominion Energy offers various ~~energy~~ efficiency programs designed to reduce energy consumption in Virginia, North Carolina, Ohio, South Carolina, Utah and Wyoming, ~~designed to reduce energy consumption~~ including programs such as:

•

Energy audits and assessments;

•

Incentives for customers to upgrade or install certain energy efficient measures and/or systems;

•

Weatherization assistance to help income-eligible customers reduce their energy usage;

•

Home energy planning, which provides homeowners with a step-by-step roadmap to efficiency improvements to reduce gas usage; and

•

Rebates for installing high-efficiency equipment.

GHG Emissions

Dominion Energy’s integrated environmental strategy supports a reduction in GHG emissions. Through 2019, Dominion Energy ~~audits~~has reduced carbon emissions from its electric generating units (based on ownership percentage) by 57% since 2005 and ~~assessments;~~reduced methane

emissions from its natural gas infrastructure operations by 25% since 2010. Dominion Energy’s 2020 emissions data is not yet available. Emissions for fiscal year 2019 include the assets acquired as a part of the SCANA Combination, such as DESC’s electric generation operations and DESC and PSNC’s natural gas operations. Dominion Energy’s 2019 emissions data presented below also includes the operations of gas transmission and distribution operations sold or to be sold to BHE as part of the GT&S Transaction and the Q-Pipe Transaction.

Dominion Energy has been reporting GHG emissions, including carbon, methane, N₂O and SF₆, from its natural gas infrastructure, electric generation and power delivery operations to the EPA since 2011 under the EPA mandatory GHG Reporting Program. Dominion Energy’s Corporate GHG Inventory used for reporting purposes follows methodologies specified in the EPA’s Mandatory GHG Reporting Rule, 40 Code of Federal Regulations Part 98 for calculating emissions, as well as approved industry protocols. In its annual Corporate GHG Inventory, Dominion Energy also voluntarily includes carbon and methane emission estimates from smaller sources that are not required to be included under the EPA’s mandatory GHG Reporting Program, including smaller electric generation, natural gas compressor stations and other sources. Dominion Energy’s Corporate GHG Inventory also includes emissions sources Dominion Energy voluntarily reports to various programs it participates in. As a result, Dominion Energy’s reported methane emissions in its Corporate GHG Inventory are higher than what is reported to the EPA.

Total CO₂ equivalent emissions reported under Dominion Energy’s Corporate GHG Inventory were 36.9 million metric tons in 2019. Reported CO₂ equivalent emissions include CO₂, CH₄, N₂O, and SF₆ emissions from Dominion Energy’s electric generation operations, electric transmission and distribution operations, and natural gas operations.

•

For Dominion Energy’s electric generation operations, total CO₂ equivalent emissions (based on ownership percentage) were 31.9 million metric tons in 2019, including 9.9 million metric tons from DESC and 22.0 million metric tons from Virginia Power.

•

For Dominion Energy’s electric transmission and distribution operations, direct CO₂ equivalent emissions were 0.05 million metric tons in 2019.

•

For Dominion Energy’s natural gas assets, total CO₂ equivalent emissions were 4.95 million metric tons in 2019.

Dominion Energy’s 2019 GHG emissions as reported under various subparts of the EPA’s Mandatory GHG Reporting Program as of December 31, 2020, are as follows:

Natural Gas Operations – 2019 Emissions

Segment	Subpart W CH₄ Emissions		Subpart C CH₄ Emissions		Subparts W & C CH₄ Emissions		Subparts W & C CO₂ Emissions		Subparts W & C N₂O Emissions
(metric tons)
Distribution		34,735				34,735		2,123
Production		17,168				17,168		10,951		0.02
Transmission pipelines		4,576				4,576		73
Transmission compressor stations		2,722		12		2,734		650,859		1.22
Gathering and boosting		3,083				3,083		93,352		0.19
Storage		1,542		5		1,547		261,741		0.49
LNG import/export		111		21		132		1,166,479		2.14
Processing		91				91		2,168		0.01
Total		64,028		38		64,066		2,187,746		4.07

Electric Generation Operations – 2019 Emissions

Company	Subparts C & D CO₂ Emissions		Subparts C & D CH₄ Emissions		Subparts C & D N₂O Emissions
(metric tons)
Virginia Power⁽¹⁾		19,051,753		17,096		27,863
DESC		9,855,332		10,239		16,239
Total		28,907,085		27,335		44,102

~~Incentives for customers to upgrade or install certain energy efficient measures and/or systems;~~

(1)	Virginia Power totals include biomass, which were not included in the Corporate GHG inventory.

Electric Transmission and Distribution Operations – 2019 Emissions

Company⁽¹⁾

Subpart DD

SF₆ Emissions

Subpart DD

SF₆ as CO₂ Equivalent Emissions

(metric tons)

Virginia Power

38,338

(1)	DESC does not trigger EPA mandatory GHG reporting.

~~Weatherization assistance to help income-eligible customers reduce their energy usage;~~

~~Home energy planning, which provides homeowners with a~~

~~step-by-step~~

~~roadmap to efficiency improvements to reduce gas usage; and~~

~~Rebates for installing high-efficiency equipment.~~

~~Cybersecurity~~

CYBERSECURITY

In an effort to reduce the likelihood and severity of cyber intrusions, the Companies have a comprehensive cybersecurity program designed to protect and preserve the confidentiality, integrity and availability of data and systems, including oversight by the Board of Directors as well as the ~~financial~~finance and risk oversight board committee. The Companies are subject to mandatory cybersecurity regulatory requirements, interface regularly with a wide range of external organizations and participate in classified briefings to maintain an

awareness of current cybersecurity threats and vulnerabilities. The Companies’ current security posture and regulatory compliance efforts are intended to address the evolving and changing cyber threats. See Item 1A. Risk Factors for additional information.

Item 1A. Risk Factors

The Companies’ businesses are influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond their control. A number of these factors have been identified below. For other factors that may cause actual results to differ materially from those indicated in any forward-looking statement or projection contained in this report, see

Forward-Looking Statements

in Item 7. MD&A.

Regulatory, Legislative and Legal Risks

The rates of the Companies’ principal electric transmission, distribution and generation operations and gas ~~transmission, storage and~~ distribution operations are subject to regulatory review.

Revenue provided by the Companies’ electric transmission, distribution and generation operations and by gas ~~transmission and~~ distribution operations is based primarily on rates approved by state and federal regulatory agencies. The profitability of the Companies’ businesses is dependent on their ability, through the rates that they are permitted to charge, to recover costs and earn a reasonable rate of return on their capital investment.

At the federal level, ~~Dominion Energy and Virginia Power’s~~the Companies’ wholesale rates for electric transmission service ~~and various rates and charges assessed by Dominion Energy and Dominion Energy Gas’ natural gas transmission and storage businesses~~ are regulated by FERC. Rates for electric transmission services are updated annually according to a FERC-approved formula rate mechanism, and may be subject to additional prospective adjustments and retroactive corrections. Rates for gas transmission and storage services are adjusted in rate cases periodically and must reflect recovery of costs plus a reasonable return on investment, in accordance with cost of service ratemaking. A failure by the Companies to support these rates could result in rate decreases from current rate levels, which could adversely affect the Companies’ results of operations, cash flows and financial condition.

At the state level, Virginia Power’s retail base rates, terms and conditions for generation and distribution services to customers in Virginia are reviewed by the Virginia Commission in a proceeding that involves the determination of Virginia Power’s actual earned ROE during a historic test period, and the determination of Virginia Power’s authorized ROE prospectively. The GTSA reinstated triennial reviews commencing with the 2021 Triennial Review. Under certain circumstances described in the Regulation Act, Virginia Power may be required to refund a portion of its earnings to customers through a refund process and to reduce its rates.

Additionally, Virginia Power’s ability to utilize CCROs for certain qualifying projects as provided for in the GTSA may be limited if the Virginia Commission does not approve such projects. Virginia Power makes assessments throughout the review period and will record a regulatory liability for refunds and/or CCRO benefits to customers in any period it is determined probable, which could be material to the Companies’ results of operations in the period recognized and to cash flows on completion of any triennial review.

In states other than Virginia, ~~Dominion Energy and Virginia Power’s~~the Companies’ retail electric base rates for generation and distribution services to customers are regulated on a

cost-of-service/

rate-of-return

basis subject to the statutes, rules and procedures of such states. Dominion Energy’s rates for gas distribution to retail customers are similarly regulated at the state level. If retail electric or gas earnings exceed the returns established by state utility commissions, retail electric rates or gas rates may be subject to review and possible reduction, which may decrease the Companies’ future earnings. Additionally, if any state utility commission


28

does not allow recovery through base rates, on a timely basis, of costs incurred in providing service, the Company’s future earnings could be negatively impacted.

Under certain circumstances, state utility regulators may impose a moratorium on increases to retail base rates for a specified period of time, which could delay recovery of costs incurred in providing service. Additionally, governmental officials, stakeholders and advocacy groups may challenge any of these regulatory reviews. Such challenges may lengthen the time, complexity and costs associated with such regulatory reviews.

~~Through the SCANA Combination, Dominion Energy acquired SCANA and DESC which are subject to numerous legal proceedings and ongoing governmental investigations and examinations.~~

SCANA and DESC are defendants in numerous federal and state legal proceedings and governmental investigations relating to the decision to abandon construction at the NND Project. Among other things, the lawsuits and investigations allege misrepresentation, failure to properly manage the NND Project, unfair trade practices and violation of anti-trust laws. Additionally, pursuant to the SCANA Merger Agreement and applicable indemnification agreements, SCANA is indemnifying former directors and officers of SCANA and DESC who are defendants in federal and state legal proceedings relating to the decision to abandon construction at the NND Project and the subsequent SCANA Combination. Among other things, the lawsuits allege breaches of various fiduciary duties.

The ~~outcome of these legal proceedings, investigations and examinations, including settlements, is uncertain and may adversely affect Dominion Energy’s financial condition or results of operation.~~

~~Dominion Energy and Virginia Power’s~~Companies’ generation business may be negatively affected by possible FERC actions that could change market design in the wholesale markets or affect pricing rules or revenue calculations in the RTO markets.

~~Dominion Energy and Virginia Power’s~~The Companies’ generation stations operating in RTO markets sell capacity, energy and ancillary services into wholesale electricity markets regulated by FERC. The wholesale markets allow these generation stations to take advantage of market price opportunities, but also expose them to market risk. Properly functioning competitive wholesale markets depend upon FERC’s continuation of clearly identified market rules. From time to time FERC may investigate and authorize RTOs to make changes in market design. FERC also periodically reviews ~~Dominion Energy’s~~the Companies’ authority to sell at market-based rates. Material changes by FERC to the design of the wholesale markets or its interpretation of market rules, ~~Dominion Energy or Virginia Power’s~~the Companies’ authority to sell power at market-based rates, or changes to pricing rules or rules involving revenue calculations, could adversely impact the future results of ~~Dominion Energy or Virginia Power’s~~the Companies’ generation business. For example, in December 2019, FERC issued an order on PJM’s Minimum Offer Price Rule proposals finding the PJM tariff unjust and unreasonable and directed PJM to expand the Minimum Offer Price Rule to all existing and new generation resources benefitting from a state subsidy to address the effects of state subsidies on new and existing resources on the PJM capacity market. The expanded Minimum Offer Price Rule will set a floor price on new and existing renewable and non-renewable state subsidized resources that do not seek a FERC exemption, increasing their risk of failing to clear the capacity auction and

not obtaining a capacity payment and obligation. In addition, ~~there have been~~ changes to the interpretation and application of FERC’s market manipulation ~~rules.~~rules may occur from time to time. A failure to comply with these market manipulation rules could lead to civil and criminal penalties.

The Companies are subject to complex governmental regulation, including tax regulation, that could adversely affect

their results of operations and subject the Companies to monetary penalties.

The Companies’ operations are subject to extensive federal, state and local regulation and require numerous permits, approvals and certificates from various governmental agencies. Such laws and regulations govern the terms and conditions of the services we offer, our relationships with affiliates, protection of our critical electric infrastructure assets and pipeline safety, among other matters. These operations are also subject to legislation governing taxation at the federal, state and local level. They must also comply with environmental legislation and associated regulations. Management believes that the necessary approvals have been obtained for existing operations and that the businesses are conducted in accordance with applicable laws. The Companies’ businesses are subject to regulatory regimes which could result in substantial monetary penalties if any of the Companies is found not to be in compliance, including mandatory reliability standards and interaction in the wholesale markets. New laws or regulations, the revision or reinterpretation of existing laws or regulations, changes in enforcement practices of regulators, or penalties imposed for

non-compliance

with existing laws or regulations may result in substantial additional expense. Recent legislative and regulatory changes that are impacting the Companies include the VCEA, the 2017 Tax Reform Act and tariffs imposed on imported solar panels by the U.S. government in 2018.

Through the SCANA Combination, Dominion Energy acquired SCANA and DESC which have been and continue to be subject to numerous legal proceedings and ongoing governmental investigations and examinations. While a significant portion of the federal and state legal proceedings and governmental investigations have been settled, SCANA and DESC remain defendants in multiple lawsuits and investigations relating to the decision to abandon construction at the NND Project. Among other things, the lawsuits and investigations allege misrepresentation, failure to properly manage the NND Project, unfair trade practices and violation of anti-trust laws. Additionally, pursuant to the SCANA Merger Agreement and applicable indemnification agreements, SCANA is indemnifying former directors and officers of SCANA and DESC who are defendants in federal and state legal proceedings relating to the decision to abandon construction at the NND Project and the subsequent SCANA Combination. Among other things, the lawsuits allege breaches of various fiduciary duties.

The ~~2017 Tax Reform Act~~outcome of these legal proceedings, investigations and examinations, including settlements, is uncertain and may adversely affect Dominion Energy’s financial condition or results of operation.

Environmental Risks

Compliance with federal and/or state requirements imposing limitations on GHG emissions or efficiency improvements, as well as Dominion Energy’s commitment to achieve net zero emissions by 2050, may result in significant compliance costs, could ~~have a material impact on~~result in certain of the Companies’ existing electric generation units being uneconomical to maintain or operate and may depend upon technological advancements which may be beyond the Companies’ control. Virginia has adopted the VCEA which establishes renewable energy and CO₂ reduction targets for Virginia Power’s generation fleet and grid operations, ~~cash flows,~~including the requirement that 100% of Virginia Power’s electricity come from zero-carbon generation by the end of 2045. The legislation mandates the development of 16,100 MW of solar or onshore wind capacity by the end of 2035, 5,200 MW of offshore wind capacity before 2035, and ~~financial results.~~

~~Excess accumulated deferred income taxes due~~2,700 MW of energy storage by the end of 2035. The VCEA also directs Virginia Power to participate in a program consistent with RGGI, requiring the purchase of carbon credits to offset emissions from Virginia Power’s generating fleet within the state. Cost recovery for these initiatives will require approval by the Virginia Commission which may be denied or materially altered to the ~~reduction~~detriment of the Companies. In addition, permitting and other project execution challenges may hinder Virginia Power’s ability to meet the requirements of the VCEA. The Companies could face similar risks if there is further legislation at the federal and/or state level mandating additional limitations on GHG emissions or requiring additional efficiency improvements.

In February 2020, Dominion Energy announced its commitment to achieve net zero emissions by 2050. To meet this commitment, the Companies expect to construct new electric generation facilities, including renewable facilities such as wind and solar, and to seek the extension of operating licenses for the Companies’ nuclear generation facilities. The Companies also need to depend on technological improvements not currently in commercial development. Additionally, actions taken in furtherance of Dominion Energy’s net zero commitment may impact existing generation facilities, including as a result of fuel switching and/or the retirement of high-emitting generation facilities and their potential replacement with lower-emitting generation facilities. Further, the ability to realize this commitment will require the Companies to be able to obtain significant financing. These efforts will require approvals from various regulatory bodies for the siting and construction of such new facilities and a determination by the applicable state commissions that costs related to the construction are prudent. Given these and other uncertainties associated with the implementation of Dominion Energy’s net zero commitment, the Companies cannot estimate the aggregate effect of future actions taken in furtherance of this commitment on their results of operations or financial condition or on their customers. However, such actions could render additional existing generation facilities uneconomical to operate, result in the ~~corporate income tax rates to 21% under the provisions~~impairment of ~~the 2017 Tax Reform Act have been recognized as regulatory liabilities and are expected to be shared with customers, generally through reductions in future rates~~assets, or in the form of credits to customer bills. The 2017 Tax Reform Act includes provisions that stipulate how these excess deferred taxes may be passed back to customers for certain accelerated tax depreciation benefits. Potential reductions in future rates attributable to other,

~~non-plant~~

~~related excess deferred taxes may be determined by our regulators. The amount and timing of these reductions could be material to~~otherwise adversely affect the Companies’ results of operations, ~~cash flows and/~~financial performance or ~~financial condition.~~liquidity.

There are also potential impacts on Dominion Energy’s natural gas business from its net zero emissions commitment as well as federal or state GHG regulations which may require further GHG emission reductions from the natural gas sector which, in addition to

resulting in increased costs, could affect demand for natural gas. Additionally, the 2017 Tax Reform Act contains provisions that limit the interest deduction on business interest to (1) business interest income, plus (2) 30 percent of the taxpayer’s adjusted taxable income. Business interest and business interest income are defined as that allocable to a trade or business and not investment interest and income. Dominion Energy is a consolidated group with both regulated and nonregulated lines of businesses. In November 2018, the U.S. Department of Treasury issued proposed regulations defining interest as any amounts associated with the time value of money or use of funds. These proposed regulations provide guidance for purposes of the exception to the interest limitation for regulated public utilities, the application of the interest limitation to consolidated groups, such as Dominion Energy, and the interest limitation with respect

~~to partnerships and partners in those partnerships. It is unclear when that guidance may be finalized, or whether that guidance~~GHG requirements could result in increased demand for energy conservation and renewable products, which could impact the natural gas business.Dominion Energy’s renewable natural gas projects, expected to be a ~~disallowance~~key component of ~~a portion~~Dominion Energy’s environmental strategy, require approvals from various regulatory bodies for the siting and construction of ~~our interest deductions in the future.~~

~~Environmental Risks~~

such facilities.

The Companies’ operations and construction activities are subject to a number of environmental laws and regulations which impose significant compliance costs on the Companies.

The Companies’ operations and construction activities are subject to extensive federal, state and local environmental statutes, rules and regulations relating to air quality, water quality, waste management, natural resources, and health and safety. Compliance with these legal requirements requires the Companies to commit significant capital toward permitting, emission fees, environmental monitoring, installation and operation of environmental control equipment and purchase of allowances and/or offsets. Additionally, the Companies could be responsible for expenses relating to remediation and containment obligations, including at sites where they have been identified by a regulatory agency as a potentially responsible party. Expenditures relating to environmental compliance have been significant in the past, and the Companies expect that they will remain significant in the future. Certain facilities have become uneconomical to operate and have been shut down, converted to new fuel types or sold. These types of events could occur again in the future.

We expect that existing environmental laws and regulations may be revised and/or new laws may be adopted including regulation of GHG emissions which could have an impact on the Companies’ business (risks relating to regulation of GHG emissions from existing fossil fuel-fired electric generating units are discussed in more detail below). In addition, further regulation of air quality and GHG emissions under the CAA ~~have been~~may be imposed on the natural gas ~~sector, including rules to limit methane leakage.~~sector. The Companies are also subject to federal water and waste regulations, including regulations concerning cooling water intake structures, coal combustion

by-product

handling and disposal practices, wastewater discharges from steam electric generating stations, management and disposal of hydraulic fracturing fluids and the potential further regulation of polychlorinated biphenyls.

Compliance costs cannot be estimated with certainty due to the inability to predict the requirements and timing of implementation of any new environmental rules or regulations. Other factors which affect the ability to predict future environmental expenditures with certainty include the difficulty in estimating

clean-up

costs and quantifying liabilities under environmental laws that impose joint and several liabilities on all responsible parties. However, such expenditures, if material, could make the Companies’ facilities uneconomical to operate, result in the impairment of assets, or otherwise adversely affect the Companies’ results of operations, financial performance or liquidity.

Any additional federal and/or state requirements imposed on energy companies mandating limitations on GHG emissions or requiring efficiency improvements may result in compliance costs that alone or in combination could make some of the Companies’ electric generation units or natural gas facilities uneconomical to maintain or operate.

The ~~ACE Rule, which became effective in September 2019, is targeted at reducing CO~~

~~emissions from existing coal-fired power plants. The ACE~~

~~Rule requires states to develop plans by July 2022 to implement CO~~

performance standards. State plans must be approved by the EPA by January 2024. States are also contemplating regulations regarding GHG emissions. For example, the Virginia General Assembly is considering legislation which would authorize Virginia to directly join the RGGI program as a full participant. Compliance with the ACE Rule or other federal or state carbon regulations, such as the RGGI program, is expected to require increasing the energy efficiency of equipment at facilities, committing significant capital toward carbon reduction programs, purchase of allowances and/or emission offset credits, fuel switching, and/or retirement of high-emitting generation facilities and potential replacement with lower-emitting generation facilities. Given these developments and uncertainties, Dominion Energy and Virginia Power cannot estimate the aggregate effect of such requirements on their results of operations, financial condition or their customers. However, such expenditures, if material, could make Dominion Energy and Virginia Power’s generation facilities uneconomical to operate, result in the impairment of assets, or otherwise adversely affect Dominion Energy or Virginia Power’s results of operations, financial performance or liquidity.

There are also potential impacts on Dominion Energy and Dominion Energy Gas’ natural gas businesses as federal or state GHG regulations may require GHG emission reductions from the natural gas sector which, in addition to resulting in increased costs, could affect demand for natural gas. Additionally, GHG requirements could result in increased demand for energy conservation and renewable products, which could impact the natural gas businesses.

~~Dominion Energy and Virginia Power~~Companies are subject to risks associated with the disposal and storage of coal ash.

~~Dominion Energy and Virginia Power~~The Companies historically produced and continue to produce coal ash, or CCRs, as a

by-product

of their coal-fired generation operations. The ash is stored and managed in impoundments (ash ponds) and landfills located at 11 different facilities, eight of which are at Virginia Power.

The EPA has issued regulations concerning the management and storage of CCRs, which Virginia has adopted. These CCR regulations require ~~Dominion Energy and Virginia Power~~the Companies to make additional capital expenditures and increase operating and maintenance expenses. In addition, ~~Dominion Energy and Virginia Power~~the Companies will incur expenses and other costs associated with closing, corrective action and ongoing monitoring of certain ash ponds. ~~Dominion Energy and Virginia Power~~The Companies also may face litigation concerning their coal ash facilities.

Further, while ~~Dominion Energy and Virginia Power~~the Companies operate their ash ponds and landfills in compliance with applicable state safety regulations, a release of coal ash with a significant environmental impact ~~such as the Dan River ash basin release by a neighboring utility,~~ could result in remediation costs, civil and/or criminal penalties, claims, litigation, increased regulation and compliance costs, and reputational damage, and could impact the financial condition of ~~Dominion Energy and/or Virginia Power.~~

the Companies.

Construction Risks

The Companies’ infrastructure build and expansion plans often require regulatory approval, including environmental permits, before commencing construction and completing projects. The


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Companies may not complete the facility construction, pipeline, conversion or other infrastructure projects that they commence, or they may complete projects on materially different terms, costs or timing than initially estimated or anticipated, and they may not be able to achieve the intended benefits of any such

project, if completed.

~~Several facility construction, pipeline, electric transmission line, expansion, conversion~~A number of large and ~~other infrastructure~~small scale projects have been announced, including pipelines, electric transmission lines, facility expansions or renewed licensing, conversions and ~~additional~~other infrastructure developments or construction. Additional projects may be considered in the future. The Companies compete for projects with companies of varying size and financial capabilities, including some that may have competitive advantages. Commencing construction on announced and future projects may require approvals from applicable state and federal agencies, and such approvals could include mitigation costs which may be material to the Companies. Projects may not be able to be completed on time or in accordance with our estimated costs as a result of weather conditions, delays in obtaining or failure to obtain regulatory approvals, delays in obtaining key materials, labor difficulties, difficulties with partners or potential partners, a decline in the credit strength of counterparties or vendors, or other factors beyond the Companies’ control. For example, ~~Atlantic Coast Pipeline~~Dominion Energy has been involved with projects which have experienced certain

delays in obtaining and maintaining permits necessary for construction along with construction delays due to judicial actions which ~~has~~ impacted the cost and schedule ~~for~~such as the Atlantic Coast Pipeline ~~Project.~~Project and ultimately led to its cancellation. Even if facility construction, pipeline, expansion, electric transmission line, conversion and other infrastructure projects are completed, the total costs of the projects may be higher than anticipated and the performance of the business of the Companies following completion of the projects may not meet expectations.

Start-up

and operational issues can arise in connection with the commencement of commercial operations at our facilities. Such issues may include failure to meet specific operating parameters, which may require adjustments to meet or amend these operating parameters. Additionally, the Companies may not be able to timely and effectively integrate the projects into their operations and such integration may result in unforeseen operating difficulties or unanticipated costs. Further, regulators may disallow recovery of some of the costs of a project if they are deemed not to be prudently incurred. Any of these or other factors could adversely affect the Companies’ ability to realize the anticipated benefits from the facility construction, pipeline, electric transmission line, expansion, conversion and other infrastructure projects.

The development, construction and commissioning of several large-scale infrastructure projects simultaneously involves significant execution risk.

~~The~~To achieve Dominion Energy’s commitment to net zero emissions by 2050 and comply with the requirements of the VCEA, the Companies are currently simultaneously developing or constructing ~~or commissioning~~ several ~~major~~electric generation projects, including ~~the Atlantic Coast Pipeline Project, the Supply Header project~~Subsequent License Renewal projects at Surry and North Anna, the Coastal Virginia Offshore Wind ~~project.~~projects and various solar projects. Several of the Companies’ key projects are increasingly large-scale, complex and being constructed in constrained geographic areas or in ~~difficult terrain,~~unfamiliar environments such as the marine environment for ~~example,~~ the ~~Atlantic Coast Pipeline Project.~~Coastal Virginia Offshore Wind projects. The advancement of the Companies’ ventures is also affected by the interventions, litigation or other activities of stakeholder and advocacy groups, some of which oppose natural

gas-related

and energy infrastructure projects. For example, certain ~~landowners and~~ stakeholder groups oppose solar farms due to the ~~Atlantic Coast Pipeline Project, which could impede construction activities or the~~

~~acquisition~~increasing quantities of

~~rights-of-way~~

~~and other~~ land ~~rights on a timely basis or on acceptable terms.~~tracts required for these facilities. Given that these projects provide the foundation for the Companies’ strategic growth plan, if the Companies are unable to obtain or maintain the required approvals, develop the necessary technical expertise, allocate and coordinate sufficient resources, adhere to budgets and timelines, effectively handle public outreach efforts, or otherwise fail to successfully execute the projects, there could be an adverse impact to the Companies’ financial position, results of operations and cash flows. Failure to comply with regulatory approval conditions or an adverse ruling in any future litigation could adversely affect the Companies’ ability to execute their business plan.

The Companies are dependent on their contractors for the successful and timely completion of large-scale infrastructure projects. The construction of such projects is expected to take several years, is typically confined within a limited geographic area or difficult ~~terrain~~environments and could be subject to delays, cost overruns, labor disputes and other factors that could cause the total cost of the project to exceed the anticipated amount and adversely affect the Companies’ financial performance and/or impair the Companies’ ability to execute the business plan for the project as scheduled.

Further, an inability to obtain financing or otherwise provide liquidity for the projects on acceptable terms could negatively affect the Companies’ financial condition, cash flows, the projects’ anticipated financial results and/or impair the Companies’ ability to execute the business plan for the projects as scheduled.

Operational Risks

The Companies’ financial performance and condition can be affected by changes in the weather, including the effects of global climate change.

Fluctuations in weather can affect demand for the Companies’ services. For example, milder than normal weather can reduce demand for electricity and gas ~~transmission and~~ distribution services. In addition, severe weather or acts of nature, including hurricanes, winter storms, earthquakes, floods and other natural disasters can stress systems, disrupt operation of the Companies’ facilities and cause service outages, production delays and property damage that require incurring additional expenses. Changes in weather conditions can result in reduced water levels or changes in water temperatures that could adversely affect operations at some of the Companies’ power stations. Furthermore, the Companies’ operations could be adversely affected and their physical plant placed at greater risk of damage should changes in global climate produce, among other possible conditions, unusual variations in temperature and weather patterns, resulting in more intense, frequent and extreme weather events, abnormal levels of precipitation and, for operations located on or near coastlines, a change in sea level or sea temperatures. Due to the location of ~~Dominion Energy and Virginia Power’s~~the Companies’ electric utility service territories and a number of its other facilities in the eastern portions of the states of South Carolina, North Carolina and Virginia which are frequently in the path of hurricanes, we experience the consequences of these weather events to a greater degree than many of our industry peers.

The Companies’ operations are subject to operational hazards, equipment failures, supply chain disruptions and personnel issues which could negatively affect the Companies.

Operation of the Companies’ facilities involves risk, including the risk of potential breakdown or failure of equipment or processes due to

aging infrastructure, fuel supply, pipeline integrity or transportation disruptions, accidents, labor disputes or work stoppages by employees, acts of terrorism or sabotage, construction delays or cost

overruns, shortages of or delays in obtaining equipment, material and labor, operational restrictions resulting from environmental limitations and governmental interventions, changes to the environment and performance below expected levels. The Companies’ businesses are dependent upon sophisticated information technology systems and network infrastructure, the failure of which could prevent them from accomplishing critical business functions. Because the Companies’ transmission facilities, pipelines and other facilities are interconnected with those of third parties, the operation of their facilities and pipelines could be adversely affected by unexpected or uncontrollable events occurring on the systems of such third parties.

Operation of the Companies’ facilities below expected capacity levels could result in lost revenues and increased expenses, including higher maintenance costs. Unplanned outages of the Companies’ facilities and extensions of scheduled outages due to mechanical failures or other problems occur from time to time and are an inherent risk of the Companies’ business. Unplanned outages typically increase the Companies’ operation and maintenance expenses and may reduce their revenues as a result of selling less output or may require the Companies to incur significant costs as a result of operating higher cost units or obtaining replacement output from third parties in the open market to satisfy forward energy and capacity or other contractual obligations. Moreover, if the Companies are unable to perform their contractual obligations, penalties or liability for damages could result.

In addition, there are many risks associated with the Companies’ principal operations and the transportation ~~storage~~ and ~~processing~~storage of natural gas ~~and NGLs,~~ including nuclear accidents, fires, explosions, uncontrolled release of natural gas and other environmental hazards, pole strikes, electric contact cases, the collision of third party equipment with pipelines and avian and other wildlife impacts. Such incidents could result in loss of human life or injuries among employees, customers or the public in general, environmental pollution, damage or destruction of facilities or business interruptions and associated public or employee safety impacts, loss of revenues, increased liabilities, heightened regulatory scrutiny and reputational risk. Further, the location of natural gas pipelines and ~~storage~~associated distribution facilities, or electric generation, transmission, substations and distribution facilities near populated areas, including residential areas, commercial business centers and industrial sites, could increase the level of damages resulting from these risks.

~~Dominion Energy and Dominion Energy Gas conduct certain operations through partnership arrangements involving third-party investors that may limit our operational flexibility.~~

Certain operations are conducted through partnership arrangements, such as Atlantic Coast Pipeline and Iroquois, to which Dominion Energy and Dominion Energy Gas have significant influence but do not control the operations of such entities. Accordingly, Dominion Energy and Dominion Energy Gas may have limited ability to influence, as they do not control, certain day to day activities affecting the operations and do not have unilateral control over decisions that may have a material financial impact on the partnership participants. Dominion Energy and Dominion Energy Gas also conduct

certain operations through entities, such as Cove Point and the owners of certain contracted generation solar facilities, to which Dominion Energy and Dominion Energy Gas maintain a controlling interest, but third-party investors hold certain protective rights. These rights may impact the ability of Dominion Energy and Dominion Energy Gas to make certain decisions, such as the retention or distribution of available cash, significant acquisitions or dispositions of assets or the ability to sell or transfer their ownership interests. In each case such partnership arrangements operate in accordance with their respective governance documents, and Dominion Energy and Dominion Energy Gas are dependent upon third parties satisfying their respective obligations, including, as applicable, funding of their required share of capital expenditures. Such third-party investors have their own interests and objectives which may differ from those of Dominion Energy and Dominion Energy Gas and, accordingly, disputes may arise amongst the owners of such partnership arrangements that may result in delays, litigation or operational impasses.

The Companies’ financial results can be adversely affected by various factors driving supply and demand for electricity and gas and related services.

Technological advances required by federal laws mandate new levels of energy efficiency in

end-use

devices, including lighting, furnaces and electric heat pumps and could lead to declines in per capita energy consumption. Additionally, certain regulatory and legislative bodies have introduced or are considering requirements and/or incentives to reduce energy consumption by a fixed date. Further, Virginia Power’s business model is premised upon the cost efficiency of the production, transmission and distribution of large-scale centralized utility generation. However, advances in distributed generation technologies, such as solar cells, gas microturbines, battery storage and fuel cells, may make these alternative generation methods competitive with large-scale utility generation, and change how customers acquire or use our services. Virginia Power has an exclusive franchise to serve retail electric customers in Virginia. However, Virginia’s Retail Access Statutes allow certain electric generation customers exceptions to this franchise. As market conditions change, Virginia Power’s customers may further pursue exceptions and Virginia Power’s exclusive franchise may erode.

Reduced energy demand or significantly slowed growth in demand due to customer adoption of energy efficient technology, conservation, distributed generation, regional economic conditions, or the impact of additional compliance obligations, unless substantially offset through regulatory cost allocations, could adversely impact the value of the Companies’ business activities.

The Companies may be materially adversely affected by negative publicity.

From time to time, political and public sentiment in connection with significant transactions and infrastructure projects, such as ~~the Atlantic Coast Pipeline,~~ the SCANA Merger and the abandonment of the NND Project, may result in a significant amount of adverse press coverage and other adverse public statements affecting the Companies. While the Atlantic Coast Pipeline project was cancelled in July 2020 and several of the legal proceedings and governmental investigations relating to the abandonment of the NND Project have been resolved, there is a risk that lingering negative publicity may continue. Additionally, any failure by the Companies to realize voluntary targets set with respect to the reduction of GHG emissions or other long-term goals could lead to adverse press coverage and other adverse public statements affecting the Companies. Adverse press coverage and other adverse statements, whether or not driven by political or public sentiment, may also result in investigations by regulators, legislators and law enforcement officials or in legal claims.


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Addressing any adverse publicity, governmental scrutiny or enforcement or other legal proceedings is time consuming and expensive and, regardless of the factual basis for the assertions being made, can have a negative impact on the reputation of the Companies, on the morale and performance of their employees and on their relationships with their respective regulators, customers and commercial counterparties. It may also have a negative impact on the Companies’ ability to take timely advantage of various business and market opportunities. The direct and indirect effects of negative publicity, and the demands of responding to and addressing it, may have a material adverse effect on the Companies’ business, financial condition and results of operations.

Dominion Energy’s ~~merchant~~nonregulated generation business operates in a challenging market, which could adversely affect its results of operations and future growth.

The success of Dominion Energy’s contracted generation business depends upon favorable market

conditions including the ability to sell power at prices sufficient to cover its operating costs. Dominion Energy operates in active wholesale markets that expose it to price volatility for electricity and nuclear fuel as well as the credit risk of counterparties. Dominion Energy attempts to manage its price risk by entering into long-term power purchase agreements with customers as well as hedging transactions, including short-term and long-term fixed price sales and purchase contracts.

The failure of Dominion Energy to maintain, renew or replace its existing long-term contracts on similar terms or with counterparties with similar credit profiles could result in a loss of revenue and/or decreased earnings and cash flows for Dominion Energy.

In these wholesale markets, the spot market price of electricity for each hour is generally determined by the cost of supplying the next unit of electricity to the market during that hour. In many cases, the next unit of electricity supplied would be provided by generating stations that consume fossil fuels, primarily natural gas. Consequently, the open market wholesale price for electricity generally reflects the cost of natural gas plus the cost to convert the fuel to electricity. Therefore, changes in the price of natural gas generally affect the open market wholesale price of electricity. To the extent Dominion Energy does not enter into long-term power purchase agreements or otherwise effectively hedge its output, these changes in market prices could adversely affect its financial results.

Dominion Energy purchases nuclear fuel primarily under long-term contracts. Dominion Energy is exposed to nuclear fuel cost volatility for the portion of its nuclear fuel obtained through short-term contracts or on the spot market, including as a result of market supply shortages. Nuclear fuel prices can be volatile and the price that can be obtained for power produced may not change at the same rate as nuclear fuel costs, thus adversely impacting Dominion Energy’s financial results. In addition, in the event that any of the contracted generation facilities experience a forced outage, Dominion Energy may not receive the level of revenue it anticipated.

Dominion Energy conducts certain operations through partnership arrangements involving third-party investors which may limit Dominion Energy’s operational flexibility or result in an adverse impact on its financial results. Certain of Dominion Energy’s operations are conducted through entities subject to partnership arrangements under which Dominion Energy has significant influence but does not control the operations of such entities or in which Dominion Energy’s control over such entities may be subject to certain rights of third-party investors. Accordingly, while Dominion Energy may have a certain level of control or influence over these entities, it may not have unilateral, or any, control over the day-to-day operations of these entities or over decisions that may have a material financial impact on the partnership participants, including Dominion Energy. In each case such partnership arrangements operate in accordance with their respective governance documents, and Dominion Energy ~~Gas~~is dependent upon third parties satisfying their respective obligations, including, as applicable, funding of their required share of capital expenditures. Such third-party investors have their own interests and objectives which may ~~not be able to maintain, renew or replace their existing portfolio of customer contracts successfully, or on favorable terms.~~

~~Upon contract expiration, customers may not elect to~~

~~re-contract~~

with Dominion Energy and Dominion Energy Gas as a result of a variety of factors, including the amount of competition in the industry, changes in the price of electricity or natural gas, their level of satisfaction with Dominion Energy and Dominion Energy Gas’ services, the extent to which Dominion Energy and Dominion Energy Gas are able to successfully execute their business plans and the effect of the regulatory framework on customer demand. The failure to replace any such customer contracts on

~~similar terms or with counterparties with similar credit profiles could result in a loss of revenue for Dominion Energy and Dominion Energy Gas and related decreases in their earnings and cash flows.~~

~~Certain~~differ from those of Dominion Energy and, accordingly, disputes may arise amongst the owners of such partnership arrangements that may result in delays, litigation or operational impasses.

For example, Dominion Energy ~~Gas’ gas pipeline services are subject~~has a noncontrolling 50% interest in Cove Point following the sale of a 25% controlling interest to BHE in November 2020. This controlling interest allows BHE to make decisions affecting Cove Point’s ability to retain its long-term ~~fixed-price “negotiated rate”~~contracts. Cove Point is a party to certain contracts that ~~are not subject to adjustment, even if the cost to perform such services exceeds the revenues received from such contracts.~~

~~Under FERC policy,~~allow a regulated service provider and a customer ~~may~~to mutually agree to sign a contract for service at a “negotiated rate” which may be above or below the FERC regulated, cost-based recourse rate for that service. These “negotiated rate” contracts are not generally subject to adjustment for increased costs which could be produced by inflation or other factors relating to the specific facilities being used to perform the services. Any shortfall of revenue as a result of these “negotiated rate” contracts could decrease ~~Dominion Energy and Dominion Energy Gas’~~Cove Point’s earnings and cash flows.

The inability to maintain or renew such contracts on favorable terms may have a material impact to Dominion Energy’s results of operations, financial position or cash flows. Dominion Energy is also dependent upon BHE for managing counterparty credit risk relating to Cove Point’s terminal services agreements for its liquefied natural gas export/liquefaction facility. While the counterparties’ obligations are supported by parental guarantees and letters of credit, there is no assurance that such credit support would be sufficient to satisfy the obligations in the event of a counterparty default. In addition, if a controversy arises under either terminal services agreement resulting in a judgment in Cove Point’s favor, Cove Point may need to seek to enforce a final U.S. court judgment in a foreign tribunal, which could involve a lengthy process. Accordingly, there is no assurance that BHE may pursue remedies in the event of default in the same manner as Dominion Energy would if it had unilateral control over such decisions.

In addition, for certain contracted generation solar facilities in which Dominion Energy maintains a controlling interest, third-party investors hold certain protective rights. These rights may impact the ability of Dominion Energy to make certain decisions, such as the retention or distribution of available cash, significant acquisitions or dispositions of assets by those entities or the ability to sell or transfer its ownership interests.

Hostile cyber intrusions could severely impair the Companies’ operations, lead to the disclosure of confidential information, damage the reputation of the Companies and otherwise have an adverse effect on the Companies’ business.

The Companies own assets deemed as critical infrastructure, the operation of which is dependent on information technology systems. Further, the computer systems that run the Companies’ facilities are not completely isolated from external networks. There appears to be an increasing level of activity, sophistication and maturity of threat actors, in particular nation state actors, that wish to disrupt the U.S. bulk power system and the U.S. gas transmission or distribution system. Such parties could view the Companies’ computer systems,

software or networks as attractive targets for cyber attack. For example, malware has been designed to target software that runs the nation’s critical infrastructure such as power transmission grids and gas pipelines. In addition, the Companies’ businesses require that they and their vendors collect and maintain sensitive customer data, as well as confidential employee and shareholder information, which is subject to electronic theft or loss.

A successful cyber attack on the systems that control the Companies’ electric generation, electric ~~or gas~~ transmission or distribution assets could severely disrupt business operations, preventing the Companies from serving customers or collecting revenues. The breach of certain business systems could affect the Companies’ ability to correctly record, process and report financial information. A major cyber incident could result in significant expenses to investigate and repair security breaches or system damage and could lead to litigation, fines, other remedial action, heightened regulatory scrutiny and damage to the Companies’ reputation. In addition, the misappropriation, corruption or loss of personally identifiable information and other confidential data at the Companies or one of their vendors could lead to significant breach notification expenses and mitigation expenses such as credit monitoring. If a significant breach were to occur, the reputation of the Companies also could be adversely affected. While the Companies maintain property and casualty insurance, along with other contractual provisions, that may cover certain damage caused by potential cyber incidents, all damage and claims arising from such incidents may not be covered or may exceed the amount of any insurance available. For these reasons, a significant cyber incident could materially and adversely affect the Companies’ business, financial condition and results of operations.

War, acts and threats of terrorism, intentional acts and other significant events could adversely affect the Companies’ operations.

The Companies cannot predict the impact that any future terrorist attacks or retaliatory military or other action may have on the energy industry in general or on the Companies’ businesses in particular. Any such future attacks or retaliatory action may adversely affect the Companies’ operations in a variety of ways, including by disrupting the power, fuel and other markets in which the Companies operate or requiring the implementation of additional, more costly security guidelines and measures. The Companies’ infrastructure facilities, including nuclear facilities and projects under construction, could be direct targets or indirect casualties of an act of terror or other physical attack. Any physical compromise of the Companies’ facilities could adversely affect the Companies’ ability to generate, purchase, transmit or distribute electricity, ~~store, transmit or~~ distribute natural gas ~~store or export LNG~~ or otherwise operate their respective facilities in the most efficient manner or at all. In addition, the amount and scope of insurance coverage maintained against losses resulting from any such attack may not be sufficient to cover such losses or otherwise adequately compensate for any business disruptions that could result.

Instability in financial markets as a result of terrorism, war, intentional acts, pandemic, credit crises, recession or other factors could result in a significant decline in the U.S. economy and/or increase the cost or limit the availability of insurance or adversely impact the Companies’ ability to access capital on acceptable terms.

Failure to attract and retain key executive officers and an appropriately qualified workforce could have an adverse effect on the Companies’ operations.

The Companies’ business strategy is dependent on their ability to recruit, retain and motivate employees. The Companies’ key executive officers are the Executive Chairman, CEO, CFO,

~~Co-COOs~~

COO and presidents and those responsible for financial, operational, legal, regulatory and accounting functions. Competition for skilled management employees in these areas of the Companies’ business operations is high. Certain events, such as an aging workforce, mismatch of skill set, or unavailability of contract resources may lead to operating challenges and increased costs. The challenges include lack of resources, loss of knowledge base and the length of time required for skill development. In this case, costs, including costs for contractors to replace employees, productivity costs and safety costs, may rise. Failure to hire and adequately train replacement employees, including the transfer of significant internal historical knowledge and expertise to new employees, or future availability and cost of contract labor may adversely affect the ability to manage and operate the Companies’ business. In addition, certain specialized knowledge is required of the Companies’ technical employees for construction and operation of transmission, generation and distribution assets. The Companies’ inability to attract and retain these employees could adversely affect their business and future operating results.

~~Dominion Energy may be unable to successfully integrate SCANA’s businesses. Dominion Energy is devoting significant resources to integrating SCANA’s businesses.~~

While Dominion Energy has assumed that a certain level of transaction and integration expenses will be incurred, there are a number of factors beyond its control that could affect the total amount or the timing of its integration expenses. Potential complexities associated with integrating SCANA, including its utility businesses, while at the same time continuing to provide consistent, high quality services

and with integrating a company with different markets and customers could arise. Due to the complexities involved in integrating SCANA and its different markets and customers, it is possible that the process could result in the disruption of Dominion Energy’s ongoing business or inconsistencies in its services, standards, controls, procedures and policies, any of which could adversely affect the ability of Dominion Energy to maintain or establish relationships with current and prospective customers, vendors and employees or could otherwise adversely affect the business and financial results of Dominion Energy.

Nuclear Generation Risks

~~Dominion Energy and Virginia Power~~

The Companies have substantial ownership interests in and operate nuclear generating units; as a result, each may incur substantial costs and liabilities.

~~Dominion Energy and Virginia Power’s~~The Companies’ nuclear facilities are subject to operational, environmental, health and financial risks such as the

on-site

storage of spent nuclear fuel, the ability to dispose of such spent nuclear fuel, the ability to maintain adequate reserves for decommissioning, limitations on the amounts and types of insurance available, potential operational liabilities and extended outages, the costs of replacement power, the costs of maintenance and the costs of securing the facilities against possible terrorist attacks. ~~Dominion Energy and Virginia Power~~The Companies maintain decommissioning trusts and external insurance coverage to minimize the financial exposure to these risks; however, it is possible that future decommissioning costs could exceed amounts in the decommissioning trusts and/or damages could exceed the amount of insurance coverage. If ~~Dominion Energy and Virginia Power’s~~the Companies’ decommissioning trust funds are insufficient, and they are

not allowed to recover the additional costs incurred through insurance or regulatory mechanisms, their results of operations could be negatively impacted.

~~Dominion Energy and Virginia Power’s~~

The Companies’ nuclear facilities are also subject to complex government regulation which could negatively impact their results of operations. The NRC has broad authority under federal law to impose licensing and safety-related requirements for the operation of nuclear generating facilities. In the event of noncompliance, the NRC has the authority to impose fines, set license conditions, shut down a nuclear unit, or take some combination of these actions, depending on its assessment of the severity of the situation, until compliance is achieved. Revised safety requirements promulgated by the NRC could require ~~Dominion Energy and Virginia Power~~the Companies to make substantial expenditures at their nuclear plants. In addition, although the Companies have no reason to anticipate a serious nuclear incident at their plants, if an incident did occur, it could materially and adversely affect their results of operations and/or financial condition. A major incident at a nuclear facility anywhere in the world, such as the nuclear events in Japan in 2011, could cause the NRC to adopt increased safety regulations or otherwise limit or restrict the operation or licensing of domestic nuclear units.

Financial, Economic and Market Risks

~~Exposure to counterparty performance may adversely affect the Companies’ financial results of operations.~~

The Companies are exposed to credit risks of their counterparties and the risk that one or more counterparties may fail or delay the performance of their contractual obligations, including but not limited to payment


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for services. Some of Dominion Energy’s and Dominion Energy Gas’ operations are conducted through partnership arrangements, as noted above. Counterparties could fail or delay the performance of their contractual obligations for a number of reasons, including the effect of regulations on their operations. Defaults or failure to perform by customers, suppliers, contractors, joint venture partners, financial institutions or other third parties may adversely affect the Companies’ financial results.

Dominion Energy and Dominion Energy Gas are exposed to counterparty credit risk relating to Cove Point’s terminal services agreements for the Liquefaction Facility. While the counterparties’ obligations are supported by parental guarantees and letters of credit, there is no assurance that such credit support would be sufficient to satisfy the obligations in the event of a counterparty default. In addition, if a controversy arises under either agreement resulting in a judgment in Cove Point’s favor, Cove Point may need to seek to enforce a final U.S. court judgment in a foreign tribunal, which could involve a lengthy process.

Changing rating agency requirements could negatively affect the Companies’ growth and business strategy.

In order to maintain appropriate credit ratings to obtain needed credit at a reasonable cost in light of existing or future rating agency requirements, the Companies may find it necessary to take steps or change their business plans in ways that may adversely affect their growth and earnings. A reduction in the Companies’ credit ratings could result in an increase in borrowing costs, loss of access to certain markets, or both, thus adversely affecting operating results and could require the Companies to post additional collateral in connection with some of its price risk management activities.

An inability to access financial markets and, in the case of Dominion Energy, ~~and Dominion Energy Gas,~~ obtain cash from subsidiaries could adversely affect the execution of the Companies’ business plans.

The Companies rely on access to short-term money markets and longer-term capital markets as significant sources of funding and liquidity for business plans with increasing capital expenditure needs, normal working capital and collateral requirements related to hedges of future sales and purchases of energy-related commodities. Deterioration in the Companies’ creditworthiness, as evaluated by credit rating agencies or otherwise, or declines in market reputation either for the Companies or their industry in general, or general financial market disruptions outside of the Companies’ control could increase their cost of borrowing or restrict their ability to access one or more financial markets. Market disruptions could stem from general market disruption due to general credit market or political events, the planned phase out of LIBOR by the end of ~~2021~~2023 or the reform or replacement of other benchmark rates, the failure of financial institutions on which the Companies rely or the bankruptcy of an unrelated company. Increased costs and restrictions on the Companies’ ability to access financial markets may be severe enough to affect their ability to execute their business plans as scheduled.

Dominion Energy ~~and Dominion Energy Gas are~~is a holding ~~companies~~company that ~~conduct~~conducts all of ~~their~~its operations through ~~their respective~~its subsidiaries. Accordingly, ~~each entity’s~~Dominion Energy’s ability to execute its business plan is further subject to the earnings and cash flows of its subsidiaries and the ability of its subsidiaries to pay dividends or advance or repay funds to it, which may, from time to time, be subject to certain contractual restrictions or restrictions imposed by regulators.

Market performance, interest rates and other changes may decrease the value of ~~Dominion Energy and Virginia Power’s~~the Companies’ decommissioning trust funds and Dominion ~~Energy and Dominion Energy Gas’~~Energy’s benefit plan assets or increase Dominion ~~Energy and Dominion Energy Gas’~~Energy’s liabilities, which could then require significant additional funding.

The performance of the capital markets affects the value of the assets that are held in trusts to satisfy future obligations to decommission ~~Dominion Energy and Virginia Power’s~~the Companies’ nuclear plants and under Dominion ~~Energy and Dominion Energy Gas’~~Energy’s pension and other postretirement benefit plans. The Companies have significant obligations in these areas and hold significant assets in these trusts. These assets are subject to market fluctuation and will yield uncertain returns, which may fall below expected return rates.

With respect to decommissioning trust funds, a decline in the market value of these assets may increase the funding requirements of the obligations to decommission ~~Dominion Energy and Virginia Power’s~~the Companies’ nuclear plants or require additional NRC-approved funding assurance.

A decline in the market value of the assets held in trusts to satisfy future obligations under Dominion ~~Energy and Dominion Energy Gas’~~Energy’s pension and other postretirement benefit plans may increase the funding requirements under such plans. Additionally, changes in interest rates will affect the liabilities under Dominion ~~Energy and Dominion Energy Gas’~~Energy’s pension and other postretirement benefit plans; as interest rates decrease, the liabilities increase, potentially requiring additional funding. Further, changes in demographics, including increased numbers of retirements or changes in mortality assumptions, may also increase the funding requirements of the obligations related to the pension and other postretirement benefit plans.

If the decommissioning trust funds and benefit plan assets are negatively impacted by market fluctuations or other factors, the Companies’ results of operations, financial condition and/or cash flows could be negatively affected.

The use of derivative instruments could result in financial losses and liquidity constraints.

The Companies use derivative instruments, including futures, swaps, forwards, options and FTRs, to manage commodity, currency and financial market risks. In addition, Dominion Energy purchases and ~~Dominion Energy Gas purchase and sell~~sells commodity-based contracts for hedging purposes.

The Dodd-Frank Act was enacted into law in July 2010 in an effort to improve regulation of financial markets. The CEA, as amended by Title VII of the Dodd-Frank Act, requires certain

over-the-counter

derivatives, or swaps, to be cleared through a derivatives clearing organization and, if the swap is subject to a clearing requirement, to be executed on a designated contract market or swap execution facility.

Non-financial

entities that use swaps to hedge or mitigate commercial risk, often referred to as end users, may elect the

end-user

exception to the CEA’s clearing requirements. The Companies have elected to exempt their swaps from the CEA’s clearing requirements. If, as a result of changes to the rulemaking process, the Companies’ derivative activities are not exempted from the clearing, exchange trading or margin requirements, the Companies could be subject to higher costs due to decreased market liquidity or increased margin payments. In addition, the Companies’ swap dealer counterparties may attempt to pass-through additional trading costs in connection with changes to or the elimination of rulemaking that implements Title VII of the Dodd-Frank Act.

Future impairments of goodwill or other intangible assets or long-lived assets may have a material adverse effect on the Companies’ results.

Goodwill is evaluated for impairment annually or more frequently if an event or circumstance occurs that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Other intangible assets and long-lived assets are evaluated for impairment on an annual basis or more frequently whenever events or circumstances indicate that an asset’s carrying value may not be recoverable. If Dominion ~~Energy or Dominion Energy Gas’~~Energy’s goodwill, including the goodwill recorded ~~by Dominion Energy~~ in connection with the

SCANA ~~Combination and the Dominion Energy Questar~~ Combination, or the Companies’ other intangible assets or long-lived assets are in the future determined to be impaired, the applicable Company ~~may~~would be required during the period in which the impairment is determined to record a noncash charge to earnings that may have a material adverse effect on the Company’s results.

Exposure to counterparty performance may adversely affect the Companies’ financial results of operations. The Companies are exposed to credit risks of their counterparties and the risk that one or more counterparties may fail or delay the performance of their contractual obligations, including but not limited to payment for services. Some of Dominion Energy’s operations are conducted through partnership arrangements, as noted above. Counterparties could fail or delay the performance of their contractual obligations for a number of reasons, including the effect of regulations on their operations. Defaults or failure to perform by customers, suppliers, contractors, joint venture partners, financial institutions or other third parties may adversely affect the Companies’ financial results.

Public health crises and epidemics or pandemics, such as COVID-19, could adversely affect the Companies’ business, results of operations, financial condition, liquidity and/or cash flows. The effects of the continued outbreak of the COVID-19 pandemic and related government responses could include extended disruptions to supply chains and capital markets, reduced labor availability and productivity and a prolonged reduction in economic activity. The effects could also have a variety of adverse impacts on the Companies, including reduced demand for energy, particularly from commercial and industrial customers, impairment of goodwill or long-lived assets and diminished ability of the Companies to access funds from financial institutions and capital markets. There remains uncertainty regarding the extent and duration of measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders and shutdowns. Such restrictions may cause operational interruptions and delays in construction projects, which, in the case of renewable energy projects, could delay the expected in-service dates of these projects and financial statement impact of the investment tax credits associated with these projects. For the duration of the outbreak of COVID-19, voluntary suspension, or potential legislative or government action, such as legislation enacted in Virginia in November 2020, may limit the Companies’ ability to collect on overdue accounts or disconnect services for non-payment, which may cause a decrease in the Companies’ results of operations and cash flows.

Item 1B. Unresolved Staff Comments

None.

~~None.~~


36

Item 2. Properties

As of December 31, ~~2019,~~2020, Dominion Energy owned its principal executive office in Richmond, Virginia and five other corporate offices. Dominion Energy also leases corporate offices in Richmond, Virginia and other cities in which its subsidiaries operate. Virginia Power ~~and Dominion Energy Gas share~~shares Dominion Energy’s principal executive office in Richmond, ~~Virginia, which is owned by Dominion Energy.~~Virginia. In addition, Virginia Power leases certain buildings and equipment.

Dominion Energy’s assets consist primarily of its investments in its subsidiaries, the principal properties of which are described ~~below.~~

below by operating segment.

Certain of Virginia Power’s properties are subject to the lien of the Indenture of Mortgage securing its First and Refunding Mortgage Bonds. There were no bonds outstanding as of December 31, ~~2019;~~2020; however, by leaving the indenture open, Virginia Power ~~expects to retain~~retains the flexibility to issue mortgage bonds in the future. Certain of Dominion Energy’s ~~merchant~~nonregulated generation facilities are also subject to liens. Additionally, DESC’s bond indenture, which secures its First Mortgage Bonds, constitutes a direct mortgage lien on substantially all of its electric utility property.

~~Dominion Energy Virginia~~

DOMINION ENERGY VIRGINIA

Virginia Power has approximately 6,700 miles of electric transmission lines of 69 kV or more located in North Carolina, Virginia and West Virginia. Portions of Virginia Power’s electric transmission lines cross national parks and forests under permits entitling the federal government to use, at specified charges, any surplus capacity that may exist in these lines. While Virginia Power owns and maintains its electric transmission facilities, they are a part of PJM, which coordinates the planning, operation, emergency assistance and exchange of capacity and energy for such facilities.

In addition, Virginia Power’s electric distribution network includes approximately ~~58,400~~58,900 miles of distribution lines, exclusive of service level lines, in Virginia and North Carolina. The grants for most of its electric lines contain

rights-of-way

that have been obtained from the apparent owners of real estate, but underlying titles have not been examined. 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. In addition, Virginia Power owns ~~471~~473 substations.

Dominion Energy also owns various solar facilities, primarily at schools in Virginia, with an aggregate generation capacity of 9 MW.

The following tables list Virginia Power’s generating units and capability as of December 31, ~~2019.~~2020.

VIRGINIA POWER UTILITY GENERATION

Plant	Location	Net Summer Capability (MW)			Percentage Net Summer Capability
Gas
Greensville County (CC)	Greensville County, VA		1,629
Brunswick County (CC)	Brunswick County, VA		1,376
Warren County (CC)	Warren County, VA		1,370
Ladysmith (CT)	Ladysmith, VA		783
Bear Garden (CC)	Buckingham County, VA		622
Remington (CT)	Remington, VA		622
Possum Point (CC)	Dumfries, VA		573
Chesterfield (CC)	Chester, VA		392
Elizabeth River (CT)	Chesapeake, VA		330
Gordonsville Energy (CC)	Gordonsville, VA		218
Gravel Neck (CT)	Surry, VA		170
Darbytown (CT)	Richmond, VA		168
Total Gas			8,253			41	%
Coal
Mt. Storm	Mt. Storm, WV		1,621
Chesterfield⁽¹⁾	Chester, VA		1,014
Virginia City Hybrid Energy Center	Wise County, VA		610
Clover	Clover, VA		439	⁽²⁾
Total Coal			3,684			18
Nuclear
Surry	Surry, VA		1,676
North Anna	Mineral, VA		1,672	⁽³⁾
Total Nuclear			3,348			17
Hydro
Bath County	Warm Springs, VA		1,808	⁽⁴⁾
Gaston	Roanoke Rapids, NC		220
Roanoke Rapids	Roanoke Rapids, NC		95
Other			1
Total Hydro			2,124			10
Oil
Yorktown⁽¹⁾	Yorktown, VA	790
Gravel Neck (CT)	Surry, VA	198
Darbytown (CT)	Richmond, VA	168
Rosemary (CC)	Roanoke Rapids, NC	160
Possum Point (CT)	Dumfries, VA	72
Low Moor (CT)	Covington, VA	48
Northern Neck (CT)	Lively, VA	47
Chesapeake (CT)	Chesapeake, VA	39
Total Oil			1,522			7
Solar⁽⁵⁾
Colonial Trail West	Surry County, VA		142
Spring Grove	Surry County, VA		98
Whitehouse Solar	Louisa County, VA		20
Woodland Solar	Isle of Wight County, VA		19
Scott Solar	Powhatan, VA		17
Total Solar			296			1
Biomass
Altavista⁽⁶⁾	Altavista, VA		51
Polyester⁽⁶⁾	Hopewell, VA		51
Southampton⁽⁶⁾	Southampton, VA		51
Total Biomass			153			1
Various
Mt. Storm (CT)	Mt. Storm, WV		11			—
			19,391
Power Purchase Agreements			917			5
Total Utility Generation			20,308			100	%

~~Virginia Power Utility Generation~~

Plant

Location

Net Summer
Capability (MW)

Percentage
Net Summer
Capability

Gas

Greensville County (CC)

Greensville County, VA

1,629

Brunswick County (CC)

Brunswick County, VA

1,376

Warren County (CC)

Warren County, VA

1,370

Ladysmith (CT)

Ladysmith, VA

783

Bear Garden (CC)

Buckingham County, VA

622

Remington (CT)

Remington, VA

622

Possum Point (CC)
(1)

Dumfries, VA

573

Chesterfield (CC)

Chester, VA

392

Elizabeth River (CT)

Chesapeake, VA

330

Gordonsville Energy (CC)

Gordonsville, VA

218

Gravel Neck (CT)

Surry, VA

170

Darbytown (CT)

Richmond, VA

168

Rosemary (CC)

Roanoke Rapids, NC

160

Total Gas

8,413

40
%
Coal

Mt. Storm

Mt. Storm, WV

1,621

Chesterfield

Chester, VA

1,014

Virginia City Hybrid Energy Center

Wise County, VA

610

Clover

Clover, VA

439
(2)
Total Coal

3,684

18

Nuclear

Surry

Surry, VA

1,676

North Anna

Mineral, VA

1,672
(3)
Total Nuclear

3,348

16

Oil

Yorktown

Yorktown, VA

790

Possum Point

Dumfries, VA

770

Gravel Neck (CT)

Surry, VA

198

Darbytown (CT)

Richmond, VA

168

Possum Point (CT)

Dumfries, VA

72

Low Moor (CT)

Covington, VA

48

Northern Neck (CT)

Lively, VA

47

Chesapeake (CT)

Chesapeake, VA

39

Total Oil

2,132

10

Hydro

Bath County

Warm Springs, VA

1,808
(4)
Gaston

Roanoke Rapids, NC

220

Roanoke Rapids

Roanoke Rapids, NC

95

Other

1

Total Hydro

2,124

10

Solar

Colonial Trail West

Surry County, VA

142

Whitehouse Solar

Louisa County, VA

20

Woodland Solar

Isle of Wight County, VA

19

Scott Solar

Powhatan, VA

17

Total Solar

198

1

Biomass

Altavista

Altavista, VA

51

Polyester

Hopewell, VA

51

Southampton

Southampton, VA

51

Total Biomass

153

1

Various

Mt. Storm (CT)

Mt. Storm, WV

11

—

20,063

Power Purchase Agreements

782

4

Total Utility Generation

20,845

100
%

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

(1) Will be retired after it meets its capacity obligation in 2023. See Note 2 to the Consolidated Financial Statements for additional information.

(2) Excludes 50% undivided interest owned by ODEC.

(3) Excludes 11.6% undivided interest owned by ODEC.

(4) Excludes 40% undivided interest owned by Allegheny Generating Company, a subsidiary of FirstEnergy Corp.

(5) All solar facilities are alternating current.

(6) In accordance with the VCEA, these units will be retired no later than 2028.

~~(1)~~

~~Will be retired after meeting capacity obligation to PJM in 2021. See Note 2 to the Consolidated Financial Statements for additional information.~~

~~(2)~~

~~Excludes 50% undivided interest owned by ODEC.~~

~~(3)~~

~~Excludes 11.6% undivided interest owned by ODEC.~~

~~(4)~~

~~Excludes 40% undivided interest owned by Allegheny Generating Company, a subsidiary of FirstEnergy Corp.~~

VIRGINIA POWER NON-JURISDICTIONAL GENERATION

Plant

Location

Net Summer

Capability (MW)

Solar⁽¹⁾

~~Virginia Power Non-jurisdictional Generation~~


~~Plant~~ Gutenberg	~~Location~~ Garysburg, NC		~~Net Summer~~ ~~Capability (MW)~~ 80
~~Solar~~ ~~(1)~~ Grasshopper	Mecklenburg County, VA		80
~~Gutenberg~~ Pecan		~~Garysburg, NC~~			80
~~Pecan~~		Pleasant Hill, NC		75	75
~~Gloucester~~ Chestnut	Halifax County, NC		75
Gloucester	Gloucester County, VA		20	20
Montross		Westmoreland County, VA		20	20
Morgans Corner		Pasquotank County, NC		20	20
Remington		Fauquier County, VA		20	20
Oceana		Virginia Beach, VA		18	18
Hollyfield		Manquin, VA		17	17
Puller		Topping, VA		15	15
Total ~~Solar~~ Non-Jurisdictional Generation			440		~~285~~

(1)	All solar facilities are alternating current.

~~Gas Transmission & Storage~~

Dominion Energy Gas has approximately 7,900 miles, excluding interests held by others, of gas transmission, gathering and storage pipelines located in the states of Colorado, Georgia, Maryland, New York, Ohio, Pennsylvania, South Carolina, Utah, Virginia, West Virginia and Wyoming.

~~Cove Point’s LNG Facility has an operational peak regasification daily~~

~~send-out~~

capacity of approximately 1.8 million Dths and an aggregate LNG storage capacity of approximately 14.6 bcfe. In addition, Cove Point has a small liquefier that has the potential to create approximately 15,000 Dths/day. The Liquefaction Facility consists of one LNG train with a nameplate outlet capacity of 5.25 Mtpa. Cove Point has authorization from the DOE to export up to 0.77 Bcfe/day (approximately 5.75 Mtpa) should the Liquefaction Facility perform better than expected.

The total designed capacity of the underground storage fields operated by Dominion Energy Gas is approximately 900 bcf. Certain storage fields are jointly-owned and operated by Dominion Energy Gas. The capacity of those fields owned by Dominion Energy Gas’ partners totals approximately 240 bcf.

~~In total, Dominion Energy Gas has 111 compressor stations with approximately 1,200,000 installed compressor horsepower.~~

In addition to the pipeline network owned by Dominion Energy Gas, Dominion Energy has approximately 2,500 miles of gas transmission, gathering and storage pipelines located in the states of West Virginia, Ohio, Arizona and Pennsylvania.

~~Gas Distribution~~

GAS DISTRIBUTION

Gas Distribution’s network is located in ~~the states of Idaho,~~Ohio, West Virginia, North Carolina, ~~Ohio,~~ Utah, ~~West Virginia~~southwestern Wyoming and ~~Wyoming.~~southeastern Idaho. This network includes approximately ~~3,700 miles of transmission pipeline and approximately 85,000~~75,500 miles of distribution mains and related service ~~facilities.~~facilities which are supported by approximately 5,700 miles of transmission, gathering and storage pipeline. The

right-of-way

grants for many natural gas pipelines have been obtained from the actual owners of real

estate, as underlying titles have been examined. Where

rights-of-way

have not been obtained, they could be acquired from private owners by condemnation, if necessary. Many natural gas pipelines are on publicly-owned property, where company rights and actions are determined on a

case-by-case

basis, with results that range from reimbursed relocation to revocation of permission to operate.

East Ohio’s integrated underground storage facilities have more than 60 bcf of working gas capacity to serve base and peak demand. PSNC owns one LNG facility that stores the liquefied equivalent of 1.0 bcf of natural gas, can regasify approximately 10% of its storage capacity per day and can liquefy less than 1% of its storage capacity per day.

~~Dominion Energy South Carolina~~

DOMINION ENERGY SOUTH CAROLINA

DESC has approximately ~~3,700~~3,800 miles and ~~26,600~~26,700 miles of electric transmission and distribution lines, respectively, exclusive of service level lines, in South Carolina. The grants for most of DESC’s electric lines contain

rights-of-way

that have been obtained from the apparent owners of real estate, but underlying property titles have not been examined. Where

rights-of-way

DESC’s natural gas system includes approximately ~~500 miles of transmission pipeline and approximately 18,400~~18,700 miles of distribution mains and related service ~~facilities.~~

facilities, which are supported by approximately 500 miles of transmission pipeline.

DESC owns two LNG facilities, one located near Charleston, South Carolina, and the other in Salley, South Carolina. The Charleston facility can store the liquefied equivalent of 1.0 bcf of natural gas, can regasify approximately 6% of its storage capacity per day and can liquefy less than 1% of its storage capacity per day. The Salley facility can store the liquefied equivalent of 0.9 bcf of natural gas and can regasify approximately 10% of its storage capacity per day. The Salley facility has no liquefying capabilities.


						39

The following table lists DESC’s generating units and capability as of December 31, ~~2019.~~2020.

Plant	Location	Net Summer Capability (MW)			Percentage Net Summer Capability
Gas
Jasper (CC) ⁽¹⁾	Hardeeville, SC		852
Columbia Energy Center (CC) ⁽¹⁾	Gaston, SC		519
Urquhart (CC) ⁽¹⁾	Beech Island, SC		458
McMeekin	Irmo, SC		250
Hagood (CT) ⁽¹⁾	Charleston, SC		126
Urquhart Unit 3	Beech Island, SC		95
Urquhart (CT)	Beech Island, SC		87
Parr (CT)⁽¹⁾	Jenkinsville, SC		60
Coit (CT)⁽¹⁾	Columbia, SC		26
Williams (CT) ⁽¹⁾	Goose Creek, SC		20
Total Gas⁽²⁾			2,493			41	%
Coal
Williams	Goose Creek, SC		605
Cope ⁽³⁾	Cope, SC		415
Wateree	Eastover, SC		342
Total Coal			1,362			22
Hydro
Fairfield	Jenkinsville, SC		576
Saluda	Irmo, SC		190
Other	Various		18
Total Hydro			784			13
Nuclear
Summer	Jenkinsville, SC		652	⁽⁴⁾		10
			5,291
Power Purchase Agreements			846	⁽⁵⁾		14
Total Utility Generation			6,137			100	%

Plant

Location

Net Summer
Capability (MW)

Percentage
Net Summer
Capability

Gas

Jasper (CC)
(1)

Hardeeville, SC

852

Columbia Energy Center (CC)
(1)

Gaston, SC

519

Urquhart (CC)
(1)

Beech Island, SC

458

McMeekin

Irmo, SC

250

Hagood (CT)
(1)

Charleston, SC

126

Urquhart Unit 3

Beech Island, SC

95

Urquhart (CT)

Beech Island, SC

87

Parr (CT)
(1)

Jenkinsville, SC

60

Williams (CT)
(1)

Goose Creek, SC

40

Coit (CT)
(1)

Columbia, SC

26

Total Gas
(2)

2,513

40
%
Coal

Wateree

Eastover, SC

684

Williams

Goose Creek, SC

605

Cope
(3)

Cope, SC

415

Total Coal

1,704

27

Hydro

Fairfield

Jenkinsville, SC

576

Saluda

Irmo, SC

190

Other

Various

18

Total Hydro

784

13

Nuclear

Summer

Jenkinsville, SC

650
(4)
Total Nuclear

650

10

Power Purchase Agreements

596
(5)
10

Total Utility Generation

6,247

100
%

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

(1)	Capable of burning fuel oil as a secondary source.

(2)	Excludes the Hardeeville gas combustion turbine which currently does not have any net summer capability.

(3)	Capable of burning natural gas as a secondary source.

(4)	Excludes 33.3% undivided interest owned by Santee Cooper.

(5)	Includes ~~143MW~~157MW from agreements with certain solar facilities within Contracted ~~Generation.~~Assets.


40

CONTRACTED ASSETS

Contracted ~~Generation~~Assets includes Dominion Energy’s 50% noncontrolling interest in Cove Point. The Cove Point LNG Facility has an operational peak regasification daily send-out capacity of approximately 1.8 million Dths and an aggregate LNG storage capacity of approximately 14.6 bcfe. In addition, Cove Point has a small liquefier that has the potential to create approximately 15,000 Dths/day. The Liquefaction Facility consists of one LNG train with a nameplate outlet capacity of 5.25 Mtpa. Cove Point has authorization from the DOE to export up to 0.77 bcfe/day (approximately 5.75 Mtpa) should the Liquefaction Facility perform better than expected. In addition, Cove Point operates a 136-mile natural gas pipeline that connects the Cove Point LNG Facility to interstate natural gas pipelines.

The following table lists Contracted ~~Generation’s~~Assets’ generating units and capability as of December 31, ~~2019.~~2020.

Plant	Location	Net Summer Capability (MW)			Percentage Net Summer Capability
Nuclear
Millstone	Waterford, CT		2,001	⁽¹⁾
Total Nuclear			2,001			58	%
Solar⁽²⁾
Escalante I, II and III	Beaver County, UT		120	⁽³⁾
Amazon Solar Farm Virginia – Southampton	Newsoms, VA		100	⁽⁴⁾
Hardin I	Hardin County, OH		97
Amazon Solar Farm Virginia – Accomack	Oak Hall, VA		80	⁽⁴⁾
Greensville	Greensville County, VA		80
Innovative Solar 37	Morven, NC		79	⁽⁴⁾
Wilkinson	Pantego, NC		74
Seabrook	Beaufort County, SC		73
Moffett Solar 1	Ridgeland, SC		71	⁽⁴⁾
Granite Mountain East and West	Iron County, UT		65	⁽³⁾
Summit Farms Solar	Moyock, NC		60	⁽⁴⁾
Enterprise	Iron County, UT		40	⁽³⁾
Iron Springs	Iron County, UT		40	⁽³⁾
Pavant Solar	Holden, UT		34	⁽⁵⁾
Camelot Solar	Mojave, CA		30	⁽⁵⁾
Midway II	Calipatria, CA		30	⁽⁴⁾
Indy I, II and III	Indianapolis, IN		20	⁽⁵⁾
Amazon Solar Farm Virginia – Buckingham	Cumberland, VA		20	⁽⁴⁾
Amazon Solar Farm Virginia – Correctional	Barhamsville, VA		20	⁽⁴⁾
Hecate Cherrydale	Cape Charles, VA		20	⁽⁴⁾
Amazon Solar Farm Virginia – Sussex Drive	Stoney Creek, VA		20	⁽⁴⁾
Amazon Solar Farm Virginia – Scott II	Powhatan, VA		20	⁽⁴⁾
Cottonwood Solar	Kings and Kern Counties, CA		16	⁽⁵⁾
Myrtle	Suffolk, VA		15
Adams East Solar	Tranquility, CA		13	⁽⁵⁾
Alamo Solar	San Bernardino, CA		13	⁽⁵⁾
CID Solar	Corcoran, CA		13	⁽⁵⁾
Imperial Valley Solar	Imperial County, CA		13	⁽⁵⁾
Kansas Solar	Lenmore, CA		13	⁽⁵⁾
Kent South Solar	Lenmore, CA		13	⁽⁵⁾
Maricopa West Solar	Kern County, CA		13	⁽⁵⁾
Old River One Solar	Bakersfield, CA		13	⁽⁵⁾
Richland Solar	Jeffersonville, GA		13	⁽⁵⁾
West Antelope Solar	Lancaster, CA		13	⁽⁵⁾
Catalina 2 Solar	Kern County, CA		12	⁽⁵⁾
Mulberry Solar	Selmer, TN		11	⁽⁵⁾
Selmer Solar	Selmer, TN		11	⁽⁵⁾
Columbia 2 Solar	Mojave, CA		10	⁽⁵⁾
Hecate Energy Clarke County	White Post, VA		10	⁽⁴⁾
Ridgeland Solar Farm I	Ridgeland, SC		10	⁽⁴⁾
Other	Various		56	^{(4) (5)}
Total Solar			1,474			42
Total Nonregulated Generation			3,475			100	%

Plant

Location

Net Summer
Capability (MW)

Percentage
Net Summer
Capability

Nuclear

Millstone

Waterford, CT

2,001
(1)
Total Nuclear

2,001

59
%
Solar
(2)

Escalante I, II and III

Beaver County, UT

120
(3)
Amazon Solar Farm Virginia—Southampton

Newsoms, VA

100
(4)
Amazon Solar Farm Virginia—Accomack

Oak Hall, VA

80
(4)
Innovative Solar 37

Morven, NC

79
(4)
Wilkinson

Pantego, NC

74

Seabrook

Beaufort County, SC

72

Moffett Solar 1

Ridgeland, SC

71
(4)
Granite Mountain East and West

Iron County, UT

65
(3)
Summit Farms Solar

Moyock, NC

60
(4)
Enterprise

Iron County, UT

40
(3)
Iron Springs

Iron County, UT

40
(3)
Pavant Solar

Holden, UT

34
(5)
Camelot Solar

Mojave, CA

30
(5)
Midway II

Calipatria, CA

30
(4)
Indy I, II and III

Indianapolis, IN

20
(5)
Amazon Solar Farm Virginia—Buckingham

Cumberland, VA

20
(4)
Amazon Solar Farm Virginia—Correctional

Barhamsville, VA

20
(4)
Hecate Cherrydale

Cape Charles, VA

20
(4)
Amazon Solar Farm Virginia—Sappony

Stoney Creek, VA

20
(4)
Amazon Solar Farm Virginia—Scott II

Powhatan, VA

20
(4)
Cottonwood Solar

Kings and Kern Counties, CA

16
(5)
Adams East Solar

Tranquility, CA

13
(5)
Alamo Solar

San Bernardino, CA

13
(5)
CID Solar

Corcoran, CA

13
(5)
Imperial Valley Solar

Imperial, CA

13
(5)
Kansas Solar

Lenmore, CA

13
(5)
Kent South Solar

Lenmore, CA

13
(5)
Maricopa West Solar

Kern County, CA

13
(5)
Old River One Solar

Bakersfield, CA

13
(5)
Richland Solar

Jeffersonville, GA

13
(5)
West Antelope Solar

Lancaster, CA

13
(5)
Catalina 2 Solar

Kern County, CA

12
(5)
Mulberry Solar

Selmer, TN

11
(5)
Selmer Solar

Selmer, TN

11
(5)
Columbia 2 Solar

Mojave, CA

10
(5)
Hecate Energy Clarke County

White Post, VA

10
(4)
Ridgeland Solar Farm I

Ridgeland, SC

10
(4)
Other

Various

43
(4)(5)
Total Solar

1,268

37

Wind

Fowler Ridge
(6)

Benton County, IN

150
(7)
4

Total Merchant Generation

3,419

100
%

(1)	Excludes 6.53% undivided interest in Unit 3 owned by Massachusetts Municipal and Green Mountain.

(2)	All solar facilities are alternating current.

(3)	Excludes 50% noncontrolling interest owned by GIP. Dominion Energy’s interest is subject to a lien securing Dominion Solar Projects III, Inc.’s debt.

(4)	Dominion Energy’s interest is subject to a lien securing Eagle Solar’s debt.

(5)	Excludes 33% noncontrolling interest owned by Terra Nova Renewable Partners. Dominion Energy’s interest is subject to a lien securing SBL Holdco’s debt.

~~(6)~~

~~Subject to a lien securing the facility’s debt.~~

~~(7)~~

~~Excludes 50% membership interest owned by BP.~~


						41

Item 3. Legal Proceedings

From time to time, the Companies are ~~alleged~~parties to ~~be in violation~~various legal, environmental or in default under orders, statutes, rules or regulations relating to the environment, compliance plans imposed upon or agreed to by the Companies, or permits issued by various local, state and/or federal agencies for the construction or operation of facilities. Administrativeother regulatory proceedings, ~~may also be pending on these matters. In addition,~~including in the ordinary course of ~~business,~~business. SEC regulations require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Companies ~~and their subsidiaries are involved in various legal~~reasonably believe will exceed a specified threshold. Pursuant to the SEC regulations, the Companies use a threshold of $1 million for such proceedings.

See Notes 13 and 23 to the Consolidated Financial Statements, ~~and~~

~~Future Issues and Other Matters~~

~~in Item 7. MD&A,~~ which information is incorporated herein by reference, for discussion of ~~various~~certain legal, environmental and other regulatory proceedings to which the Companies are a party.

Item 4. Mine Safety Disclosures

Not applicable.


42

Information about our Executive Officers

Information concerning the executive officers of Dominion Energy, each of whom is elected annually, is as follows:


Name and Age		Business Experience Past Five Years ⁽¹⁾
Thomas F. Farrell, II ~~(65)~~ (66)		Executive Chairman of the Board of Directors from October 2020 to present; President and CEO from April 2007 to ~~date.~~ September 2020.

Robert M. Blue ~~(52)~~ (53)		President and CEO from October 2020 to present; Director from November 2020 to present; Executive Vice President and Co-COO from December 2019 to ~~date;~~September 2020; Executive Vice President and President & CEO—Power Delivery Group from May 2017 to November 2019; Senior Vice President and President & CEO—Dominion Virginia Power from January 2017 to May 2017; Senior Vice President—Law, Regulation & Policy from February 2016 to December 2016; Senior Vice President—Regulation, Law, Energy Solutions and Policy from May 2015 to January ~~2016; President of Virginia Power from January 2014 to May 2015.~~ 2016.

James R. Chapman ~~(50)~~ (51)		Executive Vice President, CFO and Treasurer from January 2019 to ~~date;~~present; Senior Vice President, CFO and Treasurer from November 2018 to December 2018; Senior Vice President—Mergers & Acquisitions and Treasurer from February 2016 to October 2018; Vice President—Corporate Finance and Mergers & Acquisitions and Assistant Treasurer from May 2015 to January ~~2016; Vice President—Corporate Finance and Mergers & Acquisitions from January 2015 to May 2015.~~ 2016.


Diane Leopold ~~(53)~~(54)		Executive Vice President and COO from October 2020 to present; Executive Vice President and Co-COO from December 2019 to ~~date;~~September 2020; Executive Vice President and President & CEO—Gas Infrastructure Group from May 2017 to November 2019; Senior Vice President and President & CEO—Dominion Energy from January 2017 to May 2017; President of ~~DETI,~~ East Ohio ~~and DCP~~ from January 2014 to ~~date.~~ September 2020.
Edward H. Baine (47)		President—Dominion Energy Virginia from October 2020 to present; Senior Vice President—Power Delivery of Virginia Power from December 2019 to September 2020; Senior Vice President—Distribution of Virginia Power from February 2016 to November 2019; Senior Vice President—Transmission and Customer Service of Virginia Power from June 2015 to January 2016.
P. Rodney Blevins ~~(55)~~ (56)		President—Dominion Energy South Carolina from December 2019 to ~~date;~~present; President & Chief Executive Officer—Southeast Energy Group from January 2019 to November 2019; Senior Vice President and Chief Information Officer from January 2014 to December 2018.


Carlos M. Brown (46)		Senior Vice President, General Counsel and Chief Compliance Officer from December 2019 to present; Senior Vice President and General Counsel from January 2019 to November 2019; Vice President and General Counsel from January 2017 to December 2018; Deputy General Counsel—Litigation, Labor, and Employment of DES from July 2016 to December 2016; Director—Power Generation Station II of DES from July 2015 to June 2016.

Michele L. Cardiff (53)		Senior Vice President, Controller and CAO from October 2020 to present; Vice President, Controller and CAO from April 2014 to September 2020.

William L. Murray (53)		Senior Vice President—Corporate Affairs & Communications from February 2019 to present; Vice President—State & Electric Public Policy of DES from May 2017 to January 2019; Senior Policy Director—Public Policy of DES from April 2016 to May 2017; Managing Director—Corporate Public Policy of DES from June 2007 to March 2016.

Donald R. Raikes ~~(57)~~(58)		President—Gas Distribution of Dominion Energy from December 2019 to ~~date~~present and of Hope, East Ohio, PSNC, and Questar Gas from October 2019 to ~~date;~~September 2020; President of Hope, East Ohio, PSNC, and Questar Gas from October 2020 to present; Senior Vice President—Gas Transmission Operations of DCP, Dominion Energy Midstream and Dominion Energy Questar Pipeline from February 2019 to September 2019; Senior Vice President—Dominion Midstream Operations of DCP, Dominion Energy Midstream and Dominion Energy Questar Pipeline from August 2017 to January 2019; Senior Vice President—Pipeline Customer Service & Business Development of DCP and DETI from May 2017 to August 2017; Senior Vice President—Customer Service and Business Development of DCP and DETI from November 2014 to May 2017.

Name and Age		Business Experience Past Five Years⁽¹⁾

~~Paul E. Ruppert (55)~~ Daniel G. Stoddard (58)		President—Gas Transmission & Storage from December 2019 to date; President—Gas Transmission of DETI, Dominion Energy Questar Pipeline and DCP from August 2017 to November 2019; President—Dominion Midstream Operations of Dominion Energy Questar Pipeline and DCP from May 2017 to July 2017; Senior Vice President, Chief Nuclear Officer and President—~~Dominion Midstream Operations of Dominion Energy Midstream~~Contracted Assets from ~~January 2017~~September 2020 to July 2017; Senior Vice President—Dominion Midstream Operations of Dominion Energy Midstream from January 2016 to December 2016; Senior Vice President—Business Development & Generation Construction of Virginia Power from April 2012 to December 2015.

~~Daniel G. Stoddard (57)~~		present; Senior Vice President, Chief Nuclear Officer and President—Contracted Generation from December 2019 to ~~date;~~August 2020; Senior Vice President and Chief Nuclear Officer of Virginia Power from October 2016 to ~~date;~~present; Senior Vice President—Nuclear Operations of Virginia Power from May 2011 to September 2016.

~~Carlos M. Brown (45)~~		Senior Vice President, General Counsel and Chief Compliance Officer from December 2019 to date; Senior Vice President and General Counsel from January 2019 to November 2019; Vice President and General Counsel from January 2017 to December 2018; Deputy General Counsel—Litigation, Labor, and Employment of DES from July 2016 to December 2016; Director—Power Generation Station II of DES from July 2015 to June 2016; Director—Alternative Energy Solutions Business Development & Commercialization of DES from January 2013 to June 2015.

~~William L. Murray (52)~~		Senior Vice President—Corporate Affairs & Communications from February 2019 to date; Vice President—State & Electric Public Policy of DES from May 2017 to January 2019; Senior Policy Director—Public Policy of DES from April 2016 to May 2017; Managing Director—Corporate Public Policy of DES from June 2007 to March 2016.

~~Michele L. Cardiff (52)~~		~~Vice President, Controller and CAO from April 2014 to date.~~

(1)	All positions held at Dominion Energy, unless otherwise noted. Any service listed for Virginia Power, DETI, East Ohio, Hope, PSNC, Questar Gas, Dominion Energy Midstream, Dominion Energy Questar Pipeline, DCP and DES reflects service at a current or previous subsidiary of Dominion Energy.


						43

Part II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

~~Dominion Energy~~

DOMINION ENERGY

Dominion Energy’s common stock is listed on the NYSE under the ticker symbol D. At February ~~14, 2020,~~12, 2021, there were approximately ~~134,000~~130,000 record holders of Dominion Energy’s common stock. The number of record holders is comprised of individual shareholder accounts maintained on Dominion Energy’s transfer agent records and includes accounts with shares held in (1) certificate form, (2) book-entry in the Direct Registration System and (3) book-entry under Dominion Energy Direct

^®

. Discussions of expected dividend payments required by this Item are contained in

Liquidity and Capital Resources

in Item 7. MD&A.

Purchases of Equity Securities

Period	Total Number of Shares (or Units) Purchased				Average Price Paid per Share (or Unit)⁽⁴⁾		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs			Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased under the Plans or Programs⁽⁵⁾
10/1/20-10/31/20		52,079	⁽¹⁾	$		78.59		—	$ 0.62 billion
11/1/20-11/30/20		3,049,613	⁽²⁾			80.36		3,029,827	1.48 billion
12/1/20-12/31/20		7,387,403	⁽³⁾			76.22		7,387,403	0.92 billion
Total		10,489,095		$		77.44		10,417,230	$ 0.92 billion

~~The following table presents certain information with respect to Dominion Energy’s~~

(1)

Represents shares of common stock ~~repurchases during the fourth quarter of 2019:~~
Dominion Energy Purchases Of Equity Securities

Period

Total
Number
of Shares
(or Units)
Purchased
(1)

Average
Price Paid
per Share
(or Unit)
(2)

Total Number
of Shares (or Units)
Purchased as Part
of Publicly Announced
Plans or Programs

Maximum Number (or
Approximate Dollar Value)
of Shares (or Units) that May
Yet Be Purchased under the
Plans or Programs
(3)

10/1/19-10/31/19

31,435

$81.22

—
19,629,059 shares/$
1.18 billion

11/1/19-11/30/19

401

83.08

—
19,629,059 shares/$
1.18 billion

12/1/19-12/31/19

2,429

83.11

—
19,629,059 shares/$
1.18 billion

Total

34,265

$81.38

—
19,629,059 shares/$
1.18 billion

~~(1)~~

~~Represents shares~~ that were tendered by employees to satisfy tax withholding obligations on vested restricted stock.

(2)

Includes (i) 19,786 shares of common stock that were tendered by employees to satisfy tax withholding obligations on vested restricted stock;(ii) 1,647,192 shares of common stock purchased in open market transactions for an aggregate of approximately $132 million; and (iii) 1,382,635 shares of common stock delivered upon the completion of the purchase periods under two prepaid accelerated share repurchase agreements entered into by Dominion Energy in September 2020.

(3)

Includes (i) 2,045,345 shares of common stock purchased in open market transactions for an aggregate of approximately $163 million and (ii) 5,342,058 shares of common stock delivered to Dominion Energy under an accelerated share repurchase program. Dominion Energy entered into a prepaid accelerated share repurchase agreement with a financial institution in December 2020 to purchase $400 million in shares of common stock. No additional shares will be delivered under this agreement as the repurchase period ended in December 2020.

(4)	Represents the weighted-average price paid per share.

~~(3)~~

(5)

~~The remaining repurchase authorization is pursuant to repurchase authority granted by~~

In July 2020, the Dominion Energy Board of Directors authorized the repurchase of up to $3.0 billion in shares of common stock and rescinded its prior repurchase authorization approved in February 2005 asand modified in June 2007. ~~The aggregate~~Dominion Energy completed repurchases under this authorization ~~granted by~~in December 2020. In November 2020, the Dominion Energy Board of Directors ~~was 86 million~~authorized the repurchase of up to $1.0 billion of shares ~~(as adjusted~~of common stock in addition to ~~reflect a~~

~~two-for-one~~

~~stock split distributed~~the repurchase program authorized in ~~November 2007) not~~July 2020. This repurchase program has no expiration date or price or volume targets and may be modified suspended or terminated at any time. Shares may be purchased through open market or privately negotiated transactions or otherwise at the discretion of management subject to ~~exceed $4 billion.~~

prevailing market conditions, applicable securities laws and other factors.

~~Virginia Power~~

VIRGINIA POWER

There is no established public trading market for Virginia Power’s common stock, all of which is owned by Dominion Energy. Virginia Power intends to pay quarterly cash dividends in ~~2020~~2021 but is neither required to nor restricted, except as described in Note 21 to the Consolidated Financial Statements, from making such payments.

~~Dominion Energy Gas~~

All of Dominion Energy Gas’ membership interests are owned by Dominion Energy. Dominion Energy Gas intends to pay quarterly cash dividends in 2020 but is neither required to nor restricted, except as described in Note 21 to the Consolidated Financial Statements, from making such payments.


44

Item 6. Selected Financial Data

The following table should be read in conjunction with the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data.

Dominion Energy’s Consolidated Financial Statements include the results of operations acquired in the SCANA Combination effective January 2019.

DOMINION ENERGY

Year Ended December 31,⁽¹⁾	2020⁽²⁾		2019⁽³⁾		2018⁽⁴⁾		2017⁽⁵⁾		2016⁽⁶⁾
(millions, except per share amounts)
Operating revenue	$	14,172	$	14,401	$	11,199	$	11,004	$	10,320
Net income from continuing operations attributable
to Dominion Energy		1,583		653		2,087		2,707		1,809
Net income from continuing operations attributable
to Dominion Energy per common share-basic		1.83		0.79		3.19		4.26		2.93
Net income from continuing operations attributable
to Dominion Energy per common share-diluted		1.82		0.75		3.19		4.26		2.93
Dividends declared per common share		3.45		3.67		3.34		3.035		2.80
Total assets		95,905		103,823		77,914		76,585		71,610
Long-term debt⁽⁷⁾		33,957		28,998		27,075		26,951		26,271

~~Dominion Energy~~

Year Ended December 31,

2019
(1)

2018
(2)

2017
(3)

2016
(4)

2015

(millions, except per share amounts)

Operating revenue
$
16,572
$
13,366
$
12,586
$
11,737
$
11,683

Net income attributable to Dominion Energy

1,358

2,447

2,999

2,123

1,899

Net income attributable to Dominion Energy per common share-basic

1.66

3.74

4.72

3.44

3.21

Net income attributable to Dominion Energy per common share-diluted

1.62

3.74

4.72

3.44

3.20

Dividends declared per common share

3.67

3.34

3.035

2.80

2.59

Total assets

103,823

77,914

76,585

71,610

58,648

Long-term debt
(5)

33,824

31,144

30,948

30,231

23,468

~~(1)~~

(1)

Operating revenue, net income and earnings per share exclude amounts presented in discontinued operations related to the gas transmission and storage operations sold to, or under contract to be sold to, BHE as well as Dominion Energy’s investment in Atlantic Coast Pipeline. Long-term debt excludes amounts reflected as held-for-sale. See Note 3 to Dominion Energy’s Consolidated Financial Statements for more information regarding the amounts presented as discontinued operations or held-for-sale.

(2)

Includes $559 million after-tax charge associated primarily with the planned early retirement of certain electric generation facilities, $496 million of after-tax charges for an impairment attributable to Dominion Energy’s interests in certain nonregulated solar generation facilities and a contract termination in connection with the sale of Fowler Ridge, $191 million of after-tax charges for expected CCRO and customer arrears forgiveness for Virginia utility customers and $93 million of after-tax charges associated with litigation acquired in the SCANA Combination, partially offset by a $264 million after-tax net gain related to nuclear decommissioning trust funds.

(3)

Includes merger and integration-related costs associated with the SCANA Combination of $1.8 billion

after-tax

~~(inclusive~~ (inclusive of $756 million

after-tax

charge for refunds of amounts previously collected for the NND Project, $480 million

after-tax

charge for litigation acquired in the SCANA Combination and ~~$319~~$286 million

after-tax

charge related to a voluntary retirement program), $585 million

after-tax

charges associated primarily with the planned early retirement of certain electric generation facilities, automated meter reading infrastructure and the termination of a contract with a

non-utility

generator, partially offset by a $429 million

after-tax

net gain related to nuclear decommissioning trust funds.

~~(2)~~

(4)

Includes $568 million

after-tax

gains on sales of certain ~~merchant~~nonregulated generation facilities and equity method investments partially offset by $164 million

after-tax

charge related to the impairment of certain gathering and processing assets and a $160 million

after-tax

charge associated with Virginia legislation enacted in March 2018 that required

one-time

rate credits of certain amounts to utility customers.

~~(3)~~

(5)

Includes $851 million of tax benefits resulting from the remeasurement of deferred income taxes to the new corporate income tax rate, partially offset by $96 million of

after-tax

charges associated with equity method investments in wind-powered generation facilities.

~~(4)~~

(6)

Includes a $122 million

after-tax

charge related to future ash pond and landfill closure costs at certain utility generation facilities.

~~(5)~~

(7)

Includes finance leases.


						45

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

MD&A discusses Dominion Energy’s results of operations and general financial condition and Virginia ~~Power and Dominion Energy Gas’~~Power’s results of operations. MD&A should be read in conjunction with Item 1. Business and the Consolidated Financial Statements in Item 8. Financial Statements and Supplementary Data. Virginia Power ~~and Dominion Energy Gas meet~~meets the conditions to file under the reduced disclosure format, and therefore ~~have~~has omitted certain sections of MD&A.

~~Contents of~~

CONTENTS OF MD&A

MD&A consists of the following information:

•	Forward-Looking Statements

~~Forward-Looking Statements~~

•	Accounting Matters—Dominion Energy

•	Dominion Energy

•

Results of Operations

•

Segment Results of Operations

•	Virginia Power

~~Accounting Matters—Dominion Energy~~

•

Results of Operations

•	Liquidity and Capital Resources—Dominion Energy

•	Future Issues and Other Matters—Dominion Energy

~~Dominion Energy~~

~~Results of Operations~~

~~Segment Results of Operations~~

~~Virginia Power~~

~~Results of Operations~~

~~Dominion Energy Gas~~

~~Results of Operations~~

~~Liquidity and Capital Resources—Dominion Energy~~

~~Future Issues and Other Matters—Dominion Energy~~

~~Forward-looking Statements~~

FORWARD-LOOKING STATEMENTS

This report contains statements concerning the Companies’ 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 such words as “anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,” “could,” “plan,” “may,” “continue,” “target” or other similar words.

The Companies make forward-looking statements with full knowledge that risks and uncertainties exist that may cause actual results to differ materially from predicted results. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Additionally, other factors may cause actual results to differ materially from those indicated in any forward-looking statement. These factors include but are not limited to:

~~Unusual weather conditions and their effect on energy sales to customers and energy commodity prices;~~

Extreme weather events and other natural disasters, including, but not limited to, hurricanes, high winds, severe storms, earthquakes, flooding, climate changes and changes in water temperatures and availability that can cause outages and property damage to facilities;

~~Federal, state and local legislative and regulatory developments, including changes in federal and state tax laws and regulations;~~

~~Risks of operating businesses in regulated industries that are subject to changing regulatory structures;~~

Changes to regulated electric rates collected by Dominion Energy and Virginia Power and regulated gas distribution, transportation and storage rates, including LNG storage, collected by Dominion Energy and Dominion Energy Gas;

Changes in rules for RTOs and ISOs in which Dominion Energy and Virginia Power join and/or participate, including changes in rate designs, changes in FERC’s interpretation of market rules and new and evolving capacity models;

~~Risks associated with Virginia Power’s membership and participation in PJM, including risks related to obligations created by the default of other participants;~~

Risks associated with entities in which Dominion Energy and Dominion Energy Gas share ownership with third parties, including risks that result from lack of sole decision making authority, disputes that may arise between Dominion Energy and Dominion Energy Gas and third party participants and difficulties in exiting these arrangements;

~~Changes in future levels of domestic and international natural gas production, supply or consumption;~~

~~Fluctuations in future volumes of LNG imports or exports from the U.S. and other countries worldwide or demand for, purchases of, and prices related to natural gas or LNG;~~

~~Timing and receipt of regulatory approvals necessary for planned construction or growth projects and compliance with conditions associated with such regulatory approvals;~~

The inability to complete planned construction, conversion or growth projects at all, or with the outcomes or within the terms and time frames initially anticipated, including as a result of increased public involvement, intervention or litigation in such projects;

Changes to federal, state and local environmental laws and regulations, including those related to climate change, the tightening of emission or discharge limits for GHGs and other substances, more extensive permitting requirements and the regulation of additional substances;

~~Cost of environmental compliance, including those costs related to climate change;~~

~~Changes in implementation and enforcement practices of regulators relating to environmental standards and litigation exposure for remedial activities;~~

~~Difficulty in anticipating mitigation requirements associated with environmental and other regulatory approvals or related appeals;~~

~~Unplanned outages at facilities in which the Companies have an ownership interest;~~

The impact of operational hazards, including adverse developments with respect to pipeline and plant safety or integrity, equipment loss, malfunction or failure, operator error, and other catastrophic events;

Risks associated with the operation of nuclear facilities, including costs associated with the disposal of spent nuclear fuel, decommissioning, plant maintenance and changes in existing regulations governing such facilities;

~~Changes in operating, maintenance and construction costs;~~

~~Domestic terrorism and other threats to the Companies’ physical and intangible assets, as well as threats to cybersecurity;~~

Additional competition in industries in which the Companies operate, including in electric markets in which Dominion Energy’s merchant generation facilities operate and potential competition from the development and deployment of alternative energy sources, such as self-generation and distributed generation technologies, and availability of market alternatives to large commercial and industrial customers;

•	Unusual weather conditions and their effect on energy sales to customers and energy commodity prices;

•
46								Extreme weather events and other natural disasters, including, but not limited to, hurricanes, high winds, severe storms, earthquakes, flooding, climate changes and changes in water temperatures and availability that can cause outages and property damage to facilities;

•	The impact of extraordinary external events, such as the current pandemic health event resulting from COVID-19, and their collateral consequences, including extended disruption of economic activity in our markets;

•	Federal, state and local legislative and regulatory developments, including changes in or interpretations of federal and state tax laws and regulations;

•	Risks of operating businesses in regulated industries that are subject to changing regulatory structures;

•	Changes to regulated electric rates collected by the Companies and regulated gas distribution, transportation and storage rates collected by Dominion Energy;

•	Changes in rules for RTOs and ISOs in which the Companies join and/or participate, including changes in rate designs, changes in FERC’s interpretation of market rules and new and evolving capacity models;

•	Risks associated with Virginia Power’s membership and participation in PJM, including risks related to obligations created by the default of other participants;

•	Risks associated with entities in which Dominion Energy shares ownership with third parties, including risks that result from lack of sole decision making authority, disputes that may arise between Dominion Energy and third party participants and difficulties in exiting these arrangements;

•	Changes in future levels of domestic and international natural gas production, supply or consumption;

•	Impacts to Dominion Energy’s noncontrolling interest in Cove Point from fluctuations in future volumes of LNG imports or exports from the U.S. and other countries worldwide or demand for, purchases of, and prices related to natural gas or LNG;

•	Timing and receipt of regulatory approvals necessary for planned construction or growth projects and compliance with conditions associated with such regulatory approvals;

•	The inability to complete planned construction, conversion or growth projects at all, or with the outcomes or within the terms and time frames initially anticipated, including as a result of increased public involvement, intervention or litigation in such projects;

~~Competition in the development, construction and ownership of certain electric transmission facilities in Dominion Energy and Virginia Power’s service territory in connection with Order 1000;~~

•	Changes to federal, state and local environmental laws and regulations, including those related to climate change, the tightening of emission or discharge limits for GHGs and other substances, more extensive permitting requirements and the regulation of additional substances;

•	Cost of environmental compliance, including those costs related to climate change;

•	Changes in implementation and enforcement practices of regulators relating to environmental standards and litigation exposure for remedial activities;

•	Difficulty in anticipating mitigation requirements associated with environmental and other regulatory approvals or related appeals;

•	Unplanned outages at facilities in which the Companies have an ownership interest;

~~Changes in technology, particularly with respect to new, developing or alternative sources of generation and smart grid technologies;~~

•	The impact of operational hazards, including adverse developments with respect to pipeline and plant safety or integrity, equipment loss, malfunction or failure, operator error, and other catastrophic events;

•	Risks associated with the operation of nuclear facilities, including costs associated with the disposal of spent nuclear fuel, decommissioning, plant maintenance and changes in existing regulations governing such facilities;

•	Changes in operating, maintenance and construction costs;

•	Domestic terrorism and other threats to the Companies’ physical and intangible assets, as well as threats to cybersecurity;

•

Additional competition in industries in which the Companies operate, including in electric markets in which Dominion Energy’s nonregulated generation facilities operate and potential competition from the development and deployment of alternative energy sources, such as self-generation and distributed generation technologies, and availability of market alternatives to large commercial and industrial customers;

Changes in demand for the Companies’ services, including industrial, commercial and residential growth or decline in the Companies’ service areas, changes in supplies of natural gas delivered to Dominion Energy and Dominion Energy Gas’ pipeline systems, failure to maintain or replace customer contracts on favorable terms, changes in customer growth or usage patterns, including as a result of energy conservation programs, the availability of energy efficient devices and the use of distributed generation methods;

•	Competition in the development, construction and ownership of certain electric transmission facilities in the Companies’ service territory in connection with Order 1000;

•	Changes in technology, particularly with respect to new, developing or alternative sources of generation and smart grid technologies;

•

Changes in demand for the Companies’ services, including industrial, commercial and residential growth or decline in the Companies’ service areas, changes in supplies of natural gas delivered to Dominion Energy’s pipeline system, failure to maintain or replace customer contracts on favorable terms, changes in customer growth or usage patterns, including as a result of energy conservation programs, the availability of energy efficient devices and the use of distributed generation methods;

•	Receipt of approvals for, and timing of, closing dates for acquisitions and divestitures;

•	Impacts of acquisitions, divestitures, transfers of assets to joint ventures and retirements of assets based on asset portfolio reviews;

~~Receipt of approvals for, and timing of, closing dates for acquisitions and divestitures;~~

•	The expected timing and likelihood of completion of the Q-Pipe Transaction, including the ability to obtain the requisite regulatory approvals and the terms and conditions of such regulatory approvals;

•	Adverse outcomes in litigation matters or regulatory proceedings, including matters acquired in the SCANA Combination;

•	Counterparty credit and performance risk;

•	Fluctuations in the value of investments held in nuclear decommissioning trusts by the Companies and in benefit plan trusts by Dominion Energy;

•	Fluctuations in energy-related commodity prices and the effect these could have on Dominion Energy’s earnings and the Companies’ liquidity position and the underlying value of their assets;

~~Impacts of acquisitions, divestitures, transfers of assets to joint ventures and retirements of assets based on asset portfolio reviews;~~

•	Fluctuations in interest rates;

•	Changes in rating agency requirements or credit ratings and their effect on availability and cost of capital;

•	Global capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms;

•	Political and economic conditions, including inflation and deflation;

•	Employee workforce factors including collective bargaining agreements and labor negotiations with union employees; and

•	Changes in financial or regulatory accounting principles or policies imposed by governing bodies.

~~Adverse outcomes in litigation matters or regulatory proceedings, including matters acquired in the SCANA Combination;~~

~~Counterparty credit and performance risk;~~

~~Fluctuations in the value of investments held in nuclear decommissioning trusts by Dominion Energy and Virginia Power and in benefit plan trusts by Dominion Energy and Dominion Energy Gas;~~

~~Fluctuations in energy-related commodity prices and the effect these could have on Dominion Energy’s earnings and the Companies’ liquidity position and the underlying value of their assets;~~

~~Fluctuations in interest rates or foreign currency exchange rates;~~

~~Changes in rating agency requirements or credit ratings and their effect on availability and cost of capital;~~

~~Global capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms;~~

~~Political and economic conditions, including inflation and deflation;~~

~~Employee workforce factors including collective bargaining agreements and labor negotiations with union employees; and~~

~~Changes in financial or regulatory accounting principles or policies imposed by governing bodies.~~

Additionally, other risks that could cause actual results to differ from predicted results are set forth in Item 1A. Risk Factors.

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

~~Accounting Matters~~

ACCOUNTING MATTERS

Critical Accounting Policies and Estimates

Dominion Energy has identified the following accounting policies, including certain inherent estimates, that as a result of the judgments, uncertainties, uniqueness and complexities of the underlying accounting standards and operations involved, could result in material changes to its financial condition or results of operations under different conditions or using different assumptions. Dominion Energy has discussed the development, selection and disclosure of each of these policies with the Audit Committee of its Board of Directors.

~~Accounting for Regulated Operations~~

ACCOUNTING FOR REGULATED OPERATIONS

The accounting for Dominion Energy’s regulated electric and gas operations differs from the accounting for nonregulated operations in that Dominion Energy is required to reflect the effect of rate regulation in its Consolidated Financial Statements. For regulated businesses subject to federal or state

cost-of-service

rate regulation, regulatory practices that assign costs to accounting periods may differ from accounting methods generally applied by nonregulated companies. When it is probable that regulators will permit the recovery of current costs through future rates charged to customers, these costs that otherwise would be expensed by nonregulated companies are deferred as regulatory assets. Likewise, regulatory liabilities are recognized when it is probable that regulators will require customer refunds through future rates or when revenue is collected from customers for expenditures that have yet to be incurred.

Dominion Energy evaluates whether or not recovery of its regulatory assets through future rates is probable as well as whether a regulatory liability due to customers is probable and makes various assumptions in its analyses. These analyses are generally based on:

•

Orders issued by regulatory commissions, legislation and judicial actions;

~~Orders issued by regulatory commissions, legislation and judicial actions;~~

•

Past experience;

•

Discussions with applicable regulatory authorities and legal counsel;

•

Forecasted earnings; and

•

Considerations around the likelihood of impacts from events such as unusual weather conditions, extreme weather events and other natural disasters and unplanned outages of facilities.

~~Past experience;~~

~~Discussions with applicable regulatory authorities and legal counsel;~~

~~Forecasted earnings; and~~

~~Considerations around the likelihood of impacts from events such as unusual weather conditions, extreme weather events and other natural disasters and unplanned outages of facilities.~~

If recovery of a regulatory asset is determined to be less than probable, it will be written off in the period such assessment is made. A regulatory liability, if considered probable, will be recorded in the period such assessment is made or reversed into earnings if no longer probable. In connection with the evaluation of Virginia Power’s earnings for the 2021 Triennial Review, in 2020 Virginia Power established a regulatory liability for benefits expected to be provided to Virginia retail electric customers through the use of a CCRO in accordance with the GTSA. See Notes 12 and 13 to the Consolidated Financial Statements for additional information.

~~Asset Retirement Obligations~~

ASSET RETIREMENT OBLIGATIONS

Dominion Energy recognizes liabilities for the expected cost of retiring tangible long-lived assets for which a legal obligation exists and the ARO can be reasonably estimated. These AROs are recognized at fair value as incurred or when sufficient information becomes available to determine fair value and are generally capitalized as part of the cost of the related long-lived assets. In the

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

absence of quoted market prices, Dominion Energy estimates the fair value of its AROs using present value techniques, in which it makes various assumptions including estimates of the amounts and timing of future cash flows associated with retirement activities, credit-adjusted risk free rates and cost escalation rates. The impact on measurements of new AROs or remeasurements of existing AROs, using different cost escalation or credit-adjusted risk free rates in the future, may be significant. When Dominion Energy

revises any assumptions used to calculate the fair value of existing AROs, it adjusts the carrying amount of both the ARO liability and the related long-lived asset for assets that are in service; for assets that have ceased or are expected to cease operations, Dominion Energy adjusts the carrying amount of the ARO liability with such changes either recognized in ~~income.~~

income or as a regulatory asset.

Dominion Energy’s AROs include a significant balance related to the future decommissioning of its ~~merchant~~nonregulated and utility nuclear facilities. These nuclear decommissioning AROs are reported in Dominion Energy Virginia, Dominion Energy South Carolina and Contracted ~~Generation.~~Assets. At December 31, ~~2019,~~2020, Dominion Energy’s nuclear decommissioning AROs totaled ~~$1.7~~$1.9 billion. The following discusses critical assumptions inherent in determining the fair value of AROs associated with Dominion Energy’s nuclear decommissioning obligations.

Dominion Energy obtains from third-party specialists periodic site-specific base year cost studies in order to estimate the nature, cost and timing of planned decommissioning activities for its nuclear plants. These cost studies are based on relevant information available at the time they are performed; however, estimates of future cash flows for extended periods of time are by nature highly uncertain and may vary significantly from actual results. These cash flows include estimates on timing of decommissioning, which for regulated nuclear units factors in the probability of NRC approval for license extensions. In addition, Dominion Energy’s cost estimates include cost escalation rates that are applied to the base year costs. Dominion Energy determines cost escalation rates, which represent projected cost increases over time due to both general inflation and increases in the cost of specific decommissioning activities, for each nuclear facility. The selection of these cost escalation rates is dependent on subjective factors which are considered to be critical assumptions.

~~Income Taxes~~

INCOME TAXES

Judgment and the use of estimates are required in developing the provision for income taxes and reporting of

tax-related

assets and liabilities. The interpretation of tax laws ~~including the provisions of the 2017 Tax Reform Act,~~and associated regulations involves uncertainty since tax authorities may interpret the laws differently. ~~In addition, the states in which the Companies operate may or may not conform to some or all the provisions in the 2017 Tax Reform Act.~~ Ultimate resolution or clarification of income tax matters may result in favorable or unfavorable impacts to net income and cash flows, and adjustments to

tax-related

assets and liabilities could be material.

Given the uncertainty and judgment involved in the determination and filing of income taxes, there are standards for recognition and measurement in financial statements of positions taken or expected to be taken by an entity in its income tax returns. Positions taken by an entity in its income tax returns that are recognized in the financial statements must satisfy a ~~more-likely-~~

~~than-not~~

more-likely-than-not recognition threshold, assuming that the position will be examined by tax authorities with full knowledge of all relevant information. At December 31, ~~2019,~~2020 Dominion Energy had ~~$175~~$167 million of unrecognized tax benefits. Changes in these unrecognized tax benefits may result from remeasurement of amounts expected to be realized, settlements with tax authorities and expiration of statutes of limitations.

Deferred income tax assets and liabilities are recorded representing future effects on income taxes for temporary differences between the bases of assets and liabilities for financial reporting and tax purposes. Dominion Energy evaluates quarterly the probability of realizing deferred tax assets by considering current and historical financial results, expectations for future taxable income and the availability of tax planning strategies that can be implemented, if necessary, to realize deferred tax assets. Failure to achieve forecasted taxable income or successfully implement tax planning strategies may affect the realization of deferred tax assets. Dominion Energy establishes a valuation allowance when it is

more-likely-than-not

that all or a portion of a deferred tax asset will not be realized. At December 31, ~~2019,~~2020, Dominion Energy had established ~~$161~~$155 million of valuation allowances.

The 2017 Tax Reform Act included a broad range of tax reform provisions affecting the Companies, including changes in corporate tax rates and business deductions. Many of these provisions differ significantly from prior U.S. tax law, resulting in pervasive financial reporting implications for the Companies. The 2017 Tax Reform Act included significant changes to the Internal Revenue Code of 1986, including amendments which significantly change the taxation of individuals and business entities and included specific provisions related to regulated public utilities. The more significant changes that impact the Companies included in the 2017 Tax Reform Act are (i) reducing the corporate federal income tax rate from 35% to 21%; (ii) effective in 2018, limiting the deductibility of interest expense to 30% of adjusted taxable income for certain businesses with any disallowed interest allowed to be carried forward indefinitely; (iii) permitting 100% expensing (100% bonus depreciation) for certain qualified property; (iv) eliminating the deduction for qualified domestic production activities; and (v) limiting the utilization of net operating losses arising after December 31, 2017 to 80% of taxable income with an indefinite carryforward. The specific provisions related to regulated public utilities in the 2017 Tax Reform Act generally allow for the continued deductibility of interest expense, the exclusion from full expensing for tax purposes of certain property acquired and placed in service after September 27, 2017 and continued certain rate normalization requirements for accelerated depreciation benefits.

At the date of enactment, the Companies’ deferred taxes were remeasured based upon the new tax rate expected to apply when temporary differences are realized or settled. For regulated operations, many of the changes in deferred taxes represented amounts probable of collection from or refund to customers, and were recorded as either an increase to a regulatory asset or liability. The 2017 Tax Reform Act included provisions that stipulate how these excess deferred taxes may be passed back to customers for certain accelerated tax depreciation benefits. Potential refunds of other deferred taxes will be determined by the Companies’ regulators. For nonregulated operations, the changes in deferred taxes were recorded as an adjustment to deferred tax expense.


48

~~Accounting for Derivative Contracts and Financial Instruments at Fair Value~~

ACCOUNTING FOR DERIVATIVE CONTRACTS AND FINANCIAL INSTRUMENTS AT FAIR VALUE

Dominion Energy uses derivative contracts such as physical and financial forwards, futures, swaps, options and FTRs to manage commodity ~~interest rate~~ and ~~foreign currency exchange~~interest rate risks of its business operations. Derivative contracts, with certain exceptions, are reported in the Consolidated Balance Sheets at fair value. The majority of investments held in Dominion Energy’s nuclear decommissioning and rabbi trusts and pension and other postretirement funds are also subject to fair value accounting. See Notes 6 and 22 to the Consolidated Financial Statements for further information on these fair value measurements.

Fair value is based on actively-quoted market prices, if available. In the absence of actively-quoted market prices, management seeks indicative price information from external sources, including broker quotes and industry publications. When evaluating pricing information provided by brokers and other pricing services, Dominion Energy considers whether the broker is willing and able to trade at the quoted price, if the broker quotes are based on an active market or an inactive market and the extent to which brokers are utilizing a particular model if pricing is not readily available. If pricing information from external sources is not available, or if Dominion Energy believes that observable pricing information is not indicative of fair value, judgment is required to develop the estimates of fair value. In those cases, Dominion Energy must estimate prices based on available historical and near-term future price information and use of statistical methods, including regression analysis, that reflect its market assumptions.

Dominion Energy maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

~~Use of Estimates in Goodwill Impairment Testing~~

USE OF ESTIMATES IN GOODWILL IMPAIRMENT TESTING

As of December 31, ~~2019,~~2020, Dominion ~~Energy reported $8.9 billion of goodwill in its~~Energy’s Consolidated Balance ~~Sheet.~~Sheets include $7.4 billion presented within goodwill. The majority of the balance relates to the SCANA Combination, as discussed in Note 3 to the Consolidated Financial Statements, the Dominion Energy Questar Combination in 2016 and the acquisition of the former CNG in 2000.

In connection with Dominion Energy entering agreements for the sale of substantially all of its gas transmission and storage business to BHE, associated goodwill of $1.6 billion was reclassified to assets held for sale in the Consolidated Balance Sheets. During 2020, $1.4 billion of this amount was written off at the completion of the GT&S Transaction.

In April of each year, Dominion Energy tests its goodwill for potential impairment, and performs additional tests more frequently if an event occurs or circumstances change in the interim that would

more-likely-than-not

reduce the fair value of a reporting unit below its carrying amount. In addition, in the ~~fourth~~third quarter of ~~2019,~~2020, Dominion Energy performed impairment tests immediately before and after the realignment of its operating segments. The ~~2019, 2018 and 2017~~2020 annual ~~tests~~test and any interim tests did not result in the recognition of any goodwill impairment.

In general, Dominion Energy estimates the fair value of its reporting units by using a combination of discounted cash flows and other valuation techniques that use multiples of earnings for peer group companies and analyses of recent business combinations involving peer group companies. Fair value estimates are dependent on subjective factors such as Dominion Energy’s estimate of future cash flows, the selection of appropriate discount and growth rates, and the selection of peer group companies and recent transactions. These underlying assumptions and estimates

are made as of a point in time; subsequent modifications, particularly changes in discount rates or growth rates inherent in Dominion Energy’s estimates of future cash flows, could result in a future impairment of goodwill. Although Dominion Energy has consistently applied the same methods in developing the assumptions and estimates that underlie the fair value calculations, such as estimates of future cash flows, and based those estimates on relevant information available at the time, such cash flow estimates are highly uncertain by nature and may vary significantly from actual results. If the estimates of future cash flows used in the most recent tests had been 10% lower, the resulting fair values would have still been greater than the carrying values of each of those reporting units tested, indicating that no impairment was present.

See Note 11 to the Consolidated Financial Statements for additional information.

~~Use of Estimates in Long-lived Asset and Equity Method Investment Impairment Testing~~

USE OF ESTIMATES IN LONG-LIVED ASSET AND EQUITY METHOD INVESTMENT IMPAIRMENT TESTING

Impairment testing for an individual or group of long-lived assets, including intangible assets with definite lives, and equity method investments is required when circumstances indicate those assets may be impaired. When a long-lived asset’s carrying amount exceeds the undiscounted estimated future cash flows associated with the asset, the asset is considered impaired to the extent that the asset’s fair value is less than its carrying amount. When an equity method investment’s carrying amount exceeds its fair value, and the decline in value is deemed to be other-than-temporary, an impairment is recognized to the extent that the fair value is less than its carrying amount. Performing an impairment test on long-lived assets and equity method investments involves judgment in areas such as identifying if circumstances indicate an impairment may exist, identifying and grouping affected assets in the case of long-lived assets, and developing the undiscounted and discounted estimated future cash flows (used to estimate fair value in the absence of a market-based value) associated with the asset, including probability weighting such cash flows to reflect expectations about possible variations in their amounts or timing, expectations about the operations of the long-lived assets and equity method investments and the selection of an appropriate discount rate. When determining whether a long-lived asset or asset group has been impaired, management groups assets at the lowest level that has identifiable cash flows. Although cash flow estimates are based on relevant information available at the time the estimates are made, estimates of future cash flows are, by nature, highly uncertain and may vary significantly from actual results. For example, estimates of future cash flows would contemplate factors which may change over time, such as the expected use of the asset or underlying assets of equity method investees, including future production and sales levels, expected fluctuations of prices of commodities sold and consumed and expected proceeds from dispositions. In 2020, Dominion Energy determined that it had an impairment of its contracted nonregulated solar assets in partnerships outside of its core electric service territories. See Notes 6 and 910 to the Consolidated Financial Statements for a discussion of ~~impairments~~the impairment related to ~~certain long-lived assets and equity method investments.~~

~~As discussed in~~

~~Future Issues and Other Matters~~

~~, continued delays in obtaining and maintaining permits necessary for construction along with construction delays due to judicial actions have impacted the estimated cost and schedule for the Atlantic~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

~~Coast Pipeline Project. As a result,~~ Dominion Energy evaluated the carrying amount of its equity method investment in Atlantic Coast Pipeline for an other-than-temporary impairment and determined that it was not impaired. Any significant changes affecting the discounted cash flow estimates associated with the Atlantic Coast Pipeline Project, such as future unfavorable judicial or regulatory actions resulting in further construction and

~~in-service~~

~~delays along with an increase in construction costs, could result in an impairment charge.~~

~~Employee Benefit Plans~~

Energy’s non-wholly-owned nonregulated solar facilities.

EMPLOYEE BENEFIT PLANS

Dominion Energy sponsors noncontributory defined benefit pension plans and other postretirement benefit plans for eligible active employees, retirees and qualifying dependents. The projected costs of providing benefits under these plans are dependent, in part, on historical information such as employee demographics, the level of contributions made to the plans and earnings on plan assets. Assumptions about the future, including the expected long-term rate of return on plan assets, discount rates applied to benefit obligations, mortality rates and the anticipated rate of increase in healthcare costs and participant compensation, also have a significant impact on employee benefit costs. The impact of changes in these factors, as well as differences between Dominion Energy’s

assumptions and actual experience, is generally recognized in the Consolidated Statements of Income over the remaining average service period of plan participants, rather than immediately.

The expected long-term rates of return on plan assets, discount rates, healthcare cost trend rates and mortality rates are critical assumptions. Dominion Energy determines the expected long-term rates of return on plan assets for pension plans and other postretirement benefit plans by using a combination of:

•	Expected inflation and risk-free interest rate assumptions;

~~Expected inflation and risk-free interest rate assumptions;~~

•	Historical return analysis to determine long-term historic returns as well as historic risk premiums for various asset classes;

•	Expected future risk premiums, asset classes’ volatilities and correlations;

•	Forward-looking return expectations derived from the yield on long-term bonds and the expected long-term returns of major capital market assumptions; and

~~Historical return analysis to determine long-term historic returns as well as historic risk premiums for various asset classes;~~

•	Investment allocation of plan assets. The strategic target asset allocation for Dominion Energy’s pension funds is 28% U.S. equity, 18% non-U.S. equity, 35% fixed income, 3% real estate and 16% other alternative investments, such as private equity investments.

~~Expected future risk premiums, asset classes’ volatilities and correlations;~~

~~Forward-looking return expectations derived from the yield on long-term bonds and the expected long-term returns of major capital market assumptions; and~~

~~Investment allocation of plan assets. The strategic target asset allocation for Dominion Energy’s pension funds is 28% U.S. equity, 18%~~

~~non-U.S.~~

~~equity, 35% fixed income, 3% real estate and 16% other alternative investments, such as private equity investments.~~

Strategic investment policies are established for Dominion Energy’s prefunded benefit plans based upon periodic asset/liability studies. Factors considered in setting the investment policy include those mentioned above such as employee demographics, liability growth rates, future discount rates, the funded status of the plans and the expected long-term rate of return on plan assets. Deviations from the plans’ strategic allocation are a function of Dominion Energy’s assessments regarding short-term risk and reward opportunities in the capital markets and/or short-term market movements which result in the plans’ actual asset allocations varying from the strategic target asset allocations. Through periodic rebalancing, actual allocations are brought back in line with the targets. Future asset/liability studies will focus on strategies to further reduce pension and other postretirement plan risk, while still achieving attractive levels of returns.

Dominion Energy develops

non-investment

related assumptions, which are then compared to the forecasts of an independent investment advisor to ensure reasonableness. An internal committee selects the final assumptions. Dominion Energy calculated its pension cost using an expected long-term rate of return on plan assets assumption that ranged from 7.00% to 8.60% for 2020, 7.00% to 8.65% for 2019 and 8.75% for ~~2018 and 2017.~~2018. For ~~2020,~~2021, the expected long-term rate of return for the pension cost assumption ranged from 7.00% to ~~8.60%~~8.45% for Dominion Energy’s plans held as of December 31, ~~2019.~~2020. Dominion Energy calculated its other postretirement benefit cost using an expected long-term rate of return on plan assets assumption of 8.50% for 2020, 2019 ~~2018~~ and ~~2017.~~2018. For ~~2020,~~2021, the expected long-term rate of return for other postretirement benefit cost assumption is ~~8.50%~~8.45%. The rate used in calculating other postretirement benefit cost is lower than the rate used in calculating pension cost because of differences in the relative amounts of various types of investments held as plan assets.

Dominion Energy determines discount rates from analyses of AA/Aa rated bonds with cash flows matching the expected payments to be made under its plans. The discount rates used to calculate pension cost and other postretirement benefit cost ranged from 2.77% to 3.63% for pension plans and 3.07% to 3.52% for other postretirement benefit plans in 2020, ranged from 3.57% to 4.43% for pension plans and 4.05% to 4.41% for other postretirement benefit plans in 2019 and ranged from 3.80% to 3.81% for pension plans and 3.76% for other postretirement benefit plans in ~~2018 and ranged from 3.31% to 4.50% for pension plans and 3.92% to 4.47% for other postretirement benefit plans in 2017.~~2018. Dominion Energy selected a discount rate ranging from ~~3.47%~~2.73% to ~~3.63%~~2.95% for pension plans and ~~3.44%~~2.69% to ~~3.52%~~2.80% for other postretirement benefit plans for determining its December 31, ~~2019~~2020 projected benefit obligations.

Dominion Energy establishes the healthcare cost trend rate assumption based on analyses of various factors including the specific provisions of its medical plans, actual cost trends experienced and projected and demographics of plan participants. Dominion Energy’s healthcare cost trend rate assumption as of December 31, ~~2019 ranged from 6.50% to 6.60%~~2020 was 6.25% and is expected to gradually decrease to 5.00% by ~~2025~~2025-2026 and continue at that rate for years thereafter.

The following table illustrates the effect on cost of changing the critical actuarial assumptions previously discussed for Dominion Energy’s plans held as of December 31, 2019, while holding all other assumptions constant:

Increase in 2020 Net Periodic Cost

Change in
Actuarial
Assumptions

Pension
Benefits

Other
Postretirement
Benefits

(millions, except percentages)

Discount Rate

(0.25
)%
19

2

Long-Term rate of return on plan assets

(0.25
)%
23

5

Health care cost trend rate

1
%
N/A

20

In addition to the effects on cost, at December 31, 2019, a 0.25% decrease in the discount rate would increase Dominion Energy’s projected pension benefit obligation by $371 million and its accumulated postretirement benefit obligation by $52 million, while a 1.00% increase in the healthcare cost trend rate would increase its accumulated postretirement benefit obligation by $153 million.


50

See Note 22 to the Consolidated Financial Statements for additional information on Dominion Energy’s employee benefit plans.

~~New Accounting Standards~~

NEW ACCOUNTING STANDARDS

See Note 2 to the Consolidated Financial Statements for a discussion of new accounting standards.

~~Dominion Energy~~

DOMINION ENERGY

Results Ofof Operations

Presented below is a summary of Dominion Energy’s consolidated results:

Year Ended December 31,	2020			$ Change			2019		$ Change			2018
(millions, except EPS)
Net Income (loss) attributable to Dominion Energy	$	(401	)	$	(1,759	)	$	1,358	$	(1,089	)	$	2,447
Diluted EPS		(0.57	)		(2.19	)		1.62		(2.12	)		3.74

Year Ended
December 31,

2019

$ Change

2018

$ Change

2017

(millions, except
EPS)

Net Income attributable to Dominion Energy
$
1,358

$(1,089)
$
2,447

$(552)
$
2,999

Diluted EPS

1.62

(2.12
)
3.74

(0.98
)
4.72

Overview

2020 VS. 2019

Net income attributable to Dominion Energy decreased $1.8 billion, primarily due to charges presented in discontinued operations associated with the cancellation of the Atlantic Coast Pipeline Project and related portions of the Supply Header Project, a decrease in net investment earnings on nuclear decommissioning trust funds, an increase in charges associated with the planned early retirements of certain electric generation facilities in Virginia, an impairment charge associated with interests in certain nonregulated solar generation facilities, a contract termination charge in connection with the sale of Fowler Ridge, a charge for benefits expected to be provided to retail electric customers in Virginia through the use of a CCRO in accordance with the GTSA and a charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to legislation enacted in November 2020. These decreases in net income were partially offset by the absence of charges for refunds of amounts previously collected from retail electric customers of DESC for the NND Project and for certain regulatory assets and property, plant and equipment acquired in the SCANA Combination for which Dominion Energy committed to forgo recovery, the planned early retirement of certain Virginia Power automated meter reading infrastructure and a voluntary retirement program and a decrease in charges associated with litigation acquired in the SCANA Combination.

2019 ~~vs.~~VS. 2018

Net ~~Income~~income attributable to Dominion Energy decreased 45%, primarily due to charges for refunds of amounts previously collected from retail electric customers of DESC for the NND Project, litigation acquired in the SCANA Combination, a voluntary retirement program, ~~the~~the planned early retirement of certain Virginia Power electric generation facilities and the absence of gains on the sales of certain equity method investments. These decreases were partially offset by an increase in net investment earnings on nuclear decommissioning trust funds and the operations acquired in the SCANA Combination.

~~2018 vs. 2017~~

Net income attributable to Dominion Energy decreased 18%, primarily due to the absence of benefits in 2017 resulting from the remeasurement of deferred income taxes to the new corporate income tax rate, an impairment charge on certain gathering and processing assets, a charge associated with Virginia legislation enacted in March 2018, decreased net investment earnings on nuclear decommissioning trust funds, lower renewable energy investment tax credits and a charge for disallowance of FERC-regulated plant. These decreases were partially offset by gains on the sales of certain merchant generation facilities and equity method investments, the commencement of commercial operations of the Liquefaction Facility and the absence of charges associated with equity method investments in wind-powered generation facilities.

Analysis of Consolidated Operations

Presented below are selected amounts related to Dominion Energy’s results of operations:

Year Ended December 31,

2019

$ Change

2018

$ Change

2017

(millions)

Operating revenue
$
16,572

$3,206
$
13,366

$780
$
12,586

Electric fuel and other energy-related purchases

2,938

124

2,814

513

2,301

Purchased electric capacity

88

(34
)
122

116

6

Purchased gas

1,536

891

645

(56
)
701

Net revenue

12,010

2,225

9,785

207

9,578

Other operations and maintenance

4,428

970

3,458

258

3,200

Depreciation, depletion and amortization

2,655

655

2,000

95

1,905

Other taxes

1,040

337

703

35

668

Impairment of assets and related charges

1,535

1,132

403

388

15

Gains on sales of assets

(162
)
218

(380
)
(233
)
(147
)
Other income

986

(35
)
1,021

663

358

Interest and related charges

1,773

280

1,493

288

1,205

Income tax expense (benefit)

351

(229
)
580

610

(30
)
Noncontrolling interests

18

(84
)
102

(19
)
121

Year Ended December 31,	2020			$ Change			2019			$ Change			2018
(millions)
Operating revenue	$	14,172		$	(229	)	$	14,401		$	3,202		$	11,199
Electric fuel and other energy-related purchases		2,243			(642	)		2,885			198			2,687
Purchased electric capacity		53			(35	)		88			(34	)		122
Purchased gas		889			(671	)		1,560			956			604
Other operations and maintenance		3,685			(105	)		3,790			1,004			2,786
Depreciation, depletion and amortization		2,332			49			2,283			623			1,660
Other taxes		871			(12	)		883			303			580
Impairment of assets and other charges		2,105			585			1,520			1,508			12
Gains on sales of assets		(61	)		91			(152	)		113			(265	)
Other income		733			(78	)		811			(74	)		885
Interest and related charges		1,377			(109	)		1,486			207			1,279
Income tax expense		83			(126	)		209			(313	)		522
Net income (loss) from discontinued operations including noncontrolling interests		(1,878	)		(2,594	)		716			264			452
Noncontrolling interests		(149	)		(167	)		18			(84	)		102

An analysis of Dominion Energy’s results of operations follows:

2020 VS. 2019 ~~vs. 2018~~

~~Net~~

Operating revenue

~~increased 23%~~ decreased 2%, primarily reflecting:

•	A $700 million decrease in the fuel cost component included in utility rates as a result of a net decrease in commodity costs associated with sales to electric utility retail customers ($651 million) and gas utility customers ($49 million);

~~A $1.5~~

•	A $625 million decrease as a result of the contribution of SEMI to Wrangler in December 2019;

•	A $121 million decrease in sales to electric utility retail customers from a decrease in cooling degree days during the cooling season ($76 million) and a net decrease in heating degree days during the heating season ($45 million);

•	A $73 million decrease due to unfavorable pricing ($36 million) and lower volumes ($37 million) at Millstone, including the effects of the Millstone 2019 power purchase agreements;

•	A $71 million decrease in sales to DESC electric retail customers from the capital cost rider;

•	A $58 million decrease in sales to electric utility retail customers associated with usage factors impacted by COVID-19;

•	A $45 million decrease due to the absence of various contracts at Virginia Power; and

•	A $34 million decrease in sales to electric retail customers associated with economic and other usage factors.

These decreases were partially offset by:

•	The absence of a $1.0 billion charge for refunds of amounts previously collected from retail electric customers of DESC for the NND Project;

•	A $387 million increase from Virginia Power riders;

•	A $64 million increase in off-system PJM sales; and

•	A $45 million increase in sales to electric retail customers due to customer growth.

Electric fuel and other energy-related purchases decreased 22%, primarily due to decreased fuel costs associated with electric utility retail customers ($681 million), which are offset in operating revenue and do not impact net income, partially offset by PJM off-system sales ($64 million) and the absence of various contracts at Virginia Power ($34 million).

Purchased electric capacity decreased 40%, primarily due to a decrease in expense related to the annual PJM capacity performance market effective June 2019 ($51 million) and a Virginia Power contract termination with a non-utility generator ($13 million) partially offset by an increase in expense associated with sales to DESC electric utility retail customers ($30 million), which is offset in operating revenue and does not impact net income, and an increase in expense related to the annual PJM capacity performance market effective June 2020 ($15 million).

Purchased gas decreased 43%, primarily due to the contribution of SEMI to Wrangler in December 2019 ($579 million) and a decrease in net commodity costs for gas utilities ($49 million), which are offset in operating revenue and do not impact net income.

Other operations and maintenance decreased 3%, primarily reflecting:

•	A decrease in merger and integration-related costs associated with the SCANA Combination ($364 million), including the absence of a charge related to a voluntary retirement program ($251 million);

•	A $49 million decrease in salaries, wages and benefits; and

•	A $32 million decrease due to the contribution of SEMI to Wrangler.

These decreases were partially offset by:

•	A $144 million increase in certain Virginia Power expenditures, which are primarily recovered through state and FERC rates and do not impact net income;

•	The absence of a benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019 ($113 million);

•	A $56 million increase in outside services; and

•	A $41 million increase related to the effects of COVID-19, primarily associated with enhanced safety measures.

Depreciation, depletion and amortization increased 2%, primarily due to various projects being placed into service ($102 million) partially offset by the absence of depreciation from certain electric generation facilities that were, or have been, committed to be retired early ($58 million) and a decrease reflecting the expected approval of the nuclear plant life extensions from the NRC ($31 million).

Impairment of assets and other charges increased 38%, primarily due to:

•	A $665 million charge associated with certain nonregulated solar generation facilities;

•	An increase in charges associated with the planned early retirements of certain electric generation facilities in Virginia ($402 million);

•	A $221 million contract termination charge in connection with the sale of Fowler Ridge;

•	A charge for benefits expected to be provided to retail electric customers in Virginia through the use of a CCRO in accordance with the GTSA ($130 million);

•	A charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to legislation enacted in November 2020 ($127 million); and

•	An increase in dismantling costs associated with certain Virginia Power electric generation facilities ($54 million).

These increases were partially offset by:

•	A decrease in charges associated with litigation acquired in the SCANA Combination ($551 million);

•	The absence of a $160 million charge related to Virginia Power’s planned early retirement of certain automated meter reading infrastructure;

•	The absence of a $135 million charge related to Virginia Power’s contract termination with a non-utility generator;

•	A decrease in charges for property, plant and equipment acquired in the SCANA Combination for which Dominion Energy committed to forgo recovery ($103 million);

•	The absence of a $62 million charge related to the abandonment of a project at a Virginia Power electric generating facility; and

•	The absence of a $26 million charge for the abandonment of certain property, plant and equipment.

Gains on sales of assets decreased 60%, primarily due to a decrease in gains on the sale of nonregulated retail energy marketing assets.

Other income decreased 10%, primarily reflecting a decrease in net investment earnings on nuclear decommissioning trust funds ($217 million), an increase in charitable commitments ($65 million), primarily for social justice, and charges associated with litigation acquired in the SCANA Combination ~~due to operations acquired~~ ($~~2.5 billion)~~25 million), partially offset by the absence of a ~~$1.0 billion~~charge related to a voluntary retirement program ($111 million), an increase from equity method earnings from Cove Point following closing of the GT&S Transaction ($40 million) and an increase in non-service components of pension and other postretirement employee benefit plan credits ($33 million).

Interest and related charges decreased 7%, primarily reflecting unrealized gains associated with freestanding derivatives ($84 million), lower interest expense from early redemptions of certain securities in 2019 and 2020 ($41 million), reductions in commercial paper borrowings ($34 million) and increases in AFUDC on regulated construction projects ($28 million), partially offset by increased borrowings in response to COVID-19 ($42 million) and charges associated with the early redemption of certain securities in the first quarter of 2020 ($25 million).

Income tax expense decreased 60%, primarily due to a reduction in consolidated state deferred income taxes associated with gas transmission and storage operations ($45 million) and the absence of a charge for ~~refunds~~certain income tax-related regulatory assets acquired in the SCANA Combination for which Dominion Energy committed to forgo recovery ($194 million), partially offset by income tax expense primarily associated with the impairment of ~~amounts previously collected~~nonregulated solar generating assets held in partnerships attributable to the noncontrolling interest ($55 million) and a lower current year benefit from ~~retail electric customers~~finalizing changes in tax status of ~~DESC for~~certain subsidiaries in connection with the Dominion Energy Gas Restructuring ($24 million).

Net income from discontinued operations including noncontrolling interests decreased $2.6 billion, primarily due to charges associated with the cancellation of the Atlantic Coast Pipeline Project and related portions of the Supply Header Project.

Noncontrolling interests decreased $167 million, primarily due to impairments associated with certain nonregulated solar generation facilities ($267 million), partially offset by the sale of a 25% noncontrolling limited partnership interest in Cove Point to Brookfield in December 2019 ($97 million).

2019 VS. 2018

Operating revenue increased 29%, primarily reflecting:

•	A $3.1 billion increase from operations acquired in the SCANA Combination, including a $1.0 billion charge for refunds of amounts previously collected from retail electric customers of DESC for the NND Project;

•	A $348 million increase from Virginia Power riders;

•	The absence of a $215 million charge associated with Virginia legislation enacted in March 2018 that required one-time rate credits of certain amounts to utility customers; and

•	A $57 million increase due to favorable pricing at Millstone, including the effects of the Millstone 2019 power purchase agreements.

These increases were partially offset by:

•	A $456 million decrease from the absence of certain nonregulated generation facilities sold in 2018;

•	A $83 million decrease in the fuel cost component included in utility rates as a result of a net decrease in commodity costs associated with sales to Virginia Power utility customers; and

•	A $45 million decrease in sales to Virginia Power retail customers from lower heating degree days during the heating season, partially offset by a $25 million increase from higher cooling degree days during the cooling season.

Electric fuel and other energy-related purchases increased 7%, primarily due to a $576 million increase from ~~Virginia Power rate adjustment clauses;~~

~~A $257 million increase from~~operations acquired in the ~~Liquefaction Facility, including terminalling services provided to the Export Customers ($190 million),~~SCANA Combination, partially offset by a decrease in ~~credits associated with~~fuel costs due to the

~~start-up~~

~~phase ($44 million) and regulated gas transportation contracts to serve the Export Customers ($23 million);~~

~~The~~ absence of ~~a $215 million charge~~certain nonregulated generation facilities in 2018 ($245 million), decreased fuel costs associated with Virginia ~~legislation enacted~~Power utility customers ($83 million), which are offset in ~~March 2018 that required~~

~~one-time~~

~~rate credits of certain amounts to utility customers;~~

~~A $74 million~~operating revenue and do not impact net income, and a decrease in Virginia Power fuel costs due to the expiration of an energy supply contract ($40 million).

Purchased electric capacitydecreased 28%, primarily due to a decrease in expense related to the annual PJM capacity performance market effective June 2019 ($63 million) and a Virginia Power contract termination with a

non-utility

generator ($37 million), partially offset by an increase in expense from operations acquired in the SCANA Combination ($49 million) and the annual PJM capacity performance market effective June 2018 ($26 million);

~~A $57~~.

Purchased gas increased $956 million, ~~increase~~primarily due ~~to favorable pricing at Millstone, including the effects of the Millstone 2019 power purchase agreements; and~~

~~A $40 million decrease in Virginia Power fuel costs due to the expiration of~~ an ~~energy supply contract.~~

~~These increases were partially offset by:~~

~~A $211 million decrease from the absence of certain merchant generation facilities sold in 2018;~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

~~A $99 million decrease in services performed for Atlantic Coast Pipeline; and~~

A $45 million decrease in sales to Virginia Power retail customers from lower heating degree days during the heating season, partially offset by a $25 million increase from higher cooling degree days during the cooling season.

~~Other operations and maintenance~~

~~increased 28%, primarily reflecting:~~

~~A $735 million~~ increase from operations acquired in the SCANA Combination.

Other operations and maintenance increased 36%, primarily reflecting:

•	A $735 million increase from operations acquired in the SCANA Combination;

•	An increase in merger and integration-related costs associated with the SCANA Combination ($427 million), including a charge related to a voluntary retirement program ($251 million); and

•	A $116 million increase in certain Virginia Power transmission and generation-related expenditures. These expenses are primarily recovered through state and FERC rates and do not impact net income.

~~An increase in merger and integration-related costs associated with the SCANA Combination ($474 million), including a charge related to a voluntary retirement program ($291 million);~~

A $116 million increase in certain Virginia Power transmission and generation-related expenditures. These expenses are primarily recovered through state and FERC rates and do not impact net income; and

A $38 million increase in operating expenses from the commercial operations of the Liquefaction Facility and costs associated with regulated gas transportation contracts to serve the Export Customers.

These increases were partially offset by:

•	A $113 million benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019;

~~A $113 million benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019;~~

•	The absence of an $81 million charge associated primarily with future ash pond and landfill closure costs in connection with the enactment of Virginia legislation in April 2018; and

•	A $43 million decrease from the absence of certain nonregulated generation facilities sold in 2018.

~~A $99 million decrease in services performed for Atlantic Coast Pipeline. These expenses are billed to Atlantic Coast Pipeline and do not significantly impact net income;~~

~~The absence of an $81 million charge associated primarily with future ash pond and landfill closure costs in connection with the enactment of Virginia legislation in April 2018; and~~

~~A $43 million decrease from the absence of certain merchant generation facilities sold in 2018.~~

Depreciation, depletion and amortization

increased ~~33%~~38%, primarily due to property, plant and equipment acquired in the SCANA Combination ($559 million), including amortization of NND Project costs ($127 million), an increase from various growth projects being placed into service ($~~134 million), including the Liquefaction Facility ($28~~140 million) and the absence of a benefit for the retroactive application of depreciation rates for regulated

nuclear plants to comply with Virginia Commission requirements ($31 million), partially offset by the planned early retirement of certain Virginia Power electric generation facilities and automated meter reading infrastructure ($40 million) and the sale of certain ~~merchant~~nonregulated electric generation facilities in 2018 ($37 million).

Other taxes

increased ~~48%~~52%, primarily due to the SCANA Combination ($258 million), an increase in property tax charges for growth projects placed into service ($56 million) and a charge related to a voluntary retirement program ($2421 million).

Impairment of assets and ~~related~~other charges

increased ~~$1.1~~$1.5 billion, primarily due to:

•	Charges associated with litigation acquired in the SCANA Combination ($641 million);

~~Charges associated with litigation acquired in the SCANA Combination ($641 million);~~

•	A $346 million charge related to the early retirement of certain Virginia Power electric generation facilities;

•	A $160 million charge related to Virginia Power’s planned early retirement of certain automated meter reading infrastructure;

•	A $135 million charge related to Virginia Power’s contract termination with a non-utility generator;

•	A $105 million charge for property, plant and equipment acquired in the SCANA Combination for which Dominion Energy committed to forgo recovery;

~~A $346 million charge related to the early retirement of certain Virginia Power electric generation facilities;~~

•	A $62 million charge related to the abandonment of a project at a Virginia Power electric generating facility; and

•	The abandonment of certain property, plant and equipment ($26 million).

~~A $160 million charge related to Virginia Power’s planned early retirement of certain automated meter reading infrastructure;~~

~~A $135 million charge related to Virginia Power’s contract termination with a~~

~~non-utility~~

~~generator;~~

~~A $105 million charge for property, plant and equipment acquired in the SCANA Combination for which Dominion Energy committed to forgo recovery;~~

~~A $62 million charge related to the abandonment of a project at a Virginia Power electric generating facility; and~~

~~The abandonment of certain property, plant and equipment ($39 million); partially offset by~~

~~The absence of a $219 impairment charge on certain gathering and processing assets;~~

~~The absence of a $135 million charge for disallowance of FERC-regulated plant; and~~

~~The absence of a $37 million~~

~~write-off~~

~~associated with the Eastern Market Access Project.~~

Gains on sales of assets

decreased ~~57%~~43%, primarily due to the absence of the sale of Fairless and Manchester ($210 million) ~~and the absence of gains related to agreements to convey shale development rights under natural gas storage fields ($115 million),~~ partially offset by an increase in gains on sales of nonregulated retail energy marketing assets ($82 million).

Other income

decreased 3%8%, primarily reflecting the absence of aequity method earnings and gain ~~on, and equity earnings~~ from the sale of Dominion Energy’s 50% limited partnership interest in Blue Racer ($603 million), a charge related to a voluntary retirement program ($~~112~~111 million) and the absence of a gain on the sale of Dominion Energy’s 25% limited partnership interest in Catalyst Old River Hydroelectric Limited Partnership ($87 million). These decreases were partially offset by an increase in net investment earnings on nuclear decommissioning trust funds ($720 million) ~~and an increase in equity earnings from Atlantic Coast Pipeline ($50 million)~~.

Interest and related charges

increased ~~19%~~16%, primarily due to debt acquired in the SCANA Combination net of debt redeemed in 2019 ($314 ~~million), the absence of capitalization of interest expense associated with the Liquefaction Facility upon completion of construction ($46~~ million), partially offset by the absence of charges associated with the early redemption of certain debt securities in 2018 ($69 million) and reduced interest on long-term debt due to net debt repayments in 2018 and 2019 ($57 million).

Income tax expense

decreased ~~39%~~60%, primarily due to lower

pre-tax

income ($~~299~~383 million), the impacts of changes in tax status of certain subsidiaries in connection with the Dominion Energy Gas Restructuring ($48 million), higher investment tax credits ($39 million) and the absence of 2017 Tax Reform Act impacts ($46 million), partially offset by a charge for certain income

tax-related

regulatory assets acquired in the SCANA Combination for which Dominion Energy committed to forgo recovery ($194 million) and the absence of a state legislative change ($20 million).

Net income from discontinued operations including noncontrolling interests increased 58%, primarily due to the operations of the Liquefaction Facility for the entire year and the absence of charges for impairment of certain gathering and processing assets and disallowance of FERC-regulated plant.

Noncontrolling interests

decreased 82%, primarily due to the acquisition of the public interest in Dominion Energy Midstream in January 2019.


52

~~2018 vs. 2017~~

~~Net revenue~~

~~increased 2%, primarily reflecting:~~

A $500 million increase due to commencement of commercial operations of the Liquefaction Facility, including terminalling services provided to the Export Customers ($508 million) and regulated gas transportation contracts to serve the Export Customers ($58 million), partially offset by credits associated with the

~~start-up~~

~~phase of the Liquefaction Facility ($66 million);~~

An increase in sales to electric utility retail customers from an increase in heating degree days during the heating season of 2018 ($71 million) and an increase in cooling degree days during the cooling season of 2018 ($69 million);

~~A $130 million increase due to favorable pricing at merchant generation facilities;~~

~~A $92 million increase due to growth projects placed in service, other than the Liquefaction Facility;~~

~~A $74 million increase in services performed for Atlantic Coast Pipeline; and~~

~~A $46 million increase in sales to electric utility retail customers due to customer growth.~~

~~These increases were partially offset by:~~

~~A $325 million decrease for regulated electric generation and electric and gas distribution operations as a result of the 2017 Tax Reform Act;~~

~~A $215 million charge associated with Virginia legislation enacted in March 2018 that requires~~

~~one-time~~

~~rate credits of certain amounts to utility customers;~~

A $94 million increase in net electric capacity expense related to the annual PJM capacity performance market effective June 2017 ($112 million) and the annual PJM capacity performance market effective June 2018 ($39 million), partially offset by a benefit related to

~~non-utility~~

~~generators ($57 million);~~

~~An $89 million decrease in rate adjustment clauses associated with electric utility operations, which includes the impacts of the 2017 Tax Reform Act; and~~

~~A $38 million decrease from scheduled declines in or expiration of certain DETI and Cove Point contracts.~~

~~Net revenue does not reflect an impact from a reduction in planned outage days at Millstone as there was an offsetting increase in unplanned outage days.~~

~~Other operations and maintenance~~

~~increased 8%, primarily reflecting:~~

~~A $102 million increase in storm damage and service restoration costs in the regulated electric service territory;~~

~~An $81 million increase due to a charge associated primarily with future ash pond and landfill closure costs in connection with the enactment of Virginia legislation in April 2018;~~

~~A $73 million increase in services performed for Atlantic Coast Pipeline. These expenses are billed to Atlantic Coast Pipeline and do not significantly impact net income;~~

A $47 million increase in operating expenses from the commercial operations of the Liquefaction Facility and costs associated with regulated gas transportation contracts to serve the Export Customers; and

~~A $38 million increase in salaries, wages and benefits, partially offset by~~

~~A $74 million decrease from a reduction in planned outage days at certain merchant and utility generation facilities.~~

~~Depreciation, depletion and amortization~~

increased 5%, primarily due to an increase from various growth projects being placed into service ($187 million), including the Liquefaction Facility ($81 million), partially offset by revised depreciation rates for regulated nuclear plants to comply with the Virginia Commission requirements ($61 million).

~~Impairment of assets and related charges~~

increased $388 million, primarily due to a $219 million impairment charge on certain gathering and processing assets, a $135 million charge for disallowance of FERC-regulated plant and a $37 million

~~write-off~~

~~associated with the Eastern Market Access Project.~~

~~Gains on sales of assets~~

increased $233 million, primarily due to the sale of Fairless and Manchester ($210 million) and an increase in gains related to agreements to convey shale development rights under natural gas storage fields ($46 million).

~~Other income~~

~~increased $663 million, primarily reflecting a gain on the sale of~~

Outlook

Dominion Energy’s 50% limited partnership interest in Blue Racer ($546 million), the absence of charges associated with equity method investments in wind-powered generation facilities ($158 million), a gain on the sale of Dominion Energy’s 25% limited partnership interest in Catalyst Old River Hydroelectric Limited Partnership ($87 million) and a decrease in the

~~non-service~~

components of pension and other postretirement employee benefit credits capitalized to property, plant and equipment in 2018 ($45 million), partially offset by a decrease in net investment earnings on nuclear decommissioning trust funds ($209 million).

~~Interest and related charges~~

increased 24%, primarily due to the absence of capitalization of interest expense associated with the Liquefaction Facility upon completion of construction ($111 million), higher long-term debt interest expense resulting from net debt issuances in 2018 and 2017 ($92 million) and charges associated with the early redemption of certain debt securities ($69 million).

~~Income tax expense~~

increased $610 million, primarily due to the absence of benefits resulting from the remeasurement of deferred income taxes to the new corporate income tax rate ($851 million) and lower renewable energy investment tax credits ($138 million), partially offset by the reduced corporate income tax rate ($414 million).

~~Outlook~~

~~Dominion Energy’s 2020~~2021 net income is expected to increase on a per share basis as compared to ~~2019~~2020 primarily from the following:

~~The absence of charges for refunds of amounts previously collected from retail electric customers of DESC for the NND Project;~~

~~The absence of charges associated with the early retirement of certain Virginia Power electric generation facilities and automated meter reading infrastructure;~~

~~A reduction in merger and integration-related costs associated with the SCANA Combination, including charges related to a voluntary retirement program;~~

•	The absence of charges associated with the cancellation of the Atlantic Coast Pipeline Project and related portions of the Supply Header Project;

•

The absence of charges associated with the impairment of interests in certain nonregulated solar generation facilities, the early retirement of certain electric generation facilities and contract termination in connection with the sale of Fowler Ridge;

•	The absence of charges for expected CCRO and customer arrears forgiveness for Virginia utility customers;

•	A reduction in merger and integration related costs associated with the SCANA Combination;

•	A reduction in charges associated with litigation acquired in the SCANA Combination;

•	Construction and operation of growth projects in electric utility and gas distribution operations;

•	Share accretion as a result of repurchases of common stock completed in 2020; and

•	A decrease in planned outage days at Millstone.

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

~~A decrease in charges associated with litigation acquired in the SCANA Combination;~~

~~Construction and operation of growth projects in gas transmission and distribution;~~

~~Construction and operation of growth projects in electric utility operations;~~

~~Lower depreciation on Virginia Power’s nuclear plants associated with expected approval of license extensions from the NRC;~~

~~Reduced interest expense as a result of early redemptions of long-term debt; and~~

~~Delivery under the Millstone 2019 power purchase agreements for an entire year.~~

These increases are expected to be partially offset by the following:

•	The absence of operations sold to BHE as part of the GT&S Transaction and the Q-Pipe Transaction;

~~The absence of a benefit for the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019;~~

•	An increase in electric capacity expenses at Virginia Power; and

•	An increase in operations and maintenance expenses.

~~The noncontrolling 25% limited partnership interest in Cove Point sold in December 2019;~~

~~An increase in planned outage days at Millstone; and~~

~~Share dilution.~~

~~Segment Results Of Operations~~

SEGMENT RESULTS OF OPERATIONS

Segment results include the impact of intersegment revenues and expenses, which may result in intersegment profit or loss. In ~~December 2019,~~September 2020, Dominion Energy ~~realigned~~updated its operating segments ~~which resulted in~~following the ~~formation~~July 2020 agreement to sell substantially all of ~~five primary operating segments.~~its gas transmission and storage operations to BHE. The historical information presented herein has been recast to reflect the current segment presentation. Presented below is a summary of contributions by Dominion Energy’s operating segments to net income (loss) attributable to Dominion Energy:

Year Ended December 31,	2020						2019						2018
	Net income (loss) attributable to Dominion Energy			Diluted EPS			Net income (loss) attributable to Dominion Energy			Diluted EPS			Net income attributable to Dominion Energy		Diluted EPS
(millions, except EPS)
Dominion Energy Virginia	$	1,891		$	2.28		$	1,786		$	2.21		$	1,596	$	2.44
Gas Distribution		560			0.67			487			0.60			373		0.57
Dominion Energy South Carolina		419			0.51			430			0.53			—		—
Contracted Assets		402			0.48			460			0.57			361		0.55
Corporate and Other		(3,673	)		(4.51	)		(1,805	)		(2.29	)		117		0.18
Consolidated	$	(401	)	$	(0.57	)	$	1,358		$	1.62		$	2,447	$	3.74

Year Ended December 31,

2019

2018

2017

Net
income
(loss)
attributable
to Dominion
Energy

Diluted
EPS

Net
income
(loss)
attributable
to Dominion
Energy

Diluted
EPS

Net income
attributable
to Dominion
Energy

Diluted
EPS

(millions, except EPS)

Dominion Energy Virginia

$ 1,786

$2.21

$1,596

$2.44

$1,466

$2.30

Gas Transmission & Storage

934

1.16

844

1.29

552

0.87

Gas Distribution

488

0.60

373

0.57

351

0.55

Dominion Energy South Carolina

430

0.53

—

—

—

—

Contracted Generation

276

0.34

245

0.37

253

0.40

Corporate and Other

(2,556
)
(3.22
)
(611
)
(0.93
)
377

0.60

Consolidated

$ 1,358

$ 1.62

$ 2,447

$3.74

$2,999

$4.72

Dominion Energy Virginia

Presented below are operating statistics related to Dominion Energy Virginia’s operations:

Year Ended December 31,

2019

% Change

2018

% Change

2017

Electricity delivered (million MWh)

87.7

—
%
87.8

5
%
83.4

Electricity supplied (million MWh):

Utility

88.2

—

88.0

4

85.0

Degree days (electric distribution and utility service area):

Cooling

2,031

1

2,019

12

1,801

Heating

3,259

(10
)
3,608

16

3,104

Average electric distribution customer accounts (thousands)

2,626

1

2,600

1

2,574

Year Ended December 31,	2020		% Change				2019		% Change				2018
Electricity delivered (million MWh)		83.3		(5	)	%		87.7		—		%	87.8
Electricity supplied (million MWh):
Utility		87.0		(1	)			88.2		—				88.0
Non-Jurisdictional		0.7		75				0.4		300				0.1
Degree days (electric distribution and utility service area):
Cooling		1,759		(13	)			2,031		1				2,019
Heating		2,970		(9	)			3,259		(10	)			3,608
Average electric distribution customer accounts (thousands)		2,661		1				2,626		1				2,600

Presented below, on an

after-tax

basis, are the key factors impacting Dominion Energy Virginia’s net income contribution:

2020 VS. 2019

	Increase (Decrease)
	Amount			EPS
(millions, except EPS)
Regulated electric sales:
Weather	$	(74	)	$	(0.09	)
Other		(20	)		(0.02	)
Rider equity return		87			0.10
Electric capacity		22			0.03
Outages		29			0.04
Salaries, wages and benefits		32			0.04
Depreciation and amortization		42			0.05
Renewable energy investment tax credits		19			0.02
Other		(32	)		(0.04	)
Share dilution		—			(0.06	)
Change in net income contribution	$	105		$	0.07

2019 VS. 2018

	Increase (Decrease)
	Amount			EPS
(millions, except EPS)
Regulated electric sales:
Weather	$	(14	)	$	(0.02	)
Other		9			0.01
Rider equity return		84			0.13
Electric capacity		54			0.08
Expiration of energy supply contract		30			0.05
Renewable energy investment tax credits		(14	)		(0.02	)
Other		41			0.06
Share dilution		—			(0.52	)
Change in net income contribution	$	190		$	(0.23	)

Increase
(Decrease)

Amount

EPS

(millions, except EPS)

Regulated electric sales:

Weather

$ (14
) $
(0.02
)
Other

9

0.01

Rate adjustment clause equity return

84

0.13

Electric capacity

54

0.08

Expiration of energy supply contract

30

0.05

Renewable energy investment tax credits

(14
)
(0.02
)
Other

41

0.06

Share dilution

—

(0.52
)
Change in net income contribution

$190
$
(0.23
)

~~2018 VS. 2017~~

Increase (Decrease)

Amount

EPS

(millions, except EPS)

Regulated electric sales:

Weather

$ 86
$
0.14

Other

43

0.07

Rate adjustment clause equity return

14

0.02

Depreciation and amortization

31

0.05

Storm damage and service restoration

(19
)
(0.03
)
Planned outage costs

12

0.02

Electric capacity

(66
)
(0.10
)
Renewable energy investment tax credits

34

0.05

Other

(5
)
(0.01
)
Share dilution

—

(0.07
)
Change in net income contribution

$130
$
0.14


54

~~Gas Transmission & Storage~~

~~Presented below are operating statistics related to Gas Transmission & Storage’s operations:~~

Year Ended December 31,

2019
(1)

% Change

2018

% Change

2017

Average retail energy marketing customer accounts (thousands)

762

2
%
750

(47
)%
1,405

~~(1)~~

~~Includes SEMI effective January 2019 until December 2019.~~

~~Presented below, on an~~

~~after-tax~~

~~basis, are the key factors impacting Gas Transmission & Storage’s net income contribution:~~

~~2019 VS. 2018~~

Increase (Decrease)

Amount

EPS

(millions, except EPS)

Cove Point export contracts

$172

$ 0.26

Assignment of shale development rights

(83
)
(0.12
)
Interest expense, net

(60
)
(0.09
)
State legislative change

(18
)
(0.03
)
Noncontrolling interest

62

0.09

Atlantic Coast Pipeline equity earnings

37

0.06

Other

(20
)
(0.03
)
Share dilution

—

(0.27
)
Change in net income contribution

$ 90

$ (0.13
)

~~2018 VS. 2017~~

Increase (Decrease)

Amount

EPS

(millions, except EPS)

Transmission and storage growth projects

$ 30
$
0.05

Cove Point export contracts

259

0.41

Cove Point import contracts

(12
)
(0.02
)
DETI contract declines

(20
)
(0.03
)
Assignment of shale development rights

27

0.04

2017 Tax Reform Act impacts

113

0.18

Interest expense, net

(81
)
(0.13
)
State legislative change

18

0.03

Other

(42
)
(0.07
)
Share dilution

—

(0.04
)
Change in net income contribution

$ 292

$ 0.42

Gas Distribution

Presented below are selected operating statistics related to Gas Distribution’s operations:

Year Ended December 31,	2020		% Change				2019⁽¹⁾		% Change				2018
Gas distribution throughput (bcf):
Sales		180		(6	)	%		192		47		%		131
Transportation		868		7				811		12				725
Heating degree days (gas distribution service area):
North Carolina		2,734		(7	)			2,942
Ohio and West Virginia		5,148		(4	)			5,355		(6	)			5,693
Utah, Wyoming, and Idaho		4,973		(10	)			5,501		18				4,672
Average gas distribution customer accounts (thousands):
Sales		1,897		2				1,857		48				1,258
Transportation		1,123		1				1,108		1				1,096

(1) Includes PSNC effective January 2019.

Year Ended December 31,

2019
(1)

% Change

2018

% Change

2017

Gas distribution throughput (bcf):

Sales

192

47
%
131

1
%
130

Transportation

811

12

725

11

654

Heating degree days (gas distribution service area):

North Carolina

2,942

Ohio and West Virginia

5,355

(6
)
5,693

15

4,930

Utah, Wyoming and Idaho

5,501

18

4,672

(4
)
4,892

Average gas distribution customer accounts (thousands):

Sales

1,857

48

1,258

1

1,240

Transportation

1,108

1

1,096

1

1,086

~~(1)~~

~~Includes PSNC effective January 1, 2019.~~

Presented below, on an

after-tax

basis, are the key factors impacting Gas Distribution’s net income contribution:

2020 VS. 2019

	Increase (Decrease)
	Amount			EPS
(millions, except EPS)
Regulated gas sales:
Weather	$	(2	)	$	—
Other		11			0.01
Salaries, wages and benefits		14			0.02
Interest expense, net		36			0.04
Other		14			0.02
Share dilution		—			(0.02	)
Change in net income contribution	$	73		$	0.07

2019 VS. 2018

	Increase (Decrease)
	Amount			EPS
(millions, except EPS)
Regulated gas sales:
Weather	$	(3	)	$	—
Other		(2	)		—
Rider equity return		16			0.02
SCANA Combination		87			0.13
Other		16			0.02
Share dilution		—			(0.14	)
Change in net income contribution	$	114		$	0.03

Increase (Decrease)

Amount

EPS

(millions, except EPS)

Regulated gas sales:

Weather
$
(3
) $
—

Other

(2
)
—

Rate adjustment clause equity return

16

0.02

SCANA Combination

87

0.13

Other

17

0.02

Share dilution

—

(0.14
)
Change in net income contribution

$115

$0.03

~~2018 VS. 2017~~

Increase (Decrease)

Amount

EPS

(millions, except EPS)

Regulated gas sales:

Weather
$
7
$
0.01

Other

2

—

Rate adjustment clause equity return

9

0.01

2017 Tax Reform Act impacts

28

0.04

Interest expense

(4
)
—

Other

(20
)
(0.02
)
Share dilution

—

(0.02
)
Change in net income contribution

$22

$0.02

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

Dominion Energy South Carolina

Presented below are selected operating statistics related to Dominion Energy South Carolina’s operations:


~~Year Ended December 31,~~			~~2019~~
~~Electricity delivered (million MWh)~~			~~23.0~~
~~Electricity supplied (million MWh)~~			~~24.1~~
~~Degree days (electric and gas distribution service areas):~~
~~Cooling~~			~~951~~
~~Heating~~			~~1,179~~
~~Average electric distribution customer accounts (thousands)~~			~~739~~
~~Gas distribution throughput (bcf):~~
~~Sales~~			65
~~Average gas distribution customer accounts (thousands)~~			~~386~~

Year Ended December 31,	2020		% Change				2019
Electricity delivered (million MWh)		22.1		(4	)	%		23.0
Electricity supplied (million MWh)		23.0		(5	)			24.1
Degree days (electric and gas distribution service areas):
Cooling		794		(17	)			951
Heating		1,074		(9	)			1,179
Average electric distribution customer accounts (thousands)		753		2				739
Gas distribution throughput (bcf):
Sales		66		2				65
Average gas distribution customer accounts (thousands)		399		3				386

~~2019 VS. 2018~~

Presented below, on an

after-tax

basis, are the key factors impacting Dominion Energy South Carolina’s net income contribution:

2020 VS. 2019

	Increase (Decrease)
	Amount			EPS
(millions, except EPS)
Regulated electric sales:
Weather	$	(15	)	$	(0.02	)
Other		2			—
Regulated gas sales		12			0.02
Capital cost rider		(10	)		(0.01	)
Interest expense, net		17			0.02
Other		(17	)		(0.02	)
Share dilution		—			(0.01	)
Change in net income contribution	$	(11	)	$	(0.02	)

Increase (Decrease)

Amount

EPS

(millions, except EPS)

SCANA Combination

$430

$0.53

2019 VS. 2018

	Increase (Decrease)
	Amount		EPS
(millions, except EPS)
SCANA Combination	$	430	$	0.53

Contracted ~~Generation~~

Assets

Presented below are selected operating statistics related to Contracted ~~Generation’s~~Asset’s operations:

Year Ended December 31,		2020				% Change				2019				% Change				2018
Electricity supplied (million MWh)			19.3				(4	)	%		20.2				(30	)	%		28.8

Year Ended December 31,

2019

% Change

2018

% Change

2017

Electricity supplied (million MWh)

20.2

(30
)%
28.8

—
%
28.9

Presented below, on an

after-tax

basis, are the key factors impacting Contracted ~~Generation’s~~Asset’s net income contribution:

2020 VS. 2019

	Increase (Decrease)
	Amount			EPS
(millions, except EPS)
Margin⁽¹⁾	$	(46	)	$	(0.06	)
Planned outage costs		(29	)		(0.04	)
Renewable energy investment tax credits		17			0.02
Interest expense, net		13			0.02
Other		(13	)		(0.02	)
Share dilution		—			(0.01	)
Change in net income contribution	$	(58	)	$	(0.09	)

(1)	Includes earnings associated with a 50% noncontrolling interest in Cove Point.

2019 VS. 2018

Increase
(Decrease)

Amount

EPS

(millions, except EPS)

Margin

$ 42
$
0.06

Renewable energy investment tax credits

50

0.08

Sale of certain electric generation facilities

(95
)
(0.14
)
Interest expense

26

0.04

Other

8

0.01

Share dilution

—

(0.08
)
Change in net income contribution

$ 31
$
(0.03
)

	Increase (Decrease)
	Amount			EPS
(millions, except EPS)
Margin⁽¹⁾	$	109		$	0.17
Renewable energy investment tax credits		50			0.08
Sale of certain electric generation facilities		(95	)		(0.15	)
Interest expense		26			0.04
Other		9			0.01
Share dilution		—			(0.13	)
Change in net income contribution	$	99		$	0.02

(1)	Includes earnings associated with a 50% noncontrolling interest in Cove Point.

~~2018 VS. 2017~~

Increase (Decrease)

Amount

EPS

(millions, except EPS)

Margin

$101

$ 0.16

Planned outage costs

34

0.05

Depreciation and amortization

(9
)
(0.01
)
Renewable energy investment tax credits

(172
)
(0.28
)
2017 Tax Reform Act impacts

45

0.07

Other

(7
)
(0.01
)
Share dilution

—

(0.01
)
Change in net income contribution

$ (8
)
$(0.03
)

Corporate and Other

Presented below are the Corporate and Other segment’s after-tax results:

~~after-tax~~

Year Ended December 31,	2020			2019			2018
(millions, except EPS)
Specific items attributable to operating segments	$	(1,241	)	$	(1,901	)	$	(196	)
Specific items attributable to Corporate and Other segment		(2,166	)		384			518
Total specific items		(3,407	)		(1,517	)		322
Other corporate operations:
Interest expense, net		(384	)		(383	)		(375	)
Other		118			95			170
Total other corporate operations		(266	)		(288	)		(205	)
Total net income (expense)		(3,673	)		(1,805	)		117
EPS impact	$	(4.51	)	$	(2.29	)	$	0.18

~~results:~~

Year Ended December 31,

2019

2018

2017

(millions, except EPS)

Specific items attributable to operating segments
$
(2,039
) $
(88
) $
861

Specific items attributable to Corporate and Other segment

(50
)
(116
)
(151
)
Total specific items

(2,089
)
(204
)
710

Other corporate operations:

2017 Tax Reform Act impacts

—

(81
)
—

Interest expense, net

(430
)
(358
)
(334
)
Other

(37
)
32

1

Total other corporate operations

(467
)
(407
)
(333
)
Total net income (expense)

(2,556
)
(611
)
377

EPS impact
$
(3.22
) $
(0.93
) $
0.60

~~Total Specific Items~~

TOTAL SPECIFIC ITEMS

Corporate and Other includes specific items attributable to Dominion Energy’s primary operating segments that are not included in profit measures evaluated by executive management in assessing the segments’ performance or in allocating resources. See Note 26 to the Consolidated Financial Statements for discussion of these items in more detail. Corporate and Other also includes specific items attributable to the Corporate and Other segment. In 2020, this primarily included $2.2 billion of after-tax loss associated with discontinued operations, including the results of operations of the entities included in the GT&S and Q-Pipe Transactions as well as charges associated with the cancellation of the Atlantic Coast Pipeline Project, $82 million of after-tax charges for merger and integration-related costs associated with the SCANA Combination, a $78 million after-tax benefit of derivative mark-to-market changes and a $69 million tax benefit associated with the GT&S Transaction. In 2019, this primarily included ~~$40~~$521 million of

after-tax

earnings for the results of operations of the entities included in the GT&S and Q-Pipe Transactions and $135 million of after-tax transaction and transition costs associated with the SCANA Combination. In 2018, this primarily included $390 million of after-tax gains on the sales of certain equity method investments, $244 million of after-tax earnings for the results of operations of the entities included in the GT&S and Q-Pipe Transactions, $51 million of

after-tax

charges associated with the early redemption of certain debt securities and $31 million of

after-tax

transaction and transition costs associated with the Dominion Energy Questar Combination and SCANA Combination. ~~In 2017, this primarily included $124 million~~

VIRGINIA POWER

Results of ~~tax benefits resulting from the remeasurement of deferred income taxes to the new corporate income tax rate.~~

~~Virginia Power~~

~~Results Of~~ Operations

Presented below is a summary of Virginia Power’s consolidated results:

Year Ended December 31,	2020		$ Change			2019		$ Change			2018
(millions)
Net Income	$	1,021	$	(128	)	$	1,149	$	(133	)	$	1,282

Year Ended
December 31,

2019

$ Change

2018

$ Change

2017

(millions)

Net Income
$
1,149

$(133
) $
1,282

$(258
) $
1,540

Overview

2020 VS. 2019

Net income decreased 11%, primarily due to an increase in charges related to the planned early retirements of certain electric generation facilities, a charge for benefits expected to be provided to retail electric customers in Virginia through the use of a CCRO in accordance with the GTSA, a charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to legislation enacted in November 2020 and the absence of a benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019. These decreases were partially offset by the absence of charges related to the planned early retirement of certain automated meter reading infrastructure, a voluntary retirement program and a contract termination with a non-utility generator.

2019 VS. 2018

Net income decreased 10%, primarily due to charges associated with the planned early retirement of certain electric generation facilities and automated meter reading infrastructure, a voluntary retirement program and a contract termination with a

non-utility

generator. These decreases were partially offset by increases related to higher ~~rate adjustment clause~~rider equity returns, the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019 and the absence of charges associated with Virginia legislation enacted in March 2018 and April 2018.


56

~~2018 VS. 2017~~

Net income decreased 17%, primarily due to a charge associated with Virginia legislation enacted in March 2018, an increase in storm damage and service restoration costs, a charge associated primarily with future ash pond and landfill closure costs in connection with the enactment of Virginia legislation in April 2018 and an increase in net electric capacity expense, partially offset by an increase in heating and cooling degree days in the service territory.

Analysis of Consolidated Operations

Presented below are selected amounts related to Virginia Power’s results of operations:

Year Ended December 31,	2020			$ Change			2019		$ Change			2018
(millions)
Operating revenue	$	7,763		$	(345	)	$	8,108	$	489		$	7,619
Electric fuel and other energy-related purchases		1,636			(542	)		2,178		(140	)		2,318
Purchased (excess) electric capacity		(17	)		(57	)		40		(82	)		122
Other operations and maintenance		1,786			43			1,743		67			1,676
Depreciation and amortization		1,252			29			1,223		91			1,132
Other taxes		327			(1	)		328		28			300
Impairment of assets and other charges		1,093			336			757		757			—
Other income		80			(18	)		98		76			22
Interest and related charges		516			(8	)		524		13			511
Income tax expense		229			(35	)		264		(36	)		300

Year Ended December 31,

2019

$ Change

2018

$ Change

2017

(millions)

Operating revenue
$
8,108

$ 489
$
7,619

$ 63
$
7,556

Electric fuel and other energy-related purchases

2,178

(140
)
2,318

409

1,909

Purchased electric capacity

40

(82
)
122

116

6

Net revenue

5,890

711

5,179

(462
)
5,641

Other operations and maintenance

1,743

67

1,676

198

1,478

Depreciation and amortization

1,223

91

1,132

(9
)
1,141

Other taxes

328

28

300

10

290

Impairment of assets and other charges

757

757

—

—

—

Other income

98

76

22

(54
)
76

Interest and related charges

524

13

511

17

494

Income tax expense

264

(36
)
300

(474
)
774

An analysis of Virginia Power’s results of operations follows:

2020 VS. 2019

Operating revenue decreased 4%, primarily reflecting:

•	A $561 million decrease in the fuel cost component included in utility rates as a result of a net decrease in commodity costs associated with sales to electric utility retail customers;

•	A $100 million decrease in sales to retail customers from a decrease in cooling degree days during the cooling season ($33 million) and a decrease in heating degree days during the heating season ($67 million);

•	A $66 million decrease in sales to electric retail customers associated with economic and other usage factors;

•	A $45 million decrease due to the absence of various contracts; and

•	A $29 million decrease in sales to electric retail customers associated with usage factors impacted by COVID-19; partially offset by

•	A $387 million increase from riders;

•	A $64 million increase in off-system PJM sales; and

•	A $35 million increase in sales to electric retail customers due to customer growth.

Electric fuel and other energy-related purchases decreased 25%, primarily due to decreased fuel costs associated with electric utility retail customers ($561 million), which are offset in operating revenue and do not impact net income, partially offset by PJM off-system sales ($64 million) and the absence of various contracts ($34 million).

Purchased electric capacity decreased $57 million, primarily due to a decrease in expense related to the annual PJM capacity performance market effective June 2019 ($51 million) and a contract termination with a non-utility generator ($13 million) partially offset by an increase in expense related to the annual PJM capacity performance market effective June 2020 ($15 million).

Other operations and maintenance increased 2%, primarily reflecting:

•	A $144 million increase in certain expenses which are primarily recovered through state and FERC rates and do not impact net income;

•	The absence of a benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019 ($113 million);

•	A $27 million increase in outside services; and

•	A $22 million increase related to the effects of COVID-19.

These increases were partially offset by:

•	The absence of a charge related to a voluntary retirement program ($190 million);

•	A $39 million decrease in salaries, wages and benefits and administrative costs;

•	A $38 million decrease in outage costs; and

•	A $26 million decrease in storm damage and service restoration costs.

Depreciation and amortization increased 2%, primarily due to various projects being placed into service ($114 million), partially offset by the absence of depreciation from certain electric generation facilities that were, or have committed to be, retired early ($58 million) and a decrease reflecting the expected approval of the nuclear plant life extensions from the NRC ($31 million).

Impairment of assets and other charges increased 44%, primarily due to:

•	An increase in charges associated with the planned early retirements of certain electric generation facilities ($402 million);

•	A charge for benefits expected to be provided to retail electric customers in Virginia through the use of a CCRO in accordance with the GTSA ($130 million);

•	A charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to legislation enacted in November 2020 ($127 million); and

•	An increase in dismantling costs associated with certain electric generation facilities ($54 million); partially offset by

•	The absence of a charge related to the planned early retirement of certain automated meter reading infrastructure ($160 million);

•	The absence of a $135 million charge related to contract termination with a non-utility generator;

•	The absence of a $62 million charge related to the abandonment of a project at an electric generating facility;

•	The absence of a $21 million charge for disallowance of state-regulated plant; and

•	The absence of a $17 million charge related to the abandonment of certain property, plant and equipment.

Other income decreased 18%, primarily reflecting a decrease in net investment earnings on nuclear decommissioning trust funds.

Income tax expense decreased 13%, primarily due to lower pre-tax income.

2019 VS. 2018

~~Net~~

Operating revenue

increased ~~14%~~6%, primarily reflecting:

•	A $348 million increase from riders; and

~~A $348 million increase from rate adjustment clauses;~~

•	The absence of a $215 million charge associated with Virginia legislation enacted in March 2018 that required one-time rate credits of certain amounts to utility customers; partially offset by

•	A $83 million decrease in the fuel cost component included in utility rates as a result of a net decrease in commodity costs associated with sales to electric utility retail customers; and

•	A $45 million decrease in sales to retail customers from lower heating degree days during the heating season, partially offset by a $25 million increase from higher cooling degree days during the cooling season.

Electric fuel and other energy-related purchases decreased 6% primarily due to decreased fuel costs associated with ~~Virginia legislation enacted~~electric utility retail customers ($83 million), which are offset in ~~March 2018 that required~~

~~one-time~~

~~rate credits of certain amounts to utility customers;~~

~~A $74 million~~operating revenue and do not impact net income, and a decrease in Virginia Power fuel costs due to the expiration of an energy supply contract ($40 million).

Purchased electric capacity decreased 67%, primarily due to a decrease in expense ~~primarily~~ related to the annual PJM capacity performance market effective June 2019 ($63 million) and a contract termination with a

non-utility

generator ($37 million), partially offset by the annual PJM capacity performance market effective June 2018 ($26 million)~~; and~~

~~A $40 million decrease in fuel costs due to the expiration of an energy supply contract; partially offset by~~

A $45 million decrease in sales to retail customers from lower heating degree days during the heating season, partially offset by a $25 million increase from higher cooling degree days during the cooling season.

Other operations and maintenance

increased 4%, primarily reflecting:

•	A $190 million charge related to a voluntary retirement program; and

~~A $190 million charge related to a voluntary retirement program;~~

•	A $116 million increase in certain transmission and generation-related expenses. These expenses were primarily recovered through state and FERC rates and did not impact net income; partially offset by

•	A $113 million benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019;

•	The absence of an $81 million charge associated primarily with future ash pond and landfill closure costs in connection with the enactment of Virginia legislation in April 2018; and

•	A $25 million decrease in storm damage and service restoration costs.

~~A $116 million increase in certain transmission and generation-related expenses. These expenses were primarily~~

~~recovered through state and FERC rates and did not impact net income; partially offset by~~

~~A $113 million benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019;~~

~~The absence of an $81 million charge associated primarily with future ash pond and landfill closure costs in connection with the enactment of Virginia legislation in April 2018; and~~

~~A $25 million decrease in storm damage and service restoration costs.~~

Depreciation and amortization

increased 8%, primarily due to various projects being placed into service ($92 million) and the absence of a benefit for the retroactive application of depreciation rates for regulated nuclear plants to comply with Virginia Commission requirements ($31 million), partially offset by the absence of depreciation from certain electric generation facilities and automated meter reading infrastructure that were retired early ($40 million).

Impairment of assets and other charges

increased $757 million, primarily reflecting:

•	A $346 million charge related to the early retirement of certain electric generation facilities;

~~A $346 million charge related to the early retirement of certain electric generation facilities;~~

•	A $160 million charge related to the planned early retirement of certain automated meter reading infrastructure;

•	A $135 million charge related to contract termination with a non-utility generator; and

•	A $62 million charge related to the abandonment of a project at an electric generating facility.

~~A $160 million charge related to the planned early retirement of certain automated meter reading infrastructure;~~

~~A $135 million charge related to contract termination with a~~

~~non-utility~~

~~generator; and~~

~~A $62 million charge related to the abandonment of a project at an electric generating facility.~~

Other income

increased $76 million, primarily reflecting an increase in net investment earnings on nuclear decommissioning trust funds.

Income tax expense

decreased 12%, primarily due to lower pretax income ($29 million) and the absence of 2017 Tax Reform Act impacts ($23 million), partially offset by lower investment tax credits ($14 million).

~~2018 VS. 2017~~

~~Net revenue~~

~~decreased 8%, primarily reflecting:~~

~~A $238 million decrease for regulated generation and distribution operations as a result of the 2017 Tax Reform Act;~~

~~A $215 million charge associated with Virginia legislation enacted in March 2018 that requires~~

~~one-time~~

~~rate credits of certain amounts to utility customers;~~

~~non-utility~~

~~generators ($57 million); and~~

~~An $89 million decrease from rate adjustment clauses, which includes the impacts of the 2017 Tax Reform Act; partially offset by~~

An increase in sales to retail customers from an increase in heating degree days during the heating season of 2018 ($71 million) and an increase in cooling degree days during the cooling season of 2018 ($69 million); and

~~A $46 million increase in sales to retail customers due to customer growth.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

~~Other operations and maintenance~~

~~increased 13%, primarily reflecting:~~

~~A $102 million increase due to storm damage and service restoration costs; and~~

An $81 million increase due to a charge associated primarily with future ash pond and landfill closure costs in connection with the enactment of Virginia legislation in April 2018; partially offset by

~~A $19 million decrease from a reduction in planned outage days at certain generation facilities.~~

~~Depreciation and amortization~~

was substantially consistent as a decrease due to revised depreciation rates for regulated nuclear plants to comply with the Virginia Commission requirements ($61 million) was substantially offset by various growth projects being placed into service ($56 million).

~~Other income~~

decreased 71%, primarily related to lower realized gains (including investment income) on nuclear decommissioning trust funds ($23 million), the electric transmission tower rental portfolio, including the absence of the assignment of such amounts to Vertical Bridge Towers II, LLC ($18 million) and the absence of interest income associated with the settlement of state income tax refund claims ($11 million), partially offset by the absence of a charge associated with a customer settlement ($16 million).

~~Income tax expense~~

~~decreased 61%, primarily due to lower~~

~~pre-tax~~

income ($256 million), the reduced corporate income tax rate ($235 million) and higher renewable energy investment tax credits ($35 million), partially offset by the absence of benefits resulting from the remeasurement of deferred income taxes to the new corporate income tax rate ($93 million).

~~Dominion Energy Gas~~

~~Results of Operations~~

~~Presented below is a summary of Dominion Energy Gas’ consolidated results:~~

Year Ended December 31,

2019

$ Change

2018

$ Change

2017

(millions)

Net income attributable to Dominion Energy Gas

$721

$240

$481

$(222)

$703

~~Overview~~

~~2019 VS. 2018~~

Net income attributable to Dominion Energy Gas increased 50%, primarily due to the absence of a charge for disallowance of FERC-regulated plant, the commercial operations of the Liquefaction Facility for the entire year, the absence of a

~~write-off~~

associated with the Eastern Market Access Project and the absence of an impairment charge on certain gathering and processing assets included in discontinued operations, partially offset by the absence of gains related to agreements to convey shale development rights under natural gas storage fields and a charge related to a voluntary retirement program.

~~2018 VS. 2017~~

Net income attributable to Dominion Energy Gas decreased 32%, primarily due to an impairment charge on certain gathering and processing assets included in discontinued operations, a charge for disallowance of FERC-regulated plant and the absence of benefits from the 2017 Tax Reform Act, partially offset by the commencement of commercial operations of the Liquefaction Facility, regulated natural gas transmission activities from growth projects placed into service and an increase in gains from agreements to convey shale development rights underneath several natural gas storage fields.

~~Analysis of Consolidated Operations~~

~~Presented below are selected amounts related to Dominion Energy Gas’ results of operations:~~

Year Ended December 31,

2019

$ Change

2018

$ Change

2017

(millions)

Operating revenue
$
2,169

$ 173
$
1,996

$ 473
$
1,523

Purchased (excess) gas

7

17

(10
)
(119
)
109

Other energy-related purchases

2

(2
)
4

—

4

Net revenue

2,160

158

2,002

592

1,410

Other operations and maintenance

724

8

716

144

572

Depreciation and amortization

367

34

333

91

242

Other taxes

154

34

120

21

99

Impairment of assets and related charges

13

(150
)
163

148

15

Gains on sales of assets

(2
)
115

(117
)
(47
)
(70
)
Earnings from equity method investees

43

(11
)
54

7

47

Other income

166

77

89

27

62

Interest and related charges

311

137

174

114

60

Income tax expense (benefit)

101

(23
)
124

189

(65
)
Net Income from discontinued operations

141

117

24

(139
)
163

Noncontrolling interests

121

(54
)
175

49

126

~~An analysis of Dominion Energy Gas’ results of operations follows:~~

~~2019 VS. 2018~~

~~Net revenue~~

~~increased 8%, primarily reflecting:~~

~~A $257 million increase from the Liquefaction Facility, including terminalling services provided to the Export Customers ($190 million), a decrease in credits associated with the~~

~~start-up~~

~~phase ($44 million) and regulated gas transportation contracts to serve the Export Customers ($23 million); and~~

~~An $18 million increase due to DETI contract changes; partially offset by~~

~~A $99 million decrease in services performed for Atlantic Coast Pipeline; and~~

~~A $42 million increase in net fuel carrying costs as a result of depressed natural gas market conditions.~~


58

~~Other operations and maintenance~~

~~remained substantially consistent primarily reflecting:~~

A $45 million increase in operating expenses from the commercial operations of the Liquefaction Facility and costs associated with regulated gas transportation contracts to serve the Export Customers;

~~A $39 million charge related to a voluntary retirement program; and~~

~~A $10 million increase in salaries, wages and benefits and general administrative expenses; substantially offset by~~

~~A $99 million decrease in services performed for Atlantic Coast Pipeline. These expenses are billed to Atlantic Coast Pipeline and do not significantly impact net income.~~

~~Depreciation and amortization~~

~~increased 10%, primarily due to an increase from various growth projects being placed into service, including the Liquefaction Facility.~~

~~Other taxes~~

~~increased 28%, primarily due to property taxes associated with the Liquefaction Facility.~~

~~Impairment of assets and related charges~~

~~decreased 92%, primarily due to the absence of a charge for disallowance of FERC-regulated plant ($127 million) and the absence of a~~

~~write-off~~

~~associated with the Eastern Market Access Project ($37 million), partially offset by the abandonment of the Sweden Valley project ($13 million).~~

~~Gains on sales of assets~~

~~decreased 98%, primarily due to the absence of gains related to agreements to convey shale development rights under natural gas storage fields.~~

~~Earnings from equity method investees~~

~~decreased 20%, primarily due to lower earnings from Iroquois.~~

~~Other income~~

~~increased 87%, primarily due to interest income from Cove Point’s promissory notes receivable from Dominion Energy issued in 2018.~~

~~Interest and related charges~~

increased 79%, primarily due to Cove Point’s term loan borrowings ($78 million), the absence of capitalization of interest expense associated with the Liquefaction Facility upon completion of construction ($46 million) and higher interest expense due to increased affiliate borrowings ($10 million).

~~Income tax expense~~

decreased 19%, primarily due to the impacts of changes in tax status of certain subsidiaries in connection with the Dominion Energy Gas Restructuring ($48 million), partially offset by reductions in noncontrolling interest associated with Dominion Energy’s purchase of Dominion Energy Midstream publicly held common units ($9 million) and the absence of a state legislative change ($15 million).

~~Noncontrolling interests~~

~~decreased 31%, primarily due to the acquisition of the public interest in Dominion Energy Midstream in January 2019.~~

~~2018 VS. 2017~~

~~Net revenue~~

~~increased 42%, primarily reflecting:~~

~~start-up~~

~~phase of the Liquefaction Facility ($66 million);~~

~~A $74 million increase in services performed for Atlantic Coast Pipeline; and~~

~~A $57 million increase due to regulated natural gas transmission growth projects placed in service, other than the Liquefaction Facility; partially offset by~~

~~A $38 million decrease from scheduled declines in or expiration of certain DETI and Cove Point contracts.~~

~~Other operations and maintenance~~

~~increased 25%, primarily reflecting:~~

~~A $73 million increase in services performed for Atlantic Coast Pipeline. These expenses are billed to Atlantic Coast Pipeline and do not significantly impact net income;~~

~~A $13 million increase in salaries, wages and benefits and general administrative expenses.~~

~~Depreciation and amortization~~

~~increased 38%, primarily due to an increase from various growth projects being placed into service, including the Liquefaction Facility.~~

~~Other taxes~~

~~increased 21%, primarily due to property taxes associated with the Liquefaction Facility commencing commercial operations.~~

~~Impairment of assets and related charges~~

~~increased $148 million, primarily due to a charge for disallowance of FERC-regulated plant ($127 million) and a~~

~~write-off~~

~~associated with the Eastern Market Access Project ($37 million), partially offset by the absence of a charge to~~

~~write-off~~

~~the balance of a regulatory asset no longer considered probable of recovery ($15 million).~~

~~Gains on sales of assets~~

~~increased 67% primarily due to increased gains from agreements to convey shale development rights underneath several natural gas storage fields.~~

~~Earnings from equity method investees~~

~~increased 15%, primarily due to higher earnings from unsubscribed capacity as a result of an increase in heating degree days at Iroquois.~~

~~Other income~~

~~increased 44%, primarily due to interest income from Cove Point’s promissory notes receivable from Dominion Energy issued in September 2018 ($20 million) and a decrease in~~

~~non-service~~

components of pension and other postretirement employee benefit credits capitalized to property, plant and equipment in 2018 ($13 million), partially offset by AFUDC on rate-regulated projects ($7 million).

~~Interest and related charges~~

increased $114 million, primarily due to the absence of capitalization of interest expense associated with the Liquefaction Facility upon completion of construction ($72 million) and Cove Point’s term loan borrowings ($36 million).

~~Income tax expense~~

~~increased $189 million, primarily due to the absence of benefits resulting from the remeasurement of deferred income taxes to the new corporate income tax rate ($246 million), higher~~

~~pre-tax~~

income ($37 million), the absence of a settlement with state tax authorities ($5 million), partially offset by the reduced corporate income tax rate ($90 million) and a state legislative change ($10 million).

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

~~Liquidity And Capital Resources~~

LIQUIDITY AND CAPITAL RESOURCES

Dominion Energy depends on both internal and external sources of liquidity to provide working capital and as a bridge to long-term debt financings. Short-term cash requirements not met by cash provided by operations are generally satisfied with proceeds from short-term borrowings. Long-term cash needs are met through issuances of debt and/or equity securities.

At December 31, ~~2019,~~2020, Dominion Energy had ~~$5.1~~$5.3 billion of unused capacity under its credit facility. See additional discussion below under

Credit Facilities and Short-Term Debt.

A summary of Dominion Energy’s cash flows is presented below:

Year Ended December 31,	2020			2019			2018
(millions)
Cash, restricted cash and equivalents at beginning of year	$	269		$	391		$	185
Cash flows provided by (used in):
Operating activities		5,227			5,204			4,773
Investing activities		(2,916	)		(4,622	)		(2,358	)
Financing activities		(2,333	)		(704	)		(2,209	)
Net increase (decrease) in cash, restricted cash and equivalents		(22	)		(122	)		206
Cash, restricted cash and equivalents at end of year	$	247		$	269		$	391

Year Ended December 31,

2019

2018

2017

(millions)

Cash, restricted cash and equivalents at beginning of year
$
391
$
185
$
322

Cash flows provided by (used in):

Operating activities

5,204

4,773

4,502

Investing activities

(4,622
)
(2,358
)
(5,942
)
Financing activities

(704
)
(2,209
)
1,303

Net increase (decrease) in cash, restricted cash and equivalents

(122
)
206

(137
)
Cash, restricted cash and equivalents at end of year
$
269
$
391
$
185

Operating Cash Flows

Net cash provided by Dominion ~~Energy’s~~Energy's operating activities increased ~~$431~~$23 million, including approximately $707 million from discontinued operations. Net cash provided by continuing operations decreased primarily due to ~~operations acquired in~~litigation settlements related to the SCANA Combination, higher contributions to Dominion Energy’s qualified pension plan, payments related to a voluntary retirement plan, and a contract termination in connection with the ~~commercial operations~~sale of ~~the Liquefaction Facility for the entire year and higher deferred fuel cost recoveries in the Virginia jurisdiction,~~Fowler Ridge, partially offset by ~~an increase in property tax payments, increased interest expense, higher customer rate refunds,~~the absence of a contract termination payment to a

non-utility

generator ~~an increase in merger~~ and ~~integration-related costs associated with the SCANA Combination, and a~~ net ~~decrease~~changes in other working capital items.

Dominion Energy believes that its operations provide a stable source of cash flow to contribute to planned levels of capital expenditures and maintain or grow the dividend on common shares. In December ~~2019,~~2020, Dominion Energy’s Board of Directors established an annual dividend rate for ~~2020~~2021 of ~~$3.76~~$2.52 per share of common stock, a ~~2.5% increase~~33% decrease over the ~~2019~~2020 rate. This reduction in the annual dividend rate reflects the absence of income from operations sold to BHE as part of the GT&S Transaction and Q-Pipe Transaction as well as a revision to Dominion Energy’s target payout ratio to align with industry peers. Dividends are subject to declaration by the Board of Directors. In January ~~2020,~~2021, Dominion Energy’s Board of Directors declared dividends payable in March ~~2020~~2021 of 9463 cents per share of common stock.

Dominion Energy’s operations are subject to risks and uncertainties that may negatively impact the timing or amounts of operating cash flows, and which are discussed in Item 1A. Risk Factors.

Credit Risk

Dominion Energy’s exposure to potential concentrations of credit risk results primarily from its energy marketing and price risk management activities. Presented below is a summary of Dominion Energy’s credit exposure as of December 31, ~~2019~~2020 for these activities. Gross credit exposure for each counterparty is calculated as outstanding receivables plus any unrealized

on-

off-balance

sheet exposure, taking into account contractual netting rights.

	Gross Credit Exposure		Credit Collateral		Net Credit Exposure
(millions)
Investment grade⁽¹⁾	$	68	$	—	$	68
Non-Investment grade⁽²⁾		1				1
No external ratings:
Internally rated—investment grade⁽³⁾		35		—		35
Internally rated—non-investment grade⁽⁴⁾		3		—		3
Total	$	107	$	—	$	107

Gross
Credit
Exposure

Credit
Collateral

Net
Credit
Exposure

(millions)

Investment grade
(1)

$87

$—

$87

No external ratings:

Internally rated—investment grade
(2)

119

—

119

Internally
rated—non-investment
grade
(3)

27

—

27

Total
(4)

$233

$—

$233

(1)	Designations as investment grade are based upon minimum credit ratings assigned by Moody’s and Standard & Poor’s. The five largest counterparty exposures, combined, for this category represented approximately ~~25%~~61% of the total net credit exposure.

(2)	The five largest counterparty exposures, combined, for this category represented less than 1% of the total net credit exposure.

(3)	The five largest counterparty exposures, combined, for this category represented approximately ~~51%~~33% of the total net credit exposure.

~~(3)~~

(4)

The five largest counterparty exposures, combined, for this category represented approximately ~~11%~~2% of the total net credit exposure.

~~(4)~~

~~Excludes Millstone 2019 power purchase agreements.~~

Investing Cash Flows

Net cash used in Dominion Energy’s investing activities ~~increased $2.3~~decreased $1.7 billion, primarily due to ~~a decrease in net~~ proceeds from the ~~sale of certain merchant generation facilities~~GT&S and ~~interests in certain equity method investments and~~Q-Pipe Transactions, partially offset by an increase in plant construction and other property additions, ~~partially offset by cash and restricted~~the absence of cash acquired in the SCANA ~~Combination.~~

Combination, the acquisition of an investment in Pivotal LNG, Inc. and an additional 5% investment in Atlantic Coast Pipeline and a decrease in the proceeds from the sale of assets and equity method investments.

Financing Cash Flows and Liquidity

Dominion Energy relies on capital markets as significant sources of funding for capital requirements not satisfied by cash provided by its operations. As discussed in

Credit Ratings

, Dominion Energy’s ability to borrow funds or issue securities and the return demanded by investors are affected by credit ratings. In addition, the raising of external capital is subject to certain regulatory requirements, including registration with the SEC for certain issuances.

Dominion Energy currently meets the definition of a well-known seasoned issuer under SEC rules governing the registration, communications and offering processes under the Securities Act of 1933, as amended. The rules provide for a streamlined shelf registration process to provide registrants with timely access to capital. This allows Dominion Energy to use automatic shelf registration statements to register any offering of securities, other than those for exchange offers or business combination transactions.

From time to time, Dominion Energy may reduce its outstanding debt and level of interest expense through redemption of debt securities prior to maturity and repurchases in the open market, in privately negotiated transactions, through tender offers or otherwise.

Net cash used in Dominion ~~Energy’s~~Energy's financing activities ~~decreased $1.5~~increased $1.6 billion primarily due to ~~proceeds from~~repurchases of common stock in 2020, lower issuances of common stock, the ~~sale of a 25% noncontrolling limited partnership interest in Cove Point and the issuance~~absence of the 2019 Equity Units and the Series B Preferred Stock issuances and the absence of proceeds from the sale of a 25% noncontrolling interest in Cove Point, partially offset by ~~an increase in net debt~~higher issuances and lower repayments ~~in 2019 compared to 2018 and higher common stock dividend payments.~~

of long-term debt.

Credit Facilities and Short-Term Debt

Dominion Energy uses short-term debt to fund working capital requirements and as a bridge to long-term debt financings. The levels of borrowing may vary significantly during the course of the


60

year, depending upon the timing and amount of cash requirements not satisfied by cash from operations. In addition, Dominion Energy utilizes cash and letters of credit to fund collateral requirements. Collateral requirements are impacted by commodity prices, hedging levels, Dominion Energy’s credit ratings and the credit quality of its counterparties.

In connection with commodity hedging activities, Dominion Energy is required to provide collateral to counterparties under some circumstances. Under certain collateral arrangements, Dominion Energy may satisfy these requirements by electing to either deposit cash, post letters of credit or, in some cases, utilize other forms of security. From time to time, Dominion Energy may vary the form of collateral provided to counterparties after weighing the costs and benefits of various factors associated with the different forms of collateral. These factors include short-term borrowing and short-term investment rates, the spread over these short-term rates at which Dominion Energy can issue commercial paper, balance sheet impacts, the costs and fees of alternative collateral postings with these and other counterparties and overall liquidity management objectives.

Dominion Energy’s commercial paper and letters of credit outstanding, as well as capacity available under its credit facility, were as follows:

	Facility Limit		Outstanding Commercial Paper⁽¹⁾		Outstanding Letters of Credit		Facility Capacity Available
(millions)
At December 31, 2020
Joint revolving credit facility⁽²⁾	$	6,000	$	627	$	100	$	5,273

Facility
Limit

Outstanding
Commercial
Paper
(1)

Outstanding
Letters of
Credit

Facility
Capacity
Available

(millions)

At December 31, 2019

Joint revolving credit facility
(2)
$
6,000

$836

$89
$
5,075

(1)	The weighted-average interest rate of the outstanding commercial paper supported by Dominion Energy’s credit facility was ~~2.10%~~0.29% at December 31, ~~2019.~~2020.

(2)	This credit facility matures in March 2023 and can be used by the borrowers under the credit facility to support bank borrowings and the issuance of commercial paper, as well as to support up to a combined $2.0 billion of letters of credit.

~~In November 2017,~~

Dominion Energy ~~filed~~has an ~~SEC shelf~~effective registration statement with the SEC for the sale of up to $3.0 billion of variable denomination floating rate demand notes, called Dominion Energy Reliability Investment

^SM

. The registration limits the principal amount that may be outstanding at any one time to $1.0 billion. The notes are offered on a continuous basis and bear interest at a floating rate per annum determined by the Dominion Energy Reliability Investment Committee, or its designee, on a weekly basis. The notes have no stated maturity date, are

non-transferable

and may be redeemed in whole or in part by Dominion Energy or at the investor’s option at any time. ~~The balance as of~~At December 31, ~~2019 was $75 million. The notes are short-term debt obligations on~~2020, Dominion Energy’s Consolidated Balance ~~Sheets.~~Sheets include $268 million presented within short-term debt. The proceeds ~~will be~~are used for general corporate purposes and to repay debt.

In March ~~2019, DESC’s $700~~2020, Dominion Energy entered into a $900 million ~~credit facility~~364-Day Revolving Credit Agreement. The agreement bears interest at a variable rate. At December 31, 2020, $225 million was ~~terminated~~outstanding under the agreement. The proceeds from these borrowings were used to provide for general working capital and ~~DESC was added as a borrower~~other general corporate purposes. The maximum allowed total debt to ~~the~~total capital ratio under this agreement is consistent with such allowed ratio under Dominion Energy’s joint revolving credit ~~facility discussed above with~~facility.

In March 2020, Dominion Energy ~~Virginia Power, Dominion Energy Gas and Questar Gas. At December 31, 2019, the~~

~~sub-limit~~

~~for DESC was $500 million.~~

~~South Carolina Fuel Company, Inc.’s credit facility was terminated in February 2019. SCANA and PSNC’s credit facilities~~

~~were terminated in March 2019. Liquidity needs for these entities may be satisfied through short-term company borrowings from Dominion Energy.~~

~~In February 2019, Dominion Energy Midstream terminated its~~borrowed $500 million ~~revolving credit facility subsequent to repaying the outstanding balance of $73 million, plus accrued interest.~~

~~In September 2019, Dominion Energy Questar borrowed $3.0 billion~~ under a

364-Day

Term Loan Credit Agreement that bore interest at a variable rate. The proceeds ~~from the borrowing~~ were used to ~~repay the principal of Cove Point’s $3.0 billion term loan due in 2021.~~provide for general working capital and other general corporate purposes. In November 2020, Dominion Energy ~~provided a guarantee to support~~repaid the outstanding balance in full.

In April 2020, Dominion Energy ~~Questar’s obligation~~borrowed $625 million under ~~the~~

a 364-Day

Term Loan ~~Agreement.~~Credit Agreement that bore interest at a variable rate. The proceeds were used to provide for general working capital and other general corporate purposes. In ~~November and December 2019, principal of $1.0 billion and $2.0 billion, respectively, plus accrued interest was repaid.~~

June 2020, Dominion Energy repaid the outstanding balance in full.

Long-Term Debt

During ~~2019,~~2020, Dominion Energy issued the following long-term public debt:

Type	Issuer	Principal		Rate			Maturity
		(millions)
Senior notes	Dominion Energy	$	1,000	variable			2023
Senior notes	Dominion Energy		400		3.300	%	2025
Senior notes	Dominion Energy		350		3.600	%	2027
Senior notes	Dominion Energy		1,500		3.375	%	2030
Senior notes	Virginia Power	900			2.450	%	2050
Total notes issued		$ 4,150

Type

Issuer

Principal

Rate

Maturity

(millions)

Senior notes

Dominion Energy
$
200

4.250
%
2028

Senior notes

Dominion Energy

400

4.600
%
2049

Senior notes

Virginia Power

500

2.875
%
2029

Senior notes

Virginia Power

550

3.300
%
2049

Senior notes

Dominion Energy Gas

600

2.500
%
2024

Senior notes

Dominion Energy Gas

600

3.000
%
2029

Senior notes

Dominion Energy Gas

300

3.900
%
2049

Total notes issued
$
3,150

During ~~2019,~~2020, Dominion Energy also issued the following long-term private debt:

•	In March 2020, PSNC issued, through private placement, $200 million of 4.05% senior notes that mature in 2030. These proceeds were used for general corporate purposes.

In August 2019, Dominion Energy issued $1.0 billion of 2.45% senior notes that mature in 2023 through a private placement. The proceeds were used for general corporate purposes and to repay short-term debt, including commercial paper.

•

In June 2020, East Ohio issued, through private placement, $500 million of 1.30% senior notes, $500 million of 2.00% senior notes and $800 million of 3.00% senior notes that mature in 2025, 2030 and 2050, respectively. East Ohio used the proceeds from this offering to repay intercompany promissory notes with Dominion Energy Gas and a portion of its intercompany revolving credit agreement balance with Dominion Energy.

During ~~2019,~~2020, Dominion Energy also remarketed the following long-term debt:

~~In May 2019, Virginia Power remarketed four series of~~

~~tax-exempt~~

bonds, with an aggregate outstanding principal of $198 million to new investors. One of the bonds will bear interest at a coupon rate of 1.8% until April 2022, after which it will bear interest at a market rate to be determined at that time. Three of the bonds will bear interest at a coupon rate of 1.9% until June 2023, after which they will bear interest at a market rate to be determined at that time.

~~In June 2019, Dominion Energy successfully remarketed its $700 million 2016 Series~~

~~A-1~~

~~2.0% RSNs due 2021 and $700 million 2016 Series~~

~~A-2~~

~~2.0% RSNs due 2024 pursuant to the terms of the 2016 Equity Units. In connection with the remarketing, the interest rates on the Series~~

~~A-1~~

~~and Series~~

~~A-2~~

~~notes were reset to 2.715% and 3.071%, respectively. Dominion Energy did not receive any proceeds from the remarketing.~~

~~In October 2019, Dominion Energy Terminal Company remarketed its $27 million Peninsula Ports Authority of Virginia Coal~~

•

In June 2020, Virginia Power remarketed one series of tax-exempt bonds, with an aggregate outstanding principal of $105 million to new investors. The bonds will bear interest at a coupon rate of 1.20% until May 2024, after which they will bear interest at a market rate to be determined at that time.

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

•

~~Terminal Revenue Refunding Bonds, Series 2003 due in 2033 resulting in a reset~~

In September 2020, Virginia Power remarketed three series of tax-exempt bonds, with an aggregate outstanding principal of $322 million to new investors. One of the bonds will bear interest at a coupon rate ~~from 1.55%~~of 0.45% until April 2022, after which it will bear interest at a market rate to ~~1.70%~~be determined at that time. Two of the bonds will bear interest at a coupon rate of 0.75% until ~~October 2022.~~September 2025, after which they will bear interest at a market rate to be determined at that time.

During ~~2019,~~2020, Dominion Energy repaid, repurchased or redeemed ~~the following long-term debt before its stated maturity:~~

~~In February 2019, Dominion Energy Midstream repaid its $300 million variable rate term loan agreement due in December 2019 at the principal outstanding plus accrued interest.~~

In February and March 2019, DESC purchased certain of its first mortgage bonds having an aggregate purchase price of $1.2 billion pursuant to tender offers. Also in March 2019, SCANA purchased certain of its medium term notes having an aggregate purchase price of $300 million pursuant to a tender offer. Both DESC tender offers and the SCANA tender offer expired in the first quarter of 2019.

In May 2019, Virginia Power redeemed its $40 million 5.0% Economic Development Authority of the County of Chesterfield Pollution Control Refunding Revenue Bonds, Series 2009A, due in 2023 at the principal outstanding plus accrued interest.

In May 2019, GENCO redeemed its 5.49% senior secured notes due in 2024 at the remaining principal outstanding of $33 million plus accrued interest. In June 2019, the first mortgage lien on an electric generating facility that previously secured these notes was released.

In June 2019, Dominion Energy purchased and canceled $12 million and $13 million of its June 2006 hybrids and September 2006 hybrids, respectively. All purchases were conducted in compliance with the applicable RCC.

~~In September 2019, DESC purchased certain of its first mortgage bonds with an outstanding principal balance of $552 million pursuant to a tender offer that expired in the third quarter of 2019.~~

~~In November 2019, Dominion Energy Gas redeemed its $450 million 2014 Series A 2.50% senior notes which would have otherwise matured in December 2019.~~

~~During 2019, Dominion Energy repaid, repurchased or redeemed $9.1~~$2.9 billion of long-term debt, including redemption premiums.

The following long-term debt was repaid, repurchased or redeemed before its stated maturity:

•	In February 2020, Dominion Energy redeemed the remaining principal outstanding of $111 million and $286 million of its June 2006 hybrids and its September 2006 hybrids, respectively, both of which would have otherwise matured in 2066. All purchases

were conducted in compliance with the applicable RCC, each of which was terminated in February 2020. Expenses related to the early redemption of the hybrids were $10 million reflected within interest and related charges in the Consolidated Statements of Income for the year ended December 31, 2020.

•

In March 2020, SCANA redeemed its floating rate senior notes at the remaining principal balance of $66 million plus accrued interest. The notes would have otherwise matured in June 2034. Expenses related to the early redemption of the senior notes were $7 million reflected within interest and related charges in the Consolidated Statements of Income for the year ended December 31, 2020.

•

In March 2020, SCANA redeemed the remaining principal outstanding of $183 million of its 4.75% medium-term notes and $155 million of its 4.125% medium-term notes plus accrued interest and make-whole premiums. The notes would have otherwise matured in May 2021 and February 2022, respectively. Total expenses related to the early redemption of the medium-term notes were $14 million reflected within interest and related charges in the Consolidated Statements of Income for the year ended December 31, 2020.

•	In April 2020, Dominion Energy purchased and canceled $7 million of its 2.579% junior subordinated notes scheduled to mature in July 2020. In June 2020, Dominion Energy prepaid the remaining balance of $993 million.

In ~~January~~addition, in 2020 SCANA provided notice to redeem its floating rate senior notes at the remaining principal outstanding of $66 million plus accrued interest in March 2020. The notes would have otherwise matured in June 2034.

In February 2020, SCANA provided notice to redeem the remaining principal outstanding of $183 million of its 4.75% medium-term notes and $155 million of its 4.125% medium-term notes plus accrued interest and make-whole premiums in March 2020. The notes would have otherwise matured in May 2021 and February 2022, respectively.

In February 2020, in addition to the June 2019 purchases described above, Dominion Energy redeemed the remaining principal outstanding of $111 million and $286 million of its June 2006 hybrids and September 2006 hybrids, respectively, both ~~of which would have otherwise matured in 2066. All purchases were conducted in compliance with the applicable RCC.~~

~~Noncontrolling Interest in Dominion Energy Midstream~~

~~In January 2019,~~ Dominion Energy and Virginia Power amended portfolios of interest rate swaps extending the mandatory termination dates resulting in an increase in long-term debt. See Note 18 to the Consolidated Financial Statements for more information.

In February 2021, PSNC entered into an agreement with certain investors to issue through private placement in March 2021, $150 million 3.10% 30-year senior notes. The proceeds will be used for the repayment of existing indebtedness and for general corporate purposes.

Issuance of Common Stock

During 2020, Dominion Energy Midstream closed on an agreement and plan of merger pursuant to which Dominion Energy acquired each outstanding common unit representing limited partner interests in Dominion Energy Midstream not already owned by Dominion Energy through the issuance of 22.5issued approximately 6.7 million shares of common stock, valued at ~~$1.6 billion. Under the terms of the agreement~~$520 million, for a litigation settlement and ~~plan of merger, each publicly held outstanding common unit representing limited partner interests in~~through various programs including Dominion Energy Midstream was converted into the right to receive 0.2492 shares of Dominion Energy common stock. Immediately prior to the closing, each Series A Preferred Unit representing limited partner interests in Dominion Energy Midstream was converted into common units representing limited partner interests in Dominion Energy Midstream in accordance with the terms of Dominion Energy Midstream’s partnership agreement. See Note 20 to the Consolidated Financial Statements for more information.

~~Issuance of Common Stock, Preferred Stock and Other Equity Securities~~

Direct^®.

Dominion Energy maintains Dominion Energy Direct

^®

During ~~2019,~~2020, Dominion Energy received cash of $159 million from the issuance of 2.1 million of such shares through Dominion Energy Direct^® and employee savings plans.

In September 2020, Dominion Energy issued ~~approximately 157~~4.1 million shares of its common stock ~~valued at $11.4 billion,~~to satisfy its obligation under a settlement agreement for ~~acquisitions, settlements of stock purchase contracts and through various programs including~~the Santee Cooper Ratepayer Case discussed in Note 20 to the Consolidated Financial Statements. These shares were immediately repurchased as discussed below.

In August 2020, Dominion Energy ~~Direct~~

~~and an~~

entered into sales agency agreements to effect sales under a new at-the-market

program.

~~In January 2019, in connection with~~ Under the ~~SCANA Combination,~~sales agency agreements, Dominion Energy may, from time to time, offer and sell shares of its common stock through the sales agents or enter into one or more forward sale agreements with respect to shares of its common stock. Sales by Dominion Energy through the sales agents or by forward sellers pursuant to a forward sale agreement cannot exceed $1.0 billion in the aggregate. Dominion Energy has not issued ~~95.6~~any shares or entered into any forward sale agreements under this new program.

Repurchase of Common Stock

During 2020, Dominion Energy repurchased 38.9 million shares of Dominion Energy common stock ~~valued~~for $3.1 billion through an open market agreement, accelerated share repurchase agreements and a private transaction as discussed below.

In July 2020, in contemplation of Dominion Energy entering the July 2020 agreement to sell substantially all of its gas transmission and storage operations to BHE, the Board of Directors authorized the repurchase of up to $3.0 billion of Dominion Energy’s common stock and rescinded its prior repurchase authorization approved in February 2005 and modified in June 2007. Dominion Energy completed repurchases under this authorization in December 2020. In November 2020, the Board of Directors authorized the repurchase of up to $1.0 billion of Dominion Energy’s common stock in addition to the repurchase program authorized in July 2020. This repurchase program does not include a specific timetable or price or volume targets and may be modified, suspended or terminated at ~~$6.8 billion, representing 0.6690~~any time. Shares may be purchased through open market or privately negotiated transactions or otherwise at the discretion of management subject to prevailing market conditions, applicable securities laws and other factors.

In August 2020, Dominion Energy began repurchasing shares under an open market agreement with a ~~share~~financial institution. Through the end of 2020, Dominion Energy repurchased 10.9 million shares of Dominion Energy common stock for ~~each share of SCANA common stock outstanding at closing. SCANA’s outstanding debt totaled $6.9 billion at closing. Also in January 2019,~~$857 million.

In September 2020, Dominion Energy ~~issued 22.5~~entered into two prepaid accelerated share repurchase agreements and made payments totaling $1.5 billion for the ultimate receipt of 18.6 million shares of ~~common stock to acquire interests in~~ Dominion Energy ~~Midstream as noted above.~~

common stock. In December ~~2019,~~2020, Dominion Energy ~~contributed 6.1~~entered into another prepaid accelerated share repurchase agreement and paid $400 million for the ultimate receipt of 5.3 million shares of ~~its~~Dominion Energy common ~~stock valued at $499 million to the qualified defined benefit pension plan. During~~stock.

In September 2020, Dominion Energy ~~plans to issue~~repurchased 4.1 million shares ~~for employee savings plans and direct stock purchase and dividend reinvestment plans.~~

~~During 2019,~~of Dominion Energy ~~received cash of $309 million from the issuance of 4.0 million of such shares through Dominion Energy Direct~~

~~and employee savings plans.~~

~~In August 2019, Dominion Energy issued 18.5 million shares under the related~~common stock ~~purchase contracts entered into as part of Dominion Energy’s 2016 Equity Units and received proceeds of $1.4 billion.~~

~~In 2019, Dominion Energy issued 9.9 million shares and received cash proceeds of $793 million, net of fees and commissions paid of $8 million, through its~~

~~at-the-market~~

~~program. In~~


62

~~December 2019, Dominion Energy completed the program.~~ in a private transaction for $323 million.

See Note 20 to the Consolidated Financial Statements for ~~a description of the~~

~~at-the-market~~

~~program.~~

~~In June 2019, Dominion Energy issued $1.6 billion of 2019 Equity Units, initially in the form of 2019 Series A Corporate Units. The Corporate Units are listed on the NYSE under the symbol DCUE.~~

~~In December 2019, Dominion Energy issued 800,000 shares of Series B Preferred Stock and received proceeds of $791 million.~~

~~Repurchase of Common Stock~~

Dominion Energy did not repurchase any shares in 2019 and does not plan to repurchase shares during 2020, except for shares tendered by employees to satisfy tax withholding obligations on vested restricted stock, which does not count against its stock repurchase authorization.

more information.

Credit Ratings

Credit ratings are intended to provide banks and capital market participants with a framework for comparing the credit quality of securities and are not a recommendation to buy, sell or hold securities. Dominion Energy believes that its current credit ratings provide sufficient access to the capital markets. However, disruptions in the banking and capital markets not specifically related to Dominion Energy may affect its ability to access these funding sources or cause an increase in the return required by investors.

Dominion Energy’s credit ratings affect its liquidity, cost of borrowing under credit facilities and collateral posting requirements under commodity contracts, as well as the rates at which it is able to offer its debt securities.

Both quantitative (financial strength) and qualitative (business or operating characteristics) factors are considered by the credit rating agencies in establishing an individual company’s credit rating. Credit ratings should be evaluated independently and are subject to revision or withdrawal at any time by the assigning rating organization. The credit ratings for Dominion Energy are affected by its financial profile, mix of regulated and nonregulated businesses and respective cash flows, changes in methodologies used by the rating agencies and event risk, if applicable, such as major acquisitions or dispositions.

Credit ratings and outlooks as of February ~~25, 2020~~22, 2021 follow:

Fitch

Moody's

Standard & Poor's

Dominion Energy

~~Fitch~~

~~Moody’s~~

~~Standard & Poor’s~~

~~Dominion Energy~~

Issuer

BBB+

Baa2

BBB+

~~Issuer~~

~~BBB+~~

~~Baa2~~

~~BBB+~~

Senior unsecured debt securities

BBB+

~~BBB+~~

Baa2

~~Baa2~~

BBB

Junior subordinated notes

BBB

~~BBB~~

Baa3

~~Baa3~~

BBB

Enhanced junior subordinated notes

BBB-

~~BBB-~~

Baa3

~~Baa3~~

BBB-

Preferred Stock

BBB-

~~BBB-~~

Ba1

~~Ba1~~

BBB-

Commercial paper

P-2

~~P-2~~

A-2

Outlook

Stable

~~Stable~~

Stable

~~Stable~~

Positive

A ~~downgrade in an individual company’s~~ credit rating ~~does~~is not ~~necessarily restrict its ability~~a recommendation to ~~raise short-term~~buy, sell or hold securities and ~~long-term financing as long as its credit~~should be evaluated independently of any other rating. Ratings are subject to revision or withdrawal at any time by the applicable rating remains investment grade, but it could result in an increase in the cost of borrowing. Dominion Energy works closely with Fitch, Moody’s and Standard & Poor’s with the objective of achieving its targeted credit ratings. Dominion Energy may find it necessary to modify its

~~business plan to maintain or achieve appropriate credit ratings and such changes may adversely affect growth and EPS.~~

organization.

Debt Covenants

As part of borrowing funds and issuing debt (both short-term and long-term) or preferred securities, Dominion Energy must enter into enabling agreements. These agreements containcustomary covenants that, in the event of default, could result in the acceleration of principal and interest payments; restrictions on distributions related to capital stock, including dividends, redemptions, repurchases, liquidation payments or guarantee payments; and in some cases, the termination of credit commitments unless a waiver of such requirements is agreed to by the lenders/security holders. These provisions are customary, with each agreement specifying which covenants apply. These provisions are not necessarily unique to Dominion Energy.

~~Some of the typical covenants include:~~

~~The timely payment of principal and interest;~~

~~Information requirements, including submitting financial reports and information about changes in Dominion Energy’s credit ratings to lenders;~~

Performance obligations, audits/inspections, continuation of the basic nature of business, restrictions on certain matters related to merger or consolidation and restrictions on disposition of all or substantially all assets;

~~Compliance with collateral minimums or requirements related to mortgage bonds; and~~

~~Limitations on liens.~~

Dominion Energy is required to pay annual commitment fees to maintain its joint revolving credit facility. In addition, ~~Dominion Energy’s~~the credit agreement contains various terms and conditions that could affect ~~its~~Dominion Energy’s ability to borrow under the facility. They include a maximum debt to total capital ratio and cross-default provisions.

As of December 31, ~~2019,~~2020, the calculated total debt to total capital ratio, pursuant to the terms of the agreement, was as follows:

Company		Maximum Allowed Ratio				Actual Ratio⁽¹⁾
Dominion Energy			67.5	%			55.2	%

Company

Maximum Allowed Ratio

Actual Ratio
(1)

Dominion Energy

67.5
%
50.3%

(1)	Indebtedness as defined by the bank agreements excludes certain junior subordinated notes reflected as long-term debt as well as AOCI reflected as equity in the Consolidated Balance Sheets.

If Dominion Energy or any of its material subsidiaries fails to make payment on various debt obligations in excess of $100 million, the lenders could require the defaulting company, if it is a borrower under Dominion Energy’s credit facility, to accelerate its repayment of any outstanding borrowings and the lenders could terminate their commitments, if any, to lend funds to that company under the credit facility. In addition, if the defaulting company is Virginia Power, Dominion Energy’s obligations to repay any outstanding borrowing under the credit facility could also be accelerated and the lenders’ commitments to Dominion Energy could terminate.

The term loan and revolving credit agreements Dominion Energy ~~executed RCCs~~entered into in ~~connection~~the first quarter of 2020 have a maximum allowed total debt to total capital ratio consistent with ~~its issuance of~~ the ~~June 2006 hybrids and September 2006 hybrids. In February 2020,~~ratio under the RCCs were terminated subsequent to the redemption of the remaining principal outstanding of the June 2006 hybrids and the September 2006 hybrids. See Note 18 to the Consolidated Financial Statements for additional information.

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

credit facility discussed above.

Dominion Energy monitors compliance with these debt covenants on a regular basis in order to ensure that events of default will not occur. As of December 31, ~~2019,~~2020, there have been no events of default under Dominion Energy’s debt covenants.

Subsidiary Dividend Restrictions

Certain ~~agreements associated with~~of Dominion Energy’s ~~credit facility contain~~subsidiaries may, from time to time, be subject to certain restrictions imposed by regulators or financing arrangements on ~~the ratio of debt~~their ability to ~~total capitalization. These limitations~~pay dividends, or to advance or repay funds, to Dominion Energy. At December 31, 2020, these restrictions did not ~~restrict~~have a significant impact on Dominion Energy’s ability to pay dividends on its common stock or ~~receive dividends from~~meet its ~~subsidiaries at December 31, 2019.~~

other cash obligations.

See ~~Notes 19 and~~Note 21 to the Consolidated Financial Statements for a description of ~~potential~~such restrictions and any other restrictions on ~~dividend payments by~~ Dominion ~~Energy, including in connection with the deferral of contract adjustment payments associated with the 2019 Equity Units, which information is incorporated herein by reference, as well as the failure~~Energy’s ability to ~~declare and~~ pay ~~dividends on Series A Preferred Stock or Series B Preferred Stock.~~

dividends.

Future Cash Payments for Contractual Obligations and Planned Capital Expenditures

Contractual Obligations

Dominion Energy is party to numerous contracts and arrangements obligating it to make cash payments in future years. These contracts include financing arrangements such as debt agreements and leases, as well as contracts for the purchase of goods and services and financial derivatives. Presented below is a table summarizing cash payments that may result from contracts to which Dominion Energy is a party as of December 31, ~~2019.~~2020. For purchase obligations and other liabilities, amounts are based upon contract terms, including fixed and minimum quantities to be purchased at fixed or market-based prices. Actual cash payments will be based upon actual quantities purchased and prices paid and will likely differ from amounts presented below. The table excludes all amounts classified as current liabilities in the Consolidated Balance Sheets, other than current maturities of long-term debt, interest payable and certain derivative instruments. The majority of Dominion Energy’s current liabilities will be paid in cash in ~~2020.~~2021.

			2022-		2024-		2026 and
	2021		2023		2025		thereafter		Total
(millions)
Long-term debt⁽¹⁾	$	2,110	$	4,519	$	3,583	$	25,284	$	35,496
Interest payments⁽²⁾		1,472		2,642		2,430		17,837		24,381
Leases
Operating Leases		64		103		74		756		997
Finance Leases		36		66		50		14		166
Purchase obligations⁽³⁾:
Purchased electric capacity for utility operations		67		133		132		753		1,085
Fuel commitments for utility operations		1,056		726		327		799		2,908
Fuel commitments for nonregulated operations		223		214		174		279		890
Pipeline transportation and storage		567		908		677		2,913		5,065
Other⁽⁴⁾		604		34		9		26		673
Other long-term liabilities⁽⁵⁾:
Other contractual obligations⁽⁶⁾		7		28		1		3		39
Total cash payments	$	6,206	$	9,373	$	7,457	$	48,664	$	71,700

2020

2021-
2022

2023-
2024

2025 and
thereafter

Total

(millions)

Long-term debt
(1
)
$
2,325
$
4,284
$
5,256
$
25,253
$
37,118

Interest payments
(
2
)

1,602

2,917

2,524

19,742

26,785

Leases

Operating Leases

72

120

81

582

855

Finance Leases

34

60

45

9

148

Purchase obligations
(
3
)
:

Purchased electric capacity for utility operations

59

116

114

664

953

Fuel commitments for utility operations

1,061

932

318

946

3,257

Fuel commitments for nonregulated operations

160

184

213

222

779

Pipeline transportation and storage

591

961

640

2,459

4,651

Other
(
4
)

574

81

40

—

695

Other
long-term
liabilities
(
5
)
:

Other contractual obligations
(
6
)

29

44

14

56

143

Total cash payments
$
6,507
$
9,699
$
9,245
$
49,933
$
75,384

(1)	Based on stated maturity dates rather than the earlier redemption dates that could be elected by instrument holders.

(2)

Includes interest payments over the terms of the debt and payments on stock purchase contracts. Interest is calculated using the applicable interest rate or forward interest rate curve at December 31, ~~2019~~2020 and outstanding principal for each instrument with the terms ending at each instrument’s stated maturity. See Note 18 to the Consolidated Financial Statements. Does not reflect Dominion Energy’s ability to defer stock purchase contract payments on the 2019 Equity Units, initially in the form of corporate units.

(3)	Amounts exclude open purchase orders for services that are provided on demand, the timing of which cannot be determined.

(4)	Includes capital, operations and maintenance commitments.

(5)

Excludes regulatory liabilities, AROs, ~~and~~ employee benefit plan obligations and charitable commitments, which are not contractually fixed as to timing and amount. See Notes 12, 14, 22 and 2223 to the Consolidated Financial Statements. Due to uncertainty about the timing and amounts that will ultimately be paid, ~~$118~~$105 million of income taxes payable associated with unrecognized tax benefits are excluded. Deferred income taxes are also excluded since cash payments are based primarily on taxable income for each discrete fiscal year. See Note 5 to the Consolidated Financial Statements.

(6)	Includes interest rate ~~and foreign currency~~ swap agreements.

Planned Capital Expenditures

Dominion Energy’s planned capital expenditures, including contributions for equity method investments, are expected to total approximately ~~$8.2 billion,~~ $8.1 billion, $7.4 billion and ~~$7.6~~$8.7 billion in ~~2020,~~ 2021, 2022 and ~~2022,~~2023, respectively. Dominion Energy’s planned expenditures are expected to include construction and expansion of electric generation, including renewable energy, and natural gas distribution, ~~transmission and storage facilities,~~ construction improvements and expansion of electric transmission and distribution assets, purchases of nuclear fuel ~~maintenance,~~ and ~~contributions to Atlantic Coast Pipeline to fund Dominion Energy’s portion of the Atlantic Coast Pipeline Project.~~

maintenance.

Dominion Energy expects to fund its capital expenditures with cash from operations and a combination of securities issuances and short-term borrowings. Planned capital expenditures include capital projects that are subject to approval by regulators and the Board of Directors.

See

Dominion Energy Virginia, ~~Gas Transmission & Storage,~~ Gas Distribution, Dominion Energy South Carolina

and

Contracted ~~Generation~~Assets -Properties

in Item 1. Business for a discussion of Dominion Energy’s expansion plans.


64

The above estimates are based on a capital expenditures plan reviewed and endorsed by Dominion Energy’s Board of Directors in late ~~2019~~2020 and are subject to continuing review and adjustment and actual capital expenditures may vary from these estimates. Dominion Energy may also choose to postpone or cancel certain planned capital expenditures in order to mitigate the need for future debt financings and equity issuances.

Use of

Off-Balance

Sheet Arrangements

Corporate Office Leasing Arrangement

In December 2019, Dominion Energy signed an agreement with a lessor, as amended in May 2020, to construct and lease a new corporate office property in Richmond, Virginia. The lessor is providing equity and has obtained financing commitments from debt investors, totaling $465 million, to fund the estimated project costs. If Dominion Energy ultimately proceeds with the project through completion, itthe project is ~~not~~ expected to be completed ~~earlier than mid-2023.~~ by September 2024. Dominion Energy has been appointed to act as the construction agent for the lessor, during which time Dominion Energy will request cash draws from the lessor and debt investors to fund all project ~~costs.~~costs, which totaled $61 million as of December 31, 2020. If the project is terminated under certain ~~events of default, Dominion Energy could be required to pay up to 89.9% of the then funded amount. For specific full recourse~~ events, Dominion Energy could be required to pay up to 100% of the then funded amount.

The

~~51-month~~

lease term will commence once construction is substantially complete and the facility is able to be ~~occupied.~~occupied and will end in December 2027. At the end of the initial lease term, Dominion Energy can (i) extend the term of the lease for an additional five years, subject to the approval of the participants, at current market terms, (ii) purchase the property for an amount equal to the project costs or, (iii) subject to certain terms and conditions, sell the property on behalf of the lessor to a third party using commercially reasonable efforts to obtain the highest cash purchase price for the property. If the project is sold and the proceeds from the sale are insufficient to repay the investors for the project costs, Dominion Energy may be required to make a payment to the lessor, up to 83% of project costs, for the difference between the project costs and sale proceeds.

right-of-use

asset and a corresponding finance lease liability at the commencement of the lease term. Dominion Energy will be considered the owner of the leased property for tax purposes, and as a result, will be entitled to tax deductions for depreciation and interest expense.

Offshore Wind Vessel Leasing Arrangement

construction agent for the lessor, during which time Dominion Energy will request cash draws from the lessor and debt investors to fund all project costs, which totaled $187 million as of December 31, 2020. If the project is terminated under certain events of default, Dominion Energy could be required to pay up to 100% of the then funded amount.

The initial lease term will commence once construction is substantially complete and the vessel is delivered and will mature in November 2027. At the end of the initial lease term, Dominion Energy can (i) extend the term of the lease for an additional term, subject to the approval of the participants, at current market terms, (ii) purchase the property for an amount equal to the outstanding project costs or, (iii) subject to certain terms and conditions, sell the property on behalf of the lessor to a third party using commercially reasonable efforts to obtain the highest cash purchase price for the property. If the project is sold and the proceeds from the sale are insufficient to repay the investors for the outstanding project costs, Dominion Energy may be required to make a payment to the lessor for the difference between the outstanding project costs and sale proceeds.

Dominion Energy is not considered the owner during construction for financial accounting purposes and, therefore, will not reflect the construction activity in its consolidated financial statements. Dominion Energy expects to recognize a right-of-use asset and a corresponding finance lease liability at the commencement of the lease term. Dominion Energy will be considered the owner of the leased property for tax purposes, and as a result, will be entitled to tax deductions for depreciation and interest expense.

Guarantees

Dominion Energy primarily enters into guarantee arrangements on behalf of its consolidated subsidiaries. These arrangements are not subject to the provisions of FASB guidance that dictate a guarantor’s accounting and disclosure requirements for guarantees, including indirect guarantees of indebtedness of others

In addition, Dominion Energy has provided ~~a guarantee~~guarantees to support ~~a portion~~certain of its equity method investees, including Atlantic Coast ~~Pipeline’s obligation under a $3.4 billion revolving credit facility.~~Pipeline and Cove Point. See ~~Note~~Notes 9 and 23 to the Consolidated Financial Statements for additional information.

~~Future Issues And Other Matters~~

FUTURE ISSUES AND OTHER MATTERS

See Item 1. Business and Notes 13 and 23 to the Consolidated Financial Statements for additional information on various environmental, regulatory, legal and other matters that may impact future results of operations, financial condition and/or cash flows.

Environmental Matters

Dominion Energy is subject to costs resulting from a number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of compliance, remediation, containment and monitoring obligations.

Environmental Protection and Monitoring Expenditures

Dominion Energy incurred $238 million, $260 million ~~$198 million~~ and ~~$200~~$198 million of expenses (including accretion and depreciation) during 2020, 2019, ~~2018~~ and ~~2017,~~2018 respectively, in connection with environmental protection and monitoring activities. Dominion Energy expects these expenses to be approximately ~~$286~~$234 million and ~~$275~~$231 million in ~~2020~~2021 and ~~2021,~~2022, respectively. In addition, capital expenditures related to environmental controls were $58 million, $134 million, and $104 million for 2020, 2019, and ~~$201 million for 2019,~~ 2018, ~~and 2017,~~ respectively. Dominion Energy expects these expenditures to be approximately ~~$159~~$63 million and ~~$132~~$81 million for ~~2020~~2021 and ~~2021,~~2022, respectively.

Future Environmental Regulations

Climate Change

In December 2015, the Paris Agreement was formally adopted under the United Nations Framework Convention on Climate Change. A key element of the initial U.S. commitment to the agreement was the implementation of the Clean Power Plan,

The federal government and several states in which ~~the EPA has proposed to repeal. In June 2017, the Administration announced that the U.S. intends to file to withdraw from the Paris Agreement in 2019. Several states, including Virginia, subsequently~~Dominion Energy operates have announced a commitment to achieving ~~the~~ carbon reduction ~~goals of~~goals. In February 2021, the U.S. rejoined the Paris ~~Agreement. It~~Agreement, which establishes a universal framework for addressing GHG emissions. States may also enact legislation relating to climate change matters such as the reduction of GHG emissions and renewable energy portfolio standards, similar to the VCEA. To the extent legislation is ~~not possible at this time to predict the timing and impact of this withdrawal, or how any legal requirements in the U.S.~~enacted at the federal or state level that is more restrictive than the VCEA and/or ~~local levels pursuant~~Dominion Energy’s commitment to ~~the Paris Agreement~~achieving net zero emissions by 2050, compliance with such legislation could have a material impact ~~the Companies’ customers~~ to Dominion Energy’s financial condition and/or ~~the business.~~cash flows.

State Actions Related to Air and GHG Emissions

In August 2017, the Ozone Transport Commission released a draft model rule for control of NO

emissions from natural gas pipeline compressor fuel-fire prime movers. States within the ozone transport region, including states in which Dominion Energy has natural gas operations, are expected to develop reasonably achievable control technology rules for existing sources based on the Ozone Transport Commission model rule. States outside of the Ozone Transport Commission may also consider the model rules in setting new reasonably achievable control technology standards. Several states in which Dominion Energy operates, including ~~Pennsylvania, New York, Maryland,~~ Virginia and Ohio, are developing or have announced plans to develop state-specific regulations to control GHG emissions, including methane.

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

Dominion Energy cannot currently estimate the potential financial statement impacts related to these matters, but there could be a material impact to its financial condition and/or cash flows.

~~Water~~

In ~~November 2019,~~October 2020, the EPA ~~released~~published a proposal to revise the 2016 Cross State Air Pollution Rule Update to address interstate air quality impacts for the 2008 ozone National Ambient Air Quality Standards. The EPA’s proposed rule will affect 12 states including Virginia and West Virginia and proposes to either issue new or amend existing NO_X Ozone Season emission budgets. The EPA is proposing to require implementation of the revised emission budgets beginning with the 2021 ozone season (May 1 through September 30, 2021). Such revisions could necessitate that the Companies install additional control technology at certain facilities and/or limit the ability of facilities to run at certain times or at all. Dominion Energy cannot currently estimate the ~~Effluent Limitations Guidelines rule that, if adopted, could extend the deadlines for compliance with certain standards at several facilities. While the~~potential financial statement impacts ~~of this rule~~related to these matters, but there could be a material impact to ~~Dominion Energy’s results of operations,~~its financial condition and/or cash ~~flows, the existing regulatory frameworks in South Carolina and Virginia provide rate recovery mechanisms that could substantially mitigate any such impacts for the regulated electric utilities.~~

flows.

PHMSA Regulation

The most recent reauthorization of PHMSA included new provisions on historical records research, maximum-allowed operating pressure validation, use of automated or remote-controlled valves on new or replaced lines, increased civil penalties and evaluation of expanding integrity management beyond high-consequence areas. PHMSA has not yet issued new rulemaking on most of these items.

Dodd-Frank Act

~~The Dodd-Frank Act was enacted into law in July 2010 in an effort to improve regulation of financial markets.~~

The CEA, as amended by Title VII of the Dodd-Frank Act, requires certain

over-the

counter derivatives, or swaps, to be cleared through a derivatives clearing organization and, if the swap is subject to a clearing requirement, to be executed on a designated contract market or swap execution facility.

Non-financial

entities that use swaps to hedge or mitigate commercial risk ~~often referred to as end users,~~ may elect the

end-user

exception to the CEA’s clearing requirements. Dominion Energy ~~has elected~~utilizes the end-user exception with respect to ~~exempt~~ its ~~swaps from the CEA’s clearing requirements.~~swaps. If, as a result of changes to the rulemaking process, Dominion ~~Energy’s derivative activities are not exempted from~~Energy can no longer utilize the end-user exception or otherwise becomes subject to mandatory clearing, exchange trading or margin requirements, it could be subject to higher costs due to decreased market liquidity or increased margin payments. In addition, Dominion Energy’s swap dealer counterparties may attempt to pass-through additional trading costs in connection with changes to or the ~~elimination of~~ rulemaking ~~that implements Title VII of the Dodd-Frank Act.~~process. Due to the evolving rulemaking process, Dominion Energy is currently unable to assess the potential impact of the Dodd-Frank Act’s derivative-related provisions on its financial condition, results of operations or cash flows.

~~Virginia Legislation~~

The 2020 General Assembly session in Virginia has included several proposals which, if ultimately enacted into law, could have a material impact on Dominion Energy’s operations, as well as impacts on regulatory cost recovery. Items under consideration include environmental requirements such as joining RGGI or meeting mandatory renewable portfolio standards that could result in both the need to develop new renewable electric generation facilities and the closure of certain existing electric generation facilities, expanded use of distributed renewable generation resources and additional requirements related to

demand side management programs. Additionally, legislation has been proposed which may affect Dominion Energy’s plans and/or cost recovery mechanisms for offshore wind development and replacing diesel school buses with electric school buses. Due to the evolving legislative process, Dominion Energy is unable to estimate the potential financial statement impacts related to matters currently under consideration by the Virginia General Assembly, but there could be a material impact to its results of operations, financial condition and/or cash flows.

~~Atlantic Coast Pipeline~~

~~In September 2014, Dominion Energy, along with Duke and Southern, announced the formation of Atlantic Coast Pipeline. Atlantic Coast Pipeline is focused on constructing an approximately~~

~~600-mile~~

natural gas pipeline running from West Virginia through Virginia to North Carolina. Atlantic Coast Pipeline has continued to experience delays in obtaining and/or maintaining permits necessary for construction along with construction delays due to judicial actions. In February 2020, the Supreme Court of the U.S. heard oral arguments in Atlantic Coast Pipeline’s case regarding the Appalachian Trail crossing and is expected to issue a ruling by June 2020. If a favorable ruling is not received, Atlantic Coast Pipeline is also evaluating possible legislative and administrative remedies to this issue. Given the legal challenges and ongoing discussions with customers, project construction is expected to be completed by the end of 2021, with full

~~in-service~~

in early 2022, with project costs estimated to be approximately $8 billion, excluding financing costs. Atlantic Coast Pipeline has reached agreements in principle with major customers to amend the contracted rate to share in certain delay cost increases, pending certain regulatory approvals. Project construction activities, schedules and costs are subject to uncertainty due to permitting and/or work delays (including due to judicial or regulatory action), abnormal weather and other conditions that could result in cost or schedule modifications in the future, a suspension of AFUDC for Atlantic Coast Pipeline and/or impairment charges potentially material to Dominion Energy’s cash flows, financial position and/or results of operations. See Note 9 to the Consolidated Financial Statements for more information.

North Anna

Virginia Power is considering the construction of a third nuclear unit at a site located at North Anna. If Virginia Power decides to build a new unit, it would require a Combined Construction Permit and Operating License from the NRC, approval of the Virginia Commission and certain environmental permits and other approvals. In June 2017, the NRC issued the Combined Construction Permit and Operating License. Virginia Power has not yet committed to building a new nuclear unit at North Anna.

Southeast Energy Exchange Market

In February 2021, DESC and the other members of the Southeast Energy Exchange Market submitted the Southeast Energy Exchange Market Agreement to FERC for authorization. This agreement sets forth the framework and rules for establishing and maintaining a new voluntary electronic trading platform designed to enhance the existing bilateral market in the Southeast utilizing zero-charge transmission service. That transmission service, in turn, will be voluntarily provided by participating transmission service providers, including DESC. This matter is pending.

COVID-19

Dominion Energy continues to monitor the global outbreak of COVID-19 and developments affecting its workforce, suppliers and other aspects of its business, such as construction projects, and will take additional precautions as Dominion Energy believes are warranted. In addition, Dominion Energy continues to review both customer demand and its ability to collect customer receivables. As a result of the COVID-19 pandemic, Virginia legislation was enacted in November 2020 related to a moratorium on utility disconnections resulting in the forgiveness of certain past due accounts. Other state legislatures or utility commissions could impose similar measures which could have a material impact to Dominion Energy’s results of operations, financial position and/or cash flows.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

The matters discussed in this Item may contain “forward-looking statements” as described in the introductory paragraphs of Item 7. MD&A. The reader’s attention is directed to those paragraphs and Item 1A. Risk Factors for discussion of various risks and uncertainties that may impact the Companies.


66

~~Market Risk Sensitive Instruments And Risk Management~~

MARKET RISK SENSITIVE INSTRUMENTS AND RISK MANAGEMENT

The Companies’ financial instruments, commodity contracts and related financial derivative instruments are exposed to potential losses due to adverse changes in commodity prices, interest rates and equity security prices as described below. Commodity price risk is present in ~~Dominion Energy and Virginia Power’s~~the Companies’ electric operations and Dominion ~~Energy and Dominion Energy Gas’~~Energy’s natural gas procurement and marketing operations due to the exposure to market shifts in prices received and paid for electricity, natural gas and other commodities. The Companies use commodity derivative contracts to manage price risk exposures for these operations. Interest rate risk is generally related to their outstanding debt and future issuances of debt. In addition, the Companies are exposed to investment price risk through various portfolios of equity and debt securities.

The following sensitivity analysis estimates the potential loss of future earnings or fair value from market risk sensitive instruments over a selected time period due to a 10% change in commodity prices or interest rates.

Commodity Price Risk

To manage price risk, ~~Dominion Energy and Virginia Power~~The Companies hold commodity-based derivative instruments held for

non-trading

purposes associated with purchases and sales of electricity, natural gas and other energy-related products. Dominion Energy Gas’ operations are contracted primarily under long-term fixed reservation agreements. Accordingly, management believes that Dominion Energy Gas is not subject to material commodity price risk.

The derivatives used to manage commodity price risk are executed within established policies and procedures and may include instruments such as futures, forwards, swaps, options and FTRs that are sensitive to changes in the related commodity prices. For sensitivity analysis purposes, the hypothetical change in market prices of commodity-based derivative instruments is determined based on models that consider the market prices of commodities in future periods, the volatility of the market prices in each period, as well as the time value factors of the derivative instruments. Prices and volatility are principally determined based on observable market prices.

A hypothetical 10% decrease in commodity prices would have resulted in an increase of $2 million and a decrease of $50 million in the fair value of Dominion Energy’s commodity-based derivative instruments as of December 31, 2020 and December 31, 2019, respectively.

A hypothetical 10% decrease in commodity prices would have resulted in a decrease of $35 million and $54 million in the fair value of ~~$50 million and $6 million of Dominion Energy’s~~Virginia Power’s commodity-based derivative instruments as of December 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

A hypothetical 10% decrease in commodity prices of Virginia Power’s commodity-based derivative instruments would have resulted in a decrease in fair value of $54 million and $51 million as of December 31, 2019 and December 31, 2018, respectively.

The impact of a change in energy commodity prices on the Companies’ commodity-based derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net losses from commodity-based financial derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction, such as revenue from physical sales of the commodity.

Interest Rate Risk

The Companies manage their interest rate risk exposure predominantly by maintaining a balance of fixed and variable rate debt. They also enter into interest rate sensitive derivatives, including interest rate swaps and interest rate lock agreements. For variable rate debt outstanding for Dominion Energy ~~a hypothetical 10% increase in market interest rates would not have resulted in a material change in earnings at December 31, 2019~~ and ~~would have resulted in a $24 million decrease in earnings at December 31, 2018. For variable rate debt outstanding for~~ Virginia Power, a hypothetical 10% increase in market interest rates would not have resulted in a material change in earnings at December 31, ~~2019~~2020 or December 31, 2018. For variable rate debt outstanding for Dominion Energy Gas, a hypothetical 10% increase in market interest rates would not have resulted in a material change in earnings at December 31, 2019 and would have resulted in a $16 million decrease in earnings at December 31, 2018.

2019.

The Companies also use interest rate derivatives, including forward-starting swaps, interest rate swaps and interest rate lock agreements to manage interest rate risk. As of December 31, 2020, Dominion Energy and Virginia Power had $6.9 billion and $2.1 billion, respectively, in aggregate notional amounts of these interest rate derivatives outstanding. A hypothetical 10% decrease in market interest rates would have resulted in a decrease of $124 million and $75 million, respectively, in the fair value of Dominion Energy and Virginia Power interest rate derivatives at December 31, 2020. As of December 31, 2019, Dominion Energy and Virginia Power ~~and Dominion Energy Gas~~ had $6.4 billion ~~$1.9 billion~~ and ~~$1.3~~$1.9 billion, respectively, in aggregate notional amounts of these interest rate derivatives outstanding. A hypothetical 10% decrease in market interest rates would have resulted in a decrease of $135 million ~~$88 million~~ and ~~$17~~$88 million, respectively, in the fair value of Dominion Energy and Virginia Power ~~and Dominion Energy Gas’~~ interest rate derivatives at December 31, 2019. ~~As of December 31, 2018,~~

Prior to completing the GT&S Transaction, Dominion Energy Virginia Power and Dominion Energy Gas had $6.6 billion, $1.9 billion and $1.4 billion, respectively, in aggregate notional amounts of these interest rate derivatives outstanding. A hypothetical 10% decrease in market interest rates would have resulted in a decrease of $142 million, $94 million and $17 million, respectively, in the fair value of Dominion Energy, Virginia Power and Dominion Energy Gas’ interest rate derivatives at December 31, 2018.

~~Dominion Energy Gas holds~~held foreign currency swaps ~~with~~for the purpose of hedging the foreign currency exchange risk associated with Euro denominated debt. As ofDecember 31, 2019, ~~and December 31, 2018,~~ Dominion Energy ~~and Dominion Energy Gas~~ had

€

~~250~~ €250 million in aggregate notional amounts of these foreign currency swaps outstanding. A hypothetical 10% decrease in market interest rates would not have resulted in a material decrease in fair value of Dominion ~~Energy Gas’~~Energy’s foreign currency swaps at December 31, ~~2019 and would have resulted in a decrease of $8 million in the fair value of Dominion Energy Gas’ foreign currency swaps at December 31, 2018.~~

2019.

The impact of a change in interest rates on the Companies’ interest rate-based financial derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net gains and/or losses from interest rate derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction.

Investment Price Risk

~~Dominion Energy and Virginia Power~~

The Companies are subject to investment price risk due to securities held as investments in nuclear decommissioning and rabbi trust funds that are managed by third-party

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations, Continued~~

investment managers. These trust funds primarily hold marketable securities that are reported in the Consolidated Balance Sheets at fair value.

Dominion Energy recognized net investment gains (including investment income) on nuclear decommissioning and rabbi trust investments of $1$0.7 billion and $1.0 billion for the ~~year~~years ended December 31, ~~2019. Dominion Energy recognized net investment losses (including investment income) on nuclear decommissioning trust investments of $135 million for the year ended December 31, 2018.~~2020 and 2019, respectively. Net realized gains and losses include gains and losses from the sale of investments as well as any other-than-temporary declines in fair value. Dominion Energy recorded, in AOCI and regulatory liabilities, a net increase in unrealized gains on debt investments of $57 million and $74 million for the ~~year~~years ended December 31, 2020 and 2019, ~~and recorded a net decrease in unrealized gains on debt investments of $36 million for the year ended December 31, 2018.~~

respectively.

Virginia Power recognized net investment gains (including investment income) on nuclear decommissioning trust investments of $287 million and $481 million for the ~~year~~years ended December 31, ~~2019. Virginia Power recognized net investment losses (including investment income) on nuclear decommissioning trust investments of $44 million for the year ended December 31, 2018.~~ 2020 and 2019, respectively.Net realized gains and losses include gains and losses from the sale of investments as well as any other-than-temporary declines in fair value. Virginia Power recorded, in AOCI and regulatory liabilities, a net increase in unrealized gains on debt investments of $29 million and $30 million for the ~~year~~years ended December 31, 2020 and 2019, ~~and recorded a net decrease in unrealized gains on debt investments of $21 million for the year ended December 31, 2018.~~

respectively.

Dominion Energy sponsors pension and other postretirement employee benefit plans that hold investments in trusts to fund employee benefit payments. Virginia Power ~~and Dominion Energy Gas~~ employees participate in these plans. Dominion Energy’s pension and other postretirement plan assets experienced aggregate actual returns (losses) of $1.9 billion and $2.1 billion in 2020 and ~~$(605) million in~~ 2019, ~~and 2018,~~ respectively, versus expected returns of ~~$848~~$933 million and $806 million, respectively. Dominion Energy Gas’ pension and other postretirement plan assets for employees represented by collective bargaining units experienced aggregate actual returns (losses) of $167 million and $(129) million in 2019 and 2018, respectively, versus expected returns of $70 million and $178$848 million, respectively. Differences between actual and

expected returns on plan assets are accumulated and amortized during future periods. As such, any investment-related declines in these trusts will result in future increases in the net periodic cost recognized for such employee benefit plans and will be included in the determination of the amount of cash to be contributed to the employee benefit plans. A hypothetical 0.25% decrease in the assumed long-term rates of return on Dominion Energy’s plan assets would result in an increase in net periodic cost of ~~$23~~$25 million and ~~$19~~$23 million as of December 31, ~~2019~~2020 and ~~2018,~~2019, respectively, for pension benefits and $5 million ~~and $4 million~~ as of both December 31, ~~2019~~2020 and ~~2018, respectively,~~2019 for other postretirement benefits. A hypothetical 0.25% decrease in the assumed long-term rates of return on Dominion Energy Gas’ plan assets, for employees represented by collective bargaining units, would result in an increase in net periodic cost of $2 million and $4 million as of December 31, 2019 and 2018, respectively, for pension benefits and $1 million as of December 31, 2018 for other postretirement benefits. This hypothetical decrease would result in an immaterial change in net periodic cost to Dominion Energy Gas for other postretirement benefits as of December 31, 2019.

Risk Management Policies

The Companies have established operating procedures with corporate management to ensure that proper internal controls are maintained. In addition, Dominion Energy has established an independent function at the corporate level to monitor compliance with the credit and commodity risk management policies of all subsidiaries, including Virginia ~~Power and Dominion Energy Gas.~~Power. Dominion Energy maintains credit policies that include the evaluation of a prospective counterparty’s financial condition, collateral requirements where deemed necessary and the use of standardized agreements that facilitate the netting of cash flows associated with a single counterparty. In addition, Dominion Energy also monitors the financial condition of existing counterparties on an ongoing basis. Based on these credit policies and the Companies’ December 31, ~~2019~~2020 provision for credit losses, management believes that it is unlikely that a material adverse effect on the Companies’ financial position, results of operations or cash flows would occur as a result of counterparty nonperformance.


68

Item 8. Financial Statements and Supplementary Data


	Page Number

Dominion Energy, Inc.
Report of Independent Registered Public Accounting Firm		71	86
Consolidated Statements of Income for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017~~ 2018		74	90
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017~~2018		75	91
Consolidated Balance Sheets at December 31, ~~2019~~2020 and ~~2018~~2019		76	92
Consolidated Statements of Equity at December 31, 2020, 2019 ~~2018~~ and ~~2017~~2018 and for the years then ended		78	94
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 ~~and 2017~~		79	95

Virginia Electric and Power Company
Report of Independent Registered Public Accounting Firm		81	97
Consolidated Statements of Income for the years ended December 31, 2020, 2019 and 2018 ~~and 2017~~		82	100
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018 ~~and 2017~~		83	101
Consolidated Balance Sheets at December 31, ~~2019~~2020 and ~~2018~~2019		84	102
Consolidated Statements of Common Shareholder’s Equity at December 31, 2020, 2019 ~~2018~~ and ~~2017~~2018 and for the years then ended		86	104
Consolidated Statements of Cash Flows for the years ended December 31, ~~2019, 2018 and 2017~~		87

~~Dominion Energy Gas Holdings, LLC~~
~~Report of Independent Registered Public Accounting Firm~~		89
~~Consolidated Statements of Income for the years ended December 31, 2019, 2018 and 2017~~		90
~~Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017~~		91
~~Consolidated Balance Sheets at December 31,~~2020, 2019 and 2018		92	105
~~Consolidated Statements of Equity at December 31, 2019, 2018 and 2017 and for the years then ended~~		94
~~Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017~~		95

Combined Notes to Consolidated Financial Statements		97	106


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70

~~Report of Independent Registered~~

~~Public Accounting Firm~~

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of

Dominion Energy, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Dominion Energy, Inc. and subsidiaries (“("Dominion ~~Energy”~~Energy") at December 31, ~~2019~~2020 and ~~2018,~~2019, the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, ~~2019,~~2020, and the related notes (collectively referred to as the ~~“consolidated~~"consolidated financial ~~statements”~~statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Dominion Energy at December 31, ~~2019~~2020 and ~~2018,~~2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2019,~~2020, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), Dominion ~~Energy’s~~Energy's internal control over financial reporting at December 31, ~~2019,~~2020, based on criteria established in

Internal ~~Control—~~Control — Integrated Framework (2013)

issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February ~~28, 2020,~~25, 2021, expressed an unqualified opinion on Dominion ~~Energy’s~~Energy's internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of Dominion ~~Energy’s~~Energy's management. Our responsibility is to express an opinion on Dominion ~~Energy’s~~Energy's consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Dominion Energy in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit

committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved ~~our~~ especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

~~Investments—Equity Method Investment Impairment Evaluation—Refer to Note 9 to the Consolidated Financial Statements~~

~~Critical Audit Matter Description~~

The investment balance of Dominion Energy’s equity method investment in Atlantic Coast Pipeline, LLC (“Atlantic Coast Pipeline”) was $1.1 billion at December 31, 2019. The Atlantic Coast Pipeline project is the subject of challenges in federal courts, including, among others, challenges of the Atlantic Coast Pipeline project’s biological opinion and incidental take statement, permits providing right of way crossings of certain federal lands, the U.S. Army Corps of Engineers 404 permit, the air permit for a compressor station at Buckingham, Virginia, and the Federal Energy Regulatory Commission (“FERC”) order approving the Certificate of Public Convenience and Necessity. The delays in obtaining and maintaining permits necessary for construction along with construction delays due to judicial actions have impacted the cost and schedule for the Atlantic Coast Pipeline project; project construction is expected to be completed by the end of 2021, with full

~~in-service~~

in early 2022 with project costs estimated to be approximately $8 billion, excluding financing costs. Atlantic Coast Pipeline has reached agreements in principle with major customers to amend the contracted rate to share in certain delay cost increases, pending certain regulatory approvals.

Dominion Energy evaluated the carrying amount of its equity method investment in Atlantic Coast Pipeline for an other-than-temporary impairment and determined that it was not impaired. The estimation of the fair value of Dominion Energy’s investment in Atlantic Coast Pipeline, contained in the other-than-temporary impairment evaluation, involved significant judgments related to the resolution of outstanding permitting issues within the project timeframe and the likelihood of obtaining amended contacts with the customers.

Auditing management’s judgments regarding the resolution of outstanding permitting issues within the project timeframe and the likelihood of obtaining amended contacts with the customers involved especially subjective and complex judgment.

~~How the Critical Audit Matter Was Addressed in the Audit~~

~~Our audit procedures related to this critical audit matter included the following, among others:~~

We tested the effectiveness of controls over management’s impairment analysis, including determination of the judgments regarding the resolution of the outstanding permitting issues within the project timeframe and the likelihood of obtaining amended contacts with the customers.

~~We evaluated the reasonableness of management’s permitting, project timeframe, and customer contract assumptions by:~~

Assessing the reasonableness of management’s plans to resolve outstanding permitting issues and the corresponding impact on project timeframes by inquiring with legal counsel and executive management and considering other potential outcomes.

~~Assessing the reasonableness of the various projected~~

~~in-service~~

~~dates by inquiring with Atlantic Cost Pipeline’s project managers and engineers and comparing the~~

~~in-service~~

~~dates to the project’s timeframe.~~

~~Obtaining and reading correspondence between Atlantic Coast Pipeline and the third-party pipeline construction contractor regarding the feasibility of the various projected~~

~~in-service~~

~~dates assumed by management.~~

~~Obtaining and reading correspondence, including draft terms, between Atlantic Coast Pipeline and major customers.~~

~~Searching for disconfirming evidence by listening to earnings calls, reading press releases, news articles and other publicly available information.~~

We read and analyzed the minutes of the Board of Managers of Atlantic Coast Pipeline for discussions of changes in legal, regulatory, or business factors which could impact management’s assumptions of the resolution of the outstanding permitting issues within the project timeframe and the likelihood of obtaining amended contacts with the customers.

~~Preferred Stock—2019 Corporate Units—Refer to Notes 8 & 19 to the Consolidated Financial Statements~~

~~Critical Audit Matter Description~~

In June 2019, Dominion Energy issued $1.6 billion of 2019 Equity Units, initially in the form of 2019 Series A Corporate Units (the “2019 Equity Units”). Each 2019 Series A Corporate Unit consists of a stock purchase contract and a 1/10, or 10% undivided beneficial ownership interest in one share of Series A Preferred Stock. Beginning in June 2022, the Series A Preferred Stock is convertible at the option of the holder into Dominion Energy common stock under a formula based upon the average closing price of Dominion Energy common stock prior to the conversion date. The Series A Preferred Stock is redeemable in cash by Dominion Energy beginning September 2022 at the liquidation preference. Settlement of any conversion is payable in cash, common stock, or a combination thereof, at Dominion Energy’s election.

The stock purchase contracts obligate the holders to purchase shares of Dominion Energy common stock in June 2022. The purchase price to be paid under the stock purchase contracts is $100 per Corporate Unit and the number of shares to be purchased will be determined under a formula based on the average closing price of Dominion Energy common stock near the settlement date. The Series A Preferred Stock was pledged upon issuance as collateral to secure the purchase of common stock under the related stock purchase contracts. Dominion Energy identified no items that should be recorded as derivative instruments and

~~recorded the present value of the stock purchase contract payments as a liability offset to common stock and has recorded the Series A Preferred Stock within equity.~~

Given the complexity of the 2019 Equity Units structure and the judgments involved in applying the relevant accounting standards, auditing management’s conclusions on the balance sheet classification of the 2019 Equity Units involved the need for specialized skill and knowledge.

~~How the Critical Audit Matter Was Addressed in the Audit~~

~~Our audit procedures related to this critical audit matter included the following, among others:~~

~~We tested the effectiveness of controls over management’s technical accounting assessment of the balance sheet classification of the components of the 2019 Equity Units.~~

~~We read the applicable agreements and compared the key terms from the agreements to management’s analysis of the transaction.~~

With the assistance of professionals in our firm having expertise in accounting for debt and equity instruments, we evaluated management’s conclusions regarding the balance sheet classification of the components of the 2019 Equity Units through evaluation of the terms within the applicable agreements and considering the applicable generally accepted accounting standards.

~~We evaluated Dominion Energy’s disclosures related to the financial statement impacts of the transaction.~~

Regulatory Assets and ~~Liabilities—~~Liabilities - Impact of Rate Regulation on the Consolidated Financial ~~Statements—~~Statements — Refer to Notes 2, 12 and 13 to the Consolidated Financial Statements

Critical Audit Matter Description

Dominion Energy, through its regulated electric and gas subsidiaries, is subject to rate regulation by certain state public utility commissions and ~~FERC~~the Federal Energy Regulatory Commission (“FERC”) (collectively, the “relevant commissions”) which have jurisdiction with respect to the rates of electric utility and natural gas distribution and transmission companies. Management has determined its rate-regulated subsidiaries meet the requirements under accounting principles generally accepted in the United States of America to apply the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures, such as property, plant and equipment, net; regulatory assets; regulatory liabilities; operating revenues; other operations and maintenance expense; ~~and~~ depreciation, depletion and amortization ~~expense,~~expense; and impairment of assets and other charges, collectively, the “financial statement impacts of rate regulation.”

Revenue provided by Dominion Energy’s electric transmission, distribution and generation operations and its gas transmission and distribution operations is based primarily on rates approved by the relevant commissions. Further, Virginia Electric and Power Company’s (“Virginia Power”) retail base rates, terms and conditions for generation and distribution services to customers in Virginia are reviewed by the Virginia State Corporation Commission (the “Virginia Commission”) in a proceeding that involves the determination of Virginia Power’s actual earned return on equity (“ROE”) during a historic test period,

and ~~the~~ determination of Virginia Power’s authorized


72

ROE prospectively. Under certain circumstances, Virginia Power may be required to refund a portion of its earnings to customers.

In connection with the evaluation of Virginia Power’s earnings for the four-year test period ended December 31, 2020, Virginia Power recorded a charge of $130 million for the year ended December 31, 2020 for benefits it expects to provide to its customers through the use of a customer credit reinvestment offset in accordance with the Virginia Grid Transformation and Security Act of 2018 (“GTSA”). This evaluation included consideration of the regulatory treatment of a charge of $754 million ($561 million after-tax) recorded in the first quarter of 2020, associated with Virginia Power’s commitment to retire certain coal- and oil-fired generating units before the end of their useful lives. Virginia Power determined it was appropriate to consider this charge to be recovered as a component of Virginia Power’s base rates under the GTSA. This determination required management judgment.

When it is probable that regulators will permit the recovery of current costs through future rates charged to customers, these costs that otherwise would be expensed by nonregulated companies are deferred as regulatory assets. Likewise, regulatory liabilities are recognized when it is probable that regulators will require customer refunds through future rates or when revenue is collected from customers for expenditures that have yet to be incurred. Dominion Energy evaluates whether recovery of its regulatory assets through future rates is probable as well as whether a regulatory liability due to customers is probable and makes various assumptions in its analyses. These analyses are generally based on orders issued by regulatory commissions, legislation and judicial actions; past experience; discussions with applicable regulatory authorities and legal counsel; forecasted earnings; and considerations around the likelihood of impacts from events such as unusual weather conditions, extreme weather events, and other natural disasters, and unplanned outages of facilities.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about the financial statement impacts of rate regulation. Management judgments include assessing the likelihood of (1) recovery of its regulatory assets through future rates and (2) whether a regulatory liability is due to customers. Given management’s accounting judgments are based on assumptions about the outcome of future decisions by the relevant commissions, auditing these judgments required specialized knowledge of the accounting for rate regulation and the rate setting process due to its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the assessment of whether recovery of regulatory assets through future rates or a regulatory liability due to customers is probable included the following, among others:

•

We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) recovery of regulatory assets through future rates, and (2) whether a regulatory liability is due to customers. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities; and the monitoring and evaluation of regulatory and legislative developments that may impact the assessment of whether recovery of regulatory assets through future rates or a regulatory liability due to customers is probable.

•

We evaluated Dominion Energy’s disclosures related to the financial statement impacts of rate regulation.

•

We read and evaluated orders issued by the relevant commissions, as well as relevant regulatory statutes, interpretations, procedural memorandums, filings made by interveners, existing laws and other publicly available information to assess whether this external information was properly considered by management in concluding upon the financial statement impacts of rate regulation.

•

We assessed the regulatory treatment of significant non-recurring charges, including the $754 million charge recorded by Virginia Power in the first quarter of 2020 in connection with the early retirement decision impacting certain coal- and oil-fired generating units by considering existing precedent for the treatment of such charges, relevant legislation and regulatory orders.

•

We considered the likelihood of (1) recovery of regulatory assets through future rates and (2) whether a regulatory liability is due to customers based on precedents established by the relevant commissions’ previous orders and Dominion Energy’s past experience with the relevant commissions.

•

For regulatory matters in process, we inspected associated documents and testimony filed with the relevant commissions for any evidence that might contradict management’s assertions.

•

We read and analyzed the minutes of the Boards of Directors of Dominion Energy and Dominion Energy’s rate-regulated subsidiaries for discussions of changes in legal, regulatory, or business factors which could impact management’s conclusions with respect to the financial statement impacts of rate regulation.

Impairment of Non-Wholly-Owned Nonregulated Solar Facilities— Refer to Note 10 to the Consolidated Financial Statements

Critical Audit Matter Description

Dominion Energy performs an evaluation for impairment whenever events or changes in circumstances indicate that the carrying amount of long-lived assets with finite lives may not be recoverable. A long-lived asset is written down to fair value if the sum of its expected future undiscounted cash flows is less than its carrying amount.

In the third quarter of 2020, Dominion Energy performed a strategic review of its long-term intentions for its contracted nonregulated solar generation assets in partnerships outside of its core electric service territories in consideration of the impact of the Virginia Clean Economy Act and Dominion Energy’s decision to sell substantially all of its gas transmission and storage operations. Based on an evaluation of Dominion Energy’s interests in these long-lived assets for recoverability under a probability weighted approach, Dominion Energy determined the assets were impaired. As a result, Dominion Energy recorded a charge of $665 million ($293 million after-tax attributable to Dominion Energy and $267 million attributable to noncontrolling interest) in impairment of assets and other charges in its Consolidated Statements of Income for year ended December 31, 2020 to adjust the property, plant and equipment down to its estimated fair value of $1.4 billion. The fair value was estimated using an income approach. The valuation is considered a Level 3 fair value measurement due to the use of significant judgmental and unobservable inputs, including projected timing and amount of future cash flows and discount rates reflecting risks inherent in the future cash flows and market prices.

We identified the impairment of the contracted nonregulated solar generation assets held in partnerships as a critical audit matter due to the high degree of auditor judgment and an increased level of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate (1) the timing of management’s identification of the triggering event requiring the recoverability test, (2) the reasonableness of the probabilities assigned by management to the scenarios utilized within the recoverability model (3) the estimates underlying the future cash flows in scenarios utilized and, (4) the selection of a discount rate in deriving the fair value of the assets.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the impairment of the solar generation assets held in partnerships included the following, among others:

•

We tested the effectiveness of management’s controls over the impairment evaluation, including those over the identification of triggering events requiring recoverability tests, and those addressing the appropriateness of the key assumptions used in the recoverability test, including those addressing the probabilities assigned to the scenarios utilized and those addressing key assumptions utilized in estimation of the fair value of the assets, including selection of a discount rate.

•

We evaluated whether the timing of the identification of the triggering event was appropriate, as well as the reasonableness of probabilities management assigned to scenarios utilized in the recoverability test by:

Reading and analyzing the minutes of the Boards of Directors of Dominion Energy for discussions of changes in legal, regulatory, or business factors which could impact management’s conclusions with respect to the probabilities assigned to the scenarios utilized.

Making inquiries of executive management, and

Obtaining and considering the timing and content of business unit presentations concerning management’s future plans with respect to the solar partnerships.

•

We evaluated the reasonableness of the fair value model by:

Testing the mathematical accuracy of the model,

Evaluating the reasonableness of the forecasted cash flows by comparing cash flow projections to current executed contracts, historical revenues and gross margins, and industry trends, and

With the assistance of our fair value specialists, evaluating the reasonableness of the discount rate utilized in the model by developing a range of independent estimates and comparing those to the discount rate selected by management.

•

We evaluated Dominion Energy’s disclosures related to the financial statement impacts of the impairment.

Earnings (loss) from equity method investees– Presentation of Loss from Atlantic Coast Pipeline in Discontinued Operations — Refer to Note 9 to the Consolidated Financial Statements

Critical Audit Matter Description

Dominion Energy holds a 53% noncontrolling interest in Atlantic Coast Pipeline, LLC (“Atlantic Coast Pipeline”) which since its formation in September 2014 had been focused on the construction of an approximately 600-mile natural gas pipeline.

Atlantic Coast Pipeline determined that the pipeline was probable of abandonment in June 2020, and it fully impaired the related asset under construction which resulted in an equity method loss to Dominion Energy of $2.3 billion. In connection with Dominion Energy’s decision to sell substantially all of its gas transmission and storage operations, which it determined to be a strategic shift, Dominion Energy has reflected the results of its equity method investment in Atlantic Coast Pipeline as discontinued operations in its Consolidated Statements of Income.

Auditing the conclusion that the equity method earnings (loss) associated with Dominion Energy’s investment in Atlantic Coast Pipeline was appropriately presented in discontinued operations involved significant judgment in applying the accounting standards as to when an equity method investee can be considered abandoned.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the assessment of whether ~~recovery of regulatory assets through future rates or a regulatory liability due to customers is probable.~~

~~We evaluated~~the equity method loss associated with Dominion Energy’s ~~disclosures related to~~investment in Atlantic Coast Pipeline was appropriately presented in discontinued operations included the ~~consolidated financial statement impacts of rate regulation.~~following, among others:

•

We tested the effectiveness of controls over management’s technical accounting assessment of the presentation of the equity method earnings (loss) from Atlantic Coast Pipeline.

•

With the assistance of professionals in our firm having expertise in discontinued operations, we evaluated management’s conclusions regarding the presentation of the equity method earnings (loss) from Atlantic Coast Pipeline by considering the applicable generally accepted accounting standards.

•

We evaluated Dominion Energy’s disclosures related to the presentation of equity method earnings (loss) on Atlantic Coast Pipeline as discontinued operations.

We considered the likelihood of (1) recovery of regulatory assets through future rates and (2) whether a regulatory liability is due to customers based on precedence established by the relevant commissions’ previous orders and Dominion Energy’s past experience with the relevant commissions.

~~For regulatory matters in process, we inspected associated documents and testimony filed with the relevant commissions for any evidence that might contradict management’s assertions.~~

/s/ Deloitte & Touche LLP

Richmond, Virginia

February ~~28, 2020~~

25, 2021

We have served as Dominion Energy’s auditor since 1988.

Dominion Energy, Inc.

Consolidated Statements of Income

Year Ended December 31,	2020			2019			2018
(millions, except per share amounts)
Operating Revenue	$	14,172		$	14,401		$	11,199
Operating Expenses
Electric fuel and other energy-related purchases		2,243			2,885			2,687
Purchased electric capacity		53			88			122
Purchased gas		889			1,560			604
Other operations and maintenance		3,685			3,790			2,786
Depreciation, depletion and amortization		2,332			2,283			1,660
Other taxes		871			883			580
Impairment of assets and other charges		2,105			1,520			12
Gains on sales of assets		(61	)		(152	)		(265	)
Total operating expenses		12,117			12,857			8,186
Income from operations		2,055			1,544			3,013
Other income		733			811			885
Interest and related charges		1,377			1,486			1,279
Income from continuing operations including noncontrolling interests before income tax expense		1,411			869			2,619
Income tax expense		83			209			522
Net Income From Continuing Operations Including Noncontrolling Interests		1,328			660			2,097
Net Income (Loss) From Discontinued Operations Including Noncontrolling Interests⁽¹⁾⁽²⁾		(1,878	)		716			452
Net Income (Loss) Including Noncontrolling Interests		(550	)		1,376			2,549
Noncontrolling Interests		(149	)		18			102
Net Income (Loss) Attributable to Dominion Energy	$	(401	)	$	1,358		$	2,447
Amounts attributable to Dominion Energy
Net Income from continuing operations	$	1,583		$	653		$	2,087
Net Income (Loss) from discontinued operations		(1,984	)		705			360
Net Income (Loss) attributable to Dominion Energy	$	(401	)	$	1,358		$	2,447
EPS - Basic
Net income from continuing operations	$	1.83		$	0.79		$	3.19
Net income (loss) discontinued operations		(2.39	)		0.87			0.55
Net income (loss) attributable to Dominion Energy	$	(0.56	)	$	1.66		$	3.74
EPS - Diluted
Net income from continuing operations	$	1.82		$	0.75		$	3.19
Net income (loss) discontinued operations		(2.39	)		0.87			0.55
Net income (loss) attributable to Dominion Energy	$	(0.57	)	$	1.62		$	3.74

Year Ended December 31,

2019

2018

2017

(millions, except per share amounts)

Operating Revenue
(1)
$
16,572
$
13,366
$
12,586

Operating Expenses

Electric fuel and other energy-related purchases

2,938

2,814

2,301

Purchased electric capacity

88

122

6

Purchased gas

1,536

645

701

Other operations and maintenance

4,428

3,458

3,200

Depreciation, depletion and amortization

2,655

2,000

1,905

Other taxes

1,040

703

668

Impairment of assets and related charges

1,535

403

15

Gains on sales of assets

(162
)
(380
)
(147
)
Total operating expenses

14,058

9,765

8,649

Income from operations

2,514

3,601

3,937

Other income
(1)

986

1,021

358

Interest and related charges

1,773

1,493

1,205

Income from operations including noncontrolling interests before income tax expense (benefit)

1,727

3,129

3,090

Income tax expense (benefit)

351

580

(30
)
Net Income Including Noncontrolling Interests

1,376

2,549

3,120

Noncontrolling Interests

18

102

121

Net Income Attributable to Dominion Energy
$
1,358
$
2,447
$
2,999

Earnings Per Common Share

Net income attributable to Dominion Energy—Basic
$
1.66
$
3.74
$
4.72

Net income attributable to Dominion Energy—Diluted
$
1.62
$
3.74
$
4.72

(1)	See Note 9 for amounts attributable to related ~~parties.~~parties.

(2)	Includes income tax expense (benefit) of $(204) million, $142 million and $58 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.


74

Dominion Energy, Inc.

Consolidated Statements of Comprehensive Income

Year Ended December 31,	2020			2019			2018
(millions)
Net income including noncontrolling interests	$	(550	)	$	1,376		$	2,549
Other comprehensive loss, net of taxes:
Net deferred gains (losses) on derivatives-hedging activities, net of $81, $35 and $(10) tax		(239	)		(110	)		30
Changes in unrealized net gains (losses) on investment securities, net of $(14), $(14) and $5 tax		43			39			(18	)
Changes in net unrecognized pension and other postretirement benefit costs, net of $(2), $(4) and $75 tax		25			(22	)		(215	)
Amounts reclassified to net income:
Net derivative (gains) losses-hedging activities, net of $(75), $21 and $(35) tax		227			(62	)		102
Net realized (gains) losses on investment securities, net of $6, $1 and $(2) tax		(18	)		(4	)		5
Net pension and other postretirement benefit costs, net of $(13), $(23) and $(21) tax		37			66			78
Changes in other comprehensive income from equity method investees, net of $(1), $— and $(1) tax		1			—			1
Total other comprehensive loss		76			(93	)		(17	)
Comprehensive income (loss) including noncontrolling interests		(474	)		1,283			2,532
Comprehensive income (loss) attributable to noncontrolling interests		(149	)		18			103
Comprehensive income (loss) attributable to Dominion Energy	$	(325	)	$	1,265		$	2,429

Year Ended December 31,

2019

2018

2017

(millions)

Net Income Including Noncontrolling Interests
$
1,376
$
2,549
$
3,120

Other comprehensive income (loss), net of taxes:

Net deferred gains (losses) on derivatives-hedging activities, net of $35, $(10) and $(3) tax

(110
)
30

8

Changes in unrealized net gains (losses) on investment securities, net of $(14), $5 and $(121) tax

39

(18
)
215

Changes in net unrecognized pension and other postretirement benefit costs, net of $(4), $75 and $32 tax

(22
)
(215
)
(69
)
Amounts reclassified to net income:

Net derivative (gains) losses-hedging activities, net of $21, $(35) and $18 tax

(62
)
102

(29
)
Net realized (gains) losses on investment securities, net of $1, $(2) and $21 tax

(4
)
5

(37
)
Net pension and other postretirement benefit costs, net of $(23), $(21) and $(32) tax

66

78

50

Changes in other comprehensive gains (losses) from equity method investees, net of $—, $(1) and $(2) tax

—

1

3

Total other comprehensive income (loss)

(93
)
(17
)
141

Comprehensive income including noncontrolling interests

1,283

2,532

3,261

Comprehensive income attributable to noncontrolling interests

18

103

122

Comprehensive income attributable to Dominion Energy
$
1,265
$
2,429
$
3,139

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.


						75

Dominion Energy, Inc.

Consolidated Balance Sheets

At December 31,	2020			2019
(millions)
ASSETS
Current Assets
Cash and cash equivalents	$	172		$	135
Customer receivables (less allowance for doubtful accounts of $42 and $18)		2,295			2,085
Other receivables (less allowance for doubtful accounts of $3 at both dates)		212			340
Inventories:
Materials and supplies		1,105			1,071
Fossil fuel		349			411
Gas stored		96			134
Prepayments		309			296
Regulatory assets		699			871
Other		167			218
Current assets held for sale⁽¹⁾		1,482			535
Total current assets		6,886			6,096
Investments
Nuclear decommissioning trust funds		6,900			6,192
Investment in equity method affiliates		2,934			1,334
Other		404			379
Total investments		10,238			7,905
Property, Plant and Equipment
Property, plant and equipment		82,959			82,043
Accumulated depreciation, depletion and amortization		(25,111	)		(24,843	)
Total property, plant and equipment, net		57,848			57,200
Deferred Charges and Other Assets
Goodwill		7,381			7,395
Pension and other postretirement benefit assets		1,704			1,707
Intangible assets, net		765			685
Regulatory assets		9,133			7,652
Other		1,950			1,226
Total deferred charges and other assets		20,933			18,665
Noncurrent assets held for sale		—			13,957
Total assets	$	95,905		$	103,823

At December 31,

2019

2018

(millions)

Assets

Current Assets

Cash and cash equivalents
$
166
$
268

Customer receivables (less allowance for doubtful accounts of $20 and $14)

2,278

1,749

Other receivables (less allowance for doubtful accounts of $3 and $4
(1
)

367

331

Inventories:

Materials and supplies

1,193

1,039

Fossil fuel

412

287

Gas stored

137

92

Prepayments

328

265

Regulatory assets

879

496

Other

328

634

Total current assets

6,088

5,161

Investments

Nuclear decommissioning trust funds

6,192

4,938

Investment in equity method affiliates

1,646

1,278

Other

379

344

Total investments

8,217

6,560

Property, Plant and Equipment

Property, plant and equipment

97,466

76,578

Accumulated depreciation, depletion and amortization

(28,384
)
(22,018
)
Total property, plant and equipment, net

69,082

54,560

Deferred Charges and Other Assets

Goodwill

8,946

6,410

Pension and other postretirement benefit assets

1,708

1,279

Intangible assets, net

791

670

Regulatory assets

7,687

2,676

Other

1,304

598

Total deferred charges and other assets

20,436

11,633

Total assets
$
103,823
$
77,914

(1)	See Note 9 for amounts attributable to related ~~parties.~~parties.


76

At December 31,

2019

2018

(millions)

Liabilities and Equity

Current Liabilities

Securities due within one year
$
3,162
$
3,624

Credit facility borrowings

—

73

Short-term debt

911

334

Accounts payable

1,115

914

Accrued interest, payroll and taxes

1,323

836

Regulatory liabilities

497

356

Reserves for SCANA legal proceedings

696

—

Other
(1)

2,235

1,510

Total current liabilitie
s

9,939

7,647

Long-Term Debt

Long-term debt

30,313

26,293

Junior subordinated notes

3,406

3,430

Remarketable subordinated notes

—

1,386

Finance leases

105

35

Total long-term debt

33,824

31,144

Deferred Credits and Other Liabilities
��
Deferred income taxes and investment tax credits

6,277

5,116

Regulatory liabilities

11,001

6,840

Asset retirement obligations

4,866

2,250

Pension and other postretirement benefit liability

2,366

2,328

Other
(1)

1,517

541

Total deferred credits and other liabilities

26,027

17,075

Total liabilities

69,790

55,866

Commitments and Contingencies (see Note 23)

Equity

Preferred stock (See Note 19)

2,387

—

Common stock – no par
(
2
)

23,824

12,588

Retained earnings

7,576

9,219

Accumulated other comprehensive loss

(1,793
)
(1,700
)
Total shareholders’ equity

31,994

20,107

Noncontrolling interests

2,039

1,941

Total equity

34,033

22,048

Total liabilities and equity
$
103,823
$
77,914

~~(1)~~

~~See Note 9 for amounts attributable to related parties.~~

~~(2)~~

~~1.8 billion shares authorized; 838 million shares and 681 million shares outstanding at December 31, 2019 and 2018, respectively.~~

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

At December 31,	2020			2019
(millions)
LIABILITIES AND EQUITY
Current Liabilities
Securities due within one year	$	1,937		$	2,462
Supplemental 364-Day credit facility borrowings		225			—
Short-term debt		895			849
Accounts payable		944			1,023
Accrued interest, payroll and taxes		1,133			1,284
Regulatory liabilities		809			455
Reserves for SCANA legal proceedings		208			696
Liability to Atlantic Coast Pipeline		1,052			—
Q-Pipe Transaction deposit		1,290			—
Other⁽¹⁾		1,725			2,132
Current liabilities held for sale		625			1,039
Total current liabilities		10,843			9,940
Long-Term Debt
Long-term debt		30,915			25,492
Junior subordinated notes		2,161			3,406
Other		881			100
Total long-term debt		33,957			28,998
Deferred Credits and Other Liabilities
Deferred income taxes and investment tax credits		5,953			6,277
Regulatory liabilities		10,187			10,204
Asset retirement obligations		5,404			4,790
Pension and other postretirement benefit liability		1,706			2,364
Other⁽¹⁾		1,394			1,463
Total deferred credits and other liabilities		24,644			25,098
Noncurrent liabilities held for sale		—			5,754
Total liabilities		69,444			69,790
Commitments and Contingencies (see Note 23)
Equity
Preferred stock (See Note 19)		2,387			2,387
Common stock – no par⁽²⁾		21,258			23,824
Retained earnings		4,189			7,576
Accumulated other comprehensive loss		(1,717	)		(1,793	)
Total shareholders' equity		26,117			31,994
Noncontrolling interests		344			2,039
Total equity		26,461			34,033
Total liabilities and equity	$	95,905		$	103,823


						77

~~Dominion Energy, Inc.~~

~~Consolidated Statements of Equity~~

Preferred Stock

Common Stock

Dominion Energy
Shareholders

Shares

Amount

Shares

Amount

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Total
Shareholders’
Equity

Noncontrolling
Interests

Total
Equity

(millions except per share amounts)

December 31, 2016

628
$
8,550
$
6,854

$ (799
)
$14,605

$ 2,235
$
16,840

Net income including noncontrolling interests

2,999

2,999

121

3,120

Contributions from NRG to Four Brothers and Three Cedars

—

9

9

Issuance of common stock

17

1,302

1,302

1,302

Sale of Dominion Energy Midstream common units—net of offering costs

—

18

18

Stock awards (net of change in unearned compensation)

22

22

22

Dividends ($3.035 per common share) and distributions

(1,931
)
(1,931
)
(156
)
(2,087
)
Other comprehensive income, net of tax

140

140

1

141

Other

(9
)
14

5

5

December 31, 2017

645
$
9,865
$
7,936

$ (659
)
$17,142

$ 2,228
$
19,370

Cumulative-effect of changes in accounting principles

(127
)
1,029

(1,023
)
(121
)
127

6

Net income including noncontrolling interests

2,447

2,447

102

2,549

Issuance of common stock

36

2,461

2,461

2,461

Sale of Dominion Energy Midstream common units—net of offering costs

—

4

4

Remeasurement of noncontrolling interest in Dominion Energy Midstream

375

375

(375
)
—

Stock awards (net of change in unearned compensation)

22

22

22

Dividends ($3.34 per common share) and distributions

(2,185
)
(2,185
)
(146
)
(2,331
)
Other comprehensive income (loss), net of tax

(18
)
(18
)
1

(17
)
Other

(8
)
(8
)
(16
)
(16
)
December 31, 2018

681
$
12,588
$
9,219

$(1,700
)
$20,107

$ 1,941
$
22,048

Net income including noncontrolling interests

1,358

1,358

18

1,376

Issuance of Stock

2

2,387

39

3,014

5,401

5,401

Stock purchase contract component of 2019 Equity Units

(264
)

(264
)

(264
)
Acquisition of SCANA

96

6,818

6,818

6,818

Acquisition of public interest in Dominion Energy Midstream

22

1,181

1,181

(1,221
)
(40
)
Sale of interest in Cove Point

476

476

1,386

1,862

Stock awards (net of change in unearned compensation)

24

24

24

Preferred stock dividends (See Note 19)

(17
)

(17
)

(17
)
Common dividends ($3.67 per common share) and distributions

(2,983
)

(2,983
)
(85
)
(3,068
)
Other comprehensive loss, net of tax

(93
)
(93
)
(93
)
Other

(13
)
(1
)
(14
)
(14
)
December 31, 2019

2
$
2,387

838
$
23,824
$
7,576

$(1,793
)
$31,994

$ 2,039
$
34,033

~~The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements~~


78

~~Dominion Energy, Inc.~~

~~Consolidated Statements of Cash Flows~~

Year Ended December 31,

2019

2018

2017

(millions)

Operating Activities

Net income including noncontrolling interests
$
1,376
$
2,549
$
3,120

Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:

Depreciation, depletion and amortization (including nuclear fuel)

2,977

2,280

2,202

Deferred income taxes and investment tax credits

216

517

(3
)
Proceeds from assignment of tower rental portfolio

—

—

91

Contribution to pension plan

(21
)
—

(75
)
Provision for refunds and rate credits to electric utility customers

800

77

—

Impairment of assets and other charges

1,333

395

15

Charge related to a voluntary retirement program

320

—

—

Gains on sales of assets and equity method investments

(167
)
(1,006
)
(148
)
Net (gains) losses on nuclear decommissioning trusts funds and other investments

(626
)
102

(117
)
Charges associated with equity method investments
—

—

158

Charge (revision) for future ash pond and landfill closure costs
(113
)

81

—

Other adjustments

(5
)
19

33

Changes in:

Accounts receivable

(71
)
(110
)
(103
)
Inventories

(90
)
(29
)
15

Deferred fuel and purchased gas costs, net

195

(247
)
(71
)
Prepayments

(225
)
(51
)
(62
)
Accounts payable

(225
)
67

(89
)
Accrued interest, payroll and taxes

(78
)
(12
)
64

Customer deposits

(101
)
54

15

Margin deposit assets and liabilities

60

—

(10
)
Net realized and unrealized changes related to derivative activities

43

181

44

Asset retirement obligations

41

(35
)
(94
)
Pension and other postretirement benefits

(148
)
(114
)
(177
)
Other operating assets and liabilities

(287
)
55

(306
)
Net cash provided by operating activities

5,204

4,773

4,502

Investing Activities

Plant construction and other property additions (including nuclear fuel)

(4,980
)
(4,254
)
(5,504
)
Cash and restricted cash acquired in the SCANA Combination

389

—

—

Acquisition of solar development projects

(341
)
(151
)
(405
)
Proceeds from sales of securities

1,712

1,804

1,831

Purchases of securities

(1,749
)
(1,894
)
(1,940
)
Proceeds from sales of assets and equity method investments

447

2,542

138

Contributions to equity method affiliates

(209
)
(428
)
(370
)
Distributions from equity method affiliates

9

36

275

Other

100

(13
)
33

Net cash used in investing activities

(4,622
)
(2,358
)
(5,942
)
Financing Activities

Issuance (repayment) of short-term debt, net

404

(2,964
)
143

Issuance of short-term notes

3,000

1,450

—

Repayment and repurchase of short-term notes

(3,000
)
(1,450
)
(250
)
Credit facility borrowings

—

73

—

Repayment of credit facility borrowings

(113
)
— —
Issuance and remarketing of long-term debt

4,374

6,362

3,880

Repayment and repurchase of long-term debt (including redemption premiums)

(9,116
)
(5,682
)
(1,572
)
Proceeds from sale of interest in Cove Point

2,078

—

—

Net proceeds from issuance of Dominion Energy Midstream common units

—

4

18

Issuance of 2019 Equity Units

1,582

—

—

Issuance of Series B Preferred Stock

791

—

—

Issuance of common stock

2,515

2,461

1,302

Common dividend payments

(2,983
)
(2,185
)
(1,931
)
Other

(236
)
(278
)
(287
)
Net cash provided by (used in) financing activities

(704
)
(2,209
)
1,303

Increase (decrease) in cash, restricted cash and equivalents

(122
)
206

(137
)
Cash, restricted cash and equivalents at beginning of period

391

185

322

Cash, restricted cash and equivalents at end of period
$
269
$
391
$
185

Supplemental Cash Flow Information

Cash paid during the year for:

Interest and related charges, excluding capitalized amounts
$
1,643
$
1,362

1,083

Income taxes

106

89

9

Significant noncash investing and financing activities:
(1)(2)(3)(4)(5)

Accrued capital expenditures

555

307

343

Leases
(6)

157

—

—

Receivables from sales of assets and equity method investments

5

159

—

Guarantee provided by equity method affiliate

—

—

30

~~(1)~~

~~See Note 2 for noncash investing and financing activities related to the adoption of a new accounting standard for leasing arrangements.~~

~~(2)~~

~~See Note 3 for noncash investing and financing activities related to the SCANA Combination.~~

~~(3)~~

~~See Note 5 for noncash activities related to the sale of a noncontrolling interest in Cove Point.~~

~~(4)~~

~~See Note 9 for noncash investing activities related to the acquisition of a noncontrolling interest in Wrangler.~~

~~(5)~~

(

)

~~Includes $113 million of finance leases and $44 million of operating leases.~~

(1) See Note 9 for amounts attributable to related parties.

(2) 1.8 billion shares authorized; 806 million shares and 838 million shares outstanding at December 31, 2020 and 2019, respectively.

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

Dominion Energy, Inc.

Consolidated Statements of Equity

	Preferred Stock				Common Stock						Dominion Energy Shareholders
	Shares		Amount		Shares			Amount			Retained Earnings			AOCI			Total Shareholders' Equity			Noncontrolling Interests			Total Equity
(millions except per share amounts)
December 31, 2017						645		$	9,865		$	7,936		$	(659	)	$	17,142		$	2,228		$	19,370
Cumulative-effect of changes in accounting principles									(127	)		1,029			(1,023	)		(121	)		127			6
Net income including noncontrolling interests												2,447						2,447			102			2,549
Issuance of common stock						36			2,461									2,461						2,461
Sale of Dominion Energy Midstream common units—net of offering costs																		—			4			4
Remeasurement of noncontrolling interest in Dominion Energy Midstream									375									375			(375	)		—
Stock awards (net of change in unearned compensation)									22									22						22
Dividends ($3.34 per common share) and distributions												(2,185	)					(2,185	)		(146	)		(2,331	)
Other comprehensive income (loss), net of tax															(18	)		(18	)		1			(17	)
Other									(8	)		(8	)					(16	)					(16	)
December 31, 2018						681		$	12,588		$	9,219		$	(1,700	)	$	20,107		$	1,941		$	22,048
Net income including noncontrolling interests												1,358						1,358			18			1,376
Issuance of stock		2		2,387		39			3,014									5,401						5,401
Stock purchase contract component of 2019 Equity Units									(264	)								(264	)					(264	)
Acquisition of SCANA						96			6,818									6,818						6,818
Acquisition of public interest in Dominion Energy Midstream						22			1,181									1,181			(1,221	)		(40	)
Sale of interest in Cove Point									476									476			1,386			1,862
Stock awards (net of change in unearned compensation)									24									24						24
Preferred stock dividends (See Note 19)												(17	)					(17	)					(17	)
Common dividends ($3.67 per common share) and distributions												(2,983	)					(2,983	)		(85	)		(3,068	)
Other comprehensive loss, net of tax															(93	)		(93	)					(93	)
Other									(13	)		(1	)					(14	)					(14	)
December 31, 2019		2	$	2,387		838		$	23,824		$	7,576		$	(1,793	)	$	31,994		$	2,039		$	34,033
Cumulative-effect of changes in accounting principles												(48	)					(48	)					(48	)
Net loss including noncontrolling interests												(401	)					(401	)		(149	)		(550	)
Issuance of stock						7			481									481						481
Stock repurchases						(39	)		(3,080	)								(3,080	)					(3,080	)
Stock awards (net of change in unearned compensation)									29									29						29
Preferred stock dividends (See Note 19)												(65	)					(65	)					(65	)
Common dividends ($3.45 per common share) and distributions												(2,873	)					(2,873	)		(164	)		(3,037	)
Other comprehensive loss, net of tax															76			76						76
GT&S Transaction closing									17									17			(1,384	)		(1,367	)
Other									(13	)								(13	)		2			(11	)
December 31, 2020		2	$	2,387		806		$	21,258		$	4,189		$	(1,717	)	$	26,117		$	344		$	26,461


						79

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

Dominion Energy, Inc.

Consolidated Statements of Cash Flows

Year Ended December 31,	2020			2019			2018
(millions)
Operating Activities
Net income (loss) including noncontrolling interests	$	(550	)	$	1,376		$	2,549
Adjustments to reconcile net income (loss) including noncontrolling interests to net cash provided by operating activities:
Depreciation, depletion and amortization (including nuclear fuel)		2,836			2,977			2,280
Deferred income taxes and investment tax credits		(324	)		216			517
Gain from GT&S Transaction		(134	)		—			—
Contribution to pension plan		(250	)		(21	)		—
Provision for refunds and rate credits to electric utility customers		—			800			77
Impairment of assets and other charges		2,345			1,333			395
Loss for equity method investee		2,405			—			—
Charges related to a voluntary retirement program		—			320			—
Gains on sales of assets and equity method investments		(63	)		(167	)		(1,006	)
Net (gains) losses on nuclear decommissioning trusts funds and other investments		(412	)		(626	)		102
Charge (revision) for future ash pond and landfill closure costs		11			(113	)		81
Other adjustments		159			(5	)		19
Changes in:
Accounts receivable		(238	)		(71	)		(110	)
Inventories		39			(90	)		(29	)
Deferred fuel and purchased gas costs, net		212			195			(247	)
Prepayments		7			(225	)		(51	)
Accounts payable		35			(225	)		67
Accrued interest, payroll and taxes		(53	)		(78	)		(12	)
Customer deposits		(13	)		(101	)		54
Margin deposit assets and liabilities		26			60			—
Net realized and unrealized changes related to derivative activities		(36	)		43			181
Pension and other postretirement benefits		(319	)		(148	)		(114	)
Other operating assets and liabilities		(456	)		(246	)		20
Net cash provided by operating activities		5,227			5,204			4,773
Investing Activities
Plant construction and other property additions (including nuclear fuel)		(6,020	)		(4,980	)		(4,254	)
Cash and restricted cash acquired in the SCANA Combination		—			389			—
Acquisition of solar development projects		(311	)		(341	)		(151	)
Proceeds from GT&S Transaction and Q-Pipe Transaction		3,687			—			—
Proceeds from sales of securities		4,278			1,712			1,804
Purchases of securities		(4,379	)		(1,749	)		(1,894	)
Proceeds from sales of assets and equity method investments		143			447			2,542
Contributions to equity method affiliates		(148	)		(209	)		(428	)
Acquisition of equity method investments		(178	)		—			—
Other		12			109			23
Net cash used in investing activities		(2,916	)		(4,622	)		(2,358	)
Financing Activities
Issuance (repayment) of short-term debt, net		(16	)		404			(2,964	)
Issuance of short-term notes		1,125			3,000			1,450
Repayment and repurchase of short-term notes		(1,125	)		(3,000	)		(1,450	)
Supplemental 364-day credit facility borrowings		225			—			—
Credit facility borrowings (repayments)		—			(113	)		73
Issuance and remarketing of long-term debt		6,577			4,374			6,362
Repayment and repurchase of long-term debt (including redemption premiums)		(2,879	)		(9,116	)		(5,682	)
Proceeds from sale of interest in Cove Point		—			2,078			—
Issuance of 2019 Equity Units		—			1,582			—
Issuance of Series B Preferred Stock		—			791			—
Repurchase of common stock		(3,080	)		—			—
Issuance of common stock		159			2,515			2,461
Common dividend payments		(2,873	)		(2,983	)		(2,185	)
Other		(446	)		(236	)		(274	)
Net cash used in financing activities		(2,333	)		(704	)		(2,209	)
Increase (decrease) in cash, restricted cash and equivalents		(22	)		(122	)		206
Cash, restricted cash and equivalents at beginning of period		269			391			185
Cash, restricted cash and equivalents at end of period	$	247		$	269		$	391

See Note 2 for disclosure of supplemental cash flow information.

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

[THIS PAGE INTENTIONALLY LEFT BLANK]


80

~~Report of Independent Registered Public Accounting Firm~~

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

Virginia Electric and Power Company

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Virginia Electric and Power Company (a wholly-owned subsidiary of Dominion Energy, Inc.) and subsidiaries (“("Virginia ~~Power”~~Power") at December 31, ~~2019~~2020 and ~~2018,~~2019, the related consolidated statements of income, comprehensive income, common ~~shareholder’s~~shareholder's equity, and cash flows, for each of the three years in the period ended December 31, ~~2019,~~2020, and the related notes (collectively referred to as the ~~“consolidated~~"consolidated financial ~~statements”~~statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Virginia Power at December 31, ~~2019~~2020 and ~~2018,~~2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2019,~~2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of Virginia ~~Power’s~~Power's management. Our responsibility is to express an opinion on Virginia ~~Power’s~~Power's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Virginia Power in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Virginia Power is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of Virginia Power’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the Board of Directors and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Regulatory Assets and Liabilities - Impact of Rate Regulation on the Consolidated Financial Statements — Refer to Notes 2, 12 and 13 to the Consolidated Financial Statements

Critical Audit Matter Description

Virginia Power is subject to utility rate regulation by certain state public utility commissions and the Federal Energy Regulatory Commission (“FERC”) (collectively, the “relevant commissions”), which have jurisdiction with respect to the rates of electric utility companies in the territories Virginia Power serves. Management has determined Virginia Power meets the requirements under accounting principles generally accepted in the United States of America to apply the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures such as property, plant, and equipment, net; regulatory assets; regulatory liabilities; operating revenues; other operations and maintenance expense; depreciation and amortization expense; and impairment of assets and other charges, collectively, the “financial statement impacts of rate regulation”.

Revenue provided by Virginia Power’s electric transmission, distribution and generation operations is based on rates approved by the relevant commissions. Further, Virginia Power’s retail base rates, terms and conditions for generation and distribution services to customers in Virginia are reviewed by the Virginia State Corporation Commission (the “Virginia Commission”) in a proceeding that involves the determination of Virginia Power’s actual earned return on equity (“ROE”) during a historic test period and determination of Virginia Power’s authorized ROE prospectively. Under certain circumstances, Virginia Power may be required to refund a portion of its earnings to customers.

When it is probable that regulators will permit the recovery of current costs through future rates charged to customers, these costs that otherwise would be expensed by nonregulated companies are deferred as regulatory assets. Likewise, regulatory liabilities are recognized when it is probable that regulators will require customer refunds through future rates or when revenue is collected from customers for expenditures that have yet to be incurred. Virginia Power evaluates whether recovery of its regulatory assets through future rates is probable as well as whether a regulatory liability due to customers is probable and makes various assumptions in its analyses. These analyses are generally based on orders issued by regulatory commissions, legislation and judicial actions; past experience; discussions with applicable regulatory authorities and legal counsel; forecasted earnings; and considerations around the likelihood of impacts from events such as unusual weather conditions, extreme weather events, and other natural disasters, and unplanned outages of facilities.

We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about the financial statement impacts of rate regulation. Management judgments include assessing the likelihood of (1) recovery of its regulatory assets through future rates and (2) whether a regulatory liability is due to customers. Given that management’s accounting judgments are based on assumptions about the outcome of future decisions by the Commission, auditing these judgments required specialized knowledge of the accounting for rate regulation and the rate setting process due its inherent complexities.

How the Critical Audit Matter Was Addressed in the Audit

•

We tested the effectiveness of management’s controls over the evaluation of the likelihood of (1) the recovery of regulatory assets through future rates, and (2) whether a regulatory liability is due to customers. We also tested the effectiveness of management’s controls over the initial recognition of amounts as regulatory assets or liabilities; and the monitoring and evaluation of regulatory and legislative developments that may impact the assessment of whether recovery of regulatory assets through future rates or a regulatory liability due to customers is probable.

•

We evaluated Virginia Power’s disclosures related to the financial statement impacts of rate regulation.

•

We assessed the regulatory treatment of significant nonrecurring charges, including the $754 million charge recorded by Virginia Power in the first quarter of 2020 in connection with the early retirement decision impacting certain coal- and oil-fired generating units by considering existing precedent for the treatment of such charges, relevant legislation and regulatory orders.

•

We considered the likelihood of (1) recovery of regulatory assets through future rates and (2) whether a regulatory liability is due to customers based on precedents established by the relevant commissions’ previous orders and Virginia Power’s past experience with relevant commissions.

•

For regulatory matters in process, we inspected associated documents and testimony filed with the relevant commissions for any evidence that might contradict management’s assertions.

•

We read and analyzed the minutes of the Board of Directors of Dominion Energy, Inc. and the Board of Directors of Virginia Power, for discussions of changes in legal, regulatory, or business factors which could impact management’s conclusions with respect to the financial statement impacts of rate regulation.

/s/ Deloitte & Touche LLP

Richmond, Virginia

February ~~28, 2020~~

25, 2021

We have served as Virginia ~~Power’s~~Power's auditor since 1988.


						81

Virginia Electric and Power Company

Consolidated Statements of Income

Year Ended December 31,	2020			2019		2018
(millions)
Operating Revenue⁽¹⁾	$	7,763		$	8,108	$	7,619
Operating Expenses
Electric fuel and other energy-related purchases⁽¹⁾		1,636			2,178		2,318
Purchased (excess) capacity		(17	)		40		122
Other operations and maintenance:
Affiliated suppliers		314			367		305
Other		1,472			1,376		1,371
Depreciation and amortization		1,252			1,223		1,132
Other taxes		327			328		300
Impairment of assets and other charges		1,093			757		—
Total operating expenses		6,077			6,269		5,548
Income from operations		1,686			1,839		2,071
Other income		80			98		22
Interest and related charges⁽¹⁾		516			524		511
Income from operations before income tax expense		1,250			1,413		1,582
Income tax expense		229			264		300
Net Income	$	1,021		$	1,149	$	1,282

Year Ended December 31,

2019

2018

2017

(millions)

Operating Revenue
(1)
$
8,108
$
7,619
$
7,556

Operating Expenses

Electric fuel and other energy-related purchases
(1)

2,178

2,318

1,909

Purchased electric capacity

40

122

6

Other operations and maintenance:

Affiliated suppliers

367

305

309

Other

1,376

1,371

1,169

Depreciation and amortization

1,223

1,132

1,141

Other taxes

328

300

290

Impairment of assets and other charges

757

—

—

Total operating expenses

6,269

5,548

4,824

Income from operations

1,839

2,071

2,732

Other income

98

22

76

Interest and related charges
(1)

524

511

494

Income from operations before income tax expense

1,413

1,582

2,314

Income tax expense

264

300

774

Net Income
$
1,149
$
1,282
$
1,540

(1)	See Note 25 for amounts attributable to affiliates.

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.


82

Virginia Electric and Power Company

Consolidated Statements of Comprehensive Income

Year Ended December 31,	2020			2019			2018
(millions)
Net income	$	1,021		$	1,149		$	1,282
Other comprehensive income (loss), net of taxes:
Net deferred gains (losses) on derivatives-hedging activities, net of $9, $8 and $(1) tax		(28	)		(22	)		1
Changes in unrealized net gains (losses) on nuclear decommissioning trust funds, net of $(3), $(2) and $— tax		6			5			—
Amounts reclassified to net income:
Net derivative (gains) losses-hedging activities, net of $—, $— and $— tax		2			1			1
Net realized (gains) losses on nuclear decommissioning trust funds, net of $1, $1 and $— tax		(3	)		(1	)		—
Other comprehensive income (loss)		(23	)		(17	)		2
Comprehensive income	$	998		$	1,132		$	1,284

Year Ended December 31,

2019

2018

2017

(millions)

Net Income
$
1,149
$
1,282
$
1,540

Other comprehensive income (loss), net of taxes:

Net deferred gains (losses) on derivatives-hedging activities, net of $8, $(1) and $3 tax

(22
)
1

(5
)
Changes in unrealized net gains (losses) on nuclear decommissioning trust funds, net of $(2), $— and $(16) tax

5

—

24

Amounts reclassified to net income:

Net derivative (gains) losses-hedging activities, net of $—, $— and $— tax

1

1

1

Net realized (gains) losses on nuclear decommissioning trust funds, net of $1, $— and $3 tax

(1
)
—

(4
)
Other comprehensive income (loss)

(17
)
2

16

Comprehensive income
$
1,132
$
1,284
$
1,556

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.


						83

Virginia Electric and Power Company

Consolidated Balance Sheets

At December 31,	2020			2019
(millions)
ASSETS
Current Assets
Cash and cash equivalents	$	35		$	17
Customer receivables (less allowance for doubtful accounts of $23 and $9)		1,315			1,163
Other receivables (less allowance for doubtful accounts of $2 at both dates)		91			106
Affiliated receivables		5			27
Inventories (average cost method):
Materials and supplies		581			549
Fossil fuel		281			324
Prepayments		32			27
Regulatory assets		295			433
Other⁽¹⁾		27			30
Total current assets		2,662			2,676
Investments
Nuclear decommissioning trust funds		3,197			2,881
Other		3			3
Total investments		3,200			2,884
Property, Plant and Equipment
Property, plant and equipment		46,736			47,038
Accumulated depreciation and amortization		(14,167	)		(14,156	)
Total property, plant and equipment, net		32,569			32,882
Deferred Charges and Other Assets
Pension and other postretirement benefit assets⁽¹⁾		354			287
Intangible assets, net		334			271
Regulatory assets		3,509			1,863
Other⁽¹⁾		1,026			565
Total deferred charges and other assets		5,223			2,986
Total assets	$	43,654		$	41,428

At December 31,

2019

2018

(millions)

Assets

Current Assets

Cash and cash equivalents
$
17
$
29

Customer receivables (less allowance for doubtful accounts of $9 at both dates)

1,163

999

Other receivables (less allowance for doubtful accounts of $2 and $3)

106

76

Affiliated receivables

27

101

Inventories (average cost method):

Materials and supplies

549

550

Fossil fuel

324

287

Prepayments

27

28

Regulatory assets

433

424

Other
(1)

30

77

Total current assets

2,676

2,571

Investments

Nuclear decommissioning trust funds

2,881

2,369

Other

3

3

Total investments

2,884

2,372

Property, Plant and Equipment

Property, plant and equipment

47,038

44,524

Accumulated depreciation and amortization

(14,156
)
(14,003
)
Total property, plant and equipment, net

32,882

30,521

Deferred Charges and Other Assets

Pension and other postretirement benefit assets
(1)

287

254

Intangible assets, net

271

250

Regulatory assets

1,863

737

Other
(1)

565

175

Total deferred charges and other assets

2,986

1,416

Total assets
$
41,428
$
36,880

(1)	See Note 25 for amounts attributable to affiliates.


84

At December 31,

2019

2018

(millions)

Liabilities And Common Shareholder’s Equity

Current Liabilities

Securities due within one year
$
4
$
350

Short-term debt

243

314

Accounts payable

334

339

Payables to affiliates

210

209

Affiliated current borrowings

107

224

Accrued interest, payroll and
t
axes

253

248

Asset retirement obligations

340

245

Regulatory liabilities

167

299

Derivative liabilities
(1)

243

25

Customer deposits

121

121

Other current liabilities

450

441

Total current liabilities

2,472

2,815

Long-Term Debt

Long-term debt

12,325

11,320

Finance leases

16

1

Total long-term debt

12,341

11,321

Deferred Credits and Other Liabilities

Deferred income taxes and investment tax credits

2,962

3,017

Asset retirement obligations

3,241

1,200

Regulatory liabilities

5,074

4,647

Pension and other postretirement benefit liability
(1)

782

632

Other
(1)

567

201

Total deferred credits and other liabilities

12,626

9,697

Total liabilities

27,439

23,833

Commitments and Contingencies (see Note 23)

Common Shareholder’s Equity

Common stock – no par
(2)

5,738

5,738

Other
paid-in
capital

1,113

1,113

Retained earnings

7,167

6,208

Accumulated other comprehensive loss

(29
)
(12
)
Total common shareholder’s equity

13,989

13,047

Total liabilities and shareholder’s equity
$
41,428
$
36,880

~~(1)~~

~~See Note 25 for amounts attributable to affiliates.~~

~~(2)~~

~~500,000 shares authorized; 274,723 shares outstanding at December 31, 2019 and 2018.~~

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

At December 31,	2020			2019
(millions)
LIABILITIES AND COMMON SHAREHOLDER’S EQUITY
Current Liabilities
Securities due within one year	$	8		$	4
Short-term debt		45			243
Accounts payable		332			334
Payables to affiliates		266			210
Affiliated current borrowings		380			107
Accrued interest, payroll and taxes		253			253
Asset retirement obligations		166			340
Regulatory liabilities		425			167
Derivative liabilities⁽¹⁾		390			243
Customer deposits		114			121
Other current liabilities		448			450
Total current liabilities		2,827			2,472
Long-Term Debt
Long-term debt		13,207			12,325
Other		480			16
Total long-term debt		13,687			12,341
Deferred Credits and Other Liabilities
Deferred income taxes and investment tax credits		2,779			2,962
Asset retirement obligations		3,654			3,241
Regulatory liabilities		5,338			5,074
Pension and other postretirement benefit liability⁽¹⁾		436			782
Other ⁽¹⁾		376			567
Total deferred credits and other liabilities		12,583			12,626
Total liabilities		29,097			27,439
Commitments and Contingencies (see Note 23)
Common Shareholder’s Equity
Common stock – no par⁽²⁾		5,738			5,738
Other paid-in capital		1,113			1,113
Retained earnings		7,758			7,167
Accumulated other comprehensive loss		(52	)		(29	)
Total common shareholder’s equity		14,557			13,989
Total liabilities and shareholder’s equity	$	43,654		$	41,428

(1)	See Note 25 for amounts attributable to affiliates.

(2)
						85		500,000 shares authorized; 274,723 shares outstanding at December 31, 2020 and 2019.

~~Virginia Electric and Power Company~~

~~Consolidated Statements of Common Shareholder’s Equity~~

Common Stock

Other
Paid-In

Capital

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Total

Shares

Amount

(millions, except for shares)

(thousands)

December 31, 2016

275
$
5,738
$
1,113
$
4,968

$ 46
$
11,865

Net income

1,540

1,540

Dividends

(1,199
)
(1,199
)
Other comprehensive income, net of tax

16

16

Other

2

2

December 31, 2017

275

5,738

1,113

5,311

62

12,224

Cumulative-effect of changes in accounting principles

79

(76
)
3

Net income

1,282

1,282

Dividends

(464
)
(464
)
Other comprehensive income, net of tax

2

2

December 31, 2018

275

5,738

1,113

6,208
(12 )
13,047

Net income

1,149

1,149

Dividends

(190
)
(190
)
Other comprehensive loss, net of tax

(17
)
(17
)
December 31, 2019

275
$
5,738
$
1,113
$
7,167

$(29
) $
13,989

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.


86

Virginia Electric and Power Company

Consolidated Statements of ~~Cash Flows~~Common Shareholder’s Equity

	Common Stock
	Shares		Amount		Other Paid-In Capital		Retained Earnings			AOCI			Total
(millions, except for shares)	(thousands)
December 31, 2017		275	$	5,738	$	1,113	$	5,311		$	62		$	12,224
Cumulative-effect of changes in accounting principles								79			(76	)		3
Net income								1,282						1,282
Dividends								(464	)					(464	)
Other comprehensive income, net of tax											2			2
December 31, 2018		275		5,738		1,113		6,208			(12	)		13,047
Net income								1,149						1,149
Dividends								(190	)					(190	)
Other comprehensive loss, net of tax											(17	)		(17	)
December 31, 2019		275		5,738		1,113		7,167			(29	)		13,989
Net income								1,021						1,021
Dividends								(430	)					(430	)
Other comprehensive loss, net of tax											(23	)		(23	)
December 31, 2020		275	$	5,738	$	1,113	$	7,758		$	(52	)	$	14,557

Year Ended December 31,

2019

2018

2017

(millions)

Operating Activities

Net income
$
1,149
$
1,282
$
1,540

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization (including nuclear fuel)

1,392

1,309

1,333

Deferred income taxes and investment tax credits

(80
)
224

269

Proceeds from assignment of rental portfolio

—

—

91

Charge (revision) for future ash pond and landfill closure costs
(113
)

81

—

Impairment of assets and other charges

624

—

—

Provision for rate credits to customers

—

77

—

Charge related to a voluntary retirement program

116

—

—

Other adjustments

(86
)
(21
)
(36
)
Changes in:

Accounts receivable

(196
)
(60
)
(27
)
Affiliated receivables and payables

75

(14
)
125

Inventories

(56
)
13

3

Prepayments

1

(1
)
3

Deferred fuel expenses, net

243

(269
)
(59
)
Accounts payable

(31
)
(26
)
(42
)
Accrued interest, payroll and taxes

5

(8
)
17

Net realized and unrealized changes related to derivative activities

21

119

13

Asset retirement obligations

51

(54
)
(88
)
Other operating assets and liabilities

(331
)
188

(181
)
Net cash provided by operating activities

2,784

2,840

2,961

Investing Activities

Plant construction and other property additions

(2,642
)
(2,228
)
(2,496
)
Purchases of nuclear fuel

(157
)
(173
)
(192
)
Acquisition of solar development projects

(182
)
(141
)
(41
)
Proceeds from sales of securities

858

887

849

Purchases of securities

(905
)
(925
)
(884
)
Other

(37
)
(63
)
(41
)
Net cash used in investing activities

(3,065
)
(2,643
)
(2,805
)
Financing Activities

Issuance (repayment) of short-term debt, net

(71
)
(228
)
477

Issuance (repayment) of affiliated current borrowings, net

(117
)
191

(229
)
Issuance and remarketing of long-term debt

1,248

1,300

1,500

Repayment and repurchase of long-term debt

(591
)
(964
)
(681
)
Common dividend payments to parent

(190
)
(464
)
(1,199
)
Other

(12
)
(18
)
(11
)
Net cash provided by (used in) financing activities

267

(183
)
(143
)
Increase (decrease) in cash, restricted cash and equivalents

(14
)
14

13

Cash, restricted cash and equivalents at beginning of year

38

24

11

Cash, restricted cash and equivalents at end of year
$
24
$
38
$
24

Supplemental Cash Flow Information

Cash paid during the year for:

Interest and related charges, excluding capitalized amounts
$
495
$
498
$
458

Income taxes

272

128

362

Significant noncash investing and financing activities:
(1)

Accrued capital expenditures

292

204

169

Leases
(2)

55

—

—

~~(1)~~

~~See Note 2 for noncash investing and financing activities related to the adoption of a new accounting standard for leasing arrangements.~~

~~(2)~~

~~Includes $20 million of finance leases and $35 million of operating leases.~~

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.


						87

~~[THIS PAGE INTENTIONALLY LEFT BLANK]~~


88

~~Report of Independent Registered Public Accounting Firm~~

~~To the Board of Directors of~~

~~Dominion Energy Gas Holdings, LLC~~

~~Opinion on the Consolidated Financial Statements~~

~~We have audited the accompanying consolidated balance sheets of Dominion Energy Gas Holdings, LLC (a wholly-owned subsidiary of Dominion Energy, Inc.)~~

Virginia Electric and subsidiaries (“Dominion Energy Gas”) at December 31, 2019 and 2018, the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Dominion Energy Gas at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

~~Basis for Opinion~~

These consolidated financial statements are the responsibility of Dominion Energy Gas’ management. Our responsibility is to express an opinion on Dominion Energy Gas’ consolidated financial statements based on our audits. We are a public accounting firm registered with the PublicPower Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Dominion Energy Gas in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Dominion Energy Gas is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of Dominion Energy Gas’ internal control over financial reporting. Accordingly, we express no such opinion.

~~/s/ Deloitte & Touche LLP~~

~~Richmond, Virginia~~

~~February 28, 2020~~

~~We have served as Dominion Energy Gas’ auditor since 2012.~~


						89

~~Dominion Energy Gas Holdings, LLC~~

Consolidated Statements of ~~Income~~Cash Flows

Year Ended December 31,	2020			2019			2018
(millions)
Operating Activities
Net income	$	1,021		$	1,149		$	1,282
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including nuclear fuel)		1,421			1,392			1,309
Deferred income taxes and investment tax credits		(206	)		(80	)		224
Charge (revision) for future ash pond and landfill closure costs		11			(113	)		81
Impairment of assets and other charges		1,079			624			—
Provision for rate credits to customers		—			—			77
Charges related to a voluntary retirement program		—			116			—
Other adjustments		(61	)		(86	)		(21	)
Changes in:
Accounts receivable		(266	)		(196	)		(60	)
Affiliated receivables and payables		78			75			(14	)
Inventories		10			(56	)		13
Prepayments		(5	)		1			(1	)
Deferred fuel expenses, net		131			243			(269	)
Accounts payable		6			(31	)		(26	)
Accrued interest, payroll and taxes		(4	)		5			(8	)
Net realized and unrealized changes related to derivative activities		(6	)		21			119
Other operating assets and liabilities		(309	)		(280	)		134
Net cash provided by operating activities		2,900			2,784			2,840
Investing Activities
Plant construction and other property additions		(3,138	)		(2,642	)		(2,228	)
Purchases of nuclear fuel		(199	)		(157	)		(173	)
Acquisition of solar development projects		(35	)		(182	)		(141	)
Proceeds from sales of securities		884			858			887
Purchases of securities		(936	)		(905	)		(925	)
Other		21			(37	)		(63	)
Net cash used in investing activities		(3,403	)		(3,065	)		(2,643	)
Financing Activities
Repayment of short-term debt, net		(198	)		(71	)		(228	)
Issuance (repayment) of affiliated current borrowings, net		273			(117	)		191
Issuance and remarketing of long-term debt		1,327			1,248			1,300
Repayment and repurchase of long-term debt		(427	)		(591	)		(964	)
Common dividend payments to parent		(430	)		(190	)		(464	)
Other		(31	)		(12	)		(18	)
Net cash provided by (used in) financing activities		514			267			(183	)
Increase (decrease) in cash, restricted cash and equivalents		11			(14	)		14
Cash, restricted cash and equivalents at beginning of year		24			38			24
Cash, restricted cash and equivalents at end of year	$	35		$	24		$	38

Year Ended December 31,

2019

2018

2017

(millions)

Operating Revenue
(1)
$
2,169
$
1,996
$
1,523

Operating Expenses

Purchased (excess) gas
(1)

7

(10
)
109

Other energy-related purchases

2

4

4

Other operations and maintenance:

Affiliated suppliers

168

132

123

Other
(1)

556

584

449

Depreciation and amortization

367

333

242

Other taxes

154

120

99

Impairment of assets and related charges

13

163

15

Gains on sales of assets

(2
)
(117
)
(70
)
Total operating expenses

1,265

1,209

971

Income from continuing operations

904

787

552

Earnings from equity method investees

43

54

47

Other income

166

89

62

Interest and related charges
(1)

311

174

60

Income from continuing operations before income tax expense

802

756

601

Income tax expense (benefit)

101

124

(65
)
Net Income from Continuing Operations

701

632

666

Net Income from discontinued operations
(2)

141

24

163

Net Income including noncontrolling interests

842

656

829

Noncontrolling interests

121

175

126

Net Income Attributable to Dominion Energy Gas
$
721
$
481
$
703

~~(1)~~

~~See Note 25 for amounts attributable to related parties.~~

~~(2)~~

~~Includes income tax expense of $33 million, less than $1 million and $91 million in 2019, 2018 and 2017, respectively.~~

See Note 2 for disclosure of supplemental cash flow information.

The accompanying notes are an integral part of ~~Dominion Energy Gas’~~Virginia Power’s Consolidated Financial Statements.


90

~~Dominion Energy Gas Holdings, LLC~~

~~Consolidated Statements of Comprehensive Income~~

Year Ended December 31,

2019

2018

2017

(millions)

Net Income including noncontrolling interests
$
842
$
656
$
829

Other comprehensive income (loss), net of taxes:

Net deferred gains (losses) on derivatives-hedging activities, net of $22, $5 and $(3) tax

(61
)
(16
)
6

Changes in net unrecognized pension benefit (costs) , net of $(13), $20 and $(8) tax

33

(52
)
20

Amounts reclassified to net income:

Net derivative (gains) losses-hedging activities, net of $(2), $(7) and $2 tax

5

19

(4
)
Net pension and other postretirement benefit costs, net of $(2), $(2) and $(2) tax

5

4

4

Total other comprehensive income (loss)

(18
)
(45
)
26

Comprehensive income including noncontrolling interests

824

611

855

Comprehensive income attributable to noncontrolling interests

120

175

127

Comprehensive income attributable to Dominion Energy Gas
$
704
$
436
$
728

~~The accompanying notes are an integral part of Dominion Energy Gas’ Consolidated Financial Statements.~~


						91

~~Dominion Energy Gas Holdings, LLC~~

~~Consolidated Balance Sheets~~

At December 31,

2019

2018

(millions)

Assets

Current Assets

Cash and cash equivalents
$
27
$
99

Customer receivables (less allowance for doubtful accounts of $2 and
less than
$1)
(1)

173

187

Other receivables
(1)

26

18

Affiliated receivables

362

319

Affiliated notes receivable

—

819

Inventories:

Materials and supplies

120

95

Gas stored

2

2

Prepayments

73

77

Gas imbalances
(1)

52

187

Current assets of discontinued operations

—

444

Other

23

101

Total current assets

858

2,348

Investments

Affiliated notes receivables

3,437

4,317

Investment in equity method affiliates

312

339

Total investments

3,749

4,656

Property, Plant and Equipment

Property, plant and equipment

15,166

14,700

Accumulated depreciation and amortization

(3,538
)
(3,219
)
Total property, plant and equipment, net

11,628

11,481

Deferred Charges and Other Assets

Goodwill

1,471

1,471

Intangible assets, net

106

115

Pension and other postretirement benefit assets
(1)

840

705

Regulatory assets

40

52

Other
(1)

92

74

Total deferred charges and other assets

2,549

2,417

Noncurrent Assets of Discontinued Operations

—

5,849

Total assets
$
18,784
$
26,751

~~(1)~~

~~See Note 25 for amounts attributable to related parties.~~


92

At December 31,

2019

2018

(millions)

Liabilities and Equity

Current Liabilities

Securities due within one year
$
700
$
748

Credit facility borrowings

—

73

Short-term debt

62

10

Accounts payable

59

76

Payables to affiliates

82

124

Affiliated current borrowings

260

3,097

Accrued interest, payroll and taxe
s

128

116

Current liabilities of discontinued operations

—

1,273

Other
(1)

161

238

Total current liabilities

1,452

5,755

Long-Term Debt

Long-term debt

4,821

7,022

Finance leases

5

—

Total Long-Term Debt

4,826

7,022

Deferred Credits and Other Liabilities

Deferred income taxes and investment tax credits

1,288

1,330

Regulatory liabilities

800

765

Other

189

118

Total deferred credits and other liabilities

2,277

2,213

Noncurrent Liabilities of Discontinued Operations

—

2,896

Total liabilities

8,555

17,886

Commitments and Contingencies (see Note 23)

Equity

Predecessor equity

—

1,804

Membership interests

9,031

4,566

Accumulated other comprehensive loss

(187
)
(169
)
Total members’ equity

8,844

6,201

Noncontrolling interests

1,385

2,664

Total equity

10,229

8,865

Total liabilities and equity
$
18,784
$
26,751

~~(1)~~

~~See Note 25 for amounts attributable to related parties.~~

~~The accompanying notes are an integral part of Dominion Energy Gas’ Consolidated Financial Statements.~~


						93

~~Dominion Energy Gas Holdings, LLC~~

~~Consolidated Statements of Equity~~

Predecessor
Equity

Membership
Interests

Accumulated
Other
Comprehensive
Income (Loss)

Total
Members’
Equity

Noncontrolling
Interests

Total

(millions)

December 31, 2016

$ 1,438

$3,659

$(123
) $
4,974

$ 2,713
$
7,687

Net income including noncontrolling interests

88

615

703

126

829

Sale of Dominion Energy Midstream common units—net of offering costs

—

18

18

Dividends and distributions

(19
)
(15
)
(34
)
(87
)
(121
)
Distributions to noncontrolling interests

(193
)
(193
)
193

—

Equity contributions from Dominion Energy

44

44

7

51

Other comprehensive income, net of tax

25

25

1

26

Other

3

2

5

5

December 31, 2017

1,361

4,261

(98
)
5,524

2,971

8,495

Cumulative-effect of changes in accounting principles

29

(26
)
3

3

Net income including noncontrolling interests

180

301

481

175

656

Sale of Dominion Energy Midstream common units—net of offering costs

—

4

4

Remeasurement of noncontrolling interest in Dominion Energy Midstream

375

375

(375
)
—

Dividends and distributions

(133
)
(25
)
(158
)
(138
)
(296
)
Distributions to noncontrolling interests

(27
)
(27
)
27

Equity contributions from Dominion Energy

48

48

48

Other comprehensive loss, net of tax

(45
)
(45
)
(45
)
December 31, 2018

1,804

4,566

(169
)
6,201

2,664

8,865

Net income including noncontrolling interests

232

489

721

121

842

Acquisition of public interest in Dominion Energy Midstream

1,181

1,181

(1,221
)
(40
)
Dividends and distributions

(457
)

(457
)
(179
)
(636
)
Equity contributions from Dominion Energy

3,385

3,385

3,385

Dominion Energy Gas Restructuring

(6,145
)
3,978

(1
)
(2,168
)
(2,168
)
Other comprehensive loss, net of tax

(17
)
(17
)
(1
)
(18
)
Other

(2
)
(2
)
1

(1
)
December 31, 2019

$ —

$9,031

$(187
) $
8,844

$ 1,385
$
10,229

~~The accompanying notes are an integral part of Dominion Energy Gas’ Consolidated Financial Statements.~~


94

~~Dominion Energy Gas Holdings, LLC~~

~~Consolidated Statements of Cash Flows~~

Year Ended December 31,

2019

2018

2017

(millions)

Operating Activities

Net Income including noncontrolling interests
$
842
$
656
$
829

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

445

424

328

Deferred income taxes and investment tax credits

(3
)
380

(19
)
Charge related to a voluntary retirement program

20

—

—

Gains on sales of assets

(7
)
(109
)
(70
)
Impairment of assets and related charges

13

385

15

Other adjustments

69

21

14

Changes in:

Accounts receivable

69

(101
)
(4
)
Affiliated receivables and payables

(51
)
(310
)
26

Inventories

(50
)
(28
)
(5
)
Prepayments

59

(23
)
(20
)
Accounts payable

(109
)
1

(7
)
Accrued interest, payroll and taxes

(52
)
22

26

Pension and other postretirement benefits

(142
)
(153
)
(143
)
Other operating assets and liabilities

(37
)
30

(13
)
Net cash provided by operating activities

1,066

1,195

957

Investing Activities

Plant construction and other property additions

(704
)
(1,109
)
(1,815
)
Loan to Dominion Energy

(1,757
)
—

—

Loan to East Ohio

(115
)
—

—

Loan to Dominion Energy from Cove Point

—

(2,986
)
—

Repayment of loan by Dominion Energy to Cove Point

2,986

—

—

Repayment of loan to East Ohio

115

—

—

Repayment of affiliated notes receivable, net
647

—

32

Proceeds from assignments of shale development rights

—

109

70

Other

(22
)
(20
)
(27
)
Net cash provided by (used in) investing activities

1,150

(4,006
)
(1,740
)
Financing Activities

Issuance (repayment) of short-term debt, net

52

(619
)
169

Issuance (repayment) of affiliated current borrowings, net

(2,837
)
291

628

Issuance of long-term debt

1,500

3,750

—

Issuance of affiliated long-term debt

395

—

—

Repayment of long-term debt

(3,750
)
(255
)
—

Repayment of affiliated long-term debt

(395
)
—

—

Credit facility borrowings

—

73

—

Repayment of credit facility borrowings

(73
)
—

—

Net proceeds from sale of Dominion Energy Midstream common units

—

4

18

Contributions from Dominion Energy

3,385

25

25

Dividends and distributions

(636
)
(296
)
(121
)
Other

(16
)
(21
)
—

Net cash provided by (used in) financing activities

(2,375
)
2,952

719

Increase (decrease) in cash, restricted cash and cash equivalents

(159
)
141

(64
)
Cash, restricted cash and equivalents at beginning of year

198

57

121

Cash, restricted cash and equivalents at end of year
$
39
$
198
$
57

Supplemental Cash Flow Information

Cash paid during the year for:

Interest and related charges, excluding capitalized amounts
$
291
$
162
$
55

Income taxes

65

79

11

Significant noncash investing and financing activities:
(1)(2)

Accrued capital expenditures

25

59

69

Equity contributions from Dominion Energy

—

23

26

Finance leases

6

—

—

~~(1)~~

~~See Note 2 for noncash investing and financing activities related to the adoption of a new accounting standard for lease arrangements.~~

~~(2)~~

~~See Notes 3 and 25 for noncash investing and financing activities related to the Dominion Energy Gas Restructuring and related-party transactions.~~

~~The accompanying notes are an integral part of Dominion Energy Gas’ Consolidated Financial Statements.~~


						95

~~[THIS PAGE INTENTIONALLY LEFT BLANK]~~


96

Combined Notes to Consolidated Financial Statements

~~Note~~

NOTE 1. ~~Nature Of Operations~~

NATURE OF OPERATIONS

Dominion Energy, headquartered in Richmond, Virginia, is one of the nation’s largest producers and ~~transporters~~distributors of energy. Dominion Energy’s operations are conducted through various subsidiaries, including Virginia ~~Power and Dominion Energy Gas.~~Power. Dominion Energy’s operations also include DESC, ~~an equity investment in Atlantic Coast Pipeline and~~ regulated gas distribution operations primarily in the eastern and Rocky Mountain regions of the U.S. ~~Dominion Energy’s~~, nonregulated ~~operations include merchant~~electric generation and, ~~retail energy marketing operations.~~following the completion of the GT&S Transaction in November 2020, a noncontrolling interest in Cove Point. See Note 3 for a description of the sale of substantially all of Dominion Energy’s gas transmission and storage operations ~~acquired~~to BHE through the GT&S Transaction completed in November 2020 and the proposed Q-Pipe Transaction of Dominion Energy’s remaining regulated gas transmission and storage services in the ~~SCANA Combination.~~

Rocky Mountain region of the U.S.

Beginning ~~December 2019,~~in September 2020, Dominion Energy manages its daily operations through ~~five~~4 primary operating segments: Dominion Energy Virginia, ~~Gas Transmission & Storage,~~ Gas Distribution, Dominion Energy South Carolina and Contracted ~~Generation.~~Assets. Dominion Energy also reports a Corporate and Other segment, which includes its corporate, service company and other functions (including unallocated debt)~~. In addition,~~ as well as nonregulated retail energy marketing operations, including Dominion Energy’s noncontrolling interest in Wrangler. Corporate and Other includes specific items attributable to Dominion Energy’s operating segments that are not included in profit measures evaluated by executive management in assessing the operating segments’ performance or in allocating resources.

In addition, Corporate and Other includes the net impact of discontinued operations consisting of Dominion Energy’s gas transmission and storage operations as discussed in Note 3 and its equity investment in Atlantic Coast Pipeline as discussed in Note 9.

Virginia Power is a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and northeastern North Carolina. Virginia Power is a member of PJM, an RTO, and its electric transmission facilities are integrated into the PJM wholesale electricity markets. All of Virginia Power’s stock is owned by Dominion Energy.

~~Beginning in December 2019,~~

Virginia Power manages its daily operations through ~~one~~1 primary operating segment: Dominion Energy Virginia. It also reports a Corporate and Other segment that primarily includes specific items attributable to its operating segment that are not included in profit measures evaluated by executive management in assessing the segment’s performance or in allocating resources.

Dominion Energy Gas is a holding company that conducts business activities through FERC-regulated interstate natural gas transmission pipeline and underground storage systems in the eastern and Rocky Mountain regions of the U.S., as well as the Cove Point LNG Facility. In addition, Dominion Energy Gas owns a 50% noncontrolling interest in both Iroquois and White River Hub. See Note 3 for more information on the Dominion Energy Gas Restructuring. All of Dominion Energy Gas’ membership interests are held by Dominion Energy.

Beginning in December 2019, Dominion Energy Gas manages its daily operations through one primary operating segment: Gas Transmission & Storage. It also reports a Corporate and Other segment that primarily includes specific items attributable to its operating segment that are not included in profit measures evaluated by executive management in assessing the segment’s performance or in allocating resources and the effect of certain items recorded at Dominion Energy Gas as a result of Dominion Energy’s basis in the net assets contributed. In addition, Corporate and Other includes the net impact of discontinued operations, which is discussed in Note 3.

See Note 26 for further discussion of the Companies’ operating segments.

~~Note~~

NOTE 2. ~~Significant Accounting Policies~~

SIGNIFICANT ACCOUNTING POLICIES

General

The Companies make certain estimates and assumptions in preparing their Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses and cash flows for the periods presented. Actual results may differ from those estimates.

The Companies’ Consolidated Financial Statements include, after eliminating intercompany transactions and balances, their accounts, those of their respective majority-owned subsidiaries and

non-wholly-owned

entities in which they have a controlling financial interest. For certain partnership structures, income is allocated based on the liquidation value of the underlying contractual arrangements. At December 31, ~~2019~~2020 Dominion Energy owns 50% of the voting interests in Four Brothers and Three Cedars and has a controlling financial interest over the entities through its right to control operations. In August 2018, NRG’s ownership interest in Four Brothers and Three Cedars was transferred to GIP. GIP’s ownership interest in Four Brothers and Three Cedars, Terra Nova Renewable Partners’ 33% interest in certain Dominion ~~Energy’s merchant~~Energy nonregulated solar projects, Brookfield’s 25% interest in Cove Point (effective December 2019 until November 2020) and the non-Dominion Energy held interest in Dominion Energy Midstream (through January 2019) are reflected as noncontrolling interest in Dominion Energy’s Consolidated Financial Statements. Terra Nova Renewable Partners has a future option to buy all or a portion of Dominion Energy’s remaining 67% ownership in certain ~~merchant~~nonregulated projects upon the occurrence of certain events, ~~none of which are expected to occur in 2020. Brookfield’s~~

~~% interest in Cove Point and the public’s ownership interest in~~including any proposed sale by Dominion Energy ~~Midstream (through January 2019)~~

~~are~~

~~reflected as noncontrolling interest in Dominion Energy Gas’ Consolidated Financial Statements.~~

of its interest.

The Companies report certain contracts, instruments and investments at fair value. See Note 6 for further information on fair value measurements.

The Companies consider acquisitions or dispositions in which substantially all of the fair value of the gross assets acquired or disposed of is concentrated into a single identifiable asset or group of similar identifiable assets to be an acquisition or a disposition of an asset, rather than a business. See Notes 3 and 10 for further information on such transactions.

Dominion Energy maintains pension and other postretirement benefit ~~plans.~~plans and Virginia Power ~~and Dominion Energy Gas participate~~participates in certain of these plans. See Note 22 for further information on these plans.

Certain amounts in the Companies’ ~~2018~~2019 and ~~2017~~2018 Consolidated Financial Statements and Notes have been reclassified to conform to the ~~2019~~2020 presentation for comparative purposes; however, such reclassifications did not affect the Companies’ net income, total assets, liabilities, equity or cash flows.

Amounts disclosed for Dominion Energy are inclusive of Virginia Power, ~~and/or Dominion Energy Gas,~~ where applicable.

Operating Revenue

Operating revenue is recorded on the basis of services rendered, commodities delivered, or contracts settled and includes amounts


						97

~~Combined Notes to Consolidated Financial Statements, Continued~~

yet to be billed to customers. ~~Dominion Energy and Virginia Power~~The Companies collect sales, consumption and consumer utility ~~taxes and Dominion Energy Gas collects sales~~ taxes; however, these amounts are excluded from revenue. Dominion Energy’s customer receivables at December 31, 2020 and 2019 included $1.1 billion and ~~2018 included $896 million and $626~~$829 million, respectively, of accrued unbilled revenue based on estimated amounts of electricity and natural gas delivered but not yet billed to its utility customers. Virginia Power’s customer receivables at December 31, 2020 and 2019 ~~and 2018~~ included ~~$512~~$740 million and ~~$392~~$512 million, respectively, of accrued unbilled revenue based on estimated amounts of electricity delivered but not yet billed to its customers. Dominion Energy Gas’ customer receivables at December 31, 2019 and 2018 included $104 million and $101 million, respectively, of accrued unbilled revenue based on estimated amounts of natural gas delivered but not yet billed to its customers. See Note 25 for amounts attributable to related parties.

The primary types of sales and service activities reported as operating revenue for Dominion Energy ~~subsequent to the adoption of revised guidance for revenue recognition from contracts with customers,~~ are as follows:

Revenue from Contracts with Customers

•

Regulated electric sales consist primarily of state-regulated retail electric sales, and federally-regulated wholesale electric sales and electric transmission services;

•

Nonregulated electric sales consist primarily of sales of electricity at market-based rates and contracted fixed rates and associated hedging activity;

~~Regulated electric sales~~

~~consist primarily of state-regulated retail electric sales, and federally-regulated wholesale electric sales and electric transmission~~

•

Regulated gas sales consist primarily of state-regulated natural gas sales and related distribution services;

•

Nonregulated gas sales consist primarily of sales of natural gas production at market-based rates and contracted fixed prices, sales of gas purchased from third parties and associated hedging activity;

•

Regulated gas transportation and storage sales consist of state-regulated gas distribution charges to retail distribution service customers opting for alternate suppliers, sales of gathering services and sales of transportation services to off-system customers;

•

Other regulated revenue consists primarily of miscellaneous service revenue from electric and gas distribution operations and sales of excess electric capacity and other commodities; and

•

Other nonregulated revenue consists primarily of sales of commodities related to nonregulated extraction activities and other miscellaneous products. Other nonregulated revenue also includes sales of energy-related products and services from Dominion Energy’s retail energy marketing operations, sales to Virginia Power customers from non-jurisdictional solar generation facilities and service concession arrangements.

~~Nonregulated electric sales~~

~~consist primarily of sales of electricity at market-based rates and contracted fixed rates, and associated hedging activity;~~

~~Regulated gas sales~~

~~consist primarily of state-regulated natural gas sales and related distribution services;~~

~~Nonregulated gas sales~~

~~consist primarily of sales of natural gas production at market-based rates and contracted fixed prices, sales of gas purchased from third parties and associated hedging activity;~~

~~Regulated gas transportation and storage sales~~

consist of FERC-regulated sales of transmission and storage services and state-regulated gas distribution charges to retail distribution service customers opting for alternate suppliers and sales of gathering services;

~~Nonregulated gas transportation and storage sales~~

~~consist primarily of LNG terminalling services;~~

~~Other regulated revenue~~

~~consists primarily of miscellaneous service revenue from electric and gas distribution operations and sales of excess electric capacity and other commodities; and~~

~~Other nonregulated revenue~~

consists primarily of NGL gathering and processing, sales of NGL production and condensate, extracted products and associated hedging activity. Other nonregulated revenue also includes services performed for Atlantic Coast Pipeline, sales of energy-related products and services from Dominion Energy’s retail energy marketing operations, service concession arrangements and gas processing and handling revenue.

Other Revenue

•

Other revenue consists primarily of alternative revenue programs, gains and losses from derivative instruments not subject to hedge accounting and lease revenues.

~~Other revenue~~

~~consists primarily of alternative revenue programs, gains and losses from derivative instruments not subject to hedge accounting and lease revenues.~~

The primary types of sales and service activities reported as operating revenue for Dominion Energy, prior to the adoption of revised guidance for revenue recognition from contracts with customers, were as follows:

~~Regulated electric sales~~

~~consisted primarily of state-regulated retail electric sales, and federally-regulated wholesale electric sales and electric transmission services;~~

~~Nonregulated electric sales~~

~~consisted primarily of sales of electricity at market-based rates and contracted fixed rates, and associated derivative activity;~~

~~Regulated gas sales~~

~~consisted primarily of state- and FERC-regulated natural gas sales and related distribution services and associated derivative activity;~~

~~Nonregulated gas sales~~

consisted primarily of sales of natural gas production at market-based rates and contracted fixed prices, sales of gas purchased from third parties, gas trading and marketing revenue and associated derivative activity;

~~Gas transportation and storage sales~~

consisted primarily of FERC-regulated sales of transmission and storage services. Also included were state-regulated gas distribution charges to retail distribution service customers opting for alternate suppliers and sales of gathering services; and

~~Other revenue~~

consisted primarily of sales of NGL production and condensate, extracted products and associated derivative activity. Other revenue also included miscellaneous service revenue from electric and gas distribution operations, sales of energy-related products and services from Dominion Energy’s retail energy marketing operations and gas processing and handling revenue.

The primary types of sales and service activities reported as operating revenue for Virginia Power ~~subsequent to the adoption of revised guidance for revenue recognition from contracts with customers,~~ are as follows:

Revenue from Contracts with Customers

~~Regulated electric sales~~

~~consist primarily of state-regulated retail electric sales and federally-regulated wholesale electric sales and electric transmission services;~~

~~Other regulated revenue~~

~~consists primarily of sales of excess capacity and other commodities and miscellaneous service revenue from electric distribution operations; and~~

~~Other nonregulated revenue~~

~~consists primarily of sales to~~

~~non-jurisdictional~~

~~customers from certain solar facilities, revenue from renting space on certain electric transmission poles and distribution towers and service concession arrangements.~~

~~Other Revenue~~

~~Other revenue~~

~~consists primarily of alternative revenue programs, gains and losses from derivative instruments not subject to hedge accounting and lease revenues.~~

The primary types of sales and service activities reported as operating revenue for Virginia Power, prior to the adoption of revised guidance for revenue recognition from contracts with customers, were as follows:

~~Regulated electric sales~~

~~consisted primarily of state-regulated retail electric sales, and federally-regulated wholesale electric sales and electric transmission services; and~~

•

Regulated electric sales consist primarily of state-regulated retail electric sales and federally-regulated wholesale electric sales and electric transmission services;

	•
98								Other regulated revenue consists primarily of sales of excess capacity and other commodities and miscellaneous service revenue from electric distribution operations; and

•

Other nonregulated revenue consists primarily of sales to customers from non-jurisdictional solar generation facilities, revenue from renting space on certain electric transmission poles and distribution towers and service concession arrangements.

~~Other revenue~~

~~consisted primarily of miscellaneous service revenue from electric distribution operations and miscellaneous revenue from generation operations, including sales of capacity and other commodities.~~

The primary types of sales and service activities reported as operating revenue for Dominion Energy Gas, subsequent to the adoption of revised guidance for revenue recognition from contracts with customers, are as follows:

~~Revenue from Contracts with Customers~~

~~Regulated gas sales—wholesale~~

~~consist primarily of sales of natural gas to wholesale customers as permitted by FERC under DETI’s operating tariff;~~

~~Nonregulated gas sales~~

~~consist primarily of sales of gas purchased from third parties and royalty revenues;~~

~~Regulated gas transportation and storage sales~~

~~consist of FERC-regulated sales of transmission and storage services;~~

~~Nonregulated gas transportation and storage sales~~

~~consist primarily of LNG terminalling services~~

~~Management service revenue~~

~~consists primarily of services performed for Atlantic Coast Pipeline;~~

~~Other regulated revenue~~

~~consists primarily of miscellaneous regulated revenues; and~~

~~Other nonregulated revenue~~

~~consists primarily of miscellaneous service revenue.~~

Other Revenue

•

Other revenue consists primarily of alternative revenue programs, gains and losses from derivative instruments not subject to hedge accounting and lease revenues.

~~Other revenue~~

~~consists primarily of gains and losses from derivative instruments not subject to hedge accounting.~~

The primary types of sales and service activities reported as operating revenue for Dominion Energy Gas, prior to the adoption of revised guidance for revenue recognition from contracts with customers, were as follows:

~~Regulated gas sales~~

~~consisted primarily of sales of natural gas to wholesale customers as permitted by FERC under DETI’s operating tariff;~~

~~Nonregulated gas sales~~

consisted primarily of sales of natural gas production at market-based rates and contracted fixed prices and sales of gas purchased from third parties. Revenue from sales of gas production was recognized based on actual volumes of gas sold to purchasers and was reported net of royalties;

~~Gas transportation and storage sales~~

~~consisted primarily of FERC-regulated sales of transmission and storage services; and~~

~~Other revenue~~

~~consisted primarily of miscellaneous service revenue, gas processing and handling revenue.~~

~~perating~~

revenue for East Ohio and DGP consists primarily of state-regulated natural gas sales and related distribution services, state-regulated gas distribution charges to retail distribution service customers opting for alternate suppliers and sales of NGL gathering and processing activities, and is included in net income from discontinued operations in Dominion Energy Gas’ Consolidated Statements of Income

~~through November 6, 2019.~~

~~Dominion Energy and Virginia Power~~Companies record refunds to customers as required by state commissions as a reduction to regulated electric sales or regulated gas sales, as applicable. ~~Dominion Energy and Virginia Power’s~~The Companies’ revenue accounted for under the

alternative revenue program guidance primarily consists of the equity return for under-recovery of certain riders. Alternative revenue programs compensate ~~Dominion Energy and Virginia Power~~the Companies for certain projects and initiatives. Revenues arising from these programs are presented separately from revenue arising from contracts with customers in the categories above.

Revenues from electric and gas sales are recognized over time, as the customers of the Companies consume gas and electricity as it is delivered. Transportation and storage contracts are primarily stand-ready service contracts that include fixed reservation and variable usage fees. LNG terminalling services are also stand-ready service contracts, primarily consisting of fixed fees, offset by service credits associated with the

~~start-up~~

~~phase of the Liquefaction Facility.~~ Fixed fees are recognized ratably over the life of the contract as the stand-ready performance obligation is satisfied, while variable usage fees are recognized when Dominion Energy ~~and Dominion Energy Gas have~~has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the performance obligation completed to date. Sales of products and services ~~including NGLs,~~ typically transfer control and are recognized as revenue upon delivery of the product or service. The customer is able to direct the use of, and obtain substantially all of the benefits from, the product at the time the product is delivered. The contract with the customer states the final terms of the sale, including the description, quantity and price of each product or service purchased. Payment for most sales and services varies by contract type, but is typically due within a month of billing.

Operating revenue for the gas transmission and storage operations sold or to be sold to BHE as part of the GT&S Transaction and the Q-Pipe Transaction primarily consists of FERC-regulated sales of transmission and storage services, LNG terminalling services, sales of extracted products and associated hedging activities and NGL activities, including gathering and processing and sales of production and condensate as well as services performed for Atlantic Coast Pipeline. This revenue is included in discontinued operations in Dominion ~~Energy~~Energy’s Consolidated Statements of Income.

Transportation and ~~Dominion Energy Gas typically receive~~storage contracts associated with the operations sold or ~~retain NGLs~~to be sold to BHE as part of the GT&S Transaction and ~~natural gas from customers when providing natural gas processing, transportation or storage services. Dominion Energy~~the Q-Pipe Transaction are primarily stand-ready service contracts that include fixed reservation and ~~Dominion Energy Gas record~~variable usage fees. LNG terminalling services, included in discontinued operations, are also stand-ready service contracts, primarily consisting of fixed fees, offset by service credits associated with the ~~fair value~~start-up phase of the Liquefaction Facility. NGLs received during natural gas processing are recorded in discontinued operations at fair value as service revenue recognized over time, and ~~continue~~revenue continues to ~~recognize revenue~~be recognized from the subsequent sale of the NGLs to customers upon delivery. Dominion Energy and Dominion Energy Gas typically retain natural gas under certain transportation service arrangements that are intended to facilitate performance of the service and allow for natural losses that occur. As the intent of the allowance is to enable fulfillment of the contract rather than to provide compensation for services, the fuel allowance is not included in revenue.

Credit Risk

Credit risk is the risk of financial loss if counterparties fail to perform their contractual obligations. In order to minimize overall credit risk, credit policies are maintained, including the evaluation of counterparty financial condition, collateral requirements and the use of standardized agreements that facilitate the netting of cash flows associated with a single counterparty. In addition, counterparties may make available collateral, including letters of credit or cash held as margin deposits, as a result of exceeding agreed-upon credit limits, or may be required to prepay the transaction.

The Companies maintain a provision for credit losses based on factors surrounding the credit risk of their customers, historical trends and other information. Management believes, based on credit policies and the December 31, 2019 provision for credit losses, that it is unlikely that a material adverse effect on financial position, results of operations or cash flows would occur as a


						99

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~result of counterparty nonperformance.~~ Effective January 2020, expected credit losses ~~will be~~are estimated and recorded based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets held at amortized cost as well as expected credit losses on commitments with respect to financial guarantees.

Electric Fuel, Purchased Energy and Purchased

Gas-Deferred

Costs

Where permitted by regulatory authorities, the differences between ~~Dominion Energy and Virginia Power’s~~the Companies’ actual electric fuel and purchased energy expenses and Dominion ~~Energy and Dominion Energy Gas’~~Energy’s purchased gas expenses and the related levels of recovery for these expenses in current rates are deferred and matched against recoveries in future periods. The deferral of costs in excess of current period fuel rate recovery is recognized as a regulatory asset, while rate recovery in excess of current period fuel expenses is recognized as a regulatory liability.

Of the cost of fuel used in electric generation and energy purchases to serve Virginia utility customers, at December 31, ~~2019,~~2020, approximately ~~84%~~85% is subject to Virginia Power’s deferred fuel accounting, while substantially all of the remaining amount is subject to recovery through similar mechanisms.

Of the cost of fuel used in electric generation and energy purchases to serve South Carolina utility customers, at December 31, 2020, approximately 96% is subject to DESC��s deferred fuel accounting.

Virtually all of East Ohio, Questar Gas, Hope, DESC and PSNC’s natural gas purchases are either subject to deferral accounting or are recovered from the customer in the same accounting period as the sale.

Income Taxes

A consolidated federal income tax return is filed for Dominion Energy and its subsidiaries, including Virginia ~~Power and Dominion Energy Gas’ subsidiaries.~~Power. In addition, where applicable, combined income tax returns for Dominion Energy and its subsidiaries are filed in various states; otherwise, separate state income tax returns are filed.

Although Dominion Energy Gas and certain of its subsidiaries are disregarded for income tax purposes, a provision for income taxes is recognized to reflect the inclusion of its business activities in the tax returns of its parent, Dominion Energy.

Virginia Power ~~and Dominion Energy Gas participate~~participates in intercompany tax sharing agreements with Dominion Energy and its subsidiaries. Current income taxes are based on taxable income or loss and credits determined on a separate company basis.

Under the agreements, if a subsidiary incurs a tax loss or earns a credit, recognition of current income tax benefits is limited to refunds of prior year taxes obtained by the carryback of the net operating loss or credit or to the extent the tax loss or credit is absorbed by the taxable income of other Dominion Energy consolidated group members. Otherwise, the net operating loss or credit is carried forward and is recognized as a deferred tax asset until realized.

The 2017 Tax Reform Act included a broad range of tax reform provisions affecting the Companies, including changes in corporate tax rates and business deductions. The 2017 Tax Reform Act reduces the corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017. Deferred tax assets and liabilities are classified as noncurrent in the Consolidated Balance Sheets and measured at the enacted tax rate expected to apply when temporary differences are realized or

settled. Thus, at the date of enactment, federal deferred taxes were remeasured based upon the new 21% tax rate. The total effect of tax rate changes on deferred tax balances was recorded as a component of the income tax provision related to continuing operations for the period in which the law is enacted, even if the assets and liabilities relate to other components of the financial statements, such as items of accumulated other comprehensive income. For Dominion Energy subsidiaries that are not rate-regulated utilities, existing deferred income tax assets or liabilities were adjusted for the reduction in the corporate income tax rate and allocated to continuing operations. Dominion Energy’s rate-regulated utility subsidiaries likewise were required to adjust deferred income tax assets and liabilities for the change in income tax rates. However, if it is probable that the effect of the change in income tax rates will be recovered or refunded in future rates, the regulated utility recorded a regulatory asset or liability instead of an increase or decrease to deferred income tax expense.

Accounting for income taxes involves an asset and liability approach. Deferred income tax assets and liabilities are provided, representing future effects on income taxes for temporary differences between the bases of assets and liabilities for financial reporting and tax purposes. Accordingly, deferred taxes are recognized for the future consequences of different treatments used for the reporting of transactions in financial accounting and income tax returns. The Companies establish a valuation allowance when it is

more-likely-than-not

that all, or a portion, of a deferred tax asset will not be realized. Where the treatment of temporary differences is different for rate-regulated operations, a regulatory asset is recognized if it is probable that future revenues will be provided for the payment of deferred tax liabilities.

The Companies recognize positions taken, or expected to be taken, in income tax returns that are

more-likely-than-not

to be realized, assuming that the position will be examined by tax authorities with full knowledge of all relevant information.

If it is not

more-likely-than-not

that a tax position, or some portion thereof, will be sustained, the related tax benefits are not recognized in the financial statements. Unrecognized tax benefits may result in an increase in income taxes payable, a reduction of income tax refunds receivable or changes in deferred taxes. Also, when uncertainty about the deductibility of an amount is limited to the timing of such deductibility, the increase in income taxes payable (or reduction in tax refunds receivable) is accompanied by a decrease in deferred tax liabilities. Except when such amounts are presented net with amounts receivable from or amounts prepaid to tax authorities, noncurrent income taxes payable related to unrecognized tax benefits are classified in other deferred credits and other liabilities on the Consolidated Balance Sheets and current payables are included in accrued interest, payroll and taxes on the Consolidated Balance Sheets.

The Companies recognize interest on underpayments and overpayments of income taxes in interest expense and other income, respectively. Penalties are also recognized in other income.

~~Interest expense for the Companies was immaterial in 2019 and 2018. Dominion Energy and~~

At December 31, 2020, Virginia Power ~~both recognized interest~~had an income tax-related affiliated payable of ~~$11~~$19 million, ~~in 2017.~~comprised of $17 million of federal income taxes and $2 million of state income taxes due to Dominion ~~Energy Gas’ interest was immaterial in 2017. The Companies’ penalties were immaterial in 2019, 2018 and 2017.~~


~~100~~

Energy. These affiliated balances are expected to be paid to Dominion Energy.

At December 31, 2019, Virginia Power had an income

tax-related

affiliated payable of $35 million, comprised of $15 million of federal income taxes and $20 million of state income taxes due to Dominion Energy. Dominion Energy Gas also had a net affiliated receivable of $209 million due from Dominion Energy, representing $212 million of federal income taxes receivable and $3 million of state income taxes payable to Dominion Energy. The net affiliated receivables are expected to be received from Dominion Energy.

In addition, Dominion Energy Gas’ Consolidated Balance Sheet at December 31, 2019 included $10 million of state income taxes receivable. State income taxes receivable at Virginia Power were immaterial at December 31, 2019.

~~At December 31, 2018, Virginia Power had an income~~

~~tax-related~~

affiliated receivable of $36 million, comprised of $34 million of federal income taxes and $2 million of state income taxes due from Dominion Energy. Dominion Energy Gas also had a net affiliated receivable of $271 million due from Dominion Energy, representing $277 million of federal income taxes receivable and $6 million of state income taxes payable to Dominion Energy. Virginia Power’s net affiliated ~~receivables~~balances were ~~received from~~paid to Dominion ~~Energy, and Dominion Energy Gas’ affiliated receivables are expected to be received from Dominion~~ Energy.

In addition, Dominion Energy Gas’ Consolidated Balance Sheet at December 31, 2018 included $15 million of state income taxes receivable. State income taxes receivable at Virginia Power were immaterial at December 31, 2018.

Investment tax credits are recognized by nonregulated operations in the year qualifying property is placed in service. For regulated operations, investment tax credits are deferred and amortized over the service lives of the properties giving rise to the credits. Production tax credits are recognized as energy is generated and sold.

Cash, Restricted Cash and Equivalents

Cash, restricted cash and equivalents include cash on hand, cash in banks and temporary investments purchased with an original maturity of three months or less.

Current banking arrangements generally do not require checks to be funded until they are presented for payment. The following table illustrates the checks outstanding but not yet presented for payment and recorded in accounts payable for the Companies:

At December 31,	2020		2019
(millions)
Dominion Energy	$	50	$	29
Virginia Power		30		9

At December 31,

2019

2018

(millions)

Dominion Energy
$
29
$
35

Virginia Power

9

16

Dominion Energy Gas

6

7

Restricted Cash and Equivalents

The Companies hold restricted cash and equivalent balances that primarily consist of amounts held for litigation settlements, customer deposits and future debt payments on SBL Holdco and Dominion Solar Projects III, Inc.’s term loan agreements and on Eagle Solar’s senior note agreement.

The following table provides a reconciliation of the total cash, restricted cash and equivalents reported within the Companies’ Consolidated Balance Sheets to the corresponding amounts reported within the Companies’ Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017:~~

Cash, Restricted Cash and Equivalents at
End/Beginning of Year

December 31,
2019

December 31,
2018

December 31,
2017

December 31,
2016

(millions)

Dominion Energy

Cash and cash equivalents

$166

$268

$120

$261

Restricted cash and equivalents
(1)

103

123

65

61

Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows

$269

$391

$185

$322

Virginia Power

Cash and cash equivalents

$  17

$  29

$  14

$  11

Restricted cash and equivalents
(1)

7

9

10

—

Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows

$  24

$  38

$  24

$  11

Dominion Energy Gas

Cash and cash equivalents
(2)

$  27

$108

$  18

$  76

Restricted cash and equivalents
(1)

12

90

39

45

Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows

$  39

$198

$  57

$121

2018:

	Cash, Restricted Cash and Equivalents at End/Beginning of Year
	December 31, 2020		December 31, 2019		December 31, 2018		December 31, 2017
(millions)
Dominion Energy
Cash and cash equivalents⁽¹⁾	$	179	$	166	$	268	$	120
Restricted cash and equivalents⁽²⁾⁽³⁾		68		103		123		65
Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows	$	247	$	269	$	391	$	185
Virginia Power
Cash and cash equivalents	$	35	$	17	$	29	$	14
Restricted cash and equivalents⁽³⁾		—		7		9		10
Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows	$	35	$	24	$	38	$	24

~~(1)~~

(1)

At December 31, 2020, December 31, 2019, December 31, 2018 and December 31, 2017, Dominion Energy had $7 million, $31 million, $110 million and $21 million of cash and cash equivalents included in current assets held for sale, respectively.

(2)

At December 31, 2020, December 31, 2019, December 31, 2018 and December 31, 2017, Dominion Energy had $3 million, $12 million, $89 million and $39 million of restricted cash included in current assets held for sale, respectively.

(3)

Restricted cash and equivalent balances are presented within other current assets in the Companies’ Consolidated Balance Sheets.

Supplemental Cash Flow Information

The following table provides supplemental disclosure of cash flow information related to Dominion Energy:

Year Ended December 31,	2020		2019		2018
Cash paid during the year for:
Interest and related charges, excluding capitalized amounts	$	1,519	$	1,643		1,362
Income taxes		292		106		89
Significant noncash investing and financing activities:^{(1)(2)(3)(4)(5)}
Accrued capital expenditures		485		555		307
Leases⁽⁶⁾		173		157		—
Receivables from sales of assets and equity method investments		—		5		159

~~(2)~~

(1)

See the New Accounting Standards section below for noncash investing and financing activities related to the adoption of a new accounting standard for leasing arrangements.

(2)

See Note 3 for noncash investing and financing activities related to the SCANA Combination.

(3)

See Note 5 for noncash activities related to the sale of a noncontrolling interest in Cove Point.

(4)

See Note 9 for noncash investing activities related to the acquisition of a noncontrolling interest in Wrangler.

(5)

See Notes 18,19 and 20 for noncash financing activities related to the acquisition of the public interest in Dominion Energy Midstream, the remarketing of RSNs, the issuance of stock purchase contracts associated with the 2019 Equity Units, the contribution of stock to Dominion Energy’s qualified defined benefit pension plan, derivative restructuring and the issuance of common stock associated with the settlement of litigation. See Note 23 for non-cash investing activities related to property, plant and equipment conveyed to satisfy litigation.

(6)

Includes $46 million of finance leases and $127 million of operating leases at December 31, ~~2018, 2017~~2020 and ~~2016, Dominion Energy Gas had $9 million, $3 million and $14~~$113 million of ~~cash~~finance leases and ~~cash equivalents included in current assets~~$44 million of ~~discontinued operations, respectively.~~operating leases at December 31, 2019.

The following table provides supplemental disclosure of cash flow information related to Virginia Power:

Year Ended December 31,	2020		2019		2018
Cash paid during the year for:
Interest and related charges, excluding capitalized amounts	$	491	$	495	$	498
Income taxes		452		272		128
Significant noncash investing activities:^{(1), (2)}
Accrued capital expenditures		262		292		204
Leases⁽³⁾		32		55		—

(1)	See the New Accounting Standards section below for noncash investing and financing activities related to the adoption of a new accounting standard for leasing arrangements.

(2)	See Note 18 for non-cash financing activities related to derivative restructuring.

(3)	Includes $32 million of finance leases as of December 31, 2020 and $20 million of finance leases and $35 million of operating leases as of December 31, 2019.

Distributions from Equity Method Investees

Dominion Energy ~~and Dominion Energy Gas each hold~~holds investments that are accounted for under the equity method of ~~accounting. Dominion Energy~~accounting and ~~Dominion Energy Gas classify~~classifies distributions from equity method investees as either cash flows from operating activities or cash flows from investing activities in the Consolidated Statements of Cash Flows according to the nature of the distribution. Distributions received are classified on the basis of the nature of the activity of the investee that generated the distribution


						~~101~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

as either a return on investment (classified as cash flows from operating activities) or a return of an investment (classified as cash flows from investing activities) when such information is available to Dominion ~~Energy and Dominion Energy Gas.~~

Energy.

Derivative Instruments

The Companies are exposed to the impact of market fluctuations in the price of electricity, natural gas and other energy-related products they market and purchase, as well as interest rate ~~and foreign currency exchange rate risks of~~risk in their business operations. ~~Dominion Energy uses~~The Companies use derivative instruments such as physical and financial forwards, futures, swaps, options and FTRs to manage the commodity ~~interest rate~~ and ~~foreign currency exchange~~interest rate risks of ~~its~~their business operations. Virginia Power uses derivative instruments such as physical and financial forwards, futures, swaps, options and FTRs to manage commodity and interest rate risks. Dominion Energy Gas uses derivative instruments such as physical and financial forwards, futures and swaps to manage commodity, interest rate and foreign currency exchange rate risks.

All derivatives, except those for which an exception applies, are required to be reported in the Consolidated Balance Sheets at fair value. Derivative contracts representing unrealized gain positions and purchased options are reported as derivative assets. Derivative contracts representing unrealized losses and options sold are reported as derivative liabilities. One of the exceptions to fair value accounting, normal purchases and normal sales, may be elected when the contract satisfies certain criteria, including a requirement that physical delivery of the underlying commodity is probable. Expenses and revenues resulting from deliveries under normal purchase contracts and normal sales contracts, respectively, are included in earnings at the time of contract performance.

See Note 6 for further information about fair value measurements and associated valuation methods for derivatives.

The Companies do not offset amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral against amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement. Dominion Energy had margin assets of ~~$42~~$19 million and ~~$95~~$42 million associated with cash collateral at December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Dominion ~~Energy’s~~Energy had margin liabilities of $5 million and $2 million associated with cash collateral at December 31, 2020 and 2019, respectively. Virginia Power had margin assets of $1 million and less than $1 million associated with cash collateral at December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Virginia Power had ~~margin assets of less than $1 million associated with cash collateral at December 31, 2019. Virginia Power had 0 margin assets associated with cash collateral at December 31, 2018 and~~ 0 margin liabilities associated with cash collateral at December 31, ~~2019~~2020 and ~~2018. Dominion Energy Gas had 0 margin assets or liabilities associated with cash collateral at December 31, 2019 and 2018.~~2019. See Note 7 for further information about derivatives.

To manage price risk, the Companies hold derivative instruments that are not designated as hedges for accounting purposes. However, to the extent the Companies do not hold offsetting positions for such derivatives, they believe these instruments represent economic hedges that mitigate their exposure to fluctuations in commodity prices. All income statement activity, including amounts realized upon settlement, is presented in operating revenue, operating expenses, interest and related charges or ~~other income~~discontinued operations based on the nature of the underlying risk.

Changes in the fair value of derivative instruments result in the recognition of regulatory assets or regulatory liabilities for jurisdictions subject to cost-based rate regulation. Realized gains or losses on the derivative instruments are generally recognized when the related transactions impact earnings.

Derivative Instruments Designated as Hedging Instruments

In accordance with accounting guidance pertaining to derivatives and hedge accounting, the Companies designate a portion of their derivative instruments as either cash flow or fair value hedges for accounting purposes. For derivative instruments that are accounted for as cash flow hedges or fair value hedges, the cash flows from the derivatives and from the related hedged items are classified in operating cash flows.

Cash Flow Hedges

-A majority of the Companies’ hedge strategies represents cash flow hedges of the variable price risk primarily associated with the purchase ~~and sale~~ of ~~electricity,~~ natural ~~gas and NGLs.~~gas. The Companies also use interest rate swaps to hedge their exposure to variable interest rates on long-term ~~debt as well as foreign currency swaps to hedge their exposure to interest payments denominated in Euros.~~debt. For transactions in which the Companies are hedging the variability of cash flows, changes in the fair value of the derivatives are reported in AOCI, to the extent they are effective at offsetting changes in the hedged item. Any derivative gains or losses reported in AOCI are reclassified to earnings when the forecasted item is included in earnings, or earlier, if it becomes probable that the forecasted transaction will not occur. For cash flow hedge transactions, hedge accounting is discontinued if the occurrence of the forecasted transaction is no longer probable.

Dominion Energy entered into interest rate derivative instruments to hedge its forecasted interest payments related to planned debt issuances in 2014. These interest rate derivatives were designated by Dominion Energy as cash flow hedges prior to the formation of Dominion Energy Gas. For the purposes of the Dominion Energy Gas financial statements, the derivative balances, AOCI balance, and any income statement impact related to these interest rate derivative instruments entered into by Dominion Energy have been, and will continue to be, included in the Dominion Energy Gas’ Consolidated Financial Statements as the forecasted interest payments related to the debt issuances now occur at Dominion Energy Gas.

Fair Value Hedges

-Dominion Energy has also designated interest rate swaps as fair value hedges on certain fixed rate long-term debt to manage interest rate exposure. For fair value hedge transactions, changes in the fair value of the derivative are generally offset currently in earnings by the recognition of changes in the hedged item’s fair value. Hedge accounting is discontinued if the hedged item no longer qualifies for hedge accounting. ~~See Note 6 for further information about fair value measurements and associated valuation methods for derivatives. See Note 7 for further information on derivatives.~~

Property, Plant and Equipment

Property, plant and equipment is recorded at lower of original cost or fair value, if impaired. Capitalized costs include labor, materials and other direct and indirect costs such as asset retirement costs, capitalized interest and, for certain operations subject


~~102~~

cost-of-service

rate regulation, AFUDC and overhead costs. The cost of repairs and maintenance, including minor additions and replacements, is generally charged to expense as it is incurred.

In 2020, 2019, ~~2018~~ and ~~2017,~~2018, Dominion Energy capitalized interest costs and AFUDC to property, plant and equipment of ~~$89~~$103 million, ~~$134~~$78 million and ~~$236~~$109 million, respectively. In 2020, 2019, ~~2018~~ and ~~2017,~~2018, Virginia Power capitalized AFUDC to property, plant and equipment of $60 million, $34 million and $56 million, ~~and $37 million,~~ respectively. ~~In 2019, 2018 and 2017, Dominion Energy Gas capitalized AFUDC to property, plant and equipment of $31 million, $25 million and $34 million, respectively.~~

Under Virginia law, certain Virginia jurisdictional projects qualify for current recovery of AFUDC through rate adjustment clauses. AFUDC on these projects is calculated and recorded as a regulatory asset and is not capitalized to property, plant and equipment. In 2020, 2019, ~~2018~~ and ~~2017,~~2018, Virginia Power recorded $11 million, $4$11 million and ~~$22~~$4 million of AFUDC related to these projects, respectively.

For property subject to

cost-of-service

rate regulation, including ~~Dominion Energy and Virginia Power~~the Companies’ electric distribution, electric transmission and generation property and Dominion ~~Energy~~Energy’s natural gas distribution ~~and Dominion Energy Gas natural gas transmission~~ property, the undepreciated cost of such property, less salvage value, is generally charged to accumulated depreciation at retirement. Cost of removal collections from utility customers not representing AROs are recorded as regulatory liabilities. For property subject to

cost-of-service

rate regulation that will be abandoned significantly before the end of its useful life, the net carrying value is reclassified from

plant-in-service

when it becomes probable it will be abandoned and recorded as a regulatory asset for amounts expected to be collected through future rates.

In 2020 and 2019, ~~Virginia Power~~the Companies had the following charges, primarily recorded in impairment of assets and other charges in the Consolidated Statements of Income

(reflected in the Corporate and Other segment),

related to early retirements:

•

In March 2020, Virginia Power committed to retire certain coal- and oil-fired generating units before the end of their useful lives based on economic and other factors, including but not limited to market power prices and the VCEA. These units will

~~after-tax).~~

~~This charge is considered a component of Virginia Power’s base rates deemed recovered under the GTSA, subject to review as discussed in Note 13.~~

be retired after they meet their capacity obligations to PJM in 2023. As a result, Virginia Power recorded a charge of $751 million ($559 million after-tax). This charge is considered a component of Virginia Power’s base rates deemed recovered under the GTSA, subject to review as discussed in Note 13. Also in 2020, Virginia Power recorded charges of $54 million ($40 million after-tax) associated with dismantling certain of these electric generation facilities.

•

In January 2019, Virginia Power committed to a plan to retire certain automated metering reading infrastructure associated with its electric operations before the end of its estimated useful life and replace such equipment with more current AMI technology. As a result, Virginia Power recorded a charge of $160 million ($119 million after-tax). This charge is considered a component of Virginia Power’s base rates deemed recovered under the GTSA, subject to review as discussed in Note 13.

•

In March 2019, Virginia Power committed to retire certain electric generating units before the end of their useful lives and completed the retirement of certain units at 6 facilities representing 1,292 MW of electric generating capacity, which had previously been placed in cold reserve. An additional unit at Possum Point power station was retired after meeting its capacity obligation to PJM in December 2020. As a result, Virginia Power recorded a charge of $346 million ($257 million after-tax). This charge is considered a component of Virginia Power’s base rates deemed recovered under the GTSA, subject to review as discussed in Note 13.

•

In May 2019, Virginia Power abandoned a coal rail project at its Mt. Storm generating facility. As a result, Virginia Power recorded a charge of $62 million ($46 million after-tax).

•

In September 2019, the Companies abandoned certain property, plant and equipment before the end of its useful life. As a result, Dominion Energy recorded a charge of $26 million ($19 million after-tax) and Virginia Power recorded a charge of $17 million ($12 million after-tax).

In March 2019, Virginia Power committed to retire certain electric generating units before the end of their useful lives and completed the retirement of certain units at 6 facilities representing 1,292 MW of electric generating capacity, which had previously been placed in cold reserve. An additional unit at Possum Point power station will be retired after it meets its capacity obligation to PJM in 2021. As a result, Virginia Power recorded a charge of $346 million ($257 million

~~after-tax~~

~~). This charge is considered a component of Virginia Power’s base rates deemed recovered under the GTSA, subject to review as discussed in Note 13.~~

~~In May 2019, Virginia Power abandoned a coal rail project at its Mt. Storm generating facility. As a result, Virginia Power recorded a charge of $62 million ($46 million~~

~~after-tax).~~

In September 2019, Dominion Energy and Virginia Power abandoned certain property, plant and equipment before the end of its useful life. As a result, Dominion Energy recorded a charge of $26 million ($19 million

~~after-tax)~~

~~and Virginia Power recorded a charge of $17 million ($12 million~~

~~after-tax).~~

For property that is not subject to

cost-of-service

rate regulation, including nonutility property, cost of removal not associated with AROs is charged to expense as incurred. The Companies also record gains and losses upon retirement based upon the difference between the proceeds received, if any, and the property’s net book value at the retirement date.

Depreciation of property, plant and equipment is computed on the straight-line method based on projected service lives. The Companies’ average composite depreciation rates on utility property, plant and equipment are as follows:

Year Ended December 31,

2019

2018

2017

(percent)

Dominion Energy

Generation

2.84

2.71

2.94

Transmission

2.47

2.54

2.55

Distribution

2.80

2.97

3.00

Storage

2.40

2.40

2.48

General and other

4.04

4.20

4.38

Virginia Power

Generation

2.94

2.71

2.94

Transmission

2.54

2.52

2.54

Distribution

3.14

3.31

3.32

General and other

4.40

4.52

4.68

Dominion Energy Gas
(1)

Transmission

2.43

2.66

2.67

Storage

2.53

2.42

2.51

General and other

4.59

4.18

5.08

Year Ended December 31,	2020		2019		2018
(percent)
Dominion Energy⁽¹⁾
Generation		2.51		2.84		2.71
Transmission		2.48		2.50		2.50
Distribution		2.76		2.80		2.97
Storage		1.59		1.49		2.20
General and other		4.35		3.99		4.11
Virginia Power
Generation		2.52		2.94		2.71
Transmission		2.52		2.54		2.52
Distribution		3.19		3.14		3.31
General and other		5.09		4.40		4.52

(1)	Excludes rates for depreciation reported as discontinued operations.

In 2020, Virginia Power ~~expects to receive an~~ updated depreciation ~~study~~rates for its nuclear plants ~~in the first~~

~~quarter~~

~~of 2020, which is anticipated~~ to reflect lower depreciation rates as a result of expected approval of license extensions from the NRC.

For the year ended December 31, 2020, this adjustment resulted in a decrease of $31 million ($23 million after-tax) in depreciation expense in Virginia Power’s Consolidated Statements of Income and an increase to Dominion Energy’s EPS of $0.03 per share.

In 2018, Virginia Power revised depreciation rates for regulated nuclear plants to comply with Virginia Commission requirements. For the year ended December 31, 2018, this adjustment resulted in a decrease of $60 million ($44 million

after-tax)

in depreciation expense in Virginia Power’s Consolidated ~~Statement~~Statements of Income and an increase to Dominion Energy’s EPS of $0.07 per share. This change resulted in an annual decrease in depreciation expense of $30 million ($23 million

after-tax).

In 2017, Virginia Power revised the depreciation rates for its assets to reflect the results of a new depreciation study. This change resulted in an increase in annual depreciation expense of $40 million ($25 million

~~after-tax)~~

for 2017. Additionally, Dominion Energy revised the depreciable lives for its merchant generation assets, excluding Millstone, which resulted in a decrease in annual depreciation expense of $26 million ($16 million

~~after-tax)~~

~~for 2017.~~

Virginia Power’s non-jurisdictional property, plant and equipment is depreciated using the straight-line method over an estimated useful life of 30 years.


						~~103~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

Capitalized costs of development wells and leaseholds are amortized on a

field-by-field

basis using the

unit-of-production

method and the estimated proved developed or total proved gas and oil reserves, at a rate of ~~$1.80~~$1.97 and ~~$1.89~~$1.80 per mcfe in 2020 and 2019, ~~and 2018,~~ respectively.

Dominion Energy’s nonutility property, plant and equipment is depreciated using the straight-line method over the following estimated useful lives:

Asset			EstimatedUsefulLives
~~Asset~~ Nonregulated generation-nuclear	~~Estimated Useful Lives~~	44 years
~~Merchant generation-nuclear~~ Nonregulated generation-other		44 15-30 years
~~Merchant generation-other~~		~~15-30~~ ~~years~~
~~Nonutility gas gathering and processing~~		~~3-50~~ ~~years~~
~~LNG facility~~		~~40 years~~
General and other		5-59 years

Depreciation and amortization related to Virginia ~~Power and Dominion Energy Gas’~~Power’s nonutility property, plant and equipment and Dominion Energy’s exploration and production properties was immaterial for the years ended December 31, 2020, 2019, ~~2018~~ and ~~2017, except for Dominion Energy Gas’ nonutility LNG facility which is depreciated using the straight-line method over~~

~~estimated useful life of 40 years.~~

2018.

Nuclear fuel used in electric generation is amortized over its estimated service life on a

units-of-production

basis. ~~Dominion Energy and Virginia Power~~The Companies report the amortization of nuclear fuel in electric fuel and other energy-related purchases expense in their Consolidated Statements of Income and in depreciation and amortization in their Consolidated Statements of Cash Flows.

Long-Lived and Intangible Assets

The Companies perform an evaluation for impairment whenever events or changes in circumstances indicate that the carrying amount of long-lived assets or intangible assets with finite lives may not be recoverable. A long-lived or intangible asset is written down to fair value if the sum of its expected future undiscounted cash flows is less than its carrying amount. Intangible assets with finite lives are amortized over their estimated useful lives. See Note 6 for further discussion on the impairment of long-lived assets.

Regulatory Assets and Liabilities

The accounting for the Companies’ regulated electric and gas operations differs from the accounting for nonregulated operations in that the Companies are required to reflect the effect of rate regulation in their Consolidated Financial Statements. For regulated businesses subject to federal or state

cost-of-service

The Companies evaluate whether or not recovery of ~~its~~their regulatory assets through future rates is probable as well as whether a regulatory liability due to customers is probable and ~~makes~~make various assumptions in ~~its~~their analyses. These analyses are generally based on:

•

Orders issued by regulatory commissions, legislation and judicial actions;

~~Orders issued by regulatory commissions, legislation and judicial actions;~~

•

Past experience;

•

Discussions with applicable regulatory authorities and legal counsel;

•

Forecasted earnings; and

•

Considerations around the likelihood of impacts from events such as unusual weather conditions, extreme weather events and other natural disasters and unplanned outages of facilities.

~~Past experience;~~

~~Discussions with applicable regulatory authorities and legal counsel;~~

~~Forecasted earnings; and~~

~~Considerations around the likelihood of impacts from events such as unusual weather conditions, extreme weather events and other natural disasters and unplanned outages of facilities.~~

Generally, regulatory assets and liabilities are amortized into income over the period authorized by the regulator. If recovery of a regulatory asset is determined to be less than probable, it will be written off in the period such assessment is made. A regulatory liability, if considered probable, will be recorded in the period such assessment is made or reversed into earnings if no longer probable. See Notes 12 and 13 to the Consolidated Financial Statements for additional ~~information~~information.

Leases

~~Leases~~

The Companies lease certain assets including vehicles, real estate, office equipment and other operational assets under both operating and finance leases. For the Companies’ operating leases, rent expense is recognized on a straight-line basis over the term of the lease agreement, subject to regulatory framework. Rent expense associated with operating leases, short-term leases and variable leases is primarily recorded in other operations and maintenance expense in the Companies’ Consolidated Statements of Income. Rent expense associated with finance leases results in the separate presentation of interest expense on the lease liability and amortization expense of the related

right-of-use

asset in the Companies’ Consolidated Statements of Income.

Certain of the Companies’ leases include one or more options to renew, with renewal terms that can extend the lease from one to 70 years. The exercise of renewal options is solely at the Companies’ discretion and is included in the lease term if the option is reasonably certain to be exercised. A

right-of-use

asset and corresponding lease liability for leases with original lease terms of one year or less are not included in the Consolidated Balance Sheets, unless such leases contain renewal options that the Companies are reasonably certain will be exercised. Additionally, certain of the Companies’ leases contain escalation clauses whereby payments are adjusted for consumer price or other indices or contain fixed dollar or percentage increases. The Companies also have leases with variable payments based upon usage of, or revenues associated with, the leased assets.

The determination of the discount rate utilized has a significant impact on the calculation of the present value of the lease liability included in the Companies’ Consolidated Balance Sheets. For the Companies’ fleet of leased vehicles, the discount rate is equal to the prevailing borrowing rate earned by the lessor. For the Companies’ remaining leased assets, the discount rate implicit in the lease is generally unable to be determined from a lessee perspective. As such, the Companies use internally-developed incremental borrowing rates as a discount rate in the calculation of the present value of the lease liability. The incremental borrowing rates are determined based on an analysis of the Companies’ publicly available unsecured borrowing rates, adjusted for a collateral discount, over various lengths of time that most closely correspond to the Companies’ lease maturities.


~~104~~

In addition, Dominion Energy acts as lessor under certain power purchase agreements in which the counterparty or counterparties purchase substantially all of the output of certain solar facilities. These leases are considered operating in nature. For such leasing arrangements, rental revenue and an associated accounts receivable are recorded when the monthly output of the solar facility is determined. Depreciation on these solar facilities is computed on a straight-line basis over an estimated useful life of 30 years.

Asset Retirement Obligations

The Companies recognize AROs at fair value as incurred or when sufficient information becomes available to determine a reasonable estimate of the fair value of future retirement activities to be performed, for which a legal obligation exists. These amounts are generally capitalized as costs of the related tangible long-lived assets. Since relevant market information is not available, fair value is estimated using discounted cash flow analyses. Quarterly, the Companies assess their AROs to determine if circumstances indicate that estimates of the amounts or timing of future cash flows associated with retirement activities have changed. AROs are adjusted when significant changes in the amounts or timing of future cash flows are identified. Dominion Energy ~~and Dominion Energy Gas report~~reports accretion of AROs and depreciation on asset retirement costs associated with ~~their~~its natural gas ~~pipeline and storage well assets~~pipelines as an adjustment to the related regulatory assets or liabilities when revenue is recoverable from customers for AROs. ~~Dominion Energy and Virginia Power~~The Companies report accretion of AROs and depreciation on asset retirement costs associated with decommissioning its nuclear power stations as an adjustment to the regulatory asset or liability for certain jurisdictions. Additionally, ~~Dominion Energy and Virginia Power~~the Companies report accretion of AROs and depreciation on asset retirement costs associated with certain rider and prospective rider projects as an adjustment to the regulatory asset for certain jurisdictions. Accretion of all other AROs and depreciation of all other asset retirement costs are reported in other operations and maintenance expense and depreciation expense, respectively, in the Consolidated Statements of Income.

Debt Issuance Costs

The Companies defer and amortize debt issuance costs and debt premiums or discounts over the expected lives of the respective debt issues, considering maturity dates and, if applicable, redemption rights held by others. Deferred debt issuance costs are recorded as a reduction in long-term debt in the Consolidated Balance Sheets. Amortization of the issuance costs is reported as interest expense. Unamortized costs associated with redemptions of debt securities prior to stated maturity dates are generally recognized and recorded in interest expense immediately. As permitted by regulatory authorities, gains or losses resulting from the refinancing or redemption of debt allocable to utility operations subject to cost-based rate regulation are deferred and amortized.

Investments

Debt and Equity Securities with Readily Determinable Fair Values

Dominion Energy accounts for and classifies investments in debt securities as trading or

available-for-sale

securities. Virginia Power classifies investments in debt securities as available-for-sale securities.

~~available-for-sale~~

~~securities.~~

•

Debt securities classified as trading securities include securities held by Dominion Energy in rabbi trusts associated with certain deferred compensation plans. These securities are reported in other investments in the Consolidated Balance Sheets at fair value with net realized and unrealized gains and losses included in other income in the Consolidated Statements of Income.

•

Debt ~~securities classified as trading~~ securities classified as available-for-sale securities include all other debt securities, primarily comprised of securities held in the nuclear decommissioning trusts. These investments are reported at fair value in nuclear decommissioning trust funds in the Consolidated Balance Sheets. Net realized and unrealized gains and losses (including any credit-related impairments) on investments held in nuclear decommissioning trusts are deferred to a regulatory asset or liability, as applicable, for certain jurisdictions subject to cost-based regulation. For all other available-for-sale debt securities, including those held in Dominion Energy’s nonregulated generation nuclear decommissioning trusts, net realized gains and losses (including any credit-related impairments) are included in other income and unrealized gains and losses are reported as a component of AOCI, after-tax.

~~include securities held by Dominion Energy in rabbi trusts associated with cer~~

tain deferred compensation plans. These securities are reported in other investments in the Consolidated Balance Sheets at fair value with net realized and unrealized gains and losses included in other income in the Consolidated Statements of Income.

~~Debt securities classified as available-for-sale securities~~

include all other debt securities, primarily comprised of securities held in the nuclear decommissioning trusts. These investments are reported at fair value in nuclear decommissioning trust funds in the Consolidated Balance Sheets. Net realized and unrealized gains and losses (including any other-than-temporary impairments) on investments held in Virginia Power’s nuclear decommissioning trusts are recorded to a regulatory liability for certain jurisdictions subject to cost-based regulation. For all other

~~available-for-sale~~

debt securities, including those held in Dominion Energy’s merchant generation nuclear decommissioning trusts, net realized gains and losses (including any other-than-temporary impairments) are included in other income and unrealized gains and losses are reported as a component of AOCI,

~~after-tax.~~

In determining realized gains and losses for debt securities, the cost basis of the security is based on the specific identification method.

Equity securities with readily determinable fair values include securities held by Dominion Energy in rabbi trusts associated with certain deferred compensation plans and securities held by ~~Dominion Energy and Virginia Power~~the Companies in the nuclear decommissioning trusts. ~~Dominion Energy and Virginia Power~~The Companies record all equity securities with a readily determinable fair value, or for which they are permitted to estimate fair value using NAV (or its equivalent), at fair value in nuclear decommissioning trust funds and other investments in the Consolidated Balance Sheets. However, ~~Dominion Energy and Virginia Power~~the Companies may elect a measurement alternative for equity securities without a readily determinable fair value. Under the measurement alternative, equity securities are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. ~~Dominion Energy and Virginia Power~~The Companies qualitatively assess equity securities reported using the measurement alternative to determine whether an investment is impaired on an ongoing basis. Net realized and unrealized gains and losses on equity securities held in ~~Virginia Power’s~~the nuclear decommissioning trusts are ~~recorded~~deferred to a regulatory asset or liability, as applicable, for certain jurisdictions subject to cost-based regulation. For all other equity securities, including those held in Dominion Energy’s ~~merchant~~nonregulated generation nuclear decommissioning trusts and rabbi trusts, net realized and unrealized gains and losses are included in other income in the Consolidated Statements of Income.

Equity Securities without Readily Determinable Fair Values

The Companies account for illiquid and privately held securities without readily determinable fair values under either the equity method or cost method. Equity securities without readily determinable fair values include:

~~Equity method investments~~

~~when the Companies have the ability to exercise significant influence, but not control, over the~~

•
						~~105~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

Equity method investments when the Companies have the ability to exercise significant influence, but not control, over the investee. Dominion ~~Energy and Dominion Energy Gas’~~Energy’s investments are included in investments in equity method affiliates in ~~their~~its Consolidated Balance ~~Sheets.~~Sheets, except for the liability to Atlantic Coast Pipeline or where such investments are classified as held for sale. Dominion Energy ~~and Dominion Energy Gas record~~records equity method adjustments in other income ~~and earnings from equity method investees, respectively,~~ in ~~their~~its Consolidated Statements of Income, including ~~their~~its proportionate share of investee income or loss, gains or losses resulting from investee capital transactions, amortization of certain differences between the carrying value and the equity in the net assets of the investee at the date of investment and other adjustments required by the equity method.

•

Cost method investments when the Companies do not have the ability to exercise significant influence over the investee. The Companies’ investments are included in other investments and nuclear decommissioning trust funds. Cost method investments are reported at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

~~Cost method investments~~

when Dominion Energy and Virginia Power do not have the ability to exercise significant influence over the investee. Dominion Energy and Virginia Power’s investments are included in other investments and nuclear decommissioning trust funds. Cost method investments are reported at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

Other-Than-Temporary Impairment

The Companies periodically review their ~~investments in debt securities and~~ equity method investments to determine whether a decline in fair value should be considered other-than-temporary. If a decline in the fair value of any security is determined to be other-than-temporary, the ~~security~~investment is written down to its fair value at the end of the reporting period.

~~Decommissioning Trust Investments —Special Considerations for Debt Securities~~

~~The recognition provisions of other-than-temporary impairment guidance apply only to~~

Credit Impairment

Effective January 2020, the Companies periodically review their available-for-sale debt securities ~~classified as~~to determine whether a decline in fair value should be considered credit related. If a decline in the fair value of any available-for-sale debt security is determined to be

~~available-for-sale~~

~~held-to-maturity.~~

credit related, the credit-related impairment is recorded to an allowance included in nuclear decommissioning trust funds in the Companies’ Consolidated Balance Sheets at the end of the reporting period, with such allowance for credit losses subject to reversal in subsequent evaluations.

Using information obtained from their nuclear decommissioning trust fixed-income investment managers, ~~Dominion Energy and Virginia Power~~the Companies record in earnings, or defer as applicable for certain jurisdictions subject to cost-based regulation, any unrealized loss for a debt security when the manager intends to sell the debt security or it is

more-likely-than-not

that the manager will have to sell the debt security before recovery of its fair value up to its cost basis. If that is not the case, but the debt security is deemed to have experienced a credit loss, ~~Dominion Energy and Virginia Power~~the Companies record the credit loss in earnings ~~and any~~or defer as applicable for certain jurisdictions subject to cost-based regulation, with the remaining non-credit portion of the unrealized loss recorded in AOCI. Credit losses are evaluated primarily by considering the credit ratings of the issuer, prior instances of

non-performance

by the issuer and other factors.

Inventories

Materials and supplies and fossil fuel inventories are valued primarily using the weighted-average cost method. Stored gas inventory is valued using the weighted-average cost method, except for East Ohio gas distribution operations, which are valued using the LIFO method. Under the LIFO method, current stored gas inventory was valued at ~~$19~~$2 million and ~~$12~~$19 million at December 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. Based on the average price of gas purchased during ~~2019~~2020 and ~~2018,~~2019, the cost of replacing the current portion of stored gas inventory exceeded the amount stated on a LIFO basis by $52 million and $60 million, ~~and $87 million,~~ respectively. ~~As a result of the Dominion Energy Gas~~

~~Restructuring, at December 31, 2018, East Ohio’s stored gas inventory is reported in current assets of discontinued operations in the Consolidated Balance Sheets of Dominion Energy Gas.~~

Gas Imbalances

Natural gas imbalances occur when the physical amount of natural gas delivered from, or received by, a pipeline system or storage facility differs from the contractual amount of natural gas delivered or received. Dominion Energy ~~and Dominion Energy Gas value~~values these imbalances due to, or from, shippers and operators at an appropriate index price at period end, subject to the terms of its tariff for regulated entities. Imbalances are primarily settled

in-kind.

Imbalances due to Dominion Energy ~~and Dominion Energy Gas~~ from other parties are reported in other current assets and ~~gas imbalances, respectively, and~~ imbalances that Dominion Energy ~~and Dominion Energy Gas owe~~owes to other parties are reported in other current liabilities in the Consolidated Balance Sheets.

Goodwill

Dominion Energy ~~and Dominion Energy Gas evaluate~~evaluates goodwill for impairment annually as of April 1 and whenever an event occurs or circumstances change in the interim that would ~~more-~~

~~likely-than-not~~

more-likely-than-not reduce the fair value of a reporting unit below its carrying amount.

New Accounting Standards

Debt with Conversion Options and Contracts in an Entity’s Own Equity

In August 2020, the FASB issued revised accounting guidance for debt with conversion options and contracts in an entity’s own equity. The revised guidance eliminates the ability to assert cash settlement and exclude potential shares from the diluted EPS calculation for a contract that may be settled in stock or cash. The effective date is for interim and annual reporting periods beginning January 1, 2022 and may be adopted through a modified retrospective or fully retrospective method of transition. Upon adoption, Dominion Energy will apply the if-converted method to calculate diluted EPS in connection with any potentially dilutive instruments, or components of instruments, that may be settled in stock or cash, such as the Series A Preferred Stock.

Revenue Recognition

In May 2014, the FASB issued revised accounting guidance for revenue recognition from contracts with customers. The Companies adopted this revised accounting guidance for interim and annual reporting periods beginning January 1, 2018 using the modified retrospective method. Upon the adoption of the standard, Dominion Energy ~~and Dominion Energy Gas~~ recorded the cumulative-effect of a change in accounting principle of $3 million to retained earnings, ~~and membership interests, respectively,~~ and to establish a contract asset related to changes in the timing of revenue recognition for three existing contracts with customers at DETI.

~~As a result of adopting this revised accounting guidance, Dominion Energy records offsetting operating revenue and other energy-related purchases for~~

~~non-cash~~

consideration of performing processing and fractionation services related to NGLs. Such amounts at Dominion Energy were $107 million, recorded in the Consolidated Statements of Income for the year ended December 31, 2018. No such amounts were recorded during the year ended December 31, 2017. Dominion Energy and Dominion Energy Gas no longer record offsetting operating revenue and purchased gas for fuel retained to offset costs on certain transportation and storage arrangements. Such amounts at Dominion Energy were $111 million and at Dominion Energy Gas were $71 million, recorded in the Consolidated Statements of Income for the year ended December 31, 2017.

Financial Instruments

In January 2016, the FASB issued revised accounting guidance for the recognition, measurement, presentation and disclosure of financial instruments. The guidance became effective for the Companies’ interim and annual reporting periods beginning


~~106~~

January 1, 2018 and the Companies adopted the standard using the modified retrospective method. Upon adoption of this guidance for equity securities held at January 1, 2018, ~~Dominion Energy and Virginia Power~~The Companies recorded the cumulative-effect of a change in accounting principle to reclassify net unrealized gains from AOCI to retained earnings and to recognize equity securities previously categorized as cost method investments at fair value (using NAV) in nuclear decommissioning trust funds in the Consolidated Balance Sheets and a cumulative-effect adjustment to retained earnings. Dominion Energy and Virginia Power reclassified approximately $1.1 billion ($734 million

after-tax)

and $119 million ($73 million

after-tax),

respectively, of net unrealized gains from AOCI to retained earnings. ~~Dominion Energy and Virginia Power~~The Companies also

recorded approximately $36 million ($22 million

after-tax)

in net unrealized gains on equity securities previously classified as cost method investments, of which $3 million was recorded to retained earnings and $33 million was recorded to regulatory liabilities for net unrealized gains subject to cost-based regulation. As a result of adopting this revised accounting guidance, Dominion Energy recorded unrealized losses on equity securities, net of regulatory deferrals, of $190 million ($142 million

after-tax)

in other income in the Consolidated Statements of Income for the year ended December 31, 2018, resulting in an $0.22 loss per share for the year ended December 31, 2018. Virginia Power recorded unrealized losses on equity securities, net of regulatory deferrals, of $24 million ($18 million

after-tax)

in other income in the Consolidated Statements of Income for the year ended December 31, 2018.

Leases

In February 2016, the FASB issued revised accounting guidance for the recognition, measurement, presentation and disclosure of leasing arrangements. The update requires that a liability and corresponding

right-of-use

asset are recorded on the balance sheet for all leases, including those leases classified as operating leases, while also refining the definition of a lease. In addition, lessees are required to disclose key information about the amount, timing and uncertainty of cash flows arising from leasing arrangements. Lessor accounting remains largely unchanged.

The guidance became effective for the Companies’ interim and annual reporting periods beginning January 1, 2019. The Companies adopted this revised accounting guidance using a modified retrospective approach, which requires lessees and lessors to recognize and measure leases at the date of adoption. Under this approach, the Companies utilized the transition practical expedient to maintain historical presentation for periods before January 1, 2019. The Companies also applied the other practical expedients, which required no reassessment of whether existing contracts are or contain leases, no reassessment of lease classification for existing leases and no reassessment of existing or expired land easements that were not previously accounted for as leases. In connection with the adoption of this revised accounting guidance, Dominion Energy and Virginia Power ~~and Dominion Energy Gas~~ recorded $504 million ~~$209 million~~ and ~~$64~~$209 million, respectively, of offsetting

right-of-use

assets and liabilities for operating leases in effect at the adoption date. As a result of the ~~Dominion Energy Gas Restructuring, $25~~GT&S and Q-Pipe Transactions, $43 million of such

right-of-use

assets and liabilities for operating leases recorded

~~at Dominion Energy Gas~~ were associated with discontinued operations. See Note 15 for additional information.

Derecognition ~~And~~and Partial Sales Ofof Nonfinancial Assets

In February 2017, the FASB issued revised accounting guidance clarifying the scope of asset derecognition guidance and accounting for partial sales of nonfinancial assets. The guidance became effective for the Companies’ interim and annual reporting periods beginning January 1, 2018, and the Companies adopted the standard using the modified retrospective method. Upon adoption of the standard, Dominion Energy recorded the cumulative-effect of a change in accounting principle to reclassify $127 million from noncontrolling interests to common stock related to the sale of a noncontrolling interest in certain ~~merchant~~nonregulated solar projects completed in December 2015 and January 2016.

~~Net Periodic Pension And Other Postretirement Benefit Costs~~

In March 2017, the FASB issued revised accounting guidance for the presentation of net periodic pension and other postretirement benefit costs. This guidance became effective for the Companies beginning January 1, 2018 and requires that the service cost component of net periodic pension and other postretirement benefit costs be classified in the same line item as other compensation costs arising from services rendered by employees, while all other components of net periodic pension and other postretirement costs are classified outside of income from operations. In addition, only the service cost component remains eligible for capitalization during construction. These changes do not impact the accounting by participants in a multi-employer plan. The standard also recognizes that in the event that a regulator continues to require capitalization of all net periodic benefit costs prospectively, the difference would result in recognition of a regulatory asset or liability. For costs not capitalized for which regulators are expected to provide recovery, a regulatory asset will be established. As such, the amounts eligible for capitalization in the Consolidated Financial Statements of Virginia Power and Dominion Energy Gas, as subsidiary participants in Dominion Energy’s multi-employer plans, will differ from the amounts eligible for capitalization in the Consolidated Financial Statements of Dominion Energy, the plan administrator. These differences will result in a regulatory asset or liability recorded in the Consolidated Financial Statements of Dominion Energy.

Tax Reform

~~In December 2017, the staff of the SEC issued guidance which clarifies accounting for income taxes if information is not yet available or complete and provided for up to a~~

~~one-year~~

measurement period in which to complete the required analyses and accounting. The guidance described three scenarios associated with a company’s status of accounting for income tax reform: (1) a company is complete with its accounting for certain effects of tax reform, (2) a company is able to determine a reasonable estimate for certain effects of tax reform and records that estimate as a provisional amount, or (3) a company is not able to determine a reasonable estimate and therefore continues to apply accounting for income taxes based on the provisions of the tax laws that were in effect immediately prior to the 2017 Tax


						~~107~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

Reform Act being enacted. The Companies have accounted for the effects of the 2017 Tax Reform Act, although additional changes could occur as guidance is issued and finalized as described below. In addition, the major states in which the Companies operate have addressed conformity with some or all of the provisions of the 2017 Tax Reform Act, although some states have modified certain of these provisions.

In August 2018, the U.S. Department of Treasury issued proposed regulations addressing the availability of federal bonus depreciation for the period beginning after September 27, 2017 through December 31, 2017. The application of these changes decreased Dominion Energy’s net operating loss carryforward utilization on its 2017 tax return. The impacts of proposed and final regulations issued in 2019 on the applicability of accelerated depreciation were immaterial at the Companies, as discussed in Note 5.

In November 2018, the U.S. Department of Treasury issued proposed regulations defining interest as any amounts associated with the time value of money or use of funds. These proposed regulations provide guidance for purposes of the exception to the interest limitation for regulated public utilities, the application of the interest limitation to consolidated groups, such as Dominion Energy, and the interest limitation with respect to partnerships and partners in those partnerships. It is unclear when the guidance may be finalized, or whether that guidance could result in a disallowance of a portion of the Companies’ interest deductions in the future.

In February 2018, the FASB issued revised accounting guidance to provide clarification on the application of the 2017 Tax Reform Act for balances recorded within AOCI. The revised guidance provides for stranded amounts within AOCI from the impacts of the 2017 Tax Reform Act to be reclassified to retained earnings. The Companies adopted this guidance for interim and annual reporting periods beginning January 1, 2018 on a prospective basis. In connection with the adoption of this guidance, Dominion Energy reclassified a benefit of $289 million from AOCI to retained earnings and Virginia Power reclassified a benefit of $3 million from AOCI to retained ~~earnings and Dominion Energy Gas reclassified a benefit of $26 million from AOCI to membership interests.~~earnings. The amounts reclassified reflect the reduction in the federal income tax rate, and the federal benefit of state income taxes, on the components of the Companies’ AOCI.

~~Note~~

NOTE 3. ~~Acquisitions And Dispositions~~

ACQUISITIONS AND DISPOSITIONS

Dominion Energy

Disposition of Gas Transmission & Storage Operations to BHE

In July 2020, Dominion Energy entered into an agreement with BHE with a total value of approximately $10 billion, comprised of approximately $4.0 billion of cash consideration (subject to customary closing adjustments) plus the assumption of long-term debt, to sell substantially all of its gas transmission and storage operations, including processing assets, as well as noncontrolling partnership interests in Iroquois, JAX LNG and White River Hub and a controlling interest in Cove Point (consisting of 100% of the general partner interest and 25% of the total limited partner interests). The agreement provides that Dominion Energy retains the assets and obligations of the pension and other postretirement employee benefit plans associated with the operations included in the transaction and relating to services provided through closing. In October 2020, pursuant to a provision in the agreement with BHE, Dominion Energy elected to exclude Dominion Energy Questar Pipeline and certain other affiliated entities from the transaction as approval under the Hart-Scott-Rodino Act had not been obtained by mid-September 2020. Concurrently in October 2020, Dominion Energy

and BHE entered into a separate agreement under which Dominion Energy will sell Dominion Energy Questar Pipeline and certain other affiliated entities to BHE for cash consideration of $1.3 billion and the assumption of related long-term debt.

In November 2020, Dominion Energy completed the GT&S Transaction and received cash proceeds of $2.7 billion. This transaction is structured as an asset sale for tax purposes. Dominion Energy retained a 50% noncontrolling interest in Cove Point that is accounted for as an equity method investment upon closing of the GT&S Transaction as Dominion Energy has the ability to exercise significant influence over, but not control, Cove Point. The retained 50% noncontrolling interest in Cove Point was recognized at its initial fair value of $2.8 billion on the date of close estimated using an income approach and a market approach. The valuation is considered a Level 3 fair value measurement due to the use of significant judgment and unobservable inputs, including projected timing and amount of future cash flows and a discount rate reflecting risks inherent in the future cash flows and market prices. Upon closing the GT&S Transaction, Dominion Energy recognized a gain of $127 million (net of a $1.4 billion write-off of goodwill and a $222 million closing adjustment paid to BHE in December 2020) and an associated tax expense of $336 million, presented in net income (loss) from discontinued operations including noncontrolling interest in Dominion Energy’s Consolidated Statements of Income.

In connection with closing of the GT&S Transaction, Dominion Energy and BHE entered into a transition services agreement under which Dominion Energy will continue to provide specified administrative services to support the operations of the disposed business for up to 24 months after closing. In addition, BHE will provide certain administrative services to Dominion Energy. Dominion Energy recorded revenue of $4 million associated with the transition service agreement in operating revenue in the Consolidated Statements of Income for the year ended December 31, 2020.

Also in November 2020, BHE provided a $1.3 billion deposit to Dominion Energy on the Q-Pipe Transaction. Dominion Energy will be required to repay all or substantially all of this deposit, or issue to BHE an equivalent value in shares of Dominion Energy common stock at Dominion Energy’s option, if the Q-Pipe Transaction does not close by December 30, 2021. Dominion Energy may not solicit or accept offers from alternative buyers for all or a material portion of the Q-Pipe Transaction until after March 31, 2021 and either party may terminate the Q-Pipe Transaction if closing has not occurred on or before June 30, 2021. If the Hart-Scott-Rodino Act approval has not been obtained by June 30, 2021, upon BHE’s request, Dominion Energy will seek an alternative buyer for all or a material portion of the Q-Pipe Transaction. The Q-Pipe Transaction is structured as an asset sale for tax purposes and is expected to close in early 2021, contingent on clearance or approval under the Hart-Scott-Rodino Act, and other customary closing and regulatory conditions. Based on the recorded balances at December 31, 2020, Dominion Energy expects to recognize a pre-tax gain of approximately $450 million ($320 million after tax) upon closing, including the write-off of $191 million of goodwill, but excluding the effects of any closing adjustments.

The operations included in both the GT&S Transaction and the Q-Pipe Transaction are presented in held-for-sale and discontinued operations effective July 2020. As a result, the previously reported amounts have been recast to reflect this presentation and depreciation and amortization ceased on the applicable assets. As Cove Point had previously been consolidated within Dominion Energy’s financial statements, balances associated with Cove Point prior to the closing of the GT&S Transaction are presented within held-for-sale and discontinued operations. See Note 9 for further information regarding Dominion Energy’s equity method investment in Cove Point.

The following table represents selected information regarding the results of operations, which are reported within discontinued operations in Dominion Energy’s Consolidated Statements of Income:

	Year Ended December 31, 2020						Year Ended December 31, 2019				Year Ended December 31, 2018
	GT&S Transaction⁽¹⁾			Q-Pipe Transaction			GT&S Transaction		Q-Pipe Transaction		GT&S Transaction		Q-Pipe Transaction
(millions)
Operating revenue	$	1,710		$	246		$	2,213	$	251	$	2,134	$	247
Operating Expense⁽²⁾⁽³⁾		1,289			96			1,367		131		1,663		135
Other income (loss)		88			1			58		4		68		5
Interest and related charges⁽⁴⁾		372			20			267		20		183		20
Income (loss) before income taxes		137			131			637		104		356		97
Income tax expense (benefit)		334			(9	)		120		23		40		18
Net income (loss) including noncontrolling interests		(197	)		140			517		81		316		79
Noncontrolling interests		106			—			11		—		92		—
Net income (loss) attributable to Dominion Energy	$	(303	)	$	140		$	506	$	81	$	224	$	79

(1)	Operations associated with the GT&S Transaction are through the November 1, 2020 settlement date.

(2)

GT&S Transaction includes a charge of $482 million ($359 million after-tax) recorded in the second quarter of 2020 associated with the probable abandonment of a significant portion of the Supply Header Project as well as the establishment of a $75 million ARO as a result of the cancellation of the Atlantic Coast Pipeline Project. It also includes charges of $219 million ($165 million after-tax) associated with the impairment of certain gathering and processing assets, $127 million ($92 million after-tax) associated with the disallowance of FERC-regulated plant and $37 million ($28 million after-tax) write-off associated with the Eastern Market Access Project all recorded in 2018.

(3)	GT&S Transaction includes gains on sales of assets recorded in 2018 totaling $115 million ($83 million after-tax), associated with the conveyance of Marcellus Shale and Utica and Point Pleasant Shale acreage underneath its natural gas storage fields.

(4)	GT&S Transaction includes a loss of $237 million ($178 million after-tax) recorded in the third quarter of 2020 associated with cash flow hedges of debt-related items that were determined to be probable of not occurring.

The carrying amounts of major classes of assets and liabilities relating to the disposal groups, which are reported as held for sale in Dominion Energy’s Consolidated Balance Sheets, were as follows:

	At December 31, 2020⁽¹⁾		At December 31, 2019
	Q-Pipe Transaction		GT&S Transaction		Q-Pipe Transaction
(millions)
Current assets⁽²⁾	$	47	$	445	$	49
Equity method investments⁽³⁾		35		276		36
Property, plant and equipment, net		1,113		10,764		1,103
Other deferred charges and other assets, including goodwill⁽⁴⁾and intangible assets		224		1,553		225
Current liabilities⁽⁵⁾		30		1,002		37
Long-term debt		426		4,401		425
Other deferred credits and liabilities		154		773		155

(1)	All amounts at December 31, 2020 are classified as current in Dominion Energy’s Consolidated Balance Sheets.

(2)	Includes cash and cash equivalents of $20 million as of December 31, 2019 within the GT&S Transaction and $7 million and $11 million as of December 31, 2020 and December 31, 2019, respectively, within the Q-Pipe Transaction.

(3)	Comprised of equity method investments in Iroquois and JAX LNG within the GT&S Transaction and White River Hub within the Q-Pipe Transaction.

(4)	Includes goodwill of $1.4 billion at December 31, 2019 within the GT&S Transaction and $191 million at both December 31, 2020 and December 31, 2019 within the Q-Pipe Transaction.

(5)	Includes current portions of long-term debt of $699 million as of December 31, 2019, within the GT&S Transaction.

Capital expenditures and significant noncash items relating to the disposal groups included the following:

	Year Ended December 31, 2020				Year Ended December 31, 2019				Year Ended December 31, 2018
	GT&S Transaction⁽¹⁾		Q-Pipe Transaction		GT&S Transaction		Q-Pipe Transaction		GT&S Transaction		Q-Pipe Transaction
(millions)
Capital expenditures	$	292	$	38	$	386	$	42	$	728	$	34
Significant noncash items
Impairment of assets and other charges		469		0		13		1		391		0
Charge related to a voluntary retirement program		0		0		19		3		0		0
Depreciation, depletion and amortization		177		27		322		51		283		57
Accrued capital expenditures		0		1		25		2		56		2

(1)	Operations associated with the GT&S Transaction are through the November 1, 2020 settlement date.

In October 2020, Dominion Energy settled various derivatives related to, but not included in, the GT&S Transaction for a payment of $165 million.

Acquisition of SCANA

In January 2019, Dominion Energy issued 95.6 million shares of Dominion Energy common stock, valued at $6.8 billion, representing 0.6690 of a share of Dominion Energy common stock for each share of SCANA common stock, in connection with the completion of the SCANA Combination. SCANA, through its regulated subsidiaries, is primarily engaged in the generation, transmission and distribution of electricity in the central, southern and southwestern portions of South Carolina and in the distribution of natural gas in North Carolina and South Carolina. In addition, at the closing of the SCANA Combination, SCANA

marketed natural gas to retail customers in the southeast U.S. Following completion of the SCANA Combination, SCANA operates as a wholly-owned subsidiary of Dominion Energy. In addition, SCANA’s debt totaled $6.9 billion at closing. The SCANA Combination expanded Dominion Energy’s portfolio of regulated electric generation, transmission and distribution and regulated natural gas distribution infrastructure operations.

Merger ~~Approval and~~ Conditions

~~Merger Approval~~

The SCANA Combination required approval of SCANA’s shareholders, FERC, the North Carolina Commission, the South Carolina Commission, the Georgia Public Service Commission and the NRC and clearance from the Federal Trade Commission under the Hart-Scott-Rodino Act. All such approvals were received prior to closing of the SCANA Combination.

Various parties filed petitions for rehearing or reconsideration of the SCANA Merger Approval Order. In January 2019, the South Carolina Commission issued an order (1) granting the request of various parties and finding that DESC was imprudent in its actions by not disclosing material information to the South Carolina Office of Regulatory Staff and the South Carolina Commission with regard to costs incurred subsequent to March 2015 and (2) denying the petitions for rehearing or consideration as to other issues raised in the various petitions. The deadline to appeal the SCANA Merger Approval Order and the order on rehearing expired in April 2019, and no party has sought appeal.

Refunds to Customers

As a condition to the SCANA Merger Approval Order, DESC will provide refunds and restitution of $2.0 billion over 20 years with capital support from Dominion Energy.

In September and October 2017, DESC received proceeds totaling $1.1 billion in full satisfaction of its share of a settlement agreement among DESC, Santee Cooper and Toshiba Corporation in connection with Westinghouse and WECTEC, both wholly-owned subsidiaries of Toshiba Corporation and responsible for the engineering and construction of the NND Project, filing for bankruptcy. The purchase price allocation below includes a previously established regulatory liability at DESC totaling $1.1 billion, of which $67 million was considered current, associated with the monetization of the bankruptcy settlement with Toshiba Corporation. In accordance with the terms of the SCANA Merger Approval Order, this regulatory liability, net of amounts that may be required to satisfy any liens against NND Project property, totaling $1.0 billion will be refunded to DESC electric service customers over a

20-year

period ending in 2039.

Additionally, in the first quarter of 2019, DESC recorded a reduction in operating revenue and a corresponding regulatory liability of $1.0 billion, of which $137 million was considered current, representing a refund of amounts previously collected from retail electric customers of DESC for the NND Project to be credited over an estimated

11-year

~~period.~~ period, effective February 2019. As a result, Dominion Energy’s Consolidated ~~Statement~~Statements of Income for the year ended December 31, 2019 includes a $756 million

after-tax

~~charge.~~


~~108~~

charge which is reflected in the Corporate and Other segment.

NND Project

As a condition to the SCANA Merger Approval Order, DESC committed to excluding from rate recovery $2.4 billion of costs related to the NND Project and $180 million of costs associated with the purchase of the Columbia Energy Center power station. Regulatory assets included in SCANA’s historical balance sheet at December 31, 2018 reflected these disallowances.

The remaining regulatory asset associated with the NND Project of $2.8 billion, of which $138 million was considered current, will be collected over a

20-year

period, including a return on investment. In January 2019, DESC filed the ~~NND Project~~capital cost rider in accordance with the terms of the SCANA Merger Approval Order for rates effective in February 2019 for DESC’s retail electric customers. The South Carolina Commission approved this filing in January 2019.

Other Terms and Conditions

•

DESC agreed not to file an application for a general rate case with the South Carolina Commission with a requested effective date earlier than January 2021. See Note 13 for information on the status of DESC’s ongoing base rate case;

•

PSNC will not file an application for a general rate case with the North Carolina Commission any earlier than April 2021;

~~DESC will not file an application for a general rate case with the South Carolina Commission with a requested effective date earlier than January 2021;~~

•

Dominion Energy committed to increasing SCANA’s historical level of corporate contributions to charities by $1 million per year over five years beginning in 2019;

•

Dominion Energy will maintain DESC and PSNC’s headquarters in Cayce, South Carolina and Gastonia, North Carolina, respectively; and

•

Dominion Energy will seek to minimize reductions in local employment by allowing some DES employees supporting shared and common services functions and activities to be located in Cayce, South Carolina where it makes economic and practical sense to do so.

~~PSNC will not file an application for a general rate case with the North Carolina Commission with a requested effective date earlier than April 2021;~~

~~Dominion Energy has committed to increasing SCANA’s historical level of corporate contributions to charities by $1 million per year over five years;~~

~~Dominion Energy will maintain DESC and PSNC’s headquarters in Cayce, South Carolina and Gastonia, North Carolina, respectively; and~~

Purchase Price Allocation

SCANA’s assets acquired and liabilities assumed have been measured at estimated fair value at closing and are included in the Dominion Energy South Carolina ~~Gas Transmission & Storage~~ and Gas Distribution operating segments. The majority of the operations acquired are subject to the rate setting authority of FERC and the North and South Carolina Commissions and are therefore accounted for pursuant to ASC 980,

Regulated Operations

. The fair values of SCANA’s assets and liabilities subject to rate-setting and cost recovery provisions provide revenues derived from costs, including a return on investment of assets and liabilities included in rate base. As such, the fair values of these assets and liabilities equal their carrying values. Accordingly, neither the assets and liabilities acquired, nor the unaudited pro forma financial information, reflect any adjustments related to these amounts.

The fair value of SCANA’s assets acquired and liabilities assumed that are not subject to the rate-setting provisions discussed above and the fair values of SCANA’s investments accounted for under the equity method ~~have been~~were determined using the income approach and the market approach. The valuation of SCANA’s long-term debt is considered a Level 2 fair value measurement. All other valuations are considered Level 3 fair value measurements due to the use of significant judgmental and unobservable inputs, including projected timing and amount of future cash flows and discount rates reflecting risk inherent in the future market prices.

The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed iswas reflected as goodwill. The goodwill reflects the value associated with enhancing Dominion Energy’s portfolio of regulated operations in the growing southeast region of the U.S. The goodwill recognized is not deductible for income tax purposes, and as such, no deferred taxes have been recorded related to goodwill.

The table below shows the allocation of the purchase price to the assets acquired and liabilities assumed at closing, which reflects certain adjustments related to income taxes, as discussed in Note 5, from the preliminary valuation recognized during the measurement period.

	Amount
(millions)
Total current assets⁽¹⁾		$	1,782
Investments⁽²⁾			224
Property, plant and equipment⁽³⁾⁽⁴⁾			11,006
Goodwill			2,609
Regulatory assets⁽⁵⁾			3,940
Other deferred charges and other assets, including intangible assets⁽⁶⁾			430
Total Assets			19,991
Total current liabilities⁽⁷⁾			1,556
Long-term debt			6,707
Deferred income taxes			1,068
Regulatory liabilities			2,706
Other deferred credits and other liabilities⁽⁸⁾			1,115
Total Liabilities			13,152
Total purchase price⁽⁹⁾		$	6,839

(1)	Includes $389 million of cash, restricted cash and equivalents, of which $115 million is considered restricted.

(2)	Includes $31 million for equity method investments. The fair value adjustment on the equity method investments is considered to be equity method goodwill and is not amortized.

(

)

(3)

Includes $105 million of certain property, plant and equipment associated with the NND Project for which Dominion Energy committed to forgo recovery in accordance with the SCANA Merger Approval Order. As a result, Dominion Energy’s Consolidated Statements of Income for the year ended December 31, 2019 include a charge of $105 million ($79 million

after-tax),

included in impairment of assets and other charges (reflected in the Corporate and Other segment).

(

)

(4)

Nonregulated property, plant and equipment, excluding land, will be depreciated on a straight-line basis over the remaining useful lives of such property, primarily ranging from 5 to 78 years.

(

)

(5)

Includes $258 million of certain income

tax-related

regulatory assets associated with the NND Project for which Dominion Energy committed to forgo recovery in accordance with the SCANA Merger Approval Order. See Note 5 for additional information.

(

)

(6)

Intangible assets have an estimated weighted-average amortization period of approximately five years.

(

)

(7)

Includes $40 million outstanding under letters of credit advances, which were repaid in January 2019, as well as $173 million outstanding commercial paper under various credit facilities. ~~As discussed in Note 17, all~~All such credit facilities were terminated in 2019.

(

)

(8)

Includes a $379 million pension and other postretirement benefit liability.

(

)

(9)

Includes stock-based compensation awards with a fair value of $21 million.

Results of Operations and Unaudited Pro Forma Information

The impact of the SCANA Combination on Dominion Energy’s operating revenue was an increase of $3.3 billion and $3.1 billion for the years ended December 31, 2020 and 2019, respectively, in the Consolidated Statements of Income. The impact of the SCANA Combination on Dominion Energy’s net income attributable to Dominion Energy ~~in the Consolidated Statements of Income~~ was an increase of ~~$3.1 billion~~$277 million and a decrease of $1.1 billion for the years ended December 31, 2020 and 2019, respectively, in the Consolidated Statements of Income.

Dominion Energy incurred merger and integration-related costs of $97 million for the year ended December 31, ~~2019, respectively.~~


						~~109~~

~~Combined Notes to~~2020, all of which is recorded in other operations and maintenance expense in the Consolidated ~~Financial~~ Statements ~~Continued~~

of Income. Dominion Energy incurred merger and integration-related costs of $646 million ~~in the Consolidated Statements of Income~~ for the year ended December 31, 2019. The amount for the year ended December 31, 2019 includes $427 million for a charge related to a voluntary retirement program. See Note 22 for additional information. Of the remaining merger and integration-related costs, $210 million ~~was~~is recorded in other operations and maintenance expense and $9 million was recorded in interest and related charges in the Consolidated Statements of Income for the year ended December 31, 2019. During the year ended December 31, 2018, Dominion Energy incurred merger and integration-related costs of $27 million, recorded primarily in other operations and maintenance expense in the Consolidated Statements of Income. These costs consist of professional fees, the charitable contribution commitment described above, employee-related expenses, certain financing costs and other miscellaneous costs.

The following unaudited pro forma financial information reflects the consolidated results of operations of Dominion Energy assuming the SCANA Combination had taken place on January 1, 2018. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of the combined company.

	Twelve Months Ended December 31,
	2019⁽¹⁾		2018⁽¹⁾
(millions, except EPS)
Operating Revenue	$	15,408	$	15,344
Net income attributable to Dominion Energy		3,266		2,081
Earnings Per Common Share – Basic	$	4.04	$	2.78
Earnings Per Common Share – Diluted	$	4.00	$	2.77

Twelve
Months Ended
December 31,

2019
(1)

2018
(1)

(millions, except EPS)

Operating Revenue
$
17,579
$
17,505

Net income attributable to Dominion Energy

3,266

2,081

Earnings Per Common Share – Basic
$
4.04
$
2.78

Earnings Per Common Share – Diluted
$
4.00
$
2.77

(1)	Amounts include adjustments for non-recurring costs directly related to the SCANA Combination.

Sale of Interest Inin Cove Point

In October 2019, Dominion Energy signed an agreement to sell ~~the~~its 25% noncontrolling limited partnership interests in Cove Point ~~not contributed to Dominion Energy Gas in the Dominion Energy Gas Restructuring~~ to Brookfield. In December 2019, the sale was completed and Dominion Energy received cash consideration of $2.1 billion, subject to working capital adjustments. The sale was accounted for by Dominion Energy following the guidance for a change in a parent company’s ownership interest in a consolidated subsidiary. Because Dominion Energy ~~controls~~controlled Cove Point both before and after the sale of the noncontrolling interest, the changes in Dominion Energy’s ownership interest in Cove Point was accounted for as an equity transaction and no gain or loss was recognized.

~~Acquisitions of Wholly-Owned Merchant Solar Projects~~

~~The following table presents significant completed acquisitions of wholly-owned merchant solar projects by Dominion Energy.~~

Completed Acquisition
Date

Seller

Number of
Projects

Project Location

Project Name(s)

Initial
Acquisition
(millions)
(1)

Project
Cost
(millions)
(2)

Date of
Commercial
Operations

MW
Capacity

February 2017

Community Energy Solar, LLC

1

Virginia

Amazon Solar Farm Virginia—Southhampton
$
29
$
205

December 2017

100

March 2017

Solar Frontier Americas Holding LLC

1
(3)
California

Midway II

77

78

June 2017

30

May 2017

Cypress Creek Renewables, LLC

1

North Carolina

IS37

154

160

June 2017

79

June 2017

Hecate Energy Virginia C&C LLC

1

Virginia

Clarke County

16

16

August 2017

10

June 2017

Strata Solar Development, LLC/Moorings Farm 2 Holdco, LLC

2

North Carolina

Fremont, Moorings 2

20

20

November 2017

10

September 2017

Hecate Energy Virginia C&C LLC

1

Virginia

Cherrydale

40

41

November 2017

20

October 2017

Strata Solar Development, LLC

2

North Carolina

Clipperton, Pikeville

20

21

November 2017

10

~~(1)~~

~~The purchase price was primarily allocated to property, plant and equipment.~~

~~(2)~~

~~Includes acquisition cost.~~

~~(3)~~

~~In April 2017, Dominion Energy discontinued efforts on the acquisition of the additional 20 MW solar project from Solar Frontier Americas Holding LLC.~~

In addition during 2016, Dominion Energy acquired 100% of the equity interests of 7 solar projects in Virginia, North Carolina and South Carolina for an aggregate purchase price of $32 million, all of which was allocated to property, plant and equipment. The projects cost $421 million in total, including initial acquisition costs, and generate 221 MW combined. One of the projects commenced commercial operations in 2016 and the remaining projects commenced commercial operations in 2017.

Long-term power purchase, interconnection and operation and maintenance agreements have been executed for all of the projects described above. These projects are included in Contracted Generation. Dominion Energy has claimed federal investment tax credits on these solar projects.


~~110~~

~~Dominion Energy Gas~~

~~Dominion Energy Gas Restructuring~~

The Dominion Energy Gas Restructuring is considered to be a reorganization of entities under common control. As a result, Dominion Energy Gas’ basis in DCP and DMLPHCII, which includes the general partner of Dominion Energy Midstream, a controlling 75% interest in Cove Point, DECG, Dominion Energy Questar Pipeline, a 50% noncontrolling interest in White River Hub and a 25.93% noncontrolling interest in Iroquois, is equal to Dominion Energy’s cost basis in the assets and liabilities of such entities since the applicable inception dates of common control. In November 2019, following completion of the Dominion Energy Gas Restructuring, DCP and DMLPHCII are wholly-owned subsidiaries of Dominion Energy Gas and therefore are consolidated by Dominion Energy Gas. The accompanying Consolidated Financial Statements and Notes of Dominion Energy Gas have been retrospectively adjusted to include the historical results and financial position of DCP and DMLPHCII. The 25% interest in Cove Point retained by Dominion Energy, and subsequently sold to Brookfield in December 2019, and the

~~non-Dominion~~

~~Energy held interest in Dominion Energy Midstream are reflected as noncontrolling interest.~~

The Dominion Energy Gas Restructuring includes the disposition of East Ohio and DGP by Dominion Energy Gas in November 2019. This restructuring represents a strategic shift in the operations of Dominion Energy Gas as Dominion Energy Gas’ operations consist

of LNG import/export and storage and regulated gas transmission and storage operations. As a result, the accompanying Consolidated Financial Statements and Notes of Dominion Energy Gas have been retrospectively adjusted to include the historical results and financial position of East Ohio and DGP as discontinued operations until November 2019, presented within the Corporate and Other segment. As the Dominion Energy Gas Restructuring is considered to be a reorganization of entities under common control, Dominion Energy Gas has reflected the disposition as an equity transaction.

The following table represents selected information regarding the results of operations of East Ohio, which are reported as discontinued operations in Dominion Energy Gas’ Consolidated Statements of Income:

Period Ended
November 6, 2019

Year Ended
December 31, 2018

Year Ended
December 31, 2017

(millions)

Operating revenue
                  $
594
                    $
729
                    $
728

Depreciation and amortization

73

76

71

Other operating expenses

399

444

428

Other income

61

72

50

Interest and related charges

33

37

33

Income tax expense

26

53

86

Net income from discontinued operations

124

191

160

The carrying amounts of major classes of assets and liabilities relating to East Ohio, which are reported as discontinued operations in Dominion Energy Gas’ Consolidated Balance Sheets were as follows:


	~~At December 31, 2018~~
~~(millions)~~
~~Current assets of discontinued operations~~ ~~(1)~~	$	~~423~~
~~Investments~~		2
~~Property, plant and equipment, net~~		~~3,669~~
~~Regulatory assets~~		~~711~~
~~Other deferred charges and other assets, including goodwill and intangible assets~~		~~1,275~~
~~Noncurrent assets of discontinued operations~~		~~5,657~~
~~Current liabilities of discontinued operations~~		~~1,262~~
~~Long-term debt~~		~~1,300~~
~~Deferred income taxes and investment tax credits~~		~~716~~
~~Regulatory liabilities~~		~~747~~
~~Other deferred credits and liabilities~~		~~108~~
~~Noncurrent liabilities of discontinued operations~~		~~2,871~~

~~(1)~~

~~Includes cash and cash equivalents of $9 million as of December 31, 2018.~~

~~Capital expenditures and significant noncash items relating to East Ohio included the following:~~

Period Ended
November 6, 2019

Year Ended
December 31, 2018

Year Ended
December 31, 2017

(millions)

Capital expenditures
                    $
299
                  $
352
                  $
348

Significant noncash items
:

Charge related to a voluntary retirement program

20
— —
Accrued capital expenditures

2

5

8

The following table represents selected information regarding the results of operations of DGP, which are reported as discontinued operations in Dominion Energy Gas’ Consolidated Statements of Income:

Period Ended
November 6, 2019

Year Ended
December 31, 2018

Year Ended
December 31, 2017

(millions)

Operating revenue
                  $
125
                  $
220
                  $
114

Depreciation and amortization

4

15

15

Impairment of assets and related charges

—

219

—

Other operating expenses

97

206

91

Income tax expense (benefit)

7

(53
)
5

Net income (loss) from discontinued operations
                  $
17
                  $
(167
)                   $
3


						~~111~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~The carrying amounts of major classes of assets and liabilities relating to DGP, which are reported as discontinued operations in Dominion Energy Gas’ Consolidated Balance Sheets were as follows:~~


	~~At December 31, 2018~~
~~(millions)~~
~~Current assets of discontinued operations~~ ~~(1)~~	$	21
~~Noncurrent assets of discontinued operations~~ ~~(2)~~		~~192~~
~~Current liabilities of discontinued operations~~		11
~~Noncurrent liabilities of discontinued operations~~		25

~~(1)~~

~~Includes cash and cash equivalents of less than $1 million.~~

~~(2)~~

~~Primarily property, plant and equipment, net.~~

~~Capital expenditures and significant noncash items of DGP included the following:~~

Period Ended
November 6, 2019

Year Ended
December 31, 2018

Year Ended
December 31, 2017

(millions)

Capital expenditures
                 $
11
                             $
6
                  $
8

Significant noncash
items
:

Impairment of assets and related charges

—

(219
) —

~~Note~~

NOTE 4. ~~Operating Revenue~~

OPERATING REVENUE

The Companies’ operating revenue ~~subsequent to the adoption of revised guidance for revenue recognition from contracts with customers,~~ consists of the following:

Year Ended December 31,

2019

2018

(millions)

Dominion Energy

Regulated electric sales:

Residential
$
4,325
$
3,413

Commercial

3,219

2,503

Industrial

683

490

Government and other retail

873

854

Wholesale

176

137

Nonregulated electric sales

926

1,294

Regulated gas sales:

Residential

1,343

818

Commercial

457

221

Other

117

36

Nonregulated gas sales

496

214

Regulated gas transportation and storage:

FERC-regulated

1,057

1,091

State-regulated

742

640

Nonregulated gas transportation and storage

676

442

Other regulated revenues

259

179

Other nonregulated revenues
(1)(2)

415

563

Total operating revenue from contracts with customers

15,764

12,895

Other revenues
(2)(3)

808

471

Total operating revenue
$
16,572
$
13,366

Virginia Power

Regulated electric sales:

Residential
$
3,657
$
3,413

Commercial

2,712

2,503

Industrial

455

490

Government and other retail

823

854

Wholesale

128

137

Other regulated revenues

190

132

Other nonregulated revenues
(1)(2)

71

55

Total operating revenue from contracts with customers

8,036

7,584

Other revenues
(1)(3)

72

35

Total operating revenue
$
8,108
$
7,619

Dominion Energy Gas

Regulated gas sales—wholesale
$
9
$
25

Nonregulated gas sales
(1)

6

7

Regulated gas transportation and storage

1,300

1,249

Nonregulated gas transportation and storage

676

442

Management service revenue
(1)

162

257

Other regulated revenues
(1
)(2
)

7

19

Other nonregulated revenues
(1
)(2
)

5

3

Total operating revenue from contracts with customers

2,165

2,002

Other revenues

4

(6
)
Total operating revenue
$
2,169
$
1,996

Year Ended December 31,	2020		2019		2018
(millions)
Dominion Energy
Regulated electric sales:
Residential	$	4,833	$	4,325	$	3,413
Commercial		3,102		3,219		2,503
Industrial		730		683		490
Government and other retail		868		873		854
Wholesale		128		176		137
Nonregulated electric sales		803		926		1,294
Regulated gas sales:
Residential		1,283		1,343		818
Commercial		457		457		221
Other		88		109		11
Nonregulated gas sales		174		495		210
Regulated gas transportation and storage		801		742		640
Other regulated revenues		327		252		178
Other nonregulated revenues⁽¹⁾⁽²⁾		158		145		122
Total operating revenue from contracts with customers		13,752		13,745		10,891
Other revenues⁽³⁾⁽⁴⁾		420		656		308
Total operating revenue	$	14,172	$	14,401	$	11,199
Virginia Power
Regulated electric sales:
Residential	$	3,677	$	3,657	$	3,413
Commercial		2,342		2,712		2,503
Industrial		380		455		490
Government and other retail		804		823		854
Wholesale		90		128		137
Other regulated revenues		299		190		132
Other nonregulated revenues⁽¹⁾⁽²⁾		69		71		55
Total operating revenue from contracts with customers		7,661		8,036		7,584
Other revenues⁽¹⁾⁽³⁾		102		72		35
Total operating revenue	$	7,763	$	8,108	$	7,619

(1)
~~112~~

~~(1)~~

See Notes 9 and 25 for amounts attributable to related parties and affiliates.

(2)

Amounts above include sales which are considered to be goods transferred at a point in time. For the years ended December 31, 2020, 2019 and 2018, such amounts included ~~$171~~$22 million, $37 million and ~~$241~~$19 million, respectively, at Dominion Energy, ~~and $5 million and $10 million, respectively, at Dominion Energy Gas,~~ primarily consisting of ~~NGL sales.~~sales of commodities related to nonregulated extraction activities and other miscellaneous products. Additionally, amounts above include sales of renewable energy credits. For the years ended December 31, 2020, 2019 and 2018, such sales were $20 million, $24 million and ~~$ 17~~$17 million, respectively, at Dominion Energy and $11 million, $17 million and $11 million, respectively, at Virginia Power.

(3)

~~Includes~~

Amounts above include alternative revenue of $119 million and $82 million for the year ended December 31, 2020 at Dominion Energy and Virginia Power, $66 million and $52 million for ~~the~~ year ended December 31, 2019 at Dominion Energy and Virginia Power, respectively, and $15 million for year ended December 31, 2018 at both Dominion Energy and Virginia Power.

(4)	Amounts above include revenue associated with services provided to entities presented in discontinued operations of $4 million for the year ended December 31, 2020 and $6 million for both years ended December 31, 2019 and 2018.

The table below discloses the aggregate amount of the transaction price allocated to fixed-price performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period and when ~~the Companies expect~~Dominion Energy expects to recognize this revenue. These revenues relate to contracts containing fixed prices where ~~the Companies~~Dominion Energy will earn the associated revenue over time as ~~they stand~~it stands ready to perform services provided. This disclosure does not include revenue related to performance obligations that are part of a contract with original durations of one year or less. In addition, this disclosure does not include expected consideration related to performance obligations for which ~~the Companies elect~~Dominion Energy elects to recognize revenue in the amount ~~they have~~it has a right to invoice.

Revenue expected to be recognized on multi-year
contracts in place at December 31, 2019

2020

2021

2022

2023

2024

Thereafter

Total

(millions)

Dominion Energy
$
1,569
$
1,470
$
1,363
$
1,216
$
1,104
$
12,519
$
19,241

Virginia Power

3

1

—

—

—

—

4

Dominion Energy Gas

1,723

1,624

1,495

1,325

1,185

12,783

20,135

Revenue expected to be recognized on multi-year

contracts in place at December 31, 2020

2021

2022

2023

2024

2025

Thereafter

Total

(millions)

Dominion Energy⁽¹⁾

466

770

(1)	Includes $1 million for Virginia Power in 2021.

Contract assets represent an entity’s right to consideration in exchange for goods and services that the entity has transferred to a customer. At December 31, 2019 and 2018, Dominion Energy’s contract asset balances were $28 million and $42 million, respectively. Dominion Energy Gas’ contract asset balances were $40 million and $58 million at December 31, 2019 and 2018 respectively. Dominion Energy and Dominion Energy Gas’ contract assets are recorded in other deferred charges and other assets in the Consolidated Balance Sheets.

Contract liabilities represent an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration, or the amount that is due, from the customer. At December 31, ~~2019~~2020 and ~~2018,~~2019, Dominion Energy’s contract liability balances were ~~$123~~$130 million and ~~$106~~$102 million, respectively. At December 31, ~~2019~~2020 and ~~2018,~~2019, Virginia Power’s contract liability balances were ~~$24~~$36 million and ~~$22 million, respectively. At December 31, 2019 and 2018, Dominion Energy Gas’ contract liability balances were $20 million and $28~~$24 million, respectively. The Companies’ contract liabilities are recorded in other current liabilities and other deferred credits and other liabilities in the Consolidated Balance Sheets. The Companies’ recognize revenue as they fulfill their obligations to provide service to their customers. During ~~both~~ the years ended December 31, ~~2019~~2020 and ~~2018,~~2019, Dominion Energy recognized revenue of ~~$94~~$97 million and $85 million from the beginning contract liability balance. During the years ended December 31, 2020 and 2019, ~~and 2018~~

Virginia Power recognized revenue of ~~$22~~$24 million and ~~$25~~$22 million, respectively, from the beginning contract liability balance. ~~For years ended December 31, 2019 and 2018, Dominion Energy Gas recognized revenue of $8 million and $3 million, respectively, from the beginning contract liability balance.~~

~~The Companies’ operating revenue, prior to the adoption of revised guidance for revenue recognition from contracts with customers, consisted of the following:~~

Year Ended December 31

2017

(millions)

Dominion Energy

Electric sales:

Regulated
$
7,383

Nonregulated

1,429

Gas sales:

Regulated

1,067

Nonregulated

457

Gas transportation and storage

1,786

Other

464

Total operating revenue
$
12,586

Virginia Power

Regulated electric sales
$
7,383

Other

173

Total operating revenue
$
7,556

Dominion Energy Gas

Gas sales:

Regulated
$
6

Nonregulated

6

Gas transportation and storage

1,291

Other

220

Total operating revenue
$
1,523

~~Note~~

NOTE 5. ~~Income Taxes~~

INCOME TAXES

Judgment and the use of estimates are required in developing the provision for income taxes and reporting of

tax-related

assets and liabilities. The interpretation of tax laws and associated regulations involves uncertainty, since tax authorities may interpret the laws differently. The Companies are routinely audited by federal and state tax authorities. Ultimate resolution of income tax matters may result in favorable or unfavorable impacts to net income and cash flows, and adjustments to

tax-related

assets and liabilities could be material.


						~~113~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

The ~~2017 Tax Reform Act included a broad range~~Companies have accounted for the effects of tax reform provisions affecting the Companies as discussed in Note 2. The 2017 Tax Reform Act reduced the corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017. At the date of enactment, deferred tax assets and liabilities were remeasured based upon the new 21% enacted tax rate expected to apply when temporary differences are realized or settled. The specific provisions related to regulated public utilities in the 2017 Tax Reform Act, ~~generally allow~~although additional changes could occur as guidance is issued and finalized as described below.

In March 2020, the CARES Act was enacted which includes several significant business tax provisions that modify or temporarily suspend certain provisions of the 2017 Tax Reform Act. The CARES Act provisions are intended to improve cash flow and liquidity by, among other things, providing a temporary five-year carryback for certain net operating losses, accelerating the refund of previously generated corporate alternative minimum tax credits and temporarily increased the business interest limitation to 50% of adjusted taxable income for certain businesses. Dominion Energy utilized the income tax provisions of the CARES Act to accelerate the recognition of certain tax attributes, but they did not provide a material benefit.

In July 2020, the U.S. Department of Treasury issued final regulations providing guidance about the limitation on the deduction for business interest expenses under the 2017 Tax Reform Act as modified by the CARES Act. For consolidated groups such as Dominion Energy that have both regulated and nonregulated operations, these rules may result in a temporary disallowance of a portion of Dominion Energy’s interest deductions in the future, although any interest disallowed has an indefinite carryforward period.

In December 2020, federal legislation was enacted that, among other things, provides a two-year extension of the beginning construction deadline for, and delays the phase-down of, the solar energy investment tax credit as well as extending the deadlines and phase-down rules for certain other renewable tax credits. The legislation provides that offshore wind facilities are eligible for the ~~continued deductibility~~investment tax credit if construction on those facilities begins before 2026 with no phase-out. In addition, the U.S. Department of ~~interest expense, changed~~Treasury and the IRS issued guidance for offshore wind that extended the continuity of construction safe harbor to 10 years, which significantly enhances the ability for these projects to qualify for renewable energy tax ~~depreciation of certain property acquired after September 27, 2017, and continued certain rate normalization requirements for accelerated depreciation benefits.~~

credits.

As indicated in Note 2, certain of the Companies’ operations, including accounting for income taxes, are subject to regulatory accounting treatment. For regulated operations, many of the changes in deferred taxes from the 2017 Tax Reform Act represent amounts probable of collection from or ~~refund~~return to customers, and were recorded as either an increase to a regulatory asset or liability. ~~The 2017 Tax Reform Act included provisions that stipulate how these excess deferred~~

~~taxes may be passed back to customers for certain accelerated tax depreciation benefits. Potential refunds of other deferred taxes may be determined by the Companies’ regulators.~~ See Note 13 for more ~~information.~~

~~The Companies have accounted for the effects of the 2017 Tax Reform Act, although changes could occur as additional guidance is issued~~information and finalized, particularly as it relates to the deductibility of interest expense in consolidated groups such as Dominion Energy. In addition, the major states in which the Companies operate have addressed conformity with some or all of the provisions of the 2017 Tax Reform Act, although some states have modified certain of these provisions. The changes in deferred taxes resulting from the 2017 Tax Reform Act, and the Companies’ interpretations of proposed regulations issued in 2018 on the applicability of accelerated depreciation, were recorded as either an increase to a regulatory liability or as an adjustment to the deferred tax provision. The impacts of proposed and final regulations issued in 2019 on the applicability of accelerated depreciation were immaterial at the Companies.current year developments.

Continuing Operations

Details of income tax expense for continuing operations including noncontrolling interests were as follows:

	Dominion Energy									Virginia Power
Year Ended December 31,	2020			2019			2018			2020			2019			2018
(millions)
Current:
Federal	$	(314	)	$	(94	)	$	294		$	364		$	286		$	36
State		(81	)		58			82			71			58			40
Total current expense (benefit)		(395	)		(36	)		376			435			344			76
Deferred:
Federal
Taxes before operating loss carryforwards, investment tax credits and tax reform		12			168			30			(226	)		(128	)		199
2017 Tax Reform Act		0			0			46			0			0			21
Tax utilization expense of operating loss carryforwards		44			119			92			0			0			0
Investment tax credits		311			(51	)		(56	)		(27	)		(34	)		(51	)
State		72			(50	)		34			7			22			55
Total deferred expense (benefit)		439			186			146			(246	)		(140	)		224
Investment tax credit-gross deferral		42			62			2			42			62			2
Investment tax credit-amortization		(3	)		(3	)		(2	)		(2	)		(2	)		(2	)
Total income tax expense	$	83		$	209		$	522		$	229		$	264		$	300

Dominion Energy

Virginia Power

Dominion Energy Gas

Year Ended December 31,

2019

2018

2017

2019

2018

2017

2019

2018

2017

(millions)

Current:

Federal
$
32
$
(45
) $
(1
) $
286
$
36
$
432
$
130
$
(227
) $
75

State

103

108

(26
)
58

40

73

17

31

13

Total current expense (benefit)

135

63

(27
)
344

76

505

147

(196
)
88

Deferred:

Federal

2017 Tax Reform Act impact
(1)

—

46

(851
)
—

21

(93
)
—

(6
)
(246
)
Taxes before operating loss carryforwards, investment tax credits and tax reform

182

436

739

(128
)
199

319

(36
)
343

88

Tax utilization expense (benefit) of operating loss carryforwards

119

92

174

—

—

4

—

—

—

Investment tax credits

(51
)
(56
)
(200
)
(34
)
(51
)
(23
)
—

—

—

State

(93
)
(1
)
132

22

55

59

(10
)
(17
)
5

Total deferred expense (benefit)

157

517

(6
)
(140
)
224

266

(46
)
320

(153
)
Investment tax credit-gross deferral

62

2

5

62

2

5

—

—

—

Investment tax credit-amortization

(3
)
(2
)
(2
)
(2
)
(2
)
(2
)
—

—

—

Total income tax expense (benefit)
$
351
$
580
$
(30
) $
264
$
300
$
774
$
101
$
124
$
(65
)

~~(1)~~

The 2017 Tax Reform Act impact for Dominion Energy Gas includes an expense of $8 million for the year ended December 31, 2018 and a benefit of $93 million for the year ended December 31, 2017 arising from discontinued operations.

~~The 2017 Tax Reform Act reduced~~

In 2020, Dominion Energy’s current income taxes reflect a benefit from continuing operations as the ~~statutory federal~~current income tax ~~rate~~expense associated with gas transmission and storage operations, including taxes on the gain, is reflected in discontinued operations. Dominion Energy’s income tax expense reflects the utilization of investment tax credit carryforwards to ~~21% beginning~~offset a portion of the federal tax gain on the sale. In addition, an $18 million income tax benefit is reflected in ~~January 2018. Accordingly, current~~common shareholders’ equity associated with state deferred taxes on assets and ~~deferred income taxes are recorded at~~liabilities retained in connection with the ~~new 21% rate.~~

GT&S Transaction.

In 2019, the Dominion Energy Gas Restructuring caused changes in tax status at certain of its subsidiaries. The impacts of the changes in tax status decreased deferred income tax expense from continuing operations by $48 million at Dominion ~~Energy and Dominion Energy Gas.~~Energy. In addition, Dominion Energy recognized a taxable gain resulting from the sale of a 25% noncontrolling interest in Cove Point. The direct tax effects of the transactions included a provision for current income taxes ($362 million) and an offsetting benefit for deferred income taxes ($147 million) and were charged to common shareholders’ equity. The utilization of $208 million federal tax credit carryforwards offsetting a portion of the federal tax liability from the transaction were also charged to common shareholders’ equity. In total, the taxes recorded in common shareholders’ equity resulting from this transaction were $215 million.

~~In 2018, Dominion Energy had less than $1 million of state deferred income~~

Discontinued Operations

Income tax expense as a result of the reversal of deferred taxes upon the sale of its interest in Blue Racer and Fairless and Manchester. Dominion Energy’s current federal income taxes primarily include the recognition of a $47 million benefit related to a carryback claim for specified liability losses involving prior tax years.

In 2017, the accounting for the reduction in the corporate income tax rate decreased deferred income tax expense by $851 million at Dominion Energy, $93 million at Virginia Power and $246 million for Dominion Energy Gas for the year ending December 31, 2017. The decrease in deferred income taxes at Dominion Energy primarily relates to the remeasurement of deferred taxes on nonregulated operations and includes the effects at Virginia Power and Dominion Energy Gas. Virginia Power and Dominion Energy Gas have certain regulatory assets and liabilities that have not yet been charged or returned to customers through rates, or on which they do not earn a return, including unrecognized pension and other postretirement benefits. The remeasurement of the deferred taxes on these regulatory balances was charged


~~114~~

to continuing operations in 2017. For ratemaking purposes, Dominion Energy Gas’ subsidiary DETI follows the cash method on pension contributions. Deferred taxes recorded on pension balances as required by GAAP are not included as a component of rates and therefore the remeasurement of these deferred taxes were charged to continuing operations in 2017.

~~Discontinued Operations—Dominion Energy Gas~~

~~Tax expense reported~~(benefit) reflected in discontinued operations is $(204) million, $142 million and $58 million for the ~~period ended November 6, 2019 was $33 million. Tax expense reported in discontinued operations for~~ years ended December 31, 2020, 2019 and 2018, respectively. The 2020 income tax expense reflects a charge of $81 million for the write-off of tax-related regulatory assets associated with the Atlantic Coast Pipeline Project and ~~2017 at Dominion Energy Gas was less than $1~~the absence of a $236 million ~~and $91 million, respectively. Tax expense for discontinued operations included benefits of utilizing an immaterial amount of operating loss carryforwards~~benefit on non-deductible goodwill written off in ~~2018 and $5 million in 2017.~~connection with the GT&S Transaction.

Continuing Operations

For continuing operations including noncontrolling interests, the statutory U.S. federal income tax rate reconciles to the Companies’ effective income tax rate as follows:

	Dominion Energy												Virginia Power
Year Ended December 31,	2020				2019				2018				2020				2019				2018
U.S. statutory rate		21.0		%		21.0		%		21.0		%		21.0		%		21.0		%		21.0		%
Increases (reductions) resulting from:
State taxes, net of federal benefit		2.0				1.5				4.3				4.8				4.5				4.7
Investment tax credits		(9.6	)			(11.4	)			(2.3	)			(4.5	)			(2.9	)			(3.5	)
Production tax credits		(0.7	)			(2.1	)			(0.8	)			(0.7	)			(0.7	)			(0.7	)
Valuation allowances		0.9				0.5				0.4				0				0				0
Reversal of excess deferred income taxes		(5.4	)			(3.2	)			(2.3	)			(2.2	)			(3.1	)			(3.2	)
Federal legislative change		0				0				1.8				0				0				1.3
State legislative change		0				0				(0.8	)			0				0				0
Write-off of regulatory assets		0				21.7				0				0				0				0
Change in tax status		(1.7	)			(5.5	)			0				0				0				0
AFUDC—equity		(0.2	)			(0.2	)			(0.3	)			0				0				(0.5	)
Changes in state deferred taxes associated with assets held for sale		(3.2	)			0				0								0				0
Absence of tax on noncontrolling interest		3.8				(0.2	)			(0.1	)			0				0				0
Employee stock ownership plan deduction		(0.9	)			(1.4	)			(0.5	)			0				0				—
Nondeductible goodwill		0				1.8				0				0				0				0
Other, net		(0.1	)			1.5				(0.4	)			(0.1	)			(0.2	)			(0.1	)
Effective tax rate		5.9		%		24.0		%		20.0		%		18.3		%		18.6		%		19.0		%

Dominion Energy

Virginia Power

Dominion Energy Gas

Year Ended December 31,

2019

2018

2017

2019

2018

2017

2019

2018

2017

U.S. statutory rate

21.0
%
21.0
%
35.0
%
21.0
%
21.0
%
35.0
%
21.0
%
21.0
%
35.0
%
Increases (reductions) resulting from:

State taxes, net of federal benefit

1.3

3.0

2.0

4.5

4.7

3.7

2.5

3.2

2.6

Investment tax credits

(5.7
)
(1.9
)
(6.3
)
(2.9
)
(3.5
)
(0.8
)
—

—

—

Production tax credits

(1.1
)
(0.7
)
(0.7
)
(0.7
)
(0.7
)
(0.4
)
—

—

—

Valuation allowances

0.1

0.3

0.2

—

—

—

(0.2
)
—

0.3

Reversal of excess deferred income taxes

(2.0
)
(2.0
)
—

(3.1
)
(3.2
)
—

(0.8
)
(0.6
)
—

Federal legislative change

—

1.5

(27.5
)
—

1.3

(4.0
)
—

(0.5
)
(41.0
)
State legislative change

—

(0.6
)
—

—

—

—

—

(2.0
) (0.7 )
Write-off
of regulatory assets

10.9

—

—

—

—

—

—

—

—

Change in tax status

(2.8
)
—

—

—

—

—

(6.0
)
—

—

AFUDC—equity

(1.8
)
(0.8
)
(1.4
)
—

(0.5
)
(0.6
)
(0.5
)
(0.3
)
(0.9
)
Employee stock ownership plan deduction

(0.7
)
(0.4
)
(0.6
)
—

—

—

—

—

—

Other, net

1.1

(0.9
)
(1.7
)
(0.2
)
(0.1
)
0.6

(3.4
)
(1)

(4.4
)
(1)

(6.0
)
(1)
Effective tax rate

20.3
%
18.5
%
(1.0
)%
18.6
%
19.0
%
33.5
%
12.6
%
16.4
%
(10.7
)%

~~(1)~~

~~Includes (3.2)%, (4.6)% and (6.7)% relating to the absence of tax on noncontrolling interest in 2019, 2018 and 2017, respectively.~~

For the Companies’ rate-regulated entities, deferred taxes will reverse at the weighted average rate used to originate the deferred tax liability, which in some cases will be 35%. The Companies have recorded an estimate of excess deferred income tax amortization in ~~2019,~~2020, and changes in estimates of amounts probable of collection from or return to customers. The reversal of these excess deferred income taxes will impact the effective tax rate, and ~~may ultimately impact~~ rates charged to customers. See Note 13 for current year developments.

Dominion Energy’s 2020 effective tax rate reflects an income tax benefit of $45 million associated with the remeasurement of consolidated state deferred taxes with the classification of gas transmission and storage operations as held for sale. In addition, Dominion Energy’s effective tax rate reflects an income tax expense of $55 million attributable to the noncontrolling interest primarily associated with the impairment of non-wholly-owned nonregulated solar facilities held in partnerships discussed in Note 10.

In connection with the SCANA Combination, Dominion Energy committed to forgo, or limit, the recovery of certain income

tax-related

regulatory assets associated with the NND Project. Dominion Energy’s effective tax rate reflects deferred income tax expense of $194 million in satisfaction of this commitment. Dominion Energy’s effective tax rate also reflects the changes in consolidated state income taxes resulting from the SCANA Combination.

In 2018, the Companies applied the provisions of proposed regulations addressing the availability of federal bonus depreciation for the period beginning after September 27, 2017 through December 31, 2017. The application of these changes increased Dominion Energy’s 2017 net operating loss carryforward, the benefit of which will be recognized at the 21% rate. As a result, Dominion Energy’s effective tax rate reflects a $23 million increase to deferred income tax expense associated with the remeasurement of this deferred tax asset. The application of these proposed regulations at Dominion Energy Gas had no impact on income tax expense as the changes in, and remeasurement of, deferred tax liabilities increased regulatory liabilities by $35 million, of which $23 million is reflected in noncurrent liabilities of discontinued operations on the Consolidated Balance Sheets. The effects of these changes at Virginia Power were immaterial. These amounts and adjustments represent the Companies’ best estimate based on available information, and could be subject to change based on additional guidance in yet to be finalized regulations. In addition, changes in estimates of amounts probable of return to or collection from customers increased deferred income tax expense at Virginia Power by $23 million and increased regulatory liabilities by $31 million. At Dominion Energy, ~~Gas~~ similar changes in estimates decreased income tax expense by $5 ~~million and regulatory liabilities by $8 million. In Dominion Energy Gas’ discontinued operations, similar changes in estimates increased income tax expense by $8~~ million, which is reflected in income tax expense from continuing operations in the Consolidated Statements of Income, and regulatory liabilities ~~$10~~by $8 million, which are reflected in noncurrent liabilities of discontinued operations on the 2019 Consolidated Balance Sheets. ~~These changes also impacted Dominion Energy.~~ In addition, Dominion Energy ~~and Dominion Energy Gas’~~ effective tax rates ~~reflect~~reflects the impacts of a state legislative change enacted in the second quarter of 2018 that was retroactive to January 1, ~~2018.~~

In 2017, the Companies’ effective tax rates reflect the net benefit of remeasurement of deferred taxes resulting from the lower corporate income tax rate promulgated by the 2017 Tax Reform Act, and the completion of audits by state tax authorities that resulted in the recognition of previously unrecognized tax benefits. At December 31, 2016, Virginia Power’s unrecognized tax benefits included state refund claims for open tax years through 2011. Management believed settlement of the claims, including interest thereon, within the next twelve months was remote. In June 2017, Virginia Power received and accepted a cash offer to settle the refund claims. As a result of the settlement, Virginia Power decreased its unrecognized tax benefits by $8 million, and recognized a $2 million tax benefit, which impacted its effective tax rate. Also in connection2018 associated with ~~this settlement, Virginia Power realized interest income of $11 million, which is reflected in other income in the Consolidated Statements of Income.~~discontinued operations.


						~~115~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

The Companies’ deferred income taxes consist of the following:

	Dominion Energy						Virginia Power
At December 31,	2020			2019			2020			2019
(millions)
Deferred income taxes:
Total deferred income tax assets	$	3,285		$	3,736		$	1,204		$	1,207
Total deferred income tax liabilities		9,069			9,883			3,832			4,058
Total net deferred income tax liabilities	$	5,784		$	6,147		$	2,628		$	2,851
Total deferred income taxes:
Plant and equipment, primarily depreciation method and basis differences	$	5,824		$	6,616		$	3,227		$	3,359
Excess deferred income taxes		(1,142	)		(1,306	)		(656	)		(672	)
Unrecovered NND Project costs		529			553			0			0
DESC rate refund		(140	)		(169	)		0			0
Toshiba Settlement		(204	)		(219	)		0			0
Nuclear decommissioning		991			909			303			290
Deferred state income taxes		702			863			305			302
Federal benefit of deferred state income taxes		(147	)		(184	)		(64	)		(63	)
Deferred fuel, purchased energy and gas costs		(28	)		30			(34	)		1
Pension benefits		239			174			(105	)		(153	)
Other postretirement benefits		(14	)		(37	)		76			62
Loss and credit carryforwards		(1,534	)		(1,832	)		(354	)		(280	)
Valuation allowances		155			161			6			5
Partnership basis differences		593			823			0			0
Other		(40	)		(235	)		(76	)		0
Total net deferred income tax liabilities	$	5,784		$	6,147		$	2,628		$	2,851
Deferred Investment Tax Credits – Regulated Operations		169			130			151			111
Total Deferred Taxes and Deferred Investment Tax Credits	$	5,953		$	6,277		$	2,779		$	2,962

Dominion Energy

Virginia Power

Dominion Energy
Gas

At December 31,
2019
2018
2019
2018
2019
2018
(millions)

Deferred income taxes:

Total deferred income tax assets
$
3,736
$
2,748
$
   1,207

$   1,054

$   206
$
296

Total deferred income tax liabilities

9,883

7,813

4,058

4,020

1,494

1,626

Total net deferred income tax liabilities
$
6,147
$
5,065
$
2,851

$2,966

$1,288
$
1,330

Total deferred income taxes:

Plant and equipment, primarily depreciation method and basis differences
$
6,616
$
4,933
$
3,359
$
3,367
$
742
$
671

Excess deferred income taxes

(1,306
)
(993
)
(672
)
(678
)
(149
)
(156
)
Unrecovered NND Project costs

553

—

—

—

—

—

DESC rate refund

(169
)
—

—

—

—

—

Toshiba Settlement

(219
)
—

—

—

—

—

Nuclear decommissioning

909

815

290

273

—

—

Deferred state income taxes

863

626

302

284

199

203

Federal benefit of deferred state income taxes

(184
)
(132
)
(63
)
(60
)
(42
)
(43
)
Deferred fuel, purchased energy and gas costs

30

60

1

59

—

(1
)
Pension benefits

174

81

(153
)
(132
)
154

134

Other postretirement benefits

(37
)
(5
)
62

55

(6
)
(3
)
Loss and credit carryforwards

(1,832
)
(1,546
)
(280
)
(183
)
(1
)
(5
)
Valuation allowances

161

158

5

5

1

6

Partnership basis differences

823

1,135

—

—

423

570

Other

(235
)
(67
)
—

(24
)
(33
)
(46
)
Total net deferred income tax liabilities
$
6,147
$
5,065
$
2,851

$2,966

$1,288
$
1,330

Deferred Investment Tax Credits – Regulated Operations

130

51

111

51

—

—

Total Deferred Taxes and Deferred Investment Tax Credits
$
6,277
$
5,116
$
2,962

$3,017

$1,288
$
1,330

~~The most significant impact reflected for the 2017 Tax Reform Act is the adjustment of the net accumulated deferred income tax~~

liability for the reduction in the corporate income tax rate to 21%. In addition to amounts recognized in deferred income tax expense, the impacts of the 2017 Tax Reform Act decreased the accumulated deferred income tax liability by $3.1 billion at Dominion Energy, $1.9 billion at Virginia Power and $0.8 billion at Dominion Energy Gas at December 31, 2017, of which $0.4 billion is reflected in noncurrent liabilities of discontinued operations on the Consolidated Balance Sheets. At Dominion Energy, the December 31, 2017 balance sheet reflected the impact of the 2017 Tax Reform Act on our regulatory liabilities which increased our regulatory liabilities by $4.2 billion, and created a corresponding deferred tax asset of $1.1 billion. At Virginia Power, our regulatory liabilities increased $2.6 billion, and created a deferred tax asset of $0.7 billion. At Dominion Energy Gas, regulatory liabilities increased $1.1 billion, of which $0.5 billion is reflected in noncurrent liabilities of discontinued operations on the Consolidated Balance Sheets and created a deferred tax asset of $0.3 billion, of which $0.1 billion is reflected in noncurrent liabilities of discontinued operations on the Consolidated Balance Sheets. These adjustments had no impact on 2017 cash flows.

At December 31, ~~2019,~~2020, Dominion Energy had the following deductible loss and credit carryforwards:

	Deductible		Deferred		Valuation			Expiration
	Amount		Tax Asset		Allowance			Period
(millions)
Federal losses	$	1,169	$	246	$	—		2037
Federal investment credits	—			736	—			2036-2040
Federal production credits	—			86	—			2036-2040
Other federal credits	—			14	—			2036-2039
State losses		3,661		198		(61	)	2020-2040
State minimum tax credits	—			139	—			No expiration
State investment and other credits	—			142		(94	)	2020-2031
Total	$	4,830	$	1,561	$	(155	)

Deductible
Amount

Deferred
Tax Asset

Valuation
Allowance

Expiration
Period

(millions)

Federal losses

$ 1,361
$
286

$ —

2037

Federal investment credits

—

922

—

2035-2039

Federal production credits

—

126

—

2035-2039

Other federal credits

—

40

—

2035-2038

State losses

3,074

173

(57
)
2020-2038

State minimum tax credits

—

165

—

No expiration

State investment and other credits

—

144

(98
)
2020-2031

Total

$4,435
$
1,856

$(155)

At December 31, ~~2019,~~2020, Virginia Power had the following deductible loss and credit carryforwards:

	Deductible		Deferred		Valuation			Expiration
	Amount		Tax Asset		Allowance			Period
(millions)
Federal losses	$	—	$	—	$	—
Federal investment credits	—			294	—			2036-2040
Federal production and other credits	—			51	—			2036-2040
State investment credits	—			9		(6	)	2024
Total	$	—	$	354	$	(6	)

Deductible
Amount

Deferred
Tax Asset

Valuation
Allowance

Expiration
Period

(millions)

Federal investment credits

$ —

$ 213

$ —

2035-2039

Federal production and other credits

—

58

—

2035-2039

State investment credits

—

9

(5
)
2024

Total

$
—

$ 280

$ (5
)

~~At December 31, 2019, Dominion Energy Gas had immaterial deductible loss carryforwards and less than $1 million of credit carryforwards that expire between 2032 and 2037.~~


~~116~~

A reconciliation of changes in the Companies’ unrecognized tax benefits follows:

	Dominion Energy											Virginia Power
	2020			2019					2018			2020		2019			2018
(millions)
Balance at January 1	$	175		$	44				$	38		$	0	$	2		$	4
Acquired unrecognized tax benefits		0			129		⁽¹	⁾		0			0		0			0
Increases-prior period positions		18			0					10			0		0			0
Decreases-prior period positions		(19	)		0					0			0		0			0
Increases-current period positions		1			9					10			0		0			0
Settlements with tax authorities		0			(7	)				(6	)		0		(2	)		(1	)
Expiration of statutes of limitations		(8	)		0					(8	)		0		0			(1	)
Balance at December 31	$	167		$	175				$	44		$	0	$	0		$	2

Dominion Energy

Virginia Power

Dominion Energy
Gas

2019

2018

2017

2019

2018

2017

2019

2018

2017

(millions)

Balance at January 1
$
44
$
38
$
64
$
2
$
4
$
13

$2
$
2

$9

Acquired unrecognized tax benefits

129
(1)

—

—

—

—

—

—

—

—

Increases-prior period positions

—

10

1

—

—

—

—

—

—

Decreases-prior period positions

—

—

(9
)
—

—

(1
)
—

—

—

Increases-current period positions

9

10

5

—

—

—

—

—

—

Settlements with tax authorities

(7
)
(6
)
(23
)
(2
)
(1
)
(8
)
—

—

(7
)
Expiration of statutes of limitations

—

(8
)
—

—

(1
)
—

—

—

—

Balance at December 31
$
175
$
44
$
38
$
—
$
2
$
4

$2
$
2

$2

(1)	Acquired unrecognized tax benefits reflect $106 million plus increases in prior period positions of $76 million and decreases in prior period positions of $53 million that were recorded through purchase accounting.

Certain unrecognized tax benefits, or portions thereof, if recognized, would affect the effective tax rate. Changes in these unrecognized tax benefits may result from remeasurement of amounts expected to be realized, settlements with tax authorities and expiration of statutes of limitations. For Dominion Energy and its subsidiaries, these unrecognized tax benefits were $140 million, $141 million ~~$37 million~~ and ~~$31~~$37 million at December 31, 2020, 2019, ~~2018~~ and ~~2017,~~2018, respectively. For Dominion Energy, the change in these unrecognized tax benefits decreased income tax expense by $6 million in 2020 and increased income tax expense by $3 million and $6 million in 2019 and 2018, respectively, in continuing operations. For discontinued operations, the change in these unrecognized tax benefits increased income tax expense by ~~$3 million and~~ $5 million in ~~2019 and 2018, respectively,~~2020 and decreased income tax expense by $9less than $1 million in ~~2017.~~ both 2019 and 2018.For Virginia Power, these unrecognized tax benefits were less than $1 million ~~$2 million,~~at December 31, 2019 and $3$2 million at December 31, ~~2019, 2018 and 2017, respectively.~~2018. For Virginia Power, the change in these unrecognized tax benefits decreased income tax expense by $2 million in both 2019 and 2018, respectively, and $6 million in 2017. For Dominion Energy Gas, these unrecognized tax benefits were $2 million, at December 31, 2019, 2018 and 2017, respectively. For Dominion Energy Gas, the change in these unrecognized tax benefits decreased income tax expense by less than $1 million in 2019 and 2018, respectively, and $5 million in 2017.

2018.

Dominion Energy participates in the IRS Compliance Assurance Process which provides the opportunity to resolve complex tax matters with the IRS before filing its federal income tax returns, thus achieving certainty for such tax return filing positions agreed to by the IRS. In 2018, Dominion Energy submitted carryback claims for specified liability losses involving prior tax years. ~~These claims are currently subject to~~The IRS ~~examination. With the exception~~concluded its examination of these claims ~~the~~in 2020 with no material adjustments. The IRS has completed its audit of tax years through 2018. The statute of limitations has not yet expired for ~~tax year 2014 and~~ years after ~~2015.~~2016. Although Dominion Energy has not received a final letter indicating no changes to its taxable income for tax year ~~2018,~~2019, no material adjustments are expected. The IRS examination of tax year ~~2019~~2020 is ongoing.

It is reasonably possible that settlement negotiations and expiration of statutes of limitations could result in a decrease in unrecognized tax benefits in ~~2020~~2021 by up to ~~$86~~$69 million for Dominion ~~Energy and less than $1 million for Dominion Energy Gas.~~Energy. If such changes were to occur, other than revisions of the accrual for interest on tax underpayments and overpayments, earnings could increase by up to ~~$23~~$7 million for Dominion ~~Energy and less than $1 million for Dominion Energy Gas.~~

Energy. Otherwise, with regard to ~~2019~~2020 and prior years, ~~Dominion Energy, Virginia Power and Dominion Energy Gas~~the Companies cannot estimate the range of reasonably possible changes to unrecognized tax benefits that may occur in ~~2020.~~

2021.

For each of the major states in which Dominion Energy operates, the earliest tax year remaining open for examination is as follows:

			Earliest
~~State~~	~~Earliest~~ Open Tax ~~Year~~
~~Pennsylvania~~ ~~(1)~~ State		~~2012~~	Year
~~Connecticut~~ Pennsylvania⁽¹⁾		~~2016~~	2012
~~Virginia~~ ~~(2)~~ Connecticut		~~2016~~	2017
~~West~~ Virginia ~~(1)~~ ⁽²⁾		~~2016~~	2017
~~New York~~ ~~(1)~~ West Virginia		~~2015~~	2017
~~Utah~~ New York⁽¹⁾		~~2016~~	2015
Utah	2017
South Carolina		~~2012~~	2013

~~(1)~~

(1)

Considered a major state for ~~Dominion Energy Gas’~~entities presented in discontinued operations.

~~(2)~~

(2)

Considered a major state for Virginia Power’s ~~operations.~~operations

The Companies are also obligated to report adjustments resulting from IRS settlements to state tax authorities. In addition, if Dominion Energy utilizes operating losses or tax credits generated in years for which the statute of limitations has expired, such amounts are generally subject to examination.

~~Note~~

NOTE 6. ~~Fair Value Measurements~~

FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. However, the use of a

mid-market

pricing convention (the

mid-point

between bid and ask prices) is permitted. Fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. This includes not only the credit standing of counterparties involved and the impact of credit enhancements but also the impact of the Companies’ own nonperformance risk on their liabilities. Fair value measurements assume that the transaction occurs in the principal market for the asset or liability (the market with the most volume and activity for the asset or liability from the perspective of the reporting entity), or in the absence of a principal market, the most advantageous market for the asset or liability (the market in which the reporting entity would be able to maximize the amount received or minimize the amount paid). Dominion Energy applies fair value measurements to certain assets and liabilities including commodity, interest rate, and foreign currency derivative instruments, and other investments including those held in nuclear decommissioning, Dominion Energy’s rabbi, and pension and other postretirement benefit plan trusts, in accordance with the requirements discussed above. Virginia Power applies fair


						~~117~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

value measurements to certain assets and liabilities including commodity and interest rate derivative instruments and other investments including those held in the nuclear decommissioning trust, in accordance with the requirements discussed above. Dominion Energy Gas applies fair value measurements to certain assets and liabilities including commodity, interest rate, and foreign currency derivative instruments and other investments including those held in pension and other postretirement benefit plan trusts, in accordance with the requirements described above. The Companies apply credit adjustments to their derivative fair values in accordance with the requirements described above.

Inputs and Assumptions

Fair value is based on actively-quoted market prices, if available. In the absence of actively-quoted market prices, price information is sought from external sources, including industry publications, and to a lesser extent, broker quotes. When evaluating pricing information provided by Designated Contract Market settlement pricing, other pricing services, or brokers, the Companies consider the ability to transact at the quoted price, i.e. if the quotes are based on an active market or an inactive market and to the extent which pricing models are used, if pricing is not readily available. If pricing information from external sources is not available, or if the Companies believe that observable pricing is not indicative of fair value, judgment is required to develop the estimates of fair value. In those cases the unobservable inputs are developed and substantiated using historical information, available market data, third-party data and statistical analysis. Periodically, inputs to valuation models are reviewed and revised as needed, based on historical information, updated market data, market liquidity and relationships and changes in third-party sources.

For options and contracts with option-like characteristics where observable pricing information is not available from external sources, ~~Dominion Energy and Virginia Power~~the Companies generally use a modified Black-Scholes Model that considers time value, the volatility of the underlying commodities and other relevant assumptions when estimating fair value. ~~Dominion Energy and Virginia Power~~The Companies use other option models under special circumstances, including but not limited to Spread Approximation Model and a Swing Option Model. For contracts with unique characteristics, the

Companies may estimate fair value using a discounted cash flow approach deemed appropriate in the circumstances and applied consistently from period to period. For individual contracts, the use of different valuation models or assumptions could have a significant effect on the contract’s estimated fair value.

The inputs and assumptions used in measuring fair value include the following:

For commodity derivative contracts:

•

Forward commodity prices

•

Transaction prices

~~Forward commodity prices~~

•

Price volatility

•

Price correlation

•

Volumes

•

Commodity location

•

Interest rates

~~Transaction prices~~

•

Credit quality of counterparties and the Companies

•

Credit enhancements

•

Time value

~~Price volatility~~

~~Price correlation~~

~~Volumes~~

~~Commodity location~~

~~Interest rates~~

~~Credit quality of counterparties and the Companies~~

~~Credit enhancements~~

~~Time value~~

For interest rate derivative contracts:

•

Interest rate curves

•

Credit quality of counterparties and the Companies

~~Interest rate curves~~

•

Notional value

•

Credit enhancements

•

Time value

~~Credit quality of counterparties and the Companies~~

~~Notional value~~

~~Credit enhancements~~

~~Time value~~

For foreign currency derivative contracts:

•

Foreign currency forward exchange rates

•

Interest rates

~~Foreign currency forward exchange rates~~

•

Credit quality of counterparties and the Companies

•

Notional value

•

Credit enhancements

•

Time value

~~Interest rates~~

~~Credit quality of counterparties and the Companies~~

~~Notional value~~

~~Credit enhancements~~

~~Time value~~

For investments:

•

Quoted securities prices and indices

•

Securities trading information including volume and restrictions

~~Quoted securities prices and indices~~

•

Maturity

•

Interest rates

•

Credit quality

~~Securities trading information including volume and restrictions~~

~~Maturity~~

~~Interest rates~~

~~Credit quality~~

Levels

The Companies also utilize the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

Level 1—Quoted prices (unadjusted) in active markets for identical assets and liabilities that they have the ability to access at the measurement date. Instruments categorized in Level 1 primarily consist of financial instruments such as certain exchange-traded derivatives, and exchange-listed equities, U.S. and international equity securities, mutual funds and certain Treasury securities held in nuclear decommissioning trust funds for Dominion Energy and Virginia Power, benefit plan trust funds for Dominion Energy and Dominion Energy Gas, and rabbi trust funds for Dominion Energy.

Level 2—Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 primarily include commodity forwards and swaps, interest rate swaps, foreign currency swaps and cash and cash equivalents, corporate debt instruments, government securities and other fixed income investments held in nuclear decommissioning trust funds for Dominion Energy and Virginia Power, benefit plan trust funds for Dominion Energy and Dominion Energy Gas and rabbi trust funds for Dominion Energy.

Level 3—Unobservable inputs for the asset or liability, including situations where there is little, if any, market activity for the asset or liability. Instruments categorized in Level 3 for the Companies consist of long-dated commodity derivatives, FTRs, certain natural gas and power options and other modeled commodity derivatives.

•

Level 1—Quoted prices (unadjusted) in active markets for identical assets and liabilities that they have the ability to access at the measurement date. Instruments categorized in Level 1 primarily consist of financial instruments such as certain exchange-traded derivatives, and exchange-listed equities, U.S. and international equity securities, mutual funds and certain Treasury securities held in nuclear decommissioning trust funds for the Companies and benefit plan trust funds and rabbi trust funds for Dominion Energy.

	•
~~118~~								Level 2—Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 primarily include commodity forwards and swaps, interest rate swaps and cash and cash equivalents, corporate debt instruments, government securities and other fixed income investments held in nuclear decommissioning trust funds for the Companies and foreign currency swaps, benefit plan trust funds and rabbi trust funds for Dominion Energy.

•

The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. In these cases, the lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability. Alternative investments, consisting of investments in partnerships, joint ventures and other alternative investments held in nuclear decommissioning and benefit plan trust funds, are generally valued using NAV based on the proportionate share of the fair value as determined by reference to the most recent audited fair value financial statements or fair value statements provided by the investment manager adjusted for any significant events occurring between the investment manager’s and the Companies’ measurement date. Alternative investments recorded at NAV are not classified in the fair value hierarchy.

Transfers out of Level 3 represent assets and liabilities that were previously classified as Level 3 for which the inputs became observable for classification in either Level 1 or Level 2. Because the activity and liquidity of commodity markets vary substantially

between regions and time periods, the availability of observable inputs for substantially the full term and value of the Companies’

over-the-counter

derivative contracts is subject to change.

Level 3 Valuations

The Companies enter into certain physical and financial forwards, futures, options and swaps, which are considered Level 3 as they have one or more inputs that are not observable and are significant to the valuation. The discounted cash flow method is used to value Level 3 physical and financial forwards and futures contracts. An option model is used to value Level 3 physical ~~and financial~~ options. The discounted cash flow model for forwards and futures calculates

mark-to-market

valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return, and credit spreads. The option model calculates

mark-to-market

valuations using variations of the Black-Scholes option model. The inputs into the models are the forward market prices, implied price volatilities, risk-free rate of return, the option expiration dates, the option strike prices, the original sales prices and volumes. For Level 3 fair value measurements, certain forward market prices and implied price volatilities are considered unobservable.

The following table presents Dominion Energy’s quantitative information about Level 3 fair value measurements at December 31, ~~2019.~~2020. The range and weighted average are presented in dollars for market price inputs and percentages for price volatility.

Fair Value
(millions)

Valuation Techniques

Unobservable Input

Range

Weighted
Average
(1)

Assets

Physical and financial forwards:

Natural gas
(2)

$  13

Discounted cash flow

Market price (per Dth)
(3)

(1) -

4

—

FTRs

6

Discounted cash flow

Market price (per MWh)
(3)

(1) - 5

1

Total assets

$  19

Liabilities

Physical and financial forwards:

Natural gas
(2)

$  43

Discounted cash flow

Market price (per Dth)
(3)

(2) - 4

(1
)
FTRs

5

Discounted cash flow

Market price (per MWh)
(3)

(4) - 4

—

Physical options:

Natural gas

8

Option model

Market price (per Dth)
(3)

1 - 4

3

Price volatility
(4)

24% - 66%
37 %
Total liabilities

$  56

	Fair Value (millions)		Valuation Techniques	Unobservable Input		Range	Weighted Average⁽¹⁾
Assets
Physical and financial forwards:
Natural gas⁽²⁾	$	95	Discounted cash flow	Market price (per Dth)	⁽³⁾	(1) - 4		(1	)
FTRs		15	Discounted cash flow	Market price (per MWh)	⁽³⁾	(1) - 4		1
Total assets	$	110
Liabilities
Financial forwards:
FTRs	$	5	Discounted cash flow	Market price (per MWh)	⁽³⁾	(4) - 3		0
Physical options:
Natural gas		2	Option model	Market price (per Dth)	⁽³⁾	2 - 5		4
				Price volatility	⁽⁴⁾	20% - 56%		38	%
Total liabilities	$	7

(1)	Averages weighted by volume.

(2)	Includes basis.

(3)	Represents market prices beyond defined terms for Levels 1 and 2.

(4)	Represents volatilities unrepresented in published markets.

Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:

Significant Unobservable
Inputs

Position

Change to Input

Impact on Fair
Value Measurement

Market price

Buy

~~Buy~~

Increase (decrease)

Gain (loss)

Market price

Sell

~~Sell~~

Increase (decrease)

Loss (gain)

Price volatility

Buy

~~Buy~~

Increase (decrease)

Gain (loss)

Price volatility

Sell

~~Sell~~

Increase (decrease)

Loss (gain)

Nonrecurring Fair Value Measurements

Dominion Energy

See Note 9 for information regarding ~~an impairment charge recognized~~nonrecurring fair value measurements associated with Dominion Energy’s ~~equity method investment~~retained noncontrolling interest in Cove Point, charges related to Fowler ~~Ridge. Also, see Note 9 for information regarding fair value measurements associated with~~Ridge, Dominion Energy’s sale of its interest in Blue Racer and ~~acquisition of its~~Dominion Energy’s retained noncontrolling interest in ~~Wrangler.~~


						~~119~~

~~Combined Notes~~businesses and assets contributed to ~~Consolidated Financial Statements, Continued~~

~~Atlantic Coast Pipeline Guarantee Agreement~~

~~In October 2017, Dominion Energy entered into a guarantee agreement in connection with Atlantic Coast Pipeline’s obligation under a $3.4 billion revolving credit facility.~~Wrangler. See Note 2310 for ~~more~~ information ~~about the guarantee agreement~~regarding an impairment charge recorded associated with Atlantic Coast Pipeline’s revolving credit facility. Dominion Energy recorded a liability of $30 million, the fair value of the guarantee at inception, associated with the guarantee agreement. The fair value was estimated using a discounted cash flow method and is considered a Level 3 fair value measurement due to the use of a significant unobservable input related to the interest rate differential between the interest rate charged on the guaranteed revolving credit facility and the estimated interest rate that would have been charged had the loan not been guaranteed.

~~Dominion Energy Gas~~

~~In the fourth quarter of 2018, subsequent to the announcement of the sale of Dominion Energy’s interest~~non-wholly-owned nonregulated solar facilities in Blue Racer, Dominion Energy Gas conducted a review of strategic alternatives of its remaining gathering and processing assets at DGP. Based on an evaluation of DGP’s long-lived assets for recoverability under a probability weighted approach, Dominion Energy Gas determined the assets were impaired. As a result of this evaluation, Dominion Energy Gas recorded a charge of $219 million ($165 million

~~after-tax)~~

~~in discontinued operations in its Consolidated Statements of Income (reflected in~~

~~the~~

Corporate and Other segment) to write down DGP’s property, plant and equipment to its estimated fair value of $190 million. This charge was recorded in impairment of assets and related charges in Dominion Energy’s Consolidated

~~Statements of Income~~

~~(reflected in~~

~~the~~

Corporate and Other segment). The fair value of the property, plant and equipment was estimated using an income approach and market approach. The valuation is considered a Level 3 fair value measurement due to the use of significant judgmental and unobservable inputs, including projected timing and amount of future cash flows and discount rates reflecting risks inherent in the future cash flows and market prices.

partnerships.

Recurring Fair Value Measurements

Fair value measurements are separately disclosed by level within the fair value hierarchy with a separate reconciliation of fair value measurements categorized as Level 3. Fair value disclosures for assets held in Dominion ~~Energy and Dominion Energy Gas’~~Energy’s pension and other postretirement benefit plans are presented in Note 22.

Dominion Energy

The following table presents Dominion Energy’s assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:

	Level 1		Level 2		Level 3		Total
(millions)
December 31, 2020
Assets
Derivatives:
Commodity	$	0	$	57	$	110	$	167
Interest rate		0		230		0		230
Investments⁽¹⁾:
Equity securities:
U.S.		4,648		0		0		4,648
Fixed income:
Corporate debt instruments		0		629		0		629
Government securities		508		730		0		1,238
Cash equivalents and other		32		15		0		47
Total assets	$	5,188	$	1,661	$	110	$	6,959
Liabilities
Derivatives:
Commodity	$	0	$	48	$	7	$	55
Interest rate		0		431		0		431
Total liabilities	$	0	$	479	$	7	$	486
December 31, 2019
Assets
Derivatives:
Commodity	$	0	$	55	$	19	$	74
Interest rate		0		11		0		11
Foreign currency		0		8		0		8
Investments⁽¹⁾:
Equity securities:
U.S.		4,195		0		0		4,195
Fixed income:
Corporate debt instruments		0		463		0		463
Government securities		473		719		0		1,192
Cash equivalents and other		19		1		0		20
Total assets	$	4,687	$	1,257	$	19	$	5,963
Liabilities
Derivatives:
Commodity	$	0	$	75	$	56	$	131
Interest rate		0		606		0		606
Foreign currency		0		3		0		3
Total liabilities	$	0	$	684	$	56	$	740

Level 1

Level 2

Level 3

Total

(millions)

December 31, 2019

Assets

Derivatives:

Commodity
$
—
$
55

$  19
$
74

Interest rate

—

11

—

11

Foreign currency

—

8

—

8

Investments
(1)
:

Equity securities:

U.S.

4,195

—

—

4,195

Fixed income:

Corporate debt instruments

—

463

—

463

Government securities

473

719

—

1,192

Cash equivalents and other

19

1

—

20

Total assets
$
4,687
$
1,257

$  19
$
5,963

Liabilities

Derivatives:

Commodity
$
—
$
75

$  56
$
131

Interest rate

—

606

—

606

Foreign currency

—

3

—

3

Total liabilities
$
—
$
684

$56
$
740

December 31, 2018

Assets

Derivatives:

Commodity
$
—
$
180

$  70
$
250

Interest rate

—

18

—

18

Foreign currency

—

26

—

26

Investments
(1)
:

Equity securities:

U.S.

3,277

—

—

3,277

Fixed income:

Corporate debt instruments

—

431

—

431

Government securities

455

688

—

1,143

Cash equivalents and other

11

—

—

11

Total assets
$
3,743
$
1,343

$  70
$
5,156

Liabilities

Derivatives:

Commodity
$
—
$
129

$    6
$
135

Interest rate

—

142

—

142

Foreign currency

—

2

—

2

Total liabilities
$
—
$
273

$    6
$
279

(1)

Includes investments held in the nuclear decommissioning trusts and rabbi trusts. Excludes ~~$274~~$340 million and ~~$220~~$274 million of assets at December 31, ~~2019~~2020 and ~~2018,~~2019, respectively, measured at fair value using NAV (or its equivalent) as a practical expedient which are not required to be categorized in the fair value hierarchy.


~~120~~

The following table presents the net change in Dominion Energy’s assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:

	2020			2019			2018
(millions)
Balance at January 1,	$	(37	)	$	64		$	150
Total realized and unrealized gains (losses):
Included in earnings:
Operating Revenue		0			(1	)		(2	)
Electric fuel and other energy-related purchases		(33	)		(22	)		(15	)
Purchased gas		0			2			0
Discontinued operations		1			0			0
Included in other comprehensive income		0			0			1
Included in regulatory assets/liabilities		140			(90	)		(44	)
Settlements		33			17			(27	)
Purchases		0			(10	)		0
Sales		(1	)		6			0
Transfers out of Level 3		0			(3	)		1
Balance at December 31,	$	103		$	(37	)	$	64

2019

2018

2017

(millions)

Balance at January 1,
$
64
$
150
$
139

Total realized and unrealized gains (losses):

Included in earnings:

Operating Revenue

(1
)
(2
)
3

Electric fuel and other energy-related purchases

(22
)
(15
)
(42
)
Purchased gas

2

—

1

Included in other comprehensive income (loss)

—

1

(2
)
Included in regulatory assets/liabilities

(90
)
(44
)
42

Settlements

17

(27
)
6

Purchases

(10
)
—

—

Sales

6

—

—

Transfers out of Level 3

(3
)
1

3

Balance at December 31,
$
(37
) $
64
$
150

The amount of total gains (losses) for the period included in earnings
attributable to the change in unrealized gains (losses) relating to assets
still held at the reporting date:

Operating Revenue
$
—
$
—
$
2


						~~121~~

~~Combined Notes~~

There were 0 unrealized gains and losses included in earnings in the Level 3 fair value category relating to ~~Consolidated Financial Statements, Continued~~

~~VIRGINIA POWER~~

assets/liabilities still held at the reporting date for the years ended December 31, 2020, 2019 and 2018.

Virginia Power

The following table presents Virginia Power’s quantitative information about Level 3 fair value measurements at December 31, ~~2019.~~2020. The range and weighted average are presented in dollars for market price inputs and percentages for price volatility.

	Fair Value (millions)		Valuation Techniques	Unobservable Input		Range	Weighted Average⁽¹⁾
Assets
Physical and financial forwards:
Natural gas⁽²⁾	$	95	Discounted cash flow	Market price (per Dth)	⁽³⁾	(1) - 4		(1	)
FTRs		15	Discounted cash flow	Market price (per MWh)	⁽³⁾	(1) - 4		1
Total assets	$	110
Liabilities
Financial forwards:
FTRs	$	5	Discounted cash flow	Market price (per MWh)	⁽³⁾	(4) - 3		0
Physical options:
Natural gas		2	Option model	Market price (per Dth)	⁽³⁾	2 - 5		4
				Price volatility	⁽⁴⁾	20% - 56%		38	%
Total liabilities	$	7

Fair Value
(millions)

Valuation Techniques

Unobservable Input

Range

Weighted
Average
(1)

Assets

Physical and financial forwards:

Natural gas
(2)

$  13

Discounted cash flow

Market price (per Dth)
(3)

(1)
-
4

—

FTRs

6

Discounted cash flow

Market price (per MWh)
(3)

(1)
-
5

1

Total assets

$  19

Liabilities

Physical and financial forwards:

Natural gas
(2)

$  43

Discounted cash flow

Market price (per Dth)
(3)

(2)
-
4

(1
)
FTRs

5

Discounted cash flow

Market price (per MWh)
(3)

(4)
-
4

—

Physical options:

Natural gas

8

Option model

Market price (per Dth)
(3)

1 - 4

3

Price volatility
(4)

24%—66%
37 %
Total liabilities

$  56

(1)	Averages weighted by volume.

(2)	Includes basis.

(3)	Represents market prices beyond defined terms for Levels 1 and 2.

(4)	Represents volatilities unrepresented in published markets.


~~122~~

Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:

Significant Unobservable
Inputs

Position

Change to Input

Impact on Fair
Value Measurement

Market price

Buy

~~Buy~~

Increase (decrease)

Gain (loss)

Market price

Sell

~~Sell~~

Increase (decrease)

Loss (gain)

Price volatility

Buy

~~Buy~~

Increase (decrease)

Gain (loss)

Price volatility

Sell

~~Sell~~

Increase (decrease)

Loss (gain)

The following table presents Virginia Power’s assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:

	Level 1		Level 2		Level 3		Total
(millions)
December 31, 2020
Assets
Derivatives:
Commodity	$	0	$	5	$	110	$	115
Interest rate		0		66		0		66
Investments⁽¹⁾:
Equity securities:
U.S.		2,171		0		0		2,171
Fixed income:
Corporate debt instruments		0		348		0		348
Government securities		201		309		0		510
Cash equivalents and other		13		0		0		13
Total assets	$	2,385	$	728	$	110	$	3,223
Liabilities
Derivatives:
Commodity	$	0	$	22	$	7	$	29
Interest rate		0		376		0		376
Total liabilities	$	0	$	398	$	7	$	405
December 31, 2019
Assets
Derivatives:
Commodity	$	0	$	3	$	19	$	22
Interest rate		0		2		0		2
Investments⁽¹⁾:
Equity securities:
U.S.		1,920		0		0		1,920
Fixed income:
Corporate debt instruments		0		256		0		256
Government securities		186		361		0		547
Cash equivalents and other		0		1		0		1
Total assets	$	2,106	$	623	$	19	$	2,748
Liabilities
Derivatives:
Commodity	$	0	$	47	$	56	$	103
Interest rate		0		363		0		363
Total liabilities	$	0	$	410	$	56	$	466

Level 1

Level 2

Level 3

Total

(millions)

December 31, 2019

Assets

Derivatives:

Commodity
$
—

$    3

$19
$
22

Interest rate

—

2

—

2

Investments
(1)
:

Equity securities:

U.S.

1,920

—

—

1,920

Fixed income:

Corporate debt instruments

—

256

—

256

Government securities

186

361

—

547

Cash equivalents and other
—
1

—

1

Total assets
$
2,106

$623

$19
$
2,748

Liabilities

Derivatives:

Commodity
$
—

$  47

$56
$
103

Interest rate

—

363

—

363

Total liabilities
$
—

$410

$56
$
466

December 31, 2018

Assets

Derivatives:

Commodity
$
—

$  24

$66
$
90

Interest rate

—

3

—

3

Investments
(1)
:

Equity securities:

U.S.

1,476

—

—

1,476

Fixed income:

Corporate debt instruments

—

221

—

221

Government securities

164

343

—

507

Total assets
$
1,640

$591

$66
$
2,297

Liabilities

Derivatives:

Commodity
$
—

$    9

$  6
$
15

Interest rate

—

88

—

88

Total liabilities
$
—

$  97

$  6
$
103

(1)

Includes investments held in the nuclear decommissioning trusts. Excludes ~~$159~~$167 million and ~~$160~~$159 million of assets at December 31, ~~2019~~2020 and ~~2018,~~2019, respectively, measured at fair value using NAV (or its equivalent) as a practical expedient which are not required to be categorized in the fair value hierarchy.

The following table presents the net change in Virginia Power’s assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:

	2020			2019			2018
(millions)
Balance at January 1,	$	(37	)	$	60		$	147
Total realized and unrealized gains (losses):
Included in earnings:
Electric fuel and other energy-related purchases		(33	)		(22	)		(17	)
Included in regulatory assets/liabilities		140			(88	)		(45	)
Settlements		33			13			(25	)
Balance at December 31,	$	103		$	(37	)	$	60

2019

2018

2017

(millions)

Balance at January 1,
$
60
$
147
$
143

Total realized and unrealized gains (losses):

Included in earnings:

Electric fuel and other energy-related purchases

(22
)
(17
)
(43
)
Included in regulatory assets/liabilities

(88
)
(45
)
40

Settlements

13

(25
)
7

Balance at December 31,
$
(37
) $
60
$
147

There were no0 unrealized gains and losses included in earnings in the Level 3 fair value category relating to assets/liabilities still held at the reporting date for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017.~~

~~Dominion Energy Gas~~

The following table presents Dominion Energy Gas’ assets and liabilities for derivatives that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:

Level 1

Level 2

Level 3

Total

(millions)

December 31, 2019

Assets

Foreign currency

$ —

$8

$   —

$8

Total assets

$ —

$8

$   —

$8

Liabilities

Interest rate

$ —

$83

$   —

$83

Foreign currency

—

3

—

3

Total liabilities

$ —

$86

$   —

$86

December 31, 2018

Assets

Commodity

$ —

$3

$   —

$3

Interest rate

—

2

—

2

Foreign currency

—

26

—

26

Total assets

$ —

$31

$   —

$31

Liabilities

Interest rate

$ —

$17

$   —

$17

Foreign currency

—

2

—

2

Total liabilities

$ —

$  19

$   —

$  19

The following table presents the net change in Dominion Energy Gas’ derivative assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category. There were no changes in assets and liabilities measure at fair value on a recurring basis and included in the Level 3 fair value category during the year ended December 31, 2019.

2018

2017

(millions)

Balance at January 1,

$(2
)
$(2
)
Total realized and unrealized gains (losses):

Included in other comprehensive income (loss)

1

(3
)
Transfers out of Level 3

1

3

Balance at December 31,

$—

$(2
)


						~~123~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

There were no gains and losses included in earnings in the Level 3 fair value category for the years ended December 31, 2019, 2018 and 2017. There were no unrealized gains and losses included in earnings in the Level 3 fair value category relating to assets/liabilities still held at the reporting date for the years ended December 31, 2019, 2018 and 2017.

2018.

Fair Value of Financial Instruments

Substantially all of the Companies’ financial instruments are recorded at fair value, with the exception of the instruments described below, which are reported at historical cost. Estimated fair values have been determined using available market information and valuation methodologies considered appropriate by management. The carrying amount of cash, restricted cash and equivalents, customer and other receivables, affiliated receivables, short-term debt, affiliated current borrowings, payables to affiliates and accounts payable are representative of fair value because of the short-term nature of these instruments. For the Companies’ financial instruments that are not recorded at fair value, the carrying amounts and estimated fair values are as follows:

December 31,	2020				2019
	Carrying Amount		Estimated Fair Value⁽¹⁾		Carrying Amount		Estimated Fair Value⁽¹⁾
(millions)
Dominion Energy
Long-term debt⁽²⁾⁽³⁾	$	31,996	$	38,773	$	32,055	$	36,155
Supplemental 364-Day credit facility borrowings		225		225		—		—
Junior subordinated notes⁽⁴⁾		3,411		3,633		4,797		4,953
Virginia Power
Long-term debt⁽⁴⁾	$	13,207	$	16,455	$	12,326	$	14,281

December 31,

2019

2018

Carrying
Amount

Estimated
Fair
Value
(1)

Carrying
Amount

Estimated
Fair
Value
(1)

(millions)

Dominion Energy

Long-term debt
(2)
$
32,055

$36,155
$
29,952

$31,045

Credit facility borrowings

—

—

73

73

Junior subordinated notes
(3)

4,797

4,953

3,430

3,358

Remarketable subordinated notes
(3)

—

—

1,386

1,340

Virginia Power

Long-term debt
(3)
$
12,326

$14,281
$
11,671

$12,400

Dominion Energy Gas

Long-term debt
(4)
$
5,520

$5,738
$
7,770

$7,803

Credit facility borrowings

—

—

73

73

(1)

Fair value is estimated using market prices, where available, and interest rates currently available for issuance of debt with similar terms and remaining maturities. All fair value measurements are classified as Level 2. The carrying amount of debt issuances with short-term maturities and variable rates refinanced at current market rates is a reasonable estimate of their fair value.

(2)

Carrying amount includes current portions included in securities due within one year and amounts which represent the unamortized debt issuance costs, discount or premium, and foreign currency remeasurement adjustments. At December 31, ~~2019~~2020 and ~~2018,~~December 31, 2019, includes the valuation of certain fair value hedges associated with DominionEnergy’s fixed rate debt of $3 million and $4 million, ~~and $(20) million,~~ respectively.

(3)	Includes amounts classified as held for sale, see Note 3.

(4)	Carrying amount includes current portions included in securities due within one year and amounts which represent the unamortized debt issuance costs, discount or premium.

~~(4)~~

~~Note~~

NOTE 7. ~~Derivatives And Hedge Accounting Activities~~

DERIVATIVES AND HEDGE ACCOUNTING ACTIVITIES

See Note 2 for the Companies’ accounting policies, objectives, and strategies for using derivative instruments. See Note 6 for further information about fair value measurements and associated valuation methods for derivatives.

Derivative assets and liabilities are presented gross on the Companies’ Consolidated Balance Sheets. Dominion ~~Energy’s~~Energy and Virginia Power’s derivative contracts include both

over-the-counter

transactions and those that are executed on an exchange or other trading platform (exchange contracts) and centrally cleared. ~~Virginia Power and Dominion Energy Gas’ derivative contracts include~~

~~over-the-counter~~

~~transactions.~~

Over-the-counter

contracts are bilateral contracts that are transacted directly with a third party. Exchange contracts utilize a financial intermediary, exchange or clearinghouse to enter, execute or clear the transactions. Certain

over-the-counter

and exchange contracts contain contractual rights of setoff through master netting arrangements, derivative clearing agreements and contract default provisions. In addition, the contracts are subject to conditional rights of setoff through counterparty nonperformance, insolvency or other conditions.

In general, most

over-the-counter

transactions and all exchange contracts are subject to collateral requirements. Types of collateral for

over-the-counter

and exchange contracts include cash, letters of credit, and in some cases, other forms of security, none of which are subject to restrictions. Cash collateral is used in the table below to offset derivative assets and liabilities. Certain accounts receivable and accounts payable recognized on the Companies’ Consolidated Balance Sheets, ~~as well as~~ letters of credit and other forms of ~~security,~~securities, as well as certain other long-term debt, all of which are not included in the tables below, are subject to offset under master netting or similar arrangements and would reduce the net exposure. See Note 18 for further information regarding other long-term debt, in the form of restructured derivatives, subject to offset under master netting or similar agreements. See Note 24 for further information regarding credit-related contingent features for the Companies derivative instruments.


~~124~~

Dominion Energy

Balance Sheet Presentation

The tables below present Dominion Energy’s derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in its Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:

	December 31, 2020								December 31, 2019
	Gross Amounts Not Offset in the Consolidated Balance Sheet								Gross Amounts Not Offset in the Consolidated Balance Sheet
	Gross Assets Presented in the Consolidated Balance Sheet⁽¹⁾		Financial Instruments		Cash Collateral Received		Net Amounts		Gross Assets Presented in the Consolidated Balance Sheet⁽¹⁾		Financial Instruments		Cash Collateral Received		Net Amounts
(millions)
Commodity contracts:
Over-the-counter	$	117	$	9	$	0	$	108	$	35	$	21	$	0	$	14
Exchange		49		24		0		25		37		21		0		16
Interest rate contracts:
Over-the-counter		230		13		0		217		11		3		0		8
Foreign currency contracts:
Over-the-counter		0		0		0		0		8		8		0		0
Total derivatives, subject to a master netting or similar arrangement	$	396	$	46	$	0	$	350	$	91	$	53	$	0	$	38

(1)	Excludes $2$1 million and $7$2 million of derivative assets at December 31, 2020 and 2019, ~~and 2018,~~ respectively, which are not subject to master netting or similar arrangements.

	December 31, 2020								December 31, 2019
	Gross Amounts Not Offset in the Consolidated Balance Sheet								Gross Amounts Not Offset in the Consolidated Balance Sheet
	Gross Liabilities Presented in the Consolidated Balance Sheet⁽¹⁾		Financial Instruments		Cash Collateral Paid		Net Amounts		Gross Liabilities Presented in the Consolidated Balance Sheet⁽¹⁾		Financial Instruments		Cash Collateral Paid		Net Amounts
(millions)
Commodity contracts:
Over-the-counter	$	30	$	9	$	0	$	21	$	105	$	21	$	0	$	84
Exchange		24		24		0		0		21		21		0		0
Interest rate contracts:
Over-the-counter		431		13		17		401		606		8		35		563
Foreign currency contracts:
Over-the-counter		0		0		0		0		3		3		0		0
Total derivatives, subject to a master netting or similar arrangement	$	485	$	46	$	17	$	422	$	735	$	53	$	35	$	647

December 31, 2019

December 31, 2018

Gross Amounts Not
Offset in the Consolidated
Balance Sheet

Gross Amounts Not
Offset in the Consolidated
Balance Sheet

Gross Liabilities
Presented in the
Consolidated
Balance Sheet
(1)

Financial
Instruments

Cash
Collateral
Paid

Net
Amounts

Gross Liabilities
Presented in the
Consolidated
Balance Sheet
(1)

Financial
Instruments

Cash
Collateral
Paid

Net
Amounts

(millions)

Commodity contracts:

Over-the-counter

$105

$21

$—

$  84

$  19

$12

$—

$    7

Exchange

21

21

—

—

115

68

47

—

Interest rate contracts:

Over-the-counter

606

8

35

563

142

1

—

141

Foreign currency contracts:

Over-the-counter

3

3

—

—

2

2

—

—

Total derivatives, subject to a master netting or similar arrangement

$735

$53

$35

$647

$278

$83

$47

$148

(1)	Excludes $5$1 million and $1$5 million of derivative liabilities at December 31, 2020 and 2019, ~~and 2018,~~ respectively, which are not subject to master netting or similar arrangements.


						~~125~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

Volumes

The following table presents the volume of Dominion Energy’s derivative activity as of December 31, ~~2019.~~2020. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of their long and short positions.

	Current		Noncurrent
Natural Gas (bcf):
Fixed price ⁽¹⁾		65		0
Basis		190		477
Electricity (MWh):
Fixed price		7,932,760		6,825,680
FTRs		45,249,553		0
Interest rate⁽²⁾	$	850,000,000	$	6,058,894,892

Current

Noncurrent

Natural Gas (bcf):

Fixed price
(1)

79

34

Basis

227

495

Electricity (MWh):

Fixed price
(1)

3,810,015

—

FTRs

46,585,304

—

Liquids (Gal)
(2)

52,374,000

—

Interest rate
(3)
$
2,450,000,000
$
3,976,014,497

Foreign currency
(3)

—
€

250,000,000
€

(1) Includes options.

~~(1)~~

(2)

~~Includes options.~~

~~(2)~~

~~Includes NGLs.~~

~~(3)~~

Maturity is determined based on final settlement period.

AOCI

The following table presents selected information related to gains (losses) on cash flow hedges included in AOCI in Dominion Energy’s Consolidated Balance ~~Sheet~~Sheets at December 31, ~~2019:~~2020:

	AOCI After-Tax			Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax			Maximum Term
(millions)
Commodities:
Gas	$	(1	)	$	(1	)	12 months
Interest rate		(418	)		(42	)	396 months
Total	$	(419	)	$	(43	)

AOCI
After-Tax

Amounts Expected to be
Reclassified to Earnings
During the Next 12 Months
After-Tax

Maximum Term

(millions)

Commodities:

Gas
        $
(4
)                             $
(4
)
24 months

Electricity

19

19

12 months

Other

1

1

12 months

Interest rate

(426
)
(64
)
384 months

Foreign currency

3

(2
)
78 months

Total
        $
(407
)                             $
(50
)

The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., anticipated ~~sales)~~purchases) in earnings, thereby achieving the realization of prices contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in market prices and interest ~~rates and foreign currency exchange~~ rates.


~~126~~

In connection with the GT&S Transaction, certain cash flow hedges of debt-related items became probable of not occurring. See Note 3 for further information.

Fair Value Hedges

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings and presented in the same line item. Gains and losses on derivatives in fair value hedge relationships were immaterial for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017.~~

2018.

The following table presents the amounts recorded on the balance sheet related to cumulative basis adjustments for fair value hedges:

Carrying Amount of the Hedged Asset
(Liability)
(1)

Cumulative Amount of Fair Value
Hedging Adjustments
Included in the Carrying Amount
of the Hedged Assets
(Liabilities)
(2)

December 31,
2019

December 31,
2018

December 31,
2019

December 31,
2018

(millions)

Long-term
debt
            $
(1,154
)             $
(1,631
)                   $
(4
)
$20

	Carrying Amount of the Hedged Asset (Liability)⁽¹⁾						Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Assets (Liabilities)⁽²⁾
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
(millions)
Long-term debt	$	(1,153	)	$	(1,154	)	$	(3	)	$	(4	)

(1)	Includes ~~$(397)~~$(1,153) million and ~~$(892)~~$(397) million related to discontinued hedging relationships at December 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

~~(2)~~

~~Includes $3 million and $8 million of hedging adjustments on discontinued hedging relationships at December 31, 2019 and December 31, 2018, respectively.~~

(2) Includes $(3) million and $3 million of hedging adjustments on discontinued hedging relationships at December 31, 2020 and December 31, 2019, respectively.

Fair Value and Gains and Losses on Derivative Instruments

The following tables present the fair values of Dominion Energy’s derivatives and where they are presented in its Consolidated Balance Sheets:

Fair Value –
Derivatives
under
Hedge
Accounting

Fair Value –
Derivatives
not under
Hedge
Accounting

Total
Fair
Value

(millions)

At December 31, 2019

ASSETS

Current Assets

Commodity

$  30

$37
$
   67

Interest rate

1

—

1

Total current derivative assets
(1)

31

37

68

Noncurrent Assets

Commodity

1

6

7

Interest rate

10

—

10

Foreign currency

8

—

8

Total noncurrent derivative assets
(2)

19

6

25

Total derivative assets

$  50

$43
$
   93

LIABILITIES

Current Liabilities

Commodity

$    6

$77
$
   83

Interest rate

321

1

322

Foreign currency

3

—

3

Total current derivative liabilities
(3)

330

78

408

Noncurrent Liabilities

Commodity

1

47

48

Interest rate

267

17

284

Total noncurrent derivative liabilities
(4)

268

64

332

Total derivative liabilities

$598

$142
$
740

At December 31, 2018

ASSETS

Current Assets

Commodity

$  55

$154
$
209

Interest rate

14

—

14

Total current derivative assets
(1)

69

154

223

Noncurrent Assets

Commodity

6

35

41

Interest rate

4

—

4

Foreign currency

26

—

26

Total noncurrent derivative assets
(2)

36

35

71

Total derivative assets

$105

$189
$
294

LIABILITIES

Current Liabilities

Commodity

$  17

$112
$
129

Interest rate

26

—

26

Foreign currency

2

—

2

Total current derivative liabilities
(3)

45

112

157

Noncurrent Liabilities

Commodity

5

1

6

Interest rate

116

—

116

Total noncurrent derivative liabilities
(4)

121

1

122

Total derivative liabilities

$166

$113
$
279

	Fair Value – Derivatives under Hedge Accounting		Fair Value – Derivatives not under Hedge Accounting		Total Fair Value
(millions)
At December 31, 2020
ASSETS
Current Assets
Commodity	$	0	$	58	$	58
Interest rate		0		9		9
Total current derivative assets⁽¹⁾		0		67		67
Noncurrent Assets
Commodity		0		109		109
Interest rate		66		155		221
Total noncurrent derivative assets⁽²⁾		66		264		330
Total derivative assets	$	66	$	331	$	397
LIABILITIES
Current Liabilities
Commodity	$	0	$	42	$	42
Interest rate		363		10		373
Total current derivative liabilities⁽³⁾		363		52		415
Noncurrent Liabilities
Commodity		0		13		13
Interest rate		19		39		58
Total noncurrent derivative liabilities⁽⁴⁾		19		52		71
Total derivative liabilities	$	382	$	104	$	486
At December 31, 2019
ASSETS
Current Assets
Commodity	$	30	$	37	$	67
Interest rate		1		0		1
Total current derivative assets⁽¹⁾		31		37		68
Noncurrent Assets
Commodity		1		6		7
Interest rate		10		0		10
Foreign currency		8		0		8
Total noncurrent derivative assets⁽²⁾		19		6		25
Total derivative assets	$	50	$	43	$	93
LIABILITIES
Current Liabilities
Commodity	$	6	$	77	$	83
Interest rate		321		1		322
Foreign currency		3		0		3
Total current derivative liabilities⁽³⁾		330		78		408
Noncurrent Liabilities
Commodity		1		47		48
Interest rate		267		17		284
Total noncurrent derivative liabilities⁽⁴⁾		268		64		332
Total derivative liabilities	$	598	$	142	$	740

(1)
						~~127~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~(1)~~

Current derivative assets ~~are presented~~include $63 million and $61 million in other current assets in Dominion Energy’s Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively. The remainder is recorded in current assets held for sale in Dominion Energy’s Consolidated Balance Sheets.

(2)

Noncurrent derivative assets ~~are presented~~include $330 million and $16 million in other deferred charges and other assets in Dominion Energy’s Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively. The remainder is recorded in noncurrent assets held for sale in Dominion Energy’s Consolidated Balance Sheets.

(3)

Current derivative liabilities ~~are presented~~include $412 million and $394 million in other current liabilities in Dominion Energy’s Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively. The remainder is recorded in current liabilities held for sale in Dominion Energy’s Consolidated Balance Sheets.

(4)

Noncurrent derivative liabilities ~~are presented~~include $71 million and $329 million in other deferred credits and other liabilities in Dominion Energy’s Consolidated Balance Sheets as of December 31, 2020 and 2019, respectively. The remainder is recorded in noncurrent liabilities held for sale in Dominion Energy’s Consolidated Balance Sheets.

The following tables present the gains and losses on Dominion Energy’s derivatives, as well as where the associated activity is presented in its Consolidated Balance Sheets and Statements of Income:

Derivatives in cash flow hedging relationships

Amount of
Gain (Loss)
Recognized
in AOCI on
Derivatives
(Effective
Portion)
(1)

Amount of
Gain (Loss)
Reclassified
From AOCI
to Income

Increase
(Decrease) in
Derivatives
Subject to
Regulatory
Treatment
(2)

(millions)

Year Ended December 31, 2019

Derivative type and location of gains (losses):

Commodity:

Operating revenue

$146

Purchased gas

(3
)
Total commodity

$125

$143

$   —

Interest rate
(3)

(252
)
(54
)
(255
)
Foreign currency
(4)

(18
)
(6
)
—

Total

$(145
)
$  83

$(255
)
Year Ended December 31, 2018

Derivative type and location of gains (losses):

Commodity:

Operating revenue

$(90
)
Electric fuel and other energy-related purchases

14

Total commodity

$  64

$(76
)
$   —

Interest rate
(3)
(18 ) (48 )
39

Foreign currency
(4)
(6 ) (13 )
—

Total

$  40

$(137
)
$   39

Year Ended December 31, 2017

Derivative type and location of gains (losses):

Commodity:

Operating revenue

$  81

Purchased gas
(2 )
Total commodity

$    1

$  79

$   —

Interest rate
(3)
(8 ) (52 ) (58 )
Foreign currency
(4)

18

20

—

Total

$  11

$  47

$  (58
)

Derivatives in cash flow hedging relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives ⁽¹⁾			Amount of Gain (Loss) Reclassified From AOCI to Income			Increase (Decrease) in Derivatives Subject to Regulatory Treatment⁽²⁾
(millions)
Year Ended December 31, 2020
Derivative type and location of gains (losses):
Commodity:
Operating revenue				$	25
Purchased gas					(4	)
Discontinued operations					2
Total commodity	$	0		$	23		$	0
Interest rate:
Interest and related charges				$	(83	)
Discontinued operations					(236	)
Total interest rate	$	(309	)	$	(319	)	$	(332	)
Foreign currency⁽³⁾		(11	)		(6	)		0
Total	$	(320	)	$	(302	)	$	(332	)
Year Ended December 31, 2019
Derivative type and location of gains (losses):
Commodity:
Operating revenue				$	142
Purchased gas					(3	)
Discontinued operations					4
Total commodity	$	125		$	143		$	0
Interest rate:
Interest and related charges				$	(49	)
Discontinued operations					(5	)
Total interest rate	$	(252	)	$	(54	)	$	(255	)
Foreign currency⁽³⁾		(18	)		(6	)		0
Total	$	(145	)	$	83		$	(255	)
Year Ended December 31, 2018
Derivative type and location of gains (losses):
Commodity:
Operating revenue				$	(82	)
Electric fuel and other energy-related purchases					14
Discontinued operations					(8	)
Total commodity	$	64		$	(76	)	$	—
Interest rate:
Interest and related charges				$	(43	)
Discontinued operations					(5	)
Total interest rate	$	(18	)	$	(48	)	$	39
Foreign currency⁽³⁾		(6	)		(13	)		0
Total	$	40		$	(137	)	$	39

(1)	Amounts deferred into AOCI have no associated effect in Dominion Energy’s Consolidated Statements of Income.

(2)	Represents net derivative activity deferred into and amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Dominion Energy’s Consolidated Statements of Income.

(3)	Amounts recorded in Dominion Energy’s Consolidated Statements of Income are classified in ~~interest and related charges.~~discontinued operations.

~~(4)~~

~~Amounts recorded in Dominion Energy’s Consolidated Statements of Income are classified in other income.~~


~~128~~

Derivatives not designated as hedging instruments	Amount of Gain (Loss) Recognized in Income on Derivatives⁽¹⁾
Year Ended December 31,	2020			2019			2018
(millions)
Derivative type and location of gains (losses):
Commodity:
Operating revenue	$	73		$	41		$	(11	)
Purchased gas		(20	)		(22	)		4
Electric fuel and other energy-related purchases		(104	)		(46	)		(9	)
Discontinued operations		(11	)		(2	)		(10	)
Interest rate:
Interest and related charges		87			3			0
Discontinued operations		5			0			0
Foreign currency:
Discontinued operations		12			0			0
Total	$	42		$	(26	)	$	(26	)

Derivatives not designated as hedging instruments

Amount of Gain (Loss) Recognized in
Income on Derivatives
(1)

Year Ended December 31,

2019

2018

2017

(millions)

Derivative type and location of gains (losses):

Commodity:

Operating revenue
            $
45
        $
(28
) $
18

Purchased gas

(28
)
11

(3
)
Electric fuel and other energy-related purchases

(46
)
(9
)
(59
)
Other operations & maintenance

—

—

(1
)
Interest rate

3

—

—

Total
            $
(26
)         $
(26
) $
(45
)

(1)	Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Dominion Energy’s Consolidated Statements of Income.

Virginia Power

Balance Sheet Presentation

The tables below present Virginia Power’s derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in its Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:

	December 31, 2020								December 31, 2019
	Gross Amounts Not Offset in the Consolidated Balance Sheet								Gross Amounts Not Offset in the Consolidated Balance Sheet
	Gross Assets Presented in the Consolidated Balance Sheet⁽¹⁾		Financial Instruments		Cash Collateral Received		Net Amounts		Gross Assets Presented in the Consolidated Balance Sheet⁽¹⁾		Financial Instruments		Cash Collateral Received		Net Amounts
(millions)
Commodity contracts:
Over-the-counter	$	111	$	6	$	0	$	105	$	19	$	18	$	0	$	1
Exchange		1		1		0		0		—		0		0		—
Interest rate contracts:
Over-the-counter		66		7		0		59		2		0		0		2
Total derivatives, subject to a master netting or similar arrangement	$	178	$	14	$	0	$	164	$	21	$	18	$	0	$	3

(1)	Excludes $3 million and ~~$26~~$3 million of derivative assets at December 31, ~~2019~~2020 and ~~2018,~~2019, respectively, which are not subject to master netting or similar arrangements.

December 31, 2019

December 31, 2018

Gross Amounts Not Offset in the
Consolidated Balance Sheet

Gross Amounts Not Offset in the
Consolidated Balance Sheet

Gross Liabilities
Presented in the
Consolidated
Balance Sheet
(1)

Financial
Instruments

Cash
Collateral
Paid

Net
Amounts

Gross Liabilities
Presented in the
Consolidated
Balance Sheet
(1)

Financial
Instruments

Cash
Collateral
Paid

Net
Amounts

(millions)

Commodity contracts:

Over-the-counter

$  59

$18

$—

$  41

$  6

$6

$—

$—

Interest rate contracts:

Over-the-counter

363

—

—

363

88

—

—

88

Total derivatives, subject to a master netting or similar arrangement

$422

$18

$—

$404

$94

$6

$—

$88

	December 31, 2020								December 31, 2019
	Gross Amounts Not Offset in the Consolidated Balance Sheet								Gross Amounts Not Offset in the Consolidated Balance Sheet
	Gross Liabilities Presented in the Consolidated Balance Sheet⁽¹⁾		Financial Instruments		Cash Collateral Paid		Net Amounts		Gross Liabilities Presented in the Consolidated Balance Sheet⁽¹⁾		Financial Instruments		Cash Collateral Paid		Net Amounts
(millions)
Commodity contracts:
Over-the-counter	$	6	$	6	$	0	$	0	$	59	$	18	$	0	$	41
Exchange		1		1		0		0		0		0		0		0
Interest rate contracts:
Over-the-counter		376		7		0		369		363		0		0		363
Total derivatives, subject to a master netting or similar arrangement	$	383	$	14	$	0	$	369	$	422	$	18	$	0	$	404

(1)	Excludes ~~$44~~$22 million and $9$44 million of derivative liabilities at December 31, ~~2019~~2020 and ~~2018,~~2019, respectively, which are not subject to master netting or similar arrangements.


						~~129~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

Volumes

The following table presents the volume of Virginia Power’s derivative activity at December 31, ~~2019.~~2020. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of their long and short positions.

	Current		Noncurrent
Natural Gas (bcf):
Fixed price⁽¹⁾		30		—
Basis		134		473
Electricity (MWh):
Fixed price		928,560		350,400
FTRs		45,249,553		—
Interest rate⁽²⁾	$	850,000,000	$	1,200,000,000

Current

Noncurrent

Natural Gas (bcf):

Fixed price
(1)

41

9

Basis

132

448

Electricity (MWh):

FTRs

46,585,304

—

Interest rate
(2)
$
900,000,000
$
950,000,000

(1)	Includes options.

(2)	Maturity is determined based on final settlement period.

AOCI

The following table presents selected information related to losses on cash flow hedges included in AOCI in Virginia Power’s Consolidated Balance ~~Sheet~~Sheets at December 31, ~~2019:~~2020:

	AOCI After-Tax			Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax			Maximum Term
(millions)
Interest rate	$	(60	)	$	(2	)	396 months
Total	$	(60	)	$	(2	)

AOCI
After-Tax

Amounts Expected to be
Reclassified to Earnings
During the Next 12 Months
After-Tax

Maximum
Term

(millions)

Interest rate
            $
(34
)                                 $
(1
)
384 months

Total
            $
(34
)                                 $
(1
)

The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interest payments) in earnings, thereby achieving the realization of interest rates contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in interest rates.


~~130~~

Fair Value and Gains and Losses on Derivative Instruments

The following tables present the fair values of Virginia Power’s derivatives and where they are presented in its Consolidated Balance Sheets:

Fair Value –
Derivatives
under
Hedge
Accounting

Fair Value –
Derivatives
not under
Hedge
Accounting

Total
Fair
Value

(millions)

At December 31, 2019

ASSETS

Current Assets

Commodity

$  —

$  20
$
20

Total current derivative assets
(1)

—

20

20

Noncurrent Assets

Commodity

—

2

2

Interest rate

2

—

2

Total noncurrent derivative assets
(2)

2

2

4

Total derivative assets

$    2

$  22
$
24

LIABILITIES

Current Liabilities

Commodity

$  —

$  58
$
58

Interest rate

185

—

185

Total current derivative liabilities

185

58

243

Noncurrent Liabilities

Commodity

—

45

45

Interest rate

178

—

178

Total noncurrent derivatives liabilities
(3)

178

45

223

Total derivative liabilities

$363

$103
$
466

At December 31, 2018

ASSETS

Current Assets

Commodity

$  —

$  60
$
60

Interest rate

3

—

3

Total current derivative assets
(1)

3

60

63

Noncurrent Assets

Commodity

—

30

30

Total noncurrent derivative assets
(2)

—

30

30

Total derivative assets

$    3

$  90
$
93

LIABILITIES

Current Liabilities

Commodity

$  —

$  15
$
15

Interest rate

10

—

10

Total current derivative liabilities

10

15

25

Noncurrent Liabilities

Interest rate

78

—

78

Total noncurrent derivative liabilities
(3)

78

—

78

Total derivative liabilities

$  88

$  15
$
103

	Fair Value – Derivatives under Hedge Accounting		Fair Value – Derivatives not under Hedge Accounting		Total Fair Value
(millions)
At December 31, 2020
ASSETS
Current Assets
Commodity	$	0	$	22	$	22
Total current derivative assets⁽¹⁾		0		22		22
Noncurrent Assets
Commodity		0		93		93
Interest rate		66		0		66
Total noncurrent derivative assets⁽²⁾		66		93		159
Total derivative assets	$	66	$	115	$	181
LIABILITIES
Current Liabilities
Commodity	$	0	$	28	$	28
Interest rate		362		0		362
Total current derivative liabilities		362		28		390
Noncurrent Liabilities
Commodity		0		1		1
Interest rate		14		0		14
Total noncurrent derivatives liabilities ⁽³⁾		14		1		15
Total derivative liabilities	$	376	$	29	$	405
At December 31, 2019
ASSETS
Current Assets
Commodity	$	0	$	20	$	20
Interest rate		0		0		0
Total current derivative assets⁽¹⁾		0		20		20
Noncurrent Assets
Commodity		0		2		2
Interest rate		2		0		2
Total noncurrent derivative assets⁽²⁾		2		2		4
Total derivative assets	$	2	$	22	$	24
LIABILITIES
Current Liabilities
Commodity	$	0	$	58	$	58
Interest rate		185		0		185
Total current derivative liabilities		185		58		243
Noncurrent Liabilities
Commodity		0		45		45
Interest rate		178		0		178
Total noncurrent derivatives liabilities ⁽³⁾		178		45		223
Total derivative liabilities	$	363	$	103	$	466

(1)	Current derivative assets are presented in other current assets in Virginia Power’s Consolidated Balance Sheets.

(2)	Noncurrent derivative assets are presented in other deferred charges and other assets in Virginia Power’s Consolidated Balance Sheets.

(3)	Noncurrent derivative liabilities are presented in other deferred credits and other liabilities in Virginia Power’s Consolidated Balance Sheets.

The following tables present the gains and losses on Virginia Power’s derivatives, as well as where the associated activity is presented in its Consolidated Balance Sheets and Statements of Income:

Derivatives in cash flow hedging relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives ⁽¹⁾			Amount of Gain (Loss) Reclassified From AOCI to Income			Increase (Decrease) in Derivatives Subject to Regulatory Treatment⁽²⁾
(millions)
Year Ended December 31, 2020
Derivative type and location of gains (losses):
Interest rate⁽³⁾	$	(37	)	$	(2	)	$	(338	)
Total	$	(37	)	$	(2	)	$	(338	)
Year Ended December 31, 2019
Derivative type and location of gains (losses):
Interest rate⁽³⁾	$	(30	)	$	(1	)	$	(259	)
Total	$	(30	)	$	(1	)	$	(259	)
Year Ended December 31, 2018
Derivative type and location of gains (losses):
Interest rate⁽³⁾	$	2		$	(1	)	$	39
Total	$	2		$	(1	)	$	39

(1)	Amounts deferred into AOCI have no associated effect in Virginia Power’s Consolidated Statements of Income.

(2)	Represents net derivative activity deferred into and amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Virginia Power’s Consolidated Statements of Income.

(3)	Amounts recorded in Virginia Power’s Consolidated Statements of Income are classified in interest and related charges.

Derivatives not designated as hedging instruments	Amount of Gain (Loss) Recognized in Income on Derivatives⁽¹⁾
Year Ended December 31,	2020			2019			2018
(millions)
Derivative type and location of gains (losses):
Commodity⁽²⁾	$	(104	)	$	(45	)	$	2
Total	$	(104	)	$	(45	)	$	2

(1)	Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Virginia Power’s Consolidated Statements of Income.

(2)	Amounts recorded in Virginia Power’s Consolidated Statements of Income are classified in electric fuel and other energy-related purchases.


						~~131~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~Dominion Energy Gas~~

~~Balance Sheet Presentation~~

The tables below present Dominion Energy Gas’ derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in its Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:

December 31, 2019

December 31, 2018

Gross Amounts Not Offset in the Consolidated
Balance Sheet

Gross Amounts Not Offset in the Consolidated
Balance Sheet

Gross Assets
Presented in the
Consolidated
Balance Sheet

Financial
Instruments

Cash
Collateral
Received

Net
Amounts

Gross Assets
Presented in the
Consolidated
Balance Sheet

Financial
Instruments

Cash
Collateral
Received

Net
Amounts

(millions)

Commodity contracts:

Over-the-counter

$  —

$  —

$  —

$  —

$    3

$  —

$  —

$    3

Interest rate contracts:

Over-the-counter

—

—

—

—

2

—

—

2

Foreign currency contracts:

Over-the-counter

8

8

—

—

26

2

—

24

Total derivatives, subject to a master netting or similar arrangement

$    8

$    8

$  —

$  —

$  31

$    2

$  —

$  29

December 31, 2019

December 31, 2018

Gross Amounts Not Offset in the Consolidated
Balance Sheet

Gross Amounts Not Offset in the Consolidated
Balance Sheet

Gross Liabilities
Presented in the
Consolidated
Balance Sheet

Financial
Instruments

Cash
Collateral
Paid

Net
Amounts

Gross Liabilities
Presented in the
Consolidated
Balance Sheet

Financial
Instruments

Cash
Collateral
Paid

Net
Amounts

(millions)

Interest rate contracts:

Over-the-counter

$  83

$    5

$  —

$  78

$  17

$  —

$  —

$  17

Foreign currency contracts:

Over-the-counter

3

3

—

—

2

2

—

—

Total derivatives, subject to a master netting or similar arrangement

$  86

$    8

$  —

$  78

$  19

$    2

$  —

$  17


~~132~~

~~Volumes~~

The following table presents the volume of Dominion Energy Gas’ derivative activity at December 31, 2019. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of their long and short positions.

Current

Noncurrent

Interest rate
(1)
$
250,000,000
$
1,050,000,000

Foreign currency
(1)

€
—

€
250,000,000

~~(1)~~

~~Maturity is determined based on final settlement period.~~

~~OCI~~

~~The following table presents selected information related to gains (losses) on cash flow hedges included in AOCI in Dominion Energy Gas’ Consolidated Balance Sheet at December 31, 2019:~~

AOCI
After-Tax

Amounts Expected
to be Reclassified
to Earnings During
the Next 12
Months
After-Tax

Maximum Term

(millions)

Interest rate

$(84
)
$ 15

300 months

Foreign currency

3

(2
)
78 months

Total

$(81
)
$ 13

The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., anticipated sales) in earnings, thereby achieving the realization of prices contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in market prices, interest rates, and foreign currency exchange rates.

~~Fair Value and Gains and Losses on Derivative Instruments~~

~~The following table presents the fair values of Dominion Energy Gas’ derivatives and where they are presented in its Consolidated Balance Sheets:~~

Fair Value –
Derivatives
under
Hedge
Accounting

Fair Value –
Derivatives
not under
Hedge
Accounting

Total
Fair
Value

(millions)

At December 31, 2019

ASSETS

Noncurrent Assets

Foreign currency

$  8

$  —
$
8

Total noncurrent derivative assets
(1)

8

—

8

Total derivative assets

$  8

$  —
$
8

LIABILITIES

Current Liabilities

Interest rate

$30

$  —
$
30

Foreign currency

3

—

3

Total current derivative liabilities
(2)

33

—

33

Noncurrent Liabilities

Interest rate

53

—

53

Total noncurrent derivative
liabilities
(3)

53

—

53

Total derivative liabilities

$86

$  —
$
86

At December 31, 2018

ASSETS

Current Assets

Commodity

$  3

$  —
$
3

Interest rate

2

—

2

Total current derivative assets
(4)

5

—

5

Noncurrent Assets

Foreign currency

26

—

26

Total noncurrent derivative assets
(1)

26

—

26

Total derivative assets

$31

$  —
$
31

LIABILITIES

Current Liabilities

Interest rate

$ 9

$  —
$
9

Foreign currency

2

—

2

Total current derivative liabilities
(2)

11

—

11

Noncurrent Liabilities

Interest rate

8

—

8

Total noncurrent derivative
liabilities
(3)

8

—

8

Total derivative liabilities

$19

$  —
$
   19

~~(1)~~

~~Noncurrent derivative assets are presented in other deferred charges and other assets in Dominion Energy Gas’ Consolidated Balance Sheets.~~

~~(2)~~

~~Current derivative liabilities are presented in other current liabilities in Dominion Energy Gas’ Consolidated Balance Sheets~~

~~(3)~~

~~Noncurrent derivative liabilities are presented in other deferred credits and other liabilities in Dominion Energy Gas’ Consolidated Balance Sheets.~~

~~(4)~~

~~Current derivative assets include $2 million in other current assets, with the remainder recorded in current assets of discontinued operations in Dominion Energy Gas’ Consolidated Balance Sheets.~~


						~~133~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

The following tables present the gains and losses on Dominion Energy Gas’ derivatives, as well as where the associated activity is presented in its Consolidated Balance Sheets and Statements of Income:

Derivatives in cash flow hedging relationships

Amount of
Gain (Loss)
Recognized
in AOCI on
Derivatives
(Effective
Portion)
(1)

Amount of
Gain (Loss)
Reclassified
From AOCI
to Income

(millions)

Year Ended December 31, 2019

Derivative type and location of gains (losses):

Commodity:

Net income from discontinued operations

$     4

Total commodity

$     1

$     4

Interest rate
(2)

(68
)
(5
)
Foreign currency
(3)

(18
)
(6
)
Total

$  (85
)
$    (7
)
Year Ended December 31, 2018

Derivative type and location of gains (losses):

Commodity:

Net income from discontinued operations

$    (8
)
Total commodity

$     1

$    (8
)
Interest rate
(2)

(16
)
(5
)
Foreign currency
(3)
(6 ) (13 )
Total

$  (21
)
$  (26
)
Year Ended December 31, 2017

Derivative type and location of gains (losses):

Commodity:

Net income from discontinued operations

$    (8
)
Total commodity

$  (10
)
$    (8
)
Interest rate
(2)

1

(6
)
Foreign currency
(3)

18

20

Total

$     9

$     6

~~(1)~~

~~Amounts deferred into AOCI have no associated effect in Dominion Energy Gas’ Consolidated Statements of Income.~~

~~(2)~~

~~Amounts recorded in Dominion Energy Gas’ Consolidated Statements of Income are classified in interest and related charges.~~

~~(3)~~

~~Amounts recorded in Dominion Energy Gas’ Consolidated Statements of Income are classified in other income.~~

Derivatives not designated as hedging
instruments

Amount of Gain (Loss) Recognized in
Income on Derivatives

Year Ended December 31,

2019

2018

2017

(millions)

Derivative type and location of gains (losses):

Commodity

Operating revenue

$—

$(11
)
$—

Total

$—

$(11
)
$—

~~Note~~

NOTE 8. ~~Earnings Per Share~~

EARNINGS PER SHARE

The following table presents the calculation of Dominion Energy’s basic and diluted EPS:

	2020			2019			2018
(millions, except EPS)
Net income attributable to Dominion Energy from continuing operations	$	1,583		$	653		$	2,087
Preferred stock dividends (see Note 19)		(65	)		(17	)		—
Net income attributable to Dominion Energy from continuing operations - Basic		1,518			636			2,087
Dilutive effect of Series A Preferred Stock		(11	)		(28	)		—
Net income attributable to Dominion Energy from continuing operations - Diluted	$	1,507		$	608		$	2,087
Net income (loss) attributable to Dominion Energy from discontinued operations - Basic & Diluted	$	(1,984	)	$	705		$	360
Average shares of common stock outstanding – Basic		831.0			808.8			654.2
Net effect of dilutive securities⁽¹⁾		—			0.1			0.7
Average shares of common stock outstanding – Diluted		831.0			808.9			654.9
EPS from continuing operations - Basic	$	1.83		$	0.79		$	3.19
EPS from discontinued operations - Basic		(2.39	)		0.87			0.55
EPS attributable to Dominion Energy - Basic	$	(0.56	)	$	1.66		$	3.74
EPS from continuing operations - Diluted		1.82		$	0.75		$	3.19
EPS from discontinued operations - Diluted		(2.39	)		0.87			0.55
EPS attributable to Dominion Energy - Diluted	$	(0.57	)	$	1.62		$	3.74

2019

2018

2017

(millions, except EPS)

Net income attributable to Dominion Energy
$
1,358
$
2,447
$
2,999

Preferred stock dividends (see Note 19)

(17
)
—

—

Net income attributable to Dominion Energy – Basic

1,341

2,447

2,999

Dilutive effect of Series A Preferred Stock

(28
)
—

—

Net income attributable to Dominion Energy – Diluted

1,313

2,447

2,999

Average shares of common stock outstanding – Basic

808.8

654.2

636.0

Net effect of dilutive securities
(1)

0.1

0.7

—

Average shares of common stock outstanding – Diluted

808.9

654.9

636.0

Earnings Per Common Share – Basic
$
1.66
$
3.74
$
4.72

Earnings Per Common Share – Diluted
$
1.62
$
3.74
$
4.72

(1)	Dilutive securities for 2018 consist primarily of forward sale agreements, effective April 2018 to December 2018. See ~~Notes 17 and 19~~ Note 20for more information.

The 2019 Equity Units, the 2016 Equity Units, the Dominion Energy Midstream convertible preferred units and the Q-Pipe Transaction deposit are potentially dilutive ~~securities.~~instruments. See Notes 3, 18, 19 and 20 for additional information. The forward stock purchase contracts included within the 2019 Equity Units were excluded from the calculation of diluted EPS from continuing operations for the ~~year~~years ended December 31, 2020 and 2019 as the dilutive stock price threshold was not met. ~~The~~For the years ended December 31, 2020 and 2019, the Series A Preferred Stock included within the 2019 Equity Units is excluded from the ~~effect~~calculation of dilutive ~~securities within diluted~~ EPS from continuing operations, but a fair value adjustment is reflected within net income from continuing operations attributable to Dominion Energy for the calculation of diluted EPS ~~for the year ended December 31, 2019~~from continuing operations, based upon the expectation that the conversion will be settled in cash rather than through the issuance of Dominion Energy common stock. The impact of settling the deposit associated with the Q-Pipe Transaction in shares is excluded from the calculation for the year ended December 31, 2020 based upon the expectation Dominion Energy would settle in cash rather than through the issuance of Dominion Energy Common Stock. The 2016 Equity Units were potentially dilutive securities but were excluded from the calculation of diluted EPS from continuing operations for ~~the~~ years ended December 31, 2019 ~~2018~~ and ~~2017~~2018 as the dilutive stock price threshold was not met. The Dominion Energy Midstream convertible preferred units were potentially dilutive securities but had no effect on the calculation of diluted EPS from continuing operations for the ~~years~~year ended December 31, ~~2018 and 2017.~~2018. In calculating diluted EPS from continuing operations in connection with the Dominion Energy Midstream convertible preferred units, Dominion Energy applied the

if-converted

method.


~~134~~

~~Note~~

NOTE 9. ~~Investments~~

INVESTMENTS

Dominion Energy

Equity and Debt Securities

Rabbi Trust Securities

Equity and fixed income securities and cash equivalents in Dominion Energy’s rabbi trusts and classified as trading totaled ~~$120~~$134 million and ~~$111~~$120 million at December 31, 2020 and 2019, ~~and 2018,~~ respectively.

Decommissioning Trust Securities

Dominion Energy holds equity and fixed income securities, insurance contracts and cash equivalents in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Dominion ~~Energy’s~~Energy��s decommissioning trust funds are summarized below:

	Amortized Cost			Total Unrealized Gains		Total Unrealized Losses				Allowance for Credit Losses		Fair Value
(millions)
December 31, 2020
Equity securities:⁽¹⁾
U.S.	$	1,756		$	2,948	$	(24	)				$	4,680
Fixed income securities:⁽²⁾
Corporate debt instruments		572			58		(1	)		$	—		629
Government securities		1,119			66		(1	)			—		1,184
Common/collective trust funds		170			5		—				—		175
Insurance contracts		237			—		—						237
Cash equivalents and other⁽³⁾		(8	)		4		(1	)			—		(5	)
Total	$	3,846		$	3,081	$	(27	)	⁽⁴⁾	$	—	$	6,900
December 31, 2019
Equity securities:⁽¹⁾
U.S.	$	1,807		$	2,451	$	(20	)				$	4,238
Fixed income securities:⁽²⁾
Corporate debt instruments		434			29		0						463
Government securities		1,108			39		(2	)					1,145
Common/collective trust funds		115			4		—						119
Insurance contracts		214			—		—						214
Cash equivalents and other		13			0		0						13
Total	$	3,691		$	2,523	$	(22	)	⁽⁴⁾			$	6,192

Amortized
Cost

Total
Unrealized
Gains

Total
Unrealized
Losses

Fair
Value

(millions)

December 31, 2019

Equity securities:
(1)

U.S.
$
1,807
$
2,451
$
(20
) $
4,238

Fixed income securities:
(2)

Corporate debt instruments

434

29

—

463

Government securities

1,108

39

(2
)
1,145

Common/collective trust funds

115

4

—

119

Insurance contracts

214

—

—

214

Cash equivalents and other
(3)

13

—

—

13

Total
$
3,691
$
2,523
$
(22
)
(4)
$
6,192

December 31, 2018

Equity securities:
(1)

U.S.

$1,741

$1,640

$(51)

$3,330

Fixed income securities:
(2)

Corporate debt instruments

435

5

(9)

431

Government securities

1,092

17

(12)

1,097

Common/collective trust funds

76

—

—

76

Cash equivalents and other

4

—

—

4

Total

$3,348

$1,662

$(72)
(4)

$4,938

(1)	Unrealized gains and losses on equity securities are included in other income and the nuclear decommissioning trust regulatory liability as discussed in Note 2.

(2)	Unrealized gains and losses on fixed income securities are included in AOCI and the nuclear decommissioning trust regulatory liability as discussed in Note 2. Effective January 2020, changes in allowance for credit losses are included in other income.

(3)	Includes pending purchases of securities of $49 million and $1 million at December 31, ~~2019.~~2020 and 2019, respectively.

(4)	The fair value of securities in an unrealized loss position was ~~$298~~$293 million and ~~$833~~$298 million at December 31, 2020 and 2019, ~~and 2018,~~ respectively.

The portion of unrealized gains and losses that relates to equity securities held within Dominion Energy’s nuclear decommissioning trusts is summarized below:

Year Ended December 31,	2020			2019			2018
(millions)
Net gains (losses) recognized during the period	$	512		$	919		$	(245	)
Less: Net gains recognized during the period on securities sold during the period		(16	)		(80	)		(58	)
Unrealized gains (losses) recognized during the period on securities still held at period end⁽¹⁾	$	496		$	839		$	(303	)

Year Ended December 31,

2019

2018

(millions)

Net gains (losses) recognized during the period
$
919
$
(245
)
Less: Net gains recognized during the period on securities sold during the period

(80
)
(58
)
Unrealized gains (losses) recognized during the period on securities still held at December 31, 2019 and 2018
(1)
$
839
$
(303
)

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

The fair value of Dominion Energy’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at December 31, ~~2019~~2020 by contractual maturity is as follows:

	Amount
(millions)
Due in one year or less	$	227
Due after one year through five years		506
Due after five years through ten years		505
Due after ten years		750
Total	$	1,988

Amount

(millions)

Due in one year or less
$
198

Due after one year through five years

412

Due after five years through ten years

390

Due after ten years

727

Total
$
1,727


						~~135~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

Presented below is selected information regarding Dominion Energy’s equity and fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds.

Year Ended December 31,	2020		2019		2018
(millions)
Proceeds from sales	$	4,278	$	1,712	$	1,804
Realized gains⁽¹⁾		340		195		140
Realized losses⁽¹⁾		297		96		91

Year Ended December 31,

2019

2018

2017

(millions)

Proceeds from sales
$
1,712
$
1,804
$
1,831

Realized gains
(1)

195

140

166

Realized losses
(1)

96

91

71

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

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

Year Ended December 31,

2019

2018

2017

(millions)

Total other-than-temporary impairment losses
(1)
$
3
$
30
$
44

Losses recorded to the nuclear decommissioning trust regulatory liability

—

—

(16
)
Losses recognized in other comprehensive income (before taxes)

(3
)
(30
)
(5
)
Net impairment losses recognized in earnings
$
—
$
—
$
23

~~(1)~~

~~Amounts include other-than-temporary impairment losses for fixed income securities of $5 million at December 31, 2017.~~

Virginia Power

Virginia Power holds equity and fixed income securities and cash equivalents in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Virginia Power’s decommissioning trust funds are summarized below:

	Amortized Cost		Total Unrealized Gains		Total Unrealized Losses				Allowance for Credit Losses		Fair Value
(millions)
December 31, 2020
Equity securities:⁽¹⁾
U.S.	$	929	$	1,371	$	(21	)				$	2,279
Fixed income securities:⁽²⁾
Corporate debt instruments		315		33		—			$	—		348
Government securities		484		25		0				—		509
Common/collective trust funds		58		—		—						58
Cash equivalents and other		3		—		—				—		3
Total	$	1,789	$	1,429	$	(21	)	⁽⁴⁾	$	—	$	3,197
December 31, 2019
Equity securities:⁽¹⁾
U.S.	$	894	$	1,144	$	(11	)				$	2,027
Fixed income securities:⁽²⁾
Corporate debt instruments		241		15		—						256
Government securities		534		14		(2	)					546
Common/collective trust funds		51		—		—						51
Cash equivalents and other		1		—		—						1
Total	$	1,721	$	1,173	$	(13	)	⁽⁴⁾			$	2,881

Amortized
Cost

Total
Unrealized
Gains

Total
Unrealized
Losses

Fair
Value

(millions)

December 31, 2019

Equity securities:
(1)

U.S.

$894

$1,144

$(11)

$2,027

Fixed income securities:
(2)

Corporate debt instruments

241

15

—

256

Government securities

534

14

(2)

546

Common/collective trust funds

51

—

—

51

Cash equivalents and other

1

—

—

1

Total

$1,721

$1,173

$(13)
(4)

$2,881

December 31, 2018

Equity securities:
(1)

U.S.

$ 858

$751

$(24)

$1,585

Fixed income securities:
(2)

Corporate debt instruments

224

2

(5)

221

Government securities

504

7

(5)

506

Common/collective trust funds

51

—

—

51

Cash equivalents and other
(3)

6

—

—

6

Total

$1,643

$760

$(34)
(4)

$2,369

(1)	Unrealized gains and losses on equity securities are included in other income and the nuclear decommissioning trust regulatory liability as discussed in Note 2.2

(2)	Unrealized gains and losses on fixed income securities are included in AOCI and the nuclear decommissioning trust regulatory liability as discussed in Note 2. Effective January 2020, changes in allowance for credit losses are included in other income.

(3)	Includes pending ~~sales~~purchases of securities of $6$10 million at December 31, ~~2018.~~2020.

(4)	The fair value of securities in an unrealized loss position was ~~$185~~$142 million and ~~$404~~$185 million at December 31, 2020 and 2019, ~~and 2018,~~ respectively.

The portion of unrealized gains and losses that relates to equity securities held within Virginia Power’s nuclear decommissioning trusts is summarized below:

Year Ended December 31,

2019

2018

(millions)

Net gains (losses) recognized during the period
$
423
$
(105
)
Less: Net gains recognized during the period on securities sold during the period

(20
)
(32
)
Unrealized gains (losses) recognized during the period on securities still held at December 31, 2019 and 2018
(1)
$
403
$
(137
)

Year Ended December 31,	2020			2019			2018
(millions)
Net gains (losses) recognized during the period	$	224		$	423		$	(105	)
Less: Net gains recognized during the period on securities sold during the period		(6	)		(20	)		(32	)
Unrealized gains (losses) recognized during the period on securities still held at end of period ⁽¹⁾	$	218		$	403		$	(137	)

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

The fair value of Virginia Power’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at December 31, ~~2019,~~2020, by contractual maturity is as follows:

	Amount
(millions)
Due in one year or less	$	79
Due after one year through five years		238
Due after five years through ten years		297
Due after ten years		301
Total	$	915


	~~Amount~~
~~(millions)~~
~~Due in one year or less~~		~~$ 91~~
~~Due after one year through five years~~		~~175~~
~~Due after five years through ten years~~		~~206~~
~~Due after ten years~~		~~381~~
~~Total~~		~~$853~~

Presented below is selected information regarding Virginia Power’s equity and fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds.

Year Ended December 31,	2020		2019		2018
(millions)
Proceeds from sales	$	884	$	858	$	887
Realized gains⁽¹⁾		88		58		60
Realized losses⁽¹⁾		68		22		27

Year Ended December 31,

2019

2018

2017

(millions)

Proceeds from sales
$
858
$
887
$
849

Realized gains
(1)

58

60

75

Realized losses
(1)

22

27

30

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


~~136~~

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

Year Ended December 31,

2019

2018

2017

(millions)

Total other-than-temporary impairment losses
(1)
$
2
$
15
$
20

Losses recorded to the nuclear decommissioning trust regulatory liability

—

—

(16
)
Losses recognized in other comprehensive income (before taxes)

(2
)
(15
)
(2
)
Net impairment losses recognized in earnings
$
—
$
—
$
2

~~(1)~~

~~Amounts include other-than-temporary impairment losses for fixed income securities of $2 million at December 31, 2017.~~

~~Equity Method Investments~~

~~Dominion Energy~~

EQUITY METHOD INVESTMENTS

Investments that Dominion Energy ~~account~~accounts for under the equity method of accounting are as follows:

Company

Ownership%

Investment
Balance

Description

As of December 31,

2019

2018

(millions)

Atlantic Coast Pipeline

48
% $
1,123
$
820

Gas transmission system

Iroquois

50
%
276

302

Gas transmission system

Fowler Ridge

50
%
74

82

Wind-powered merchant generation facility

Wrangler

20
%
77

—

Nonregulated retail energy marketing

Other
(1)(2)

various

96

74

Total
$
1,646
$
1,278

					Investment
Company	Ownership%				Balance					Description
As of December 31,					2020			2019
(millions)
Cove Point		50	%	⁽²⁾	$	2,784		$	0	LNG import/export and storage facility
Atlantic Coast Pipeline		53	%	⁽³⁾		0	⁽⁵⁾		1,123	Gas transmission system
Wrangler		20	%			74			77	Nonregulated retail energy marketing
Fowler Ridge		50	%	⁽⁴⁾		0			74	Wind-powered nonregulated generation facility
Other⁽¹⁾	various					76			60
Total					$	2,934		$	1,334

(1)	Liability of less than $1 million associated with NedPower recorded to other deferred credits and other liabilities, on the Consolidated Balance Sheets as of December 31, 2018. See additional discussion of NedPower below.

~~(2)~~

Dominion Energy has an $

$59 million unfunded commitment to be made to Align RNG by the end of ~~202~~

2022.

(2)	Effective November 2020, following the completion of the GT&S Transaction, Dominion Energy began accounting for its 50% noncontrolling interest in Cove Point as an equity method investment. See discussion below and Note 3 for additional information.

(3)	Dominion Energy owned 53% and 48% of Atlantic Coast Pipeline at December 31, 2020 and 2019, respectively. See discussion below for additional information.

(4)	Dominion Energy sold its 50% noncontrolling interest in Fowler Ridge in September 2020. See discussion below for additional information.

(5)	Dominion Energy’s Consolidated Balance Sheet at December 31, 2020 includes a $1.1 billion liability associated with its investment in Atlantic Coast Pipeline. See discussion below for additional information.

Dominion Energy recorded equity earnings on its investments ~~totaled $168~~of $40 million, ~~$197~~$8 million and ~~$14~~$76 million in 2020, 2019, and 2018, ~~and 2017,~~ respectively, ~~included~~ in other income in ~~Dominion Energy’s~~its Consolidated Statements of Income. In addition, Dominion Energy recorded equity earnings (losses) of $(2.3) billion, $117 million and $67 million in 2020, 2019 and 2018, respectively, in discontinued operations related to its investment in Atlantic Coast Pipeline. Dominion Energy received distributions from these investments of ~~$112~~$102 million, ~~$209~~$38 million and ~~$419~~$111 million in 2020, 2019, ~~2018~~ and ~~2017,~~2018, respectively. As of December 31, 2020 and 2019, ~~and 2018~~

the net difference between the carrying amount of Dominion Energy’s investments and its share of underlying equity in net assets was ~~$110~~$213 million and ~~$161~~$(35) million, respectively. At December 31, 2020, these differences are comprised of $27 million of equity method goodwill that is not being amortized, $227 million basis difference from Dominion Energy’s investment in Cove Point, which is being amortized over the useful lives of the underlying assets and a net $(41) million basis difference primarily attributable to an unfunded commitment made to Align RNG. At December 31, 2019 these differences are comprised of ~~$159~~$11 million of equity method goodwill that is not being amortized and a net ~~$49~~$(46) million basis difference from Dominion Energy’s investments in Fowler ~~which is being amortized over the useful lives of the underlying assets, in~~Ridge, Atlantic Coast Pipeline ~~which is being amortized over the term of its credit facility~~

and an unfunded commitment ~~to be~~ made to Align RNG. At

Cove Point

Prior to January 2019, Dominion Energy owned all of the common equity interest in Cove Point except for a preferred equity interest held by Dominion Energy Midstream (entitled to the first $50 million of annual cash distributions made by Cove Point), in which Dominion Energy owned a controlling financial interest and consolidated. As discussed in Note 20, Dominion Energy acquired all outstanding partnership interests of Dominion Energy Midstream not owned by Dominion Energy in January 2019. In December 2019, Dominion Energy closed on an agreement to sell a 25% noncontrolling limited partnership interests in Cove Point. In November 2020, in conjunction with the GT&S Transaction, Dominion Energy sold 100% of its general partner interest and 25% of the total limited partner interest in Cove Point. Dominion Energy retained a 50% noncontrolling limited partnership interest in Cove Point which is accounted for as an equity method investment as Dominion Energy has the ability to exercise significant influence over, but not control, Cove Point. See Note 3 for further information regarding the sales of interests in Cove Point.

Income before income taxes recorded by Cove Point for 2020, 2019 and 2018 was $511 million, $471 million and $292 million, respectively. For the periods prior to closing of the GT&S Transaction, earnings attributable to Dominion Energy are presented in discontinued operations. Subsequent to the closing of the GT&S Transaction through December 31, ~~2018~~

~~these differences~~2020, earnings attributable to Dominion Energy of $40 million are ~~comprised~~presented within other income in its Consolidated Statements of ~~$146~~Income.

Dominion Energy recorded distributions from Cove Point of $70 million and 0 contributions to Cove Point from the date of ~~equity method goodwill that is not being amortized and $15 million related~~disposal through December 31, 2020.

All activity relating to ~~basis differences from~~ Dominion Energy’s ~~investments~~noncontrolling interest in ~~wind projects, which are being amortized over~~Cove Point is recorded within Contracted Assets. See Note 3 for further information regarding the ~~useful lives of the underlying assets, and in~~ GT&S Transaction.

Atlantic Coast Pipeline ~~which is being amortized over the term of its credit facility.~~

~~Atlantic Coast Pipeline~~

In September 2014, Dominion Energy, along with Duke Energy and Southern, announced the formation of Atlantic Coast ~~Pipeline. The Atlantic Coast~~ Pipeline ~~partnership agreement includes provisions to allow Dominion Energy an option to purchase additional ownership interest in Atlantic Coast Pipeline to maintain a leading ownership percentage. As~~for the purpose of ~~December 31, 2019, the members hold the following membership interests: Dominion Energy, 48%; Duke, 47%; and Southern, 5%.~~

~~Atlantic Coast Pipeline is focused on~~ constructing an approximately

600-mile

natural gas pipeline running from West Virginia through Virginia to North Carolina. Subsidiaries and affiliates of ~~all 3 members plan~~Dominion Energy, Duke Energy and Southern had planned to be customers of the pipeline under

20-year

contracts.

In March 2020, Dominion Energy completed the acquisition from Southern of its 5% membership interest in Atlantic Coast Pipeline and its 100% ownership interest in Pivotal LNG, Inc., for $184 million in aggregate, subject to certain purchase price adjustments. Pivotal LNG, Inc. includes a 50% noncontrolling interest in JAX LNG. Following completion of the acquisition, Dominion Energy owns a 53% noncontrolling membership interest in Atlantic Coast Pipeline with Duke Energy owning the remaining interest.

Atlantic Coast Pipeline continues to be reflected as an equity method investment as the power to direct the activities most significant to Atlantic Coast Pipeline is ~~considered an equity method investment as~~shared with Duke Energy. As a result, Dominion Energy has the ability to exercise significant influence, but not control, over the investee. ~~See Note 16 for more information.~~

Dominion Energy recorded contributions of $186 million, $414 million and $310 million during 2019, 2018 and 2017, respectively, to Atlantic Coast Pipeline. At December 31, 2019, Dominion Energy had $7 million of contributions payable to Atlantic Coast Pipeline included within other current liabilities in the Consolidated Balance Sheets.

~~Dominion Energy did not receive distributions from Atlantic Coast Pipeline during 2019 and received distributions of $36 million and $270 million during 2018 and 2017, respectively.~~

~~In October 2017, Dominion Energy entered into a guarantee agreement to support a portion of Atlantic Coast Pipeline’s obligation under its credit facility. See Note 23 for more information.~~

The Atlantic Coast Pipeline Project ishad been the subject of challenges in federal courts including, among others, challenges of the Atlantic Coast Pipeline Project’s biological opinion and incidental take statement, permits providing right of way crossings of certain federal lands, the ~~U.S.~~ Army Corps of Engineers 404 permit, the air permit for a compressor station at Buckingham, Virginia, and the FERC order approving the CPCN. Each of these challenges ~~alleges~~

alleged non-compliance

on the part of federal and state permitting authorities and adverse ecological consequences if the Atlantic Coast Pipeline Project iswas permitted to proceed. Since December 2018, notable developments in these challenges ~~include~~included a stay in December 2018 issued by the U.S. Court of Appeals for the Fourth Circuit and the same court’s July 2019 vacatur of the biological opinion and incidental take statement (which stay and subsequent vacatur halted most project construction activity), the U.S. Court of Appeals for the Fourth Circuit decisions vacating the permits to cross certain federal forests and the air permit for a compressor station at Buckingham, Virginia, the U.S. Court of Appeals for the Fourth Circuit’s remand to ~~U.S.~~the Army Corps of Engineers of Atlantic Coast Pipeline’s Huntington District 404 verification and the U.S. Court of Appeals for the Fourth Circuit’s remand to the National Park Service of Atlantic Coast Pipeline’s Blue Ridge Parkway

right-of-way.

Atlantic Coast Pipeline continues to vigorously defend these challenges and is coordinating with the federal and state authorities to obtain new authorizations. Atlantic Coast Pipeline continues coordinating and working with U.S. Fish and Wildlife Service and other parties in


						~~137~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~preparation for a reissuance of the biological opinion and incidental take statement.~~ In June 2019, the Solicitor General of the U.S. and Atlantic Coast Pipeline filed petitions requesting that the Supreme Court of the U.S. hear the case regarding the Appalachian Trail ~~crossing. In February~~crossing and in June 2020, the Supreme Court of the U.S. ~~heard oral arguments~~ruled in favor of the ~~case and is expected to issue a ruling no later than June 2020. If a favorable ruling is not received,~~ Atlantic Coast Pipeline, isreversing the lower court’s decision and remanding the case back to the U.S. Court of Appeals for the Fourth Circuit.

The project also ~~evaluating possible legislative~~faced new and ~~administrative remedies~~serious challenges from uncertainty related to ~~this issue.~~

~~Given~~NWP 12, specifically, from the ~~legal challenges described above and ongoing discussions with customers, project construction is expected to be completed~~decision of the U.S. District Court for the District of Montana in April 2020 vacating an NWP 12 issued by the ~~end~~Army Corps of ~~2021,~~Engineers, including among other things gas pipelines, followed by a U.S. Court of Appeals for the Ninth Circuit ruling in May 2020 denying a stay of that decision. In July 2020, the Supreme Court of the U.S. issued an order allowing other new oil and gas pipeline projects to use the NWP 12 process pending appeal to the U.S. Court of Appeals for the Ninth Circuit; however, that did not decrease the uncertainty associated with ~~full~~

~~in-service~~

an eventual ruling. The Montana district court decision was viewed as likely to prompt similar challenges in ~~early 2022, with project costs estimated~~other federal circuit courts related to ~~be approximately $8 billion, excluding financing costs.~~permits issued under NWP 12, including for the Atlantic Coast Pipeline ~~has reached agreements in principle with~~

~~major~~

~~customers~~Project.

In July 2020, as a result of the continued permitting delays, growing legal uncertainties and the need to ~~amend~~incur significant capital expenditures to maintain project timing before such uncertainties could be resolved, Dominion Energy and Duke Energy announced the contracted rate to share in certain delay cost increases, pending certain regulatory approvals. Project construction activities, schedules and costs are also subject to uncertainty due to permitting and/or work delays (including due to judicial or regulatory action), abnormal weather and other conditions that could result in further cost or schedule modifications, a suspensioncancellation of ~~AFUDC for~~the Atlantic Coast Pipeline ~~and/or impairment charges potentially~~Project.

As a result of the determination of the probable abandonment of the Atlantic Coast Pipeline Project in June 2020, Dominion Energy recorded equity method earnings (losses) of $(2.3) billion ($(1.8) billion after-tax) for the year ended December 31, 2020, $117 million ($118 million after-tax) for the year ended December 31, 2019 and $67 million ($67 million after-tax) for the year ended December 31, 2018. In connection with Dominion Energy’s decision to sell substantially all of its gas transmission and storage operations, Dominion Energy has reflected the results of its equity method investment in Atlantic Coast Pipeline as discontinued operations in its Consolidated Statements of Income. As a result of its share of equity losses exceeding its investment Dominion Energy’s Consolidated Balance Sheets at December 31, 2020 includes a liability of $1.1 billion which reflects Dominion Energy’s obligations to Atlantic Coast Pipeline related to its credit facility and AROs. ‌

In October 2017, Dominion Energy entered into a guarantee agreement to support a portion of Atlantic Coast Pipeline’s obligation under a $3.4 billion revolving credit facility with a stated maturity date of October 2021. Atlantic Coast Pipeline informed Dominion Energy it intends to terminate and repay the outstanding balance of the revolving credit facility in the first quarter of 2021. As of December 31, 2020, Atlantic Coast Pipeline had borrowed $1.8 billion against the revolving credit facility. In July 2020, the capacity of the revolving credit facility was reduced from $3.4 billion to $1.9 billion. Dominion Energy’s Consolidated Balance Sheets include a liability of $6 million and $14 million associated with this guarantee agreement at December 31, 2020 and 2019, respectively. The $1.1 billion liability at December 31, 2020 discussed above includes a $48 million adjustment related to this guarantee agreement that

is reflected within equity as a cumulative effect of a change in accounting principle upon adoption of the new credit loss standard in January 2020.

Dominion Energy recorded contributions of $107 million, $186 million and $414 million during 2020, 2019 and 2018, respectively, to Atlantic Coast Pipeline. At December 31, 2019, Dominion Energy had $7 million of contributions payable to Atlantic Coast Pipeline included within other current liabilities in its Consolidated Balance Sheets.

Dominion Energy expects to incur additional losses from Atlantic Coast Pipeline as it completes wind-down activities. While Dominion Energy is unable to precisely estimate the amounts to be incurred by Atlantic Coast Pipeline, the portion of such amounts attributable to Dominion Energy is not expected to be material to Dominion Energy’s ~~cash flows,~~results of operations, financial position ~~and/~~or ~~results~~statement of ~~operations.~~

~~In February 2020, Dominion Energy entered into agreements with Southern~~cash flows.

DETI provided services to acquire its 5% membership interest in Atlantic Coast Pipeline and its 100% ownership interest in Pivotal LNG, Inc., for approximately $175 million in aggregate, plus certain purchase price adjustments. Pivotal LNG, Inc. includes a 50% noncontrolling interest in JAX LNG, LLC, an LNG supplier in Florida serving the growing marine and truck LNG markets. The acquisitions are expected to close by the second quarter of 2020. Following completion of the acquisition, Dominion Energy will own a 53% noncontrolling membership interest in Atlantic Coast Pipeline which ~~will continue~~totaled $49 million, $103 million and $203 million in 2020 (prior to ~~be reflected as an equity method investment as~~closing of the ~~power~~GT&S Transaction), 2019 and 2018, respectively, included in discontinued operations in Dominion Energy’s Consolidated Statements of Income. Amounts receivable related to ~~direct the activities most significant~~these services were $7 million at December 31, 2019, composed entirely of accrued unbilled revenue, included in current assets held for sale in Dominion Energy’s Consolidated Balance Sheets.

All activity relating to Atlantic Coast Pipeline is ~~shared with Duke.~~

recorded within the Corporate and Other segment.

Blue Racer

In December 2018, Dominion Energy sold its 50% limited partnership interest in Blue Racer for

up-front

cash consideration of $1.05 billion and additional consideration of $150 million, subject to increase for interest costs effective March 2019, payable upon the purchaser’s availability of cash. The additional consideration was recorded at a fair value of $150 million on the date of sale following a discounted cash flow model and is included within other receivables in the Consolidated Balance Sheets at December 31, 2018. The valuation is considered a Level 3 fair value measurement due to the use of judgment and unobservable inputs, including projected timing and amount of future cash flows and a discount rate reflecting risks inherent in the future cash flows. As a result of the sale, Dominion Energy recognized a gain of $546 million ($390 million

after-tax),

included in other income in its Consolidated Statements of Income for the year ended December 31, 2018. In addition, the purchaser agreed to pay additional consideration contingent upon the achievement of certain financial performance milestones of Blue Racer from 2019 through 2021. Pursuant to the purchase agreement, the aggregate will not exceed $300 million, which represents a gain contingency,

and, as a result, Dominion Energy will not recognize any additional gain unless such consideration is realizable. Blue Racer did not achieve the 2019 or 2020 financial performance milestones set forth in the sale agreement. In the first quarter of 2019, Dominion Energy received $151 million of additional consideration, including applicable interest, in connection with this sale.

All activity relating to Blue Racer ~~did not achieve~~is recorded within the ~~2019 financial performance milestones set forth~~Corporate and Other segment.

Fowler Ridge

In September 2020, Dominion Energy sold its 50% noncontrolling partnership interest in Fowler Ridge to BP and terminated an affiliate’s long-term power, capacity and renewable energy credit contract with Fowler Ridge for a net payment by Dominion Energy of $150 million. The $150 million payment was allocated between the contract termination and sale based on the relative fair value of each using an income approach. The fair value determinations for the payment allocations are considered Level 3 fair value measurements due to the use of significant judgmental and unobservable inputs, including the amount of future cash flows and discount rate reflecting risks inherent in the ~~sale agreement.~~

~~Fowler Ridge & NedPower~~

~~In the fourth quarter of 2017,~~future cash flows and market prices. Dominion Energy ~~recorded~~recognized a ~~charge~~loss of ~~$126~~$221 million ($76165 million

after-tax)

on the contract termination, included in impairment of assets and other ~~income~~charges in its Consolidated Statements of Income reflecting its share of a long-lived asset impairment of property, plant and equipment recorded by NedPower, which resulted in losses in excess of Dominion Energy’s investment balance. Dominion Energy recordedfor the ~~excess losses due to its commitment to provide further financial support for NedPower, resulting in a liability of $17 million at~~year ended December 31, ~~2017, recorded~~2020, reflected in the Corporate and Other segment.

All activity relating to ~~other deferred credits and other liabilities, on the Consolidated Balance Sheets.~~

~~As a result of the impairment recorded by NedPower, Dominion Energy evaluated its equity method investment in~~ Fowler Ridge, ~~a similar wind-powered merchant generation facility, determined its fair value was other than-temporarily impaired and~~unless otherwise specified, is recorded ~~an impairment charge of $32 million ($20 million~~within Contracted Assets.

~~after-tax)~~

in other income in its Consolidated Statements of Income. The fair value of $81 million was estimated using a discounted cash flow method and is considered a Level 3 fair value measurement due to the use of significant unobservable inputs related to the timing and amount of future equity distributions based on the investee’s future wind generation and operating costs.

Wrangler

In September 2019, Dominion Energy entered into an agreement to form Wrangler, a partnership with Interstate Gas Supply, Inc. Wrangler will operate a nonregulated natural gas retail energy marketing business with Dominion Energy contributing its nonregulated retail energy marketing operations and Interstate Gas Supply, Inc. contributing cash. Dominion Energy has a 20% noncontrolling ownership interest in Wrangler which is accounted for as an equity method investment as Dominion Energy has the ability to exercise significant influence, but not control, over the investee.

The initial contribution, consisting of SEMI, closed in December 2019 for which Dominion Energy received $301 million in cash proceeds and a 20% noncontrolling ownership interest in Wrangler with

initial fair value of $75 million estimated using the market approach. This valuation is considered a Level 2 fair value measurement given that it is based on the agreed-upon sales price. In connection with the transaction, Dominion Energy recorded a gain of $147 million, net of a $73 million

write-off

of goodwill, presented in gains on sales of assets, and an associated tax expense of $82 million, in the Consolidated ~~Statement~~Statements of ~~Income. Over~~Income for the ~~next two years,~~year ended December 31, 2019.

The second contribution, consisting of certain nonregulated natural gas retail energy contracts, closed in November 2020 for which Dominion Energy received $74 million in cash proceeds and retained a 20% noncontrolling ownership interest through its ownership interest in Wrangler in the contracts valued at $13 million using the market approach. This valuation is considered a Level 2 fair value measurement given that it is based on the agreed-upon sales price. In connection with the transaction, Dominion Energy recorded a gain of $64 million presented in gains on sales of assets, and an associated tax expense of $19 million, in the Consolidated Statements of Income for the year ended December 31, 2020. Dominion Energy’s Consolidated Balance Sheets at December 31, 2019 included $41 million presented in current assets held for sale.

In 2021, under the terms of the agreement, Dominion Energy expects to contribute its remaining nonregulated natural gas retail energy marketing operations to Wrangler. As a result of ~~these contributions,~~this contribution, Dominion Energy will receive additional cash consideration which will be based upon future financial performance. When ~~these~~this future ~~contributions occur,~~contribution occurs, Dominion Energy expects to retain a 20% noncontrolling ownership interest in Wrangler.


~~138~~

As of December 31, ~~2019, $41~~2020, $63 million of assets and $15 million of liabilities associated with ~~Dominion Energy’s residential contracts~~the remaining nonregulated retail energy marketing operations to be contributed to Wrangler in December ~~2020~~2021 were classified as held for sale and were included in ~~other~~ current assets held for sale and current liabilities held for sale on ~~the~~Dominion Energy’s Consolidated Balance ~~Sheet.~~Sheets, respectively. The related disposal group is primarily comprised of customer receivables, goodwill, inventories, and ~~inventories.~~

account payables.

All activity relating to Wrangler is recorded within ~~Gas Transmission & Storage.~~

the Corporate and Other –segment.

Other- Catalyst Old River Hydroelectric Limited Partnership

In September 2018, Dominion Energy completed the sale of its 25% limited partnership interest in Catalyst Old River Hydroelectric Limited Partnership and received proceeds of $91 million. The sale resulted in a gain of $87 million ($63 million

after-tax),

which is included in other income in Dominion Energy’s Consolidated ~~Statement of Income.~~

~~Dominion Energy Gas~~

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

Company

Ownership%

Investment
Balance

Description

As of December 31,

2019

2018

(millions)

Iroquois

50
%
$276

$302

Gas transmission system

White River Hub

50
%
36

37

Gas transmission system

Total

$312

$339

Dominion Energy Gas’ equity earnings on its investment totaled $43 million, $54 million and $47 million in 2019, 2018 and 2017, respectively. Dominion Energy Gas received distributions from its investment of $74 million, $64 million and $55 million in 2019, 2018 and 2017, respectively. As of December 31, 2019 and 2018, the carrying amount of Dominion Energy Gas’ investment exceeded its share of underlying equity in net assets by $146 million. The difference reflects equity method goodwill and is not being amortized.

~~Summarized financial information provided to Dominion Energy Gas by Iroquois for 100% of Iroquois at December 31, 2019 and 2018~~

~~and for the years ended December 31, 2019, 2018 and 2017~~

~~is presented below.~~

At December 31, 2019

At December 31, 2018

(millions)

Current assets

$ 79
$
112

Noncurrent assets

586

588

Current liabilities

37

165

Noncurrent liabilities

334

193

Year Ended
December 31, 2019

Year Ended
December 31, 2018

Year Ended
December 31, 2017

(millions)

Revenues

$180

$194

$194

Operating income

93

108

110

Net income

82

94

93

Summarized financial information provided to Dominion Energy Gas by White River Hub for 100% of White River Hub at December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017 is presented below.

At December 31, 2019

At December 31, 2018

(millions)

Current assets

$ 3

$ 3

Noncurrent assets

39

41

Current liabilities

2

2

Year Ended
December 31, 2019

Year Ended
December 31, 2018

Year Ended
December 31, 2017

(millions)

Revenues

$10

$12

$10

Operating income

6

8

7

Net income

6

8

7

~~Atlantic Coast Pipeline~~

DETI provides services to Atlantic Coast Pipeline which totaled $103 million, $203 million and $129 million in 2019, 2018 and 2017, respectively, included in operating revenue in Dominion Energy and Dominion Energy Gas’ Consolidated Statements of ~~Income. Amounts receivable related to these services were $7 million~~Income, reflected in the Corporate and ~~$13 million at December 31, 2019 and 2018, respectively, composed entirely of accrued unbilled revenue, included in other receivables in Dominion Energy Gas’ Consolidated Balance Sheets.~~Other segment.


						~~139~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~Note~~

NOTE 10. ~~Property, Plant~~

~~and~~

~~Equipment~~

PROPERTY, PLANT AND EQUIPMENT

Major classes of property, plant and equipment and their respective balances for the Companies are as follows:

At December 31,	2020		2019
(millions)
Dominion Energy
Utility:
Generation	$	22,697	$	25,317
Transmission		14,351		13,472
Distribution		27,311		25,746
Storage		436		428
Nuclear fuel		2,283		2,296
General and other		4,130		3,978
Plant under construction		3,350		2,377
Total utility		74,558		73,614
Non-jurisdictional - including plant under construction		1,225		854
Nonutility:
Nonregulated generation-nuclear		1,736		1,652
Nonregulated generation-other		3,268		3,985
Nuclear fuel		1,012		930
Other-including plant under construction		1,160		1,008
Total nonutility		7,176		7,575
Total property, plant and equipment	$	82,959	$	82,043
Virginia Power
Utility:
Generation	$	16,769	$	19,552
Transmission		11,000		10,229
Distribution		12,839		12,095
Nuclear fuel		1,709		1,688
General and other		845		825
Plant under construction		2,338		1,784
Total utility		45,500		46,173
Non-jurisdictional - including plant under construction		1,225		854
Other		11		11
Total property, plant and equipment	$	46,736	$	47,038

At December 31,
2019
2018
(millions)

Dominion Energy

Utility:

Generation
$
25,317
$ 18,896
Transmission

20,486
16,666
Distribution

25,748
18,535
Storage

3,227
2,906
Nuclear fuel

2,296
1,626
Oil and gas

1,792
1,763
General and other

2,413
1,783
Plant under construction

2,956
2,348
Total utility

84,235
64,523
Non-jurisdictional—including plant under construction

854
407
Nonutility:

Merchant generation-nuclear

1,652
1,550
Merchant generation-other

3,985
3,802
Nuclear fuel

930
1,025
Gas gathering and processing

190
185
LNG facility

4,425
3,977
Other—including plant under construction

1,195
1,109
Total nonutility

12,377
11,648
Total property, plant and equipment
$
97,466
$ 76,578

Virginia Power

Utility:

Generation
$
19,552
$ 18,896
Transmission

10,229
9,391
Distribution

12,095
11,771
Nuclear fuel

1,688
1,626
General and other

825
820
Plant under construction

1,784
1,602
Total utility

46,173
44,106
Non-jurisdictional—including plant under construction

854
407
Other

11
11
Total property, plant and equipment
$
47,038
$ 44,524

Dominion Energy Gas

Utility:

Transmission
$
7,014
$ 6,790
Storage

2,799
2,615
General and other

219
210
Plant under construction

574
732
Total utility

10,606
10,347
Nonutility:

LNG facility

4,425
3,977
Other—including plant under construction

135
376
Total nonutility

4,560
4,353
Total property, plant and equipment
$
15,166
$ 14,700

Jointly-Owned Power Stations

~~Dominion Energy and Virginia Power’s~~

The Companies proportionate share of jointly-owned power stations at December 31, ~~2019~~2020 is as ~~follows~~follows:

	Bath County Pumped Storage Station⁽¹⁾			North Anna Units 1 and 2⁽¹⁾			Clover Power Station⁽¹⁾			Millstone Unit 3⁽²⁾			Summer Unit 1 ⁽²⁾
(millions, except percentages)
Ownership interest		60	%		88.4	%		50	%		93.5	%		66.7	%
Plant in service		1,064			2,587			609			1,292			1,519
Accumulated depreciation		(688	)		(1,359	)		(260	)		(482	)		(676	)
Nuclear fuel		—			793			—			573			575
Accumulated amortization of nuclear fuel		—			(661	)		—			(444	)		(354	)
Plant under construction		3			158			1			78			61

Bath
County
Pumped
Storage
Station
(1)

North
Anna
Units 1
and 2
(1)

Clover
Power
Station
(1)

Millstone
Unit 3
(2)

Summer
Unit 1
(2)

(millions, except
percentages)

Ownership interest

60
% ��
88.4
%
50
%
93.5
%
66.7
%
Plant in service

1,058

2,564

610

1,267

1,394

Accumulated depreciation

(661
)
(1,321
)
(247
)
(449
)
(659
)
Nuclear fuel

—

793

—

483

608

Accumulated amortization of nuclear fuel

—

(634
)
—

(390
)
(389
)
Plant under construction

7

143

5

87

77

(1)	Units jointly owned by Virginia Power.

(2)	Unit jointly owned by Dominion Energy.

The

co-owners

are obligated to pay their share of all future construction expenditures and operating costs of the jointly-owned facilities in the same proportion as their respective ownership interest. ~~Dominion Energy and Virginia Power~~The Companies report their share of operating costs in the appropriate operating expense (electric fuel and other energy-related purchases, other operations and maintenance, depreciation, depletion and amortization and other taxes, etc.) in the Consolidated Statements of Income.

Sale of Certain Retail Energy Marketing Assets

In October 2017, Dominion Energy entered into an agreement to sell certain assets associated with its nonregulated retail energy marketing ~~operations for total consideration of $143 million, subject to customary approvals and certain adjustments. In December 2017, the~~operations. The first phase of the agreement closed ~~for $79 million, which resulted~~ in ~~the recognition of a $78 million ($48 million~~

~~after-tax)~~

~~benefit, included in gains on sales of assets in~~December 2017. Dominion ~~Energy’s Consolidated Statements of Income. In October 2018,~~Energy closed the second phase of the agreement ~~closed~~in October 2018 for $63 million,which resulted in the recognition of a $65 million ($49 million

after-tax)

benefit included in gains on sales of assets in Dominion Energy’s Consolidated Statements of Income. Pursuant to the agreement, Dominion Energy entered into a commission agreement with the buyer upon the first closing in December 2017 under which the buyer will pay a commission in connection with the right to use Dominion Energy’s brand in marketing materials and other services over a

ten-year

term.

Sale of Certain ~~Merchant~~Nonregulated Generation Facilities

In December 2018, Dominion Energy completed the sale of Fairless and Manchester for total consideration of $1.2 billion, subject to customary closing adjustments. Dominion Energy recognized a gain of $210 million ($198 million

after-tax)

included in gains on sales of assets in Dominion Energy’s Consolidated Statements of Income. The

after-tax

gain reflects Dominion Energy’s assessment and

more-likely-than-not

conclusion that the utilization of state tax incentives will reduce the income tax expense associated with the sale of these facilities.


~~140~~

Acquisition of Solar Projects

The following table presents acquisitions by Virginia Power of solar projects. Virginia Power has claimed or expects to claim federal investment tax credits on the projects.

Date Agreement

Entered

Date Agreement

Closed

Project Location

Project Name

Project Cost

(millions)⁽¹⁾

Date of Commercial

Operations

MW Capacity

September 2017

October 2018

North Carolina

Pecan

140

December 2018

September 2017

June 2019

North Carolina

Gutenberg

142

September 2019

June 2018

February 2019

Virginia

Gloucester

April 2019

August 2018

May 2019

Virginia

Grasshopper

128

October 2020

August 2018

May 2019

North Carolina

Chestnut

127

January 2020

June 2019

Virginia

Ft. Powhatan

270

Expected 2021

150

June 2019

August 2019

Virginia

Belcher

165

Expected 2021

August 2019

November 2019

Virginia

Bedford

110

Expected 2021

October 2019

Virginia

Maplewood

185

Expected 2022

120

December 2019

January 2020

Virginia

Rochambeau

Expected 2021

May 2020

Virginia

Pumpkinseed

130

Expected 2022

(1) Includes acquisition costs.

Date Agreement
Entered

Date Agreement
Closed

Project Location

Project
Name

Project Cost
(millions)
(1)

Date of Commercial
Operations

MW Capacity

September 2017

October 2018

North Carolina

Pecan

$140

December 2018

75

September 2017

June 2019

North Carolina

Gutenberg

142

September 2019

80

June 2018

February 2019

Virginia

Gloucester

37

April 2019

20

August 2018

May 2019

Virginia

Grasshopper

130

Expected 2020

80

August 2018

May 2019

North Carolina

Chestnut

130

Expected 2020

75

June 2019

June 2019

Virginia

Ft. Powhatan

270

Expected 2021

150

June 2019

August 2019

Virginia

Belcher

160

Expected 2020

88

August 2019

November 2019

Virginia

Bedford

110

Expected 2021

70

October 2019

October 2019

Virginia

Maplewood

190

Expected 2022

120

December 2019

January 2020

Virginia

Rochambeau

35

Expected 2021

20

~~(1)~~

~~Includes acquisition costs.~~

The following table presents acquisitions by Dominion Energy

of solar projects. Dominion Energy

has claimed or

expects to claim federal investment tax credits on the projects.

Date Agreement

Entered

Date Agreement

Closed

Project Location

Project Name

Project Cost

(millions)⁽¹⁾

Date of Commercial

Operations

MW Capacity

August 2019

Virginia

Greensville

127

December 2020

August 2019

Virginia

Myrtle

June 2020

September 2019

South Carolina

Seabrook

103

December 2019

November 2019

North Carolina

Wilkinson

153

December 2019

May 2020

South Carolina

Blackville

December 2020

May 2020

South Carolina

Denmark

December 2020

May 2020

August 2020

South Carolina

Yemassee

January 2021

May 2020

October 2020

South Carolina

Trask

Expected 2021

June 2020

Ohio

Hardin I

240

Split⁽²⁾

150

July 2020

Virginia

Madison

125

Expected 2022

August 2020

Expected 2022

Ohio

Hardin II

295

Expected 2023

150

Date Agreement
Entered

Date Agreement
Closed

Project Location

Project
Name

Project Cost
(millions)
(1)

Date of Commercial
Operations

MW Capacity

August 2019

August 2019

Virginia

Greensville

$130

Expected 2020

80

August 2019

August 2019

Virginia

Myrtle

35

Expected 2020

15

September 2019

September 2019

South Carolina

Seabrook

103

December 2019

72

November 2019

November 2019

North Carolina

Wilkinson

153

December 2019

74

~~(1)~~

~~Includes acquisition costs.~~

~~Assignment~~

(1) Includes acquisition costs.

(2)In December 2020 and January 2021, 97 MW and 53 MW of ~~Tower Rental Portfolio~~

the project commenced commercial operations, respectively.

In addition to the facilities discussed above, Dominion Energy has also entered into various agreements to install solar facilities, primarily at schools in Virginia, ~~Power rents space~~with in-service dates in 2020 or 2021. Through February 2021, Dominion Energy anticipates a total projected cost of approximately $61 million under these agreements with an associated aggregate generation capacity of 30 MW. Dominion Energy has claimed or expects to claim federal investment tax credits on ~~certain~~the projects.

Acquisition of ~~its electric transmission towers to various wireless carriers for communications antennas~~Gathering and ~~other equipment.~~ Processing Assets

In March 2017, Virginia Power sold its rental portfolio to Vertical Bridge Towers II, LLC for $91 million in cash. The proceeds are subject to Virginia Power’s FERC-regulated tariff, under which it is required to return half of the proceeds to customers. Virginia Power recorded $7 million and $6 million in operating revenue

~~in 2019 and 2018, respectively,~~

~~and $11 million in other income~~

~~2017, with $22 million remaining to be recognized ratably through 2023.~~

~~Assignments of Shale Development Rights~~

~~In December 2013, Dominion Energy Gas~~2020, Wexpro closed on agreements with two natural gas producers to convey over time approximately 100,000 acres of Marcellus Shale development rights underneath several of its natural gas storage fields. The agreements provided for payments to Dominion Energy Gas, subject to customary adjustments, of approximately $200 million over a period of nine years, and an overriding royalty interest in gas produced from the acreage. In 2013 through 2016, Dominion Energy Gas received approximately $116 million of cash proceeds and through amendments closed on the immediate conveyance of approximately 9,000 acres and a 32% partial interest in the 70,000 acres of Marcellus Shale development rights, which resulted in the recognition of $78 million of gains. In August 2017, Dominion

Energy Gas and the natural gas producer signed an amendment to the agreement, which included the finalization of contractual matters on previous conveyances, the conveyance of Dominion Energy Gas’ remaining 68% interest in approximately 70,000 acres and the elimination of Dominion Energy Gas’ overriding

royalty interest in gas produced from all acreage. Dominion Energy Gas received total consideration of $130 million, with $65 million received in 2017 and $65 million received in September 2018 in connection with the final conveyance. As a result of this amendment, in 2017, Dominion Energy Gas recognized a $56 million ($33 million

~~after-tax)~~

gain included in gains on sales of assets in Dominion Energy Gas’ Consolidated Statements of Income associated with the finalization of the contractual matters on previous conveyances, a $9 million ($5 million

~~after-tax)~~

gain included in gains on sales of assets in Dominion Energy Gas’ Consolidated Statements of Income associated with the elimination of its overriding royalty interest and in 2018, a $65 million ($47 million

~~after-tax)~~

~~gain included in gains on sales of assets in Dominion Energy Gas’ Consolidated Statements of Income associated with the final conveyance of acreage.~~

~~In November 2014, Dominion Energy Gas closed~~ an agreement with a natural gas ~~producer~~gathering systems operator to ~~convey over time approximately 24,000 acres~~purchase existing natural gas gathering systems including pipelines, compressors and dehydration equipment for total consideration of ~~Marcellus Shale development rights underneath one~~$38 million. These facilities gather natural gas in Colorado, Utah and Wyoming.

Non-Wholly-Owned Nonregulated Solar Facilities

In the third quarter of 2020, Dominion Energy performed a strategic review of its ~~natural~~long-term intentions for its contracted nonregulated solar generation assets in partnerships outside of its core electric service territories in consideration of the impact of the VCEA and Dominion Energy’s decision to sell substantially all of its gas transmission and storage ~~fields. The agreement provided~~operations. Based on an evaluation of Dominion Energy’s interests in these long-lived assets for ~~payments~~recoverability under a probability weighted approach, Dominion Energy determined the assets were impaired. As a result of this evaluation, Dominion Energy recorded a charge of $665 million ($293 million after-tax attributable to Dominion Energy ~~Gas, subject~~and $267 million attributable to ~~customary adjustments, of approximately $120 million over a period of four years, and an overriding royalty interest~~noncontrolling interest) in ~~gas produced from the acreage. In 2014 through 2016, Dominion Energy Gas received~~

approximately $70 million in proceeds on the conveyance of approximately 12,000 acres and as well as a 50% interest in approximately 4,000 acres along with an overriding royalty interest, which resulted in the recognition of $70 million of gains. In July 2017, in connection with the existing agreement, Dominion Energy Gas conveyed an additional 50% interest in approximately 2,000 acres of Marcellus Shale development rights and received proceeds of $5 million and an overriding royalty interest


						~~141~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~in gas produced from the acreage. This transaction resulted in a $5 million ($3 million~~

~~after-tax)~~

~~gain. The gains are included in gains on sales~~impairment of assets and other charges in ~~Dominion Energy Gas’~~its Consolidated Statements of ~~Income. In January 2018, Dominion Energy Gas~~Income (reflected in the Corporate and Other segment) for the ~~natural gas producer closed on~~year ended December 31, 2020 to adjust the property, plant and equipment down to its estimated fair value of $1.4 billion. The fair value was estimated using an ~~amendment~~income approach. The valuation is considered a Level 3 fair value measurement due to the ~~agreement, which included~~use of significant judgmental and unobservable inputs, including projected timing and amount of future cash flows and discount rates reflecting risks inherent in the ~~conveyance of Dominion Energy Gas’ remaining 50% interest in approximately 18,000 acres~~future cash flows and the elimination of Dominion Energy Gas’ overriding royalty interest in gas produced from all acreage. Dominion Energy Gas received proceeds of $28 million, resulting in an approximately $28 million ($20 millionmarket prices.

~~after-tax)~~

~~gain recorded in gains on sales of assets in Dominion Energy Gas’ Consolidated Statements of Income.~~

In March 2018, Dominion Energy Gas closed an agreement with a natural gas producer to convey approximately 11,000 acres of Utica and Point Pleasant Shale development rights underneath one of its natural gas storage fields. The agreement provided for a payment to Dominion Energy Gas, subject to customary adjustments, of

~~$16 million. In March 2018, Dominion Energy Gas received cash proceeds of $16 million associated with the conveyance of the acreage, resulting in a $16 million ($12 million~~

~~after-tax)~~

~~gain recorded in gains on sales of assets in Dominion Energy Gas’ Consolidated Statements of Income.~~

In June 2018, Dominion Energy Gas closed an amendment to an agreement with a natural gas producer for the elimination of Dominion Energy Gas’ overriding royalty interest in gas produced from approximately 9,000 acres of Marcellus Shale development rights underneath one of its natural gas storage fields previously conveyed in December 2013. In June 2018, Dominion Energy Gas received proceeds of $6 million associated with the transaction, resulting in a $6 million ($4 million

~~after-tax)~~

~~gain recorded in gains on sales of assets in Dominion Energy Gas’ Consolidated Statements of Income.~~

~~All activity related to shale development rights is recorded within Gas Transmission & Storage.~~

~~Note~~

NOTE 11. GOODWILL AND INTANGIBLE ASSETS

Goodwill ~~and Intangible Assets~~

~~Goodwill~~

~~During the fourth quarter of 2019,~~

In September 2020, Dominion Energy ~~realigned~~updated its ~~segments which resulted in the formation of five primary~~ operating segments following the July 2020 agreement to sell its gas transmission and ~~Dominion Energy Gas finalized a restructuring that was accounted~~storage operations to BHE. See Note 3 for ~~as a reorganization of entities under common control. The historical~~ information ~~presented herein has been~~on the goodwill recast to held for sale associated with the ~~current segment presentation~~GT&S Transaction and ~~the current structure of~~Q-Pipe Transaction. In addition, goodwill associated with Dominion ~~Energy Gas. With respect to the segment realignment, goodwill has been~~Energy’s nonregulated retail energy marketing operations was reassigned to the ~~affected reporting units~~Corporate and ~~operating segments~~Other segment using a relative fair value allocation ~~approach.~~approach with the historical information recast herein. The changes in Dominion Energy’s ~~and Dominion Energy Gas’~~ carrying amount and segment allocation of goodwill are presented below:

	Dominion Energy Virginia		Gas Distribution		Dominion Energy South Carolina		Contracted Assets		Corporate and Other			Total
(millions)
Dominion Energy
Balance at December 31, 2018⁽¹⁾	$	2,106	$	2,497	$	—	$	242	$	14		$	4,859
SCANA Combination ⁽²⁾		—		1,015		1,521		—		73			2,609
Contribution of SEMI to Wrangler⁽³⁾		—		—		—		—		(73	)		(73	)
Balance at December 31, 2019⁽¹⁾	$	2,106	$	3,512	$	1,521	$	242	$	14		$	7,395
Contribution to Wrangler⁽³⁾		—		—		—		—		(14	)		(14	)
Balance at December 31, 2020⁽¹⁾	$	2,106	$	3,512	$	1,521	$	242	$	—		$	7,381

Dominion
Energy
Virginia

Gas
Transmission
& Storage

Gas
Distribution

Dominion
Energy
South
Carolina

Contracted
Generation

Corporate
and Other

Total

(millions)

Dominion Energy

Balance at December 31, 2017
(1)
$
2,106
         $
1,561
     $
2,496
  $
—
        $
242

        $—
$
6,405

Purchase Accounting Adjustment

—

4

1

—

—

—

5

Balance at December 31, 2018
(1)
$
2,106
         $
1,565
     $
2,497
  $
—
        $
242

        $—
$
6,410

SCANA Combination
(2)

—

73

1,015

1,521

—

—

2,609

Contribution of SEMI to Wrangler
(3)

—

(73
)
—

—

—

—

(73
)
Balance at December 31, 2019
(1)
$
2,106
         $
1,565
     $
3,512
  $
1,521
        $
242

        $—
$
8,946

Dominion Energy Gas

Balance at December 31, 2017
(1)
$
—
         $
1,466
     $
—
  $
—
        $
—

        $—
$
1,466

Purchase Accounting Adjustment

—

5

—

—

—

—

5

Balance at December 31, 2018
(1)
$
—
         $
1,471
     $
—
  $
—
        $
—

        $—
$
1,471

No events affecting goodwill

—

—

—

—

—

—

—

Balance at December 31, 2019
(1)
$
—
         $
1,471
     $
—
  $
—
        $
—

        $—
$
1,471

~~(1)~~

~~Goodwill amounts do not contain any accumulated impairment losses.~~

~~(2)~~

~~See Note 3 for discussion of Dominion Energy’s acquisitions.~~

~~(3)~~

~~See Note 9 for additional information.~~


~~142~~

(1) Goodwill amounts do not contain any accumulated impairment losses.

(2) See Note 3 for more information on the SCANA Combination. As a result of the December 2019 segment realignment, the acquired goodwill was reassigned using a relative fair value approach.

(3) See Note 9 for additional information including amounts reclassified to held for sale at December 31, 2020.

Other Intangible Assets

The Companies’ other intangible assets are subject to amortization over their estimated useful lives. Dominion Energy’s amortization expense for intangible assets was ~~$106~~$69 million, ~~$82~~$95 million and ~~$80~~$72 million for 2020, 2019 ~~2018~~ and ~~2017,~~2018, respectively. In ~~2019~~

~~, in addition to intangible assets acquired in the SCANA Combination~~

2020, Dominion Energy acquired ~~$120~~$152 million of intangible assets, primarily representing software and

right-of-use

assets, with an estimated weighted-average amortization period of approximately 1011 years. Amortization expense for Virginia Power’s intangible assets was $28 million, $30 million ~~for 2019~~ and $31 million for ~~both~~2020, 2019 and 2018, ~~and 2017.~~respectively. In ~~2019,~~2020, Virginia Power acquired ~~$52~~$95 million of intangible assets, primarily representing software, with an estimated weighted-average amortization period of 811 years. Dominion Energy Gas’ amortization expense for intangible assets was $11 million for both 2019 and 2018 and $9 million for 2017. In 2019, Dominion Energy Gas acquired $7 million of intangible assets, primarily representing software and

~~right-of-use~~

~~assets, with an estimated weighted-average amortization period of approximately 29 years.~~

The components of intangible assets are as follows:

	2020				2019
At December 31,	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
(millions)
Dominion Energy
Software, licenses and other	$	1,295	$	530	$	1,162	$	477
Virginia Power
Software, licenses and other	$	482	$	148	$	406	$	135

2019

2018

At December 31,

Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
Amortization

(millions)

Dominion Energy

Software, licenses and other
$
1,340

$549
$
1,033

$363

Virginia Power

Software, licenses and other
$
406

$135
$
384

$134

Dominion Energy Gas

Software, licenses and other
$
178

$ 72
$
179

$ 64

Annual amortization expense for these intangible assets is estimated to be as follows:

	2021		2022		2023		2024		2025
(millions)
Dominion Energy	$	77	$	56	$	42	$	34	$	26
Virginia Power	$	32	$	18	$	12	$	9	$	6

2020

2021

2022

2023

2024

(millions)

Dominion Energy
$
88
$
78
$
70
$
56
$
49

Virginia Power
$
25
$
19
$
15
$
8
$
6

Dominion Energy Gas
$
9
$
8
$
8
$
5
$
4

~~Note~~

NOTE 12. ~~Regulatory Assets And Liabilities~~

REGULATORY ASSETS AND LIABILITIES

Regulatory assets and liabilities include the following:

At December 31,	2020		2019
(millions)
Dominion Energy
Regulatory assets:
Deferred cost of fuel used in electric generation⁽¹⁾	$	—	$	48
Deferred project costs and DSM programs for gas utilities⁽²⁾		35		21
Unrecovered gas costs⁽³⁾		78		99
Deferred rider costs for Virginia electric utility⁽⁴⁾⁽⁵⁾		98		109
Deferred nuclear refueling outage costs⁽⁶⁾		53		68
NND Project costs⁽⁷⁾		138		138
PJM transmission rates⁽⁸⁾		71		121
Other		226		267
Regulatory assets-current		699		871
Pension and other postretirement benefit costs⁽⁹⁾		1,363		1,431
Deferred rider costs for Virginia electric utility^{(4)(5)(10)(11)}		311		235
PJM transmission rates⁽⁸⁾		46		85
Deferred project costs for gas utilities⁽²⁾		632		521
Interest rate hedges⁽¹²⁾		1,042		709
AROs and related funding⁽¹³⁾		331		311
Cost of reacquired debt⁽¹⁴⁾		245		262
NND Project costs⁽⁷⁾		2,364		2,503
Ash pond and landfill closure costs⁽¹⁵⁾		2,301		1,016
Other		498		579
Regulatory assets-noncurrent		9,133		7,652
Total regulatory assets	$	9,832	$	8,523
Regulatory liabilities:
Deferred cost of fuel used in electric generation⁽¹⁾	$	58	$	—
Provision for future cost of removal and AROs⁽¹⁶⁾		183		124
Reserve for refunds and rate credits to electric utility customers⁽¹⁷⁾		128		143
Reserve for future credits to Virginia electric customers⁽¹⁸⁾		120		—
Cost-of-service impact of 2017 Tax Reform Act⁽¹⁹⁾		12		4
Income taxes refundable through future rates⁽²⁰⁾		124		71
Monetization of guarantee settlement⁽²¹⁾		67		67
Other		117		46
Regulatory liabilities-current		809		455
Income taxes refundable through future rates⁽²⁰⁾		4,376		4,529
Provision for future cost of removal and AROs⁽¹⁶⁾		2,150		2,208
Nuclear decommissioning trust⁽²²⁾		1,719		1,471
Monetization of guarantee settlement⁽²¹⁾		903		970
Reserve for refunds and rate credits to electric utility customers⁽¹⁷⁾		540		656
Overrecovered other postretirement benefit costs⁽²³⁾		111		54
Other		388		316
Regulatory liabilities-noncurrent		10,187		10,204
Total regulatory liabilities	$	10,996	$	10,659

At December 31,

2019

2018

(millions)

Dominion Energy

Regulatory assets:

Deferred cost of fuel used in electric generation
(1)
$
48
$
174

Deferred project costs and DSM programs for gas utilities
(2)

21

17

Unrecovered gas costs
(3)

102

14

Deferred rate adjustment clause costs for Virginia electric utility
(4)(5)

109

78

Deferred nuclear refueling outage costs
(6)

68

69

NND Project costs
(7)

138

—

PJM transmission rates
(8)

121

45

Other

272

99

Regulatory assets-current

879

496

Deferred cost of fuel used in electric generation
(1)

—

83

P
ension and other postretirement benefit costs
(9)

1,431

1,497

Deferred rate adjustment clause costs for Virginia electric utility
(4)(5)(10)

235

230

PJM transmission rates
(8)

85

192

Deferred project costs for gas utilities
(2)

521

335

Interest rate hedges
(11)

741

184

AROs and related funding
(12)

311

—

Cost of reacquired debt
(13)(14)

262

3

NND Project costs
(7)

2,503

—

Ash pond and landfill closure costs
(15)

1,016

27

Other

582

125

Regulatory assets-noncurrent

7,687

2,676

Total regulatory assets
$
8,566
$
3,172

Regulatory liabilities:

Provision for future cost of removal and AROs
(16)
$
142
$
117

Reserve for refunds and rate credits to electric utility customers
(17)

143

71

Cost-of-service
impact of 2017 Tax Reform Act
(18)

4

104

Income taxes refundable through future rates
(19)

77

—

Monetization of guarantee settlement
(20)

67

—

Other

64

64

Regulatory liabilities-current

497

356

Income taxes refundable through future rates
(19)

5,088

4,071

Provision for future cost of removal and AROs
(16)

2,302

1,409

Nuclear decommissioning trust
(21)

1,471

1,070

Monetization of guarantee settlement
(20)

970

—

Reserve for refunds and rate credits to electric utility customers
(17)

656

—

Overrecovered other postretirement benefit costs
(22)

189

120

Other

325

170

Regulatory liabilities-noncurrent

11,001

6,840

Total regulatory liabilities
$
11,498
$
7,196

~~(1)~~

(1)

Reflects deferred fuel expenses for the Virginia, North Carolina and South Carolina jurisdictions of Dominion Energy’s electric generation operations.

~~(2)~~

(2)

Primarily reflects amounts expected to be collected from or owed to gas customers in Dominion Energy’s service territories associated with current and prospective rider projects, including CEP, PIR and pipeline integrity management. See Note 13 for more ~~information.~~information.

~~(3)~~

(3)

Reflects unrecovered or overrecovered gas costs at regulated gas operations, which are recovered or refunded through filings with the applicable regulatory ~~authority.~~authority.

	(4)
						~~143~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~(4)~~

Reflects deferrals under Virginia Power’s electric transmission FERC formula rate and the deferral of costs associated with certain current and prospective rider projects, net of excess deferred income taxes ~~refundable~~ from the 2017 Tax Reform Act for Virginia Power. See Note 13 for more information.

~~(5)~~

(5)

As a result of actions from the Virginia Commission in the first quarter of 2019 regarding the ratemaking treatment of excess deferred taxes from the adoption of the 2017 Tax Reform Act for all existing ~~rate adjustment clauses,~~riders, Virginia Power recorded a $29 million ($22 million

after-tax)

charge in operating revenue in the Consolidated Statements of Income for amounts ~~which are~~ probable of being returned to ~~customers.~~customers primarily in 2019 and 2020.

~~(6)~~

(6)

Legislation enacted in Virginia in April 2014 requires Virginia Power to defer operation and maintenance costs incurred in connection with the refueling of any nuclear-powered generating plant. These deferred costs will be amortized over the refueling cycle, not to exceed 18 months.

~~(7)~~

(7)

Reflects expenditures by DESC associated with the NND Project, which pursuant to the SCANA Merger Approval Order, will be recovered from DESC electric service customers over a

20-year

period ending in 2039. See Note 3 for more ~~information.~~information.

~~(8)~~

(8)

Reflects amounts to be recovered through retail rates in Virginia for payments Virginia Power will make to PJM over a

ten-year

period ending 2028 under the terms of a FERC settlement agreement in May 2018 resolving a PJM cost allocation ~~matter.~~matter.‌

~~(9)~~

(9)

Represents unrecognized pension and other postretirement employee benefit costs expected to be recovered or refunded through future rates generally over the expected remaining service period of plan participants by certain of Dominion ~~Energy’s~~Energy's rate-regulated ~~subsidiaries.~~subsidiaries.

~~(10)~~

(10)

During the first quarter of 2019, Virginia Power recorded a charge of $17 million ($13 million

after-tax)

in impairment of assets and other charges (reflected in the Corporate and Other segment)

write-off

the balance of a regulatory asset for which it is no longer seeking ~~recovery.~~recovery.

~~(11)~~

(11)

During the second quarter of 2020, Virginia Power recorded a charge of $16 million ($15 million after-tax) in impairment of assets and other charges (reflected in the Corporate and Other segment) to write off the balance of a regulatory asset for which it is no longer seeking recovery.

(12)

Reflects interest rate hedges recoverable from or refundable to customers. Certain of these instruments are settled and any related payments are being amortized into interest expense over the life of the related debt, which has a weighted-average useful life of approximately 27 years as of December 31, ~~2019.~~2020.

~~(12)~~

(13)

Represents deferred depreciation and accretion expense related to legal obligations associated with the future retirement of generation, transmission and distribution properties. The AROs primarily relate to DESC’s electric generating facilities, including Summer, and are expected to be recovered over the related property lives and periods of decommissioning which may range up to approximately 105

~~years.~~ years.

~~(13)~~

(14)

Costs of the reacquisition of debt are deferred and amortized as interest expense over the

would-be

remaining life of the reacquired debt. The reacquired debt costs had a weighted-average life of approximately 26 years as of December 31, ~~2019.~~2020.

~~(14)~~

During 2019, DESC purchased certain of its first mortgage bonds as discussed in Note 18. As a result of these transactions, DESC incurred net costs, including write-offs of unamortized discount, premium and debt issuance costs, of $270 million.

(15)

Primarily reflects legislation enacted in Virginia in March 2019 which requires any CCR unit located at certain Virginia Power stations to be closed by removing the CCRs to an approved landfill or through recycling for beneficial reuse. Subject to approval by the Virginia Commission, amounts are expected to be collected over a period between 15 and 18 years commencing no earlier than 2021. Virginia Power is entitled to collect carrying costs once expenditures have been made. See Note 2314 for additional information. As a result of the March 2020 planned early retirement of certain facilities, amounts recoverable through riders were reclassified from property, plant and equipment.

~~(16)~~

(16)

Rates charged to customers by Dominion Energy’s regulated businesses include a provision for the cost of future activities to remove assets that are expected to be incurred at the time of ~~retirement.~~retirement.

~~(17)~~

(17)

Reflects amounts previously collected from retail electric customers of DESC for the NND Project to be credited over an estimated

11-year

period effective February 2019, in connection with the SCANA Merger Approval ~~Order and Virginia legislation enacted in March 2018 that required~~

~~one-time~~

~~rate credits of certain amounts to utility customers in Virginia.~~Order. See Notes 3 and 13 for more information.

(18)

Represents a reserve for benefits expected to be provided through the use of a CCRO in accordance with the GTSA to jurisdictional retail electric customers in Virginia in connection with the 2021 Triennial Review. See Note 13 for additional information.

~~(18)~~

(19)

Balance refundable to customers related to the decrease in revenue requirements for recovery of income taxes at the Companies’ regulated electric generation and electric and natural gas distribution operations. See Notes 3 and 13 for ~~additional information.~~more information.

~~(19)~~

(20)

Amounts recorded to pass the effect of reduced income taxes from the 2017 Tax Reform Act to customers in future periods, which will primarily reverse at the weighted average tax rate that was used to build the reserves over the remaining book life of the property, net of amounts to be recovered through future rates to pay income taxes that become payable when rate revenue is provided to recover AFUDC ~~equity.~~equity.

~~(20)~~

(21)

Reflects amounts to be refunded to DESC electric service customers over a

20-year

period ending in 2039 associated with the monetization of a bankruptcy settlement agreement. See Note 3 for ~~additional information.~~more information.

~~(21)~~

(22)

Primarily reflects a regulatory liability representing amounts collected from Virginia jurisdictional customers and placed in external trusts (including income, losses and changes in fair value thereon, as applicable) for the future decommissioning of Dominion Energy’s utility nuclear generation stations, in excess of the related ~~AROs.~~AROs.

~~(22)~~

(23)

Reflects a regulatory liability for the collection of postretirement benefit costs allowed in rates in excess of expense ~~incurred.~~incurred.

At December 31,	2020		2019
(millions)
Virginia Power
Regulatory assets:
Deferred cost of fuel used in electric generation⁽¹⁾	$	—	$	48
Deferred rider costs⁽²⁾⁽³⁾		98		109
Deferred nuclear refueling outage costs⁽⁴⁾		53		68
PJM transmission rates⁽⁵⁾		71		121
Other		73		87
Regulatory assets-current		295		433
Deferred rider costs^(2)(3)(6)(7)		311		235
PJM transmission rates⁽⁵⁾		46		85
Interest rate hedges⁽⁸⁾		733		404
Ash pond and landfill closure costs⁽⁹⁾		2,301		1,016
Other		118		123
Regulatory assets-noncurrent		3,509		1,863
Total regulatory assets	$	3,804	$	2,296
Regulatory liabilities:
Deferred cost of fuel used in electric generation⁽¹⁾	$	58	$	—
Provision for future cost of removal⁽¹⁰⁾		152		103
Reserve for future credits to Virginia electric customers⁽¹¹⁾		120		—
Income taxes refundable through future rates⁽¹²⁾		54		54
Other		41		10
Regulatory liabilities-current		425		167
Income taxes refundable through future rates⁽¹²⁾		2,404		2,438
Nuclear decommissioning trust⁽¹³⁾		1,719		1,471
Provision for future cost of removal⁽¹⁰⁾		980		1,054
Deferred cost of fuel used in electric generation⁽¹⁾		54		30
Other		181		81
Regulatory liabilities-noncurrent		5,338		5,074
Total regulatory liabilities	$	5,763	$	5,241

At December 31,

2019

2018

(millions)

Virginia Power

Regulatory assets:

Deferred cost of fuel used in electric generation
(1)
$
48
$
174

Deferred rate adjustment clause costs
(2)(3)

109

78

Deferred nuclear refueling outage costs
(4)

68

69

PJM transmission rates
(5)

121

45

Other

87

58

Regulatory assets-current

433

424

Deferred rate adjustment clause costs
(2)(3)(6)

235

230

PJM transmission rates
(5)

85

192

Interest rate hedges
(7)

404

151

Deferred cost of fuel used in electric generation
(1)

—

83

Ash pond and landfill closure costs
(8)

1,016

27

Other

123

54

Regulatory assets-noncurrent

1,863

737

Total regulatory assets
$
2,296
$
1,161

Regulatory liabilities:

Provision for future cost of removal
(9)
$
103
$
92

Cost-of-service
impact of 2017 Tax Reform Act
(10)

—

95

Reserve for rate credits to electric utility customers
(11`)

—

71

Income taxes refundable through future rates
(12)

54

—

Other

10

41

Regulatory liabilities-current

167

299

Income taxes refundable through future rates
(12)

2,438

2,579

Nuclear decommissioning trust
(13)

1,471

1,070

Provision for future cost of removal
(9)

1,054

940

Other

111

58

Regulatory liabilities-noncurrent

5,074

4,647

Total regulatory liabilities
$
5,241
$
4,946

~~(1)~~

(1)

Reflects deferred fuel expenses for ~~the~~ Virginia and North Carolina jurisdictions of Virginia Power’s generation ~~operations.~~operations.

~~(2)~~

(2)

Reflects deferrals under Virginia Power’s electric transmission FERC formula rate and the deferral of costs associated with certain current and prospective rider projects, net of excess deferred income taxes ~~refundable~~ from the 2017 Tax Reform ~~Act for Virginia Power.~~Act. See Note 13 for more ~~information.~~information.

~~(3)~~

(3)

after-tax)

charge in operating revenue in the Consolidated Statements of Income for amounts ~~which are~~ probable of being returned to ~~customers.~~customers primarily in 2019 and 2020.

~~(4)~~

(4)

~~(5)~~

(5)

Reflects amounts to be recovered through retail rates in Virginia for payments Virginia Power will make to PJM over a

ten-year

period ending 2028 under the terms of a FERC settlement agreement in May 2018 resolving a PJM cost allocation matter.

	(6)
~~144~~

~~(6)~~

During the first quarter of 2019, Virginia Power recorded a charge of $17 million ($13 million

after-tax)

in impairment of assets and other charges (reflected in the Corporate and Other segment)

write-off

the balance of a regulatory asset for which it is no longer seeking recovery.

~~(7)~~

(7)

(8)

~~(8)~~

(9)

Primarily reflects legislation enacted in Virginia in March 2019 which requires any CCR unit located at certain Virginia Power stations to be closed by removing the CCR to an approved landfill or through recycling for beneficial reuse. Subject to approval by the Virginia Commission, amounts are expected to be collected over a period between 15 and 18 years commencing no earlier than 2021. Virginia Power is entitled to collect carrying costs once expenditures have been made. See Note 2314 for additional information. As a result of the March 2020 planned early retirement of certain facilities, amounts recoverable through riders were reclassified from property, plant and equipment.

~~(9)~~

(10)

Rates charged to customers by Virginia ~~Power’s~~Power's regulated businesses include a provision for the cost of future activities to remove assets that are expected to be incurred at the time of retirement.

~~(10)~~

~~Balance refundable~~

(11)

Represents a reserve for benefits expected to be provided through the use of a CCRO in accordance with the GTSA to jurisdictional retail electric customers ~~related to~~in Virginia in connection with the ~~decrease in revenue requirements for recovery of income taxes at regulated electric generation and distribution operations.~~2021 Triennial Review. See Note 13 for additional information.

~~(11)~~

~~Charge associated with Virginia legislation enacted in March 2018 that required~~

~~one-time~~

~~rate credits of certain amounts to utility customers. See Note 13 for additional information.~~

(12)

Amounts recorded to pass the effect of reduced income taxes from the 2017 Tax Reform Act to customers in future periods, which will reverse at the weighted average tax rate that was used to build the reserves over the remaining book life of the property, net of amounts to be recovered through future rates to pay income taxes that become payable when rate revenue is provided to recover AFUDC ~~equity.~~equity.

~~(13)~~

(13)

Primarily reflects a regulatory liability representing amounts collected from Virginia jurisdictional customers and placed in external trusts (including income, losses and changes in fair value thereon) for the future decommissioning of Virginia Power’s utility nuclear generation stations, in excess of the related ~~AROs.~~AROs.

At December 31,

2019

2018

(millions)

Dominion Energy Gas

Regulatory assets:

Unrecovered gas costs
(1)
$
2
$
1

Other

6

7

Regulatory assets-current
(2)

8

8

Unrecognized pension and other postretirement benefit costs
(3)

—

15

Interest rate hedges
(4)

32

33

Other

8

4

Regulatory assets-noncurrent

40

52

Total regulatory assets
$
48
$
60

Regulatory liabilities:

Provision for future cost of removal and AROs
(5)
$
18
$
9

Overrecovered gas costs
(1)

8

7

Other

15

8

Regulatory liabilities-current
(6)

41

24

Income taxes refundable through future rates
(7)

560

530

Provision for future cost of removal and AROs
(6)

95

113

Overrecovered other postretirement benefit costs
(8)

133

106

Other

12

16

Regulatory liabilities-noncurrent

800

765

Total regulatory liabilities
$
841
$
789

~~(1)~~

~~Reflects unrecovered or overrecovered gas costs at regulated gas operations, which are recovered or refunded through filings with the applicable regulatory authority.~~

~~(2)~~

~~Current regulatory assets are presented in other current assets in Dominion Energy Gas’ Consolidated Balance Sheets.~~

~~(3)~~

~~(4)~~

~~(5)~~

Rates charged to customers by Dominion Energy Gas’ regulated businesses include a provision for the cost of future activities to remove assets that are expected to be incurred at the time of retirement.

~~(6)~~

~~Current regulatory liabilities are presented in other current liabilities in Dominion Energy Gas’ Consolidated Balance Sheets.~~

~~(7)~~

~~(8)~~

~~Reflects a regulatory liability for the collection of postretirement benefit costs allowed in rates in excess of expense incurred.~~

At December 31, ~~2019,~~2020, Dominion Energy and Virginia Power ~~and Dominion Energy Gas’~~ regulatory assets include ~~$3.3 billion, $1.8~~$4.5 billion and ~~$46 million,~~$3.2 billion, respectively, on which they do not expect to earn a return during the applicable recovery period. With the exception of certain items discussed above, the majority of these expenditures are expected to be recovered within the next two years.

~~ote~~

NOTE 13. ~~Regulatory Matters~~

REGULATORY MATTERS

Regulatory Matters Involving Potential Loss Contingencies

As a result of issues generated in the ordinary course of business, the Companies are involved in various regulatory matters. Certain regulatory matters may ultimately result in a loss; however, as such matters are in an initial procedural phase, involve uncertainty as to the outcome of pending reviews or orders, and/or involve significant factual issues that need to be resolved, it is not possible for the Companies to estimate a range of possible loss. For regulatory matters that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the regulatory process such that the Companies are able to estimate a range of possible loss. For regulatory matters that the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any estimated range is based on currently available information, involves elements of judgment and significant uncertainties and may not represent the Companies’ maximum possible loss exposure. The circumstances of such regulatory matters will change from time to time and actual results may vary significantly from the current estimate. For current matters not specifically reported below, management does not anticipate that the outcome from such matters would have a material effect on the Companies’ financial position, liquidity or results of operations.

FERC

—

~~Electric~~

ELECTRIC


						~~145~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

wholesale purchasers in Virginia and North Carolina. DESC sells electricity to wholesale purchasers in its balancing authority area under its electric cost based tariff and to wholesale purchasers outside of its balancing authority area under its market based rate authority. Dominion Energy’s ~~merchant~~nonregulated generators sell electricity in the PJM, CAISO and

ISO-NE

wholesale markets, and to wholesale purchasers in the states of Virginia, North Carolina, Indiana, Connecticut, Tennessee, Georgia, California, Ohio, South Carolina and Utah, under Dominion Energy’s market-based sales tariffs authorized by FERC or pursuant to FERC authority to sell as a qualified facility. In addition, Virginia Power 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 Virginia Power’s service territory. Any such sales would be voluntary.

~~Rates~~

~~In April 2008,~~

FERC granted an application for Virginia Power’s electric transmission operations to establish a forward-looking formula rate mechanism that updates transmission rates on an annual basis and approved an ROE effective as of January 1, 2008. The formula rate is designed to recover the expected revenue requirement for each calendar year and is updated based on actual costs. The FERC-approved formula method, which is based on projected costs, allows Virginia Power to earn a current return on its investment in electric transmission infrastructure.

In March 2010, ODEC and North Carolina Electric Membership Corporation filed a complaint with FERC against Virginia Power claiming, among other issues, that the incremental costs of undergrounding certain transmission line projects were unjust, unreasonable and unduly discriminatory or preferential and should be excluded from Virginia Power’s transmission formula rate. A settlement of the other issues raised in the complaint was approved by FERC in May 2012.

In March 2014, FERC issued an order excluding from Virginia Power’s transmission rates for wholesale transmission customers located outside Virginia the incremental costs of undergrounding certain transmission line projects. FERC found it is not just and reasonable for

~~non-Virginia~~

wholesale transmission customers to be allocated the incremental costs of undergrounding the facilities because the projects are a direct result of Virginia legislation and Virginia Commission pilot programs intended to benefit the citizens of Virginia. The order is retroactively effective as of March 2010 and will cause the reallocation of the costs charged to wholesale transmission customers with loads outside Virginia to wholesale transmission customers with loads in Virginia. FERC determined that there was not sufficient evidence on the record to determine the magnitude of the underground increment and held a hearing to determine the appropriate amount of undergrounding cost to be allocated to each wholesale transmission customer in Virginia.

In October 2017, FERC issued an order determining the calculation of the incremental costs of undergrounding the transmission projects and affirming that the costs are to be recovered from the wholesale transmission customers with loads located in Virginia. FERC directed Virginia Power to rebill all wholesale transmission customers retroactively to March 2010 within 30 days of when the proceeding becomes final and no longer subject to rehearing. In November 2017, Virginia Power,

North Carolina Electric Membership Corporation and the wholesale transmission customers filed petitions for rehearing. In July 2018, FERC denied the rehearing requests related to the October 2017 order determining the calculation of the undergrounding costs. Several parties have appealed FERC’s decision to the U.S. Court of Appeals for the D.C. Circuit. In December 2019, the U.S. Court of Appeals for the D.C. Circuit denied the appeal.

In January 2019, FERC issued an order denying PJM’s request to waive certain provisions of the PJM Tariff regarding the liquidation of a portfolio of FTRs owned by GreenHat who had defaulted on its financial obligations. As a result of FERC’s order, PJM is required to use the existing tariff provisions to liquidate GreenHat’s FTR portfolio and allocate the resulting costs to PJM members. In February 2019, PJM filed a request for clarification and rehearing with FERC. Also in February 2019, Virginia Power and certain other PJM members filed a request for rehearing with FERC. In June 2019, FERC established a hearing and settlement proceedings to address the issues raised in PJM’s request for clarification and rehearing. In October 2019, PJM submitted a settlement offer to FERC which was approved by FERC in December 2019. Based on the terms of the settlement, the impact to Virginia Power is expected to be immaterial.

~~FERC—~~—G

In July 2017, FERC audit staff communicated to DETI that it had substantially completed an audit of DETI’s compliance with the accounting and reporting requirements of FERC’s Uniform System of Accounts and provided a description of matters and preliminary recommendations. In November 2017, the FERC audit staff issued its audit report which ~~could have~~had the potential to result in adjustments which could behave been material to Dominion ~~Energy and Dominion Energy Gas’~~Energy’s results of operations. In December 2017, DETI provided its response to the audit report. ~~DETI requested FERC review of contested findings and submitted its plan for compliance with the uncontested portions of the report.~~ In ~~connection with one uncontested issue, DETI recognized a charge of $15 million ($9 million~~

~~after-tax)~~

~~recorded within impairment of assets and related charges in Dominion Energy and Dominion Energy Gas’ Consolidated Statements of Income~~

~~(reflected in the Corporate and Other segment)~~

~~during 2017 to~~

~~write-off~~

~~the balance of a regulatory asset, originally established in 2008, that is no longer considered probable of recovery.~~2018, DETI recognized a charge of $129 million ($94 million

after-tax)

recorded ~~primarily~~ within ~~impairment of assets and related charges~~discontinued operations in Dominion ~~Energy and Dominion Energy Gas’~~Energy’s Consolidated Statements of Income

~~(reflected in the Corporate and Other segment)~~

~~during 2018~~ for a disallowance of plant, originally established beginning in 2012, for the resolution of one matter with FERC. ~~Pending final resolution~~In November 2020, Dominion Energy completed the sale of DETI as part of the ~~audit process and a determination by FERC, management is unable to estimate the potential impact of the remaining finding and no amounts have been recognized.~~GT&S Transaction.

2017 Tax Reform Act

Subsequent to the enactment of the 2017 Tax Reform Act, the Companies’ state regulators issued orders requesting that public utilities evaluate the total tax impact on the entity’s cost of service and accrue a regulatory liability attributable to the benefits of the reduction in the corporate income tax rate. Certain of the orders requested that the public utilities submit a


~~146~~

response to the state regulatory commissions detailing the total tax impact on the utility’s cost of service.

The Companies began to reserve the impacts of the

cost-of-service

reduction as regulatory liabilities in January 2018 and will continue until rates are reset pursuant to state regulators’ approvals. The Companies have recorded a reasonable estimate of net income taxes refundable through future rates in the jurisdictions in which they ~~operate and are currently assessing these actions and decisions, which could have a material impact on the Companies’ results of operations, financial condition and/or cash flows.~~

operate.

In September 2018, the Virginia Commission issued an order directing Virginia Power to submit a filing quantifying the impacts of the 2017 Tax Reform Act in advance of the April 1, 2019 implementation as required by legislation, which filing was submitted in October 2018. In January 2019, Virginia Power filed updated testimony with a proposed annual revenue reduction of approximately $171 million. Additionally, Virginia Power proposed to issue a

~~one-time~~

~~bill credit to customers within 90 days of this effective date, to~~

~~true-up~~

~~the difference between the final revenue reduction for the period January 1, 2018 through March 31, 2019 and the $125 million interim rate reduction implemented on July 1, 2018.~~Act. In March 2019, the Virginia Commission issued an order approving an annual revenue reduction of approximately $183 million effective April 2019 and ordered Virginia Power to implement the

one-time

customer credit on or before July 1, 2019. In the second quarter of 2019, Virginia Power refunded to customers $132 million.

In August 2018, Virginia Power filed with FERC to waive protocols and begin reflecting projected tax reform benefits of approximately $100 million through the transmission formula rate prior to the normal formula rate process. FERC granted the waiver and the amounts began being reflected in customer billings in November 2018 reflecting the adjustment effective January 1, 2018.

In October 2018, the North Carolina Commission issued an order requesting companies file to reduce base rates expeditiously. Virginia Power made its compliance filing in October 2018 and submitted an annual base rate revenue decrease of approximately $14 million effective in early 2019. Virginia Power also proposed to issue a

~~one-time~~

~~bill credit in early 2019 for its 2018 tax savings collected provisionally from customers.~~ In March 2019, the North Carolina Commission issued an order approving Virginia Power’s proposed annual base rate revenue decrease of approximately $14 million effective in early 2019 and

one-time

bill ~~credit.~~credit for its 2018 tax savings collected provisionally from customers. In the second quarter of 2019, Virginia Power refunded to customers $13 million.

In March 2019, Questar Gas filed with the Utah and Wyoming Commissions as to the impact of excess deferred income taxes resulting from the 2017 Tax Reform Act. Questar Gas proposed to return the 2018 amortization of excess deferred income taxes to customers and to incorporate the remaining excess deferred income tax impact in its next general rate cases in each jurisdiction. ~~In May 2019, the~~The Utah Commission issued an order effective March 2020 approving Questar Gas’ proposal to ~~pass back~~refund the ~~2018~~January 2019 through February 2020 amortization of excess deferred income taxes over ~~twelve~~12 months beginning in June ~~2019. The matter~~2020. Additionally, new base rates that went into effect in Utah on March 1, 2020 include the prospective impacts of sharing excess deferred income taxes with customers. In April 2020, at the request of the Wyoming Commission, ~~is pending.~~

this matter was considered in conjunction with the base rate case that was filed in November 2019. In June 2020, the Wyoming Commission approved a proposal to share the benefits of deferred income taxes for the period January 2018 through August 2020 with customers over a one year period beginning in September 2020. In addition, new base rates that went into effect in Wyoming in September 2020 include the prospective impacts of sharing excess deferred income taxes with customers.

In October 2018, the Ohio Commission issued an order requiring rate-regulated utilities to file an application reflecting the

impact of the 2017 Tax Reform Act on current rates by January 1, 2019. In December 2018, East Ohio filed its application proposing an approach to establishing rates and charges by and through which to return tax reform benefits to its customers. In December 2019, the Ohio Commission issued an order approving customer credits of approximately $600 million that will be shared with customers primarily over the remaining book life of the property to which the excess deferred income taxes relate. In addition, East Ohio will reduce rates approximately $19 million per year to account for the 2017 Tax Reform Act’s impact on its equity return component of rates charged to customers.

A tax savings credit, which passes through the reduction in the federal income tax rate under the 2017 Tax Reform Act to customers in accordance with the settlement agreement approved by the Ohio Commission, became effective with the first billing cycle in April 2020.

In connection with the SCANA Merger Approval Order, the South Carolina Commission approved DESC’s provision of approximately $100 million in bill credits related to the 2017 Tax Reform Act’s impact on retail electric customer rates for the period beginning January 2018 through January 2019. These credits have been included in bills rendered on and after the first billing cycle of February 2019. In addition, the South Carolina Commission approved a tax rider whereby the effects of the reduction in the corporate income tax rate resulting from the 2017 Tax Reform Act will benefit retail electric customers. This tax rider reduced base rates to ~~retail electric~~ customers by ~~approximately~~ $63 million in 2019 and ~~is expected to reduce these rates by $67~~$66 million in 2020.

Unamortized excess deferred income taxes that remained at the end of 2020 will be considered in future rate proceedings.

In October 2018, the South Carolina Commission issued an order approving adjustment to DESC’s natural gas rate schedules, under the terms of the Natural Gas Rate Stabilization Act, to reflect the reduction in the federal corporate tax rate arising from the 2017 Tax Reform Act. The approved natural gas rate schedules also included a tax reform rate rider to refund certain income tax amounts previously collected from customers. These lower rates, representing a $20 million decreased revenue requirement, became effective for bills rendered on and after the first billing cycle in November 2018.

In December 2018, the North Carolina Commission issued an order approving PSNC’s proposed adjustments to customer rates, representing a $13 million decreased revenue requirement, to reflect the reduction in the federal corporate tax rate arising from the 2017 Tax Reform Act. These lower rates became effective for service rendered on and after January 1, 2019. Amounts collected in customer rates during 2018 and amounts arising from excess deferred income taxes have been recorded in regulatory liabilities and must be considered in PSNC’s next general rate case proceeding or in three years, whichever is sooner. The reduction in the federal corporate tax rate and its impact on PSNC’s various rate riders will be addressed in future proceedings related to those riders.

~~During 2018, Dominion Energy’s FERC-regulated pipelines, including those accounted for as equity method investments, filed the Form~~

~~501-G~~

with FERC. Dominion Energy Overthrust Pipeline, LLC, White River Hub, Dominion Energy Questar Pipeline, DETI, DECG, Cove Point and Iroquois have reached resolution through a FERC waiver or FERC terminating the

~~501-G~~

~~proceeding, or through settlement, which did not result in a material impact to results of operations, financial condition and/or cash flows of Dominion Energy or Dominion Energy Gas.~~


						~~147~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

Other Regulatory Matters

~~irginia~~

~~egulation~~

Virginia Regulation

Regulation Act

The Regulation Act enacted in 2007 instituted a

cost-of-service

rate model, ending Virginia’s planned transition to retail competition for electric supply service to most classes of customers.

The Regulation Act authorizes stand-alone rate adjustment clauses for recovery of costs for new generation projects, FERC-approved transmission costs, underground distribution lines, environmental compliance, conservation and energy efficiency programs, renewable energy programs and nuclear license renewals, and also contains statutory provisions directing Virginia Power to file annual fuel cost recovery cases with the Virginia Commission. ~~As amended, it provides for enhanced returns on capital expenditures on specific newly-proposed generation projects.~~

If the Virginia Commission’s future rate decisions, including actions relating to Virginia Power’s rate adjustment clause filings, differ materially from Virginia Power’s expectations, it may adversely affect its results of operations, financial condition and cash flows.

In November 2019, the Virginia Commission approved a 9.2% general ROE for Virginia Power’s non-transmission rate adjustment clauses and for purposes of determining Virginia Power’s base rate earnings in the 2021 Triennial Review.

In 2020, Virginia Power recorded a charge of $130 million ($97 million after-tax) in impairment of assets and other charges in its Consolidated Statements of Income (reflected in the Corporate and Other segment) for benefits expected to be provided through the use of a CCRO in accordance with the GTSA. This charge reflects benefits expected to be provided to jurisdictional customers as a result of the 2021 Triennial Review as well as the impact on certain non-jurisdictional customers which follow Virginia Power’s jurisdictional customer rate methodology.

Grid Transformation and Security Act of 2018

In March 2018, the GTSA reinstated base rate reviews ~~on a triennial basis, other than~~commencing with the ~~first review~~2021 Triennial Review which ~~will be a quadrennial review, occurring for Virginia Power in 2021 for the four successive~~

~~12-month~~

~~test periods beginning January 1, 2017 and ending December 31, 2020. This review for Virginia Power~~ will occur one year earlier than under the Regulation Act legislation enacted in February 2015.

In the triennial review proceedings, earnings that are more than 70 basis points above the utility’s authorized ROE that might have been refunded to customersand served as the basis for a reduction in future rates, may be reduced by Virginia ~~Commission~~

~~approved~~Commission-approved investment amounts in qualifying solar or wind generation facilities or electric distribution grid transformation projects that Virginia Power elects to include in a ~~customer credit reinvestment offset.~~CCRO. The legislation declares that electric distribution grid transformation projects are in the public interest and provides that the costs of such projects may be recovered through a rate adjustment clause if not the subject of a ~~customer credit reinvestment offset.~~CCRO. Any costs that are the subject of a ~~customer credit reinvestment offset~~CCRO may not be recovered in base rates for the service life of the projects and may not be included in base rates in future triennial review proceedings. In any triennial review in which the Virginia Commission determines that the utility’s earnings are more than 70 basis points above its authorized ROE, base rates are subject to reduction prospectively and customer refunds would be due unless the total ~~customer credit reinvestment offset~~CCRO elected by the utility equals or exceeds the amount of earnings in excess of the 70 basis points. In the 2021 review, any such rate reduction is limited to $50 million.

The legislation also includes provisions requiring Virginia Power to provide current customers

one-time

rate credits totaling $200 million and to reduce base rates to reflect reductions in income tax expense resulting from the 2017 Tax Reform Act. As a result, Virginia Power incurred a $215 million ($160 million

after-tax)

charge (reflected in the Corporate and Other segment during 2018) in connection with this legislation, including the impact on certain

non-jurisdictional

customers which follow Virginia Power’s jurisdictional customer rate methodology. In July

2018 and January 2019, Virginia Power credited $138 million and $77 million, respectively, to current customers’ bills.

In addition, Virginia Power reduced base rates on an annual basis by $125 million effective July 2018, to reflect the estimated effect of the 2017 Tax Reform Act. In March 2019, the Virginia Commission directed an annual revenue reduction of $183 million in rates for generation and distribution services pursuant to the GTSA effective April 2019.

In ~~July 2018, Virginia Power filed a petition with~~January 2019, the Virginia Commission issued an order approving capital spending for ~~approval of~~ the first three years of ~~its~~

Virginia Power’s ten-year

plan totaling $68 million for electric distribution grid transformation projects as authorized by the GTSA. During the first three years of the plan, Virginia Power proposed to focus on the following seven foundational components of the overall grid transformation plan: (i) smart meters; (ii) customer information platform; (iii) reliability and resilience; (iv) telecommunications infrastructure; (v) cyber and physical security; (vi) predictive analytics; and (vii) emerging technology. The total estimated capital investment during 2019-2021 was $816 million and the proposed operations and maintenance expenses were $102 million. In January 2019, the Virginia Commission issued its final order approving capital spending for the first three years of the plan totaling $68 millionGTSA on cyber and physical security and related telecommunications infrastructure (Phase IA). The Virginia Commission declined to approve ~~the remainder~~certain of the proposed components for the first three years of the plan, the proposed spending for which was not found reasonable and prudent based on the record in the proceeding.

In September 2019, Virginia Power filed a revised plan which ~~includes~~included six components: (i) smart meters; (ii) customer information platform; (iii) grid improvement projects; (iv) telecommunications infrastructure; (v) cyber security; and (vi) a smart charging electric vehicle infrastructure pilot program (Phase IB). For Phase IB, the total proposed capital investment during 2019 – 2021 is $503 million and the proposed operations and maintenance investment iswas $78 million. ~~This matter is pending.~~

~~Regulation Act~~

In March ~~2019,~~2020, the Virginia Commission issued an order approving $212 million of costs related to a new customer information platform, targeted grid hardening and corridor improvements, an electric vehicle Smart Charging Infrastructure Pilot Program, cyber security, stakeholder engagement and customer education and denied the costs associated with AMI, self-healing grid and certain other grid hardening projects alleging that Virginia Power did not prove the reasonableness and prudency of these costs. In April 2020, Virginia Power filed a petition for reconsideration of the Virginia Commission’s order and requested clarification of certain matters, including the Smart Charging Infrastructure Pilot Program. Additionally, Virginia Power requested clarification of certain matters relating to an ~~application for~~AMI time-of-use rate and the smart charging electric vehicle infrastructure pilot program. Subsequently, in April 2020, the Virginia Commission ~~to determine the general ROE for~~denied in full Virginia Power’s

~~non-transmission~~

~~rate adjustment clauses~~ petition for reconsideration; however, it stated that its March 2020 order contained all necessary approvals for the smart charging electric vehicle infrastructure pilot program. Virginia Power intends to file a revised plan in 2021.

Utility Disconnection Moratorium Legislation

In November 2020, legislation was enacted in Virginia relating to the moratorium on utility disconnections during the COVID-19 pandemic and resulted in Virginia Power forgiving Virginia jurisdictional retail electric customer balances that were more than 30 days past due as of September 30, 2020. As a result, Virginia Power recorded a charge of $127 million ($94 million after-tax) in impairment of assets and other charges (reflected in the Corporate and Other segment). For the purposes of Virginia Power’s 2021 Triennial Review, the charge is excluded from Virginia Power’s cost of service for purposes of determining any test period earnings and determining any future rates. To the extent that the Virginia Commission determines total earnings for the test period to be above Virginia Power’s ~~base rate~~authorized earnings band, the forgiven balance amounts are offset against the excess earnings in the determination of any customer bill credits, or utilization of a CCRO, as part of the 2021 ~~quadrennial~~Triennial Review.

Virginia 2020 Legislation

In April 2020, the Governor of Virginia signed into law the VCEA, which along with related legislation forms a comprehensive framework affecting Virginia Power’s operations. The VCEA replaces Virginia’s voluntary renewable energy portfolio standard for Virginia Power with a mandatory program setting annual renewable energy portfolio standard requirements based on the percentage of total electric energy sold by Virginia Power, excluding existing nuclear generation and certain new carbon-free resources, reaching 100% by the end of 2045. The VCEA includes related requirements concerning deployment of wind, solar and energy storage resources, as well as provides for certain measures to increase net-metering, including an allocation for low-income customers, incentivizes energy efficiency programs and directs Virginia to participate in a carbon trading program. While the legislation affects several portions of Virginia Power’s operations, key provisions of the GTSA remain in effect, including the triennial review structure and timing, the use of the CCRO and the $50 million cap on revenue reductions in the first triennial review proceeding. Key provisions of the VCEA and related legislation passed include the following:

•

FossilFuel Electric Generation: The legislation mandates Chesterfield Power Station Units 5 & 6 and Yorktown Power Station Unit 3 to be retired by the end of 2024, Altavista, Southampton and Hopewell to be retired by the end of 2028 and Virginia Power’s remaining fossil fuel units to be retired by the end of 2045, unless the retirement of such generating units will compromise grid reliability or security. The legislation also imposes a temporary moratorium on CPCNs for fossil fuel generation, unless the resources are needed for grid reliability. In addition, the Virginia Commission shall determine the amortization period for recovery of any appropriate costs due to the early retirement of any electric generation facilities, which could result in the reversal of previous retirement costs deemed recovered during the review period ending 2020. As discussed in Note 2, Virginia Power had recorded charges for early retirement of certain coal- and oil-fired generating units in the first quarters of 2020 and 2019. Virginia Power also revised the depreciable lives of Altavista, Southampton and Hopewell for the mandated retirement to the end of 2028, which will not have a material impact to Virginia Power’s results of operations or cash flows given the existing regulatory framework.

•

Renewable Generation: The legislation provides a detailed renewable energy portfolio standard to achieve 100% zero-carbon generation by the end of 2045, excluding existing nuclear generation and certain new carbon-free resources. Components include requirements to petition the Virginia Commission for approval to construct or acquire new generating capacity to reach 16.1 GW of installed solar and onshore wind by the end of 2035, which includes specific requirements for utility-scale solar of 3.0 GW by the end of 2024, up to 15.0 GW by the end of 2035 and 1.1 GW of small-scale solar by the end of 2035. The legislation deems 2.7 GW of energy storage, including up to 800 MW for any one project which may include a pumped storage facility, by the end of 2035 to be in the public interest. The legislation also deems the construction or purchase of an offshore wind facility constructed off the Virginia coast with a capacity of up to 5.2 GW before 2035 to be in the public interest and provides certain presumptions facilitating cost recovery. The costs of such a facility constructed by the utility with a capacity between 2.5 and 3.0 GW will be presumed reasonably and prudently incurred if the Virginia Commission finds that the project meets competitive procurement requirements, the projected cost of the facility does not exceed a specified industry benchmark and the utility commences construction by the end of 2023 or has a plan for the facility to be in service by the end of 2027. Projects to meet these requirements are subject to approval by the Virginia Commission.

•

Energy Efficiency:The legislation includes an energy efficiency target of 5% energy savings, as measured from a 2019 baseline, through verifiable energy efficiency programs by the end of 2025 with future targets to be set by the Virginia Commission. Virginia Power has the opportunity to offset the lost revenues with margins on program spend if certain targets are achieved and can also seek recovery of the lost revenues associated with energy efficiency programs if such reductions are found to have caused Virginia Power to earn more than 50 basis points below a fair rate of return on its rates for generation and distribution services.

•

Carbon trading program: The legislation directs Virginia Power to participate in a market-based carbon trading program consistent with RGGI through 2050. All costs of the carbon trading program are recoverable through an environmental rider.

•

Low-income customers: The legislation includes the establishment of a percentage of income payment program to be administered by the Virginia Department of Housing and Community Development and the Virginia Department of Social Services. To fund the program, Virginia Power will remit amounts collected from customers under a universal service fee established and set by the Virginia Commission. As such, this program will not affect Virginia Power’s results of operations, financial position or cash flows. In December 2020, the Virginia Commission issued a final order confirming a revenue requirement of $93 million related to this program. Implementation details and the effective date of the program will be established in future legislation prior to collection of fees from customers.

Virginia Power expects to incur significant costs, including capital expenditures, to comply with the legislative requirements discussed above. The legislation allows for cost recovery under the ~~four successive~~

~~12-month~~

~~test periods beginning January 1, 2017 and ending December 31, 2020. The application supported a 10.75% ROE for these~~existing or modified regulatory framework through rate adjustment clauses, rates for generation and ~~quadrennial review period. In November 2019, the Virginia Commission approved a 9.2% general ROE for Virginia Power.~~

~~Virginia Fuel Expenses~~

In May 2019, Virginia Power filed its annual fuel factor with the Virginia Commission to recover an estimated $1.5 billion in Virginia jurisdictional projected fuel expenses for the rate year beginning July 1, 2019 and the projected June 30, 2019 under recovered balance of $124 million. Virginia Power’s proposed fuel rate represented a fuel revenue decrease of $192 million when applied to projected kilowatt-hour sales for the period July 1, 2019 to June 30, 2020. Subsequently in May 2019, Virginia Power revised its fuel factor filing to reduce the projected June 30, 2019


~~148~~

~~underrecovered balance to $107 million and a fuel revenue decrease of $254 million. In August 2019, the Virginia Commission approved~~distribution services or Virginia Power’s fuel ~~rate.~~

factor, as approved by the Virginia Commission. Costs allocated to the North Carolina jurisdiction will be recovered, subject to approval by the North Carolina Commission, in accordance with the existing regulatory framework.

Virginia Fuel Expenses

In February 2020, Virginia Power filed its annual fuel factor with the Virginia Commission to recover an estimated $1.2 billion in Virginia jurisdictional projected fuel expenses for the rate year beginning July 1, 2020 and a projected over-recovery of approximately $81 million for the prior year balance as of June 30, 2020. Virginia Power requested that the new fuel factor rate be implemented on an interim basis two months early, beginning on May 1, 2020. In March 2020, the Virginia Commission approved interim rates. Virginia Power’s proposed fuel rate represents a fuel revenue decrease of approximately $393 million when applied to projected kilowatt-hour sales for the rate year beginning May 1, 2020. ~~This matter is pending.~~

~~Battery Storage Pilot~~

In August 2019, Virginia Power filed an application with the Virginia Commission to participate in a pilot program for electric power storage batteries, which includes three projects for deployment of battery energy storage systems. Virginia Power also requested an amended CPCN to construct and operate a battery energy storage system at Scott Solar. The projects are estimated to cost approximately $35 million.

~~In February~~June 2020, the Virginia Commission approved a revised fuel rate based on an updated projected over-recovery of $103 million from the ~~request.~~

prior year balance as of June 30, 2020.

Solar Facility Projects

In May 2020 and July ~~2018,~~2020, Virginia Power entered into and closed on separate agreements to acquire Grassfield Solar, Norge Solar and Sycamore Solar. The projects are expected to cost approximately $170 million in aggregate once constructed, including the initial acquisition cost. The facilities are expected to generate 82 MW combined and be placed into service in 2021 and 2022. In October 2020, Virginia Power filed an application with the Virginia Commission for CPCNs to construct ~~2 solar facilities. Colonial Trail West~~ and ~~Spring Grove 1~~operate these projects as part of its efforts to meet the renewable generation development requirements under VCEA. This matter is pending.

In December 2020, Virginia Power entered into and closed on separate agreements to acquire Fountain Creek Solar and Otter Creek Solar. The projects are ~~estimated~~expected to cost approximately ~~$410~~$280 million ~~excluding financing costs. Colonial Trail West commenced commercial operations~~ in ~~December 2019 and Spring Grove 1 is~~aggregate once constructed, including the initial acquisition cost. The facilities are expected to ~~commence commercial operations in~~generate 140 MW combined and be placed into service by the ~~fourth quarter~~end of ~~2020.~~2023. Virginia Power ~~also applied for approval of Rider~~

~~US-3~~

associated with these projects with a proposed $10 million total revenue requirement for the rate year beginning June 1, 2019. In January 2019, the Virginia Commission issued a final order granting CPCNsexpects to ~~construct the solar facilities, subject to a~~

~~20-year~~

~~performance guarantee of the facilities at a 25% solar capacity factor when normalized for force majeure events. In April 2019, the Virginia Commission approved Rider~~

~~US-3.~~

~~In July 2019, Virginia Power filed an application~~file with the Virginia Commission for ~~a CPCN~~CPCNs to construct ~~Sadler Solar, which is estimated~~and operate these projects as well as a rider to ~~cost approximately $146 million, excluding financing costs. Sadler Solar is expected to commence commercial operations, subject to regulatory approvals~~recover the costs associated with the ~~project,~~recovery of certain renewable generation facilities in Virginia by the ~~fourth quarter~~end of ~~2020. Virginia Power also applied for approval of Rider~~

~~US-4~~

associated with this project with a proposed $9 million total revenue requirement for the rate year beginning June 1, 2020. In January 2020, the Virginia Commission issued a final order granting the CPCN to construct Sadler Solar, subject to a

~~20-~~

~~year performance guarantee of the facility at a 22% solar capacity factor when normalized for force majeure events. This matter regarding Rider~~

~~US-4~~

~~is pending.~~

~~Rate Adjustment Clauses~~

2021.

Riders

Below is a discussion of significant riders associated with various Virginia Power projects:

~~The Virginia Commission previously approved Rider T1 concerning transmission rates. In May 2019, Virginia Power~~

proposed a $920 million total revenue requirement consisting of $474 million for the transmission component of Virginia Power’s base rates and $446 million for Rider T1 for the rate year beginning September 1, 2019. This total revenue requirement represents a $271 million increase versus the revenues to be produced during the rate year under current rates. In July 2019, the Virginia Commission approved the filing.

The Virginia Commission previously approved Rider U in conjunction with cost recovery to move certain electric distribution facilities underground as authorized by Virginia legislation. In October 2019, the Virginia Commission approved Virginia Power’s proposed fourth phase of conversions totaling $123 million and a total $52 million revenue requirement for the rate year beginning February 1, 2020 for continuing recovery of the previously approved phase conversions and the proposed fourth phase conversions.

In December 2018, Virginia Power filed a petition requesting approval of Rider E and proposed a $114 million total revenue requirement for the rate year beginning November 1, 2019. In August 2019, the Virginia Commission issued an order approving in part and denying in part the petition. As a result, Virginia Power recorded a $21 million ($16 million

~~after-tax)~~

~~charge in impairment of assets and other charges in the Consolidated Statements of Income for the three and nine months ended September 30, 2019 to~~

~~write-off~~

certain disallowed environmental property, plant and equipment and regulatory assets. In August 2019, the Virginia Commission granted Virginia Power’s petition for reconsideration of the disallowed amount and stayed the order issued earlier in August 2019. In October 2019, the Virginia Commission approved Virginia Power’s request to implement a total revenue requirement of $104 million on an interim basis, subject to

~~true-up,~~

pending resolution of the petition for reconsideration. In November 2019, the Virginia Commission denied the petition for reconsideration and the $104 million total revenue requirement remains in effect.

~~Additional significant riders associated with various Virginia Power projects are as follows:~~

Rider Name

Application
Date

Approval
Date

Rate Year
Beginning

Total
Revenue
Requirement
(millions)

Increase
(Decrease)
Over
Previous
Year
(millions)

Rider S

May 2019

February 2020

April 2020

$195

$(20
)
Rider GV

May 2019

February 2020

April 2020

132

12

Rider W

May 2019

February 2020

April 2020

106

1

Rider R

May 2019

February 2020

April 2020

44

(13
)
Rider B

May 2019

February 2020

April 2020

32

(6
)
Rider
US-3

July 2019

Pending

June 2020

31

21

Rider BW

October 2019

Pending

September 2020

120

1

Rider
US-2

October 2019

Pending

September 2020

10

(5
)
Rider E

January 2020

Pending

November 2020

88

(16
)

•

The Virginia Commission previously approved Rider T1 concerning transmission rates. In May 2020, Virginia Power proposed a $1 billion total revenue requirement consisting of $474 million for the transmission component of Virginia Power’s base rates and $529 million for Rider T1 for the rate year beginning September 1, 2020. This total revenue requirement represents a $73 million increase versus the revenues to be produced during the rate year under current rates. In July 2020, the Virginia Commission approved the filing.

•

The Virginia Commission previously approved Rider U in conjunction with cost recovery to move certain electric distribution facilities underground as authorized by Virginia legislation. In June 2020, Virginia Power proposed an $80 million total revenue requirement consisting of $44 million for previously approved phases and $36 million for phase five costs for Rider U for the rate year beginning April 1, 2021. This total revenue requirement represents a $28 million increase over the previous year. This matter is pending.

•

The Virginia Commission previously approved Riders C1A, C2A and C3A in connection with cost recovery for DSM programs. In December 2019, Virginia Power filed a petition to approve an additional 10 new energy efficiency programs and 1 new demand response DSM program for five years, subject to future extension, with a $186 million cost cap, and proposed a total $60 million revenue requirement for the rate year beginning September 1, 2020. This total revenue requirement represents an $11 million increase over the previous year. In July 2020, the Virginia Commission approved the filing. In December 2020, Virginia Power filed a petition to approve an additional 10 new energy efficiency programs and 1 new demand response DSM program for five years, subject to future extension, with a $162 million cost cap, and proposed a total $78 million revenue requirement for the rate year beginning September 1, 2021. This total revenue requirement represents an $18 million increase over the previous year. Virginia Power also requested approval to establish a new Rider C4A in connection with cost recovery for DSM programs. This matter is pending.

•	In October 2020, Virginia Power applied for approval of Rider CE associated with Grassfield Solar, Norge Solar and Sycamore Solar described above. Virginia Power proposed an $11 million revenue requirement for the rate year beginning June 1, 2021. This matter is pending.

•

Pursuant to Virginia legislation, Virginia Power can recover costs associated with participating in a market-based carbon trading program consistent with RGGI. In December 2020, Virginia Power filed for approval of Rider RGGI with a proposed $167 million revenue requirement for the rate year beginning August 1, 2021. This matter is pending.

•

Pursuant to the VCEA, Virginia Power can recover costs of compliance with the mandatory renewable portfolio standard program. In December 2020, Virginia Power filed for approval of Rider RPS with a proposed $13 million revenue requirement for the rate year beginning August 1, 2021. This matter is pending.

~~149~~

•	Additional significant riders associated with various Virginia Power projects are as follows:

Rider Name

Application Date

Approval Date

Rate Year

Beginning

Total Revenue Requirement (millions)

Increase (Decrease) Over Previous Year (millions)

Rider US-3

July 2019

March 2020

June 2020

Rider BW

October 2019

June 2020

September 2020

(20

)

Rider US-2

October 2019

July 2020

September 2020

)

Rider E

January 2020

September 2020

November 2020

(19

)

Rider B

June 2020

Pending

April 2021

)

Rider GV

June 2020

Pending

April 2021

154

Rider R

June 2020

Pending

April 2021

Rider S

June 2020

Pending

April 2021

194

)

Rider W

June 2020

Pending

April 2021

120

Rider US-3

July 2020

Pending

June 2021

Rider US-4

July 2020

Pending

June 2021

Rider BW

October 2020

Pending

September 2021

113

Rider US-2

October 2020

Pending

September 2021

—

Rider E

January 2021

Pending

November 2021

(18

)

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~Coastal Virginia Offshore Wind Project~~

MW wind turbine generators located approximately 27 miles off the coast of Virginia Beach, Virginia in federal waters, and for a CPCN, for the generation tie line connecting the generators to shore. This project is expected to cost approximately $300 million and to be placed into service by the end of 2020.

Electric Transmission Projects

In November 2013, the Virginia Commission issued an order granting Virginia Power a CPCN to construct approximately 7 miles of new overhead 500 kV transmission line from the existing Surry switching station in Surry County to a new Skiffes Creek switching station in James City County, and approximately 20 miles of new 230 kV transmission line in James City County, York County, and the City of Newport News from the proposed new Skiffes Creek switching station to Virginia

Power’s existing Whealton substation in the City of Hampton. In February 2019, the transmission line project was placed into service. In March 2019, the U.S. Court of Appeals for the D.C. Circuit issued an order vacating the permit from the U.S. Army Corps of Engineers issued in July 2017 and ordered the U.S. Army Corps of Engineers to do a full environmental impact study of the project. In April 2019, Virginia Power and the U.S. Army Corps of Engineers filed petitions for rehearing with the U.S. Court of Appeals for the D.C. Circuit, asking that the permit from the U.S. Army Corps of Engineers remain in effect while an environmental impact study is performed. In May 2019, the U.S. Court of Appeals for the D.C. Circuit denied the request for rehearing and ordered the U.S. District Court for the D.C. Circuit to consider and issue a ruling on whether the permit should be vacated during the U.S. Army Corps of Engineers’ preparation of an environmental impact statement. In November 2019, the U.S. District Court for the D.C. Circuit issued an order allowing the permit to remain in effect while an environmental impact ~~study~~statement is ~~performed.~~prepared. In November 2020, the U.S. Army Corps of Engineers issued a draft environmental impact statement noting there is no better alternative. This matter is ~~pending.~~pending

In December 2019, Virginia Power filed an application with the Virginia Commission for a CPCN to construct a new Evergreen Mills switching station and add approximately one mile of overhead 230 kV double circuit transmission lines from both the existing Brambleton-Yardley Ridge line and Brambleton-Poland Road line in Loudoun County, Virginia, estimated to cost approximately $30 million. In May 2020, the Virginia Commission issued an order approving in part and denying in part the petition. The Virginia Commission approved Virginia Power’s request to construct the new Evergreen Mills switching station and the new 230 kV double circuit transmission line from the existing Brambleton-Yardley Ridge line with a total estimated cost of $25 million.

Additional significant Virginia Power electric transmission projects approved

applied for are as follows:

Description and Location of Project	Application Date	Approval Date	Type of Line	Miles of Lines	Cost Estimate (millions)
Rebuild and operate five segments between the Loudoun and Ox substations	August 2019	June 2020	230 kV	19	70
Build new Lockridge substation and line loop in Loudon County, Virginia	December 2019	October 2020	230 kV	< 1	35
Bristers-Ladysmith Rebuild Project in the Counties of Fauquier, Stafford, Spotsylvania and Caroline, Virginia	May 2020	February 2021	500 kV	37	110
Relocate and replace a transmission line underground between the Tysons substation and the future Spring Hill substation	September 2020	Pending	230 kV	< 1	30
Rebuild an existing transmission line and install new line adjacent thereto in the Counties of New Kent, King William, King and Queen, Essex and Richmond, Virginia	October 2020	Pending	230 kV	41	100
Rebuild Clubhouse - Dry Bread Line and Dry Bread - Lakeview Line in Greensville County, Virginia	November 2020	Pending	230 kV	13	20
Rebuild transmission lines and related projects in the Counties of York and James City and the City of Williamsburg, Virginia	January 2021	Pending	230 kV	11	30

Description and Location
of Project

Application
Date

Approval
Date

Type of
Line

Miles
of
Lines

Cost
Estimate
(millions)

Rebuild and operate transmission line between Lanexa and the Northern Neck
in Virginia

June 2018

February 2019

230 kV

3

$ 30

Build a new substation and connect three existing
transmission lines thereto in Fluvanna County, Virginia

October 2018

June 2019

230 kV

<1

30

Rebuild and operate the Glebe
substation and relocate and operate in Arlington County, Virginia and the City
of Alexandria, Virginia existing overhead line
underground

March 2019

September 2019

230 kV

<1

125

Rebuild and operate transmission line between Valley, Virginia and
Mt. Storm, West Virginia

April 2019

November 2019

500 kV

65

290

Rebuild and operate transmission line between the Suffolk substation and
the Virginia/North Carolina state line

May 2019

November 2019

230 kV
11
20

Rebuild and operate five segments between the Loudoun
and Ox substations

August 2019

Pending

230 kV

19

70

Build new Evergreen Mills switching station and line loops in Loudoun County,
Virginia

December 2019

Pending

230 kV

2

30

Build new Lockridge substation and line loop in Loudoun County, Virginia

December 2019

Pending

230 kV

<1

35

North Carolina Regulation

North Carolina Base Rate Case

In March 2019, Virginia Power filed its base rate case and schedules with the North Carolina Commission. Virginia Power proposed a

non-fuel,

base rate increase of $27 million effective November 1, 2019 on an interim basis subject to refund, with any permanent rates ordered by the North Carolina Commission effective January 1, 2020. The base rate increase was proposed to recover the significant investments in generation, transmission and distribution infrastructure for the benefit of North Carolina customers. Virginia Power presented an earned return of 7.52% based upon a fully-adjusted test period, compared to its authorized 9.90% return, and proposed a 10.75% ROE. In September 2019, Virginia Power revised its filing to reduce the

non-fuel

base rate increase to $24 million. In January 2020, the North Carolina Commission approved a 9.75% ROE and disallowed certain costs associated with coal ash remediation at Chesterfield power station.

In February 2020, the North Carolina Commission issued its final order relating to base rates. In July 2020, Virginia Power filed a notice of appeal and exceptions to the Supreme Court of North Carolina, arguing that the North Carolina Commission committed reversible error on certain issues relating to the ratemaking treatment of certain coal ash remediation costs. This matter is ~~reviewing the order and assessing its options.~~

pending.

North Carolina Fuel Filing

In August ~~2019,~~2020, Virginia Power submitted its annual filing to the North Carolina Commission to adjust the fuel component of its electric rates. ~~Virginia Power proposed~~In January 2021, the North Carolina Commission approved a total ~~$18~~$16 million decrease to the fuel component of its electric rates for the rate year beginning February 1, ~~2020.~~2021.

Pipeline Integrity and Safety Program

The North Carolina Commission has authorized PSNC to use a tracker mechanism to recover the incurred capital investment and associated costs of complying with federal standards for pipeline integrity and safety requirements that are not in current base rates. In ~~January~~September 2020, the North Carolina Commission approved ~~Virginia Power’s proposed fuel change adjustment.~~

PSNC’s request to increase the integrity management annual revenue requirement to $31 million, an increase of $3 million over its previous filing, effective September 2020.

In February 2021, the North Carolina Commission approved PSNC’s request to increase the integrity management annual revenue requirement to $33 million, an increase of $2 million over its previous filing, effective March 2021.

South Carolina Regulation

South Carolina Electric Base Rate Case

In August 2020, DESC filed its retail electric base rate case and schedules with the South Carolina Commission. DESC proposed a non-fuel, base rate increase of $178 million, or 7.75%, based on an adjusted test year data, effective on or after the first billing cycle of March 2021. The base rate increase was proposed to recover the significant investment in assets and operating resources required to serve an expanding customer base, maintain the safety, reliability and efficiency of DESC’s system and meet increasingly stringent reliability, security and environmental requirements for the benefit of South Carolina customers. DESC presented an earned ROE of 5.90% based upon a fully-adjusted test period. The proposed rates would provide for an earned ROE equal to the current authorized earned ROE of 10.25% established in the previous rate case in 2012. In January 2021, the South Carolina Commission approved a proposal made by the South Carolina Office of Regulatory Staff, and agreed to by DESC and other intervenors, to stay the base rate case due to the current economic conditions and to allow the parties more time to negotiate a settlement with a final order to be issued no later than August 2021. In connection with this order, DESC, the South Carolina Office of Regulatory Staff and other parties of record are to provide monthly updates to the South Carolina Commission on the progress towards reaching a negotiated settlement. This matter is pending.

DSM Programs

DESC has approval for a DSM rider through which it recovers expenditures related to its DSM programs. In January 2019, DESC filed an application with the South Carolina Commission seeking approval to recover $30 million of costs and net lost revenues associated with these programs, along with an incentive to invest in such programs. In April 2019, the South Carolina Commission approved the request for the rate year beginning with the first billing cycle of May 2019.


~~150~~

In January 2020, DESC filed an application with the South Carolina Commission seeking approval to recover $40 million of costs and net lost revenues associated with these programs, along with an incentive to invest in such programs. In April 2020, The South Carolina Commission approved the filing.

In January 2021, DESC filed an application with the South Carolina Commission seeking approval to recover $48 million of costs and net lost revenues associated with these programs, along with an incentive to invest in such programs. This matter is pending.

Natural Gas ~~Rate Stabilization Act~~

Rates

In June ~~2019,~~2020, DESC filed with the South Carolina Commission its monitoring report for the

12-month

period ended March 31, ~~2019~~2020 with a total revenue requirement of ~~$437~~$409 million. This represents a $7$9 million overall annual increase to its natural gas rates under the terms of the Natural Gas Rate Stabilization Act effective ~~for~~with the ~~rate year beginning~~first billing cycle of November ~~2019.~~2020. In October ~~2019,~~2020, the South Carolina Commission approved a total revenue requirement of ~~$436~~$406 million effective with the first billing cycle of November ~~2019.~~

2020. This represents a $6 million overall annual increase to DESC’s natural gas rates. Additionally, the South Carolina Commission authorized an allowed ROE of 9.90%, a reduction from the prior ROE of 10.25%. The South Carolina Commission also approved an agreement between the South Carolina Office of Regulatory Staff and DESC that DESC will file its next retail natural gas general rate proceeding no later than April 2023.

Cost of Fuel

DESC’s retail electric rates include a cost of fuel component approved by the South Carolina Commission which may be adjusted periodically to reflect changes in the price of fuel purchased by DESC. In April 2019, the South Carolina Commission approved DESC’s proposal to decrease the total fuel cost component of retail electric rates. DESC’s proposal included maintaining its base fuel component at the current level to produce a projected under-recovered balance of $35 million at the end of the

~~12-month~~

period beginning with the first billing cycle of May 2019 and requested carrying costs for any base fuel under-collected balances, should they occur. DESC also proposed reducing its variable environmental component and maintaining or reducing its distributed energy resource components. Changes in rates became effective beginning with the first billing cycle of May 2019.

In February 2020, DESC filed

a proposal

with the South Carolina Commission to decrease the total fuel cost component of retail electric rates. DESC’s proposed decrease would reduce annual base fuel component recoveries by approximately $44 million and is projected to return to customers the existing over-collected balance while recovering DESC’s current base fuel costs over the 12-month period beginning with the first billing cycle of May 2020. In addition, DESC proposed an increase to its variable environmental and distributed energy resource components. In April 2020, the South Carolina Commission approved the filing.

In February 2021, DESC filed with the South Carolina Commission a proposal to increase the total fuel cost component of retail electric rates. DESC’s proposed adjustment would increase annual base fuel component recoveries by approximately $36 million and is designed to recover DESC’s current base fuel costs, net of the existing over-collected balance, over the 12-month period beginning with the first billing cycle of May 2021. In addition, DESC proposed a decrease to its variable environmental component and an increase to its distributed energy resource component. This matter is pending.

Electric Transmission Projects

In 2020, DESC ~~expects to begin~~began several electric transmission projects in connection with two new nuclear plants under development by Southern. These transmission projects are required to be in place prior to these plants beginning operations to maintain reliability. DESC anticipates the projects to go into service in phases, costing approximately $75 million in aggregate. In February 2020, DESC filed an application with the South Carolina Commission requesting approval to construct and operate 28 miles of 230 kV transmission lines in Aiken County, South Carolina estimated to cost approximately $30 million. ~~This matter is pending.~~

In June 2020, the South Carolina Commission approved the filing.

Ohio Regulation

PIR Program

In 2008, East Ohio began PIR, aimed at replacing approximately 25% of its pipeline system. In September 2016, the Ohio Commission approved a stipulation filed jointly by East Ohio and the Staff of the Ohio Commission to continue the PIR program and

associated cost recovery for another five-year term, calendar years

2017 through 2021, and to permit East Ohio to increase its annual capital expenditures to $200 million by 2018 and 3% per year thereafter subject to the cost recovery rate increase caps proposed by East Ohio.

In April ~~2019,~~2020, the Ohio Commission approved East Ohio’s application to adjust the PIR cost recovery rates for ~~2018~~2019 costs. The filing reflects gross plant investment for ~~2018~~2019 of ~~$202~~$209 million, cumulative gross plant investment of ~~$1.6~~$1.8 billion and a revenue requirement of ~~$190~~$218 million.

In December 2020, East Ohio filed an application with the Ohio Commission requesting approval to extend the PIR program for an additional five years upon expiration of the current authorization at the end of 2021. East Ohio proposed continued capital investment increases of 3% per year, with related increases in the annual rate-increase caps. In its application, East Ohio proposed that the new five-year period should include investment through December 31, 2026. This case is pending.

CEP Program

In 2011, East Ohio began CEP which enables East Ohio to defer depreciation expense, property tax expense and carrying costs at the debt rate of 6.5% on capital investments not covered by its PIR program to expand, upgrade or replace its pipeline system and information technology systems as well as investments necessary to comply with the Ohio Commission or other government regulation. In May 2019, East Ohio filed an application for an alternative rate plan to establish a CEP rider to recover existing

CEP-related

deferrals and to establish an ongoing recovery mechanism for future deferrals. The filing reflects cumulative gross plant investment of $723 million through 2018 and a revenue requirement of $83 million. In December 2020, the Ohio Commission approved a cumulative gross plant investment of $721 million and a revenue requirement of $83 million.

West Virginia Regulation

West Virginia Base Rate Case

In September 2020, Hope filed its base rate case and schedules with the West Virginia Commission. Hope proposed a non-fuel, base rate increase of $28 million. The base rate increase was proposed to recover the significant investment in distribution infrastructure and costs associated with the acquisition of over 2,000 miles of gathering assets, both for the benefit of West Virginia customers. The proposed rates would provide for an ROE of 10.25% compared to the authorized ROE of 9.45%. The rates are expected to go into effect in July 2021. This matter is pending.

~~West Virginia Regulation~~

PREP

In May ~~2019,~~2020, Hope filed a PREP application with the West Virginia Commission requesting approval to recover PREP costs related to ~~$29~~$39 million and ~~$39~~$54 million of projected capital investment for ~~2019~~2020 and ~~2020,~~2021, respectively. The application also includes a

true-up

of PREP costs related to the ~~2018~~2019 actual capital investment of ~~$30~~$27 million and sets forth ~~$10~~$13 million of annual PREP costs to be recovered in proposed rates effective November 1, ~~2019.~~2020. In October ~~2019,~~2020, the West Virginia Commission approved PREP rates effective November 1, ~~2019.~~2020.

Utah ~~And Wyoming~~ Regulation

~~LNG Storage Facility~~

Purchased Gas

In ~~April 2019,~~September 2020, Questar Gas ~~filed~~submitted a ~~request~~filing with the Utah Commission for

~~pre-approval~~

~~to construct an LNG storage facility with~~ a ~~liquefaction rate of 8.2~~$40 million ~~cubic feet per day.~~gas cost increase. In October ~~2019, the Utah Commission granted~~

~~pre-approval~~

~~to construct the LNG storage facility.~~

~~Utah Base Rate Case~~

~~In July 2019, Questar Gas filed its base rate case and schedules with the Utah Commission. Questar Gas proposed a~~

~~non-fuel,~~

base rate increase of $19 million effective March 2020. The base rate increase was proposed to recover the significant investment in distribution infrastructure for the benefit of Utah customers. Questar Gas presented an earned return of 9.05% based upon a fully-adjusted test period, compared to its authorized 9.85% return, and proposed a 10.5% ROE.

~~In February~~ 2020, the Utah Commission approved ~~a non-fuel, base rate increase of $3 million effective March 2020. This revenue requirement increase is based~~the application on an ~~approved ROE of 9.50%.~~

~~Wyoming Base Rate Case~~

Ininterim basis, with rates effective November ~~2019, Questar Gas filed its base rate case and schedules with the Wyoming Commission. Questar Gas proposed a non-fuel, base rate increase of $4 million effective September~~ 2020. ~~The~~


						~~151~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~base rate increase was proposed to replace aging infrastructure and expand its system. Questar Gas presented an earned return of~~

~~7.46%, based upon a fully-adjusted test period, compared to its authorized 9.5% return, and proposed a 10.5% ROE. This matter is pending.~~

Rural Expansion Program

In December 2019, Questar Gas filed an application with the Utah Commission for a CPCN to construct natural gas infrastructure to extend service to Eureka, Utah. The project is expected to include 11 miles of high-pressure pipeline and up to 360 service lines and to be in service in late 2021. Questar Gas also requested approval of a rural expansion rate adjustment tracker to recover the construction costs of the project. ~~This matter is pending.~~

~~FERC—GAS~~

~~Cove Point~~

In ~~February 2019, Cove Point submitted its annual electric power cost adjustment to FERC requesting approval to recover $24 million. FERC~~August 2020, the Utah Commission approved the CPCN and the rural expansion rate adjustment ~~in March 2019.~~

tracker.

Wyoming Regulation

Wyoming Base Rate Case

In November 2019, Questar Gas filed its base rate case and schedules with the Wyoming Commission. Questar Gas proposed a non-fuel, base rate increase of $4 million effective September 2020. The base rate increase was proposed to replace aging infrastructure and expand its system. Questar Gas presented an earned return of 7.46%, based upon a fully-adjusted test period, compared to its authorized 9.5% return, and proposed a 10.5% ROE. In June ~~2015, Cove Point executed two binding precedent agreements for~~2020, the approximately $150 million Eastern Market Access Project. In January 2018, Cove Point received FERC authorization to construct and operate the project facilities. In October 2018, Cove Point announced it was evaluating alternatives toWyoming Commission approved a proposed Charles County, Maryland compressor station that was initially part of this project and in December 2018, after working with project customers for alternative solutions, decided not to pursue further construction at this location resulting in a revised project estimate of approximately $45 million and a

~~write-off~~

~~of $37 million ($28 million~~

~~after-tax).~~

In May 2019, Cove Point filed an application for an amendment to vacate its FERC authorization for the Charles County, Maryland compressor station and revised its project scope. In August 2019, Cove Point received FERC authorization and the Eastern Market Access Project commenced commercial operations in September 2019.

In connection with the Eastern Market Access Project, in August 2019, Cove Point filed to update its annual electric power cost adjustment requesting FERC approval to recover $25 million, representing anbase rate increase of $1$2 million ~~from the adjustment approved in March 2019. FERC approved the adjustment in August 2019.~~

~~In January 2020, pursuant to the terms of a previous settlement, Cove Point filed a general rate case for its FERC-jurisdictional services,~~annually, with ~~proposed~~ rates ~~to be~~ effective ~~March~~September 1, 2020. ~~Cove Point proposed~~This revenue requirement increase was based on an ~~annual~~

~~cost-of-service~~

approved ROE of ~~approximately $182 million. Cove Point anticipates that FERC will suspend the changes in rates for five months following the proposed effective date, until August 1, 2020.~~

~~DETI~~

~~September 2019~~

~~, DETI submitted its annual transportation cost rate adjustment to FERC requesting approval to recover $~~

~~million. Also in~~

~~September 2019~~

~~, DETI submitted its annual electric power cost adjustment to FERC requesting approval to recover $~~

~~million. In~~

~~October 2019~~

~~, FERC approved these adjustments.~~

In December 2019, DETI filed an application to request FERC authorization to construct, operate and maintain the Tri-West project to provide 120,000 Dth per day of firm transportation service in from Pennsylvania to Ohio for delivery to Tennessee Gas Pipeline Company. The project facilities are expected to cost approximately

~~$25 million and be in service by the end of 2020.~~

In August 2018, DETI executed a binding precedent agreement with a customer for the West Loop project. The project is expected to cost approximately $95 million and provide 150,000 Dth per day of firm transportation service from Pennsylvania to Ohio for delivery to a proposed combined-cycle, natural

~~gas-fired~~

In January 2018, DETI filed an application to request FERC authorization to construct and operate certain facilities located in Ohio and Pennsylvania for the Sweden Valley project. In June 2019, DETI withdrew its application for the project due to certain regulatory delays. As a result of the project abandonment, during the second quarter of 2019, DETI recorded a charge of $13 million ($10 million

~~after-tax),~~

~~included in impairment of assets and other charges in Dominion Energy and Dominion Energy Gas’ Consolidated Statements of Income~~

~~(reflected in the Corporate and Other segment)~~

9.35%.

~~Note~~

NOTE 14. ~~Asset Retirement Obligations~~

ASSET RETIREMENT OBLIGATIONS

AROs represent obligations that result from laws, statutes, contracts and regulations related to the eventual retirement of certain of the Companies’ long-lived assets. ~~Dominion Energy and Virginia Power’s~~The Companies AROs are primarily associated with the decommissioning of their nuclear generation facilities and ash pond and landfill closures. Dominion Energy Gas’ AROs primarily include plugging and abandonment of gas and oil wells and the interim retirement of natural gas gathering, transmission, distribution and storage pipeline components.

The Companies have also identified, but not recognized, AROs related to the retirement of ~~the Cove Point LNG Facility,~~ Dominion ~~Energy and Dominion Energy Gas’~~Energy’s storage wells in ~~their~~its underground natural gas storage network, certain Virginia Power electric transmission and distribution assets located on property with easements, rights of way, franchises and lease agreements, Virginia Power’s hydroelectric generation facilities and the abatement of certain asbestos not expected to be disturbed in ~~Dominion Energy and Virginia Power’s~~the Companies’ generation facilities. The Companies currently do not have sufficient information to estimate a reasonable range of expected retirement dates for any of these assets since the economic lives of these assets can be extended indefinitely through regular repair and maintenance and they currently have no plans to retire or dispose of any of these assets. As a result, a settlement date is not determinable for these assets and AROs for these assets will not be reflected in the Consolidated Financial Statements until sufficient information becomes available to determine a reasonable estimate of the fair value of the activities to be performed. The Companies continue to monitor operational and strategic developments to identify if sufficient information exists to reasonably estimate a retirement date for these assets.


~~152~~

The changes to AROs during ~~2018~~2019 and ~~2019~~2020 were as follows:

Amount

(millions)

Dominion Energy

AROs at December 31, 2017
$
2,432

Obligations incurred during the period

20

Obligations settled during the period

(159
)
Revisions in estimated cash flows
(2)

120

Accretion

119

AROs at December 31, 2018
(1)
$
2,532

Obligations incurred during the period
(2)

2,413

Obligations settled during the period

(137
)
AROs acquired in the SCANA Combination

577

Revisions in estimated cash flows
(3)

(324
)
Accretion

213

AROs at December 31, 2019
(1)
$
5,274

Virginia Power

AROs at December 31, 2017
$
1,365

Obligations incurred during the period

14

Obligations settled during the period

(119
)
Revisions in estimated cash flows
(2)

120

Accretion

65

AROs at December 31, 2018
$
1,445

Obligations incurred during the period
(
2
)

2,408

Obligations settled during the period

(81
)
Revisions in estimated cash flows
(3)

(323
)
Accretion

132

AROs at December 31, 2019
$
3,581

Dominion Energy Gas

AROs at December 31, 2017
$
85

Obligations incurred during the period

3

Obligations settled during the period

(6
)
Accretion

6

AROs at December 31, 2018
(
4
)
$
88

Obligations settled during the period

(3
)
Accretion

4

AROs at December 31, 2019
(
4
)
$
89

	Amount
(millions)
Dominion Energy
AROs at December 31, 2018	$	2,444
Obligations incurred during the period⁽¹⁾		2,413
AROs acquired in the SCANA Combination		577
Obligations settled during the period		(134	)
Revisions in estimated cash flows⁽²⁾		(324	)
Accretion		208
AROs at December 31, 2019⁽³⁾	$	5,184
Obligations incurred during the period		67
Obligations settled during the period		(114	)
Revisions in estimated cash flows⁽⁴⁾		228
Accretion		218
AROs at December 31, 2020⁽³⁾	$	5,583
Virginia Power
AROs at December 31, 2018	$	1,445
Obligations incurred during the period⁽¹⁾		2,408
Obligations settled during the period		(81	)
Revisions in estimated cash flows⁽²⁾		(323	)
Accretion		132
AROs at December 31, 2019	$	3,581
Obligations incurred during the period		48
Obligations settled during the period		(85	)
Revisions in estimated cash flows⁽⁵⁾		139
Accretion		137
AROs at December 31, 2020	$	3,820

(1)	~~Includes $282 million and $408 million reported in other current liabilities at December 31, 2018, and 2019, respectively.~~

~~(2)~~

Reflects future ash pond and landfill closure costs at certain utility generation facilities. See ~~Note 23 for further information.~~discussion below.

~~(3)~~

(2)

Reflects revisions to future ash pond and landfill closure costs at certain utility generation facilities as well as revisions for ~~20 year~~20-year license extensions for regulated nuclear power stations in Virginia.

~~(4)~~

(3)

Includes ~~$74~~$394 million and ~~$75~~$179 million reported ~~in other deferred credits and other liabilities, with the remainder recorded~~ in other current liabilities at December 31, ~~2018~~2019 and ~~2019,~~2020, respectively.

(4)	Reflects revisions to future ash pond and landfill closure costs at certain utility generation facilities, asbestos abatement costs associated with certain utility facilities and from the completion of a nuclear decommissioning cost study related to Summer.

(5)	Reflects revisions to future ash pond and landfill closure costs at certain utility generation facilities and asbestos abatement costs associated with certain utility facilities.

Dominion Energy’s AROs at December 31, 2020 and 2019, ~~and 2018,~~ include ~~$1.7~~$1.9 billion and ~~$1.6~~$1.7 billion, respectively, with ~~$0.8~~$0.9 billion and ~~$0.9~~$0.8 billion recorded by Virginia Power, related to the future decommissioning of their nuclear facilities. ~~Dominion Energy and Virginia Power~~The Companies have established trusts dedicated to funding the future decommissioning activities.

At December 31, ~~2019~~2020 and ~~2018,~~2019, the aggregate fair value of Dominion Energy’s trusts, consisting primarily of equity and debt securities, totaled ~~$6.2~~$6.9 billion and ~~$4.9~~$6.2 billion, respectively. At December 31, ~~2019~~2020 and ~~2018,~~2019, the aggregate fair value of Virginia Power’s trusts, consisting primarily of debt and equity securities, totaled $3.2 billion and $2.9 billion, ~~and $2.4 billion,~~ respectively.

In addition, AROs at December 31, 2020 and 2019 include $2.8 billion and $2.6 billion, respectively, related to Virginia Power’s future ash pond and landfill closure costs. Regulatory mechanisms, ~~primar~~

~~ily~~

primarily associated with legislation ~~enacted in Virginia in March 2019,~~described below, provide for recovery of costs to be incurred.

In April 2018, the Governor of Virginia signed legislation into law extending an existing permit moratorium on the VDEQ issuing solid waste permits for the closure of ash ponds at Virginia Power’s Bremo, Chesapeake, Chesterfield and Possum Point power stations until July 2019. The legislation also required Virginia Power to solicit and compile by November 2018, information from third parties on the suitability, cost and market demand for beneficiation or recycling of coal ash from these units. In connection with this legislation, Virginia Power recorded an $81 million ($60 million after-tax) charge recorded in other operations and maintenance expense in its Consolidated Statements of Income.

CCR to an approved landfill or through recycling for beneficial reuse. Costs associated with the closure of these CCR units, including costs allocated to customers outside of Virginia, are recoverable through a rider approved by the Virginia Commission. In connection with this legislation, Virginia Power recorded a $2.4 billion ARO related to the cost of landfills and beneficial reuse, with an offsetting increase to property, plant and equipment of $1.3 billion for the Chesterfield power station and an increase primarily to regulatory assets for the remaining portion related to the Bremo, Chesapeake and Possum Point power stations in 2019. In connection with the March 2020 commitment for the planned early retirement of the Chesterfield power station, these costs were reclassified from property, plant and equipment primarily to regulatory assets for amounts recoverable through riders and the remaining $185 million associated with nonjurisdictional customers was reclassified to other deferred charges and other assets. In 2020, Virginia Power recorded a $140 million increase to the landfill and beneficial use AROs from revisions to post closure monitoring costs, the execution of a coal beneficiation contract and a landfill at the Chesterfield power station. See ~~Notes~~Note 12 ~~and 23~~ for additional information.

~~Note~~

In addition, Virginia Power revised its estimated cash flows for the existing ARO related to future ash pond and landfill closure costs, which resulted in a decrease of $202 million and a corresponding $113 million ($84 million after-tax) benefit in other operations and maintenance expense in the Consolidated Statements of Income in 2019.

NOTE 15. ~~Leases~~

LEASES

At December 31, 2020 and 2019, the Companies had the following lease assets and liabilities recorded in the Consolidated Balance Sheets:

	December 31, 2020		December 31, 2019
(millions)
Dominion Energy
Lease assets:
Operating lease assets⁽¹⁾	$	564	$	462
Finance lease assets⁽²⁾		148		134
Total lease assets	$	712	$	596
Lease liabilities:
Operating lease liabilities⁽³⁾	$	54	$	53
Finance lease liabilities⁽⁴⁾		32		27
Total lease liabilities - current		86		80
Operating lease liabilities ⁽⁵⁾		516		413
Finance lease liabilities⁽⁶⁾		108		100
Total lease liabilities - noncurrent		624		513
Total lease liabilities	$	710	$	593
Virginia Power
Operating lease assets⁽¹⁾	$	185	$	212
Finance lease assets⁽²⁾		45		19
Total lease assets	$	230	$	231
Lease liabilities:
Operating lease liabilities⁽³⁾	$	28	$	30
Finance lease liabilities⁽⁴⁾		8		3
Total lease liabilities - current		36		33
Operating lease liabilities ⁽⁵⁾		155		180
Finance lease liabilities⁽⁶⁾		36		16
Total lease liabilities - noncurrent		191		196
Total lease liabilities	$	227	$	229

(1)
	~~December 31, 2019~~
~~(millions)~~
~~Dominion Energy~~
~~Lease assets:~~
~~Operating lease assets~~ ~~(1)~~	$	~~499~~
~~Finance lease assets~~ ~~(2)~~		~~140~~
~~Total lease assets~~	$	~~639~~
~~Lease liabilities:~~
~~Operating lease liabilities~~ ~~(3)~~	$	59
~~Finance lease liabilities~~ ~~(4)~~		29
~~Total lease liabilities—current~~		88
~~Operating lease liabilities~~ ~~(5)~~		~~442~~
~~Finance lease liabilities~~		~~105~~
~~Total lease liabilities—noncurrent~~		~~547~~
~~Total lease liabilities~~	$	~~635~~
~~Virginia Power~~
~~Operating lease assets~~ ~~(1)~~	$	~~212~~
~~Finance lease assets~~ ~~(2)~~		19
~~Total lease assets~~	$	~~231~~
~~Lease liabilities:~~
~~Operating lease liabilities~~ ~~(3)~~	$	30
~~Finance lease liabilities~~ ~~(4)~~		3
~~Total lease liabilities—current~~		33
~~Operating lease liabilities~~ ~~(5)~~		~~180~~
~~Finance lease liabilities~~		16
~~Total lease liabilities—noncurrent~~		~~196~~
~~Total lease liabilities~~	$	~~229~~
~~Dominion Energy Gas~~
~~Operating lease assets~~ ~~(1)~~	$	37
~~Finance lease assets~~ ~~(2)~~		6
~~Total lease assets~~	$	43
~~Lease liabilities:~~
~~Operating lease liabilities~~ ~~(3)~~	$	6
~~Finance lease liabilities~~ ~~(4)~~		1
~~Total lease liabilities—current~~		7
~~Operating lease liabilities~~ ~~(5)~~		29
~~Finance lease liabilities~~		5
~~Total lease liabilities—noncurrent~~		34
~~Total lease liabilities~~	$	41

~~(1)~~

Included in other deferred charges and other assets in the Companies’ Consolidated Balance Sheets.

(2)

Included in property, plant and equipment in the Companies’ Consolidated Balance Sheets, net of ~~$27 million, $4~~$50 million and $1$9 million of accumulated amortization at Dominion Energy and Virginia Power, ~~and Dominion Energy Gas,~~ respectively, at December 31, 2020 and net of $26 million and $4 million of accumulated amortization at Dominion Energy and Virginia Power, respectively, at December 31, 2019.

(3)	Included in other current liabilities in the Companies’ Consolidated Balance Sheets.

(4)	Included in securities due within one year in the Companies’ Consolidated Balance Sheets.

(5)	Included in other deferred credits and other liabilities in the Companies’ Consolidated Balance Sheets.

(6)	Included in other long-term debt in the Companies’ Consolidated Balance Sheets.

In addition to the amounts disclosed above, Dominion Energy’s Consolidated Balance ~~Sheet~~Sheets at December 31, 2020 and 2019 includes property, plant and equipment of $2.2 billion and $2.8 billion, respectively, and accumulated depreciation of ~~$2.8 billion~~$68 million and $364 million, respectively, related to facilities subject to power purchase agreements under which Dominion Energy is the lessor.


						~~153~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

For the ~~year~~years ended December 31, 2020 and 2019, total lease cost associated with the Companies’ leasing arrangements consisted of the following:

	Year Ended December 31, 2020		Year Ended December 31, 2019
(millions)
Dominion Energy
Finance lease cost:
Amortization	$	33	$	20
Interest		—		4
Operating lease cost		68		79
Short-term lease cost		20		26
Variable lease cost		8		5
Total lease cost	$	129	$	134
Virginia Power
Operating lease cost	$	36	$	41
Short-term lease cost		12		13
Variable lease cost		4		2
Total lease cost	$	52	$	56


	~~Year Ended~~ ~~December 31, 2019~~
~~(millions)~~
~~Dominion Energy~~
~~Finance lease cost:~~
~~Amortization~~	$	20
~~Interest~~		4
~~Operating lease cost~~		87
~~Short-term lease cost~~		30
~~Variable lease cost~~		6
~~Total lease cost~~	$	~~147~~
~~Virginia Power~~
~~Operating lease cost~~	$	41
~~Short-term lease cost~~		13
~~Variable lease cost~~		2
~~Total lease cost~~	$	56
~~Dominion Energy Gas~~
~~Operating lease cost~~	$	7
~~Short-term lease cost~~		7
~~Total lease cost~~	$	14

For the ~~year~~years ended December 31, 2020 and 2019, cash paid for amounts included in the measurement of the lease liabilities consisted of the following amounts, included in the Companies’ Consolidated Statements of Cash Flows:

	Year Ended December 31, 2020		Year Ended December 31, 2019
(millions)
Dominion Energy
Operating cash flows for finance leases	$	—	$	4
Operating cash flows for operating leases		96		111
Financing cash flows for finance leases		33		20
Virginia Power
Operating cash flows for operating leases		52		56


	~~Year Ended~~ December 31, 2019
~~(millions)~~
~~Dominion Energy~~
~~Operating cash flows for finance leases~~	$	4
~~Operating cash flows for operating leases~~		~~121~~
~~Financing cash flows for finance leases~~		20
~~Virginia Power~~
~~Operating cash flows for operating leases~~		56
~~Dominion Energy Gas~~
~~Operating cash flows for operating leases~~		14

In addition to the amounts disclosed above, Dominion Energy’s Consolidated ~~Statement~~Statements of Income for the ~~year~~years ended December 31, 2020 and 2019, ~~includes~~include $175 million and $174 million, respectively, of rental revenue, included in operating revenue and $102 million and $94 million, respectively, of depreciation expense, included in depreciation, depletion and amortization, related to facilities subject to power purchase agreements under which Dominion Energy is the lessor.

At December 31, 2020 and 2019, the weighted average remaining lease term and weighted discount rate for the Companies’ finance and operating leases were as follows:


	~~December 31, 2019~~
~~Dominion Energy~~
~~Weighted average remaining lease term—finance leases~~		~~5 years~~
~~Weighted average remaining lease term—operating leases~~		~~21 years~~
~~Weighted average discount rate—finance leases~~		~~3.84~~	%
~~Weighted average discount rate—operating leases~~		~~4.47~~	%
~~Virginia Power~~
~~Weighted average remaining lease term—finance leases~~		~~6 years~~
~~Weighted average remaining lease term—operating leases~~		~~20 years~~
~~Weighted average discount rate—finance leases~~		~~4.12~~	%
~~Weighted average discount rate—operating leases~~		~~4.29~~	%
~~Dominion Energy Gas~~
~~Weighted average remaining lease term—finance leases~~		~~6 years~~
~~Weighted average remaining lease term—operating leases~~		~~11 years~~
~~Weighted average discount rate—finance leases~~		~~4.08~~	%
~~Weighted average discount rate—operating leases~~		~~4.37~~	%

	December 31, 2020			December 31, 2019
Dominion Energy
Weighted average remaining lease term - finance leases	5 years			5 years
Weighted average remaining lease term - operating leases	26 years			22 years
Weighted average discount rate - finance leases		3.17	%		3.83	%
Weighted average discount rate - operating leases		4.07	%		4.48	%
Virginia Power
Weighted average remaining lease term - finance leases	6 years			6 years
Weighted average remaining lease term - operating leases	21 years			20 years
Weighted average discount rate - finance leases		2.51	%		4.12	%
Weighted average discount rate - operating leases		4.26	%		4.29	%

The Companies’ lease liabilities have the following maturities:

Maturity of Lease Liabilities	Dominion Energy						Virginia Power
(millions)	Operating			Finance			Operating			Finance
2021	$	64		$	36		$	31		$	9
2022		56			34			25			8
2023		47			31			20			8
2024		40			29			15			7
2025		34			21			11			6
After 2025		756			14			194			9
Total undiscounted lease payments		997			165			296			47
Present value adjustment		(427	)		(25	)		(113	)		(3	)
Present value of lease liabilities	$	570		$	140		$	183		$	44

Maturity of Lease Liabilities

Dominion Energy

Virginia Power

Dominion Energy
Gas

Operating

Finance

Operating

Finance

Operating

Finance

(millions)

2020
    $
72
    $
34
    $
34
    $
4
    $
7
    $
2

2021

65

31

30

4

6

1

2022

55

29

24

4

5

1

2023

45

26

19

3

4

1

2024

36

19

14

3

3

1

After 2024

582

9

205

4

20

1

Total undiscounted lease payments

855

148

326

22

45

7

Present value adjustment

(377
)
(14
)
(139
)
(3
)
(10
)
(1
)
Present value of lease liabilities
    $
478
    $
134
    $
187
    $
19
    $
35
    $
6

Corporate Office Leasing ~~Arrangements~~

In July 2016, Dominion Energy signed an agreement with a lessor to construct and lease a new corporate office property in Richmond, Virginia. The lessor provided equity and obtained financing commitments from debt investors, totaling $365 million, which funded total project costs. The project became substantially complete in August 2019 at which point the facility was available for Dominion Energy’s use and the five-year lease term commenced.

Upon commencement, the lease for the facility was classified as a finance lease. At the end of the initial lease term, Dominion Energy can (i) extend the term of the lease for an additional five years, subject to the approval of the participants, at current market terms, (ii) purchase the property for an amount equal to the project costs or, (iii) subject to certain terms and conditions, sell the property on behalf of the lessor to a third party using commercially reasonable efforts to obtain the highest cash purchase price for the


~~154~~

property. If the project is sold and the proceeds from the sale are insufficient to repay the investors for the project costs, Dominion Energy may be required to make a payment to the lessor, up to 87% of project costs, for the difference between the project costs and sale proceeds. No

~~end-of-term~~

~~options were deemed reasonably certain of exercise at commencement date. At commencement, Dominion Energy recorded a~~

~~right-of-use~~

asset and offsetting lease obligation of $67 million, representing the present value of consideration over the five-year term at the rate implicit in the lease. Dominion Energy is considered the owner of the leased property for tax purposes, and as a result, is entitled to tax deductions for depreciation and interest expense.

Arrangement

If Dominion Energy ultimately proceeds with the

project

through completion, it

the project is

~~not~~

expected to be completed

~~earlier than~~

~~mid-2023.~~

by September 2024. Dominion Energy has been appointed to act as the construction agent for the lessor, during which time Dominion Energy will request cash draws from the lessor and debt investors to fund all project ~~costs.~~costs, which totaled $61 million as of December 31, 2020. If the project is terminated under certain ~~events of default, Dominion Energy could be required to pay up to 89.9% of the then funded amount. For specific full recourse~~ events, Dominion Energy could be required to pay up to 100% of the then funded amount.

The

~~51-month~~

right-of-use

Offshore Wind Vessel Leasing Arrangement

In December 2020, Dominion Energy signed an agreement with a lessor to complete construction of and lease a Jones Act compliant offshore wind installation vessel. This vessel is designed to handle current turbine technologies as well as next generation turbines. The lessor is providing equity and has obtained financing commitments from debt investors, totaling $550 million, to fund the estimated project costs. The project is expected to be completed by the end of 2023. Dominion Energy has been appointed to act as the construction agent for the lessor, during which time Dominion Energy will request cash draws from the lessor and debt investors to fund all project costs, which totaled $187 million as of December 31, 2020. If the project is terminated under certain events of default, Dominion Energy could be required to pay up to 100% of the then funded amount.

to the lessor for the difference between the outstanding project costs and sale proceeds. Dominion Energy is not considered the owner during construction for financial accounting purposes and, therefore, will not reflect the construction activity in its consolidated financial statements. Dominion Energy expects to recognize a right-of-use asset and a corresponding finance lease liability at the commencement of the lease term. Dominion Energy will be considered the owner of the leased property for tax purposes, and as a result, will be entitled to tax deductions for depreciation and interest expense.

~~Note~~

NOTE 16. ~~Variable Interest Entities~~

VARIABLE INTEREST ENTITIES

The primary beneficiary of a VIE is required to consolidate the VIE and to disclose certain information about its significant variable interests in the VIE. The primary beneficiary of a VIE is the entity that has both 1) the power to direct the activities that most significantly impact the entity’s economic performance and 2) the obligation to absorb losses or receive benefits from the entity that could potentially be significant to the VIE.

Dominion Energy

At December 31, ~~2019,~~2020, Dominion Energy owns the manager and 67% of the membership interest in certain ~~merchant~~nonregulated solar facilities, as discussed in Note 2. Dominion Energy has concluded that these entities are VIEs due to the members lacking the characteristics of a controlling financial interest. In addition, in 2016 Dominion Energy created a wholly owned subsidiary, SBL Holdco, as a holding company of its interest in the VIE ~~merchant~~nonregulated solar facilities and accordingly SBL Holdco is a VIE. Dominion Energy is the primary beneficiary of SBL Holdco and the ~~merchant~~nonregulated solar facilities, as it has the power to direct the activities that most significantly impact their economic performance as well as the obligation to absorb losses and benefits which could be significant to them. Dominion Energy’s securities due within one year and long-term debt include ~~$31~~$32 million and ~~$267~~$239 million, respectively, of debt issued by SBL Holdco net of issuance costs that is nonrecourse to Dominion Energy and is secured by SBL Holdco’s interest in certain ~~merchant~~nonregulated solar facilities.

At December 31, 2020, Dominion Energy owns a ~~48%~~50% membership interest in Cove Point, as discussed in Notes 3 and 9. Dominion Energy concluded that Cove Point is a VIE due to the limited partners lacking the characteristics of a controlling financial interest. As a result of the GT&S Transaction, effective November 1, 2020, Dominion Energy is no longer the primary beneficiary of Cove Point as BHE retains the power to direct the activities that most significantly impact Cove Point’s economic performance. Dominion Energy’s maximum exposure to loss is limited to its current and future investment, as well as any obligations under a guarantee provided. See Note 23 for more information.

At December 31, 2020, Dominion Energy owns a 53% membership interest in Atlantic Coast Pipeline. ~~See Note 9 for more details regarding the nature of this entity.~~ Dominion Energy concluded that Atlantic Coast Pipeline is a VIE because it has insufficient equity to finance its activities without additional subordinated financial support. Dominion Energy has concluded that it is not the primary beneficiary of Atlantic Coast Pipeline as it does not have the power to direct the activities of Atlantic Coast Pipeline that most significantly impact its economic performance, as the power to direct is shared among multiple unrelated parties. In February 2020, Dominion Energy entered an agreement to acquire Southern’s 5% membership interest which is expected to close by the second quarter of 2020. Following completion of the acquisition, Dominion Energy will own a 53% noncontrolling membership interest in Atlantic Coast Pipeline which is not expected to change Dominion Energy’s conclusion that it is not the primary beneficiary as the power to direct the activities most significant to Atlantic Coast Pipeline will be shared with ~~Duke.~~Duke Energy. Dominion Energy is obligated to provide capital contributions based on its ownership percentage. Dominion Energy’s maximum exposure to loss is limited to ~~its current and~~any future investment as well as any obligations under a guarantee provided. See Note 239 for more ~~information.~~

~~Dominion Energy previously concluded that Dominion Energy Midstream was a VIE due to~~details regarding the ~~limited partners lacking the characteristics~~nature of a controlling financial interest and that it was the primary beneficiary as it had the power to direct the activities that most significantly impact the economic performance as well as to absorb losses and benefits which could be significant to Dominion Energy Midstream. In January 2019, Dominion Energy acquired all outstanding partnership interests not owned by Dominion Energy and Dominion Energy Midstream became a wholly-owned subsidiary of Dominion Energy. As a result, Dominion Energy concluded that Dominion Energy Midstream is no longer a VIE.

this entity.

Dominion Energy and Virginia Power

~~Dominion Energy and Virginia Power’s~~

The Companies’ nuclear decommissioning trust funds and Dominion Energy’s rabbi trusts hold investments in limited partnerships or similar type entities (see Note 9 for further details). Dominion Energy and Virginia Power concluded that these partnership investments are VIEs due to the limited partners lacking the characteristics of a controlling financial interest. Dominion Energy and Virginia Power have concluded neither is the primary beneficiary as they do not have the power to


						~~155~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

direct the activities that most significantly impact these VIEs’ economic performance. Dominion Energy and Virginia Power are obligated to provide capital contributions to the partnerships

required

by each partnership agreement based on their ownership percentages. Dominion Energy and Virginia Power’s maximum exposure to loss is limited to their current and future investments.

Virginia Power

Virginia Power had a long-term power and capacity contract with 1

non-utility

generator with an aggregate summer generation capacity of approximately 218 MW. The contract contained certain variable pricing mechanisms in the form of partial fuel reimbursement that Virginia Power considered to be variable interests and for which Virginia Power had previously concluded if the generation facility were to be a VIE that it would not be the primary beneficiary. In May 2019, Virginia Power entered into an agreement and paid $135 million to terminate the remaining contract with the

non-utility

generator. A $135 million ($100 million

after-tax)

charge was recorded in impairment of assets and other charges in Virginia Power’s Consolidated Statements of Income (reflected in the Corporate and Other segment) during the second quarter of 2019. Virginia Power paid $13 million and $50 million ~~and $86 million~~ for

electric capacity to

non-utility

generators and $1 million ~~$18 million~~ and ~~$24~~$18 million for electric energy to

non-utility

generators for the years ended December 31, 2019 ~~2018~~ and ~~2017, respectively.~~

~~Dominion Energy and Dominion Energy Gas~~

As part of the Dominion Energy Gas Restructuring, Dominion Energy contributed to Dominion Energy Gas a 75% controlling limited partner interest in Cove Point. In December 2019, Dominion Energy sold its retained 25% noncontrolling limited partner interest in Cove Point. Dominion Energy Gas concluded that Cove Point is a VIE due to the limited partners lacking the characteristics of a controlling financial interest. Dominion Energy Gas is the primary beneficiary of Cove Point as it has the power to direct the activities that most significantly impact its economic performance as well as the obligation to absorb losses and benefits which could be significant to it.

~~Dominion Energy Gas~~

DETI has been engaged to oversee the construction of, and to subsequently operate and maintain, the projects undertaken by Atlantic Coast Pipeline based on the overall direction and oversight of Atlantic Coast Pipeline’s members. An affiliate of DETI holds a membership interest in Atlantic Coast Pipeline, therefore DETI is considered to have a variable interest in Atlantic Coast Pipeline. The members of Atlantic Coast Pipeline hold the power to direct the construction, operations and maintenance activities of the entity. DETI has concluded it is not the primary beneficiary of Atlantic Coast Pipeline as it does not have the power to direct the activities of Atlantic Coast Pipeline that most significantly impact its economic performance. DETI has no obligation to absorb any losses of the VIE. See Note 25 for information about associated related party receivable balances.

Dominion Energy Gas purchased shared services from DECGS and DEQPS, affiliated VIEs, of $49 million, $45 million and $45 million for the years ended December 31, 2019, 2018 and 2017, respectively. Dominion Energy Gas’ Consolidated Balance Sheets included amounts due to DECGS and DEQPS of $15 million and $6 million at December 31, 2019 and at December 31, 2018, respectively.

~~Dominion Energy~~

Gas determined that neither it nor any of its consolidated entities is the primary beneficiary of DECGS or DEQPS, as neither it nor any of its consolidated entities has both the power to direct the activities that most significantly impact their economic performance as well as the obligation to absorb losses and benefits which could be significant to them. DECGS and DEQPS provide

~~marketing~~

~~and operation~~

services to Dominion Energy and its subsidiaries as subsidiary service companies. Neither Dominion Energy Gas nor any of its consolidated entities has any obligation to absorb more than its allocated share of DECGS or DEQPS costs.

Virginia Power ~~and Dominion Energy Gas~~

~~Virginia Power and Dominion Energy Gas~~ purchased shared services from DES, an affiliated VIE, of $349 million, $387 million and ~~$119 million,~~ $335 ~~million and $106 million, and $340 million and $106~~ million for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017,~~2018, respectively. Virginia ~~Power and Dominion Energy Gas’~~Power’s Consolidated Balance Sheets included amounts due to DES of $175 million at December 31, 2020, and $102 million ~~and $27 million, respectively,~~ at December 31, 2019, ~~and $107 million and $43 million,~~ respectively, ~~at December 31, 2018,~~ recorded in payables to affiliates in the Consolidated Balance Sheets. Virginia Power ~~and Dominion Energy Gas~~ determined that ~~neither~~it is not the primary beneficiary of DES as ~~neither has both the~~it does not have power to direct the activities that most significantly impact its economic performance as well as the obligation to absorb losses and benefits which could be significant to it. DES provides accounting, legal, finance and certain administrative and technical services to all Dominion Energy subsidiaries, including Virginia ~~Power and Dominion Energy Gas.~~Power. Virginia Power ~~and Dominion Energy Gas have~~has no obligation to absorb more than ~~their~~its allocated ~~shares~~share of DES costs.

~~Note~~

NOTE 17. ~~Short-term Debt and Credit Agreements~~

SHORT-TERM DEBT AND CREDIT AGREEMENTS

The Companies use short-term debt to fund working capital requirements and as a bridge to long-term debt financings. The levels of borrowing may vary significantly during the course of the year, depending upon the timing and amount of cash requirements not satisfied by cash from operations. In addition, Dominion Energy utilizes cash and letters of credit to fund collateral requirements. Collateral requirements are impacted by commodity prices, hedging levels, Dominion Energy’s credit ratings and the credit quality of its counterparties.

Dominion Energy

Dominion Energy’s short-term financing is supported through its access to the joint revolving credit facility described below. Commercial paper and letters of credit outstanding, as well as capacity available under the credit facility were as follows:

	Facility Limit		Outstanding Commercial Paper⁽¹⁾		Outstanding Letters of Credit		Facility Capacity Available
(millions)
At December 31, 2020
Joint revolving credit facility⁽²⁾⁽³⁾	$	6,000	$	627	$	100	$	5,273
At December 31, 2019
Joint revolving credit facility⁽²⁾	$	6,000	$	836	$	89	$	5,075

(1)
~~156~~

~~(1)~~

The weighted-average interest rates of the outstanding commercial paper supported by Dominion Energy’s credit facility was ~~2.10%~~0.29% and ~~2.93%~~2.10% at December 31, 2020 and 2019, ~~and 2018,~~ respectively.

(2)	This credit facility matures in March 2023 and can be used by the borrowers under the credit facility to support bank borrowings and the issuance of commercial paper, as well as to support up to a combined $2.0 billion of letters of credit.

~~In March 2019, DESC’s $700 million credit facility was terminated~~

(3)	In October 2020, the joint revolving credit facility was amended to remove Dominion Energy Gas as a co-borrower.

DESC and ~~DESC was added~~Questar Gas’ short-term financings are supported through access as ~~a borrower~~co-borrowers to the joint revolving credit facility discussed above with ~~Dominion Energy, Virginia Power, Dominion Energy Gas and Questar Gas. DESC’s short-term financing is supported through its access as~~

~~co-borrower~~

to the ~~facility.~~Companies. At December 31, ~~2019,~~2020, the

~~sub-limit~~

sub-limits for DESC ~~was $500 million.~~

~~Questar Gas’ short-term financing is supported through its access as~~

~~co-borrower~~

~~to the joint revolving credit facility discussed above with Dominion Energy, Virginia Power, Dominion Energy Gas~~ and ~~DESC. At December 31, 2019, the~~

~~sub-limit~~

~~for~~ Questar Gas ~~was~~were $500 million and $250 ~~million.~~

~~South Carolina Fuel Company, Inc.’s credit facility was terminated in February 2019. SCANA~~million, respectively.

In January 2020, DESC and ~~PSNC’s credit facilities were terminated in~~GENCO applied to FERC for a two-year short-term borrowing authorization. In March ~~2019. Liquidity needs for these entities may be satisfied through short-term intercompany borrowings from Dominion Energy.~~

~~In April 2019,~~2020, FERC granted DESC ~~renewed its FERC~~ authority through ~~April 2020~~March 2021 to issue short-term indebtedness (pursuant to Section 204 of the Federal Power Act) in amounts not to exceed $2.2 billion outstanding with maturity dates of one year or less. In addition, in ~~April 2019,~~March 2020, FERC granted GENCO ~~renewed its FERC~~ authority through ~~April 2020~~March 2021 to issue short-term indebtedness not to exceed $200 million outstanding with maturity dates of one year or less. In January ~~2020,~~2021, DESC and GENCO applied to FERC for a two-year short-term borrowing authorization. The applications are pending.

In addition to the credit facility mentioned above, Dominion Energy also has a credit facility which had an original stated maturity date of June 2020 and allowed Dominion Energy to issue up to $21 million in letters of credit. In May 2020, the credit facility was amended to increase the facility capacity to approximately $30 million and extend the maturity date to June 2022. At December 31, 2020 and 2019, Dominion Energy had $30 million and $21 million, respectively, in letters of credit outstanding under this agreement.

In addition to the credit facilities mentioned above, SBL Holdco has $30 million of credit facilities which had an original stated maturity date of December 2017 with automatic

one-year

renewals through the maturity of the SBL Holdco term loan agreement in December 2023. Dominion Solar Projects III, Inc. has $25 million of credit facilities which had an original stated maturity date of May 2018 with automatic

one-year

renewals through the maturity of the Dominion Solar Projects III, Inc. term loan agreement in May 2024. At both December 31, 2020 and 2019, no0 amounts were outstanding under either of these facilities.

In ~~February 2019,~~March 2020, Dominion Energy ~~Midstream terminated its $500~~entered into a $900 million ~~revolving credit facility subsequent~~364-Day Revolving Credit Agreement. The agreement bears interest at a variable rate. At December 31, 2020, $225 million was outstanding under the agreement. The proceeds from these borrowings were used to ~~repaying the outstanding balance of $73 million, plus accrued interest.~~

~~In addition~~provide for general working capital and other general corporate purposes. The maximum allowed total debt to ~~the~~total capital ratio under this supplemental agreement is consistent with such allowed ratio under Dominion Energy’s joint revolving credit ~~facility mentioned above,~~facility.

In March 2020, Dominion Energy ~~also has a credit facility with a maturity date in June 2020 which allows Dominion Energy to issue up to approximately $21~~borrowed $500 million ~~in letters of credit. At December 31, 2019, Dominion Energy had $21 million in letters of credit outstanding under this agreement.~~

~~In September 2019, Dominion Energy Questar borrowed $3.0 billion~~ under a 364-Day Term Loan Credit Agreement that ~~accrued~~bore interest at a variable rate. The proceeds were used to provide for general working capital and other general corporate purposes. In November 2020, Dominion Energy repaid the outstanding balance in full.

In April 2020, Dominion Energy borrowed $625 million under a 364-Day Term Loan Credit Agreement that bore interest at a variable rate. The proceeds ~~from the borrowing~~ were used to ~~repay~~provide for general working capital and other general corporate purposes. In June 2020, Dominion Energy repaid the outstanding balance in full.

Dominion Energy has an effective shelf registration statement with the SEC for the sale of up to $3.0 billion of variable denomination floating rate demand notes, called Dominion Energy Reliability Investment^SM. The registration limits the principal ~~of Cove Point’s $3.0 billion term loan due in 2021.~~amount that may be outstanding at any one time to $1.0 billion. The notes are offered on a continuous basis and bear interest at a floating rate per annum determined by the Dominion Energy ~~provided~~Reliability Investment Committee, or its designee, on a ~~guarantee to support~~weekly basis. The notes have no stated maturity date, are non-transferable and may be redeemed in whole or in part by Dominion Energy ~~Questar’s obligation under~~or at the

~~364-Day~~

~~Term Loan Agreement. In November~~ investor’s option at any time. At December 31, 2020 and December 31, 2019, ~~principal of $1.0 billion~~Dominion Energy’s Consolidated Balance Sheets include $268 million and ~~$2.0 billion,~~$75 million, respectively, ~~plus accrued interest was repaid.~~

presented within short-term debt. The proceeds are used for general corporate purposes and to repay debt.

Virginia Power

Virginia Power’s short-term financing is supported through its access as

co-borrower

to the joint revolving credit facility. The credit facility can be used for working capital, as support for the combined commercial paper programs of the borrowers under the credit facility and for other general corporate purposes.

Virginia Power’s share of commercial paper and letters of credit outstanding under ~~its~~the joint revolving credit facility with Dominion Energy, ~~Dominion Energy Gas,~~ Questar Gas and DESC were as follows:

Facility
Limit

Outstanding
Commercial
Paper
(1)

Outstanding
Letters of
Credit

(millions)

At December 31, 2019

Joint revolving credit facility
(2)

$6,000

$243

$ 7

At December 31, 2018

Joint revolving credit facility
(2)

$6,000

$314

$16

	Facility Limit		��	Outstanding Commercial Paper⁽¹⁾		Outstanding Letters of Credit
(millions)
At December 31, 2020
Joint revolving credit facility⁽²⁾⁽³⁾	$	6,000		$	45	$	12
At December 31, 2019
Joint revolving credit facility⁽²⁾	$	6,000		$	243	$	7

(1)	The weighted-average interest rates of the outstanding commercial paper supported by the credit facility was ~~2.10%~~0.30% and ~~2.94%~~2.10% at December 31, 2020 and 2019, ~~and 2018,~~ respectively.

(2)

The full amount of the facility is available to Virginia Power, less any amounts outstanding to

co-borrowers

Dominion Energy, ~~Dominion Energy Gas,~~ Questar Gas and DESC. The

sub-limit

for Virginia Power is set within the facility limit but can be changed at the option of the borrowers under the credit facility multiple times per year. At December 31, ~~2019,~~2020, the

sub-limit

for Virginia Power was $1.5 billion. If Virginia Power has liquidity needs in excess of its

sub-limit,

the

sub-limit

may be changed or such needs may be satisfied through short-term intercompany borrowings from Dominion Energy. This credit facility matures in March 2023 and can be used to support bank borrowings and the issuance of commercial paper, as well as to support up to $2.0 billion (or the

sub-limit,

whichever is less) of letters of credit.

~~Dominion Energy Gas~~

~~Dominion Energy Gas’ short-term financing is supported by its access as~~

~~co-borrower~~

(3)

In October 2020, the joint revolving credit facility. The credit facility can be used for working capital, as support for the combined commercial paper programs of the borrowers under the credit facility and for other general corporate purposes.

~~Dominion Energy Gas’ share of commercial paper and letters of credit outstanding under its joint credit facility with Dominion Energy, Virginia Power, Questar Gas and DESC were as follows:~~

Facility
Limit

Outstanding
Commercial
Paper
(1)

Outstanding
Letters of
Credit

(millions)

At December 31, 2019

Joint revolving credit facility
(2)

$1,500

$62

$—

At December 31, 2018

Joint revolving credit facility
(2)

$1,500

$10

$—

~~(1)~~

~~The weighted-average interest rates of the outstanding commercial paper supported by the~~ credit facility was ~~1.98% and 2.58% at December 31, 2019 and 2018, respectively.~~

~~(2)~~

~~A maximum of $1.5 billion of the facility is available~~amended to remove Dominion Energy Gas ~~assuming adequate capacity is available after giving effect to uses by~~

~~co-borrowers~~

~~Dominion Energy, Virginia Power, Questar Gas and DESC. The~~

~~sub-limit~~

~~for Dominion Energy Gas is set within the facility limit but can be changed at the option of the borrowers under the credit facility multiple times per year. At December 31, 2019, the~~

~~sub-limit~~

~~for Dominion Energy Gas was $750 million. If Dominion Energy Gas has liquidity needs in excess of its~~

~~sub-limit,~~

~~the~~

~~sub-limit~~

~~sub-limit,~~

~~whichever is less) of letters of credit.~~

a co-borrower.


						~~157~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~Note~~

NOTE 18. ~~Long-term Debt~~

At December 31,

2019
Weighted-
average
Coupon
(1)

2019

2018

(millions, except percentages)

Dominion Energy Gas Holdings, LLC:

Unsecured senior notes:

Variable rate, due 2021

2.49
% $
500
$
500

2.5% to 4.8%, due 2019 to 2049
(2)

3.44
%
4,631

3,587

Cove Point, term loan, due 2021
(3)

—

3,000

Dominion Energy Midstream:

Term loan, variable rate, due 2019

—

300

Revolving credit agreement, variable rate, due 2021
(4)

—

73

Dominion Energy Questar Pipeline, unsecured senior notes, 3.53% to 4.875%, due 2028 to 2041

4.23
%
430

430

Dominion Energy Gas Holdings, LLC total principal
$
5,561
$
7,890
��
Securities due within one year

2.80
%
(699
)
(748
)
Credit facility borrowings
(4)

—
(73 )
Unamortized discount and debt issuance costs

(41
)
(47
)
Finance leases

5

—

Dominion Energy Gas Holdings, LLC total long-term debt
$
4,826
$
7,022

Virginia Electric and Power Company:

Unsecured senior notes:

2.75% to 8.875%, due 2019 to 2049

4.27
% $
11,789
$
11,090

Tax-
exempt financings, 1.80% to 5.0%, due 2023 to 2041
(5)
(6)

2.02
%
625

664

Virginia Electric and Power Company total principal
$
12,414
$
11,754

Securities due within one year

4.29
%
(1
)
(350
)
Unamortized discount, premium and debt issuances costs, net

(88
)
(83
)
Finance leases

16

—

Virginia Electric and Power Company total long-term debt
$
12,341
$
11,321

Dominion Energy, Inc.:

Unsecured senior notes:

Variable rates, due 2019 and 2020

2.31
% $
300
$
800

1.6% to 7.0%, due 2019 to 2049
(7)

4.15
%
7,688

7,488

Unsecured junior subordinated notes:

2.579% to 4.104%, due 2019 to 2024

3.01
%
2,950

2,100

Payable to affiliated trust, 8.4%, due 2031

8.40
%
10

10

Enhanced junior subordinated notes:

Variable rates, due 2066
(8)

4.41
%
397

422

5.25% and 5.75%, due 2054 and 2076

5.48
%
1,485

1,485

Remarketable subordinated notes, 2.0%, due 2021 and 2024

—

1,400

Questar Gas, unsecured senior notes, 2.98% to 7.20%, due 2024 to 2051

4.25
%
750

750

SCANA:

Unsecured medium term notes, 4.125% to 6.25%, due 2020 to 2022
(9)(10)

5.06
%
508

—

Unsecured senior notes, variable rate, due 2034
(11)

2.61
%
66

—

PSNC, senior debentures and notes, 4.13% to 7.45%, due 2020 to 2047

5.05
%
700

—

DESC:

First mortgage bonds, 3.22% to 6.625%, due 2021 to 2065
(12)

5.42
%
3,267

—

Tax-
exempt financings:
(13)

Variable rate due 2038

1.65
%
35

—

GENCO, variable rates due 2038
(14)

1.65
%
33

—

3.625% and 4.00%, due 2028 and 2033

3.90
%
54

—

Other

3.69
%
1

—

Secured senior notes, 4.82%, due 2042
(15)

4.82
%
345

362

Term loans, variable rates, due 2023 and 2024
(15)

4.24
%
527

582

Tax-
exempt financing, 1.7%, due 2033

1.70
%
27

27

Dominion Energy Gas Holdings, LLC total principal (from above)

5,561

7,890

Virginia Electric and Power Company total principal (from above)

12,414

11,754

Dominion Energy, Inc. total principal
$
37,118
$
35,070

Fair value hedge valuation
(16)

4

(20
)
Securities due within one year
(8)(10)(11)(17)

3.41
%
(3,133
)
(3,624
)
Credit facility borrowings
(4)

—
(73 )
Unamortized discount, premium and debt issuance costs, net

(270
)
(248
)
Finance leases

105

39

Dominion Energy, Inc. total long-term debt
$
33,824
$
31,144

LONG-TERM DEBT

At December 31,	2020 Weighted- average Coupon⁽¹⁾			2020			2019
(millions, except percentages)
Virginia Electric and Power Company:
Unsecured Senior Notes:
2.45% to 8.875%, due 2022 to 2050		4.14	%	$	12,689		$	11,789
Tax-Exempt Financings⁽²⁾:
0.45% to 1.90%, due 2032 to 2041		1.14	%		625			625
Virginia Electric and Power Company total principal				$	13,314		$	12,414
Securities due within one year					—			(1	)
Unamortized discount, premium and debt issuances costs, net					(107	)		(88	)
Derivative restructuring					444			—
Finance leases					36			16
Virginia Electric and Power Company total long-term debt				$	13,687		$	12,341
Dominion Energy, Inc.:
Supplemental 364-Day credit facility, variable rate, due 2021		1.18	%	$	225		$	—
Unsecured Senior Notes:
Variable rates, due 2020 and 2023		0.75	%		1,000			300
2.0% to 7.0%, due 2021 to 2049⁽³⁾		3.98	%		9,938			7,688
Unsecured Junior Subordinated Notes:
2.579% to 4.104%, due 2020 to 2024⁽⁴⁾		3.23	%		1,950			2,950
Payable to Affiliated Trust, 8.4%, due 2031		8.40	%		10			10
Enhanced Junior Subordinated Notes:
Variable rates, due 2066⁽⁵⁾					—			397
5.25% and 5.75%, due 2054 and 2076		5.48	%		1,485			1,485
Questar Gas, Unsecured Senior Notes, 2.98% to 7.20%, due 2024 to 2051		4.25	%		750			750
East Ohio, Unsecured Senior Notes, 1.30% to 3.00%, due 2025 to 2050		2.25	%		1,800			—
SCANA:
Unsecured Medium Term Notes, 4.125% to 6.25%, due 2020 to 2022⁽⁶⁾					—			508
Unsecured Senior Notes, variable rate, due 2034 ⁽⁷⁾					—			66
PSNC, Senior Debentures and Notes, 4.05% to 7.45%, due 2020 to 2047		4.62	%		800			700
DESC:
First Mortgage Bonds, 3.22% to 6.625%, due 2021 to 2065		5.42	%		3,267			3,267
Tax-Exempt Financings⁽⁸⁾:
Variable rate due 2038		0.13	%		35			35
GENCO, variable rate due 2038		0.13	%		33			33
3.625% and 4.00%, due 2028 and 2033		3.90	%		54			54
Other		3.67	%		1			1
Secured Senior Notes, 4.82%, due 2042⁽⁹⁾		4.82	%		331			345
Term Loans, variable rates, due 2023 and 2024⁽⁹⁾		2.55	%		476			527
Tax-Exempt Financing, 1.7% due 2033		1.70	%		27			27
Virginia Electric and Power Company total principal (from above)					13,314			12,414
Dominion Energy, Inc. total principal⁽¹⁰⁾				$	35,496		$	31,557
Fair value hedge valuation⁽¹¹⁾					3			4
Securities due within one year⁽¹²⁾		3.14	%		(1,905	)		(2,435	)
Supplemental 364-Day credit facility borrowings					(225	)		—
Unamortized discount, premium and debt issuance costs, net					(293	)		(228	)
Derivative restructuring					773			—
Finance leases					108			100
Dominion Energy, Inc. total long-term debt				$	33,957		$	28,998

(1)
~~158~~

~~(1)~~

Represents weighted-average coupon rates for debt outstanding as of December 31, ~~2019.~~2020.

(2)	~~Amount includes foreign currency remeasurement adjustments.~~

~~(3)~~

~~In September 2019, Cove Point repaid its $3.0 billion term loan due in 2021.~~

~~(4)~~

In February 2019, Dominion Energy Midstream repaid its $300 million variable rate term loan due in December 2019 and terminated the credit facility due in March 2021 subsequent to repaying the $73 million outstanding balance. As such, credit facility borrowings are presented within current liabilities in Dominion Energy Gas’ Consolidated Balance Sheets at December 31, 2018.

~~(5)~~

These financings relate to certain pollution control equipment at Virginia Power’s generating facilities.

~~(6)~~

(3)

~~(7)~~

Includes debt assumed by Dominion Energy from the merger of its former CNG subsidiary.

~~(8)~~

(4)

In April 2020, Dominion Energy purchased and canceled $7 million of its 2.579% junior subordinated notes that mature in July 2020. In June 2020, Dominion Energy prepaid the remaining balance of $993 million.

(5)

In February 2020, Dominion Energy purchased and cancelled the remaining $111 million and $286 million of its June 2006 hybrids and September 2006 hybrids, respectively, both of which would have otherwise matured in 2066. As such, these borrowings are presented within securities due within one year in Dominion Energy’s Consolidated Balance Sheets at December 31, 2019.

~~(9)~~

(6)

~~In March 2019, SCANA purchased certain of its medium term notes having an aggregate purchase price of $300 million pursuant to tender offer that expired in the first quarter of 2019.~~

~~(10)~~

In February 2020, SCANA provided notice to redeem the remaining principal outstanding of $183 million of its 4.75% medium-term notes and $155 million of its 4.125% ~~medium-term~~medium term notes plus accrued interest and make-whole premiums in March 2020. The notes would have otherwise matured in May 2021 and February 2022, respectively. As such, these borrowings are presented within securities due within one year in Dominion Energy’s Consolidated Balance Sheets at December 31, 2019.

~~(11)~~

(7)

In January 2020, SCANA provided notice to redeem its floating rate senior notes at the remaining principal outstanding of $66 million plus accrued interest in March 2020. The notes would have otherwise matured in June 2034. As such, these borrowings are presented within securities due within one year in Dominion Energy’s Consolidated Balance Sheets at December 31, 2019.

~~(12)~~

(8)

In February, March and September 2019, DESC purchased certain of its first mortgage bonds having an aggregate purchase price of $1.8 billion pursuant to tender offers. The February and March tender offers expired in the first quarter of 2019 and the September tender offer expired in the third quarter of 2019.

~~(13)~~

Industrial revenue bonds totaling $68 million are secured by letters of credit

that

expire, subject to renewal, in the fourth quarter of ~~2020.~~

2021.

)

(9)

)

Represents debt associated with Eagle Solar, SBL Holdco and Dominion Solar Projects III, Inc. The debt is nonrecourse to Dominion Energy and is secured by Eagle Solar’s, SBL Holdco’s and Dominion Solar Projects III, Inc’s interest in certain solar facilities.

)

(10)

Excludes amounts classified as held for sale. See Note 3.

(11)	Represents the valuation of certain fair value hedges associated with Dominion Energy’s fixed rate debt.

)

(12)

Includes ~~$20~~$22 million of estimated mandatory prepayments due within one year based on estimated cash flows in excess of debt service at SBL Holdco and Dominion Solar Projects III, Inc.

Based on stated maturity dates rather than early redemption dates that could be elected by instrument holders, the scheduled principal payments of long-term debt at December 31, ~~2019,~~2020, were as follows:

	2021			2022			2023			2024			2025			Thereafter			Total
(millions, except percentages)
Virginia Power
Unsecured Senior Notes	$	—		$	750		$	700		$	350		$	350		$	10,539		$	12,689
Tax-Exempt Financings		—			—			—			—						625			625
Total	$	—		$	750		$	700		$	350		$	350		$	11,164		$	13,314
Weighted-average Coupon		—			3.15	%		2.75	%		3.45	%		3.10	%		4.18	%
Dominion Energy
Supplemental 364-Day Credit Facility	$	225		$	—		$	—		$	—		$	—		$	—		$	225
Term Loans⁽¹⁾		35			34			250			157			—			—			476
First Mortgage Bonds		33			—			—			—			—			3,234			3,267
Unsecured Senior Notes⁽²⁾⁽³⁾		550			1,500			2,700			690			2,000			19,537			26,977
Secured Senior Notes		17			19			16			17			19			243			331
Tax-Exempt Financings		—			—			—			—			—			775			775
Unsecured Junior Subordinated Notes Payable to Affiliated Trusts		—			—			—			—			—			10			10
Unsecured Junior Subordinated Notes⁽⁴⁾		1,250			—			—			700			—			—			1,950
Enhanced Junior Subordinated Notes⁽⁵⁾		—			—			—			—			—			1,485			1,485
Total	$	2,110		$	1,553		$	2,966		$	1,564		$	2,019		$	25,284		$	35,496
Weighted-average Coupon		2.93	%		2.96	%		1.98	%		3.17	%		3.01	%		4.45	%

2020

2021

2022

2023

2024

Thereafter

Total

(millions, except percentages)

Dominion Energy Gas
$
700
$
500
$
—
$
650
$
1,050
$
2,661
$
5,561

Weighted-average coupon

2.80
%
2.49
%
—

3.29
%
2.97
%
3.95
%
Virginia Power

Unsecured senior notes
$
—
$
—
$
750
$
700
$
350
$
9,989
$
11,789

Tax-
exempt financings

—

—

—

—

625

625

Total
$
—
$
—
$
750
$
700
$
350
$
10,614
$
12,414

Weighted-average coupon

—

—

3.15
%
2.75
%
3.45
%
4.35
%
Dominion Energy

Term loans
(1
)
$
35
$
35
$
34
$
259
$
164
$
—
$
527

First mortgage bonds

—

33

—

—

—

3,234

3,267

Unsecured senior notes
(2)(3)

1,275

1,237

1,659

2,355

1,745

19,092

27,363

Secured senior notes

15

17

19

16

17

261

345

Tax-
exempt financings

—

—

—

—

—

774

774

Unsecured junior subordinated notes payable
to affiliated trusts

—

—

—

—

—

10

10

Unsecured junior subordinated notes

1,000

1,250

—

—

700

—

2,950

Enhanced junior subordinated notes
(4)

—

—

—

—

—

1,882

1,882

Total
$
2,325
$
2,572
$
1,712
$
2,630
$
2,626
$
25,253
$
37,118

Weighted-average coupon

3.09
%
3.15%

3.10
%
2.95%

3.19%

4.62
%

(1)

Excludes mandatory prepayments associated with SBL Holdco and Dominion Solar Projects III, Inc. based on cash flows in excess of debt service. At December 31, ~~2019, $20~~2020, $22 million of estimated mandatory prepayments due within one year were included in securities due within one year in Dominion Energy’s Consolidated Balance Sheets.

(2)	In January 2020, SCANA provided notice to redeem its floating rate senior notes at the remaining principal outstanding of $66 million plus accrued interest in March 2020. The notes would have otherwise matured in June 2034.

(3)

(4)	In April 2020, Dominion Energy purchased and canceled $7 million of its 2.579% junior subordinated notes that mature in July 2020. In June 2020, Dominion Energy prepaid the remaining balance of $993 million.

(5)

In February 2020, Dominion Energy purchased and cancelled the remaining $111 million and $286 million of its June 2006 hybrids and September 2006 hybrids, respectively, both of which would have otherwise matured in 2066. As such, these borrowings are presented within current liabilities in Dominion Energy’s Consolidated Balance Sheets at December 31, 2019.


						~~159~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

The Companies’ short-term credit facility and long-term debt agreements contain customary covenants and default provisions. As of December 31, ~~2019,~~2020, there were no events of default under these covenants.

Senior Note Issuances

Senior Note Redemptions

In ~~November 2018 and December 2018, Dominion Energy~~March 2020, SCANA redeemed its floating rate senior notes at the ~~following outstanding series~~remaining principal balance of $66 million plus accrued interest. The notes would have otherwise matured in June 2034. Expenses related to the early redemption of the senior notes: 2011 Series A 4.45% Senior Notes due 2021, 2014 Series B 2.50% Senior Notes due 2019, 2014 Series C 3.625% Senior Notes due 2024 and 2018 Series A Floating Rate Senior Notes due 2020 with an aggregate outstanding principal of $2.2 billion. The aggregate redemption price paid was $2.2 billion and represents the principal amount outstanding, accrued and unpaidnotes were $7 million reflected within interest and ~~the applicable make-whole premium of $34 million. Total~~related charges ~~of $69 million, including~~in the ~~make-whole premium, were recognized and recorded in interest expense in Dominion Energy’s~~ Consolidated Statements of ~~Income.~~

Income for the year ended December 31, 2020.

Enhanced Junior Subordinated Notes

In June 2006 and September 2006, Dominion Energy issued $300 million of June 2006 hybrids and $500 million of September 2006 hybrids, respectively. The June 2006 hybrids and the September 2006 hybrids bore interest at the three-month LIBOR plus 2.825%, reset quarterly and at the three-month LIBOR plus 2.3%, reset quarterly, respectively. Dominion Energy executed RCCs in connection with its issuance of the June 2006 hybrids and the September 2006 hybrids. Under the terms of the RCCs, redemptions of the hybrids were subject to certain conditions. In 2019, Dominion Energy purchased and cancelled $12 million and $13 million of its June 2006 hybrids and September 2006 hybrids, respectively. In February 2020, Dominion Energy ~~purchased and cancelled~~redeemed the remaining $111 million and $286 million of its June 2006 hybrids and September 2006 hybrids, respectively, both of which would have otherwise matured in 2066. All purchases were conducted in compliance with the applicable RCC, each of which was terminated in February 2020.

Expenses related to the early redemption of the hybrids were $10 million reflected within interest and related charges in the Consolidated Statements of Income for the year ended December 31, 2020.

In October 2014, Dominion Energy issued $685 million of October 2014 hybrids that will bear interest at 5.75% per year until October 1, 2024. Thereafter, they will bear interest at the three-month LIBOR plus 3.057%, reset quarterly.

In July 2016, Dominion Energy issued $800 million of 5.25% July 2016 hybrids. The July 2016 hybrids are listed on the NYSE under the symbol DRUA.

Dominion Energy may defer interest payments on the hybrids on one or more occasions for up to 10 consecutive years. If the interest payments on the hybrids are deferred, Dominion Energy may not make distributions related to its capital stock, including dividends, redemptions, repurchases, liquidation payments or guarantee payments during the deferral period. Also, during the deferral period, Dominion Energy may not make any payments on or redeem or repurchase any debt securities that are equal in right of payment with, or subordinated to, the hybrids.

Remarketable Subordinated Notes

In July 2014, Dominion Energy issued $1.0 billion of 2014 Series A 6.375% Equity Units, initially in the form of Corporate Units. In August 2016, Dominion Energy issued $1.4 billion of 2016 Series A 6.75% Equity Units, initially in the form of Corporate

~~Units. The Corporate Units were listed on the NYSE under the symbols DCUC and DCUD, respectively.~~

Each 2014 Series A Corporate Unit consisted of a stock purchase contract and 1/20 interest in a RSN issued by Dominion Energy. Each 2016 Series A Corporate Unit consisted of a stock purchase contract, a 1/40 interest in a 2016 Series

~~A-1~~

~~RSN issued by Dominion Energy and a 1/40 interest in a 2016 Series~~

~~A-2~~

RSN issued by Dominion Energy. The stock purchase contracts obligated the holders to purchase shares of Dominion Energy common stock at a future settlement date prior to the relevant RSN maturity date. The purchase price paid under the stock purchase contracts was $50 per Corporate Unit and the number of shares purchased was determined under a formula based upon the average closing price of Dominion Energy common stock near the settlement date. The RSNs were pledged as collateral to secure the purchase of common stock under the related stock purchase contracts.

In May 2017, Dominion Energy successfully remarketed the $1.0 billion 2014 Series A 1.50% RSNs due 2020 pursuant to the terms of the related 2014 Equity Units. In connection with the remarketing, the interest rate on the junior subordinated notes was reset to 2.579%, payable on a semi-annual basis and Dominion Energy ceased to have the ability to redeem the notes at its option or defer interest payments.

In June 2019, Dominion Energy successfully remarketed the $700 million 2016 Series

A-1

2.0% RSNs due 2021 and $700 million 2016 Series

A-2

2.0% RSNs due 2024 pursuant to the terms of the related 2016 Equity Units. In connection with the remarketing, the interest rates on the Series

A-1

and Series

A-2

notes were reset to 2.715% and 3.071%, respectively, payable on a semi-annual basis, and Dominion Energy ceased to have the ability to redeem the notes at its option or defer interest payments.

~~At December 31, 2019, the securities are included in junior subordinated notes in Dominion Energy’s Consolidated Balance Sheets.~~

Dominion Energy did not receive any proceeds from the ~~remarketings.~~remarketing. Remarketing proceeds belonged to the investors holding the ~~related equity units~~2016 Equity Units and were temporarily used to purchase a portfolio of treasury securities. Upon maturity of ~~each~~the portfolio, the proceeds were applied on behalf of the investors on the related stock purchase contract settlement date to pay the purchase price to Dominion Energy for issuance of ~~12.5 million shares of its common stock in July 2017 and~~ 18.5 million shares of its common stock in August 2019.

Derivative Restructuring

In June 2020, Dominion Energy amended a portfolio of interest rate swaps with a notional value of $2.0 billion, extending the mandatory termination dates from 2020 and 2021 to December 2024. The transaction is viewed as a noncash financing activity with an embedded interest rate swap. As a result, in June 2020, Dominion Energy recorded $326 million in other long-term debt, representing the net present value of the initial fair value measurement of the new contract with an imputed interest rate of 1.19%, in its Consolidated Balance Sheets with an embedded interest rate derivative that had a fair value of zero at inception.

In August 2020, Virginia Power amended a portfolio of interest rate swaps with a notional value of $900 million, extending the mandatory termination dates from 2020 to December 2023. The transaction is viewed as a noncash financing activity with an

~~Note~~

embedded interest rate swap. As a result, in August 2020, Virginia Power recorded $443 million in other long-term debt, representing the net present value of the initial fair value measurement of the new contract with an imputed interest rate of 0.34%, in its Consolidated Balance Sheets with an embedded interest rate derivative that had a fair value of zero at inception. The interest rate swaps were in a hedge relationship prior to the transaction. Virginia Power de-designated the hedge relationships prior to the transaction and then designated the new interest rate swap in a hedge relationship after the transaction.

NOTE 19. ~~Preferred Stock~~

PREFERRED STOCK

Dominion Energy is authorized to issue up to 20 million shares of preferred stock,which may be designated into separate classes. At both December 31, 2020 and 2019, Dominion Energy had issued and outstanding 2.4 million shares preferred stock, 1.6 million and 0.8 million of which were designated as the Series A Preferred Stock and the Series B Preferred Stock, respectively. ~~No shares of preferred stock were outstanding at December 31, 2018.~~

DESC is authorized to issue up to 20 million shares of preferred stock. At both December 31, 2020 and 2019, DESC had issued and outstanding 1,000 shares of preferred stock, all of which were held by SCANA and are eliminated in consolidation.


~~160~~

Virginia Power is authorized to issue up to 10 million shares of preferred stock, $100 liquidation preference; however, 0ne were issued and outstanding at December 31, 2020 or 2019.

2019 Corporate Units

In June 2019, Dominion Energy issued $1.6 billion of 2019 Equity Units, initially in the form of 2019 Series A Corporate Units. The Corporate Units are listed on the NYSE under the symbol DCUE. The net proceeds were used for general corporate purposes and to repay short-term debt, including commercial paper.

Each 2019 Series A Corporate Unit consists of a stock purchase contract and a 1/10, or 10%, undivided beneficial ownership interest in one share of Series A Preferred Stock. Beginning in June 2022, the Series A Preferred Stock is convertible at the option of the holder into Dominion Energy common stock under a formula based upon the average closing price of Dominion Energy common stock prior to the conversion date. The Series A Preferred Stock is redeemable in cash by Dominion Energy beginning September 2022 at the liquidation preference. Settlement of any conversion is payable in cash, common stock or a combination thereof, at Dominion Energy’s election.

The stock purchase contracts obligate the holders to purchase shares of Dominion Energy common stock in June 2022. The purchase price to be paid under the stock purchase contracts is $100 per Corporate Unit and the number of shares to be purchased will be determined under a formula based upon the average closing price of Dominion Energy common stock near the settlement date. The Series A Preferred Stock was pledged upon issuance as collateral to secure the purchase of common stock under the related stock purchase contracts.

Dominion Energy pays cumulative dividends on the Series A Preferred Stock and quarterly contract adjustment payments on the stock purchase contracts, at the rates described below. Dominion Energy may elect to pay such dividends and/or payments in cash, shares of Dominion Energy common stock or a

combination of cash and shares of Dominion Energy common stock. Dominion Energy may defer the contract adjustment payments for one or more consecutive periods but generally not beyond the purchase contract settlement date. If payments are deferred, Dominion Energy may not make any distributions related to its capital stock, including dividends, redemptions, repurchases or liquidation payments. Also, during the deferral period, Dominion Energy may not make any payments on or redeem, repay or repurchase any debt securities that are equal in right of payment with, or subordinated to, the contract adjustment payments or make any payment on any guarantee of a security of a subsidiary if the guarantee ranks equal or junior to the contract adjustment payments. Unless all accumulated and unpaid dividends on the Series A Preferred Stock have been declared and paid, Dominion Energy may not make any distributions on any of its capital stock ranking equal or junior to the Series A Preferred Stock as to dividends or upon liquidation, as applicable, including dividends, redemptions, repurchases or liquidation payments. In such circumstances, Dominion Energy also may not make any contract adjustment payments or other similar types of payments, subject to certain exceptions.

Dominion Energy has recorded the present value of the stock purchase contract payments as a liability offset to common stock. Stock purchase contract payments are recorded against this liability. Accretion of the stock purchase contract liability is recorded as imputed interest expense. In calculating diluted EPS, Dominion Energy applies the treasury stock method to the stock purchase contracts and the

if-converted

method to the Series A Preferred Stock. Under the terms of the stock purchase contracts, assuming no anti-dilution or other adjustments, the maximum number of shares of common stock Dominion Energy will issue in June 2022 is 21.8 million.

Selected information about Dominion Energy’s 2019 Equity Units is presented below:

Issuance Date

Units Issued

Total Net

Proceeds⁽¹⁾

Total Preferred

Stock⁽²⁾

Cumulative

Dividend Rate

Stock Purchase

Contract

Annual Rate

Stock Purchase

Contract

Liability⁽³⁾

Stock Purchase

Contract

Settlement Date

(millions except interest rates)

6/14/2019

1,582

1,610

1.75

5.5

250

6/1/2022

Issuance Date

Units
Issued

Total Net
Proceeds
(1)

Total
Preferred Stock
(2)

Cumulative
Dividend Rate

Stock Purchase
Contract Annual
Rate

Stock Purchase
Contract Liability
(3)

Stock Purchase
Contract
Settlement Date

(millions except interest rates)

6/14/2019

16
$
1,582

$1,610

1.75
%
5.5
%
$250

6/1/2022

~~(1)~~

~~Issuance costs of $28 million were recorded as a reduction to preferred stock ($14 million) and common stock ($14 million) in the Consolidated Balance Sheets.~~

~~(2)~~

~~Dominion Energy recorded dividends of $15 million ($9.479 per share) for the year ended December 31, 2019.~~

~~(3)~~

~~Payments of $38 million were made in 2019. The stock purchase contract liability was $212 million at December 31, 2019.~~

(1) Issuance costs of $28 million were recorded as a reduction to preferred stock ($14 million) and common stock ($14 million) in the Consolidated Balance Sheets at December 31, 2019.

(2)Dominion Energy recorded dividends of $28 million ($17.50 per share) and $15 million ($9.479 per share) for the years ended December 31, 2020 and 2019, respectively.

(3) Payments of $83 million and $38 million were made in 2020 and 2019, respectively. The stock purchase contract liability was $129 million and $212 million at December 31, 2020 and 2019, respectively.

Series B Preferred Stock

In December 2019, Dominion Energy issued 800,000 shares of Series B Preferred Stock for $791 million, net of $9 million of issuance costs. The preferred stock has a liquidation preference of $1,000 per share and currently pays a 4.65% dividend per share on the liquidation preference. Dividends are paid cumulatively on a semi-annual basis, commencing June 15, 2020. Dominion Energy recorded dividends of $37 million ($46.50 per share) and $2 million ($1.9375 per share) for the ~~year~~years ended December 31, ~~2019.~~2020 and 2019, respectively. The dividend rate for the Series B Preferred Stock will be reset every five years beginning on December 15, 2024 to equal the then-current five-year U.S. Treasury rate plus a spread of 2.993%. Unless all accumulated and unpaid dividends on the Series B Preferred Stock have been declared and paid, Dominion Energy may not make any ~~dis~~

~~tributions~~distributions on any of its capital stock ranking equal or junior to the Series B Preferred Stock as to dividends or upon liquidation, including through dividends, redemptions, repurchases or otherwise.

Dominion Energy may, at its option, redeem the Series B Preferred Stock in whole or in part on December 15, 2024 or on any subsequent fifth anniversary of such date at a price equal to $1,000 per share plus any accumulated and unpaid dividends. Dominion Energy may also, at its option, redeem the Series B Preferred Stock in whole but not in part at a price equal to $1,020 per share plus any accumulated and unpaid dividends at any time within a certain period of time following any change in the criteria ratings agencies use to assign equity credit to securities such as the Series B Preferred Stock that has certain adverse effects on the equity credit actually received by the Series B Preferred Stock.


						~~161~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

Holders of the Series B Preferred Stock have no voting rights except in the limited circumstances provided for in the terms of the Series B Preferred Stock or as otherwise required by applicable law. The Series B Preferred Stock is not subject to any sinking fund or other obligation of ours to redeem, repurchase or retire the Series B Preferred Stock. The preferred stock contains no conversion rights.

~~Virginia Power~~

~~Virginia Power is authorized to issue up to 10 million shares of preferred stock, $100 liquidation preference; however, 0ne were issued~~

NOTE 20. EQUITY

Common Stock

Dominion Energy

During 2020, 2019, and ~~outstanding at December 31, 2019 or 2018.~~

~~Note 20. Equity~~

~~Common Stock~~

~~Dominion Energy~~

~~During 2019,~~ 2018, ~~and 2017,~~ Dominion Energy recorded, net of fees and commissions, $481 million, $11.0 billion ~~$2.5 billion~~ and ~~$1.3~~$2.5 billion from the issuance of approximately 7 million, 157 million ~~36 million~~ and 1736 million shares of common stock, respectively, for acquisitions, settlements of stock purchase contracts and litigation and through various programs including Dominion Energy Direct

^®

, employee savings plans and an

at-the-market

program.

Acquisitions

During 2019, Dominion Energy issued 95.6 million shares of common stock in connection with the acquisition of SCANA. At the time of issuance, these common stock shares were valued at $6.8 billion. See Note 3 for further information on the issuance of Dominion Energy common stock in connection with the SCANA Combination.

In January 2019, Dominion Energy and Dominion Energy Midstream closed on an agreement and plan of merger pursuant to which Dominion Energy acquired each outstanding common unit representing limited partner interests in Dominion Energy Midstream not already owned by Dominion Energy through the issuance of 22.5 million shares of common stock valued at $1.6 billion. Under the terms of the agreement and plan of merger, each publicly held outstanding common unit representing limited partner interests in Dominion Energy Midstream was converted into the right to receive 0.2492 shares of Dominion Energy common stock. Immediately prior to the closing, each Series A Preferred Unit representing limited partner interests in Dominion Energy Midstream was converted into common units representing limited partner interests in Dominion Energy Midstream in accordance with the terms of Dominion Energy Midstream’s partnership agreement. The merger was accounted for by Dominion Energy following the guidance for a change

in a parent company’s ownership interest in a consolidated subsidiary. Because Dominion Energy controls Dominion Energy Midstream both before and after the merger, the changes in Dominion Energy’s ownership interest in Dominion Energy Midstream were accounted for as an equity transaction and no0 gain or loss was recognized. In connection with the merger, Dominion Energy recognized $40 million of income taxes in equity primarily attributable to establishing additional regulatory liabilities related to excess deferred income taxes and changes in state income taxes.

Subsequent to this activity, as a result of the Dominion Energy Gas Restructuring, Dominion Energy Gas is considered to have acquired all of the outstanding partnership interests of Dominion Energy Midstream and Dominion Energy Midstream became a wholly-owned subsidiary of Dominion Energy Gas.

Pension Plan Contribution

In December 2019, Dominion Energy contributed 6.1 million shares of its common stock valued at $499 million to the qualified defined benefit pension plans. See Note 22 for further information regarding activity surrounding pension plan contributions.

Dominion Energy Direct

^®

and Employee Savings Plans

Dominion Energy maintains Dominion Energy Direct

^®

and a number of employee savings plans through which contributions may be invested in Dominion Energy’s common stock. These shares may either be newly issued or purchased on the open market with proceeds contributed to these plans. ~~Currently,~~In August 2020, Dominion Energy isbegan purchasing its common stock on the open market for these direct stock purchase plans. During 2020, Dominion Energy received cash of $159 million from the issuance of 2.1 million of such shares through Dominion Energy Direct^® and employee savings plans.In January 2021, Dominion Energy began issuing new shares of common stock for these direct stock purchase plans. ~~During 2019, Dominion Energy received cash of $309 million from the issuance of 4.0 million of such shares through Dominion Energy Direct~~

~~and employee savings plans.~~

Stock Purchase Contracts

In August 2019, Dominion Energy issued 18.5 million shares under the related stock purchase contracts entered into as part of Dominion Energy’s 2016 Equity Units and received proceeds of $1.4 billion. ~~In 2017, Dominion Energy issued 12.5 million shares under the related stock purchase contracts entered into as part of Dominion Energy’s 2014 Equity Units and received proceeds of $1.0 billion.~~ See Note 18 for further information surrounding these stock purchase contracts.

~~At-the-Market~~

~~Program~~

Other Issuances

In ~~June 2017,~~September 2020, Dominion Energy ~~filed an SEC shelf registration~~issued 4.1 million shares of its common stock to satisfy its obligation under a settlement agreement for the ~~sale of debt and equity securities including the ability to sell common stock through an~~

~~at-the-market~~

~~program. Also,~~Santee Cooper Ratepayer Case discussed in Note 23. These shares were immediately repurchased as discussed below.

At-the-Market Program

In June 2017, Dominion Energy entered into ~~three separate~~ sales agency agreements to effect sales under the program and pursuant to which it may offer from time to time up to $500 million aggregate amount of its common stock. Sales of common stock can be made by means of privately negotiated transactions, as transactions on the NYSE at market prices or in such other transactions as are agreed upon by Dominion Energy and the sales agents in conformance with applicable securities laws.an at-the-market program. In January 2018, Dominion Energy ~~provided sales instructions to one of the sales agents and~~ issued 6.6 million shares ~~through~~

~~at-the-market~~

~~issuances~~ and received cash proceeds of $495 million, net of fees and commissions paid of $5 ~~million. Following these issuances, Dominion Energy had no remaining ability to issue stock under the 2017 sales agency agreements and~~million, which completed the program.

In February 2018, Dominion Energy entered into ~~six separate~~ sales agency agreements to effect sales under ~~a new~~

an at-the-market

program pursuant to which it may offer from time to time up to $1.0 billion aggregate amount of its common stock. These agreements replaced the sales agency agreements entered into by Dominion Energy in June 2017. Sales of common stock can be made by means of private negotiated transactions, as transactions


~~162~~

~~on the NYSE at market prices or in such other transactions as are agreed upon by Dominion Energy and the sales agents in conformance with applicable securities laws.~~ program. In the fourth quarter of 2018, Dominion Energy ~~provided sales instructions to two of the sales agents and~~ issued 2.7 million shares ~~through~~

~~at-the-market~~

~~issuances~~ and received cash proceeds of $197 million, net of fees and commissions paid of $2 million. In the first quarter of 2019, Dominion Energy ~~provided sales instructions to one of the sales agents and~~ issued 2.1 million shares and received cash proceeds of $154 million, net of fees and commissions paid of $2 million. In the fourth quarter of 2019, Dominion Energy ~~provided sales instructions to two of the sales agents and~~ issued 7.8 million shares and received cash proceeds of $639 million, net of fees and commissions paid of $6 million. Following these issuances, Dominion Energy had no remaining ~~ability to issue stock~~capacity under ~~the 2018~~this program.

In March 2020, Dominion Energy entered into sales agency agreements to effect sales under a $500 million at-the-market common stock program. Dominion Energy did 0t issue any shares under this program which expired in June 2020.

In August 2020, Dominion Energy entered into sales agency agreements to effect sales under a new at-the-market program. Under the sales agency agreements, Dominion Energy may, from time to time, offer and ~~completed~~sell shares of its common stock through the sales agents or enter into one or more forward sale agreements with respect to shares of its common stock. Sales by Dominion Energy through the sales agents or by forward sellers pursuant to a forward sale agreement cannot exceed $1.0 billion in the aggregate. Dominion Energy has 0t issued any shares or entered into any forward sale agreements under this new program.

Forward Sale Agreements

In 2018, Dominion Energy entered into separate forward sale agreements with Goldman Sachs & Co. LLC and Credit Suisse Capital LLC, as forward purchasers, and an underwriting agreement with Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. LLC, as representatives of the several underwriters named therein, relating to an aggregate of 20 million shares of Dominion Energy

common stock. The underwriting agreement granted the underwriters a

30-day

option to purchase up to an additional ~~three~~3 million shares of Dominion Energy common stock, which the underwriters exercised with respect to approximately 2.1 million shares in April 2018. Dominion Energy entered into separate forward sale agreements with the forward purchasers with respect to the additional shares. In December 2018, Dominion Energy received proceeds of $1.4 billion (after deducting underwriting discounts, but before deducting expenses, and subject to forward price adjustments under the forward sale agreements) upon the physical settlement of 22.1 million shares.

Repurchase of Common Stock

During 2020, Dominion Energy ~~did not~~repurchased 38.9 million shares of Dominion Energy common stock for $3.1 billion through an open market agreement, a private transaction and accelerated share repurchase ~~any shares~~agreements as discussed below.

In July 2020, in ~~2019 or 2018~~contemplation of Dominion Energy entering the July 2020 agreement to sell substantially all of its gas transmission and storage operations to BHE, the Board of Directors authorized the repurchase of up to $3.0 billion of Dominion Energy’s common stock and rescinded its prior repurchase authorization approved in February 2005 and modified in June 2007. Dominion Energy completed repurchases under this authorization in December 2020. In November 2020, the Board of Directors authorized the repurchase of up to $1.0 billion of Dominion Energy’s common stock in addition to the repurchase program authorized in July 2020. This repurchase program does not ~~plan~~include a specific timetable or price or volume targets and may be modified, suspended or terminated at any time. Shares may be purchased through open market or privately negotiated transactions or otherwise at the discretion of management subject to prevailing market conditions, applicable securities laws and other factors.

In August 2020, Dominion Energy began repurchasing shares under an open market agreement with a financial institution. During the third quarter of 2020, Dominion Energy repurchased 7.2 million shares of Dominion Energy common stock for $562 million. During the fourth quarter of 2020, Dominion energy repurchased 3.7 million shares of Dominion Energy common stock for $295 million.

In September 2020, Dominion Energy repurchased 4.1 million shares of Dominion Energy common stock in a private transaction for $323 million.

In September 2020, Dominion Energy entered into 2 prepaid accelerated share repurchase agreements with separate financial institutions as counterparties. Dominion Energy made payments totaling $1.5 billion to the counterparties in exchange for an aggregate of 17.2 million shares of Dominion Energy common stock, which represented approximately 90% of $1.5 billion worth of Dominion Energy shares based on the closing price of such shares on the date the agreements were executed. In November 2020, Dominion Energy received an additional 1.4 million shares upon completion of the respective purchase periods under the terms of the agreements. The number of additional shares delivered under each agreement was based on the average of the daily volume-weighted average stock prices of Dominion Energy’s common stock during the term of the applicable purchase period, less a discount. As a result, Dominion Energy recorded a reduction to common stock of $1.5 billion.

In December 2020, ~~except~~Dominion Energy entered into a new prepaid accelerated share repurchase agreement with one financial institution as the counterparty. Dominion Energy paid $400 million to the counterparty in exchange for an aggregate of 5.0 million shares of Dominion Energy common stock, which represented all $400 million worth of Dominion Energy shares based on the closing price of such shares on the date the agreement was executed. In December 2020, Dominion Energy received an additional 0.3 million shares upon completion of the purchase period under the terms of the agreement. The number of additional shares was based on the average of the daily volume-weighted average stock prices of Dominion Energy’s common stock during the term of the purchase period, less a discount. As a result, Dominion Energy recorded a reduction to common stock of $400 million.

In addition to the repurchases described above, Dominion Energy also repurchases shares tendered by employees to satisfy tax withholding obligations on vested restricted stock, which do not count against its stock repurchase authorization.

Dominion Energy did 0t repurchase any shares in 2019 or 2018 except for shares tendered by employees to satisfy tax withholding obligations on vested restricted stock.

Virginia Power

In 2020, 2019, ~~2018~~ and ~~2017,~~2018, Virginia Power did not issue any shares of its common stock to Dominion Energy.

Noncontrolling Interests

GT&S Transaction Closing

In November 2020, as part of the GT&S Transaction, Dominion Energy sold a 25% controlling interest in Cove Point to BHE

resulting in Dominion Energy’s remaining 50% noncontrolling interest accounted for as an equity method investment prospectively. As a result, the $1.4 billion of noncontrolling interest related to the 25% interest in Cove Point held by Brookfield was reversed. See Notes 3 and 9 for further information on the GT&S Transaction and Dominion Energy’s equity method investment in Cove Point.

Sale of Interest in Cove Point

In December 2019, Dominion Energy completed the sale of its 25% noncontrolling limited partnership interest in Cove Point to Brookfield in exchange for cash consideration of $2.1 billion, subject to working capital adjustments. See Note 3 for further information on the sale of this interest.

Remeasurement of Dominion Energy Midstream Units

In May 2018, all of the subordinated units of Dominion Energy Midstream held by Dominion Energy were converted into common units on a 1:1 ratio following the payment of Dominion Energy Midstream’s distribution for the first quarter of 2018. In

June 2018, Dominion Energy, as general partner, exercised an incentive distribution right reset as defined in Dominion Energy Midstream’s partnership agreement and received 27 million common units representing limited partner interests in Dominion Energy Midstream. As a result of the increase in its ownership interest in Dominion Energy Midstream, Dominion Energy recorded a decrease in noncontrolling interest, and a corresponding increase in shareholders’ equity, of $375 million reflecting the change in the carrying value of the interest in the net assets of Dominion Energy Midstream held by others.

Accumulated Other Comprehensive Income (Loss)

Presented in the table below is a summary of AOCI by component:

At December 31,

2019

2018

(millions)

Dominion Energy

Net deferred losses on derivatives-hedging activities, net of $135 and $79 tax
$
(407
) $
(234
)
Net unrealized gains on nuclear decommissioning trust funds, net of $(13) and $— tax

37

2

Net unrecognized pension and other postretirement benefit costs, net of $492 and $519 tax

(1,421
)
(1,465
)
Other comprehensive loss from equity method investees, net of $1 and $— tax

(2
)
(2
)
Total AOCI, including noncontrolling interests
$
(1,793
) $
(1,699
)
Less other comprehensive income attributable to noncontrolling interests

—

1

Total AOCI, excluding noncontrolling interests
$
(1,793
) $
(1,700
)
Virginia Power

Net deferred losses on derivatives-hedging activities, net of $11 and $4 tax
$
(34
) $
(13
)
Net unrealized gains on nuclear decommissioning trust funds, net of $(1) and $— tax

5

1

Total AOCI
$
(29
) $
(12
)
Dominion Energy Gas

Net deferred losses on derivatives-hedging activities, net of $28 and $8 tax
$
(82
) $
(25
)
Net unrecognized pension costs, net of $41 and $56 tax

(106
)
(144
)
Total AOCI, including noncontrolling interests

(188
)
(169
)
Less other comprehensive income (loss) attributable to noncontrolling interests

(1
)
—

Total AOCI, excluding noncontrolling interests
$
(187
) $
(169
)

At December 31,	2020			2019
(millions)
Dominion Energy
Net deferred losses on derivatives-hedging activities, net of $141 and $135 tax	$	(419	)	$	(407	)
Net unrealized gains on nuclear decommissioning trust funds, net of $(21) and $(13) tax		62			37
Net unrecognized pension and other postretirement benefit costs, net of $478 and $492 tax		(1,359	)		(1,421	)
Other comprehensive loss from equity method investees, net of $— and $1 tax		(1	)		(2	)
Total AOCI	$	(1,717	)	$	(1,793	)
Virginia Power
Net deferred losses on derivatives-hedging activities, net of $21 and $11 tax	$	(60	)	$	(34	)
Net unrealized gains on nuclear decommissioning trust funds, net of $(3) and $(1) tax		8			5
Total AOCI	$	(52	)	$	(29	)


						~~163~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

Dominion Energy

The following table presents Dominion Energy’s changes in AOCI by component, net of tax:

Deferred
gains and
losses on
derivatives-
hedging
activities

Unrealized
gains and
losses on
investment
securities

Unrecognized
pension and
other
postretirement
benefit costs

Other
comprehensive
loss from
equity method
investees

Total

(millions)

Year Ended December 31, 2019

Beginning balance

$(235)

$     2

$(1,465
)
$(2
)
$(1,700)

Other comprehensive income before reclassifications: gains (losses)

(110)

39

(22)

—

(93)

Amounts reclassified from AOCI: (gains) losses
(1)

(62)

(4)

66

—

—

Net current period other comprehensive income (loss)

(172)

35

44

—

(93
)
Ending balance

$(407)

$37

$(1,421
)
$(2
)
$(1,793
)
Year Ended December 31, 2018

Beginning balance

$(302)

$747

$(1,101)

$(3)

$(659
)
Other comprehensive income before reclassifications: gains (losses)

30

(18
)
(215)

1

(202
)
Amounts reclassified from AOCI: (gains) losses
(1)

102

5

78

—

185

Net current period other comprehensive income (loss)

132

(13)

(137)

1

(17)

Cumulative-effect of changes in accounting principle

(64)

(732)

(227)

—

(1,023
)
Less other comprehensive income (loss) attributable to noncontrolling interests

1

—

—

—

1

Ending balance

$(235)

$     2

$(1,465)

$(2)

$  (1,700
)

	Deferred gains and losses on derivatives-hedging activities			Unrealized gains and losses on investment securities			Unrecognized pension and other postretirement benefit costs			Other comprehensive loss from equity method investees			Total
(millions)
Year Ended December 31, 2020
Beginning balance	$	(407	)	$	37		$	(1,421	)	$	(2	)	$	(1,793	)
Other comprehensive income before reclassifications: gains (losses)		(239	)		43			25			1			(170	)
Amounts reclassified from AOCI: (gains) losses⁽¹⁾		227			(18	)		37			—			246
Net current period other comprehensive income (loss)		(12	)		25		��	62			1			76
Ending balance	$	(419	)	$	62		$	(1,359	)	$	(1	)	$	(1,717	)
Year Ended December 31, 2019
Beginning balance	$	(235	)	$	2		$	(1,465	)	$	(2	)	$	(1,700	)
Other comprehensive income before reclassifications: gains (losses)		(110	)		39			(22	)		—			(93	)
Amounts reclassified from AOCI: (gains) losses⁽¹⁾		(62	)		(4	)		66			—			—
Net current period other comprehensive income (loss)		(172	)		35			44			—			(93	)
Ending balance	$	(407	)	$	37		$	(1,421	)	$	(2	)	$	(1,793	)

(1)	See table below for details about these reclassifications.

The following table presents Dominion Energy’s reclassifications out of AOCI by component:


~~Details about AOCI components~~	Amounts reclassified from AOCI			Affected line item in the Consolidated Statements of Income
~~(millions)~~
~~Year Ended December 31, 2019~~
~~Deferred (gains) and losses on derivatives-hedging activities:~~
~~Commodity contracts~~		~~$(146)~~		~~Operating revenue~~
		3		~~Purchased gas~~
~~Interest rate contracts~~		54		~~Interest and related charges~~
~~Foreign currency contracts~~		6		~~Other Income~~
~~Total~~		~~(83~~	)
~~Tax~~		21		~~Income tax expense~~
~~Total, net of tax~~		~~$(62~~	)
~~Unrealized (gains) and losses on investment securities:~~
~~Realized (gain) loss on sale of securities~~		~~$(5)~~		~~Other income~~
~~Total~~		~~(5)~~
~~Tax~~		1		~~Income tax expense~~
~~Total, net of tax~~		~~$(4~~	)
~~Unrecognized pension and other postretirement benefit costs:~~
~~Amortization of prior-service costs (credits)~~		~~$(24)~~		~~Other income~~
~~Amortization of actuarial losses~~		~~113~~		~~Other income~~
~~Total~~		89
~~Tax~~		~~(23~~	)	~~Income tax expense~~
~~Total, net of tax~~		~~$66~~
~~Year Ended December 31, 2018~~
~~Deferred (gains) and losses on derivatives-hedging activities:~~
~~Commodity contracts~~		~~$90~~		~~Operating revenue~~
		~~(14~~	)	~~Purchased gas~~
~~Interest rate contracts~~		48		~~Interest and related charges~~
~~Foreign currency contracts~~		13		~~Other Income~~
~~Total~~		~~137~~
~~Tax~~		~~(35~~	)	~~Income tax expense~~
~~Total, net of tax~~		~~$102~~
~~Unrealized (gains) and losses on investment securities:~~
~~Realized (gain) loss on sale of securities~~		$7		~~Other income~~
~~Total~~		7
~~Tax~~		(2	)	~~Income tax expense~~
~~Total, net of tax~~		$5
~~Unrecognized pension and other postretirement benefit costs:~~
~~Prior-service costs (credits)~~		~~$(21~~	)	~~Other income~~
~~Actuarial losses~~		~~120~~		~~Other income~~
~~Total~~		99
~~Tax~~		~~(21~~	)	~~Income tax expense~~
~~Total, net of tax~~		~~$78~~

Details about AOCI components	Amounts reclassified from AOCI			Affected line item in the Consolidated Statements of Income
(millions)
Year Ended December 31, 2020
Deferred (gains) and losses on derivatives-hedging activities:
Commodity contracts	$	(25	)	Operating revenue
		4		Purchased gas
		(2	)	Discontinued operations
Interest rate contracts		83		Interest and related charges
		236		Discontinued operations
Foreign currency contracts		6		Discontinued operations
Total		302
Tax		(75	)	Income tax expense
Total, net of tax	$	227
Unrealized (gains) and losses on investment securities:
Realized (gain) loss on sale of securities	$	(24	)	Other income
Total		(24	)
Tax		6		Income tax expense
Total, net of tax	$	(18	)
Unrecognized pension and other postretirement benefit costs:
Amortization of prior-service costs (credits)	$	(84	)	Other income
Amortization of actuarial losses		134		Other income
Total		50
Tax		(13	)	Income tax expense
Total, net of tax	$	37
Year Ended December 31, 2019
Deferred (gains) and losses on derivatives-hedging activities:
Commodity contracts	$	(142	)	Operating revenue
		3		Purchased gas
		(4	)	Discontinued operations
Interest rate contracts		49		Interest and related charges
		5		Discontinued operations
Foreign currency contracts		6		Discontinued operations
Total		(83	)
Tax		21		Income tax expense
Total, net of tax	$	(62	)
Unrealized (gains) and losses on investment securities:
Realized (gain) loss on sale of securities	$	(5	)	Other income
Total		(5	)
Tax		1		Income tax expense
Total, net of tax	$	(4	)
Unrecognized pension and other postretirement benefit costs:
Prior-service costs (credits)	$	(24	)	Other income
Actuarial losses		113		Other income
Total		89
Tax		(23	)	Income tax expense
Total, net of tax	$	66


~~164~~

Virginia Power

The following table presents Virginia Power’s changes in AOCI by component, net of tax:

Deferred
gains and
losses on
derivatives-
hedging
activities

Unrealized
gains and
losses on
investment
securities

Total

(millions)

Year Ended December 31, 2019

Beginning balance

$(13
) $
1

$(12)

Other comprehensive income before reclassifications: gains (losses)

(22
)
5

(17)

Amounts reclassified from AOCI: (gains) losses
(1)

1

(1
)
—

Net current period other comprehensive income (loss)

(21
)
4

(17)

Ending balance

$(34
) $
5

$(29)

Year Ended December 31, 2018

Beginning balance

$(12
) $
74
$
62

Other comprehensive income before reclassifications: gains (losses)

1

—

1

Amounts reclassified from AOCI: gains (losses)
(1)

1

—

1

Net current period other comprehensive income (loss)

2

—

2

Cumulative-effect of changes in accounting principle

(3
)
(73
)
(76)

Ending balance

$(13
) $
1
$
(12)

	Deferred gains and losses on derivatives-hedging activities			Unrealized gains and losses on investment securities			Total
(millions)
Year Ended December 31, 2020
Beginning balance	$	(34	)	$	5		$	(29	)
Other comprehensive income before reclassifications: gains (losses)		(28	)		6			(22	)
Amounts reclassified from AOCI: (gains) losses⁽¹⁾		2			(3	)		(1	)
Net current period other comprehensive income (loss)		(26	)		3			(23	)
Ending balance	$	(60	)	$	8		$	(52	)
Year Ended December 31, 2019
Beginning balance	$	(13	)	$	1		$	(12	)
Other comprehensive income before reclassifications: gains (losses)		(22	)		5			(17	)
Amounts reclassified from AOCI: gains (losses)⁽¹⁾		1			(1	)		—
Net current period other comprehensive income (loss)		(21	)		4			(17	)
Ending balance	$	(34	)	$	5		$	(29	)

(1)	See table below for details about these reclassifications.

The following table presents Virginia Power’s reclassifications out of AOCI by component:

Details about AOCI components	Amounts reclassified from AOCI			Affected line item in the Consolidated Statements of Income
(millions)
Year Ended December 31, 2020
(Gains) losses on cash flow hedges:
Interest rate contracts	$	2		Interest and related charges
Total		2
Tax		—		Income tax expense
Total, net of tax	$	2
Unrealized (gains) and losses on investment securities:
Realized (gain) loss on sale of securities	$	(4	)	Other income
Total		(4	)
Tax		1		Income tax expense
Total, net of tax	$	(3	)
Year Ended December 31, 2019
(Gains) losses on cash flow hedges:
Interest rate contracts	$	1		Interest and related charges
Total		1
Tax		—		Income tax expense
Total, net of tax	$	1
Unrealized (gains) and losses on investment securities:
Realized (gain) loss on sale of securities	$	(2	)	Other income
Total		(2	)
Tax		1		Income tax expense
Total, net of tax	$	(1	)


~~Details about AOCI components~~	Amounts reclassified from AOCI		Affected line item in the Consolidated Statements of Income
~~(millions)~~

~~Year Ended December 31, 2019~~
~~(Gains) losses on cash flow hedges:~~
~~Interest rate contracts~~		~~$ 1~~	~~Interest and related charges~~
~~Total~~		1
~~Tax~~		—	~~Income tax expense~~
~~Total, net of tax~~		~~$ 1~~
~~Unrealized (gains) and losses on investment securities:~~
~~Realized (gain) loss on sale of securities~~		~~$ (2)~~	~~Other income~~
~~Impairment~~		—	~~Other income~~
~~Total~~		~~(2)~~
~~Tax~~		1	~~Income tax expense~~
~~Total, net of tax~~		~~$ (1)~~
~~Year Ended December 31, 2018~~
~~(Gains) losses on cash flow hedges:~~
~~Interest rate contracts~~		~~$ 1~~	~~Interest and related charges~~
~~Total~~		1
~~Tax~~		—	~~Income tax expense~~
~~Total, net of tax~~		~~$ 1~~

~~Dominion Energy Gas~~

~~The following table presents Dominion Energy Gas’ changes in AOCI by component, net of tax:~~

Deferred gains
and losses on
derivatives-
hedging
activities

Unrecognized
pension and
other
postretirement
benefit costs

Total

(millions)

Year Ended December 31, 2019

Beginning balance

$(25
)
$(144
) $
(169)

Other comprehensive income before reclassifications: gains (losses)

(61
)
33

(28
)
Amounts reclassified from AOCI: (gains) losses
(1)

5

5

10

Net current period other comprehensive income (loss)

(56
)
38

(18
)
Dominion Energy Gas Restructuring

(1
)
—

(1
)
Less other comprehensive income attributable to noncontrolling interests

(1
)
—

(1
)
Ending balance

$(81
)
$(106
) $
(187
)
Year Ended December 31, 2018

Beginning balance

$(23
)
$(75
) $
(98
)
Other comprehensive income before reclassifications: gains (losses)

(16
)
(52
)
(68
)
Amounts reclassified from AOCI: gains (losses)
(1)

19

4

23

Net current period other comprehensive income (loss)

3

(48
)
(45
)
Cumulative-effect of changes in accounting principle

(5
)
(21
)
(26
)
Ending balance

$(25
)
$(144
)
$(169
)

~~(1)~~

~~See table below for details about these reclassifications.~~


						~~165~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~The following table presents Dominion Energy Gas’ reclassifications out of AOCI by component:~~


~~Details about AOCI components~~	Amounts reclassified from AOCI		Affected line item in the Consolidated Statements of Income
~~(millions)~~

~~Year Ended December 31, 2019~~
~~Deferred (gains) and losses on derivatives-hedging activities:~~
~~Commodity contracts~~		~~$ (4)~~	~~Net income from discontinued operations~~
~~Interest rate contracts~~		5	~~Interest and related charges~~
~~Foreign currency contracts~~		6	~~Other income~~
~~Total~~		7
~~Tax~~		~~(2)~~	~~Income tax expense~~
~~Total, net of tax~~		~~$ 5~~
~~Unrecognized pension costs:~~
~~Actuarial losses~~		~~$ 7~~	~~Other income~~
~~Total~~		7
~~Tax~~		~~(2)~~	~~Income tax expense~~
~~Total, net of tax~~		~~$ 5~~
~~Year Ended December 31, 2018~~
~~Deferred (gains) and losses on derivatives-hedging activities:~~
~~Commodity contracts~~		~~$ 8~~	~~Net income from discontinued operations~~
~~Interest rate contracts~~		5	~~Interest and related charges~~
~~Foreign currency contracts~~		13	~~Other income~~
~~Total~~		26
~~Tax~~		~~(7)~~	~~Income tax expense~~
~~Total, net of tax~~		~~$19~~
~~Unrecognized pension costs:~~
~~Actuarial losses~~		~~$ 6~~	~~Other income~~
~~Total~~		6
~~Tax~~		~~(2)~~	~~Income tax expense~~
~~Total, net of tax~~		~~$ 4~~

Stock-Based Awards

The 2014 Incentive Compensation Plan permits stock-based awards that include restricted stock, performance grants, goal-based stock, stock options and stock appreciation rights. The

Non-Employee

Directors Compensation Plan permits grants of restricted stock and stock options. Under provisions of these plans, employees and

non-employee

directors may be granted options to purchase common stock at a price not less than its fair market value at the date of grant with a maximum term of eight years. Option terms are

set at the discretion of the CGN Committee of the Board of Directors or the Board of Directors itself, as provided under each plan. No options are outstanding under either plan. At December 31, ~~2019,~~2020, approximately 2120 million shares were available for future grants under these plans.

Goal-based stock awards are granted in lieu of cash-based performance grants to certain officers who have not achieved a certain targeted level of share ownership. As of December 31, ~~2019,~~2020, unrecognized compensation cost related to nonvested goal-based stock awards was immaterial.

Dominion Energy measures and recognizes compensation expense relating to share-based payment transactions over the vesting period based on the fair value of the equity or liability instruments issued. Dominion Energy’s results for the years ended December 31, 2020, 2019, and 2018 ~~and 2017~~ include $64 million, $46 million and $48 million, ~~and $45 million,~~

respectively, of compensation costs and $16 million, $11 million ~~$12 million~~ and ~~$16~~$12 million, respectively of income tax benefits related to Dominion Energy’s stock-based compensation arrangements. Stock-based compensation cost is reported in other operations and maintenance expense in Dominion Energy’s Consolidated Statements of Income. Excess Tax Benefits are classified as a financing cash flow.

Restricted Stock

Restricted stock grants are made to officers under Dominion Energy’s LTIP and may also be granted to certain key

non-officer

employees. The fair value of Dominion Energy’s restricted stock awards is equal to the closing price of Dominion Energy’s stock on the date of grant. New shares are issued for restricted stock awards on the date of grant and generally vest over a ~~three~~three-year~~-year~~ service period. The following table provides a summary of restricted stock activity for the years ended December 31, 2020, 2019, ~~2018~~ and ~~2017:~~2018:

	Shares			Weighted - average Grant Date Fair Value
	(thousands)
Nonvested at December 31, 2017		1,043		$	73.32
Granted		534			72.92
Vested		(316	)		73.59
Cancelled and forfeited		(53	)		74.25
Nonvested at December 31, 2018		1,208		$	73.03
Granted		614			76.49
Vested		(324	)		71.75
Cancelled and forfeited		(96	)		77.16
Nonvested at December 31, 2019		1,402		$	74.77
Granted		531			81.74
Vested		(424	)		74.39
Cancelled and forfeited		(99	)		81.59
Nonvested at December 31, 2020		1,410		$	77.41

Shares

Weighted—average
Grant Date Fair
Value

(thousands)

Nonvested at December 31, 2016

886

$71.40

Granted

454

74.24

Vested

(287
)
68.90

Cancelled and forfeited

(10
)
72.37

Nonvested at December 31, 2017

1,043

$73.32

Granted

534

72.92

Vested

(316
)
73.59

Cancelled and forfeited

(53
)
74.25

Nonvested at December 31, 2018

1,208

$73.03

Granted

614

76.49

Vested

(324
)
71.75

Cancelled and forfeited

(96
)
77.16

Nonvested at December 31, 2019

1,402

$74.77

As of December 31, ~~2019,~~2020, unrecognized compensation cost related to nonvested restricted stock awards totaled ~~$59~~$61 million and is expected to be recognized over a weighted-average period of ~~2.1~~2.0 years. The fair value of restricted stock awards that vested was ~~$23~~$35 million, $23 million and ~~$21~~$23 million in 2020, 2019, ~~2018~~ and ~~2017,~~2018, respectively. Employees may elect to have shares of restricted stock withheld upon vesting to satisfy tax withholding obligations. The number of shares withheld will vary for each employee depending on the vesting date fair market value of Dominion Energy stock and the applicable federal, state and local tax withholding rates.

Cash-Based Performance Grants

Cash-based performance grants are made to Dominion Energy’s officers under Dominion Energy’s LTIP. The actual payout of cash-based performance grants will vary between ~~zero~~0 and 200% of the targeted amount based on the level of performance metrics achieved.


~~166~~

~~In February 2017, two cash-based performance grants were made to officers as Dominion Energy transitioned from a~~

~~two-year~~

~~performance period to a three-year performance period. Payout of the~~

~~two-year~~

performance grant occurred in January 2019 based on the achievement of two performance metrics during 2017 and 2018: TSR relative to that of companies that are members of Dominion Energy’s compensation peer group and ROIC with an additional partial payout based on Dominion Energy’s price-earnings ratio relative to that of the members of Dominion Energy’s compensation peer group. The total payout under the two-year grant was

~~$13 million. Payout~~

of the three-year performance grant occurred in January 2020 based on the achievement of two performance metrics during 2017, 2018 and 2019: TSR relative to that of companies that are members of Dominion Energy’s compensation peer group and ROIC with an additional partial payout based on Dominion Energy’s price-earnings ratio relative to that of the members of Dominion Energy’s compensation peer group.

~~The~~

~~total of the payout under the three-year grant was $13 million and a liability of $13 million had been accrued for the award.~~

In February 2018, a cash-based performance grant was made to officers. Payout of the performance grant ~~is expected to occur by March 15,~~occurred in January 2021 based on the achievement of two performance metrics during 2018, 2019 and 2020: TSR relative to that of companies that are members of Dominion Energy’s compensation peer group and ~~ROIC. There are~~ROIC with an additional ~~opportunities to earn a portion of the award~~payout based on Dominion Energy’s ~~absolute TSR or relative~~ price-earnings ratio ~~performance. At December 31, 2019, the targeted amount~~relative to that of the ~~three-year~~members of Dominion Energy’s peer compensation group. The total of the payout under the grant was $15 million, ~~and a liability~~all of ~~$8 million had been~~which was accrued ~~for this award.~~at December 31, 2020.

In February 2019, a cash-based performance grant was made to officers. Payout of the performance grant is expected to occur by March 15, 2022 based on the achievement of two performance metrics during 2019, 2020 and 2021: TSR relative to that of companies that are members of Dominion Energy’s compensation peer group and ROIC.There are additional opportunities to earn a portion of the award based on Dominion Energy’s absolute TSR or relative price-earnings ratio performance. At December 31, 2020, the targeted amount of the three-year grant was $15 million and a liability of $14 million had been accrued for this award.

In February 2020, a cash-based performance grant was made to officers. Payout of the performance grant is expected to occur by March 15, 2023 based on the achievement of two performance metrics during 2020, 2021 and 2022: TSR relative to that of companies that are members of Dominion Energy’s compensation peer group and ROIC. There are additional opportunities to earn a portion of the award based on Dominion Energy’s absolute TSR or relative price-earnings ratio performance. At December 31, ~~2019,~~2020, the targeted amount of the three-year grant was $16 million and a liability of $5$8 million had been accrued for this award.

~~Note~~

NOTE 21. ~~Dividend Restrictions~~

DIVIDEND RESTRICTIONS

The Virginia Commission may prohibit any public service company, including Virginia Power, from declaring or paying a dividend to an affiliate if found to be inconsistent with the public interest. At December 31, ~~2019,~~2020, the Virginia Commission had not restricted the payment of dividends by Virginia Power.

The North Carolina Commission, in its order approving the SCANA Combination, limited cumulative dividends payable to Dominion Energy by Virginia Power and PSNC to (i) the amount of retained earnings atthe day prior to closing of the SCANA Combination plus (ii) any future earnings recorded by Virginia Power and PSNC after such ~~date.~~closing. In addition, notice to the North Carolina Commission is required if payment of dividends causes the equity component of Virginia Power and PSNC’s capital structure to fall below 45%.

The Ohio ~~Commission~~and Utah Commissions may prohibit any public service company, including East Ohio and Questar Gas, from declaring or paying a dividend to

an affiliate if found to be detrimental to the public interest. At December 31, ~~2019,~~2020, neither the Ohio Commission nor the Utah Commission had ~~not~~ restricted the payment of dividends by East Ohio.

There is no specific restriction from the South Carolina Commission on the payment of dividends paid by DESC. Pursuant to the SCANA Merger Approval Order, the amount of any DESC dividends paid must be reasonable and consistent with the long-term payout ratio of the electric utility industry and gas distribution industry. ~~There is no specific restriction on the payment of dividends by DESC.~~

At December 31, ~~2019,~~2020, DESC’s retained earnings ~~are below~~exceed the balance established by the Federal Power Act as a reserve on earnings attributable to hydroelectric generation plants. As a result, DESC is ~~prohibited from the payment of dividends without regulatory approval until the balance of its retained earnings increases.~~

The Utah Commission may prohibit any public service company, including Questar Gas, from declaring or paying a dividend to an affiliate if found to be detrimental to the public interest. At December 31, 2019, the Utah Commission had not restricted the payment of dividends by Questar Gas.

~~Certain agreements associated with the Companies’ credit facility contain restrictions on the ratio of debt to total capitalization. These limitations did not restrict the Companies’ ability~~permitted to pay dividends ~~or receive dividends from their subsidiaries at December 31, 2019.~~

~~In connection with~~without additional regulatory approval provided that such amounts would not bring the ~~SCANA Combination, under~~retained earnings balance below the terms of the merger agreement, Dominion Energy could not declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock, other than regular quarterly cash dividends from January 2018 through January 2019.

As part of the merger agreement with Dominion Energy Midstream from November 2018 through January 2019, Dominion Energy could not declare, set aside or pay any dividends on, or make any other distributions (whether in cash, stock or property) in respect of, any of its capital stock, other than regular quarterly cash dividends.

threshold.

See Notes 18 and 19 for a description of potential restrictions on common stock dividend payments by Dominion Energy in connection with the deferral of interest payments on the enhanced junior subordinated notes, the deferral of contract adjustment payments on the 2019 Equity Units or a failure to pay dividends on the Series A Preferred Stock or Series B Preferred Stock.

~~Note~~

NOTE 22. ~~Employee Benefit Plans~~

EMPLOYEE BENEFIT PLANS

Dominion ~~Energy and Dominion Energy Gas—~~Energy—Defined Benefit Plans

Dominion Energy provides certain retirement benefits to eligible active employees, retirees and qualifying dependents. ~~Dominion Energy Gas participates in a number of the Dominion Energy-sponsored retirement plans.~~ Under the terms of its benefit plans, Dominion Energy reserves the right to change, modify or terminate the plans. From time to time in the past, benefits have changed, and some of these changes have reduced benefits.

Dominion Energy maintains qualified noncontributory defined benefit pension plans covering virtually all employees. Retirement benefits are based primarily on years of service, age and the employee’s compensation. Dominion Energy’s funding policy is to contribute annually an amount that is in accordance with the provisions of ERISA. The pension programs also provide


						~~167~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

benefits to certain retired executives under company-sponsored nonqualified employee benefit plans. The nonqualified plans are funded through contributions to grantor trusts. Dominion Energy also provides retiree healthcare and life insurance benefits with annual employee premiums based on several factors such as age, retirement date and years of service.

Pension benefits for Dominion Energy Gas employees not represented by collective bargaining units are covered by the Dominion Energy Pension Plan, a defined benefit pension plan sponsored by Dominion Energy that provides benefits to multiple Dominion Energy subsidiaries. Pension benefits for Dominion Energy Gas employees represented by collective bargaining units are covered by a sep

~~rate pension plan that provides benefits to employees of both DETI and Hope. Employee compensation is the basis for allocating pension costs and obligations between DETI and Hope.~~

Retiree healthcare and life insurance benefits for Dominion Energy Gas employees not represented by collective bargaining units are covered by the Dominion Energy Retiree Health and Welfare Plan, a plan sponsored by Dominion Energy that provides certain retiree healthcare and life insurance benefits to multiple Dominion Energy subsidiaries. Retiree healthcare and life insurance benefits for Dominion Energy Gas employees represented by collective bargaining units are covered by a sep

rate other postretirement benefit plan that provides benefits to both DETI and Hope. Employee headcount is the basis for allocating other postretirement benefit costs and obligations between DETI and Hope.

Dominion Energy Gas included the separate pension and other postretirement benefit plans for East Ohio employees covered by collective bargaining units through November 2019, the effective date of the Dominion Energy Gas Restructuring. See Note 3 for more information on the Dominion Energy Gas Restructuring.

Pension and other postretirement benefit costs are affected by employee demographics (including age, compensation levels and years of service), the level of contributions made to the plans and earnings on plan assets. These costs may also be affected by changes in key assumptions, including expected long-term rates of return on plan assets, discount rates, healthcare cost trend rates, mortality rates and the rate of compensation increases.

Dominion Energy uses December 31 as the measurement date for all of its employee benefit ~~plans, including those in which Dominion Energy Gas participates.~~plans. Dominion Energy uses the market-related value of pension plan assets to determine the expected return on plan assets, a component of net periodic pension cost, for all pension ~~plans, including those in which Dominion Energy Gas participates.~~plans. The market-related value recognizes changes in fair value on a straight-line basis over a four-year period, which reduces

year-to-year

volatility. Changes in fair value are measured as the difference between the expected and actual plan asset returns, including dividends, interest and realized and unrealized investment gains and losses. Since the market-related value recognizes changes in fair value over a four-year period, the future market-related value of pension plan assets will be impacted as previously unrecognized changes in fair value are recognized.

Dominion Energy’s pension and other postretirement benefit plans hold investments in trusts to fund employee benefit payments. Dominion Energy’s pension and other postretirement plan assets experienced aggregate actual returns (losses) of $1.9 billion and $2.1 billion in 2020 and ~~$(605) million in~~ 2019, ~~and 2018,~~ respectively, versus expected returns of ~~$848~~$933 million and ~~$806 million, respectively. Dominion Energy Gas’ pension and other postretirement plan~~

assets for employees represented by collective bargaining units experienced aggregate actual returns (losses) of $167 million and $(129) million in 2019 and 2018, respectively, versus expected returns of $70 million and $178$848 million, respectively. Differences between actual and expected returns on plan assets are accumulated and amortized during future periods. As such, any investment-related declines in these trusts will result in future increases in the net periodic cost recognized for such employee benefit plans and will be included in the determination of the amount of cash to be contributed to the employee benefit plans.

In the third quarter of 2020, Dominion Energy remeasured certain pension plans due to a curtailment resulting from entering an agreement to sell substantially all of its gas transmission and storage operations to BHE. The remeasurement resulted in an increase in the pension benefit obligation of $497 million and a decrease in the fair value of the pension plan assets of $87 million. The impact of the remeasurement on net periodic pension benefit cost (credit) was recognized prospectively from the remeasurement date. The remeasurement increased the net periodic benefit credit by approximately $4 million for the year ending December 31, 2020, excluding the impacts of curtailments. The discount rate used for the remeasurement was 3.11% - 3.16% with all other assumptions used for the remeasurement consistent with the measurement as of December 31, 2019.

In the fourth quarter of 2020, Dominion Energy remeasured certain other postretirement benefit plans due to a curtailment and settlement resulting from Dominion Energy completing the GT&S Transaction. The remeasurement resulted in an increase in the accumulated postretirement benefit obligation of $16 million and a decrease in the fair value of the other postretirement benefit plan assets of $25 million. The impact of the remeasurement on net periodic benefit cost (credit) was recognized prospectively from the remeasurement date. The discount rate used for the remeasurement was 3.07% - 3.11%. The initial healthcare cost trend rate used for the remeasurement was 6.25% and decreased to 5.00% by 2025-2026. All other assumptions used for the remeasurement consistent with the measurement as of December 31, 2019.

Voluntary Retirement Program

In March 2019, the Companies announced a voluntary retirement program to employees that meet certain age and service requirements. ~~The voluntary retirement program will not compromise safety or the Companies’ ability to comply with applicable laws and regulations.~~ In 2019, upon the determinations made concerning the number of employees that elected to participate in the program, Dominion Energy recorded a charge of $427 million ($319 million

after-tax)

included within other operations and maintenance expense ($~~291~~251 million), other taxes ($2421 million), other income ($111 million) and ~~other income~~discontinued operations ($~~112~~44 million), and Virginia Power recorded a charge of $198 million ($146 million

after-tax)

included within other operations and maintenance expense ($190 million) and other taxes ($8 million) ~~and Dominion Energy Gas recorded a charge of $74 million ($58 million~~

~~after-tax)~~

~~included within other operations and maintenance expense ($39 million), other taxes ($2 million), other income ($1 million) and discontinued operations ($32 million)~~ in ~~the~~their respective Consolidated Statements of Income.

In the second quarter of 2019, Dominion Energy ~~and Dominion Energy Gas~~ remeasured ~~their~~its pension and other postretirement benefit plans as a result of the voluntary retirement program. The remeasurement resulted in an increase in the pension benefit obligation of $484 million and ~~$32 million and~~ an increase in the fair value of the pension plan assets of $671 ~~million and $146 million for Dominion Energy and Dominion Energy Gas, respectively.~~million. In addition, the remeasurement resulted in an increase in the accumulated postretirement benefit obligation of $101 million and ~~$8 million and~~ an increase in the fair value of the other postretirement benefit plan assets of $156 ~~million and $29 million for Dominion Energy and Dominion Energy Gas, respectively.~~million. The impact of the remeasurement on net periodic benefit cost (credit) was recognized prospectively from the remeasurement date. The discount rate used for the remeasurement was 4.07%—4.10% for the Dominion Energy pension plans ~~4.10% for Dominion Energy Gas pension plans,~~and 4.05%—4.08% for the Dominion Energy ~~other postretirement benefit plans, and 4.05% for the Dominion Energy Gas~~ other postretirement benefit plans. All other assumptions used for the remeasurement were consistent with the measurement as of December 31, 2018.

In the third quarter of 2019, Dominion Energy remeasured a pension plan as a result of a settlement from the voluntary retirement program at SCANA. The settlement and related remeasurement resulted in an increase in the pension benefit obligation of $37 million and an increase in the fair value of the pension plan assets of $51 million for Dominion Energy. The impact of the remeasurement on net periodic benefit cost (credit) was recognized prospectively from the remeasurement date. The discount rate used for the remeasurement was 3.57%. All other assumptions used for the remeasurement were consistent with the measurement as of December 31, 2018.


~~168~~

Funded Status

The following table summarizes the changes in pension plan and other postretirement benefit plan obligations and plan assets and includes a statement of the plans’ funded status for Dominion ~~Energy and Dominion Energy Gas (for employees represented by collective bargaining units):~~Energy:

	Pension Benefits						Other Postretirement Benefits
Year Ended December 31,	2020			2019			2020			2019
(millions, except percentages)
Dominion Energy
Changes in benefit obligation:
Benefit obligation at beginning of year	$	10,446		$	8,500		$	1,769		$	1,363
Dominion Energy SCANA Combination (See Note 3)		—			854			—			253
Service cost		173			162			28			26
Interest cost		351			394			58			68
Benefits paid		(461	)		(470	)		(120	)		(96	)
Actuarial (gains) losses during the year		992			1,054			33			111
Plan amendments		—			—			(6	)		—
Settlements, curtailments and special termination benefits⁽¹⁾		(138	)		(48	)		(16	)		44
Benefit obligation at end of year	$	11,363		$	10,446		$	1,746		$	1,769
Changes in fair value of plan assets:
Fair value of plan assets at beginning of year	$	9,631		$	7,197		$	1,880		$	1,581
Dominion Energy SCANA Combination (See Note 3)		—			727			—			—
Actual return (loss) on plan assets		1,602			1,747			300			349
Employer contributions		278			557			13			12
Benefits paid		(461	)		(470	)		(93	)		(62	)
Settlements⁽²⁾		(71	)		(127	)		—			—
Fair value of plan assets at end of year	$	10,979		$	9,631		$	2,100		$	1,880
Funded status at end of year	$	(384	)	$	(815	)	$	354		$	111
Amounts recognized in the Consolidated Balance Sheets at December 31:
Noncurrent pension and other postretirement benefit assets	$	1,054		$	1,266		$	650		$	442
Other current liabilities		(14	)		(29	)		(15	)		(17	)
Noncurrent pension and other postretirement benefit liabilities		(1,424	)		(2,052	)		(281	)		(314	)
Net amount recognized	$	(384	)	$	(815	)	$	354		$	111
Significant assumptions used to determine benefit obligations as of December 31:
Discount rate	2.73%–2.95%			3.47%–3.63%			2.69%–2.80%			3.44%–3.52%
Weighted average rate of increase for compensation		4.53	%		4.23	%	n/a			n/a
Crediting interest rate for cash balance and similar plans	1.93% - 2.15%			2.67-2.83%			n/a			n/a

Pension Benefits

Other Postretirement Benefits

Year Ended December 31,

2019

2018

2019

2018

(millions, except percentages)

Dominion Energy

Changes in benefit obligation:

Benefit obligation at beginning of year
$
8,500
$
9,052
$
1,363
$
1,529

Dominion Energy SCANA Combination (See Note 3)

854

—

253

—

Service cost

162

157

26

27

Interest cost

394

337

68

56

Benefits paid

(470
)
(358
)
(96
)
(87
)
Actuarial (gains) losses during the year

1,054

(688
)
111

(158
)
Plan amendments

—

—

—

(4
)
Settlements and curtailments
(1)

(48
)
—

44

—

Benefit obligation at end of year
$
10,446
$
8,500
$
1,769
$
1,363

Changes in fair value of plan assets:

Fair value of plan assets at beginning of year
$
7,197
$
8,062
$
1,581
$
1,729

Dominion Energy SCANA Combination (See Note 3)

727

—

—

—

Actual return (loss) on plan assets

1,747

(513
)
349

(92
)
Employer contributions

557

6

12

12

Benefits paid

(470
)
(358
)
(62
)
(68
)
Settlements
(2)

(127
)
—

—

—

Fair value of plan assets at end of year
$
9,631
$
7,197
$
1,880
$
1,581

Funded status at end of year
$
(815
) $
(1,303
) $
111
$
218

Amounts recognized in the Consolidated Balance Sheets at December 31:

Noncurrent pension and other postretirement benefit assets
$
1,266
$
1,003
$
442
$
276

Other current liabilities

(29
)
(34
)
(17
)
(2
)
Noncurrent pension and other postretirement benefit liabilities

(2,052
)
(2,272
)
(314
)
(56
)
Net amount recognized
$
(815
) $
(1,303
) $
111
$
218

Significant assumptions used to determine benefit
obligations as of December 31:

Discount rate

3.47%–3.63%

4.42%–4.43%

3.44%–3.52%

4.37%–4.38%

Weighted average rate of increase for compensation

4.23%

4.32%

n/a

n/a

Dominion Energy Gas

Changes in benefit obligation:

Benefit obligation at beginning of year
$
730
$
773
$
256
$
290

Dominion Energy Gas Restructuring (See Note 3)

(468
)
—

(135
)
—

Service cost

6

18

1

4

Interest cost

11

29

5

11

Benefits paid

(15
)
(34
)
(8
)
(18
)
Actuarial (gains) losses during the year

30

(56
)
1

(27
)
Plan amendments

—

—

—

(4
)
Settlements and curtailments
(1)

1

—

1

—

Benefit obligation at end of year
$
295
$
730
$
121
$
256

Changes in fair value of plan assets:

Fair value of plan assets at beginning of year
$
1,656
$
1,803
$
311
$
333

Dominion Energy Gas Restructuring
(See Note 3)

(1,084
)
—
$
(126
)
—

Actual return (loss) on plan assets

129

(113
)
38

(16
)
Employer contributions

—

—

12

12

Benefits paid

(15
)
(34
)
(8
)
(18
)
Fair value of plan assets at end of year
$
686
$
1,656
$
227
$
311

Funded status at end of year
$
391
$
926
$
106
$
55

Amounts recognized in the Consolidated Balance
Sheets at December 31:

Noncurrent pension and other postretirement benefit assets
$
391
$
310
$
106
$
63

Noncurrent assets of discontinued operations

—

616

—

—

Noncurrent liabilities of discontinued operations

—

—

—

(8
)
Net amount recognized
$
391
$
926
$
106
$
55

Significant assumptions used to determine
benefit obligations as of December 31:

Discount rate

3.63
%
4.42
%
3.44
%
4.37
%
Weighted average rate of increase for compensation

4.64
%
4.55
%
n/a

n/a

~~(1)~~

(1)

2020 amounts include curtailments and settlements recognized as a result of the GT&S Transaction as well as settlements of qualified and nonqualified pension obligations. 2019 amounts relate primarily to a curtailment and settlement as a result of the voluntary retirement program.

(2)

2020 amounts relate primarily to settlements of qualified and nonqualified pension obligations. 2019 amounts relate primarily to a settlement as a result of the voluntary retirement program.


						~~169~~

~~Combined Notes~~

Actuarial losses recognized during 2020 and 2019 in Dominion Energy’s pension benefit obligations include a $1.0 billion and a $1.1 billion loss, respectively, resulting from decreases in discount rates. Actuarial losses recognized during 2020 in Dominion Energy’s other postretirement benefit obligations include a $149 million loss resulting from a decrease in discount rates, and were partially offset by a $85 million actuarial gain as a result of a completed experience study in one of Dominion Energy’s other postretirement plans and the impact of an update to ~~Consolidated Financial Statements, Continued~~

healthcare claims assumptions. Actuarial losses recognized during 2019 in Dominion Energy’s other postretirement benefit obligations include a $168 million loss resulting from a decrease in discount rates and were partially offset by a $55 million actuarial gain as a result of the impact of an update to healthcare claims and other healthcare-related cost assumptions.

The ABO for all of Dominion Energy’s defined benefit pension plans was ~~$9.7~~$10.6 billion and ~~$7.8~~$9.7 billion at December 31, 2020 and 2019, ~~and 2018,~~ respectively. The ABO for the defined benefit pension plans covering Dominion Energy Gas employees represented by collective bargaining units was $279 million and $689 million at December 31, 2019 and 2018, respectively.

Under its funding policies, Dominion Energy evaluates plan funding requirements annually, usually in the fourth quarter after receiving updated plan information from its actuary. Based on the funded status of each plan and other factors, Dominion Energy determines the amount of contributions for the current year, if any, at that time. In December 2020, Dominion Energy contributed $250 million to its qualified defined benefit pension plans. During 2019, Dominion Energy made $520 million of contributions to its

qualified

defined

benefit pension plans, including 6.1 million shares of its common stock valued at $499 million. The shares were contributed through a private placement, exempt from registration requirements, with an independent fiduciary and investment manager to a separate account within the qualified defined benefit pension plans. Dominion Energy also entered into a registration rights agreement with the independent fiduciary and investment manager pursuant to which Dominion Energy agreed to provide

registrations rights on customary terms with respect to the shares. Dominion Energy ~~Gas did 0t~~expects to make ~~any~~$17 million of contributions tofor its qualified ~~defined benefit~~ pension plans in ~~2019. Dominion Energy expects to make $29 million of the minimum required contributions in 2020, and 0 contributions are currently expected in 2020 for Dominion Energy Gas.~~

2021.

Certain regulatory authorities have held that amounts recovered in utility customers’ rates for other postretirement benefits, in excess of benefits actually paid during the year, must be deposited in trust funds dedicated for the sole purpose of paying such benefits. Accordingly, certain of Dominion Energy’s subsidiaries ~~including Dominion Energy Gas,~~ fund other postretirement benefit costs through VEBAs. Dominion Energy’s remaining subsidiaries do not prefund other postretirement benefit costs but instead pay claims as presented. Dominion ~~Energy’s~~Energy did 0t make any contributions to VEBAs all of which pertained to Dominion Energy Gas employees, totaled $12 million for 2019 and 2018, and Dominion Energy expects to contribute approximately $12 million to the Dominion Energy VEBAs in 2020, all of which pertains to Dominion Energy Gas employees.

~~Dominion Energy and Dominion Energy Gas do 0t expect any pension or~~associated with its other postretirement ~~plan assets to be returned during~~plans in 2020.

The following table provides information on the benefit obligations and fair value of plan assets for plans with a benefit obligation in excess of plan assets for Dominion ~~Energy and Dominion Energy Gas (for employees represented by collective bargaining units):~~Energy:

	Pension Benefits				Other Postretirement Benefits
As of December 31,	2020		2019		2020⁽¹⁾		2019
(millions)
Dominion Energy
Benefit obligation	$	10,697	$	9,552	$	305	$	341
Fair value of plan assets		9,259		7,471		9		10

Pension Benefits

Other Postretirement
Benefits

As of December 31,

2019

2018

2019

2018

(millions)

Dominion Energy

Benefit obligation

$

9,552
$
7,705
      $
341
    $
164

Fair value of plan assets

7,471

5,398

10

136

Dominion Energy Gas

Benefit obligation
$
—
$
—
      $

—
    $
134

Fair value of plan assets

—

—

—

126

The following table provides information on the ABO and fair value of plan assets for Dominion Energy’s pension plans with an ABO in excess of plan assets:

As of December 31,	2020		2019
(millions)
Accumulated benefit obligation	$	9,970	$	8,852
Fair value of plan assets		9,259		7,471

As of December 31,

2019

2018

(millions)

Accumulated benefit obligation
$
8,852
$
7,056

Fair value of plan assets

7,471

5,398

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for Dominion ~~Energy and Dominion Energy Gas’ (for employees represented by collective bargaining units)~~Energy’s plans:

	Estimated Future Benefit Payments
	Pension Benefits		Other Postretirement Benefits
(millions)
Dominion Energy
2021	$	486	$	110
2022		512		108
2023		515		106
2024		533		104
2025		535		101
2026-2030		2,792		478

Estimated Future Benefit Payments

Pension Benefits

Other Postretirement
Benefits

(millions)

Dominion Energy

2020
            $
535
                    $
120

2021

472

117

2022

511

116

2023

519

114

2024

536

113

2025-2029

2,792

528

Dominion Energy Gas

2020
            $
15
                    $
8

2021

15

8

2022

15

8

2023

15

8

2024

15

8

2025-2029

79

36

Plan Assets

Dominion Energy’s overall objective for investing its pension and other postretirement plan assets is to achieve appropriate long-term rates of return commensurate with prudent levels of risk. ~~As a participating employer in various pension plans sponsored by Dominion Energy, Dominion Energy Gas is subject to Dominion Energy’s investment policies for such plans.~~ To minimize risk, funds are broadly diversified among asset classes, investment strategies and investment advisors. The strategic target asset allocations for substantially all of Dominion Energy’s pension funds are 28% U.S. equity, 18%

non-U.S.

equity, 35% fixed income, 3% real estate and 16% other alternative investments. U.S. equity includes investments in

large-cap,

mid-cap

and

small-cap

companies located in the U.S.

Non-U.S.

equity includes investments in

large-cap

and

small-cap

companies located outside of the U.S. including both developed and emerging markets. Fixed income includes corporate debt instruments of companies from diversified industries and U.S. Treasuries. The U.S. equity,

non-U.S.

equity and fixed income investments are in individual securities as well as mutual funds. Real estate includes equity real estate investment trusts and investments in partnerships. Other alternative investments include partnership investments in private equity, debt and hedge funds that follow several different strategies.

Dominion Energy also utilizes common/collective trust funds as an investment vehicle for its defined benefit plans. A common/collective trust fund is a pooled fund operated by a bank or trust company for investment of the assets of various organizations and individuals in a well-diversified portfolio. Common/collective trust funds are funds of grouped assets that follow various investment strategies.


~~170~~

from the strategic target asset allocations. Through periodic rebalancing, actual allocations are brought back in line with the target. Future asset/liability studies will focus on strategies to further reduce pension and other postretirement plan risk, while still achieving attractive levels of returns. Financial derivatives may be used to obtain or manage market exposures and to hedge assets and liabilities.

For fair value measurement policies and procedures related to pension and other postretirement benefit plan assets, see Note 6.

The fair values of Dominion ~~Energy and Dominion Energy Gas’ (for employees represented by collective bargaining units)~~Energy’s pension plan assets by asset category are as follows:

At December 31,	2020								2019
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
(millions)
Dominion Energy
Cash and cash equivalents	$	20	$	1	$	—	$	21	$	22	$	1	$	—	$	23
Common and preferred stocks:
U.S.⁽¹⁾		2,405		—		—		2,405		2,284		—		—		2,284
International		1,727		—		—		1,727		1,634		—		—		1,634
Insurance contracts		—		409		—		409		—		360		—		360
Corporate debt instruments		32		1,385		—		1,417		273		859		—		1,132
Government securities		30		772		—		802		58		757		—		815
Total recorded at fair value	$	4,214	$	2,567	$	—	$	6,781	$	4,271	$	1,977	$	—	$	6,248
Assets recorded at NAV⁽²⁾:
Common/collective trust funds								2,905								2,355
Alternative investments:
Real estate funds								108								91
Private equity funds								856								787
Debt funds								168								159
Hedge funds								13								14
Total recorded at NAV							$	4,050							$	3,406
Total investments⁽³⁾							$	10,831							$	9,654

At December 31,

2019

2018

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

(millions)

Dominion Energy

Cash and cash equivalents
$
22
$
1

$
—
$
23
$
17
$
1

$—
$
18

Common and preferred stocks:

U.S.
(1)

2,284

—

—

2,284

1,645

—

—

1,645

International

1,634

—

—

1,634

1,061

—

—

1,061

Insurance contracts

—

360

—

360

—

318

—

318

Corporate debt instruments

273

859

—

1,132

23

729

—

752

Government securities

58

757

—

815

25

605

—

630

Total recorded at fair value
$
4,271
$
1,977

$—
$
6,248
$
2,771
$
1,653

$—
$
4,424

Assets recorded at NAV
(2)
:

Common/collective trust funds

2,355

1,849

Alternative investments:

Real estate funds

91

108

Private equity funds

787

633

Debt funds

159

155

Hedge funds

14

17

Total recorded at NAV
$
3,406
$
2,762

Total investments
(3)
$
9,654
$
7,186

Dominion Energy Gas

Cash and cash equivalents
$
1
$
—

$
—
$
1
$
4
$
—

$—
$
4

Common and preferred stocks:

U.S.

177

—

—

177

378

—

—

378

International

114

—

—

114

244

—

—

244

Insurance contracts

—

28

—

28

—

73

—

73

Corporate debt instruments

3

66

—

69

5

168

—

173

Government securities

2

59

—

61

6

139

—

145

Total recorded at fair value
$
297
$
153

$—
$
450
$
637
$
380

$—
$
1,017

Assets recorded at NAV
(2)
:

Common/collective trust funds

157

425

Alternative investments:

Real estate funds

7

25

Private equity funds

61

146

Debt funds

12

36

Hedge funds

1

4

Total recorded at NAV
$
238
$
636

Total investments
(4)
$
688
$
1,653

(1)	Includes $365 million and $508 million of Dominion Energy common stock at December 31, ~~2019.~~2020 and 2019, respectively.

(2)	These investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient ~~which~~ are not required to be categorized in the fair value hierarchy.

(3)

Excludes net assets related to pending sales of securities and advanced subscriptions of $198 million, net accrued income of $20 million, and includes net assets related to pending purchases of securities of $71 million at December 31, 2020. Excludes net assets related to pending sales of securities of $52 million, net accrued income of $24 million, and includes net assets related to pending purchases of securities of $99 million at December 31, 2019. Excludes net assets related to pending sales of securities of $12 million, net accrued income of $21 million, and includes net assets related to pending purchases of securities of $22 million at December 31, 2018.

~~(4)~~

Excludes net assets related to pending sales of securities of $2 million, net accrued income of $2 million, and includes net assets related to pending purchases of securities of $6 million at December 31, 2019. Excludes net assets related to pending sales of securities of $3 million, net accrued income of $5 million, and includes net assets related to pending purchases of securities of $5 million at December 31, 2018.


						~~171~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

The fair values of Dominion ~~Energy and Dominion Energy Gas’ (for employees represented by collective bargaining units)~~Energy’s other postretirement plan assets by asset category are as follows:

At December 31,	2020									2019
	Level 1		Level 2			Level 3		Total		Level 1		Level 2		Level 3		Total
(millions)
Dominion Energy
Cash and cash equivalents	$	—	$	2		$	—	$	2	$	2	$	—	$	—	$	2
Common and preferred stocks:
U.S.		817		—			—		817		719		—		—		719
International		240		—			—		240		206		—		—		206
Insurance contracts		—		23			—		23		—		21		—		21
Corporate debt instruments		2		60			—		62		1		50		—		51
Government securities		2		42			—		44		2		44		—		46
Total recorded at fair value	$	1,061	$	127		$	—	$	1,188	$	930	$	115	$	—	$	1,045
Assets recorded at NAV⁽¹⁾:
Common/collective trust funds									765								717
Alternative investments:
Real estate funds									10								8
Private equity funds									117								100
Debt funds					��				10								10
Hedge funds									1								1
Total recorded at NAV								$	903							$	836
Total investments⁽²⁾								$	2,091							$	1,881

At December 31,

2019

2018

Level 1

Level 2

Level 3

Total

Level 1

Level 2

Level 3

Total

(millions)

Dominion Energy

Cash and cash equivalents
      $
2
      $
—

$—
    $
2
    $
1
    $
1

$—
    $
2

Common and preferred stocks:

U.S.

719

—

—

719

554

—

—

554

International

206

—

—

206

170

—

—

170

Insurance contracts

—

21

—

21

—

19

—

19

Corporate debt instruments

1

50

—

51

1

44

—

45

Government securities

2

44

—

46

2

37

—

39

Total recorded at fair value
      $
930
      $
115

$—
    $
1,045
    $
728
    $
101

$—
    $
829

Assets recorded at NAV
(1)
:

Common/collective trust funds

717

650

Alternative investments:

Real estate funds

8

10

Private equity funds

100

80

Debt funds

10

10

Hedge funds

1

1

Total recorded at NAV
    $
836
    $
751

Total investments
(2)
    $
1,881
    $
1,580

Dominion Energy Gas

Common and preferred stocks:

U.S.
      $
86
      $
—

$—
    $
86
    $
113
    $
—

$—
    $
113

International

21

—

—

21

30

—

—

30

Total recorded at fair value
      $
107
      $
—

$—
    $
107
    $
143
    $
—

$—
    $
143

Assets recorded at NAV
(1)
:

Common/collective trust funds

105

148

Alternative investments:

Real estate funds

1

2

Private equity funds

14

18

Debt funds

—

—

Total recorded at NAV
    $
120
    $
168

Total investments
    $
227
    $
311

(1)	These investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient ~~which~~ are not required to be categorized in the fair value hierarchy.

(2)

Excludes net assets related to pending sales of securities of $10 million, net accrued income of $2 million, and includes net assets related to pending purchases of securities of $2 million at December 31, 2020. Excludes net assets related to pending sales of securities of $2 million, net accrued income of $2 million, and includes net assets related to pending purchases of securities of $5 million at December 31, 2019. Excludes net assets related to pending sales of securities of $1 million, net accrued income of $2 million, and includes net assets related to pending purchases of securities of $2 million at December 31, 2018.


~~172~~

The ~~Plan’s~~plan assets investments are determined based on the fair values of the investments and the underlying investments, which have been determined as follows:

~~Cash and Cash Equivalents~~

~~—Investments are held primarily in short-term notes and treasury bills, which are valued at cost plus accrued interest.~~

~~Common and Preferred Stocks~~

~~—Investments are valued at the closing price reported on the active market on which the individual securities are traded.~~

~~Insurance Contracts~~

—Investments in Group Annuity Contracts with John Hancock were entered into after 1992 and are stated at fair value based on the fair value of the underlying securities as provided by the managers and include investments in U.S. government securities, corporate debt instruments, state and municipal debt securities.

~~Corporate Debt Instruments~~

—Investments are valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar instruments, the instrument is valued under a discounted cash flows approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks or a broker quote, if available.

~~Government Securities~~

~~—Investments are valued using pricing models maximizing the use of observable inputs for similar securities.~~

~~Common/Collective Trust Funds~~

—Common/collective trust funds invest in debt and equity securities and other instruments with characteristics similar to those of the funds’ benchmarks. The primary objectives of the funds are to seek investment returns that approximate the overall performance of their benchmark indexes. These benchmarks are major equity indices, fixed income indices, and money market indices that focus on growth, income, and liquidity strategies, as applicable. Investments in common/collective trust funds are stated at the NAV as determined by the issuer of the common/collective trust funds and are based on the fair value of the underlying investments held by the fund less its liabilities. The NAV is used as a practical expedient to estimate fair value. The common/collective trust funds do not have any unfunded commitments, and do not have any applicable liquidation periods or defined terms/periods to be held. The majority of the common/collective trust funds have limited withdrawal or redemption rights during the term of the investment.

~~Alternative Investments~~

—Investments in real estate funds, private equity funds, debt funds and hedge funds are stated at fair value based on the NAV of the Plan’s proportionate share of the partnership, joint venture or other alternative investment’s fair value as determined by reference to audited financial statements or NAV statements provided by the investment manager. The NAV is used as a practical expedient to estimate fair value.

•

Cash and Cash Equivalents—Investments are held primarily in short-term notes and treasury bills, which are valued at cost plus accrued interest.

•

Common and Preferred Stocks—Investments are valued at the closing price reported on the active market on which the individual securities are traded.

•

Insurance Contracts—Investments in Group Annuity Contracts with John Hancock were entered into after 1992 and are stated at fair value based on the fair value of the underlying securities as provided by the managers and include investments in U.S. government securities, corporate debt instruments and state and municipal debt securities.

•

Corporate Debt Instruments—Investments are valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar instruments, the instrument is valued under a discounted cash flows approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks or a broker quote, if available.

•

Government Securities—Investments are valued using pricing models maximizing the use of observable inputs for similar securities.

•

Common/Collective Trust Funds—Common/collective trust funds invest in debt and equity securities and other instruments with characteristics similar to those of the funds’ benchmarks. The primary objectives of the funds are to seek investment returns that approximate the overall performance of their benchmark indexes. These benchmarks are major equity indices, fixed income indices and money market indices that focus on growth, income and liquidity strategies, as applicable. Investments in common/collective trust funds are stated at the NAV as determined by the issuer of the common/collective trust funds and are based on the fair value of the underlying investments held by the fund less its liabilities. The NAV is used as a practical expedient to estimate fair value. The common/collective trust funds do not have any unfunded commitments, and do not have any applicable liquidation periods or defined terms/periods to be held. The

~~173~~

majority of the common/collective trust funds have limited withdrawal or redemption rights during the term of the investment.

•

Alternative Investments—Investments in real estate funds, private equity funds, debt funds and hedge funds are stated at fair value based on the NAV of the plan’s proportionate share of the partnership, joint venture or other alternative investment’s fair value as determined by reference to audited financial statements or NAV statements provided by the investment manager. The NAV, which is used as a practical expedient to estimate fair value, is adjusted for contributions and distributions occurring between the investment manager’s and Dominion Energy’s measurement date. These valuations also involve assumptions and methods that are reviewed, evaluated, and adjusted, if necessary, by Dominion Energy.

~~Combined Notes to Consolidated Financial Statements, Continued~~

Net Periodic Benefit (Credit) Cost

The service cost component of net periodic benefit (credit) cost is reflected in other operations and

maintenance expense in Dominion Energy’s Consolidated Statements of Income, except for $13 million, $16 million and $18 million for the years ended December 31, 2020, 2019 and 2018, respectively, presented in discontinued operations. The non-service

cost components of net periodic benefit (credit) cost are reflected in other ~~operations and maintenance expense and other~~ income ~~respectively,~~ in ~~the~~Dominion Energy’s Consolidated Statements of Income. The components of the provision for net periodic benefit (credit) cost and amounts recognized in other comprehensive income and regulatory assets and liabilities for Dominion Energy ~~and Dominion Energy Gas’ (for employees represented by collective bargaining units)~~ plans are as follows:

Pension Benefits

Other Postretirement Benefits

Year Ended December 31,

2019

2018

2017

2019

2018

2017

(millions, except percentages)

Dominion Energy

Service cost
$
162
$
157
$
138
$
26
$
27
$
26

Interest cost

394

337

345

68

56

60

Expected return on plan assets

(708
)
(663
)
(639
)
(140
)
(143
)
(128
)
Amortization of prior service (credit) cost

1

1

1

(52
)
(52
)
(51
)
Amortization of net actuarial loss

172

193

162

10

11

13

Settlements and curtailments

72

—

—

42

—

—

Net periodic benefit (credit) cost
$
93
$
25
$
7
$
(46
) $
(101
) $
(80
)
Changes in plan assets and benefit obligations recognized in other comprehensive income and regulatory assets and liabilities:

Current year net actuarial (gain) loss
$
16
$
490
$
142
$
(98
) $
78
$
12

Prior service (credit) cost

—

—

5

2

(4
)
(73
)
Settlements and curtailments

6

—

1

—

—

2

Less amounts included in net periodic benefit cost:

Amortization of net actuarial loss

(172
)
(193
)
(162
)
(10
)
(11
)
(13
)
Amortization of prior service credit (cost)

(1
)
(1
)
(1
)
52

52

51

Total recognized in other comprehensive income and regulatory assets and liabilities
$
(151
) $
296
$
(15
) $
(54
) $
115
$
(21
)
Significant assumptions used to determine periodic cost:

Discount rate

3.57%-
4.43
%
3.80%-3.81
%
3.31%-4.50
%
4.05%
-
4.41
%
3.76
%
3.92%-4.47
%
Expected long-term rate of return on plan assets

7.00%-
8.65
%
8.75
%
8.75
%
8.50
%
8.50
%
8.50
%
Weighted average rate of increase for compensation

4.20
%
4.09
%
4.09
%
n/a

n/a

n/a

Healthcare cost trend rate
(1)

6.50%
-
6.60
%
7.00
%
7.00
%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
(1)

5.00
%
5.00
%
5.00
%
Year that the rate reaches the ultimate trend rate
(1)

2023-2025

2022

2021

Dominion Energy Gas
(2)

Service cost
$
6
$
18
$
15
$
1
$
4
$
4

Interest cost

11

29

30

5

11

12

Expected return on plan assets

(54
)
(150
)
(141
)
(16
)
(28
)
(24
)
Amortization of prior service (credit) cost

—

—

—

(5
)
(4
)
(3
)
Amortization of net actuarial loss

7

19

16

3

3

2

Settlements and curtailments

1

—

—

1

—

—

Net periodic benefit (credit) cost
$
(29
) $
(84
) $
(80
) $
(11
) $
(14
) $
(9
)
Changes in plan assets and benefit obligations recognized in other comprehensive income and regulatory assets and liabilities:

Current year net actuarial (gain) loss
$
(46
) $
207
$
(75
) $
(21
) $
16
$
18

Prior service cost

—

—

—

—

(4
)
(61
)
Less amounts included in net periodic benefit cost:

Amortization of net actuarial loss

(7
)
(19
)
(16
)
(3
)
(3
)
(2
)
Amortization of prior service credit (cost)

—

—

—

5

4

3

Total recognized in other comprehensive income and regulatory assets and liabilities
$
(53
) $
188
$
(91
) $
(19
) $
13
$
(42
)
Significant assumptions used to determine periodic cost:

Discount rate

4.10%-4.42
% 3.81 % 4.50 %
4.05%-4.37
% 3.81 % 4.47 %
Expected long-term rate of return on plan assets

8.65
%
8.75
%
8.75
%
8.50
%
8.50
%
8.50
%
Weighted average rate of increase for compensation

4.55
%
4.11
%
4.11
%
n/a

n/a

n/a

Healthcare cost trend rate
(1)

6.50
%
7.00
%
7.00
%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
(1)

5.00
%
5.00
%
5.00
%
Year that the rate reaches the ultimate trend rate
(1)

2025

2022

2021

	Pension Benefits									Other Postretirement Benefits
Year Ended December 31,	2020			2019			2018			2020			2019			2018
(millions, except percentages)
Dominion Energy
Service cost	$	173		$	162		$	157		$	28		$	26		$	27
Interest cost		351			394			337			58			68			56
Expected return on plan assets		(777	)		(708	)		(663	)		(156	)		(140	)		(143	)
Amortization of prior service (credit) cost		1			1			1			(49	)		(52	)		(52	)
Amortization of net actuarial loss		206			172			193			6			10			11
Settlements, curtailments and special termination benefits		14			72			—			(59	)		42			—
Net periodic benefit (credit) cost	$	(32	)	$	93		$	25		$	(172	)	$	(46	)	$	(101	)
Changes in plan assets and benefit obligations recognized in other comprehensive income and regulatory assets and liabilities:
Current year net actuarial (gain) loss	$	166		$	16		$	490		$	(110	)	$	(98	)	$	78
Prior service (credit) cost		—			—			—			(6	)		2			(4	)
Settlements and curtailments		(81	)		6			—			59			—			—
Less amounts included in net periodic benefit cost:
Amortization of net actuarial loss		(206	)		(172	)		(193	)		(6	)		(10	)		(11	)
Amortization of prior service credit (cost)		(1	)		(1	)		(1	)		49			52			52
Total recognized in other comprehensive income and regulatory assets and liabilities	$	(122	)	$	(151	)	$	296		$	(14	)	$	(54	)	$	115
Significant assumptions used to determine periodic cost:
Discount rate	2.77%-3.63%			3.57%-4.43%			3.80%-3.81%			3.07%-3.52%			4.05% to 4.41%			3.76%
Expected long-term rate of return on plan assets	7.00%-8.60%			7.00% -8.65%				8.75	%		8.50	%		8.50	%		8.50	%
Weighted average rate of increase for compensation		4.23	%		4.20	%		4.09	%	n/a			n/a			n/a
Crediting interest rate for cash balance and similar plans	2.31-2.83%			2.77-3.63%			3.00-3.01%			n/a			n/a			n/a
Healthcare cost trend rate⁽¹⁾											6.25	%	6.50% to 6.60%				7.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)⁽¹⁾											5.00	%		5.00	%		5.00	%
Year that the rate reaches the ultimate trend rate⁽¹⁾										2025-2026			2023-2025			2022

(1)	Assumptions used to determine net periodic cost for the following year.

~~(2)~~

~~Amounts related to East Ohio are presented within discontinued operations.~~


~~174~~

The components of AOCI and regulatory assets and liabilities for Dominion ~~Energy and Dominion Energy Gas’ (for employees represented by collective bargaining units)~~Energy’s plans that have not been recognized as components of net periodic benefit (credit) cost are as follows:

Pension Benefits

Other
Postretirement
Benefits

At December 31,

2019

2018

2019

2018

(millions)

Dominion Energy

Net actuarial loss
$
3,327
$
3,477
$
241
$
350

Prior service (credit) cost

5

7

(339
)
(393
)
Total
(1)
$
3,332
$
3,484
$
(98
) $
(43
)
Dominion Energy Gas

Net actuarial loss
$
150
$
555
$
44
$
89

Prior service (credit) cost

—

—

(49
)
(52
)
Total
(2)
$
150
$
555
$
(5
) $
37

	Pension Benefits				Other Postretirement Benefits
At December 31,	2020		2019		2020			2019
(millions)
Dominion Energy
Net actuarial loss	$	3,207	$	3,327	$	120		$	241
Prior service (credit) cost		4		5		(232	)		(339	)
Total⁽¹⁾	$	3,211	$	3,332	$	(112	)	$	(98	)

(1)

As of December 31, 2020, of the $3.2 billion and $(112) million related to pension benefits and other postretirement benefits, $1.9 billion and $(40) million, respectively, are included in AOCI, with the remainder included in regulatory assets and liabilities. As of December 31, 2019, of the $3.3 billion and $(98) million related to pension benefits and other postretirement benefits, $2.0 billion and $(65) million, respectively, are included in AOCI, with the remainder included in regulatory assets and liabilities. As of December 31, 2018, of the $3.5 billion and $(43) million related to pension benefits and other postretirement benefits, $2.0 billion and $(41) million, respectively, are included in AOCI, with the remainder included in regulatory assets and liabilities.

~~(2)~~

As of December 31, 2019, of the $150 million related to pension benefits, $147 million is included in AOCI, with the remainder included in regulatory assets and liabilities; the $(5) million related to other postretirement benefits is included entirely in regulatory assets and liabilities. As of December 31, 2018, of the $555 million related to pension benefits, $200 million is included in AOCI, with the remainder included

~~noncurrent assets of discontinued operations; of the~~

~~$37 million related to other postretirement benefits~~

~~, $22 million~~

~~is included~~

~~in noncurrent assets of discontinued operations with the remainder~~

~~included~~

~~in regulatory assets and liabilities.~~

The following table provides the components of AOCI and regulatory assets and liabilities for Dominion Energy and Dominion Energy Gas’ (for employees represented by collective bargaining units) plans as of December 31, 2019 that are expected to be amortized as components of net periodic benefit (credit) cost in 2020:

Pension Benefits

Other
Postretirement
Benefits

(millions)

Dominion Energy

Net actuarial loss

$194

$5

Prior service (credit) cost

1

(50
)
Dominion Energy Gas

Net actuarial loss

$7

$2

Prior service (credit) cost

—

(5
)

The expected long-term rates of return on plan assets, discount rates, healthcare cost trend rates and mortality are critical assumptions in determining net periodic benefit (credit) cost. Dominion Energy develops

non-investment

related assumptions, which are then compared to the forecasts of an independent investment advisor to ensure reasonableness. An internal committee selects the final assumptions used for Dominion Energy’s pension and other postretirement plans including ~~those in which Dominion Energy Gas participates, including~~ discount rates, expected long-term rates of return, healthcare cost trend rates and mortality rates.

Dominion Energy determines the expected long-term rates of return on plan assets for its pension plans and other postretirement benefit plans ~~including those in which Dominion Energy Gas participates,~~ by using a combination of:

•

Expected inflation and risk-free interest rate assumptions;

~~Expected inflation and risk-free interest rate assumptions;~~

•

Historical return analysis to determine long term historic returns as well as historic risk premiums for various asset classes;

•

Expected future risk premiums, asset classes’ volatilities and correlations;

•

Forward-looking return expectations derived from the yield on long-term bonds and the expected long-term returns of major capital market assumptions; and

•

Investment allocation of plan assets.

~~Historical return analysis to determine long term historic returns as well as historic risk premiums for various asset classes;~~

~~Expected future risk premiums, asset classes’ volatilities and correlations;~~

~~Forward-looking return expectations derived from the yield on long-term bonds and the expected long-term returns of major capital market assumptions; and~~

~~Investment allocation of plan assets.~~

Dominion Energy determines discount rates from analyses of AA/Aa rated bonds with cash flows matching the expected payments to be made under its ~~plans, including those in which Dominion Energy Gas participates.~~

plans.

Mortality rates are developed from actual and projected plan experience for postretirement benefit plans. Dominion Energy’s actuary conducts an experience study periodically as part of the process to select its best estimate of mortality. Dominion Energy considers both standard mortality tables and improvement factors as well as the plans’ actual experience when selecting a best estimate.

Assumed healthcare cost trend rates have a significant effect on the amounts reported for Dominion Energy’s retiree healthcare ~~plans, including those in which~~plans. Dominion Energy ~~Gas participates. A one percentage point change in assumed~~establishes the healthcare cost trend ~~rates would have had~~rate assumption based on analyses of various factors including the ~~following effects for Dominion Energy~~specific provisions of its medical plans, actual cost trends experienced and ~~Dominion Energy Gas’ (for employees represented by collective bargaining units) other postretirement benefit plans:~~

Other Postretirement Benefits

One percentage
point increase

One percentage
point decrease

(millions)

Dominion Energy

Effect on net periodic cost for 2020

$20

$(11)

Effect on other postretirement benefit obligation at December 31, 2019

153

(128)

Dominion Energy Gas

Effect on net periodic cost for 2020

$2

$(2)

Effect on other postretirement benefit obligation at December 31, 2019

14

(12)

~~Dominion Energy Gas (Employees Not Represented by Collective Bargaining Units)~~projected and demographics of plan participants.

Virginia Power—Participation in Defined Benefit Plans

Virginia Power employees ~~and Dominion Energy Gas employees not represented by collective bargaining units~~ are covered by the Dominion Energy Pension Plan described above. As a participating ~~employers,~~employer, Virginia Power ~~and Dominion Energy Gas are~~is subject to Dominion Energy’s funding policy, which is to contribute annually an amount that is in accordance with ERISA. During ~~2019,~~2020, Virginia Power ~~and~~made a payment to Dominion Energy ~~Gas made no contributions~~for $313 million related to its participation in the Dominion Energy Pension ~~Plan, and no contributions~~Plan. In addition, in December 2020, Dominion Energy notified Virginia Power of a required contribution of $151 million, recorded in payables to ~~this plan are currently expected~~affiliates in Virginia Power’s Consolidated Balance Sheets at December 31, 2020. Virginia Power’s net periodic pension cost related to this plan was $118 million, $152 million and $126 million in 2020, 2019 and ~~$110 million in 2019,~~ 2018, ~~and 2017, respectively. Dominion Energy Gas’ net periodic pension~~


						~~175~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~credit related to this plan was $(8) million, $(35) million and $(35) million in 2019, 2018 and 2017,~~ respectively. Net periodic ~~pension~~benefit (credit) cost is reflected in other operations and maintenance expense in ~~their respective~~Virginia Power’s Consolidated Statements of Income ~~except for $(14) million, $(21) million and $(20) million of Dominion Energy Gas’ costs in 2019, 2018 and 2017, respectively, that are recorded in net income from discontinued operations.~~ The funded status of various Dominion Energy subsidiary groups and employee compensation are the basis for determining the share of total pension costs for participating Dominion Energy subsidiaries. See Note 25 for Virginia Power ~~and Dominion Energy Gas~~ amounts due to/from Dominion Energy related to this plan.

Retiree healthcare and life insurance benefits, for Virginia Power employees ~~and for Dominion Energy Gas employees not represented by collective bargaining units,~~ are covered by the Dominion Energy Retiree Health and Welfare Plan described above. Virginia Power’s net periodic benefit (credit) cost related to this plan was $(58) million, $(27) million and $(51) million in 2020, 2019 and ~~$(42) million in 2019,~~ 2018, ~~and 2017, respectively. Dominion Energy Gas’ net periodic benefit (credit) cost related to this plan was $(4) million, $(8) million and $(6) million for 2019, 2018 and 2017,~~ respectively. Net periodic benefit (credit) cost is reflected in other operations and maintenance ~~expenses~~expense in ~~their respective~~Virginia Power’s Consolidated Statements of ~~Income, except for~~

~~less than $(1~~

~~) million, $(2) million and $(2) million of Dominion Energy Gas’ costs in 2019, 2018 and 2017, respectively, that are recorded in net income from discontinued operations.~~Income. Employee headcount is the basis for determining the share of total other postretirement benefit costs for participating Dominion Energy subsidiaries. See Note 25 for Virginia Power ~~and Dominion Energy Gas~~ amounts due to/from Dominion Energy related to this plan.

Dominion Energy holds investments in trusts to fund employee benefit payments for the pension and other postretirement benefit plans in which Virginia ~~Power and Dominion Energy Gas’~~Power’s employees participate. Any investment-related declines in these trusts will result in future increases in the net periodic cost recognized for such employee benefit plans and will be included in the determination of the amount of cash that Virginia Power ~~and Dominion Energy Gas~~ will provide to Dominion Energy for ~~their shares~~its share of employee benefit plan contributions.

Certain regulatory authorities have held that amounts recovered in rates for other postretirement benefits, in excess of benefits actually paid during the year, must be deposited in trust funds dedicated for the sole purpose of paying such benefits. Accordingly,

Virginia Power ~~and Dominion Energy Gas fund~~funds other postretirement benefit costs through VEBAs.

During ~~2019~~2020 and ~~2018,~~2019, Virginia Power ~~and Dominion Energy Gas~~ made

contributions to the VEBAs and does

0t expect to contribute to the VEBAs in ~~2020.~~

2021.

Defined Contribution Plans

Dominion Energy also sponsors defined contribution employee savings plans that cover substantially all employees. During 2020, 2019 ~~2018~~ and ~~2017,~~2018, Dominion Energy recognized ~~$73~~$67 million, ~~$51~~$69 million and ~~$45~~$46 million, respectively, as employer matching contributions to these ~~plans. Dominion Energy Gas participates in these employee savings~~ plans, ~~both specific to Dominion Energy~~

Gas and that cover multiple Dominion Energy subsidiaries. During 2019, 2018 and 2017, Dominion Energy Gas recognized $4 million, $8 million and $8 million, respectively, as employer matching contributions to these plans.excluding discontinued operations. Virginia Power also participates in these employee savings plans. During 2020, 2019 ~~2018~~ and ~~2017,~~2018, Virginia Power recognized ~~$20~~$19 million, $20 million and ~~$19~~$20 million, respectively, as employer matching contributions to these plans.

~~Note~~

NOTE 23. ~~Commitments and Contingencies~~

COMMITMENTS AND CONTINGENCIES

As a result of issues generated in the ordinary course of business, the Companies are involved in legal proceedings before various courts and are periodically subject to governmental examinations (including by regulatory authorities), inquiries and investigations. Certain legal proceedings and governmental examinations involve demands for unspecified amounts of damages, are in an initial procedural phase, involve uncertainty as to the outcome of pending appeals or motions, or involve significant factual issues that need to be resolved, such that it is not possible for the Companies to estimate a range of possible loss. For such matters that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the litigation or investigative processes such that the Companies are able to estimate a range of possible loss. For legal proceedings and governmental examinations that the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any accrued liability is recorded on a gross basis with a receivable also recorded for any probable insurance recoveries. Estimated ranges of loss are inclusive of legal fees and net of any anticipated insurance recoveries. Any estimated range is based on currently available information and involves elements of judgment and significant uncertainties. Any estimated range of possible loss may not represent the Companies’ maximum possible loss exposure. The circumstances of such legal proceedings and governmental examinations will change from time to time and actual results may vary significantly from the current estimate. For current proceedings not specifically reported below, management does not anticipate that the liabilities, if any, arising from such proceedings would have a material effect on the Companies’ financial position, liquidity or results of operations.

Environmental Matters

The Companies are subject to costs resulting from a number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of compliance, remediation, containment and monitoring obligations.

Air

~~CAA~~

The CAA, as amended, is a comprehensive program utilizing a broad range of regulatory tools to protect and preserve the nation’s air quality. At a minimum, states are required to establish regulatory programs to address all requirements of the CAA. However, states may choose to develop regulatory programs that are more restrictive. Many of the Companies’ facilities are subject to the CAA’s permitting and other requirements.


~~176~~

MATS

In February 2019, the EPA published a proposed rule to reverse its previous finding that it is appropriate and necessary to regulate ~~toxic~~hazardous air pollutant emissions from ~~power plants. However,~~coal- and oil-fired electric generating units. In May 2020, the EPA’s final rule became effective. The final rule is consistent with the EPA’s February 2019 proposal, and determines that it is not appropriate and necessary to regulate mercury and hazardous air pollutant emissions from coal- and oil-fired electric generating units. The final rule also states

that the MATS rule remains in place and the emissions standards for affected coal- and ~~other requirements of the MATS rule would remain in place as the EPA is~~oil-fired electric generating units will not ~~proposing to remove coal and~~

~~oil-fired~~

power plants from the list of sources that are regulated under MATS. Although litigation of the MATS rule and the outcome of the EPA’s rulemaking are still pending, the regulation remains in effect and Dominion Energy and Virginia Powerchange. The Companies are complying with the applicable requirements of the rule and do not expect any ~~adverse~~material impacts to their ~~operations at this time.~~

operations.

Ozone Standards

The EPA published final

non-attainment

designations for the October 2015 ozone standard in June 2018. States have until August 2021 to develop plans to address the new standard. Until the states have developed implementation plans for the standard, the Companies are unable to predict whether or to what extent the new rules will ultimately require additional controls. The expenditures required to implement additional controls could have a material impact on the Companies’ results of operations and cash flows.

Oil and Gas NSPS

In August 2012, the EPA issued an NSPS impacting new and modified facilities in the natural gas production and gathering sectors and made revisions to the NSPS for natural gas processing and transmission facilities. These rules establish equipment performance specifications and emissions standards for control of VOC emissions for natural gas production wells, tanks, pneumatic controllers and compressors in the upstream sector. In June 2016, the EPA issued another NSPS regulation for the oil and natural gas sector, to regulate methane and VOC emissions from new and modified facilities in transmission and storage, gathering and boosting, production and processing facilities. All projects which commenced construction after September 2015 are required to comply with this regulation. In October 2018, the EPA published a proposed rule reconsidering and amending portions of the 2016 rule, including but not limited to, the fugitive emissions requirements at well sites and compressor stations. The amended portions of the 2016 rule were effective immediately upon publication. ~~Until~~In August 2020, the ~~proposed rule regarding~~EPA issued two final amendments related to the reconsideration ~~is final,~~ of the NSPS for the oil and natural gas sector applicable to VOC and methane emissions. Together, the two amendments have the effect of rescinding the methane portion of the NSPS for all segments of the oil and natural gas sector, rescinding all methane and VOC NSPS for the transmission and storage segment and modifying some of the NSPS VOC requirements for facilities in the production and processing segments. The two amendments have been challenged in the U.S. Court of Appeals for the D.C. Circuit but remain in effect pending the outcome of the litigation. Dominion Energy ~~and Dominion Energy Gas are implementing~~has completed an evaluation of the ~~2016 regulation. Dominion Energy and Dominion Energy Gas are still evaluating whether~~ potential impacts onand expects that any impact would be insignificant to its results of operations, financial condition and/or cash ~~flows related to this matter will be material.~~

flows.

ACE Rule

In July 2019, the EPA published the final rule informally referred to as the ACE Rule, as a replacement for the Clean Power Plan. In January 2021, the U.S. Court of Appeals for the D.C. Circuit vacated the ACE Rule and remanded it to the EPA. This decision will take effect upon issuance of the court’s mandate. The ACE Rule applies to existing coal-fired power plants. The final rule includes unit-specific performance standards based on the degree of emission reduction levels achievable from unit efficiency improvements to be determined by the permitting agency. The ACE Rule requiresplants and would require states to develop plans by July 2022 ~~to implement these~~establishing unit-specific performance ~~standards. These state plans must be approved by~~standards for existing coal-fired power plants. It is unknown at this time if or how the EPA ~~by January 2024. While~~will replace the ~~impacts of~~

~~this rule could be material to Dominion Energy~~ACE Rule and ~~Virginia Power’s results of~~how that replacement will affect the Companies’ operations, financial condition and/or cash ~~flows, the existing regulatory frameworks in South Carolina and Virginia provide rate recovery mechanisms that could substantially mitigate any such impacts for the regulated electric utilities.~~

flows.

Carbon Regulations

In August 2016, the EPA issued a draft rule proposing to reaffirm that a source’s obligation to obtain a PSD or Title V permit for GHGs is triggered only if such permitting requirements are first triggered by

non-GHG,

or conventional, pollutants that are regulated by the New Source Review program, and ~~to set~~exceed a significant emissions rate atof 75,000 tons per year of ~~CO2~~CO₂ equivalent ~~emissions under which a source would not be required to apply BACT for its GHG~~ emissions. Until the EPA ultimately takes final action on this rulemaking, the Companies cannot predict the impact to their results of operations, financial condition and/or cash ~~flows.~~

flows.

In December 2018, the EPA proposed revised Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources. The proposed rule would amend the previous determination that the best system of emission reduction for newly constructed coal-fired steam generating units is no longer partial carbon capture and storage. Instead, the proposed revised best system of emission reduction for this source category is the most efficient demonstrated steam cycle (e.g., supercritical steam conditions for large units and subcritical steam conditions for small units) in combination with the best operating practices. In January 2021, the EPA published a final rule affirming that electric generating units are included for the purposes of regulating GHG emissions from new, modified and reconstructed stationary sources. The proposed revision to the performance standards remains pending. Until the EPA ultimately takes final action on this rulemaking, the Companies cannot predict the impact to their results of operations, financial condition and/or cash flows.

State Regulations

In May 2019, VDEQ issued a final rule establishing a state carbon regulation program with a 28.0 million ton initial state-wide carbon cap in 2020. The cap iswas to be reduced by approximately ~~three~~3 percent per year through 2030, resulting in an ultimate cap of 19.6 million tons. The final rule ~~includes~~included a provision for VDEQ to delay implementation of the rule ~~and possible adjustments to the baseline cap~~ pending authorization from the General Assembly and Governor of Virginia. ~~Once~~In April 2020, Virginia legislation was enacted authorizing VDEQ ~~is authorized~~ to ~~begin implementation~~implement the final rule. In June 2020, the VDEQ signed the CO₂ Budget Trading Program rule outlining the requirements for Virginia’s direct participation in RGGI starting in 2021. As a result of joining RGGI in 2021, Virginia’s allotment of the ~~rule,~~regional cap was adjusted to approximately 27.1 million tons, although Virginia Power may purchase additional allowances from the ~~impacts of this program could be material to Dominion Energy~~secondary market and ~~Virginia Power’s results of operations, financial condition and/or cash flows; however,~~other states in the ~~existing~~RGGI program. The regulatory framework in Virginia provides rate recovery mechanisms that ~~could~~are expected to substantially mitigate any such impact.

The legislation discussed above is considered related legislation to the VCEA as discussed in Note 13. The VCEA institutes a mandatory renewable portfolio standard, enhances renewable generation and energy storage development, requires the retirement of certain generation facilities, establishes energy efficiency targets, expands net metering and directs Virginia’s participation in a market-based carbon trading program through 2050.

Water

The CWA, as amended, is a comprehensive program requiring a broad range of regulatory tools including a permit program to authorize and regulate discharges to surface waters with strong enforcement mechanisms. The Companies must comply with applicable aspects of the CWA programs at their operating facilities.

Regulation 316(b)

In October 2014, the final regulations under Section 316(b) of the CWA that govern existing facilities and new units at existing facilities that employ a cooling water intake structure and that have flow levels exceeding a minimum threshold became effective.


						~~177~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

The rule establishes a national standard for impingement based on seven compliance options, but forgoes the creation of a single technology standard for entrainment. Instead, the EPA has delegated entrainment technology decisions to state regulators. State regulators are to make

case-by-case

entrainment technology determinations after an examination of ~~five~~5 mandatory facility-specific factors, including a social cost-benefit test, and ~~six~~6 optional facility-specific factors. The rule governs all electric generating stations with water withdrawals above two MGD, with a heightened entrainment analysis for those facilities over 125 MGD. Dominion Energy and Virginia Power currently have 1315 and ~~seven~~9 facilities, respectively, that are subject to the final regulations. Dominion Energy ~~anticipates~~is also working with the EPA and state regulatory agencies to assess the applicability of Section 316(b) to eight hydroelectric facilities, including three Virginia Power facilities. The Companies anticipate that itthey may have to install impingement control technologies at certain of these stations that have once-through cooling systems. ~~Dominion Energy and Virginia Power~~The Companies are currently evaluating the need or potential for entrainment controls under the final rule as these decisions will be made on a

case-by-case

basis after a thorough review of detailed biological, technology, cost and benefit studies. DESC is conducting studies and implementing plans as required by the rule to determine appropriate intake structure modifications at certain facilities to ensure compliance with this rule. While the impacts of this rule could be material to ~~Dominion Energy and Virginia Power’s~~the Companies’ results of operations, financial condition and/or cash flows, the existing regulatory frameworks in South Carolina and Virginia provide rate recovery mechanisms that could substantially mitigate any such impacts for the regulated electric ~~utilities.~~

utilities.

Effluent Limitations Guidelines

In September 2015, the EPA released a final rule to revise the Effluent Limitations Guidelines for the Steam Electric Power Generating Category. The final rule ~~establishes~~established updated standards for wastewater discharges that apply primarily at coal and oil steam generating stations. Affected facilities are required to convert from wet to dry or closed cycle coal ash management, improve existing wastewater treatment systems and/or install new wastewater treatment technologies in order to meet the new discharge limits. In April 2017, the EPA granted ~~two~~2 separate petitions for reconsideration of the Effluent Limitations Guidelines final rule and stayed future compliance dates in the rule. Also in April 2017, the U.S. Court of Appeals for the Fifth Circuit granted the EPA’s request for a stay of the pending consolidated litigation challenging the rule while the EPA addresses the petitions for reconsideration. In September 2017, the EPA signed a rule to postpone the earliest compliance dates for certain waste streams regulations in the Effluent Limitations Guidelines final rule from November 2018 to November 2020; however, the latest date for compliance for these regulations ~~remains~~was December 2023. In October 2020, the EPA released the final rule that extends the latest dates for compliance. Individual facilities’ compliance dates will vary based on circumstances and the determination by state regulators and may range from 2021 to 2028. While the impacts of this rule could be material to ~~Dominion Energy and Virginia Power’s~~the Companies’ results of operations, financial condition and/or cash flows, the existing regulatory frameworks in South Carolina and Virginia provide rate recovery mechanisms that could substantially mitigate any such impacts for the regulated electric ~~utilities.~~utilities.

Waste Management and Remediation

The operations of the Companies are subject to a variety of state and federal laws and regulations governing the management and

disposal of solid and hazardous waste, and release of hazardous substances associated with current and/or historical operations. The CERCLA, as amended, and similar state laws, may impose joint, several and strict liability for cleanup on potentially responsible parties who owned, operated or arranged for disposal at facilities affected by a release of hazardous substances. In addition, many states have created programs to incentivize voluntary remediation of sites where historical releases of hazardous substances are identified and property owners or responsible parties decide to initiate cleanups.

From time to time, ~~Dominion Energy, Virginia Power or Dominion Energy Gas~~the Companies may be identified as a potentially responsible party in connection with the alleged release of hazardous substances or wastes at a site. Under applicable federal and state laws, the Companies could be responsible for costs associated with the investigation or remediation of impacted sites, or subject to contribution claims by other responsible parties for their costs incurred at such sites. The Companies also may identify, evaluate and remediate other potentially impacted sites under voluntary state programs. Remediation costs may be subject to reimbursement under the Companies’ insurance policies, rate recovery mechanisms, or both. Except as described below, the Companies do not believe these matters will have a material effect on results of operations, financial condition and/or cash flows.

Dominion Energy has determined that it is associated with former manufactured gas plant sites, including certain sites associated with Virginia Power. At 1112 sites associated with Dominion Energy, including certain sites acquired in the SCANA Combination, remediation work has been substantially completed under federal or state oversight. Where required, the sites are following state-approved groundwater monitoring programs. Dominion Energy has proposed or expects to propose remediation plans associated with ~~three~~3 sites, including ~~one~~1 at Virginia Power, and expects to conduct remediation activities primarily ~~in 2020. As~~by the end of 2021. At December 31, 2020 and 2019, Dominion Energy had $42 million and $34 million, respectively, of reserves recorded. Dominion Energy’s reserves include charges of $14 million ($11 million after-tax) and $16 million ($12 million after-tax) recorded in 2020 and 2018, respectively, in other operations and maintenance expense in the Consolidated Statements of Income. At December 31, 2020 and 2019, Virginia Power ~~have $34~~had $26 million and $16 million, respectively, of reserves ~~recorded, including a charge~~recorded. Virginia Power’s reserves include charges of $10 million ($7 million after-tax) and $16 million ($12 million after-tax) ~~that Virginia Power~~ recorded in 2020 and 2018, respectively, in other operations and maintenance expense in the Consolidated Statements of Income. In addition, for ~~one~~1 site associated with Dominion Energy, an updated work plan submitted to SCDHEC in September 2018,

would increase costs by approximately $8$11 million if ~~approved.~~approved by federal and state agencies. In September 2020, this plan was submitted to the Army Corps of Engineers. Dominion Energy is associated with 1312 additional sites, including ~~two~~2 associated with Virginia Power, which are not under investigation by any state or federal environmental agency nor the subject of any current or proposed plans to perform remediation activities. Due to the uncertainty surrounding such sites, ~~Dominion Energy and Virginia Power~~the Companies are unable to make an estimate of the potential financial statement impacts.

~~Ash Pond and Landfill Closure Costs~~

In April 2015, the EPA enacted a final rule regulating CCR landfills, existing ash ponds that still receive and manage CCRs, and inactive ash ponds that do not receive, but still store, CCRs. Dominion Energy currently operates inactive ash ponds, existing ash ponds and CCR landfills subject to the final rule at 11 different facilities, eight of which are at Virginia Power. This rule created a legal obligation for Dominion Energy and Virginia Power to retrofit or close all of its inactive and existing ash ponds over a


~~178~~

~~certain period of time, as well as perform required monitoring, corrective action, and post-closure care activities as necessary.~~

~~In December 2016, legislation was enacted that creates a framework for~~

~~EPA-~~

approved state CCR permit programs. In August 2017, the EPA issued interim guidance outlining the framework for state CCR program approval. The EPA has enforcement authority until state programs are approved. The EPA and states with approved programs both will have authority to enforce CCR requirements under their respective rules and programs. In September 2017, the EPA agreed to reconsider portions of the CCR rule in response to two petitions for reconsideration. In March 2018, the EPA proposed certain changes to the CCR rule related to issues remanded as part of the pending litigation and other issues the EPA is reconsidering. Several of the proposed changes would allow states with approved CCR permit programs additional flexibilities in implementing their programs. In July 2018, the EPA promulgated the first phase of changes to the CCR rule. Until all phases of the CCR rule are promulgated, Dominion Energy and Virginia Power cannot forecast potential incremental impacts or costs related to existing coal ash sites in connection with future implementation of the 2016 CCR legislation and reconsideration of the CCR rule. In August 2018, the U.S. Court of Appeals for the D.C. Circuit issued its decision in the pending challenges of the CCR rule, vacating and remanding to the EPA three provisions of the rule. Dominion Energy and Virginia Power do not expect the scope of the U.S. Court of Appeals for the D.C. Circuit’s decision to impact their closure plans, but cannot forecast incremental impacts associated with any future changes to the CCR rule in connection with the court’s remand.

In April 2017, the Governor of Virginia signed legislation into law that placed a moratorium on the VDEQ issuing solid waste permits for closure of ash ponds at Virginia Power’s Bremo, Chesapeake, Chesterfield and Possum Point power stations until May 2018. The law also required Virginia Power to conduct an assessment of closure alternatives for the ash ponds at these four stations, to include an evaluation of excavation for recycling or

~~off-site~~

disposal, surface and groundwater conditions and safety. Virginia Power completed the assessments and provided the report on December 1, 2017. In April 2018, the Governor of Virginia signed legislation into law extending the existing permit moratorium until July 2019. The legislation also required Virginia Power to solicit and compile by November 2018, information from third parties on the suitability, cost and market demand for beneficiation or recycling of coal ash from these units. The coal ash recycling business plan was submitted to the legislature in November 2018. The extended moratorium does not apply to a permit required for an impoundment where CCRs have already been removed and placed in another impoundment

~~on-site,~~

are being removed from an impoundment, or are being processed in connection with a recycling or beneficial use project. In connection with this legislation, in the second quarter of 2018, Virginia Power recorded an increase to its ARO and a related environmental liability related to future ash pond and landfill closure costs of $131 million, which resulted in an $81 million ($60 million

~~after-tax)~~

charge recorded in other operations and maintenance expense in its Consolidated Statement of Income, a $46 million increase in property, plant and equipment associated with asset retirement costs and a $4 million increase in regulatory assets.

In March 2019, the Governor of Virginia signed into law legislation which requires any CCR unit located at Virginia Power’s Bremo, Chesapeake, Chesterfield or Possum Point power stations that stop accepting CCR prior to July 2019 be closed by removing the CCR to an approved landfill or through recycling for beneficial reuse. The legislation further requires that at least 6.8 million cubic yards of CCR be beneficially reused. Costs associated with the closure of these CCR units are recoverable through a rate adjustment clause approved by the Virginia Commission with a revenue requirement that cannot exceed $225 million in any

~~12-month~~

period. Associated costs that are allocated to customers outside of Virginia, and not actually recovered from such customers, are recoverable through the Virginia rate adjustment clause. In connection with this legislation, Virginia Power recorded a $2.4 billion ARO related to the cost of landfills and beneficial reuse, with an offsetting increase to property, plant and equipment of $1.3 billion for the Chesterfield power station and an increase primarily to regulatory assets for the remaining portion related to the Bremo, Chesapeake and Possum Point power stations during the first quarter of 2019. In addition, Virginia Power revised its estimated cash flows for the existing ARO related to future ash pond and landfill closure costs, which resulted in a decrease of $202 million and a corresponding $113 million ($84 million

~~after-tax)~~

~~benefit in other operations and maintenance expense in the Consolidated Statement of Income in the first quarter of 2019.~~

Other Legal Matters

The Companies are defendants in a number of lawsuits and claims involving unrelated incidents of property damage and personal injury. Due to the uncertainty surrounding these matters, the Companies are unable to make an estimate of the potential financial statement impacts; however, they could have a material impact on results of operations, financial condition and/or cash flows.

SCANA Legal Proceedings

The following describes certain legal proceedings involving Dominion Energy, SCANA or DESC relating to events occurring before closing of the SCANA Combination. Dominion Energy intends to vigorously contest the lawsuits, claims and assessments which have been filed or initiated against SCANA and DESC. No reference to, or disclosure of, any proceeding, item or matter described below shall be construed as an admission or indication that such proceeding, item or matter is material. For certain of these matters, and unless otherwise noted therein, Dominion Energy is unable to estimate a reasonable range of possible loss and the related financial statement impacts, but for any such matter there could be a material impact to its results of operations, financial condition and/or cash flows. For the matters for which Dominion Energy is able to reasonably estimate a probable loss, Dominion Energy’s Consolidated Balance Sheets at December 31, 2020 and 2019 include reserves of $208 million and $696 million, respectively, and insurance receivables of $8 million and $111 million, respectively, included within other ~~receivables at~~receivables. Dominion Energy’s Consolidated Statements of Income for the year ended December 31, ~~2019.~~2020 include charges of $90 million ($68 million after-tax) included within impairment of assets and other charges (reflected in the Corporate and Other segment). In addition, Dominion Energy’s Consolidated Statements of Income for the year ended December 31, 2020 include charges of $25 million ($25 million after-tax) included within other income (expense). Dominion Energy’s Consolidated Statements of Income for the year ended December 31, 2019 includes charges of $641 million ($480 million

~~after-tax~~

) after-tax), included within impairment of assets and other charges ~~included within~~(reflected in the Corporate and Other ~~segment.~~segment).


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~~Combined Notes to Consolidated Financial Statements, Continued~~

Ratepayer Class Actions

In May 2018, a consolidated complaint against DESC, SCANA and the State of South Carolina was filed in the State Court of Common Pleas in Hampton County, South Carolina (the DESC Ratepayer Case). In September 2018, the court certified this case as a class action. The plaintiffs allege, among other things, that DESC was negligent and unjustly enriched, breached alleged fiduciary and contractual duties and committed fraud and misrepresentation in failing to properly manage the NND Project, and that DESC committed unfair trade practices and violated state anti-trust laws. The plaintiffs sought a declaratory judgment that DESC may not charge its customers for any past or continuing costs of the NND Project, sought to have SCANA and DESC’s assets frozen and all monies recovered from Toshiba Corporation and other sources be placed in a constructive trust for the benefit of ratepayers and sought specific performance of the alleged implied contract to construct the NND Project.

In December 2018, the State Court of Common Pleas in Hampton County entered an order granting preliminary approval of a class action settlement and a stay of

pre-trial

proceedings in the DESC Ratepayer Case. The settlement agreement, contingent upon the closing of the SCANA Combination, provided that SCANA and DESC would establish an escrow account and proceeds from the escrow account would be distributed to the class members, after payment of certain taxes, ~~attorneys’~~attorneys' fees and other expenses and administrative costs. The escrow account would include (1) up to $2.0 billion, net of a credit of up to $2.0 billion in future electric bill relief, which would inure to the benefit of the escrow account in favor of class members over a period of time established by the South Carolina Commission in its order related to matters before the South Carolina Commission related to the NND Project, (2) a cash payment of $115 million and (3) the transfer of certain DESC-owned real estate or sales proceeds from the sale of such properties, which counsel for the DESC Ratepayer Class estimate to have an aggregate value between $60 million and $85 million. At the closing of the SCANA Combination, SCANA and DESC funded the cash payment portion of the escrow account. The court held a fairness hearing on the settlement in May 2019. In June 2019, the court entered an order granting final approval of the settlement, which order became effective July 2019. In July 2019, DESC transferred $117 million representing the cash payment, plus accrued interest, to the plaintiffs. ~~In addition,~~Through August 2020, property, plant and equipment with a net recorded value of ~~$54~~$27 million ~~is in the process of being~~had been transferred to the plaintiffs in coordination with the court-appointed real estate trustee to satisfy the settlement agreement.

In September 2020, the court entered an order approving a final resolution of the transfer of real estate or sales proceeds with a cash contribution of $38.5 million by DESC and the conveyance of property, plant and equipment with a net recorded value of $3 million. In October 2020, DESC completed the conveyance of property, plant and equipment and funded this cash contribution.

In September 2017, a purported class action was filed by Santee Cooper ratepayers against Santee Cooper, DESC, Palmetto Electric Cooperative, Inc. and Central Electric Power Cooperative, Inc. in the State Court of Common Pleas in Hampton County, South Carolina (the Santee Cooper Ratepayer Case). The allegations are substantially similar to those in the DESC Ratepayer Case. The plaintiffs seek a declaratory judgment that the defendants may not charge the purported class for reimbursement for past or future costs of the NND Project. In March 2018, the plaintiffs filed an amended complaint including as additional named defendants, including certain then current and former directors of Santee Cooper and SCANA. In June 2018, Santee Cooper filed a Notice of Petition for Original

Jurisdiction with the Supreme Court of

South Carolina. In December 2018, Santee Cooper filed its answer to the ~~plaintiffs’~~plaintiffs' fourth amended complaint and filed cross claims against DESC, which was denied. In October 2019, Santee Cooper voluntarily consented to stay its cross claims against DESC pending the outcome of the trial of the underlying case. In November 2019, DESC removed the case to the U.S. District Court for the District of South Carolina. In December 2019, the plaintiffs and Santee Cooper filed a motion to remand the case to state court. In January 2020, the case was remanded to state court. In ~~February~~March 2020, the parties executed a ~~preliminary~~ settlement ~~term sheet~~agreement relating to this matter as well as the Luquire Case and the Glibowski Case described below. The ~~proposed~~ settlement ~~is expected to be~~agreement provides that Dominion Energy and Santee Cooper will establish a fund for the benefit of class members in the amount of $520 million, of which Dominion Energy’s portion is $320 ~~million. The parties are currently negotiating~~million of shares of Dominion Energy common stock. Also in March 2020, the court granted preliminary approval for the settlement agreement. In July 2020, the court issued a final approval of the settlement agreement. In September 2020, Dominion Energy issued $322 million of shares of Dominion Energy common stock to satisfy its obligation under the settlement agreement, ~~based on the preliminary settlement term sheet that will be presented to the court for preliminary approval. This case is pending.~~

including interest charges.

In July 2019, a similar purported class action was filed by certain Santee Cooper ratepayers against DESC, SCANA, Dominion Energy and former directors and officers of SCANA in the State Court of Common Pleas in Orangeburg, South Carolina (the Luquire Case). In August 2019, DESC, SCANA and Dominion Energy were voluntarily dismissed from the case. The claims are similar to the Santee Cooper Ratepayer Case. In ~~February~~March 2020, the parties executed a ~~preliminary~~ settlement ~~term sheet~~agreement as described above relating to this matter as well as the Santee Cooper Ratepayer Case and the Glibowski Case. This case ~~is pending.~~

was dismissed as part of the Santee Cooper Ratepayer Case settlement described above.

RICO Class Action

In January 2018, a purported class action was filed, and subsequently amended, against SCANA, DESC and certain former executive officers in the U.S. District Court for the District of South Carolina (the Glibowski Case). The plaintiff alleges, among other things, that SCANA, DESC and the individual defendants participated in an unlawful racketeering enterprise in violation of RICO and conspired to violate RICO by fraudulently inflating utility bills to generate unlawful proceeds. The DESC Ratepayer Class Action

settlement described previously contemplates dismissal of claims by DESC ratepayers in this case against DESC, SCANA and their officers. In August 2019, the individual defendants filed motions to dismiss. In ~~February~~March 2020, the parties executed a ~~preliminary~~ settlement ~~term sheet~~agreement as described above relating to this matter as well as the Santee Cooper Ratepayer Case and the Luquire Case. This case ~~is pending.~~

was dismissed as part of the Santee Cooper Ratepayer Case settlement described above.

SCANA Shareholder Litigation

In September 2017, a purported class action was filed against SCANA and certain former executive officers and directors in the U.S. District Court for the District of South Carolina. Subsequent additional purported class actions were separately filed against all or nearly all of these ~~defendants.~~defendants (collectively the SCANA Securities Class Action). In January 2018, the U.S. District Court for the District of South Carolina consolidated these suits, and the plaintiffs filed a consolidated amended complaint in March 2018. The plaintiffs allege, among other things, that the defendants violated §10(b) of the Securities Exchange Act of 1934, as amended, and Rule

10b-5

promulgated thereunder, and that the individually named defendants are liable under §20(a) of the same act. In June 2018, the defendants filed motions to dismiss. In March 2019, the U.S. District Court for the District of South Carolina granted in part and denied in part


~~180~~

the defendants’ motions to dismiss. In December 2019, the parties executed a settlement agreement pursuant to which SCANA will pay $192.5 million, up to $32.5 million of which can be satisfied through the issuance of shares of Dominion Energy common stock, subject to approval by the U.S. District Court for the District of South Carolina. In February 2020, the U.S. District Court for the District of South Carolina granted preliminary approval of the settlement agreement, pending a fairness hearing.

In March 2020, SCANA funded an escrow account with $160 million in cash and the balance of the settlement will be paid upon final approval of the settlement by the court. In July 2020, the court granted final approval of the settlement agreement. In August 2020, SCANA paid the balance of $32.5 million in cash to satisfy the settlement.

In September 2017, a shareholder derivative action was filed against certain former executive officers and directors of SCANA in the State Court of Common Pleas in Richland County, South Carolina. In September 2018, this action was consolidated with another action in the Business Court Pilot Program in Richland County. The plaintiffs allege, among other things, that the defendants breached their fiduciary duties to shareholders by their gross mismanagement of the NND Project, and that the defendants were unjustly enriched by bonuses they were paid in connection with the project. ~~The~~In January 2019, the defendants ~~have~~ filed a motion to dismiss the consolidated action. In February 2019, one action was voluntarily dismissed. In March 2020, the court denied the defendants’ motion to dismiss. In April 2020, the defendants filed a notice of appeal with the South Carolina Court of Appeals and a petition with the Supreme Court of South Carolina seeking appellate review of the denial of the motion to dismiss. In June 2020, the plaintiffs filed a motion to dismiss the appeal with the South Carolina Court of Appeals, which was granted in July 2020. In August 2020, the Supreme Court of South Carolina denied the defendants’ petition seeking appellate review. Also in August 2020, the defendants filed a petition for rehearing with the South Carolina Court of Appeals relating to the July 2020 ruling by the court, which was denied in October 2020. In November 2020, SCANA filed a petition of certiorari with the Supreme Court of South Carolina seeking appellate review of the denial of SCANA’s motion to dismiss. This case is pending.

In January 2018, a purported class action was filed against SCANA, Dominion Energy and certain former executive officers and directors of SCANA in the State Court of Common Pleas in Lexington County, South Carolina (the City of Warren Lawsuit). The plaintiff alleges, among other things, that defendants violated their fiduciary duties to shareholders by executing a merger agreement that would unfairly deprive plaintiffs of the true value of their SCANA stock, and that Dominion Energy aided and abetted these actions. Among other remedies, the plaintiff seeks to enjoin and/or rescind the merger. In February 2018, Dominion Energy removed the case to the U.S. District Court for the District of South Carolina, and filed a Motion to Dismiss in March 2018. In June 2018, the case was remanded back to the State Court of Common Pleas in Lexington County. Dominion Energy appealed the decision to remand to the U.S. Court of Appeals for the Fourth Circuit, where the appeal was consolidated with a similar appeal in the Metzler Lawsuit discussed below. In June 2019, the U.S. Court of Appeals for the Fourth Circuit reversed the order remanding the case to state court. ~~The case is pending in the U.S. District Court for the District of South Carolina.~~

In February 2018, a purported class action was filed against Dominion Energy and certain former directors of SCANA and DESC in the State Court of Common Pleas in Richland County, South Carolina (the Metzler Lawsuit). The allegations made and the relief sought by the plaintiffs are substantially similar to that described for the City of Warren Lawsuit. In February 2018, Dominion Energy removed the case to the U.S. District Court for the District of South Carolina, and filed a Motion to Dismiss in March 2018. In August 2018, the case was remanded back to the State Court of Common Pleas in Richland County. Dominion Energy appealed the decision to remand to the U.S. Court of Appeals for the Fourth Circuit, where the appeal was consolidated with the City of Warren Lawsuit. In June 2019, the U.S. Court of Appeals for the Fourth Circuit reversed the order remanding the case to state court. ~~The case is pending in the U.S. District Court for the District of South Carolina.~~

In September 2019, the U.S. District Court for the District of South Carolina granted the plaintiffs’ motion to consolidate the City of Warren Lawsuit and the Metzler Lawsuit. In October 2019, the plaintiffs filed an amended complaint against certain former directors and executive officers of SCANA and DESC,

which stated substantially similar allegations to those in the City of Warren Lawsuit and the Metzler ~~Lawsuit.~~Lawsuit as well as an inseparable fraud claim. In November 2019, the defendants filed a motion to dismiss. In April 2020, the U.S. District Court for the District of South Carolina denied the motion to dismiss. In May 2020, SCANA filed a motion to

intervene, which was denied in August 2020. In September 2020, SCANA filed a notice of appeal with the U.S. Court of Appeals for the Fourth Circuit. This case is pending.

In May 2019, a case was filed against certain former executive officers and directors of SCANA in the State Court of Common Pleas in Richland County, South Carolina. The ~~plaintiffs allege,~~plaintiff alleges, among other things, that the defendants breached their fiduciary duties to shareholders by their gross mismanagement of the NND Project, were unjustly enriched by the bonuses they were paid in connection with the project and breached their fiduciary duties to

secure and obtain the best price for the sale of SCANA. Also in May 2019, the case was removed to the U.S. District Court of South Carolina by the

non-South

Carolina defendants. In June 2019, the plaintiffs filed a motion to remand the case to state court. In January 2020, the case was remanded to state court. In February 2020, the defendants filed a motion to dismiss. This case is pending.

Employment Class Actions and Indemnification

In August 2017, a case was filed in the U.S. District Court for the District of South Carolina on behalf of persons who were formerly employed at the NND Project. In July 2018, the court certified this case as a class action. In February 2019, certain of these plaintiffs filed an additional case, which case has been dismissed and the plaintiffs have joined the case filed August 2017. The plaintiffs allege, among other things, that SCANA, DESC, Fluor Corporation and Fluor Enterprises, Inc. violated the Worker Adjustment and Retraining Notification Act in connection with the decision to stop construction at the NND Project. The plaintiffs allege that the defendants failed to provide adequate advance written notice of their terminations of employment and are seeking damages, which could be as much as $100 million for 100% of the NND Project.

In January 2021, the U.S. District Court for the District of South Carolina granted summary judgment in favor of SCANA, DESC, Fluor Corporation and Fluor Enterprises, Inc. In February 2021, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Fourth Circuit. This case is pending.

In September 2018, a case was filed in the State Court of Common Pleas in Fairfield County, South Carolina by Fluor Enterprises, Inc. and Fluor Daniel Maintenance Services, Inc. against DESC and Santee Cooper. The plaintiffs make claims for indemnification, breach of contract and promissory estoppel arising from, among other things, the ~~defendants’~~defendants' alleged failure and refusal to defend and indemnify the Fluor defendants in the aforementioned case. ~~These cases are~~This case is pending.

FILOT Litigation and Related Matters

In November 2017, Fairfield County filed a complaint and a motion for temporary injunction against DESC in the State Court of Common Pleas in Fairfield County, South Carolina, making allegations of breach of contract, fraud, negligent misrepresentation, breach of fiduciary duty, breach of implied duty of good faith and fair dealing and unfair trade practices related to DESC’s termination of the FILOT agreement between DESC and Fairfield County related to the NND Project. The plaintiff sought a temporary and permanent injunction to prevent DESC from terminating the FILOT agreement. The plaintiff withdrew the motion for temporary injunction in December 2017. This case is pending.

Governmental Proceedings and Investigations

In June 2018, DESC received a notice of proposed assessment of approximately $410 million, excluding interest, from the SCDOR following its audit of DESC’s sales and use tax returns for the periods September 1, 2008 through December 31, 2017. The proposed assessment, which includes 100% of the NND Project, is based on the SCDOR’s position that DESC’s sales and


						~~181~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

use tax exemption for the NND Project does not apply because the facility will not become operational. ~~DESC has protested~~In December 2020, the ~~proposed assessment, which remains pending.~~

parties reached an agreement in principle in the amount of $165 million to resolve this matter.

In September and October 2017, SCANA was served with subpoenas issued by the U.S. Attorney’s Office for the District of South Carolina and the Staff of the SEC’s Division of Enforcement seeking documents related to the NND Project. In February 2020, the SEC filed a complaint against SCANA, two of its former executive officers and DESC in the U.S. District Court for the District of South Carolina alleging that the defendants violated federal securities laws by making false and misleading statements about the NND Project. In April 2020, SCANA and DESC reached an agreement in principle with the Staff of the SEC’s Division of Enforcement to settle, without admitting or denying the allegations in the complaint. In December 2020, the U.S. District Court for the District of South Carolina issued an order approving the settlement which required SCANA to pay a civil monetary penalty totaling $25 million, and SCANA and DESC to pay disgorgement and prejudgment interest totaling $112.5 million, which disgorgement and prejudgment interest amount were deemed satisfied by the settlements in the SCANA Securities Class Action and the DESC Ratepayer Case. SCANA paid the civil penalty in December 2020. The SEC civil action against two former executive officers of SCANA remains pending and is currently subject to a stay granted by the court in June 2020 at the request of the U.S. Attorney’s Office for the District of South Carolina.

In addition, the South Carolina Law Enforcement Division is conducting a criminal investigation into the handling of the NND Project by SCANA and DESC. ~~These matters are pending. SCANA and DESC are~~Dominion Energy is cooperating fully with the investigations by the U.S. Attorney’s Office and the South

Carolina Law Enforcement Division, including responding to additional subpoenas and document ~~requests; however,~~requests. Dominion Energy ~~cannot currently predict whether~~has also entered into a cooperation agreement with the U.S. Attorney’s Office and the South Carolina Attorney General’s Office. The cooperation agreement provides that in consideration of its full cooperation with these investigations to the satisfaction of both agencies, neither such agency will criminally prosecute or bring any civil action against Dominion Energy or any of its current, previous, or future direct or indirect subsidiaries related to ~~what extent~~the NND Project. A former executive officer of SCANA ~~or DESC may incur~~entered a ~~material liability.~~

plea agreement with the U.S. Attorney’s Office and the South Carolina Attorney General’s Office in June 2020 and entered a guilty plea with the U.S. District Court for the District of South Carolina in July 2020. Another former executive officer of SCANA entered a plea agreement with the U.S. Attorney's Office and the South Carolina Attorney General's Office in November 2020. These matters are pending.

Other Litigation

In December 2018, arbitration proceedings commenced between DESC and Cameco Corporation related to a supply agreement signed in May 2008. This agreement provides the terms and conditions under which DESC agreed to purchase uranium hexafluoride from Cameco Corporation over a period from 2010 to 2020. Cameco Corporation alleges that DESC violated this agreement by failing to purchase the stated quantities of uranium hexafluoride for the 2017 and 2018 delivery years. DESC denies that it is in breach of the agreement and believes that it has reduced its purchase quantity within the terms of the agreement. ~~This matter is pending.~~

In January 2021, the parties entered into a mutual release of claims and dismissed the arbitration.

Abandoned NND Project

DESC, for itself and as agent for Santee Cooper, entered into an engineering, construction and procurement contract with Westinghouse and WECTEC in 2008 for the design and construction of the NND Project, of which DESC’s ownership share is 55%. Various difficulties were encountered in connection with the project. The ability of Westinghouse and WECTEC to adhere to established budgets and construction schedules was affected by many variables, including unanticipated difficulties encountered in connection with project engineering and the construction of project components, constrained financial resources of the contractors, regulatory, legal, training and construction processes associated with securing approvals, permits and licenses and necessary amendments to them within projected time frames, the availability of labor and materials at estimated costs and the efficiency of project labor. There were also contractor and supplier performance issues, difficulties in timely meeting critical regulatory requirements, contract disputes, and changes in key contractors or subcontractors. These matters preceded the filing for bankruptcy protection by Westinghouse and WECTEC in March 2017, and were the subject of comprehensive analyses performed by SCANA and Santee Cooper.

Based on the results of SCANA’s analysis, and in light of Santee ~~Cooper’s~~Cooper's decision to suspend construction on the NND Project, in July 2017, SCANA determined to stop the construction of the units and to pursue recovery of costs incurred in connection with the construction under the abandonment provisions of the Base Load

Review Act or through other means. This decision by SCANA became the focus of numerous legislative, regulatory and legal proceedings. Some of these proceedings remain unresolved and are described above.

In September 2017, DESC, for itself and as agent for Santee Cooper, filed with the U.S. Bankruptcy Court for the Southern

District of New York Proofs of Claim for unliquidated damages against each of Westinghouse and WECTEC. These Proofs of Claim were based upon the anticipatory repudiation and material breach by Westinghouse and WECTEC of the contract, and assert against Westinghouse and WECTEC any and all claims that are based thereon or that may be related thereto.

Westinghouse’s reorganization plan was confirmed by the U.S. Bankruptcy Court for the Southern District of New York and became effective in August 2018. In connection with the effectiveness of the reorganization plan, the contract associated with the NND Project was deemed rejected. DESC is contesting approximately $285 million of filed liens in Fairfield County, South Carolina. Most of these asserted liens are claims that relate to work performed by Westinghouse subcontractors before the Westinghouse bankruptcy, although some of them are claims arising from work performed after the Westinghouse bankruptcy.

Westinghouse has indicated that some unsecured creditors have sought or may seek amounts beyond what Westinghouse allocated when it submitted its reorganization plan to the U.S. Bankruptcy Court for the Southern District of New York. If any unsecured creditor is successful in its attempt to include its claim as part of the class of general unsecured creditors beyond the amounts in the bankruptcy reorganization plan allocated by Westinghouse, it is possible that the reorganization plan will not provide for payment in full or nearly in full to its

pre-petition

trade creditors. The shortfall could be significant.

DESC and Santee Cooper were responsible for amounts owed to Westinghouse for valid work performed by Westinghouse subcontractors on the NND Project after the Westinghouse bankruptcy filing until termination of the interim assessment agreement. In December 2019, DESC and Santee Cooper entered into a confidential settlement agreement with W Wind Down Co LLC resolving claims relating to the interim assessment agreement.

Further, some Westinghouse subcontractors who have made claims against Westinghouse in the bankruptcy proceeding also filed against DESC and Santee Cooper in South Carolina state court for damages. Many of these claimants have also asserted construction liens against the NND Project site. DESC also intends to oppose these claims and liens. With respect to claims of Westinghouse subcontractors, DESC believes there were sufficient amounts previously funded during the interim assessment agreement period to pay such validly asserted claims. With respect to the Westinghouse subcontractor claims which relate to other periods, DESC understands that such claims will be paid pursuant to Westinghouse’s confirmed bankruptcy reorganization plan. DESC further understands that the amounts paid under the plan may satisfy such claims in full. Therefore, DESC believes that the Westinghouse subcontractors may be paid substantially (and potentially in full) by Westinghouse. While Dominion Energy cannot be assured that it will not have any exposure on account of unpaid Westinghouse subcontractor claims, which DESC is presently disputing, Dominion Energy believes it is unlikely that it will be required to make payments on account of such claims.


~~182~~

~~Appalachian Gateway~~

~~Gas Producers Litigation~~

In connection with the Appalachian Gateway project, Dominion Energy Field Services, Inc. entered into contracts for firm purchase rights with a group of small gas producers. In June 2016, the gas producers filed a complaint in the Circuit Court of Marshall County, West Virginia against Dominion Energy, DETI and Dominion Energy Field Services, Inc., among other defendants, claiming that the contracts are unenforceable and seeking compensatory and punitive damages. During the third quarter of 2016, Dominion Energy, DETI and Dominion Energy Field Services, Inc. were served with the complaint. Also in the third quarter of 2016, Dominion Energy and DETI, with the consent of the other defendants, removed the case to the U.S. District Court for the Northern District of West Virginia. In October 2016, the defendants filed a motion to dismiss and the plaintiffs filed a motion to remand. In February 2017, the U.S. District Court entered an order remanding the matter to the Circuit Court of Marshall County, West Virginia. In March 2017, Dominion Energy was voluntarily dismissed from the case; however, DETI and Dominion Energy Field Services, Inc. remained parties to the matter. In April 2017, the case was transferred to the Business Court Division of West Virginia. In January 2018, the court granted the motion to dismiss filed by the defendants on two counts. In 2019, all claims were settled between Dominion Energy Field Services, Inc. and the gas producers, and all claims against DETI and Dominion Energy Field Services, Inc. were dismissed with no material impact to Dominion Energy or Dominion Energy Gas’ results of operations, financial condition or cash flows.

~~FERC~~

FERC staff in the Office of Enforcement, Division of Investigations, conducted a non-public investigation of Virginia Power’s offers of combustion turbines generators into the PJM day-ahead markets from April 2010 through September 2014. FERC staff notified Virginia Power of its preliminary findings relating to Virginia Power’s alleged violation of FERC’s rules in connection with these activities. Virginia Power provided its response to FERC staff’s preliminary findings letter explaining why Virginia Power’s conduct was lawful and refuting any allegation of wrongdoing. In May 2019, FERC issued an order approving an agreement between Virginia Power and FERC staff that settled any and all potential claims relating to the types of activities that were the subject of the investigation, under which Virginia Power neither admits nor denies the alleged violations and paid $7 million in disgorgement to PJM and a $7 million penalty to the U.S. Department of the Treasury.

Nuclear Matters

In March 2011, a magnitude 9.0 earthquake and subsequent tsunami caused significant damage at the Fukushima Daiichi nuclear power station in northeast Japan. These events resulted in significant nuclear safety reviews by the NRC and industry groups such as the Institute of Nuclear Power Operations. Like other U.S. nuclear operators, Dominion Energy has gathered supporting data and participated in industry initiatives focused on the ability to respond to and mitigate the consequences of, design-basis and beyond-design-basis events at its stations.

In July 2011, an NRC task force provided initial recommendations based on its review of the Fukushima Daiichi accident and in October 2011 the NRC staff prioritized these recommendations into Tiers 1, 2 and 3. Tier 1 recommendations consisted of actions which the NRC staff determined should be started without unnecessary delay. Tier 2 and 3 items consisted of items which could not be initiated in the near term because of resource restraints, the need for further technical assessment, or were dependent on activities related to the higher priority Tier 1 issues. In December 2011, the NRC Commissioners approved the agency staff’s prioritization and recommendations, and that same month an appropriations act directed the NRC to require reevaluation of external hazards (not limited to seismic and flooding hazards) as soon as possible.

Based on the prioritized recommendations, in March 2012, the NRC issued orders and information requests requiring specific reviews and actions to all operating reactor licensees, construction permit holders and combined license holders based on the lessons learned from the Fukushima Daiichi event. The orders applicable to Dominion Energy requiring implementation of safety enhancements related to mitigation strategies for responding to extreme natural events resulting in the loss of power at plants, and enhancing spent fuel pool instrumentation have been implemented. The information requests issued by the NRC requested each reactor licensee to reevaluate the seismic and external flooding hazards at their facility using

present-day

methods and information, conduct walkdowns of their facility to ensure protection against these hazards in their current design basis, and to reevaluate their emergency communications systems and staffing levels. The walkdowns of each unit have been completed, audited by the NRC and found to be adequate. Reevaluation of the emergency communications systems and staffing levels was completed as part of the effort to comply with the orders. Reevaluation of the seismic hazards is complete and final with NRC acceptance received for all Dominion Energy facilities. Reevaluation of the external flooding hazards is complete for all Dominion Energy facilities. ~~However,~~The NRC ~~acceptance of~~approved the external flooding hazards ~~reevaluations~~ for Surry in May 2020 and Millstone ~~and Surry have not yet been received. NRC is expected to accept these external flooding hazards analyses~~ in August 2020. ~~Dominion Energy and Virginia Power~~The Companies do not currently expect that compliance with the ~~NRC’s~~NRC's information requests will materially impact their financial position, results of operations or cash flows during the implementation period. The NRC staff has resolved the Tier 2 and Tier 3 recommendations and no additional future actions on the part of Dominion Energy are anticipated with respect to these recommendations. Therefore, ~~Dominion Energy and Virginia Power~~the Companies do not expect material financial impacts related to compliance with Tier 2 and Tier 3 recommendations.

Nuclear Operations

Nuclear ~~Decommissioning—~~Decommissioning – Minimum Financial Assurance

The NRC requires nuclear power plant owners to annually update minimum financial assurance amounts for the future decommissioning of their nuclear facilities. Decommissioning involves the decontamination and removal of radioactive contaminants from a nuclear power station once operations have ceased, in accordance with standards established by the NRC.


						~~183~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

The ~~2019~~2020 calculation for the NRC minimum financial assurance amount, aggregated for Dominion Energy and Virginia Power’s nuclear units, excluding joint owners’ assurance amounts and Millstone Unit 1 and Kewaunee, as those units are in a decommissioning state, was $2.8 billion and $1.8 billion, respectively, and has been satisfied by a combination of the funds being collected and deposited in the nuclear decommissioning trusts and the real annual rate of return growth of the funds allowed by the NRC. The ~~2019~~2020 NRC minimum financial assurance amounts above were calculated using preliminary December 31, ~~2019~~2020 U.S. Bureau of Labor Statistics indices. Dominion Energy believes that the amounts currently available in its decommissioning trusts and their expected earnings will be sufficient to cover expected decommissioning costs for the Millstone and Kewaunee units. Virginia Power also believes that the decommissioning funds and their expected earnings for the Surry and North Anna units will be sufficient to cover decommissioning costs, particularly when combined with future ratepayer collections and contributions to these decommissioning trusts, if such future collections and

contributions are required. This reflects a positive long-term outlook for trust fund investment returns as the decommissioning of the units will not be complete for decades. ~~Dominion Energy and Virginia Power~~The Companies will continue to monitor these trusts to ensure they meet the NRC minimum financial assurance requirement, which may include, if needed, the use of parent company guarantees, surety bonding or other financial instruments recognized by the NRC. See Note 9 for additional information on nuclear decommissioning trust investments.

Nuclear Insurance

The Price-Anderson Amendments Act of 1988 provides the public up to ~~$14.1~~$13.8 billion of liability protection on a per site, per nuclear incident basis, via obligations required of owners of nuclear power plants, and allows for an inflationary provision adjustment every five years. During the second quarter of ~~2019,~~2020, the total liability protection per nuclear incident available to all participants in the Secondary Financial Protection Program decreased from ~~$14.1~~$13.9 billion to ~~$13.9~~$13.8 billion. This decrease does not impact Dominion Energy’s responsibility per active unit under the Price-Anderson Amendments Act of 1988. ~~Dominion Energy and Virginia Power~~The Companies have purchased $450 million of coverage from commercial insurance pools for Millstone, Summer, Surry and North Anna with the remainder provided through the mandatory industry retrospective rating plan. In the event of a nuclear incident at any licensed nuclear reactor in the U.S., ~~Dominion Energy and Virginia Power~~the Companies could be assessed up to $138 million for each of their licensed reactors not to exceed $21 million per year per reactor. There is no limit to the number of incidents for which this retrospective premium can be assessed. The NRC granted an exemption in March 2015 to remove Kewaunee from the Secondary Financial Protection program. This same exemption permitted Dominion Energy to reduce Kewaunee’s required level of liability coverage to $100 million. This reduction was implemented in January 2018, following the removal and storage of the spent nuclear fuel from the spent fuel pool. The current levels of nuclear property insurance coverage for ~~Dominion Energy and Virginia Power’s~~the Companies’ nuclear units are as follows:

	Coverage
(billions)
Dominion Energy
Millstone	$	1.70
Kewaunee		0.05
Summer		2.75
Virginia Power⁽¹⁾
Surry	$	1.70
North Anna		1.70

(1)
	~~Coverage~~
~~(billions)~~
~~Dominion Energy~~
~~Millstone~~	$	~~1.70~~
~~Kewaunee~~		~~0.05~~
~~Summer~~		~~2.75~~
~~Virginia Power~~ ~~(1)~~
~~Surry~~	$	~~1.70~~
~~North Anna~~		~~1.70~~

~~(1)~~

Surry and North Anna share a blanket property limit of $200 million.

~~Dominion Energy and Virginia Power’s~~

The Companies’ nuclear property insurance coverage for Millstone, Summer, Surry and North Anna exceeds the NRC minimum requirement for nuclear power plant licensees of $1.06 billion per reactor site. In March 2015, the NRC granted an exemption which allowed Kewaunee to reduce its property insurance limit to $50 million. This reduction was implemented in January 2018, following the removal and storage of the spent nuclear fuel from the spent fuel pool. This includes coverage for premature decommissioning and functional total loss. The NRC requires that the proceeds from this insurance be used first, to return the reactor to and maintain it in a safe and stable condition and second, to decontaminate the reactor and station site in accordance with a plan approved by the NRC. Nuclear property insurance is provided by NEIL, a mutual insurance company, and is subject to retrospective premium assessments in any policy year in which losses exceed the funds available to the insurance company. Dominion Energy and Virginia ~~Power’s~~Power's maximum retrospective premium assessment for the current policy period is ~~$81~~$99 million and ~~$50~~$48 million, respectively. Based on the severity of the incident, the Board of Directors of the nuclear insurer has the discretion to lower or eliminate the maximum retrospective premium assessment. ~~Dominion Energy and Virginia Power~~The Companies have the financial responsibility for any losses that exceed the limits or for which insurance proceeds are not available because they must first be used for stabilization and decontamination.

Additionally, DESC maintains an excess property insurance policy with the European Mutual Association for Nuclear Insurance. The policy provides coverage to Summer for property damage and outage costs up to $415 million resulting from an event of a non-nuclear origin. The European Mutual Association for Nuclear Insurance policy permits retrospective assessments under certain conditions to cover insurer's losses. Based on the current annual premium, DESC's share of the retrospective premium assessment would not exceed $2 million.

Millstone, ~~and~~ Virginia Power and Summer also purchase accidental outage insurance from NEIL to mitigate certain expenses, including replacement power costs, associated with the prolonged outage of a nuclear unit due to direct physical damage. Under this program, ~~Dominion Energy and Virginia Power~~the Companies are subject to a retrospective premium assessment for any policy year in which losses exceed funds available to NEIL. Dominion Energy and Virginia ~~Power’s~~Power's maximum retrospective premium assessment for the current policy period is ~~$31~~$33 million and ~~$10~~$9 million, respectively.

ODEC, a part owner of North Anna, Santee Cooper, a part owner of Summer and Massachusetts Municipal and Green Mountain, part owners of Millstone’s Unit 3, are responsible to ~~Dominion Energy and Virginia Power~~the Companies for their share of the nuclear decommissioning obligation and insurance premiums on applicable units, including any retrospective premium assessments and any losses not covered by insurance.

Under Price-Anderson, DESC (for itself and on behalf of Santee-Cooper) maintains agreements of indemnity with the NRC that, together with private insurance, cover third-party liability arising from any nuclear incident occurring at Summer. Price-Anderson provides funds up to $14.0 billion for public liability claims that could arise from a single nuclear incident. Each nuclear plant is insured against this liability to a maximum of $450 million by American Nuclear Insurers with the remaining coverage provided by a mandatory program of


~~184~~

deferred premiums that could be assessed, after a nuclear incident, against all owners of commercial nuclear reactors. Each reactor licensee is liable for up to $138 million per reactor owned for each nuclear incident occurring at any reactor in the U.S., provided that not more than $21 million of the liability per reactor would be assessed per year. DESC’s maximum assessment, based on its

~~two-thirds~~

ownership of Summer, would be $92 million per incident, but not more than $14 million per year. Both the maximum assessment per reactor and the maximum yearly assessment are adjusted for inflation at least every five years.

DESC currently maintains insurance policies (for itself and on behalf of Santee Cooper) with NEIL. The policies provide coverage to Summer for property damage and outage costs up to $2.75 billion resulting from an event of nuclear origin and up to $2.33 billion resulting from an event of a

~~non-nuclear~~

origin. The NEIL policies in aggregate, are subject to a maximum loss of $2.75 billion for any single loss occurrence. The NEIL policies permit retrospective assessments under certain conditions to cover insurer’s losses. Based on the current annual premium, DESC’s portion of the retrospective premium assessment would not exceed $24 million. DESC currently maintains an excess property insurance policy (for itself and on behalf of Santee Cooper) with the European Mutual Association for Nuclear Insurance. The policy provides coverage to Summer for property damage and outage costs up to $415 million resulting from an event of a

~~non-nuclear~~

origin. The European Mutual Association for Nuclear Insurance policy permits retrospective assessments under certain conditions to cover insurer’s losses. Based on the current annual premium, DESC’s portion of the retrospective premium assessment would not exceed $2 million.

To the extent that insurable claims for property damage, decontamination, repair and replacement and other costs and expenses arising from an incident at Summer exceed the policy limits of insurance, or to the extent such insurance becomes unavailable in the future, and to the extent that DESC’s rates would not recover the cost of any purchased replacement power, DESC will retain the risk of loss as a self-insurer. DESC has no reason to anticipate a serious nuclear or other incident. However, if such an incident were to occur, it likely would have a material impact on DESC’s results of operations, cash flows and financial position.

Spent Nuclear Fuel

~~Dominion Energy and Virginia Power~~

The Companies entered into contracts with the DOE for the disposal of spent nuclear fuel under provisions of the Nuclear Waste Policy Act of 1982. The DOE failed to begin accepting the spent fuel on January 31, 1998, the date provided by the Nuclear Waste Policy Act and by ~~Dominion Energy and Virginia Power’s~~the Companies’ contracts with the DOE. ~~Dominion Energy and Virginia Power~~The Companies have previously received damages award payments and settlement payments related to these contracts.

By mutual agreement of the parties, the settlement agreements are extendable to provide for resolution of damages incurred after 2013. The settlement agreements for the Surry, North Anna and Millstone nuclear power stations have been extended to provide for periodic payments for damages incurred through December 31, ~~2019,~~2022, and additional extensions are contemplated by the settlement agreements. A similar agreement for Summer extends until the DOE has accepted the same amount of spent fuel from the

facility as if it has fully performed its contractual obligations. In June 2018, a lawsuit for Kewaunee was filed in the U.S. Court of Federal Claims for recovery of spent nuclear fuel storage costs incurred ~~for the period January 1, 2014 through December 31, 2017.~~after 2013. In March 2019, Dominion Energy amended its filing for recovery of spent nuclear fuel storage to include costs incurred for the year ended December 31, 2018. This matter is pending.

In 2020, Virginia Power received payments of $24 million for resolution of claims incurred at North Anna and Surry for the period of January 1, 2018 through December 31, 2018. In addition, Dominion Energy received payments of $11 million for resolution of claims incurred at Millstone for the period of July 1, 2018 through June 30, 2019 and $4 million for resolution of its share of claims incurred at Summer for the period of January 1, 2019 through December 31, 2019.

In 2019, Virginia Power received payments of $15 million for resolution of claims incurred at North Anna and Surry for the period of January 1, 2017 through December 31, ~~2017 and~~2017. In addition, Dominion Energy received $11 million for resolution of claims incurred at Millstone for the period of July 1, 2017 through June 30, ~~2018. In 2019, Dominion Energy received payment of~~2018 and $3 million for resolution of its share of claims incurred at Summer for the period of January 1, 2018 through December 31, 2018.

In 2018, Virginia Power ~~and Dominion Energy~~ received payments of $16 million for resolution of claims incurred at North Anna and Surry for the period of January 1, 2016 through December 31, ~~2016, and~~2016. In addition, Dominion Energy received payment of $13 million for resolution of claims incurred at Millstone for the period of July 1, 2016 through June 30, 2017.

In 2017, Virginia Power and Dominion Energy received payments of $22 million for resolution of claims incurred at North Anna and Surry for the period of January 1, 2015 through December 31, 2015, and $14 million for resolution of claims incurred at Millstone for the period of July 1, 2015 through June 30, 2016.

~~Dominion Energy and Virginia Power~~

The Companies continue to recognize receivables for certain spent nuclear fuel-related costs that they believe are probable of recovery from the DOE. Dominion Energy’s receivables for spent nuclear fuel-related costs totaled ~~$52~~$46 million and ~~$49~~$52 million at December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Virginia Power’s receivables for spent nuclear fuel-related costs totaled $35 million ~~and $30 million~~ at both December 31, ~~2019~~2020 and ~~2018, respectively.~~

~~Dominion Energy and Virginia Power~~2019.

The Companies will continue to manage their spent fuel until it is accepted by the DOE.

Long-Term Purchase Agreements

At December 31, ~~2019,~~2020, Dominion Energy had the following long-term commitments that are noncancelable or are cancelable only under certain conditions, and that a third party has used to secure financing for the facility that will provide the contracted goods or services:

2020

2021

2022

2023

2024

Thereafter

Total

(millions)

Purchased electric capacity
(1)

$45

$44

$44

$44

$44

$494

$715

	2021		2022		2023		2024		2025		Thereafter		Total
(millions)
Purchased electric capacity⁽¹⁾	$	67	$	66	$	66	$	66	$	65	$	749	$	1,079

(1)

Commitments represent estimated amounts payable for energy under power purchase contracts with qualifying facilities which expire at various dates through 2046. Energy payments are generally based on fixed dollar amounts per month and totaled $52 million and $29 million for the ~~year~~years ended December 31, ~~2019.~~2020 and 2019, respectively.

Guarantees, Surety Bonds and Letters of Credit

~~In October 2017,~~

Upon the closing of the GT&S Transaction, Dominion Energy ~~entered into~~retained its 4 guarantees related to Cove Point, an equity method investment, in support of terminal services, transportation and construction. NaN of the Cove Point guarantees have a cumulative maximum exposure of $1.9 billion while the other 2 guarantees have 0 maximum limit. No amounts related to these guarantees have been recorded. Dominion Energy’s guarantee agreement to support a portion of Atlantic Coast Pipeline’s obligation under a ~~$3.4 billion~~ revolving credit facility ~~with a~~


						~~185~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~stated maturity date of October 2021. Dominion Energy’s maximum potential loss exposure under the terms of the guarantee~~ is ~~limited to 48% of the outstanding borrowings under the revolving credit facility, an equal percentage to Dominion Energy’s ownership~~described in Atlantic Coast Pipeline. As of December 31, 2019, Atlantic Coast Pipeline has borrowed $1.8 billion against the revolving credit facility and borrowed an additional $27 million in January and February 2020. Dominion Energy’s Consolidated Balance Sheet includes a liability of $14 million and $21 million associated with this guarantee agreement at December 31, 2019 and 2018, respectively.Note 9.

In addition, at December 31, 2019, Dominion Energy had issued an additional $27 million of guarantees, primarily to support other equity method investees. No amounts related to the other guarantees have been recorded.

Dominion Energy also enters into guarantee arrangements on behalf of its consolidated subsidiaries, primarily to facilitate their commercial transactions with third parties. If any of these subsidiaries fail to perform or pay under the contracts and the counterparties seek performance or payment, Dominion Energy would be obligated to satisfy such obligation. To the extent that a liability subject to a guarantee has been incurred by one of Dominion Energy’s consolidated subsidiaries, that liability is included in the Consolidated Financial Statements. Dominion Energy is not required to recognize liabilities for guarantees issued on behalf of its subsidiaries unless it becomes probable that it will have to perform under the guarantees. Terms of the guarantees typically end once obligations have been paid. Dominion Energy currently believes it is unlikely that it would be required to perform or otherwise incur any losses associated with guarantees of its subsidiaries’ obligations.

At December 31, ~~2019,~~2020, Dominion Energy had issued the following subsidiary ~~guarantees:~~guarantees:

	Maximum Exposure
(millions)
Commodity transactions⁽¹⁾	$	1,854
Nuclear obligations⁽²⁾		202
Solar⁽³⁾		467
Other⁽⁴⁾		1,004
Total⁽⁵⁾	$	3,527

(1)
	~~Maximum Exposure~~
~~(millions)~~
~~Commodity transactions~~ ~~(1)~~	$	~~2,215~~
~~Nuclear obligations~~ ~~(2)~~		~~182~~
~~Cove Point~~ ~~(3)~~		~~1,900~~
~~Solar~~ ~~(4)~~		~~477~~
~~Other~~ ~~(5)~~		~~377~~
~~Total~~ ~~(6)~~	$	~~5,151~~

~~(1)~~

Guarantees related to commodity commitments of certain subsidiaries. These guarantees were provided to counterparties in order to facilitate physical and financial transaction related commodities and services.

(2)	Guarantees primarily related to certain DGI ~~subsidiaries’~~subsidiaries regarding all aspects of running a nuclear facility.

(3)	Guarantees related to Cove Point, in support of terminal services, transportation and construction. Cove Point has two guarantees that have no maximum limit and, therefore, are not included in this amount.

~~(4)~~

Includes guarantees to facilitate the development of solar projects. Also includes guarantees entered into by DGI on behalf of certain subsidiaries to facilitate the acquisition and development of solar projects.

~~(5)~~

(4)

Guarantees related to other miscellaneous contractual obligations such as leases, environmental obligations, construction projects and insurance programs. Also includes guarantees entered into by Dominion Energy RNG Holdings, LLC on behalf of a subsidiary to facilitate construction of renewable natural gas facilities. Due to the uncertainty of ~~worker’s~~workers’ compensation claims, the parental guarantee has no stated limit.

~~(6)~~

(5)

Excludes Dominion Energy’s guarantees for the new corporate office properties and an offshore wind installation vessel discussed ~~further within~~in Note 15.

Additionally, at December 31, ~~2019,~~2020, Dominion Energy had purchased ~~$163~~$157 million of surety bonds, including ~~$77~~$88 million at Virginia Power, and ~~$26 million at Dominion Energy Gas, and~~

authorized the issuance of letters of credit by financial institutions of ~~$89~~$100 million to facilitate commercial transactions by its subsidiaries with third parties. Under the terms of surety bonds, the Companies are obligated to indemnify the respective surety bond company for any amounts paid.

Indemnifications

As part of commercial contract negotiations in the normal course of business, the Companies may sometimes agree to make payments to compensate or indemnify other parties for possible future unfavorable financial consequences resulting from specified events. The specified events may involve an adverse judgment in a lawsuit or the imposition of additional taxes due to a change in tax law or interpretation of the tax law. The Companies are unable to develop an estimate of the maximum potential amount of any other future payments under these contracts because events that would obligate them have not yet occurred or, if any such event has occurred, they have not been notified of its occurrence. However, at December 31, ~~2019,~~2020, the Companies believe any other future payments, if any, that could ultimately become payable under these contract provisions, would not have a material impact on their results of operations, cash flows or financial position.

~~Note~~

Charitable Commitments

In 2020, Dominion Energy made unconditional promises to several charitable organizations, including to support its commitment to diversity and social justice through scholarship programs and donations to historically black colleges and universities. As a result, Dominion Energy recorded charges totaling $80 million in other income in its Consolidated Statements of Income. These commitments are to be funded at various intervals through 2028. Dominion Energy’s Consolidated Balance Sheets include $73 million in other deferred credits and other liabilities at December 31, 2020.

NOTE 24. ~~Credit Risk~~

CREDIT RISK

Dominion Energy

As a diversified energy company, Dominion Energy transacts primarily with major companies in the energy industry and with commercial and residential energy consumers. These transactions principally occur in the Northeast,

mid-Atlantic,

Midwest and Rocky Mountain and Southeast regions of the U.S. Dominion Energy does not believe that this geographic concentration contributes significantly to its overall exposure to credit risk. In addition, as a result of its large and diverse customer base, Dominion Energy is not exposed to a significant concentration of credit risk for receivables arising from electric and gas utility operations.

Dominion Energy’s exposure to credit risk is concentrated primarily within its energy marketing and price risk management activities, as Dominion Energy transacts with a smaller, less diverse group of counterparties and transactions may involve large notional volumes and potentially volatile commodity prices. Energy marketing and price risk management activities include marketing of ~~merchant~~nonregulated generation output, structured transactions and the use of financial contracts for enterprise-wide hedging purposes. Gross credit exposure for each counterparty is calculated as outstanding receivables plus any unrealized

on-

off-balance

sheet exposure, taking into account contractual netting rights. Gross credit exposure is calculated prior to the application of any collateral. At December 31, ~~2019,~~2020, Dominion Energy’s credit exposure totaled ~~$233~~$107 million. Of this amount, investment grade counterparties, including those internally rated, represented ~~88%~~96%, and no0 single counterparty, whether investment grade or

non-investment

grade, exceeded ~~$61~~$41 million of exposure.

Virginia Power

Virginia Power sells electricity and provides distribution and transmission services to customers in Virginia and northeastern North Carolina. Management believes that this geographic concentration risk is mitigated by the diversity of Virginia Power’s


~~186~~

customer base, which includes residential, commercial and industrial customers, as well as rural electric cooperatives and municipalities. Credit risk associated with trade accounts receivable from energy consumers is limited due to the large number of customers. Virginia Power’s exposure to potential concentrations of credit risk results primarily from sales to wholesale customers. Virginia Power’s gross credit exposure for each counterparty is calculated as outstanding receivables plus any unrealized

on-

off-balance

sheet exposure, taking into account contractual netting rights. Gross credit exposure is calculated prior to the application of collateral. At December 31, ~~2019,~~2020, Virginia Power’s credit exposure totaled ~~$71~~$15 million. Of this amount, investment grade counterparties, including those internally rated, represented ~~96%~~97%, and no0 single counterparty exceeded ~~$61~~$6 million of exposure.

~~Dominion Energy Gas~~

Dominion Energy Gas transacts mainly with major companies in the energy industry. These transactions principally occur in the eastern and Rocky Mountain regions of the U.S. Dominion Energy Gas does not believe that this geographic concentration contributes to its overall exposure to credit risk. In addition, as a result of its large and diverse customer base, Dominion Energy Gas is not exposed to a significant concentration of credit risk for receivables arising from its regulated operations. Dominion Energy Gas’ gross credit exposure for each counterparty is calculated as outstanding receivables plus any unrealized

~~on-~~

~~off-balance~~

sheet exposure, taking into account contractual netting rights. Gross credit exposure is calculated prior to the application of collateral. At December 31, 2019, Dominion Energy Gas’ credit exposure totaled $46 million. Of this amount, investment grade counterparties, including those internally rated, represented 81%, and no single counterparty, whether investment grade or

~~non-investment~~

~~grade, exceeded $9 million of exposure.~~

Upon the Liquefaction Facility commencing commercial operations in April 2018, the majority of Cove Point’s revenue and earnings are expected to be generated from annual reservation payments under certain terminalling, storage and transportation contracts with the Export Customers. If such agreements were terminated and Cove Point was unable to replace such agreements on comparable terms, there could be a material impact on results of operations, financial condition and/or cash flows.

The Export Customers comprised approximately 34% and 32% of Dominion Energy Gas’ operating revenues for the years ended December 31, 2019 and 2018, respectively, with Dominion Energy Gas’ largest customer representing approximately 17% and 12% of such amounts.

In 2019, DETI provided service to 296 customers with approximately 98% of its storage and transportation revenue being provided through firm services. The ten largest customers provided approximately 38% of the total storage and transportation revenue and the thirty largest provided approximately 72% of the total storage and transportation revenue.

Credit-Related Contingent Provisions

~~The majority~~

Certain of Dominion Energy’s derivative instruments contain credit-related contingent provisions. These provisions require Dominion Energy to provide collateral upon the occurrence of specific events, primarily a credit rating downgrade. If the credit-related contingent features underlying these instruments that are in a liability position and not fully collateralized with cash were

fully triggered, as of December 31, ~~2019~~2020 and ~~2018,~~2019, Dominion Energy would have been required to post ~~an additional~~$14 million and $10 million, ~~and $1 million,~~ respectively, of additional collateral to its counterparties. The collateral that would be required to be posted includes the impacts of any offsetting asset positions and any amounts already posted for derivatives,

non-derivative

contracts and derivatives elected under the normal purchases and normal sales exception, per contractual terms. Dominion Energy had posted no$1 million of collateral at December 31, ~~2019 and 2018,~~2020 related to derivatives with credit-related contingent provisions that are in a liability position and not fully collateralized with ~~cash.~~cash and had posted 0 collateral at December 31, 2019. The aggregate fair value of all derivative instruments with credit-related contingent provisions that are in a liability position and not fully collateralized with cash as of December 31, 2020 and 2019 ~~and 2018~~ was ~~$10~~$15 million and $1$10 million, respectively, which does not include the impact of any offsetting asset positions.

If the credit-related contingent features underlying these instruments that are in a liability position and not fully collateralized with cash were fully triggered as of December 31, 2020 and 2019, Virginia Power would have been required to post an additional $2 million and $8 million, respectively, of collateral to its counterparties. ~~Credit-related contingent provisions for Virginia Power were not material as of December 31, 2018.~~

~~Credit-related contingent provisions for Dominion Energy Gas were not material as of December 31, 2019 and 2018.~~

See Note 7 for further information about derivative instruments.

~~Note~~

NOTE 25. ~~Related-party Transactions~~

RELATED-PARTY TRANSACTIONS

Virginia Power ~~and Dominion Energy Gas engage~~engages in related party transactions primarily with other Dominion Energy subsidiaries (affiliates). Virginia ~~Power and Dominion Energy Gas’~~Power’s receivable and payable balances with affiliates are settled based on contractual terms or on a monthly basis, depending on the nature of the underlying transactions. Virginia Power ~~and Dominion Energy Gas are~~is included in Dominion Energy’s consolidated federal income tax return and, where applicable, combined income tax returns for Dominion Energy are filed in various states. See Note 2 for further information. Dominion Energy’s transactions with equity method investments are described in Note 9. A discussion of significant related party transactions follows.

Virginia Power

Transactions with Affiliates

Virginia Power transacts with affiliates for certain quantities of natural gas and other commodities in the ordinary course of business. Virginia Power also enters into certain commodity derivative contracts with affiliates. Virginia Power uses these contracts, which are principally comprised of forward commodity purchases, to manage commodity price risks associated with purchases of natural gas. See Notes 7 and 1920 for more information. ~~As of~~At December 31, 2020, Virginia Power’s derivative assets and liabilities with affiliates were $3 million and $22 million, respectively. At December 31, 2019, Virginia Power’s derivative assets and liabilities with affiliates were $3 million and $53 million, respectively. ~~As of December 31, 2018, Virginia Power’s derivative assets and liabilities with affiliates were $26 million and $10 million, respectively.~~

Virginia Power participates in certain Dominion Energy benefit plans as described in Note 22.At December 31, ~~2019~~2020 and ~~2018,~~2019, Virginia Power’s amounts due to Dominion Energy associated with the Dominion Energy Pension Plan and


						~~187~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

reflected in noncurrent pension and other postretirement benefit liabilities in the Consolidated Balance Sheets were ~~$782~~$436 million and ~~$632~~$782 million, respectively. At December 31, ~~2019~~2020 and ~~2018,~~2019, Virginia Power’s amounts due from Dominion Energy associated with the Dominion Energy Retiree Health and Welfare Plan and reflected in noncurrent pension and other postretirement benefit assets in the Consolidated Balance Sheets were $354 million and $287 million, ~~and $254 million,~~ respectively.

DES and other affiliates provide accounting, legal, finance and certain administrative and technical services to Virginia Power. In addition, Virginia Power provides certain services to affiliates, including charges for facilities and equipment usage.

The financial statements for all years presented include costs for certain general, administrative and corporate expenses assigned by DES to Virginia Power on the basis of direct and allocated methods in accordance with Virginia Power’s services agreements with DES. Where costs incurred cannot be determined by specific identification, the costs are allocated based on the proportional level of effort devoted by DES resources that is attributable to the entity, determined by reference to number of employees, salaries and wages and other similar measures for the relevant DES service. Management believes the assumptions and methodologies underlying the allocation of general corporate overhead expenses are reasonable.

Presented below are Virginia Power’s significant transactions with DES and other affiliates:

Year Ended December 31,

2019

2018

2017

(millions)

Commodity purchases from affiliates
$
690
$
930
$
674

Services provided by affiliates
(1)

503

450

453

Services provided to affiliates

24

24

25

Year Ended December 31,	2020		2019		2018
(millions)
Commodity purchases from affiliates	$	569	$	690	$	930
Services provided by affiliates⁽¹⁾		455		503		450
Services provided to affiliates		18		24		24

(1)	Includes capitalized expenditures of $141 million, $133 million ~~$145 million~~ and ~~$144~~$145 million for the year ended December 31, 2020, 2019 and 2018, ~~and 2017,~~ respectively.

Virginia Power has borrowed funds from Dominion Energy under short-term borrowing arrangements. There were ~~$107~~$380 million and ~~$224~~$107 million in short-term demand note borrowings from Dominion Energy as of December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. The weighted-average interest rate of these borrowings was ~~3.22%~~0.30% and ~~2.94%~~3.22% at December 31, ~~2019~~2020 and ~~2018,~~2019, respectively. Virginia Power had no0 outstanding borrowings, net of repayments under the Dominion Energy money pool for its nonregulated subsidiaries as of December 31, ~~2019~~2020 and ~~2018.~~2019. Interest charges related to Virginia Power’s borrowings from Dominion Energy were immaterial for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017.~~

2018.

There were no0 issuances of Virginia Power’s common stock to Dominion Energy in 2020, 2019 ~~2018~~ or ~~2017.~~2018.

~~Dominion Energy Gas~~

~~Transactions with Related Parties~~

Dominion Energy Gas transacts with affiliates for certain quantities of natural gas and other commodities at market prices in the ordinary course of business. Additionally, Dominion Energy Gas provides transportation and storage services to affiliates. Dominion Energy Gas also enters into certain other contracts with affiliates, and related parties, including construction services, which are presented separately from contracts involving commodities or services. As of December 31, 2019 and 2018, Dominion Energy Gas did not

have any commodity derivative assets and liabilities. See Notes 7 and 20 for more information. See Note 9 for information regarding transactions with an affiliate. See Note 3 for information regarding the Dominion Energy Gas Restructuring, an affiliated transaction.

Dominion Energy Gas participates in certain Dominion Energy benefit plans as described in Note 22. At December 31, 2019 and 2018, Dominion Energy Gas’ amounts due from Dominion Energy associated with the Dominion Energy Pension Plan and reflected in noncurrent pension and other postretirement benefit assets in the Consolidated Balance Sheets were $326 million and $319 million, respectively. Dominion Energy Gas’ amounts due from Dominion Energy associated with the Dominion Energy Retiree Health and Welfare Plan and reflected in noncurrent pension and other postretirement benefit assets in the Consolidated Balance Sheets were $17 million and $13 million at December 31, 2019 and 2018, respectively.

DES, DECGS, DEQPS and other affiliates provide accounting, legal, finance and certain administrative and technical services to Dominion Energy Gas. Dominion Energy Gas provides certain services to related parties, including technical services.

The financial statements for all years presented include costs for certain general, administrative and corporate expenses assigned by DES, DECGS and DEQPS to Dominion Energy Gas on the basis of direct and allocated methods in accordance with Dominion Energy Gas’ services agreements with DES, DECGS and DEQPS. Where costs incurred cannot be determined by specific identification, the costs are allocated based on the proportional level of effort devoted by DES, DECGS and DEQPS resources that is attributable to the entity, determined by reference to number of employees, salaries and wages and other similar measures for the relevant DES service. Management believes the assumptions and methodologies underlying the allocation of general corporate overhead expenses are reasonable. The costs of these services follow:

Year Ended December 31,

2019

2018

2017

(millions)

Sales of natural gas and transportation and storage services
$
249
$
168
$
173

Purchases of natural gas and transportation and storage services

12

—

10

Services provided by related parties
(1)

226

169

193

Services provided to related parties
(2)

164

260

190

~~(1)~~

~~Includes capitalized expenditures of $19 million, $37 million and $53 million for the year ended December 31, 2019, 2018 and 2017, respectively.~~

~~(2)~~

~~Amounts primarily attributable to Atlantic Coast Pipeline, a related party VIE.~~

~~The following table presents affiliated and related party balances reflected in Dominion Energy Gas’ Consolidated Balance Sheets:~~

At December 31,

2019

2018

(millions)

Other receivables
(1)
$
7
$
13

Imbalances receivable from affiliates

8

16

Imbalances payable from affiliates
(2)

1

4

Other deferred charges and other assets

12

—

~~(1)~~

~~Represents amounts due from Atlantic Coast Pipeline, a related party VIE.~~

~~(2)~~

~~Amounts are presented in other current liabilities in Dominion Energy Gas’ Consolidated Balance Sheets.~~


~~188~~

Affiliated receivables at December 31, 2019 and December 31, 2018 included $22 million and $7 million of accrued unbilled revenue, respectively. This revenue is based on estimated amounts of services provided but not yet billed to various affiliates.

Affiliated notes receivable from East Ohio and DGP borrowings under an IRCA with Dominion Energy Gas were $704 million at December 31, 2018. Interest income on the IRCAs was $14 million, $15 million and $5 million for the years ended December 31, 2019, 2018 and 2017, respectively.

In 2016, DMLPHCII issued a five-year $15.0 million promissory note to Dominion Energy. The interest rate is a fixed 2.75% per annum. Interest income earned on the promissory note was immaterial for the years ended December 31, 2019, 2018 and 2017.

In 2018, in connection with the closing of a $3.0 billion term loan, Cove Point loaned Dominion Energy $3.0 billion in exchange for a promissory note. The promissory note had an annual interest rate of 3.6% which was payable quarterly and was scheduled to mature in 2021. Interest income related to Dominion Energy’s borrowing was $82 million and $21 million for the years ended December 31, 2019 and December 31, 2018, respectively, presented in other income in the Consolidated Statements of Income and accrued interest was immaterial at December 31, 2018, presented in affiliated receivables in the Consolidated Balance Sheets. In September 2019, Dominion Energy repaid the promissory note to Cove Point and the proceeds were used by Cove Point to repay its $3.0 billion term loan.

In November 2019, Dominion Energy Gas issued a five-year promissory note to Dominion Energy under which it may lend up to $3.0 billion. Dominion Energy Gas’ affiliated notes receivable from Dominion Energy totaled $1.8 billion at December 31, 2019. The promissory note has a fixed annual interest rate of 2.5% payable

~~quarterly~~

~~. Interest income on the promissory note was $5 million for the year ended December 31, 2019.~~

At December 31, 2019 and 2018, Dominion Energy Gas’ affiliated notes receivable from East Ohio totaled $1.7 billion and $1.4 billion, respectively. These promissory notes have fixed annual interest rates between 3.67% to 4.90% which are payable semi-annually. Interest income on these promissory notes was $72 million for the year ended December 31, 2019 and $64 million for both the years ended December 31, 2018 and 2017.

Dominion Energy Gas’ borrowings under the IRCA with Dominion Energy totaled $251 million and $218 million as of December 31, 2019 and 2018, respectively. The weighted-average interest rate of these borrowings was 2.02% and 2.78% at December 31, 2019 and 2018, respectively. Interest charges related to Dominion Energy Gas’ total borrowings from Dominion Energy were $3 million for December 31, 2019 and less than $1 million for December 31, 2018 and 2017, respectively.

DCP had borrowings under an IRCA with Dominion Energy of $2.8 billion at December 31, 2018. The weighted-average interest rate for these borrowings was 3.43% at December 31, 2018. In October 2019, DCP repaid the outstanding balance and accrued interest utilizing funds from a capital contribution from Dominion Energy. Interest charges related to DCP’s total borrowings from Dominion Energy totaled $94 million, $96 million and $82 million for the years ended December 31, 2019, 2018 and 2017, respectively.

In addition, DCP had borrowings of $9 million and $57 million with DES as of December 31, 2019 and 2018 respectively. The weighted-average interest rate for these borrowings was 3.85% and 3.45% at December 31, 2019 and 2018, respectively. Interest related to DCP’s total borrowings from DES totaled $3 million, $1 million and less than $1 million for the years ended December 31, 2019, 2018 and 2017, respectively.

DMLPHCII had borrowings under an IRCA with Dominion Energy of $22 million December 31, 2018. The weighted-average interest rate for these borrowings was 3.43% at December 31, 2018. In October 2019, DMLPHCII repaid the outstanding balance and accrued interest utilizing funds from a capital contribution from Dominion Energy. Interest charges related to DMLPHCII’s total borrowings from Dominion Energy were less than $1 million for each of the years ended December 31, 2019, 2018 and 2017.

In the first quarter of 2019, Dominion Energy Midstream borrowed $395 million from Dominion Energy under a $400 million promissory note with Dominion Energy that was scheduled to mature in 2022. The interest rate was fixed 3.5% per annum. In October 2019, Dominion Energy Midstream repaid the outstanding balance and accrued interest utilizing funds from a capital contribution from Dominion Energy. Interest charges of $10 million were incurred for the year ended December 31, 2019.

For the periods ending December 31, 2019, 2018 and 2017, Dominion Energy Gas, including entities acquired in the Dominion Energy Gas Restructuring, distributed $603 million, $230 million and $239 million to Dominion Energy, respectively.

~~Note~~

NOTE 26. ~~Operating Segments~~

OPERATING SEGMENTS

The Companies are organized primarily on the basis of products and services sold in the U.S. A description of the operations included in the Companies’ primary operating segments is as follows:


Primary Operating Segment	Description of Operations	Dominion Energy	Virginia Power	Dominion Energy Gas
Dominion Energy Virginia	Regulated electric distribution	X	X
	Regulated electric transmission	X	X
	Regulated electric generation fleet ⁽¹⁾	X	X
~~Gas Transmission & Storage~~	~~Regulated gas transmission and storage~~ ~~(2)~~	X		X
	~~LNG terminalling and storage~~	X		X
	~~Nonregulated retail energy marketing~~	X
Gas Distribution	Regulated gas distribution and storage ~~(3)~~ ⁽²⁾	X
Dominion Energy South Carolina	Regulated electric distribution	X
	Regulated electric transmission	X
	Regulated electric generation fleet	X
	Regulated gas distribution and storage	X
Contracted ~~Generation~~ Assets	~~Merchant~~ Nonregulated electric generation fleet	X


		Noncontrolling interest in Cove Point		X	~~189~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~(1)~~

~~Includes Virginia Power’s nonjurisdictional generation operations.~~

~~(2)~~

~~Includes gathering and processing activities.~~

~~(3)~~

~~Includes Wexpro’s natural gas development and production operations.~~

(1) Includes Virginia Power’s nonjurisdictional generation operations.

(2)Includes renewable natural gas operations as well as Wexpro’s natural gas development and production operations.

In addition to the operating segments above, the Companies also report a Corporate and Other segment.

Dominion Energy

The Corporate and Other Segment of Dominion Energy

includes its corporate, service companies and other functions (including unallocated debt). as well as nonregulated retail energy marketing operations, including Dominion Energy’s noncontrolling interest in Wrangler. In addition, Corporate and Other includes specific items attributable to Dominion Energy’s operating segments that are not included in profit measures evaluated by executive management in assessing the segments’ performance or in allocating ~~resources.~~

resources, as well as the net impact of the gas transmission and storage operations held in discontinued operations which are discussed in Note 3.

In ~~2019,~~2020, Dominion Energy reported

after-tax

net expenses of ~~$2.6~~$3.7 billion in the Corporate and Other segment, ~~with $2.0~~including $3.4 billion of ~~the~~after-tax net expenses for specific items with $1.2 billion of after-tax net expenses attributable to ~~specific items related to~~ its operating segments.

The net expenses for specific items attributable to Dominion Energy’s operating segments in 2020 primarily related to the impact of the following items:

•	A $751 million ($564 million after-tax) charge primarily related to the planned early retirement of certain Virginia Power electric generation facilities, attributable to Dominion Energy Virginia;

•	A $405 million ($325 million after-tax) charge associated with certain nonregulated solar generation facilities, attributable to Contracted Assets;

•	A $221 million ($171 million after-tax) charge associated with the sale of Fowler Ridge, attributable to Contracted Assets; and

•	A $130 million ($97 million after-tax) charge for the expected CCRO to be provided to Virginia retail electric customers under the GTSA, attributable to Dominion Energy Virginia;

•	A $127 million ($94 million after-tax) charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to legislation enacted in November 2020, attributable to Dominion Energy Virginia; and

•	A $117 million ($93 million after-tax) of charges associated with litigation acquired in the SCANA Combination, attributable to Dominion Energy South Carolina; partially offset by

•	A $335 million ($264 million after-tax) net gain related to investments in nuclear decommissioning trust funds attributable to:

•

Dominion Energy Virginia ($27 million after-tax); and

•

Contracted Assets ($237 million after-tax).

In 2019, Dominion Energy reported after-tax net expenses of $1.8 billion in the Corporate and Other segment, including $1.5 billion of after-tax net expenses for specific items with $1.9 billion of after-tax net expenses attributable to its operating segments.

The net expenses for specific items attributable to Dominion Energy’s operating segments in 2019 primarily related to the impact of the following items:

~~A $1.0 billion ($756 million~~

~~after-tax)~~

•	A $1.0 billion ($756 million after-tax) charge for refunds of amounts previously collected from retail electric customers of DESC for the NND Project, attributable to Dominion Energy South Carolina;

•	$641 million ($480 million after-tax) of charges associated with litigation acquired in the SCANA Combination, attributable to Dominion Energy South Carolina;

•	$427 million ($320 million after-tax) of charges for merger and integration-related costs associated with the SCANA Combination, including a $394 million ($295 million after-tax) charge related to a voluntary retirement program, attributable to:

•

Dominion Energy Virginia ($151 million after-tax);

•

Gas Distribution ($56 million after-tax);

•

Dominion Energy South Carolina ($75 million after-tax); and

•

Contracted Assets ($38 million after-tax).

•	A $346 million ($257 million after-tax) charge related to the early retirement of certain Virginia Power electric generation facilities, attributable to Dominion Energy Virginia;

•	A $194 million tax charge for $258 million of income tax-related regulatory assets acquired in the SCANA Combination for which Dominion Energy committed to forgo recovery, attributable to Dominion Energy South Carolina;

~~$641 million ($480 million~~

~~after-tax)~~

~~of charges associated with litigation acquired in the SCANA Combination, attributable to Dominion Energy South Carolina;~~

•	A $160 million ($119 million after-tax) charge related to Virginia Power’s planned early retirement of certain automated meter reading infrastructure, attributable to Dominion Energy Virginia;

•	A $135 million ($100 million after-tax) charge related to Virginia Power’s contract termination with a non-utility generator, attributable to Dominion Energy Virginia;

•	A $114 million ($86 million after-tax) charge for property, plant and equipment acquired in the SCANA Combination primarily for which Dominion Energy committed to forgo recovery, attributable to Dominion Energy South Carolina; partially offset by

•	A $553 million ($411 million after-tax) net gain related to investments in nuclear decommissioning trust funds attributable to:

•

Dominion Energy Virginia ($49 million after-tax); and

•

Contracted Assets ($362 million after-tax); and

•	A $113 million ($84 million after-tax) benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019, attributable to Dominion Energy Virginia.

~~$484 million ($315 million~~

~~after-tax)~~

~~of charges for merger and integration-related costs associated with the SCANA Combination, including a $444 million ($332 million~~

~~after-tax)~~

~~charge related to a voluntary retirement program, attributable to:~~

~~Dominion Energy Virginia ($151 million~~

~~after-tax);~~

~~Gas Distribution ($56 million~~

~~after-tax);~~

~~Dominion Energy South Carolina ($75 million~~

~~after-tax);~~

~~and~~

~~Contracted Generation ($38 million~~

~~after-tax);~~

~~partially offset by~~

~~Gas Transmission & Storage ($5 million~~

~~after-tax~~

~~benefit);~~

~~A $346 million ($257 million~~

~~after-tax)~~

~~charge related to the early retirement of certain Virginia Power electric generation facilities, attributable to Dominion Energy Virginia;~~

~~A $194 million tax charge for $258 million of income~~

~~tax-related~~

~~regulatory assets acquired in the SCANA Combination for which Dominion Energy committed to forgo recovery, attributable to Dominion Energy South Carolina;~~

~~A $160 million ($119 million~~

~~after-tax)~~

~~charge related to Virginia Power’s planned early retirement of certain automated meter reading infrastructure, attributable to Dominion Energy Virginia;~~

~~A $135 million ($100 million~~

~~after-tax)~~

~~charge related to Virginia Power’s contract termination with a~~

~~non-utility~~

~~generator, attributable to Dominion Energy Virginia;~~

~~A $114 million ($86 million~~

~~after-tax)~~

charge for property, plant and equipment acquired in the SCANA Combination primarily for which Dominion Energy committed to forgo recovery, attributable to Dominion Energy South Carolina; partially offset by

~~A $553 million ($411 million~~

~~after-tax)~~

~~net gain related to investments in nuclear decommissioning trust funds attributable to:~~

~~Dominion Energy Virginia ($49 million~~

~~after-tax);~~

~~and~~

~~Contracted Generation ($362 million~~

~~after-tax);~~

~~and~~

~~A $113 million ($84 million~~

~~after-tax)~~

~~benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019, attributable to Dominion Energy Virginia.~~

In 2018, Dominion Energy reported

after-tax

net ~~expenses~~income of ~~$611~~ $117million in the Corporate and Other segment, ~~with $88~~including $322 million of ~~the~~after-tax net income for specific items with $196 million of after-tax net expenses attributable to ~~specific items related to~~ its operating segments.

The net expenses for specific items attributable to Dominion Energy’s operating segments in 2018 primarily related to the impact of the following items:

~~A $219 million ($164 million~~

~~after-tax)~~

~~charge related to the impairment of certain gathering and processing assets attributable to Gas Transmission & Storage;~~

~~A $215 million ($160 million~~

~~after-tax)~~

~~charge associated with Virginia legislation enacted in March 2018 that requires~~

~~one-time~~

~~rate credits of certain amounts to utility customers, attributable to Dominion Energy Virginia;~~

~~A $170 million ($134 million~~

~~after-tax)~~

~~net loss related to our investments in nuclear decommissioning trust funds attributable to:~~

~~Dominion Energy Virginia ($14 million~~

~~after-tax);~~

~~and~~

~~Contracted Generation ($120 million~~

~~after-tax);~~

~~A $124 million ($88 million~~

~~after-tax)~~

~~charge for disallowance of FERC-regulated plant attributable to Gas Transmission & Storage;~~

~~An $81 million ($60 million~~

~~after-tax)~~

charge associated primarily with the asset retirement obligations for ash ponds and landfills at certain utility generation facilities in connection with the enactment of Virginia legislation in April 2018 attributable to Dominion Energy Virginia; and

~~A $70 million ($52 million~~

~~after-tax)~~

~~charge associated with major storm damage and service restoration attributable to Dominion Energy Virginia; partially offset by~~

~~An $828 million ($619 million~~

~~after-tax)~~

~~benefit associated with the sale of certain merchant generation facilities and equity method investments attributable to:~~

~~Contracted Generation ($229 million~~

~~after-tax);~~

~~and~~

~~Gas Transmission & Storage ($390 million~~

~~after-tax).~~

~~In 2017, Dominion Energy reported~~

~~after-tax~~

~~net benefits of $377 million in the Corporate and Other segment, with $861 million of the net benefits attributable to specific items related to its operating segments.~~

~~The net benefits for specific items in 2017 primarily related to the impact of the following items:~~

~~A $1.0 billion tax benefit resulting from the remeasurement of deferred income taxes as a result of the 2017 Tax Reform Act, primarily attributable to:~~

~~Dominion Energy Virginia ($83 million);~~

~~Gas Transmission & Storage ($302 million);~~

~~Gas Distribution ($56 million);~~

~~Contracted Generation ($569 million); partially offset by~~

~~$158 million ($96 million~~

~~after-tax)~~

~~of charges associated with equity method investments in wind-powered generation facilities, attributable to Contracted Generation.~~

•	A $215 million ($160 million after-tax) charge associated with Virginia legislation enacted in March 2018 that required one-time rate credits of certain amounts to utility customers, attributable to Dominion Energy Virginia;

•
~~190~~								A $170 million ($134 million after-tax) net loss related to our investments in nuclear decommissioning trust funds attributable to:

•

Dominion Energy Virginia ($14 million after-tax); and

•

Contracted Assets ($120 million after-tax);

•	An $81 million ($60 million after-tax) charge associated primarily with the asset retirement obligations for ash ponds and landfills at certain utility generation facilities in connection with the enactment of Virginia legislation in April 2018 attributable to Dominion Energy Virginia; and

•	A $70 million ($52 million after-tax) charge associated with major storm damage and service restoration attributable to Dominion Energy Virginia; partially offset by

•	A $282 million ($229 million after-tax) benefit associated with the sale of certain nonregulated generation facilities, attributable to Contracted Assets.

The following table presents segment information pertaining to Dominion Energy’s operations:

Year Ended December 31,

Dominion
Energy
Virginia

Gas
Transmission &
Storage

Gas
Distribution

Dominion
Energy
South
Carolina

Contracted
Generation

Corporate
and Other

Adjustments &
Eliminations

Consolidated
Total

(millions)

2019

Total revenue from external customers

$8,170

$3,074

$2,367

$2,948

$1,135

$(1,122
)
$       —

$16,572

Intersegment revenue

(13
)
247

18

4

15

1,199

(1,470
)
—

Total operating revenue

8,157

3,321

2,385

2,952

1,150

77

(1,470
)
16,572

Depreciation, depletion and amortization

1,216

400

335

452

179

73

—

2,655

Equity in earnings of equity method investees

—

161

2

(4
)
(1
)
10

—

168

Interest income

11

211

4

9

92

160

(386
)
101

Interest and related charges

530

405

116

242

98

768

(386
)
1,773

Income tax expense (benefit)

482

262

114

163

20

(690
)
—

351

Net income (loss) attributable to Dominion Energy

1,786

934

488

430

276

(2,556
)
—

1,358

Investment in equity method investees

—

1,517

32

—

74

23

—

1,646

Capital expenditures

3,002

431

848

562

367

111

—

5,321

Total assets (billions)

43.7

20.9

16.0

15.8

10.2

6.9

(9.7
)
103.8

2018

Total revenue from external customers

$8,401

$1,867

$1,769

$     —

$1,487

$   (249
)
$      91

$13,366

Intersegment revenue

(552
)
723

16

—

8

723

(918
)
—

Total operating revenue

7,849

2,590

1,785

—

1,495

474

(827
)
13,366

Depreciation, depletion and amortization

1,158

348

263

—

213

18

—

2,000

Equity in earnings of equity method investees

—

178

—

—

18

1

—

197

Interest income

10

143

—

—

80

122

(271
)
84

Interest and related charges

516

262

79

—

124

784

(272
)
1,493

Income tax expense (benefit)

380

236

95

—

75

(206
)
—

580

Net income (loss) attributable to Dominion Energy

1,596

844

373

—

245

(611
)
—

2,447

Investment in equity method investees

—

1,159

—

—

82

37

—

1,278

Capital expenditures
2,640 765 647
—
247 106
—
4,405
Total assets (billions)

39.1

22.6

11.8

—

9.0

8.3

(12.9
)
77.9

2017

Total revenue from external customers

$8,254

$1,054

$1,778

$     —

$1,345

$     (27
)
$    182

$12,586

Intersegment revenue

(688
)
946

17

—

9

724

(1,008
)
—

Total operating revenue

7,566

2,000

1,795

—

1,354

697

(826
)
12,586

Depreciation, depletion and amortization

1,141

260

258

—

200

46

—

1,905

Equity in earnings of equity method investees

—

158

—

—

(171
)
(5
)
—

(18
)
Interest income

19

114

—

—

77

94

(222
)
82

Interest and related charges

497

100

72

—

110

648

(222
)
1,205

Income tax expense (benefit)

865

291

195

—

(160
)
(1,221
)
—

(30
)
Net income (loss) attributable to Dominion Energy

1,466

552

351

—

253

377

—

2,999

Capital expenditures
2,726 1,489 452
—
979 263
—
5,909

Year Ended December 31,	Dominion Energy Virginia			Gas Distribution		Dominion Energy South Carolina			Contracted Assets			Corporate and Other			Adjustments & Eliminations			Consolidated Total
(millions)
2020
Total revenue from external customers	$	7,802		$	2,345	$	2,782		$	1,020		$	200		$	48		$	14,197
Intersegment revenue		(15	)		10		5			51			963			(1,039	)		(25	)
Total operating revenue		7,787			2,355		2,787			1,071			1,163			(991	)		14,172
Depreciation, depletion and amortization		1,247			344		474			182			85			0			2,332
Equity in earnings of equity method investees		0			0		(1	)		35			6			0			40
Interest income		13			6		12			91			73			(88	)		107
Interest and related charges		527			76		219			75			568			(88	)		1,377
Income tax expense (benefit)		496			121		107			(16	)		(625	)		0			83
Net income (loss) from discontinued operations		0			0		0			167			(2,045	)		0			(1,878	)
Net income (loss) attributable to Dominion Energy		1,891			560		419			402			(3,673	)		0			(401	)
Investment in equity method investees⁽¹⁾		0			55		0			2,784			95			0			2,934
Capital expenditures		3,406			1,151		700			649			425			0			6,331
Total assets (billions)		46.0			17.1		16.0			13.1			8.6			(4.9	)		95.9
2019
Total revenue from external customers	$	8,170		$	2,367	$	2,948		$	1,083		$	(239	)	$	79		$	14,408
Intersegment revenue		(13	)		18		4			73			1,071			(1,160	)		(7	)
Total operating revenue		8,157			2,385		2,952			1,156			832			(1,081	)		14,401
Depreciation, depletion and amortization		1,216			335		452			180			100			0			2,283
Equity in earnings of equity method investees		0			2		(4	)		(1	)		11			0			8
Interest income		11			4		9			97			112			(136	)		97
Interest and related charges		530			116		242			98			636			(136	)		1,486
Income tax expense (benefit)		482			114		163			20			(570	)		0			209
Net income from discontinued operations		0			0		0			183			533			0			716
Net income (loss) attributable to Dominion Energy		1,786			487		430			460			(1,805	)		0			1,358
Investment in equity method investees		0			37		0			74			1,223			0			1,334
Capital expenditures		3,002			853		562			367			537			0			5,321
Total assets (billions)		43.7			16.0		15.8			10.2			24.0			(5.9	)		103.8
2018
Total revenue from external customers	$	8,401		$	1,769	$	0		$	813		$	27		$	177		$	11,187
Intersegment revenue		(552	)		16		0			621			602			(675	)		12
Total operating revenue		7,849			1,785		0			1,434			629			(498	)		11,199
Depreciation, depletion and amortization		1,158			263		0			213			26			0			1,660
Equity in earnings of equity method investees		0			0		0			18			58			0			76
Interest income		10			0		0			84			94			(108	)		80
Interest and related charges		516			79		0			124			668			(108	)		1,279
Income tax expense (benefit)		380			95		0			75			(28	)		0			522
Net income from discontinued operations		0			0		0			116			336			0			452
Net income attributable to Dominion Energy		1,596			373		0			361			117			0			2,447
Capital expenditures		2,640			647		0			247			871			0			4,405

(1)	Excludes liability to Atlantic Coast Pipeline.

Intersegment sales and transfers for Dominion Energy are based on contractual arrangements and may result in intersegment profit or loss that is eliminated in ~~consolidation.~~


						~~191~~

~~Combined Notes~~consolidation, including amounts related to ~~Consolidated Financial Statements, Continued~~entities presented within discontinued operations.

Virginia Power

The Corporate and Other Segment of Virginia Power

primarily includes specific items attributable to its operating segment that are not included in profit measures evaluated by executive management in assessing the segment’s performance or in allocating resources.

In 2020, Virginia Power reported after-tax net expenses of $863 million in the Corporate and Other segment, including $915 million of after-tax net expenses for specific items all of which were attributable to its operating segment.

The net expenses for specific items attributable to its operating segment in 2020 primarily related to a $751 million ($559 million after-tax) charge related to the planned early retirement of certain electric generation facilities, a $130 million ($97 million after-tax) charge for the expected CCRO to be provided to Virginia retail electric customers under the GTSA and a $127 million ($94 million after-tax) charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to legislation enacted in November 2020.

In 2019, Virginia Power reported

after-tax

net expenses of $634 million in ~~its~~the Corporate and Other segment, ~~with~~including $627 million of ~~the~~after-tax net expenses for specific items all of which were attributable to its operating segment.

The net expenses for specific items attributable to its operating segment in 2019 primarily related to the impact of the following items:

•	A $346 million ($257 million after-tax) charge related to the early retirement of certain electric generation facilities;

~~A $346 million ($257 million~~

~~after-tax)~~

~~charge related to the early retirement of certain electric generation facilities;~~

•	A $198 million ($146 million after-tax) charge related to a voluntary retirement program;

•	A $160 million ($119 million after-tax) charge related to the planned early retirement of certain automated meter reading infrastructure;

•	A $135 million ($100 million after-tax) charge related to a contract termination with a non-utility generator; and

•	A $62 million ($46 million after-tax) charge related to the abandonment of a project at an electric generating facility, partially offset by

•	A $113 million ($84 million after-tax) benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019.

~~A $198 million ($146 million~~

~~after-tax)~~

~~charge related to a voluntary retirement program;~~

~~A $160 million ($119 million~~

~~after-tax)~~

~~charge related to the planned early retirement of certain automated meter reading infrastructure;~~

~~A $135 million ($100 million~~

~~after-tax)~~

~~charge related to a contract termination with a~~

~~non-utility~~

~~generator; and~~

~~A $62 million ($46 million~~

~~after-tax)~~

~~charge related to the abandonment of a project at an electric generating facility, partially offset by~~

~~A $113 million ($84 million~~

~~after-tax)~~

~~benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019.~~

In 2018, Virginia Power reported

after-tax

net expenses of $312 million in ~~its~~the Corporate and Other segment, all of which w

~~ere~~

was for specific items attributable to its ~~primary~~ operating segment.

The net expenses for specific items attributable to its operating segment in 2018 primarily related to the impact of the following items:

•	A $215 million ($160 million after-tax) charge associated with Virginia legislation enacted in March 2018 that required one-time rate credits of certain amounts to utility customers;

~~A $215 million ($160 million~~

~~after-tax)~~

~~charge associated with Virginia legislation enacted in March 2018 that requires~~

~~one-time~~

~~rate credits of certain amounts to utility customers;~~

•	An $81 million ($60 million after-tax) charge associated primarily with the asset retirement obligations for ash ponds and landfills at certain utility generation facilities in connection with the enactment of Virginia legislation in April 2018; and

•	A $70 million ($52 million after-tax) charge associated with major storm damage and service restoration.

~~An $81 million ($60 million~~

~~after-tax)~~

~~A $70 million ($52 million~~

~~after-tax)~~

~~charge associated with major storm damage and service restoration.~~

~~In 2017, Virginia Power reported an~~

~~after-tax~~

~~net benefit of $74 million in its Corporate and Other segment, all of which was attributable to its primary operating segment.~~

~~The net benefit for specific items in 2017 primarily related to the impact of the following item:~~

~~A $93 million tax benefit resulting from the remeasurement of deferred income taxes as a result of the 2017 Tax Reform Act.~~

The following table presents segment information pertaining to Virginia Power’s operations:

Year Ended December 31,

Dominion Energy
Virginia

Corporate
and Other

Consolidated
Total

(millions)

2019

Operating revenue

$8,137

$ (29
)
$8,108

Depreciation and amortization

1,215

8

1,223

Interest income

11

—

11

Interest expense (benefit) and related charges

529

(5
)
524

Income tax expense (benefit)

481

(217
)
264

Net income (loss)

1,783

(634
)
1,149

Capital expenditures

2,981

—

2,981

Total assets (billions)

41.4

—

41.4

2018

Operating revenue

$7,835

$(216
)
$7,619

Depreciation and amortization

1,157

(25
)
1,132

Interest income (expense)

10

—

10

Interest expense (benefit) and related charges

516

(5
)
511

Income tax expense (benefit)

378

(78
)
300

Net income (loss)

1,594

(312
)
1,282

Capital expenditures

2,542

—

2,542

Total assets (billions)

37.0

(0.1
)
36.9

2017

Operating revenue

$7,556

$ —

$7,556

Depreciation and amortization

1,141

—

1,141

Interest income (expense)

19

—

19

Interest expense (benefit) and related charges

497

(3
)
494

Income tax expense (benefit)

868

(94
)
774

Net income

1,466

74

1,540

Capital expenditures

2,729

—

2,729

Year Ended December 31,	Dominion Energy Virginia		Corporate and Other			Consolidated Total
(millions)
2020
Operating revenue	$	7,763	$	0		$	7,763
Depreciation and amortization		1,245		7			1,252
Interest income		11		0			11
Interest expense (benefit) and related charges		524		(8	)		516
Income tax expense (benefit)		500		(271	)		229
Net income (loss)		1,884		(863	)		1,021
Capital expenditures		3,372		0			3,372
Total assets (billions)		43.7		0			43.7
2019
Operating revenue	$	8,137	$	(29	)	$	8,108
Depreciation and amortization		1,215		8			1,223
Interest income		11		0			11
Interest expense (benefit) and related charges		529		(5	)		524
Income tax expense (benefit)		481		(217	)		264
Net income (loss)		1,783		(634	)		1,149
Capital expenditures		2,981		0			2,981
Total assets (billions)		41.4		0			41.4
2018
Operating revenue	$	7,835	$	(216	)	$	7,619
Depreciation and amortization		1,157		(25	)		1,132
Interest income		10		0			10
Interest expense (benefit) and related charges		516		(5	)		511
Income tax expense (benefit)		378		(78	)		300
Net income (loss)		1,594		(312	)		1,282
Capital expenditures		2,542		0			2,542


~~192~~

~~Dominion Energy Gas~~

~~The Corporate and Other Segment of Dominion Energy Gas~~

primarily includes specific items attributable to Dominion Energy Gas’ operating segment that are not included in profit measures evaluated by executive management in assessing the segment’s performance or in allocating resources and the effect of certain items recorded at Dominion Energy Gas as a result of Dominion Energy’s basis in the net assets contributed. In addition, Corporate and Other includes the net impact of discontinued operations, which are discussed in Note 3.

~~In 2019, Dominion Energy Gas reported~~

~~after-tax~~

~~net benefit of $127 million in its Corporate and Other segment, with $12 million of net~~

~~expense~~

~~attributable to its operating segment.~~

~~The net~~

~~expense~~

~~for specific items in 2019 primarily related to the impact of the following items:~~

~~A $48 million tax benefit resulting from changes in tax status of certain subsidiaries in connection with the Dominion Energy Gas Restructuring~~

;

~~and~~

~~A $42 million ($31 million~~

~~after-tax)~~

~~charge related to a voluntary retirement program.~~

~~In 2018, Dominion Energy Gas reported~~

~~after-tax~~

~~net expenses of $90 million in its Corporate and Other segment, with $107 million of these net expenses attributable to its operating segment.~~

~~The net expense for specific items in 2018 primarily related to a $124 million ($88 million~~

~~after-tax)~~

~~charge for disallowance of FERC-regulated plant.~~

~~In 2017, Dominion Energy Gas reported~~

~~after-tax~~

~~net benefit of $389 million in its Corporate and Other segment, with $156 million of the net~~

~~benefit~~

~~attributable to its operating segment.~~

~~The net benefit for specific items in 2017 primarily related to a $169 million tax benefit resulting from the remeasurement of deferred income taxes as a result of the 2017 Tax Reform Act.~~

~~The following table presents segment information pertaining to Dominion Energy Gas’ operations:~~

Year Ended December 31,

Gas
Transmission &
Storage

Corporate and
Other

Consolidated
Total

(millions)

2019

Operating revenue

$2,186

$  (17
)
$2,169

Depreciation and amortization

367

—

367

Equity in earnings of equity method investees

43

—

43

Interest income

105

—

105

Interest and related charges

309

2

311

Income tax expense (benefit)

170

(69
)
101

Net Income from discontinued operations

—

141

141

Net Income attributable to Dominion Energy Gas

594

127

721

Investment in equity method investees

312

—

312

Capital expenditures

391

313

704

Total assets (billions)

18.8

—

18.8

2018

Operating revenue

$1,996

$    —

$1,996

Depreciation and amortization

333

—

333

Equity in earnings of equity method investees

54

—

54

Interest income

26

—

26

Interest and related charges

173

1

174

Income tax expense (benefit)

226

(102
)
124

Net Income from discontinued operations

—

24

24

Net Income (loss) attributable to Dominion Energy Gas

571

(90
)
481

Investment in equity method investees

339

—

339

Capital expenditures

749

360

1,109

Total assets (billions)

19.9

6.9

26.8

2017

Operating revenue

$1,523

$    —

$1,523

Depreciation and amortization

242

—

242

Equity in earnings of equity method investees

47

—

47

Interest income

4

—

4

Interest and related charges

60

—

60

Income tax expense (benefit)

189

(254
)
(65
)
Net Income from discontinued operations

—

163

163

Net Income attributable to Dominion Energy Gas

314

389

703

Capital expenditures

1,459

356

1,815


						~~193~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

~~ote~~OTE 27. ~~Quarterly Financial Data (Unaudited)~~

QUARTERLY FINANCIAL DATA (UNAUDITED)

A summary of the Companies’ quarterly results of operations for the years ended December 31, ~~2019~~2020 and ~~2018~~2019 follows. Amounts reflect all adjustments necessary in the opinion of management for a fair statement of the results for the interim periods. Results for interim periods may fluctuate as a result of weather conditions, changes in rates and other factors.

In addition, Dominion Energy’s results have been recast reflecting the presentation of operations included in the GT&S Transaction, Q-Pipe Transaction and investment in Atlantic Coast Pipeline as discontinued operations. See Notes 3 and 9 for more information.

Dominion Energy

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

(millions)

2019

Operating revenue
$
3,858
$
3,970
$
4,269
$
4,475

Income (loss) from operations

(482
)
461

1,314

1,221

Net income (loss) including noncontrolling interests

(677
)
58

985

1,010

Net income (loss) attributable to Dominion Energy

(680
)
54

975

1,009

Basic EPS:

Net income (loss) attributable to Dominion Energy

(0.86
)
0.07

1.19

1.22

Diluted EPS:

Net income (loss) attributable to Dominion Energy

(0.86
)
0.05

1.17

1.21

Dividends per share (Series A Preferred Stock)

—

0.729

4.375

4.375

Dividends per share (Series B Preferred Stock)

—

—

—

1.9375

Dividends declared per common share

0.9175

0.9175

0.9175

0.9175

2018

Operating revenue
$
3,466
$
3,088
$
3,451
$
3,361

Income from operations

875

742

1,150

834

Net income including noncontrolling interests

526

478

883

662

Net income attributable to Dominion Energy

503

449

854

641

Basic EPS:

Net income attributable to Dominion Energy

0.77

0.69

1.31

0.97

Diluted EPS:

Net income attributable to Dominion Energy

0.77

0.69

1.30

0.97

Dividends declared per common share

0.835

0.835

0.835

0.835

	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
(millions)
2020
Operating revenue	$	3,938		$	3,106		$	3,607		$	3,521
Income from continuing operations		368			804			27			856
Net income (loss) from continuing operations including noncontrolling interests		(468	)		869			112			815
Net income (loss) from discontinued operations including noncontrolling interest		229			(2,001	)		19			(125	)
Net income (loss) including noncontrolling interests		(239	)		(1,132	)		131			690
Net income (loss) attributable to Dominion Energy		(270	)		(1,169	)		356			682
Basic EPS:
Net income (loss) from continuing operations		(0.57	)		1.01			0.42			0.98
Net income (loss) from discontinued operations		0.23			(2.42	)		(0.01	)		(0.16	)
Net income (loss) attributable to Dominion Energy		(0.34	)		(1.41	)		0.41			0.82
Diluted EPS:
Net income (loss) from continuing operations		(0.57	)		0.90			0.42			0.98
Net income (loss) from discontinued operations		0.23			(2.42	)		(0.01	)		(0.16	)
Net income (loss) attributable to Dominion Energy		(0.34	)		(1.52	)		0.41			0.82
Dividends declared per preferred share (Series A)		4.375			4.375			4.375			4.375
Dividends declared per preferred share (Series B)		11.625			11.625			11.625			11.625
Dividends declared per common share		0.9400			0.9400			0.9400			0.6300
2019
Operating revenue	$	3,281		$	3,443		$	3,782		$	3,895
Income (loss) from continuing operations		(744	)		248			1,104			936
Net income (loss) from continuing operations including noncontrolling interests		(908	)		(199	)		947			820
Net income (loss) from discontinued operations including noncontrolling interest		231			257			38			190
Net income (loss) including noncontrolling interests		(677	)		58			985			1,010
Net income (loss) attributable to Dominion Energy		(680	)		54			975			1,009
Basic EPS:
Net income (loss) from continuing operations		(1.14	)		(0.25	)		1.14			0.99
Net income from discontinued operations		0.28			0.32			0.05			0.22
Net income (loss) attributable to Dominion Energy		(0.86	)		0.07			1.19			1.21
Diluted EPS:
Net income (loss) continuing operations		(1.14	)		(0.25	)		1.12			0.99
Net income from discontinued operations		0.28			0.32			0.05			0.22
Net income (loss) attributable to Dominion Energy		(0.86	)		0.07			1.17			1.21
Dividends per share (Series A Preferred Stock)		—			0.729			4.375			4.375
Dividends per share (Series B Preferred Stock)		—			—			—			1.9375
Dividends declared per common share		0.9175			0.9175			0.9175			0.9175

Dominion Energy’s 2020 results include the impact of the following significant items:

•	Fourth quarter results include a $94 million after-tax charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to legislation enacted in November 2020.

•

Third quarter results include a $298 million after-tax charge associated with certain nonregulated solar generation facilities, a $170 million after-tax charge associated with the sale of Fowler Ridge and a $149 million after-tax charge for the expected CCRO to be provided to Virginia retail electric customers under the GTSA.

•	Second quarter results include $2.2 billion of after-tax charges presented in discontinued operations associated with the cancellation of the Atlantic Coast Pipeline Project and the related portions of the Supply Header Project.

•	First quarter results include a $566 million after-tax charge primarily related to the planned early retirement of certain Virginia Power electric generation facilities.

Dominion Energy’s 2019 results include the impact of the following significant items:

•	Fourth quarter results include a $244 million after-tax charge related to litigation acquired in the SCANA Combination, offset by a $150 million net gain related to nuclear decommissioning trust funds.

Fourth quarter results include a $244 million after-tax charge related to litigation acquired in the SCANA Combination, offset by a $150 million net gain related to nuclear decommissioning trust funds.

•	Second quarter results include a $283 million after-tax charge related to a voluntary retirement program, a $100 million after-tax charge related to a contract termination with a non-utility generator and a $75 million after-tax charge for litigation acquired in the SCANA Combination.

Second quarter results include a $316 million after-tax charge related to a voluntary retirement program, a $100 million after-tax charge related to a contract termination with a non-utility generator and a $75 million after-tax charge for litigation acquired in the SCANA Combination.

•

First quarter results include $1.3 billion of after-tax merger and integration-related costs related to the SCANA Combination (inclusive of a $756 million after-tax charge for refunds of amounts previously collected from retail electric customers of DESC for the NND Project, a $277 million after-tax charge for certain regulatory assets and property, plant and equipment acquired in the SCANA Combination for which Dominion Energy committed to forego recovery and $134 million after-tax charge for litigation acquired in the SCANA Combination) and a $409 million after-tax charge for the planned early retirement of certain Virginia Power electric generation facilities and automated metering reading infrastructure, partially offset by $197 million after-tax net gain related to nuclear decommissioning trust funds and an $84 million after-tax revision to future ash ponds and landfill closure costs.

Virginia Power ~~electric generation facilities~~

Virginia Power’s quarterly results of operations were as follows:

~~and automated metering reading infrastructure~~

	First Quarter			Second Quarter		Third Quarter		Fourth Quarter
(millions)
2020
Operating revenue	$	1,930		$	1,805	$	2,248	$	1,780
Income (loss) from operations		(133	)		635		687		497
Net income (loss)		(280	)		490		475		336
2019
Operating revenue	$	1,965		$	1,938	$	2,264	$	1,941
Income from operations		122			238		820		659
Net income		20			100		602		427

~~, partially offset by $197 million after-tax net gain related to nuclear decommissioning trust funds and an $84 million after-tax revision to future ash ponds and landfill closure costs.~~

~~Dominion Energy’s 2018~~

Virginia Power’s 2020 results include the impact of the following significant items:

•	Fourth quarter results include a $94 million after-tax charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to legislation enacted in November 2020.

~~Fourth quarter results include $536 million of~~

~~after-tax~~

~~gains from the sale of certain merchant generation facilities and equity method investments partially offset by a $164 million~~

~~after-tax~~

~~impairment charge for certain gathering and processing assets.~~

•	Third quarter results include a $149 million after-tax charge for the expected CCRO to be provided to Virginia retail electric customers under the GTSA.

•	First quarter results include a $561 million after-tax charge primarily related to the planned early retirement of certain Virginia Power electric generation facilities.

~~Second quarter results include an $89 million~~

~~after-tax~~

~~charge for disallowance of FERC-regulated plant.~~

~~First quarter results include a $160 million~~

~~after-tax~~

~~charge associated with Virginia legislation enacted in March 2018 that required~~

~~one-time~~

~~rate credits of certain amounts to utility customers.~~

~~Virginia Power~~

~~Virginia Power’s quarterly results of operations were as follows:~~

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

(millions)

2019

Operating revenue
$
1,965
$
1,938
$
2,264
$
1,941

Income from operations

122

238

820

659

Net income

20

100

602

427

2018

Operating revenue
$
1,748
$
1,829
$
2,232
$
1,810

Income from operations

364

533

756

418

Net income

184

339

520

239

Virginia Power’s 2019 results include the impact of the following significant ~~item:~~

items:

Second quarter results include a $144 million after-tax charge related to a voluntary retirement program, a $100 million after-tax charge related to a contract termination with a non-utility generator and a $47 million after-tax charge for the abandonment of a project at an electric generation facility.

~~First quarter results include a $409 million~~

~~after-tax~~

~~charge~~

for the planned early retirement of certain electric generation facilities and automated metering reading infrastructure, partially offset by an $84 million after-tax revision to future ash ponds and landfill closure costs.

•

•
~~194~~								First quarter results include a $409 million after-tax charge for the planned early retirement of certain electric generation facilities and automated metering reading infrastructure, partially offset by an $84 million after-tax revision to future ash ponds and landfill closure costs.

~~Virginia Power’s 2018 results include the impact of the following significant item:~~

~~First quarter results include a $160 million~~

~~after-tax~~

~~charge associated with Virginia legislation enacted in March 2018 that required~~

~~one-time~~

~~rate credits of certain amounts to utility customers.~~

~~Dominion Energy Gas~~

~~Dominion Energy Gas’ quarterly results of operations were as follows:~~

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

(millions)

2019

Operating revenue

$566

$530

$502

$571

Income from continuing operations

247

179

202

276

Net income from continuing operations

172

123

130

276

Net income from discontinued operations

54

26

45

16

Net income including noncontrolling interests

226

149

175

292

Net income attributable to
Dominion Energy Gas

190

119

151

261

2018

Operating revenue

$389

$508

$533

$566

Income from continuing operations

167

90

302

228

Net income from continuing operations

157

84

209

182

Net income (loss) from discontinued operations

56

45

33

(110
)
Net income including noncontrolling interests

213

129

242

72

Net income attributable to Dominion Energy Gas

180

83

191

27

~~Dominion Energy Gas’s 2019 results include the impact of the following significant items:~~

~~Second quarter results include a $58 million after-tax charge related to a voluntary retirement program~~

~~, including $32 million in discontinued operations.~~

~~Dominion Energy Gas’s 2018 results include the impact of the following significant items:~~

~~Fourth quarter results include a $165 million~~

~~after-tax~~

~~impairment charge for certain gathering and processing assets, included in discontinued operations.~~

~~Second quarter results include an $89 million~~

~~after-tax~~

~~charge for disallowance of FERC-regulated plant.~~


						~~195~~

~~Combined Notes to Consolidated Financial Statements, Continued~~

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Dominion Energy

Senior management of Dominion Energy, including Dominion Energy’s CEO and CFO, evaluated the effectiveness of Dominion Energy’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation process, Dominion Energy’s CEO and CFO have concluded that Dominion Energy’s disclosure controls and procedures are effective. There were no changes that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, Dominion Energy’s internal control over financial reporting.

Management’s Annual Report on Internal Control ~~Over~~over Financial Reporting

Management of Dominion Energy understands and accepts responsibility for Dominion ~~Energy’s~~Energy's financial statements and related disclosures and the effectiveness of internal control over financial reporting (internal control). Dominion Energy continuously strives to identify opportunities to enhance the effectiveness and efficiency of internal control, just as Dominion Energy does throughout all aspects of its business.

Dominion Energy maintains a system of internal control designed to provide reasonable assurance, at a reasonable cost, that its assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed and recorded in accordance with established procedures. This system includes written policies, an organizational structure designed to ensure appropriate segregation of responsibilities, careful selection and training of qualified personnel and internal audits.

The Audit Committee of the Board of Directors of Dominion Energy, composed entirely of independent directors, meets periodically with the independent registered public accounting firm, the internal auditors and management to discuss auditing, internal control, and financial reporting matters of Dominion Energy and to ensure that each is properly discharging its responsibilities. Both the independent registered public accounting firm and the internal auditors periodically meet alone with the Audit Committee and have free access to the Audit Committee at any time.

SEC rules implementing Section 404 of the Sarbanes-Oxley Act of 2002 require Dominion Energy’s ~~2019~~2020 Annual Report to contain a ~~management’s~~management's report and a report of the independent registered public accounting firm regarding the effectiveness of internal control. As a basis for the report, Dominion Energy tested and evaluated the design and operating effectiveness of internal controls. Based on its assessment as of December 31, ~~2019,~~2020, Dominion Energy makes the following assertions:

Management is responsible for establishing and maintaining effective internal control over financial reporting of Dominion Energy.

There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.

Management evaluated Dominion ~~Energy‘s~~Energy’s internal control over financial reporting as of December 31, ~~2019.~~2020. This assessment was based on criteria for effective internal control over financial reporting described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that Dominion Energy maintained effective internal control over financial reporting as of December 31, ~~2019.~~

2020.

Dominion Energy’s independent registered public accounting firm is engaged to express an opinion on Dominion ~~Energy‘s~~Energy’s internal control over financial reporting, as stated in their report which is included herein.

In January 2019, Dominion Energy acquired SCANA. Dominion Energy excluded all of the acquired SCANA businesses from the scope of management’s assessment of the effectiveness of Dominion Energy’s internal control over financial reporting as of December 31, 2019. SCANA constituted 19% of Dominion Energy’s total revenues for 2019 and 17% of Dominion Energy’s total assets as of December 31, 2019.

February ~~28, 2020~~25, 2021


~~196~~

~~Report of Independent Registered Public Accounting Firm~~

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Dominion Energy, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Dominion Energy, Inc. and subsidiaries (“Dominion Energy”) at December 31, ~~2019,~~2020, based on criteria established in

Internal Control—Integrated Framework (2013)

issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).In our opinion, Dominion Energy maintained, in all material respects, effective internal control over financial reporting at December 31, ~~2019,~~2020, based on criteria established in

Internal Control—Integrated Framework (2013)

issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements at and for the year ended December 31, ~~2019,~~2020, of Dominion Energy and our report dated February ~~28, 2020,~~25, 2021, expressed an unqualified opinion on those consolidated financial statements.

As described in Management’s Annual Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting the legacy SCANA Corporation businesses (the “SCANA businesses”), which were acquired on January 1, 2019, and which constitute 19% of total revenues and 17% of total assets of the consolidated financial statement amounts at and for the year ended December 31, 2019. Accordingly, our audit did not include the internal control over financial reporting of SCANA businesses.

Basis for Opinion

Dominion Energy’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying ~~Management’s~~Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on Dominion Energy’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Dominion Energy in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Deloitte & Touche LLP

Richmond, Virginia

February ~~28, 2020~~25, 2021


						~~197~~

Virginia Power

Senior management of Virginia Power, including Virginia Power’s CEO and CFO, evaluated the effectiveness of Virginia Power’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation process, Virginia Power’s CEO and CFO have concluded that Virginia Power’s disclosure controls and procedures are effective. There were no changes that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, Virginia Power’s internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting

Management of Virginia Power understands and accepts responsibility for Virginia ~~Power’s~~Power's financial statements and related disclosures and the effectiveness of internal control over financial reporting (internal control). Virginia Power continuously strives to identify opportunities to enhance the effectiveness and efficiency of internal control, just as it does throughout all aspects of its business.

Virginia Power maintains a system of internal control designed to provide reasonable assurance, at a reasonable cost, that its assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed and recorded in accordance with established procedures. This system includes written policies, an organizational structure designed to ensure appropriate segregation of responsibilities, careful selection and training of qualified personnel and internal audits.

The Board of Directors also serves as Virginia ~~Power’s~~Power's Audit Committee and meets periodically with the independent registered public accounting firm, the internal auditors and management to discuss Virginia ~~Power’s~~Power's auditing, internal accounting control and financial reporting matters and to ensure that each is properly discharging its responsibilities.

SEC rules implementing Section 404 of the Sarbanes-Oxley Act require Virginia ~~Power’s 2019~~Power's 2020 Annual Report to contain a ~~management’s~~management's report regarding the effectiveness of internal control. As a basis for the report, Virginia Power tested and evaluated the design and operating effectiveness of internal controls. Based on the assessment as of December 31, ~~2019,~~2020, Virginia Power makes the following assertions:

Management is responsible for establishing and maintaining effective internal control over financial reporting of Virginia Power.

Management evaluated Virginia ~~Power’s~~Power's internal control over financial reporting as of December 31, ~~2019.~~2020. This assessment was based on criteria for effective internal control over financial reporting described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that Virginia Power maintained effective internal control over financial reporting as of December 31, ~~2019.~~

2020.

This annual report does not include an attestation report of Virginia ~~Power’s~~Power's registered public accounting firm regarding internal control over financial reporting. ~~Management’s~~Management's report is not subject to attestation by Virginia ~~Power’s~~Power's independent registered public accounting firm pursuant to a permanent exemption under the Dodd-Frank Act.

February ~~28, 2020~~25, 2021

~~Dominion Energy Gas~~

Senior management of Dominion Energy Gas, including Dominion Energy Gas’ CEO and CFO, evaluated the effectiveness of Dominion Energy Gas’ disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation process, Dominion Energy Gas’ CEO and CFO have concluded that Dominion Energy Gas’ disclosure controls and procedures are effective. There were no changes that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, Dominion Energy Gas’ internal control over financial reporting.

~~Management’s Annual Report on Internal Control over Financial Reporting~~

Management of Dominion Energy Gas understands and accepts responsibility for Dominion Energy Gas’ financial statements and related disclosures and the effectiveness of internal control over financial reporting (internal control). Dominion Energy Gas continuously strives to identify opportunities to enhance the effectiveness and efficiency of internal control, just as it does throughout all aspects of its business.

Dominion Energy Gas maintains a system of internal control designed to provide reasonable assurance, at a reasonable cost, that its assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed and recorded in accordance with established procedures. This system includes written policies, an organizational structure designed to ensure appropriate segregation of responsibilities, careful selection and training of qualified personnel and internal audits.

The Board of Directors also serves as Dominion Energy Gas’ Audit Committee and meets periodically with the independent registered public accounting firm, the internal auditors and management to discuss Dominion Energy Gas’ auditing, internal accounting control and financial reporting matters and to ensure that each is properly discharging its responsibilities.

SEC rules implementing Section 404 of the Sarbanes-Oxley Act require Dominion Energy Gas’ 2019 Annual Report to contain a management’s report regarding the effectiveness of internal control. As a basis for the report, Dominion Energy Gas tested and evaluated the design and operating effectiveness of internal controls. Based on the assessment as of December 31, 2019, Dominion Energy Gas makes the following assertions:

~~Management is responsible for establishing and maintaining effective internal control over financial reporting of Dominion Energy Gas.~~


~~198~~

~~controls can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.~~

Management evaluated Dominion Energy Gas’ internal control over financial reporting as of December 31, 2019. This assessment was based on criteria for effective internal control over financial reporting described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that Dominion Energy Gas maintained effective internal control over financial reporting as of December 31, 2019.

This annual report does not include an attestation report of Dominion Energy Gas’ registered public accounting firm regarding internal control over financial reporting. Management’s report is not subject to attestation by Dominion Energy Gas’ independent registered public accounting firm pursuant to a permanent exemption under the Dodd-Frank Act.

~~February 28, 2020~~

Item 9B. Other Information

None.

~~Explanatory Note: The following information is furnished in this Form 10-K in lieu of being furnished pursuant to Item 2.02 in a Form~~

~~8-K.~~

~~The date of the events reported below was February 28, 2020.~~

On February 11, 2020, Dominion Energy issued its 4th Quarter 2019 Earnings Release Kit reporting unaudited earnings determined in accordance with GAAP for the year ended December 31, 2019. On February 28, 2020, Dominion Energy issued a revised 4th Quarter 2019 Earnings Release Kit to reflect a reduction in reported earnings for the year ended December 31, 2019. The reduction relates to additional reserves taken for SCANA legal proceedings. The revised Earnings Release Kit reflecting the reduction in earnings is furnished with this Form 10-K as Exhibit 99.

~~199~~

Part III

Item 10. Directors, Executive Officers and Corporate Governance

~~Dominion Energy~~

DOMINION ENERGY

The following information for Dominion Energy is incorporated by reference from the Dominion Energy ~~2020~~2021 Proxy Statement, which will be filed on or around March ~~26, 2020:~~

19, 2021:

•	Information regarding the directors required by this item is found under the heading Item 1—Election of Directors.

~~Information regarding the directors required by this item is found under the heading~~

~~Election of Directors~~

•	Information regarding compliance with Section 16 of the Securities Exchange Act of 1934, as amended, required by this item is found under the heading Other Information—Delinquent Section 16(a) Reports.

•	Information regarding the Dominion Energy Audit Committee Financial expert(s) and the Dominion Energy Audit Committee required by this item is found under the heading Corporate Governance—Board and Committee Governance—The Committees of the Board—Audit Committee.

•	Information regarding Dominion Energy’s Code of Ethics and Business Conduct required by this item is found under the heading Other Information—Code of Ethics and Business Conduct.

~~Information regarding compliance with Section 16 of the Securities Exchange Act of 1934, as amended, required by this item is found under the heading~~

~~Delinquent Section 16(a) Reports~~

~~Information regarding the Dominion Energy Audit Committee Financial expert(s) required by this item is found under the heading~~

~~The Committees of the Board—Audit Committee~~

~~Information regarding the Dominion Energy Audit Committee required by this item is found under the headings~~

~~The Committees of the Board—Audit Committee~~

~~and~~

~~Audit Committee Report~~

~~Information regarding Dominion Energy’s Code of Ethics and Business Conduct required by this item is found under the heading~~

~~Other Information~~

—

~~Code of Ethics and Business Conduct~~

The information concerning the executive officers of Dominion Energy required by this item is included in Part I of this Form

10-K

under the caption

Information about our

Executive Officers

. Each executive officer of Dominion Energy is elected annually.

Item 11. Executive Compensation

~~Dominion Energy~~

DOMINION ENERGY

The following information about Dominion Energy is contained in the ~~2020~~2021 Proxy Statement and is incorporated by reference: ~~the information regarding executive compensation contained under the headings~~

~~Compensation Discussion and Analysis~~

~~and~~

~~Executive Compensation Tables~~

~~; the information regarding Compensation Committee interlocks contained under the heading~~

~~Compensation Committee Interlocks~~

•

Information regarding executive compensation and the Compensation Committee review and discussions of Compensation Discussion and Analysis contained under the heading Executive Compensation.

~~and~~

•

Informationregarding Compensation Committee interlocks contained under the heading Corporate Governance—Compensation Committee InterlocksandInsider Participation.

~~Insider Participation~~

•

Information regarding director compensation contained under the heading Compensation of Non-Employee Directors.

~~; the information regarding the Compensation Committee review and discussions of Compensation Discussion and Analysis contained under the heading~~

~~Compensation, Governance and Nominating Committee Report~~

~~; and the information regarding director compensation contained under the heading~~

~~Compensation of Non-Employee Directors.~~

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

~~Dominion Energy~~

DOMINION ENERGY

The information concerning stock ownership by directors, executive officers and five percent beneficial owners contained under the heading

~~Securities~~Security Ownership

of Certain Beneficial Owners and Managementin the ~~2020~~2021 Proxy Statement is incorporated by reference.

The information regarding equity securities of Dominion Energy that are authorized for issuance under its equity compensation plans contained under the heading

Executive Compensation—Executive Compensation ~~Tables-Equity~~

Tables—Equity Compensation Plans

in the ~~2020~~2021 Proxy Statement is incorporated by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

~~Dominion Energy~~

DOMINION ENERGY

The information regarding related party transactions required by this item found under the heading

~~Other Information—~~Corporate Governance—Certain Relationships and Related Party Transactions,

and information regarding director independence found under the heading

Corporate ~~Governance –Director~~Governance—Director Independence,

in the ~~2020~~2021 Proxy Statement is incorporated by reference.


~~200~~

Item 14. Principal Accountant Fees and Services

~~Dominion Energy~~

DOMINION ENERGY

The information concerning principal accountant fees and services contained under the heading

Audit-Related Matters—Auditor Fees and Pre-Approval Policy

in the ~~2020~~2021 Proxy Statement is incorporated by reference.

~~Virginia Power and Dominion Energy Gas~~

VIRGINIA POWER

The following table presents fees paid to Deloitte & Touche LLP for services related to Virginia Power ~~and Dominion Energy Gas~~ for the fiscal years ended December 31, ~~2019~~2020 and ~~2018.~~2019.

Type of Fees	2020		2019
(millions)
Virginia Power
Audit fees	$	2.30	$	2.13
Audit-related fees	—		—
Tax fees	—		—
All other fees	—		—
Total Fees	$	2.30	$	2.13

Type of Fees

2019

2018

(millions)

Virginia Power

Audit fees

$2.13
$
1.68

Audit-related fees

—

—

Tax fees

—

—

All other fees

—

—

Total Fees

$2.13
$
1.68

Dominion Energy Gas

Audit fees

$2.31
$
0.97

Audit-related fees

0.26

0.26

Tax fees

—

—

All other fees

—

—

Total Fees

$2.57
$
1.23

Audit fees represent fees of Deloitte & Touche LLP for the audit of Virginia ~~Power and Dominion Energy Gas’~~Power’s annual consolidated financial statements, the review of financial statements included in Virginia ~~Power and Dominion Energy Gas’~~Power’s quarterly Form

10-Q

reports, and the services that an independent auditor would customarily provide in connection with subsidiary audits, statutory requirements, regulatory filings and similar engagements for the fiscal year, such as comfort letters, attest services, consents and assistance with review of documents filed with the SEC.

Audit-related fees consist of assurance and related services that are reasonably related to the performance of the audit or review of Virginia ~~Power and Dominion Energy Gas’~~Power’s consolidated financial statements or internal control over financial reporting. This category may include fees related to the performance of audits and attest services not required by statute or regulations, due diligence related to mergers, acquisitions and investments, and accounting consultations about the application of GAAP to proposed transactions.

Virginia ~~Power and Dominion Energy Gas’ Boards~~Power’s Board of Directors ~~have~~has adopted the Dominion Energy Audit Committee

pre-approval

policy for their independent auditor’s services and fees and have delegated the execution of this policy to the Dominion Energy Audit Committee. In accordance with this delegation, each year the Dominion Energy Audit Committee

pre-approves

a schedule that details the services to be provided for the following year and an estimated charge for such services. At its December ~~2019~~2020 meeting, the Dominion Energy Audit Committee approved schedules of services and fees for ~~2020~~ 2021inclusive of Virginia ~~Power and Dominion Energy Gas.~~Power. In accordance with the

pre-approval

policy, any changes to the

pre-approved

schedule may be

pre-approved

by the Dominion Energy Audit Committee or a delegated member of the Dominion Energy Audit Committee.


~~201~~

Part IV

Item 15. Exhibits and Financial Statement Schedules

(a) Certain documents are filed as part of this Form

10-K

and are incorporated by reference and found on the pages noted.

1. Financial Statements

See Index on page ~~69.~~

85.

2. All schedules are omitted because they are not applicable, or the required information is either not material or is shown in the financial statements or the related notes.

3. Exhibits (incorporated by reference unless otherwise noted)

Exhibit

Number

Description

Dominion

Energy

Virginia

Power

Exhibit
Number

~~Description~~

~~Dominion~~

~~Energy~~

~~Virginia~~

~~Power~~

~~Dominion~~

~~Energy~~

~~Gas~~

2.1.a

~~2.1~~

Purchase and Sale Agreement, dated as of July 3, 2020, by and among Dominion Energy, Inc., Dominion Energy Questar Corporation and Berkshire Hathaway Energy Company (Exhibit 2.1, Form 8-K filed July 6, 2020, File No. 1-8489).

2.1.b

Purchase and Sale Agreement, dated as of October 5, 2020, by and among Dominion Energy Questar Corporation, Berkshire Hathaway Energy Corporation and Dominion Energy, Inc., as guarantor (Exhibit 2.1, Form 8-K filed October 6, 2020, File No. 1-8489).

2.2

Agreement and Plan of Merger by and among Dominion Energy, Inc., Sedona Corp. and SCANA Corporation, dated as of January 2, 2018 (Exhibit 2.1, Form 8-K filed January 5, 2018, File No. 1-8489).

3.1.a

~~3.1.a~~

Dominion Energy, Inc. Articles of Incorporation, as restated, effective December 13, 2019 (Exhibit 3.1, Form 8-K filed December 13, 2019, File No.1-8489).

3.1.b

~~3.1.b~~

Virginia Electric and Power Company Amended and Restated Articles of Incorporation, as in effect on October 30, 2014 (Exhibit 3.1.b, Form 10-Q filed November 3, 2014, File No. 1-2255).

3.2.a

~~3.1.c~~

~~Articles of Organization of Dominion Energy Gas Holdings, LLC (Exhibit 3.1, Form S-4 filed April 4, 2014, File No. 333-195066).~~

~~3.1.d~~

~~Articles of Amendment to the Articles of Organization of Dominion Energy Gas Holdings, LLC (Exhibit 3.1, Form 8-K filed May 16, 2017, File No. 1-37591).~~

~~3.2.a~~

Dominion Energy, Inc. Bylaws, as amended and restated, effective ~~September 26, 2019~~July 30, 2020 (Exhibit ~~3.2,~~3.1, Form 8-K filed ~~October 2, 2019,~~July 31, 2020, File No. 1-8489).

3.2.b

~~3.2.b~~

Virginia Electric and Power Company Amended and Restated Bylaws, effective June 1, 2009 (Exhibit 3.1, Form 8-K filed June 3, 2009, File No. 1-2255).

~~3.2.c~~

~~Operating Agreement of Dominion Energy Gas Holdings, LLC as amended and restated, Effective November 5, 2019 (Exhibit 3.1, Form 8-K filed November 12, 2019, File No. 001-37591).~~

Dominion Energy, Inc., and Virginia Electric and Power Company ~~and Dominion Energy Gas Holdings, LLC~~ agree to furnish to the Securities and Exchange Commission upon request any other instrument with respect to long-term debt as to which the total amount of securities authorized does not exceed 10% of any of their total consolidated assets.

4.1.a

~~4.1.a~~

See Exhibit 3.1.a above.

4.1.b

~~4.1.b~~

See Exhibit 3.1.b above.

4.2

~~4.2~~

Indenture of Mortgage of Virginia Electric and Power Company, dated November 1, 1935, as supplemented and modified by Fifty-Eighth Supplemental Indenture (Exhibit 4(ii), Form

10-K

for the fiscal year ended December 31, 1985, File No.

1-2255);

Ninety-Second Supplemental Indenture, dated as of July 1, 2012 (Exhibit 4.1, Form 10-Q for the quarter ended June 30, 2012 filed August 1, 2012, File No. 1-2255)..

Exhibit

Number

Description

Dominion

Energy

Virginia

Power

~~202~~

4.3

Exhibit
Number

~~Description~~

~~Dominion~~

~~Energy~~

~~Virginia~~

~~Power~~

~~Dominion~~

~~Energy~~

~~Gas~~

~~4.3~~

4.4

~~4.4~~

Senior Indenture, dated as of September 1, 2017, between Virginia Electric and Power Company and U.S. Bank National Association, as Trustee (Exhibit 4.1, Form 8-K filed September 13, 2017, File No.000-55337); First Supplemental Indenture, dated as of September 1, 2017 (Exhibit 4.2, Form 8-K filed September 13, 2017, File No.000-55337);; Second Supplemental Indenture, dated as of March 1, 2018 (Exhibit 4.2, Form 8-K filed March 22, 2018, File No. 000-55337);; Third Supplemental Indenture, dated as of November 1, 2018 (Exhibit 4.2, Form 8-K filed November 28, 2018, File No. 000-55337);; Fourth Supplemental Indenture, dated as of July 1, 2019 (Exhibit 4.2, Form 8-K filed July 10, 2019, File No. 00-55337);; Fifth Supplemental Indenture, dated as of December 1, 2019 (Exhibit 4.2, Form 8-K filed December 5, 2019, File No. 000-55337); Sixth Supplemental Indenture, dated as of December 1, 2020 (Exhibit 4.2, Form 8-K filed December 15, 2020, File No. 00-55337).

4.5

~~4.5~~

Indenture, Junior Subordinated Debentures, dated December 1, 1997, between Dominion Resources, Inc. and The Bank of New York Mellon (as successor trustee to JP Morgan Chase Bank (formerly The Chase Manhattan Bank)) as supplemented by a Form of Second Supplemental Indenture, dated January 1, 2001 (Exhibit 4.6, Form 8-K filed January 12, 2001, File No. 1-8489).

Exhibit

Number

Description

Dominion

Energy

Virginia

Power

4.6

~~4.6~~

Indenture, dated April 1, 1995, between Consolidated Natural Gas Company and The Bank of New York Mellon (as successor trustee to United States Trust Company of New York) (Exhibit (4), Certificate of Notification No. 1 filed April 19, 1995, File No. 70-8107);; Securities Resolution No. 2 effective as of October 16, 1996 (Exhibit 2, Form 8-A filed October 18, 1996, File No. 1-3196 and relating to the 6⁷/8% Debentures Due October 15, 2026);; Securities Resolution No. 4 effective as of December 9, 1997 (Exhibit 2, Form 8-A filed December 12, 1997, File No. 1-3196 and relating to the 6.80% Debentures Due December 15, 2027)..


						~~203~~

Exhibit
Number

4.7

~~Description~~

~~Dominion~~

~~Energy~~

~~Virginia~~

~~Power~~

~~Dominion~~

~~Energy~~

~~Gas~~

~~4.7~~

4.8

~~4.8~~

Exhibit

Number

Description

Dominion

Energy

Virginia

Power

4.9

~~4.9~~


~~204~~

Exhibit
Number

4.10

~~Description~~

~~Dominion~~

~~Energy~~

~~Virginia~~

~~Power~~

~~Dominion~~

~~Energy~~

~~Gas~~

~~4.10~~

~~Replacement Capital Covenant entered into by Dominion Resources, Inc. dated June 23, 2006 (Exhibit 4.3, Form 10-Q for the quarter ended June 30, 2006 filed August 3, 2006, File No. 1-8489), as amended by~~ ~~Amendment No. 1 to Replacement Capital Covenant dated September 26, 2011 (Exhibit 4.2, Form 10-Q for the quarter ended September 30, 2011 filed October 28, 2011, File No. 1-8489)~~.

~~4.11~~

Replacement Capital Covenant entered into by Dominion Resources, Inc. dated September 29, 2006 (Exhibit 4.3, Form 10-Q for the quarter ended September 30, 2006 filed November 1, 2006, File No. 1-8489)~~, as amended by~~ ~~Amendment No. 1 to Replacement Capital Covenant dated September 26, 2011 (Exhibit 4.3, Form 10-Q for the quarter ended September 30, 2011 filed October 28, 2011, File No. 1-8489)~~.

~~4.12~~

2016 Series A Purchase Contract and Pledge Agreement, dated August 15, 2016, between the Company and Deutsche Bank Trust Company Americas, as Purchase Contract Agent, Collateral Agent, Custodial Agent and Securities Intermediary (Exhibit 4.7, Form 8-K filed August 15, 2016, File No. 1-8489).

~~4.13~~

~~4.14~~

2019 Series A Purchase Contract and Pledge Agreement, dated June 14, 2019, among the Dominion Energy, Inc., Deutsche Bank Trust Company Americas, in its capacity as the purchase contract agent, and HSBC Bank USA, National Association, in its capacity as the collateral agent, custodial agent and securities intermediary (Exhibit 3.1, Form 8-K filed June 14, 2019, File No.1-8489).

4.11

~~4.15~~

Registration Rights Agreement, dated December 16, 2019, by and between Dominion Energy, Inc. and Gallagher Fiduciary Advisors, LLC on behalf of the Dominion Energy, Inc. Defined Benefit Master Trust (Exhibit 4.1, Form 8-K filed December 20, 2019, File No. 1-8489).

4.12

~~4.16~~

Description of Dominion Energy, Inc.’s Common Stock ~~(filed herewith)~~(Exhibit 4.16, Form 10-K for the fiscal year ended December 31, 2019 filed February 28, 2020, File No.1-8489).

4.13

~~4.17~~

Description of Dominion Energy, Inc.’s 2016 Series A 5.25% Enhanced Junior Subordinated Notes due 2076 ~~(filed herewith)~~(Exhibit 4.17, Form 10-K for the fiscal year ended December 31, 2019 filed February 28, 2020, File No.1-8489).

4.14

~~4.18~~

Description of Dominion Energy, Inc.’s 2019 Series A Corporate Units ~~(filed herewith)~~(Exhibit 4.18, Form 10-K for the fiscal year ended December 31, 2019 filed February 28, 2020, File No.1-8489).

4.15

~~4.19~~

Description of Virginia Electric and Power Company’s Common Stock ~~(filed herewith)~~(Exhibit 4.19, Form 10-K for the fiscal year ended December 31, 2019 filed February 28, 2020, File No.1-8489).

~~4.20~~

~~Description of Dominion Energy Gas Holdings, LLC’s Limited Liability Company Membership Interests (filed herewith).~~

~~4.21~~

~~Description of Dominion Energy Gas Holdings, LLC’s 2014 Series C 4.6% Senior Notes due 2044 (filed herewith).~~

Exhibit

Number

Description

Dominion

Energy

Virginia

Power

10.1

~~205~~

Exhibit
Number

~~Description~~

~~Dominion~~

~~Energy~~

~~Virginia~~

~~Power~~

~~Dominion~~

~~Energy~~

~~Gas~~

~~10.1~~

$6,000,000,000 Fourth Amended and Restated Revolving Credit Agreement, dated March 22, 2019, among Dominion Energy, Inc., Virginia Electric and Power Company, Dominion Energy Gas Holdings, LLC, Questar Gas Company, South Carolina Electric & Gas Company, JPMorgan Chase Bank, N.A., as Administrative Agent, Mizuho Bank, Ltd., Bank of America, N.A., The Bank of Nova Scotia and Wells Fargo Bank, N.A., as Syndication Agents, and other lenders named therein (Exhibit 10.1, Form 8-K filed March 26, 2019, File No. 1-8489); as amended by the First Amendment, dated October 30, 2020, to the Fourth Amended and Restated Revolving Credit Agreement (Exhibit 10.1, Form 10-Q for the quarter ended September 30, 2020 filed November 6, 2020, File No. 1-8489).

10.2

~~10.2~~

~~Inter-Company Credit Agreement, dated October 17, 2013, between Dominion Resources, Inc. and Dominion Gas Holdings, LLC (Exhibit 10.2, Form S-4 filed April 4, 2014, File No. 333-195066)~~.

~~10.3~~

DRS Services Agreement, dated January 1, 2003, between Dominion Resources, Inc. and Dominion Resources Services, Inc. (Exhibit 10.1, Form 10-K for the fiscal year ended December 31, 2011 filed February 28, 2012, File No. 1-8489)..

10.3

~~10.4~~

~~DRS~~DES Services Agreement, dated January 1, ~~2012,~~2021, between Dominion ~~Resources~~Energy Services, Inc. and Virginia Electric and Power Company ~~(Exhibit 10.2, Form 10-K for the fiscal year ended December 31, 2011 filed February 28, 2012, File No. 1-8489 and File No. 1-2255)~~(filed herewith)..

10.4

~~10.5~~

~~DRS Services Agreement, dated September 12, 2013, between Dominion Gas Holdings, LLC and Dominion Resources Services, Inc. (Exhibit 10.3, Form S-4 filed April 4, 2014, File No. 333-195066)~~.

~~10.6~~

~~DRS Services Agreement, dated January 1, 2003, between Dominion Transmission Inc. and Dominion Resources Services, Inc. (Exhibit 10.4, Form S-4 filed April 4, 2014, File No. 333-195066).~~

~~10.7~~

~~DRS Services Agreement, dated January 1, 2003, between Dominion Iroquois, Inc. and Dominion Resources Services, Inc. (Exhibit 10.6, Form S-4 filed April 4, 2014, File No. 333-195066)~~.

~~10.8~~

Agreement between PJM Interconnection, L.L.C. and Virginia Electric and Power Company (Exhibit 10.1, Form 8-K filed April 26, 2005, File No. 1-2255 and File No. 1-8489)..

10.5

~~10.9~~

Form of Settlement Agreement in the form of a proposed Consent Decree among the United States of America, on behalf of the United States Environmental Protection Agency, the State of New York, the State of New Jersey, the State of Connecticut, the Commonwealth of Virginia and the State of West Virginia and Virginia Electric and Power Company (Exhibit 10, Form 10-Q for the quarter ended March 31, 2003 filed May 9, 2003, File No. 1-8489 and File No. 1-2255).

10.6*

10.10*

~~Dominion Resources, Inc. Executive Supplemental Retirement Plan, as amended and restated effective December 17, 2004 (Exhibit 10.5, Form 8-K filed December 23, 2004, File No. 1-8489), as amended~~ ~~September 26, 2014 (Exhibit 10.1, Form 10-Q for the fiscal quarter ended September 30, 2014 filed November 3, 2014)~~.

10.11*

Form of Employment Continuity Agreement for certain officers of Dominion Resources, Inc. ~~and Virginia Electric and Power Company,~~, amended and restated July 15, 2003 (Exhibit 10.1, Form 10-Q for the quarter ended June 30, 2003 filed August 11, 2003, File No. 1-8489 and File No. 1-2255), as amended March 31, 2006 (Exhibit 10.1, Form 8-K filed April 4, 2006, File No. 1-8489).

10.7*

10.12*

Form of Employment Continuity Agreement for certain officers of Dominion Resources, Inc. ~~and Virginia Electric and Power Company~~ dated January 24, 2013 (effective for certain officers elected subsequent to February 1, 2013) (Exhibit 10.9, Form 10-K for the fiscal year ended December 31, 2013 filed February 28, 2014, File No. 1-8489 and File No. 1-2255).

10.8*

10.13*

~~Dominion Resources, Inc. Retirement Benefit Restoration Plan, as amended and restated effective December 17, 2004 (Exhibit 10.6, Form 8-K filed December 23, 2004, File No. 1-8489), as amended~~ ~~September 26, 2014 (Exhibit 10.2, Form 10-Q for the fiscal quarter ended September 30, 2014 filed November 3, 2014)~~.


~~206~~

Exhibit
Number

~~Description~~

~~Dominion~~

~~Energy~~

~~Virginia~~

~~Power~~

~~Dominion~~

~~Energy~~

~~Gas~~

10.14*

Dominion Resources, Inc. Executives’ Deferred Compensation Plan, amended and restated effective December 31, 2004 (Exhibit 10.7, Form 8-K filed December 23, 2004, File No. 1-8489)..

10.9*

10.15*

Dominion Resources, Inc. New Executive Supplemental Retirement Plan, as amended and restated effective July 1, 2013 (Exhibit 10.2, Form 10-Q for the quarter ended June 30, 2013 filed August 6, 2013 File No. 1-8489), as amended September 26, 2014 (Exhibit 10.3, Form 10-Q for the fiscal quarter ended September 30, 2014 filed November 3, 2014), as amended effective October 1, 2019 (Exhibit 10.1, Form 8-K filed October 2, 2019, File No. 1-8489), as amended December 11, 2020 (filed herewith).

10.16*

10.10*

Dominion Resources, Inc. New Retirement Benefit Restoration Plan, as amended and restated effective January 1, 2009 (Exhibit 10.17, Form 10-K for the fiscal year ended December 31, 2008 filed February 26, 2009, File No. 1-8489 and Exhibit 10.20, Form 10-K for the fiscal year ended December 31, 2008 filed February 26, 2009, File No. 1-2255), as amended September 26, 2014 (Exhibit 10.4, Form 10-Q for the fiscal quarter ended September 30, 2014 filed November 3, 2014).

Exhibit

Number

Description

Dominion

Energy

Virginia

Power

10.11*

10.17*

Dominion Resources, Inc. Stock Accumulation Plan for Outside Directors, amended as of February 27, 2004 (Exhibit 10.15, Form 10-K for the fiscal year ended December 31, 2003 filed March 1, 2004, File No. 1-8489) as amended effective December 31, 2004 (Exhibit 10.1, Form 8-K filed December 23, 2004, File No. 1-8489).

10.12*

10.18*

Dominion Resources, Inc. Directors Stock Compensation Plan, as amended February 27, 2004 (Exhibit 10.16, Form 10-K for the fiscal year ended December 31, 2003 filed March 1, 2004, File No. 1-8489) as amended effective December 31, 2004 (Exhibit 10.2, Form 8-K filed December 23, 2004, File No. 1-8489).

10.13*

10.19*

Dominion Resources, Inc. Non-Employee Directors’ Compensation Plan, effective January 1, 2005, as amended and restated effective December 17, 2009 (Exhibit 10.18, Form 10-K filed for the fiscal year ended December 31, 2009 filed February 26, 2010, File No. 1-8489).

10.14*

10.20*

Dominion Resources, Inc. Executive Stock Purchase Tool Kit, effective September 1, 2001, amended and restated May 7, 2014 (Exhibit 10.4, Form 10-Q for the fiscal quarter ended June 30, 2014 filed July 30, 2014, File No. 1-8489 and File No. 1-2250).

10.15*

10.21*

Letter agreement between Dominion Resources, Inc. and Thomas F. Farrell, II, dated February 27, 2003 (Exhibit 10.24, Form 10-K for the fiscal year ended December 31, 2002 filed March 20, 2003, File No. 1-8489), as amended December 16, 2005 (Exhibit 10.1, Form 8-K filed December 16, 2005, File No. 1-8489).

10.16*

10.22*

Supplemental Retirement Agreement dated October 22, 2003 between Dominion Resources, Inc. and Paul D. Koonce (Exhibit 10.18, Form 10-K for the fiscal year ended December 31, 2003 filed March 1, 2004, File No. 1-2255).

10.23*

Form of Advancement of Expenses for certain directors and officers of Dominion Resources, Inc., approved by the Dominion Resources, Inc. Board of Directors on October 24, 2008 (Exhibit 10.2, Form 10-Q for the quarter ended September 30, 2008 filed October 30, 2008, File No. 1-8489 andExhibit 10.3, Form 10-Q for the quarter ended September 30, 2008 filed October 30, 2008, File No. 1-2255).

10.17*

10.24*

Dominion Resources, Inc. 2014 Incentive Compensation Plan, effective May 7, 2014 (Exhibit 10.1, Form 8-K filed May 7, 2014, File No. 1-8489).

10.18*

10.25*

Dominion Energy, Inc. Deferred Compensation Plan, effective July 1, 2021 (filed herewith).

Form of Restricted Stock Award Agreement under the 2016 Long-Term Incentive Program approved January 21, 2016 (Exhibit 10.48, Form 10-K for the fiscal year ended December 31, 2015 filed February 26, 2016, File No. 1-8489).

10.19*

10.26*

Form of Restricted Stock Award Agreement under the 2017 Long-Term Incentive Program approved January 24, 2017 (Exhibit 10.46, Form 10-K for the fiscal year ended December 31, 2016 filed February 28, 2017, File No. 1-8489).


						~~207~~

Exhibit
Number

~~Description~~

~~Dominion~~

~~Energy~~

~~Virginia~~

~~Power~~

~~Dominion~~

~~Energy~~

~~Gas~~

10.27*

~~2017 Performance Grant Plan under the 2014 Incentive Compensation Plan approved January 24, 2017 (Exhibit 10.3, Form 10-Q for the quarter ended March 31, 2017 filed May 4, 2017, File No. 1-8489)~~.

10.28*

2018 Performance Grant Plan under the 2018 Long-Term Incentive Program approved January 25, 2018 (Exhibit 10.43, Form 10-K for the fiscal year ended December 31, 2017, filed February 27, 2018, File No. 1-8489).

10.29*

Form of Restricted Stock Award Agreement under the 2018 Long-Term Incentive Program approved January 25, 2018 (Exhibit 10.44, Form 10-K for the fiscal year ended December 31, 2017, filed February 27, 2018, File No. 1-8489).

10.30*

2019 Performance Grant Plan under the 2019 Long-Term Incentive Program approved January 24, 2019 (Exhibit 10.42, Form 10-K for the fiscal year ended December 31, 2018, filed February 28, 2019, File No. 1-8489).

10.20*

10.31*

2019 Goal-Based Stock Award Agreement under the 2019 Long-Term Incentive Program approved January 24, 2019 (Exhibit 10.43, Form 10-K for the fiscal year ended December 31, 2018, filed February 28, 2019, File No. 1-8489)..

10.21*

10.32*

Form of Restricted Stock Award Agreement under the 2019 Long-Term Incentive Program approved January 24, 2019 (Exhibit ~~10.42,~~10.44, Form 10-K for the fiscal year ended December 31, 2018, filed February 28, 2019, File No. 1-8489).

10.22*

10.33*

2020 Performance Grant Plan under the 2020 Long-Term Incentive Program approved January 23, 2020 ~~(filed herewith)~~(Exhibit 10.33, Form 10-K for the fiscal year ended December 31, 2019 filed February 28, 2020, File No.1-8489).

10.23*

10.34*

2020 Goal-Based Stock Award Agreement under the 2020 Long-Term Incentive Program approved January 23, 2020 ~~(filed herewith)~~(Exhibit 10.34, Form 10-K for the fiscal year ended December 31, 2019 filed February 28, 2020, File No.1-8489).

Exhibit

Number

Description

Dominion

Energy

Virginia

Power

10.24*

10.35*

Form of Restricted Stock Award Agreement under the 2020 Long-Term Incentive Program approved January 23, 2020 (Exhibit 10.35, Form 10-K for the fiscal year ended December 31, 2019 filed February 28, 2020, File No.1-8489).

10.25*

Restricted Stock Award Agreement for Diane Leopold (Exhibit 10.2, Form 10-Q for the quarter ended September 30, 2020 filed November 6, 2020, File No. 1-8489).

10.26*

2021 Performance Grant Plan under the 2021 Long-Term Incentive Program approved January 21, 2021 (filed herewith).

10.27*

Form of 2021 Goal-Based Stock Award Agreement under the 2021 Long-Term Incentive Program approved January 21, 2021 (filed herewith).

10.28*

Form of Restricted Stock Agreement under the 2021 Long-Term Incentive Program approved January 21, 2021 (filed herewith).

10.29*

2021 Restricted Stock Award Agreement for Thomas F. Farrell, II (filed herewith).

10.30*

2021 Performance Grant Plan for Thomas F. Farrell, II (filed herewith).

Subsidiaries of Dominion Energy, Inc. (filed herewith).

Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm for Dominion Energy, Inc., and Virginia Electric and Power Company ~~and Dominion Energy Gas Holdings, LLC~~ (filed herewith).

31.a

~~31.a~~

Certification by Chief Executive Officer of Dominion Energy, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.b

~~31.b~~

Certification by Chief Financial Officer of Dominion Energy, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.c

~~31.c~~

Certification by Chief Executive Officer of Virginia Electric and Power Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.d

~~31.d~~

Certification by Chief Financial Officer of Virginia Electric and Power Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.a

~~31.e~~

~~Certification by Chief Executive Officer of Dominion Energy Gas Holdings, LLC pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).~~

~~31.f~~

~~Certification by Chief Financial Officer of Dominion Energy Gas Holdings, LLC pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).~~

~~32.a~~

Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Dominion Energy, Inc. as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.b

~~32.b~~

Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Virginia Electric and Power Company as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

Exhibit

Number

Description

Dominion

Energy

Virginia

Power

~~208~~

101

Exhibit
Number

~~Description~~

~~Dominion~~

~~Energy~~

~~Virginia~~

~~Power~~

~~Dominion~~

~~Energy~~

~~Gas~~

~~32.c~~

Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Dominion Energy Gas Holdings, LLC as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

~~Dominion Energy, Inc. Earnings Release Kit (furnished herewith).~~

~~101~~

~~The~~

The following financial statements from Dominion Energy, Inc.’s Annual Report on Form

10-K

for the year ended December 31, ~~2019,~~2020, filed on February ~~28, 2020,~~25, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. The following financial statements from Virginia Electric and Power Company’s Annual Report on Form

10-K

for the year ended December 31, ~~2019,~~2020, filed on February ~~28, 2020,~~25, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Common Shareholder’s Equity (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. ~~The following financial statements from Dominion Energy Gas Holdings, LLC’s Annual Report on Form~~

~~10-K~~

for the year ended December 31, 2019, filed on February 28, 2020, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.

104

~~104~~

Cover Page Interactive Data File formatted in iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101.

*	Indicates management contract or compensatory plan or arrangement.

Item 16. Form 10-K Summary

None.

~~10-K~~

~~Summary~~

~~None.~~


						~~209~~

Signatures

~~Dominion Energy~~

DOMINION ENERGY

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		DOMINION ENERGY, INC.

By:	~~By:~~		/s/ ~~Thomas F. Farrell, II~~ Robert M. Blue
			(~~Thomas F. Farrell, II, Chairman,~~Robert M. Blue, President and Chief Executive Officer)

Date: February ~~28, 2020~~

25, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the ~~28th~~25th day of February, ~~2020.~~

2021.

Signature		Title
~~Signature~~			~~Title~~

/s/ Thomas F. Farrell, II Thomas F. Farrell, II			Executive Chairman of the Board of Directors ~~President and Chief~~ ~~Executive Officer~~


/s/ James A. Bennett James A. Bennett			Director


/s/ Robert M. Blue Robert M. Blue	Director, President and Chief Executive Officer
/s/ Helen E. Dragas Helen E. Dragas			Director


/s/ James O. Ellis, Jr. James O. Ellis, Jr.			Director

/s/ D. Maybank Hagood	Director
D. Maybank Hagood			~~Director~~

~~/s/ John W. Harris~~ ~~John W. Harris~~		~~Director~~

~~/s/~~ /s/ Ronald W. Jibson Ronald W. Jibson			Director


/s/ Mark J. Kington Mark J. Kington			Director

~~/s/~~
/s/ Joseph M. Rigby Joseph M. Rigby			Director

~~/s/~~
/s/ Pamela J. Royal Pamela J. Royal			Director

~~/s/~~
/s/ Robert H. Spilman, Jr. Robert H. Spilman, Jr.			Director

~~/s/~~
/s/ Susan N. Story Susan N. Story			Director

~~/s/~~
/s/ Michael E. Szymanczyk Michael E. Szymanczyk			Director


/s/ James R. Chapman James R. Chapman			Executive Vice President, Chief Financial Officer and Treasurer


/s/ Michele L. Cardiff Michele L. Cardiff			Senior Vice President, Controller and Chief Accounting Officer


~~210~~

Virginia Power


		VIRGINIA ELECTRIC AND POWER COMPANY

By:	~~By:~~		/s/ ~~Thomas F. Farrell, II~~ Robert M. Blue
			(~~Thomas F. Farrell, II, Chairman of the Board~~ ~~of Directors and~~ Robert M. Blue, Chief Executive Officer)

Date: February ~~28, 2020~~

25, 2021

2021.


Signature		Title

~~/s/ Thomas F. Farrell, II~~ ~~Thomas F. Farrell, II~~		~~Chairman of the Board of Directors and Chief Executive Officer~~
/s/ Edward H. Baine Edward H. Baine		Director


/s/ Robert M. Blue Robert M. Blue		Director and Chief Executive Officer

/s/ ~~Carlos M. Brown~~ ~~Carlos M. Brown~~ Diane Leopold Diane Leopold		Director

~~/s/~~
/s/ James R. Chapman James R. Chapman		Executive Vice President, Chief Financial Officer and Treasurer

~~/s/~~ /s/ Michele L. Cardiff Michele L. Cardiff		Senior Vice President, Controller and Chief Accounting Officer


						~~211~~

~~Dominion Energy Gas~~


		~~DOMINION ENERGY GAS HOLDINGS, LLC~~

		~~By:~~		~~/s/ Thomas F. Farrell, II~~
				~~(Thomas F. Farrell, II, Chairman of the Board~~ ~~of Directors and Chief Executive Officer)~~

~~Date: February 28, 2020~~


~~Signature~~		~~Title~~

~~/s/ Thomas F. Farrell, II~~ ~~Thomas F. Farrell, II~~		~~Chairman of the Board of Directors and Chief Executive Officer~~

~~/s/ Carlos M. Brown~~ ~~Carlos M. Brown~~		~~Director~~

~~/s/ James R. Chapman~~ ~~James R. Chapman~~		~~Director, Executive Vice President, Chief Financial Officer and Treasurer~~

~~/s/ Michele L. Cardiff~~ ~~Michele L. Cardiff~~		~~Vice President, Controller and Chief Accounting Officer~~


~~212~~

238


	NRC license expiration year		Most recent cost estimate (2019 dollars) (1)		Funds in trusts at December 31, 2019		2019 contributions to trusts
(dollars in millions)

Surry
Unit 1		2032		$ 803		$ 815		$ —
Unit 2		2033		794		803		—

North Anna
Unit 1 (2)		2038		720		651		—
Unit 2 (2)		2040		724		612		—
Total				$3,041		$2,881		$—


Source	2019			2018 (1)

Natural gas		46	%		37	%
Coal		27			35
Nuclear (2)		23			20
Renewable/hydro (3)		4			8
Total		100	%		100	%


	NRC license expiration year		Most recent cost estimate (2019 dollars) (1)		Funds in trusts at December 31, 2019		2019 contributions to trusts
(dollars in millions)

Millstone
Unit 1 (2)		N/A	$	450		$ 622		$ —
Unit 2		2035		653		828		—
Unit 3 (3)		2045		741		813		—

Kewaunee
Unit 1 (4)		N/A		573		834		—
Total			$	2,417		$3,097		$ —