UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended SeptemberJune 30, 20172023
or
☐ | 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, address of principal executive offices and registrants’ telephone number | I.R.S. Employer Identification Number | ||
001-08489 | DOMINION ENERGY, INC.
| 54-1229715 | ||
000-55337 | VIRGINIA ELECTRIC AND POWER COMPANY | 54-0418825 | ||
|
|
| ||
120 Tredegar Street Richmond, Virginia23219
|
State or other jurisdiction of incorporation or organization of the registrants: Virginia
Securities registered pursuant to Section 12(b) of the Act:
Registrant | Trading Symbol | Title of Each Class | Name of Each Exchange on Which Registered |
DOMINION ENERGY, INC. | D | Common Stock, no par value | New York Stock Exchange |
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☒ No ☐ Virginia Electric and Power Company Yes☒ No ☐
Dominion Energy Gas Holdings, LLC Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).
Dominion Energy, Inc. Yes☒ No ☐ Virginia Electric and Power Company Yes☒ No ☐
Dominion Energy Gas Holdings, LLC Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “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 | ☐ | ||
|
|
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. ☐
Virginia Electric and Power Company
Large accelerated filer | ☐ | Accelerated filer | ☐ | Emerging growth company | ☐ | |
Non-accelerated filer | ☒ |
| Smaller reporting 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. ☐
Dominion Energy Gas Holdings, LLC
|
|
|
| |
|
|
|
|
|
|
|
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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Dominion Energy, Inc. Yes ☐ No ☒ Virginia Electric and Power Company Yes ☐ No ☒
Dominion Energy Gas Holdings, LLC Yes ☐ No ☒
At October 13, 2017,July 28, 2023, the latest practicable date for determination, Dominion Energy, Inc. had 643,529,769836,772,913 shares of common stock outstanding and Virginia Electric and Power Company had 274,723 shares of common stock outstanding. Dominion Energy, Inc. is the sole holder of Virginia Electric and Power Company’s common stock. Dominion Energy, Inc. holds all of the membership interests of Dominion Energy Gas Holdings, LLC.
This combined Form 10-Q 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 makemakes no representationsrepresentation as to the information relating to Dominion Energy, Inc.’s other operations.
VIRGINIA ELECTRIC AND POWER COMPANY AND DOMINION ENERGY GAS HOLDINGS, LLC MEETMEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND AREIS FILING THIS FORM 10-Q UNDER THE REDUCED DISCLOSURE FORMAT.
1
Page Number | ||
3 | ||
Item 1. |
| |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
|
Item 3. |
| |
Item 4. |
| |
Item 1. |
| |
Item 1A. |
| |
Item 2. |
| |
Item |
| |
Item 6. | 84 | |
2
The following abbreviations or acronyms used in this Form 10-Q are defined below:
Abbreviation or Acronym | Definition | |
|
| |
| Dominion | |
|
| |
| Virginia Commission review of Virginia Power’s earned return on base rate generation and distribution services for the two successive 12-month test periods beginning January 1, 2021 and ending December 31, 2022 and prospective rate base setting for the succeeding annual periods beginning January 1, 2024 and ending December 31, 2025 | |
2025 Biennial Review | Future Virginia Commission review of Virginia Power’s earned return on base rate generation and distribution services for the two successive 12-month test periods beginning January 1, 2023 and ending December 31, 2024 and prospective rate base setting for the succeeding annual periods beginning January 1, 2026 and ending December 31, 2027 | |
ACE Rule | Affordable Clean Energy Rule | |
AFUDC | Allowance for funds used during construction | |
| 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 | |
|
| |
bcf | Billion cubic feet | |
|
| |
| A | |
|
| |
|
| |
CCR | Coal combustion residual | |
|
| |
| 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 | |
CFO | Chief Financial Officer | |
CO2 | Carbon dioxide | |
| A 142 MW utility-scale solar power station located in Surry County, Virginia |
3
Companies | Dominion Energy and Virginia Power, | |
Contracted Assets | Contracted Assets operating segment | |
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 |
| |
CPCN | Certificate of Public Convenience and Necessity | |
|
| |
|
| |
| Clean Water Act | |
DECP Holdings | The legal entity DECP Holdings, Inc., which holds Dominion | |
DEQPS | MountainWest Pipeline Services, Inc. (formerly known as Dominion | |
| Dominion Energy | |
|
| |
|
| |
| U.S. Department of Energy | |
Dominion Energy | The legal entity, Dominion Energy, Inc. |
|
| |
A dividend reinvestment and open enrollment direct stock purchase plan | ||
Dominion Energy Questar Pipeline | The legal entity, | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| Dominion Utility Privatization, LLC, a joint venture between Dominion Energy and Patriot | |
DSM | Demand-side management | |
Dth | Dekatherm | |
Duke Energy | The legal entity, Duke Energy Corporation, one or more of its consolidated subsidiaries, or | |
East Ohio | The East Ohio Gas Company, doing business as Dominion Energy Ohio | |
|
| |
EPA | U.S. Environmental Protection Agency | |
EPS | Earnings per common share | |
FERC | Federal Energy Regulatory Commission | |
|
|
4
|
| |
|
| |
|
| |
| U.S. generally accepted accounting principles | |
|
| |
|
| |
GHG | Greenhouse gas | |
|
| |
|
| |
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. |
|
| |
| ||
|
| |
|
| |
kV | Kilovolt | |
|
| |
|
| |
|
| |
|
| |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
MGD | Million gallons | |
Millstone | Millstone nuclear power station | |
|
| |
| Megawatt hour | |
|
| |
|
| |
|
| |
|
| |
NO | Nitrogen oxide | |
NRC | U.S. Nuclear Regulatory Commission | |
|
| |
|
| |
| Public Utilities Commission of Ohio | |
Order 1000 | Order issued by FERC adopting requirements for electric transmission planning, cost allocation and development | |
| The period May 1st through September 30th, as determined on a federal level | |
Patriot | Patriot Utility Privatizations, LLC, a joint venture between Foundation Infrastructure Partners, LLC and John Hancock Life Insurance Company (U.S.A.) and affiliates | |
PFAS | Per- and polyfluorinated substances, a group of widely used chemicals that break down very slowly over time in the environment | |
PIPP | Percentage of Income Payment Plan deployed by East Ohio | |
PIR | Pipeline Infrastructure Replacement program deployed by East Ohio | |
PJM | PJM Interconnection, | |
|
|
5
PSNC | Public Service Company of North Carolina, Incorporated, doing business as Dominion Energy North Carolina | |
|
| |
|
| |
|
| |
|
| |
|
| |
| A rate adjustment clause associated with the recovery of costs related to | |
Rider | A rate adjustment clause associated with the recovery of costs related to certain renewable generation, energy storage and related transmission facilities in Virginia as well as certain small-scale distributed generation projects and related transmission facilities | |
Rider D | A rate mechanism which allows PSNC to recover from customers all prudently incurred gas costs and the related portion of uncollectible expenses as well as losses on negotiated gas and transportation sales | |
Rider GT | A rate adjustment clause associated with the recovery of costs associated with electric distribution grid transformation projects that the Virginia Commission has approved as authorized by the GTSA | |
Rider GV | A rate adjustment clause associated with the recovery of costs related to Greensville County | |
Rider OSW | A rate adjustment clause associated with costs incurred to construct, own and operate the CVOW Commercial Project | |
Rider PPA | A rate adjustment clause associated with the recovery of costs associated with power purchase agreements for the energy, capacity, ancillary services and renewable energy credits owned by third parties | |
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 SNA | A rate adjustment clause associated with costs relating to the preparation of the applications for subsequent license renewal to the NRC to extend the operating licenses of Surry and North Anna and related projects | |
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 |
|
| |
A rate adjustment clause associated with the recovery of costs related to | ||
|
| |
|
| |
|
| |
|
|
6
| A | |
| South Carolina Public Service Authority | |
SCANA | The legal entity, SCANA Corporation, one or more of its consolidated subsidiaries, or the entirety of SCANA Corporation and its consolidated subsidiaries | |
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 | |
SCDOR | South Carolina Department of Revenue | |
SEC | U.S. Securities and Exchange Commission | |
|
| |
| Dominion Energy’s Series A Cumulative Perpetual Convertible Preferred Stock, without par value, with a liquidation preference of $1,000 per share (previously designated the 1.75% Series A Cumulative Perpetual Convertible Preferred Stock) | |
Series B Preferred Stock | Dominion Energy’s 4.65% Series B Fixed-Rate Cumulative Redeemable Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000 per share | |
Series C Preferred Stock | Dominion Energy’s 4.35% Series C Fixed-Rate Cumulative Redeemable Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000 per share | |
South Carolina Commission | Public Service Commission of South Carolina | |
Southwest Gas | The legal entity, | |
| A | |
|
| |
| V.C. Summer nuclear power station | |
Surry | Surry nuclear power station | |
UEX | Uncollectible Expense Rider deployed by East Ohio | |
|
| |
|
| |
|
| |
| 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 | |
|
| |
|
| |
|
| |
WP&L | Wisconsin Power and Light Company, a subsidiary of Alliant Energy Corporation | |
WPSC | Wisconsin Public Service Corporation, a subsidiary of WEC Energy Group | |
Wrangler | Wrangler Retail Gas Holdings, LLC, a partnership between Dominion Energy (through March 2022) and Interstate Gas Supply, Inc. |
7
PART I. FINANCIALFINANCIAL INFORMATION
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
(millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating Revenue |
| $ | 3,794 |
|
| $ | 3,596 |
|
| $ | 9,046 |
|
| $ | 7,875 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Electric fuel and other energy-related purchases |
|
| 939 |
|
|
| 730 |
|
|
| 1,961 |
|
|
| 1,408 |
|
Purchased electric capacity |
|
| 15 |
|
|
| 16 |
|
|
| 23 |
|
|
| 29 |
|
Purchased gas |
|
| 227 |
|
|
| 202 |
|
|
| 991 |
|
|
| 847 |
|
Other operations and maintenance |
|
| 932 |
|
|
| 985 |
|
|
| 1,853 |
|
|
| 2,039 |
|
Depreciation, depletion and amortization |
|
| 706 |
|
|
| 695 |
|
|
| 1,426 |
|
|
| 1,393 |
|
Other taxes |
|
| 222 |
|
|
| 235 |
|
|
| 497 |
|
|
| 488 |
|
Impairment of assets and other charges |
|
| 53 |
|
|
| 415 |
|
|
| 151 |
|
|
| 405 |
|
Losses (gains) on sales of assets |
|
| (22 | ) |
|
| 636 |
|
|
| (23 | ) |
|
| 608 |
|
Total operating expenses |
|
| 3,072 |
|
|
| 3,914 |
|
|
| 6,879 |
|
|
| 7,217 |
|
Income (loss) from operations |
|
| 722 |
|
|
| (318 | ) |
|
| 2,167 |
|
|
| 658 |
|
Earnings from equity method investees |
|
| 90 |
|
|
| 83 |
|
|
| 170 |
|
|
| 163 |
|
Other income (expense) |
|
| 325 |
|
|
| (287 | ) |
|
| 609 |
|
|
| (241 | ) |
Interest and related charges |
|
| 430 |
|
|
| 47 |
|
|
| 1,016 |
|
|
| 221 |
|
Income (loss) from continuing operations including noncontrolling |
|
| 707 |
|
|
| (569 | ) |
|
| 1,930 |
|
|
| 359 |
|
Income tax expense (benefit) |
|
| 121 |
|
|
| (117 | ) |
|
| 342 |
|
|
| 119 |
|
Net Income (Loss) From Continuing Operations |
|
| 586 |
|
|
| (452 | ) |
|
| 1,588 |
|
|
| 240 |
|
Net Income (Loss) From Discontinued Operations(1) |
|
| 13 |
|
|
| (1 | ) |
|
| 8 |
|
|
| 18 |
|
Net Income (Loss) Including Noncontrolling Interests |
|
| 599 |
|
|
| (453 | ) |
|
| 1,596 |
|
|
| 258 |
|
Noncontrolling Interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Net Income (Loss) Attributable to Dominion Energy |
| $ | 599 |
|
| $ | (453 | ) |
| $ | 1,596 |
|
| $ | 258 |
|
Amounts attributable to Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) from continuing operations |
| $ | 586 |
|
| $ | (452 | ) |
| $ | 1,588 |
|
| $ | 240 |
|
Net income (loss) from discontinued operations |
|
| 13 |
|
|
| (1 | ) |
|
| 8 |
|
|
| 18 |
|
Net income (loss) attributable to Dominion Energy |
| $ | 599 |
|
| $ | (453 | ) |
| $ | 1,596 |
|
| $ | 258 |
|
EPS - Basic |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) from continuing operations |
| $ | 0.67 |
|
| $ | (0.58 | ) |
| $ | 1.85 |
|
| $ | 0.23 |
|
Net income (loss) from discontinued operations |
|
| 0.02 |
|
|
| — |
|
|
| 0.01 |
|
|
| 0.02 |
|
Net income (loss) attributable to Dominion Energy |
| $ | 0.69 |
|
| $ | (0.58 | ) |
| $ | 1.86 |
|
| $ | 0.25 |
|
EPS - Diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) from continuing operations |
| $ | 0.67 |
|
| $ | (0.58 | ) |
| $ | 1.85 |
|
| $ | 0.23 |
|
Net income (loss) from discontinued operations |
|
| 0.02 |
|
|
| — |
|
|
| 0.01 |
|
|
| 0.02 |
|
Net income (loss) attributable to Dominion Energy |
| $ | 0.69 |
|
| $ | (0.58 | ) |
| $ | 1.86 |
|
| $ | 0.25 |
|
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenue |
| $ | 3,179 |
|
| $ | 3,132 |
|
| $ | 9,376 |
|
| $ | 8,651 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric fuel and other energy-related purchases |
|
| 638 |
|
|
| 606 |
|
|
| 1,711 |
|
|
| 1,791 |
|
Purchased (excess) electric capacity |
|
| 21 |
|
|
| (6 | ) |
|
| (8 | ) |
|
| 107 |
|
Purchased gas |
|
| 24 |
|
|
| 77 |
|
|
| 441 |
|
|
| 252 |
|
Other operations and maintenance |
|
| 649 |
|
|
| 765 |
|
|
| 2,166 |
|
|
| 2,133 |
|
Depreciation, depletion and amortization |
|
| 485 |
|
|
| 400 |
|
|
| 1,421 |
|
|
| 1,112 |
|
Other taxes |
|
| 162 |
|
|
| 145 |
|
|
| 519 |
|
|
| 448 |
|
Total operating expenses |
|
| 1,979 |
|
|
| 1,987 |
|
|
| 6,250 |
|
|
| 5,843 |
|
Income from operations |
|
| 1,200 |
|
|
| 1,145 |
|
|
| 3,126 |
|
|
| 2,808 |
|
Other income |
|
| 73 |
|
|
| 63 |
|
|
| 249 |
|
|
| 189 |
|
Interest and related charges |
|
| 305 |
|
|
| 250 |
|
|
| 905 |
|
|
| 715 |
|
Income from operations including noncontrolling interests before income tax expense |
|
| 968 |
|
|
| 958 |
|
|
| 2,470 |
|
|
| 2,282 |
|
Income tax expense |
|
| 272 |
|
|
| 230 |
|
|
| 683 |
|
|
| 561 |
|
Net Income Including Noncontrolling Interests |
|
| 696 |
|
|
| 728 |
|
|
| 1,787 |
|
|
| 1,721 |
|
Noncontrolling Interests |
|
| 31 |
|
|
| 38 |
|
|
| 100 |
|
|
| 55 |
|
Net Income Attributable to Dominion Energy |
| $ | 665 |
|
| $ | 690 |
|
| $ | 1,687 |
|
| $ | 1,666 |
|
Earnings Per Common Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Dominion Energy - Basic |
| $ | 1.03 |
|
| $ | 1.10 |
|
| $ | 2.66 |
|
| $ | 2.72 |
|
Net income attributable to Dominion Energy - Diluted |
|
| 1.03 |
|
|
| 1.10 |
|
|
| 2.66 |
|
|
| 2.71 |
|
Dividends Declared Per Common Share |
| $ | 0.7700 |
|
| $ | 0.7000 |
|
| $ | 2.2800 |
|
| $ | 2.1000 |
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income including noncontrolling interests |
| $ | 696 |
|
| $ | 728 |
|
| $ | 1,787 |
|
| $ | 1,721 |
|
Other comprehensive income, net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred gains on derivatives-hedging activities(1) |
|
| 11 |
|
|
| 14 |
|
|
| 82 |
|
|
| 56 |
|
Changes in unrealized net gains on investment securities(2) |
|
| 48 |
|
|
| 31 |
|
|
| 141 |
|
|
| 72 |
|
Changes in net unrecognized pension and other postretirement benefit costs(3) |
|
| — |
|
|
| 15 |
|
|
| — |
|
|
| 15 |
|
Amounts reclassified to net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net derivative gains-hedging activities(4) |
|
| (15 | ) |
|
| (34 | ) |
|
| (56 | ) |
|
| (141 | ) |
Net realized gains on investment securities(5) |
|
| (4 | ) |
|
| (13 | ) |
|
| (36 | ) |
|
| (23 | ) |
Net pension and other postretirement benefit costs(6) |
|
| 14 |
|
|
| 9 |
|
|
| 38 |
|
|
| 25 |
|
Changes in other comprehensive income (loss) from equity method investees(7) |
|
| — |
|
|
| — |
|
|
| 2 |
|
|
| (1 | ) |
Total other comprehensive income |
|
| 54 |
|
|
| 22 |
|
|
| 171 |
|
|
| 3 |
|
Comprehensive income including noncontrolling interests |
|
| 750 |
|
|
| 750 |
|
|
| 1,958 |
|
|
| 1,724 |
|
Comprehensive income attributable to noncontrolling interests |
|
| 31 |
|
|
| 38 |
|
|
| 100 |
|
|
| 55 |
|
Comprehensive income attributable to Dominion Energy |
| $ | 719 |
|
| $ | 712 |
|
| $ | 1,858 |
|
| $ | 1,669 |
|
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) including noncontrolling interests |
| $ | 599 |
|
| $ | (453 | ) |
| $ | 1,596 |
|
| $ | 258 |
|
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net deferred gains (losses) on derivatives-hedging |
|
| 6 |
|
|
| 29 |
|
|
| (3 | ) |
|
| 54 |
|
Changes in unrealized net gains (losses) on investment |
|
| (1 | ) |
|
| (27 | ) |
|
| 16 |
|
|
| (89 | ) |
Changes in net unrecognized pension and other |
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 30 |
|
Amounts reclassified to net income (loss): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net derivative (gains) losses-hedging activities(4) |
|
| 8 |
|
|
| 11 |
|
|
| 16 |
|
|
| 21 |
|
Net realized (gains) losses on investment securities(5) |
|
| (2 | ) |
|
| 9 |
|
|
| (1 | ) |
|
| 12 |
|
Net pension and other postretirement benefit costs |
|
| (12 | ) |
|
| 16 |
|
|
| (23 | ) |
|
| 33 |
|
Changes in other comprehensive income from equity |
|
| — |
|
|
| — |
|
|
| 1 |
|
|
| 1 |
|
Total other comprehensive income (loss) |
|
| (1 | ) |
|
| 40 |
|
|
| 6 |
|
|
| 62 |
|
Comprehensive income (loss) including noncontrolling interests |
|
| 598 |
|
|
| (413 | ) |
|
| 1,602 |
|
|
| 320 |
|
Comprehensive income attributable to noncontrolling |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Comprehensive income (loss) attributable to Dominion Energy |
| $ | 598 |
|
| $ | (413 | ) |
| $ | 1,602 |
|
| $ | 320 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Net of $(2) million and $(10) million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $1 million and $(18) million tax for the six months ended June 30, 2023 and 2022, respectively.
(2) Net of $3 million and $9 million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $(4) million and $28 million tax for the six months ended June 30, 2023 and 2022, respectively.
(3) Net of $— million and $2 million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $— million and $(8) million tax for the six months ended June 30, 2023 and 2022, respectively.
(4) Net of $(2) million and $(3) million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $(5) million and $(7) million tax for the six months ended June 30, 2023 and 2022, respectively.
(5) Net of $1 million and $(3) million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $— million and $(4) million tax for the six months ended June 30, 2023 and 2022, respectively.
(6) Net of $4 million and $(6) million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $8 million and $(12) million tax for the six months ended June 30, 2023 and 2022, respectively.
(7) Net of $— million and $— million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $— million and $— million tax for the six months ended June 30, 2023 and 2022, respectively.
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
DOMINION ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| September 30, 2017 |
|
| December 31, 2016(1) |
|
| June 30, 2023 |
|
| December 31, 2022(1) |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 227 |
|
| $ | 261 |
|
| $ | 137 |
|
| $ | 153 |
|
Customer receivables (less allowance for doubtful accounts of $16 and $18) |
|
| 1,292 |
|
|
| 1,523 |
| ||||||||
Other receivables (less allowance for doubtful accounts of $3 and $2) |
|
| 212 |
|
|
| 183 |
| ||||||||
Customer receivables (less allowance for doubtful accounts of $34 and $31) |
|
| 2,496 |
|
|
| 2,952 |
| ||||||||
Other receivables (less allowance for doubtful accounts of $3 at both dates) |
|
| 399 |
|
|
| 405 |
| ||||||||
Inventories |
|
| 1,527 |
|
|
| 1,524 |
|
|
| 1,826 |
|
|
| 1,729 |
|
Derivative assets |
|
| 260 |
|
|
| 1,137 |
| ||||||||
Margin deposit assets |
|
| 169 |
|
|
| 480 |
| ||||||||
Regulatory assets |
|
| 311 |
|
|
| 244 |
|
|
| 1,945 |
|
|
| 2,340 |
|
Other |
|
| 425 |
|
|
| 513 |
|
|
| 628 |
|
|
| 607 |
|
Current assets held for sale |
|
| 117 |
|
|
| 47 |
| ||||||||
Total current assets |
|
| 3,994 |
|
|
| 4,248 |
|
|
| 7,977 |
|
|
| 9,850 |
|
Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Nuclear decommissioning trust funds |
|
| 4,881 |
|
|
| 4,484 |
|
|
| 6,553 |
|
|
| 5,957 |
|
Investment in equity method affiliates |
|
| 1,895 |
|
|
| 1,561 |
|
|
| 3,006 |
|
|
| 3,012 |
|
Other |
|
| 320 |
|
|
| 298 |
|
|
| 393 |
|
|
| 390 |
|
Total investments |
|
| 7,096 |
|
|
| 6,343 |
|
|
| 9,952 |
|
|
| 9,359 |
|
Property, Plant and Equipment |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Property, plant and equipment |
|
| 73,610 |
|
|
| 69,556 |
|
|
| 95,088 |
|
|
| 91,202 |
|
Accumulated depreciation, depletion and amortization |
|
| (20,799 | ) |
|
| (19,592 | ) |
|
| (28,545 | ) |
|
| (27,742 | ) |
Total property, plant and equipment, net |
|
| 52,811 |
|
|
| 49,964 |
|
|
| 66,543 |
|
|
| 63,460 |
|
Deferred Charges and Other Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Goodwill |
|
| 6,405 |
|
|
| 6,399 |
|
|
| 7,295 |
|
|
| 7,295 |
|
Regulatory assets |
|
| 2,503 |
|
|
| 2,473 |
|
|
| 8,863 |
|
|
| 9,087 |
|
Other |
|
| 2,582 |
|
|
| 2,183 |
|
|
| 5,434 |
|
|
| 5,192 |
|
Total deferred charges and other assets |
|
| 11,490 |
|
|
| 11,055 |
|
|
| 21,592 |
|
|
| 21,574 |
|
Total assets |
| $ | 75,391 |
|
| $ | 71,610 |
|
| $ | 106,064 |
|
| $ | 104,243 |
|
|
|
(1) Dominion Energy’s Consolidated Balance Sheet at December 31, 2022 has been derived from the audited Consolidated Balance Sheet at that date.
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
DOMINION ENERGY, INC.
CONSOLIDATED BALANCE SHEETS—(Continued)
(Unaudited)
|
| September 30, 2017 |
|
| December 31, 2016(1) |
|
| June 30, 2023 |
|
| December 31, 2022(1) |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
| ||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
| ||||||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Securities due within one year |
| $ | 2,788 |
|
| $ | 1,709 |
|
| $ | 4,349 |
|
| $ | 3,341 |
|
Supplemental credit facility borrowings |
|
| 450 |
|
|
| — |
| ||||||||
Short-term debt |
|
| 3,060 |
|
|
| 3,155 |
|
|
| 4,575 |
|
|
| 3,423 |
|
Accounts payable |
|
| 757 |
|
|
| 1,000 |
|
|
| 997 |
|
|
| 1,825 |
|
Accrued interest, payroll and taxes |
|
| 843 |
|
|
| 798 |
|
|
| 998 |
|
|
| 1,199 |
|
Derivative liabilities |
|
| 332 |
|
|
| 778 |
| ||||||||
Regulatory liabilities |
|
| 88 |
|
|
| 163 |
|
|
| 583 |
|
|
| 946 |
|
Other |
|
| 1,023 |
|
|
| 1,290 |
| ||||||||
Other(2) |
|
| 1,702 |
|
|
| 1,938 |
| ||||||||
Total current liabilities |
|
| 8,559 |
|
|
| 8,115 |
|
|
| 13,986 |
|
|
| 13,450 |
|
Long-Term Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Long-term debt |
|
| 25,529 |
|
|
| 24,878 |
|
|
| 37,596 |
|
|
| 36,832 |
|
Junior subordinated notes |
|
| 3,980 |
|
|
| 2,980 |
|
|
| 1,387 |
|
|
| 1,387 |
|
Remarketable subordinated notes |
|
| 1,377 |
|
|
| 2,373 |
| ||||||||
Supplemental credit facility borrowings |
|
| — |
|
|
| 450 |
| ||||||||
Other |
|
| 240 |
|
|
| 245 |
| ||||||||
Total long-term debt |
|
| 30,886 |
|
|
| 30,231 |
|
|
| 39,223 |
|
|
| 38,914 |
|
Deferred Credits and Other Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Deferred income taxes and investment tax credits |
|
| 9,379 |
|
|
| 8,602 |
|
|
| 7,067 |
|
|
| 6,698 |
|
Regulatory liabilities |
|
| 2,906 |
|
|
| 2,622 |
|
|
| 10,255 |
|
|
| 10,107 |
|
Other |
|
| 5,159 |
|
|
| 5,200 |
|
|
| 7,105 |
|
|
| 7,193 |
|
Total deferred credits and other liabilities |
|
| 17,444 |
|
|
| 16,424 |
|
|
| 24,427 |
|
|
| 23,998 |
|
Total liabilities |
|
| 56,889 |
|
|
| 54,770 |
|
|
| 77,636 |
|
|
| 76,362 |
|
Commitments and Contingencies (see Note 15) |
|
|
|
|
|
|
|
| ||||||||
Equity |
|
|
|
|
|
|
|
| ||||||||
Common stock – no par(2) |
|
| 9,789 |
|
|
| 8,550 |
| ||||||||
Commitments and Contingencies (see Note 17) |
|
|
|
|
|
| ||||||||||
Shareholders' Equity |
|
|
|
|
|
| ||||||||||
Preferred stock (see Note 16) |
|
| 1,783 |
|
|
| 1,783 |
| ||||||||
Common stock – no par(3) |
|
| 23,704 |
|
|
| 23,605 |
| ||||||||
Retained earnings |
|
| 7,119 |
|
|
| 6,854 |
|
|
| 4,507 |
|
|
| 4,065 |
|
Accumulated other comprehensive loss |
|
| (628 | ) |
|
| (799 | ) |
|
| (1,566 | ) |
|
| (1,572 | ) |
Total common shareholders' equity |
|
| 16,280 |
|
|
| 14,605 |
| ||||||||
Shareholders' equity |
|
| 28,428 |
|
|
| 27,881 |
| ||||||||
Noncontrolling interests |
|
| 2,222 |
|
|
| 2,235 |
|
|
| — |
|
|
| — |
|
Total equity |
|
| 18,502 |
|
|
| 16,840 |
| ||||||||
Total liabilities and equity |
| $ | 75,391 |
|
| $ | 71,610 |
| ||||||||
Total shareholders' equity |
|
| 28,428 |
|
|
| 27,881 |
| ||||||||
Total liabilities and shareholders' equity |
| $ | 106,064 |
|
| $ | 104,243 |
|
|
|
|
|
(1) Dominion Energy’s Consolidated Balance Sheet at December 31, 2022 has been derived from the audited Consolidated Balance Sheet at that date.
(2) See Note 10 for amounts attributable to related parties.
(3) 1.8 billion shares authorized; 837 million and 835 million shares outstanding at June 30, 2023 and December 31, 2022, respectively.
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
11
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
|
| Common Stock |
|
| Dominion Energy Shareholders |
|
| Total Common |
|
|
|
|
|
|
|
|
| |||||||||||
|
| Shares |
|
| Amount |
|
| Retained Earnings |
|
| AOCI |
|
| Shareholders' Equity |
|
| Noncontrolling Interests |
|
| Total Equity |
| |||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015 |
|
| 596 |
|
| $ | 6,680 |
|
| $ | 6,458 |
|
| $ | (474 | ) |
| $ | 12,664 |
|
| $ | 938 |
|
| $ | 13,602 |
|
Net income including noncontrolling interests |
|
|
|
|
|
|
|
|
|
| 1,666 |
|
|
|
|
|
|
| 1,666 |
|
|
| 55 |
|
|
| 1,721 |
|
Contributions from SunEdison to Four Brothers and Three Cedars |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| 178 |
|
|
| 178 |
|
Sale of interest in merchant solar projects |
|
|
|
|
|
| 22 |
|
|
|
|
|
|
|
|
|
|
| 22 |
|
|
| 117 |
|
|
| 139 |
|
Purchase of Dominion Energy Midstream common units |
|
|
|
|
|
| (3 | ) |
|
|
|
|
|
|
|
|
|
| (3 | ) |
|
| (14 | ) |
|
| (17 | ) |
Issuance of common stock |
|
| 31 |
|
|
| 2,079 |
|
|
|
|
|
|
|
|
|
|
| 2,079 |
|
|
|
|
|
|
| 2,079 |
|
Stock awards (net of change in unearned compensation) |
|
|
|
|
|
| 10 |
|
|
|
|
|
|
|
|
|
|
| 10 |
|
|
|
|
|
|
| 10 |
|
Present value of stock purchase contract payments related to RSNs |
|
|
|
|
|
| (191 | ) |
|
|
|
|
|
|
|
|
|
| (191 | ) |
|
|
|
|
|
| (191 | ) |
Dividends and distributions |
|
|
|
|
|
|
|
|
|
| (1,287 | ) |
|
|
|
|
|
| (1,287 | ) |
|
| (39 | ) |
|
| (1,326 | ) |
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 3 |
|
|
| 3 |
|
|
|
|
|
|
| 3 |
|
Other |
|
|
|
|
|
| (5 | ) |
|
|
|
|
|
|
|
|
|
| (5 | ) |
|
| (1 | ) |
|
| (6 | ) |
September 30, 2016 |
|
| 627 |
|
| $ | 8,592 |
|
| $ | 6,837 |
|
| $ | (471 | ) |
| $ | 14,958 |
|
| $ | 1,234 |
|
| $ | 16,192 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 |
|
| 628 |
|
| $ | 8,550 |
|
| $ | 6,854 |
|
| $ | (799 | ) |
| $ | 14,605 |
|
| $ | 2,235 |
|
| $ | 16,840 |
|
Net income including noncontrolling interests |
|
|
|
|
|
|
|
|
|
| 1,687 |
|
|
|
|
|
|
| 1,687 |
|
|
| 100 |
|
|
| 1,787 |
|
Contributions from NRG to Four Brothers and Three Cedars |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| 9 |
|
|
| 9 |
|
Issuance of common stock |
|
| 16 |
|
|
| 1,232 |
|
|
|
|
|
|
|
|
|
|
| 1,232 |
|
|
|
|
|
|
| 1,232 |
|
Stock awards (net of change in unearned compensation) |
|
|
|
|
|
| 17 |
|
|
|
|
|
|
|
|
|
|
| 17 |
|
|
|
|
|
|
| 17 |
|
Dividends and distributions |
|
|
|
|
|
|
|
|
|
| (1,435 | ) |
|
|
|
|
|
| (1,435 | ) |
|
| (123 | ) |
|
| (1,558 | ) |
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 171 |
|
|
| 171 |
|
|
|
|
|
|
| 171 |
|
Other |
|
|
|
|
|
| (10 | ) |
|
| 13 |
|
| . |
|
|
| 3 |
|
| 1 |
|
|
| 4 |
| ||
September 30, 2017 |
|
| 644 |
|
| $ | 9,789 |
|
| $ | 7,119 |
|
| $ | (628 | ) |
| $ | 16,280 |
|
| $ | 2,222 |
|
| $ | 18,502 |
|
QUARTER-TO-DATE
| Preferred Stock |
| Common Stock |
| Dominion Energy Shareholders |
|
|
|
|
|
|
| |||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Retained Earnings |
| AOCI |
| Total |
| Noncontrolling |
| Total |
| |||||||||
(millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
March 31, 2022 |
| 2 |
| $ | 1,783 |
|
| 811 |
| $ | 21,657 |
| $ | 5,516 |
| $ | (1,436 | ) | $ | 27,520 |
| $ | — |
| $ | 27,520 |
|
Net loss including noncontrolling |
|
|
|
|
|
|
|
|
| (453 | ) |
|
|
| (453 | ) |
| — |
|
| (453 | ) | |||||
Issuance of stock |
|
|
|
|
| 21 |
|
| 1,758 |
|
|
|
|
|
| 1,758 |
|
|
|
| 1,758 |
| |||||
Stock awards (net of change in |
|
|
|
|
|
|
| 12 |
|
|
|
|
|
| 12 |
|
|
|
| 12 |
| ||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
| (25 | ) |
|
|
| (25 | ) |
|
|
| (25 | ) | ||||||
Common stock dividends ($0.6675 |
|
|
|
|
|
|
|
|
| (555 | ) |
|
|
| (555 | ) |
| — |
|
| (555 | ) | |||||
Other comprehensive income, net of |
|
|
|
|
|
|
|
|
|
|
| 40 |
|
| 40 |
|
|
|
| 40 |
| ||||||
June 30, 2022 |
| 2 |
| $ | 1,783 |
|
| 832 |
| $ | 23,427 |
| $ | 4,483 |
| $ | (1,396 | ) | $ | 28,297 |
| $ | — |
| $ | 28,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
March 31, 2023 |
| 2 |
| $ | 1,783 |
|
| 836 |
| $ | 23,652 |
| $ | 4,486 |
| $ | (1,565 | ) | $ | 28,356 |
| $ | — |
| $ | 28,356 |
|
Net income including noncontrolling |
|
|
|
|
|
|
|
|
| 599 |
|
|
|
| 599 |
|
| — |
|
| 599 |
| |||||
Issuance of stock |
|
|
|
|
| 1 |
|
| 42 |
|
|
|
|
|
| 42 |
|
|
|
| 42 |
| |||||
Stock awards (net of change in |
|
|
|
|
|
|
| 10 |
|
|
|
|
|
| 10 |
|
|
|
| 10 |
| ||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
| (20 | ) |
|
|
| (20 | ) |
|
|
| (20 | ) | ||||||
Common stock dividends ($0.6675 |
|
|
|
|
|
|
|
|
| (558 | ) |
|
|
| (558 | ) |
| — |
|
| (558 | ) | |||||
Other comprehensive loss, net of |
|
|
|
|
|
|
|
|
|
|
| (1 | ) |
| (1 | ) |
|
|
| (1 | ) | ||||||
June 30, 2023 |
| 2 |
| $ | 1,783 |
|
| 837 |
| $ | 23,704 |
| $ | 4,507 |
| $ | (1,566 | ) | $ | 28,428 |
| $ | — |
| $ | 28,428 |
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
12
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWSEQUITY
(Unaudited)
Nine Months Ended September 30, |
| 2017 |
|
| 2016 |
| ||
(millions) |
|
|
|
|
|
|
|
|
Operating Activities |
|
|
|
|
|
|
|
|
Net income including noncontrolling interests |
| $ | 1,787 |
|
| $ | 1,721 |
|
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization (including nuclear fuel) |
|
| 1,649 |
|
|
| 1,325 |
|
Deferred income taxes and investment tax credits |
|
| 652 |
|
|
| 481 |
|
Proceeds from assignment of tower rental portfolio |
|
| 91 |
|
|
| — |
|
Gains on the sales of assets and equity method investment in Iroquois |
|
| (61 | ) |
|
| (50 | ) |
Contribution to pension plan |
|
| (75 | ) |
|
| — |
|
Other adjustments |
|
| (95 | ) |
|
| (78 | ) |
Changes in: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| 247 |
|
|
| 19 |
|
Inventories |
|
| (34 | ) |
|
| (10 | ) |
Deferred fuel and purchased gas costs, net |
|
| (81 | ) |
|
| 84 |
|
Prepayments |
|
| 34 |
|
|
| 71 |
|
Accounts payable |
|
| (158 | ) |
|
| (89 | ) |
Accrued interest, payroll and taxes |
|
| 61 |
|
|
| 205 |
|
Margin deposit assets and liabilities |
|
| 51 |
|
|
| 1 |
|
Pension and other postretirement benefits |
|
| (132 | ) |
|
| (91 | ) |
Other operating assets and liabilities |
|
| (272 | ) |
|
| (203 | ) |
Net cash provided by operating activities |
|
| 3,664 |
|
|
| 3,386 |
|
Investing Activities |
|
|
|
|
|
|
|
|
Plant construction and other property additions (including nuclear fuel) |
|
| (4,122 | ) |
|
| (4,536 | ) |
Acquisition of Dominion Energy Questar, net of cash acquired |
|
| — |
|
|
| (4,372 | ) |
Acquisition of solar development projects |
|
| (343 | ) |
|
| (21 | ) |
Proceeds from sales of securities |
|
| 1,496 |
|
|
| 1,009 |
|
Purchases of securities |
|
| (1,555 | ) |
|
| (1,065 | ) |
Contributions to equity method affiliates |
|
| (343 | ) |
|
| (124 | ) |
Other |
|
| (6 | ) |
|
| 80 |
|
Net cash used in investing activities |
|
| (4,873 | ) |
|
| (9,029 | ) |
Financing Activities |
|
|
|
|
|
|
|
|
Repayment of short-term debt, net |
|
| (95 | ) |
|
| (713 | ) |
Issuance of short-term notes |
|
| — |
|
|
| 1,200 |
|
Repayment and repurchase of short-term notes |
|
| (250 | ) |
|
| (600 | ) |
Issuance of long-term debt |
|
| 3,480 |
|
|
| 5,730 |
|
Repayment and repurchase of long-term debt |
|
| (1,529 | ) |
|
| (1,169 | ) |
Proceeds from sale of interest in merchant solar projects |
|
| — |
|
|
| 117 |
|
Contributions from NRG and SunEdison to Four Brothers and Three Cedars |
|
| 9 |
|
|
| 178 |
|
Issuance of common stock |
|
| 1,233 |
|
|
| 2,079 |
|
Common dividend payments |
|
| (1,435 | ) |
|
| (1,287 | ) |
Other |
|
| (238 | ) |
|
| (248 | ) |
Net cash provided by financing activities |
|
| 1,175 |
|
|
| 5,287 |
|
Decrease in cash and cash equivalents |
|
| (34 | ) |
|
| (356 | ) |
Cash and cash equivalents at beginning of period |
|
| 261 |
|
|
| 607 |
|
Cash and cash equivalents at end of period |
| $ | 227 |
|
| $ | 251 |
|
Supplemental Cash Flow Information |
|
|
|
|
|
|
|
|
Significant noncash investing and financing activities(1): |
|
|
|
|
|
|
|
|
Accrued capital expenditures |
| $ | 355 |
|
| $ | 341 |
|
YEAR-TO-DATE
|
|
| Preferred Stock |
| Common Stock |
| Dominion Energy Shareholders |
|
|
|
|
|
|
| |||||||||||||||
| Shares |
| Amount |
| Shares |
| Amount |
| Retained Earnings |
| AOCI |
| Total Shareholders' |
| Noncontrolling |
| Total |
| |||||||||
(millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
December 31, 2021 |
| 2 |
| $ | 1,783 |
|
| 810 |
| $ | 21,610 |
| $ | 5,373 |
| $ | (1,458 | ) | $ | 27,308 |
| $ | — |
| $ | 27,308 |
|
Net income including noncontrolling |
|
|
|
|
|
|
|
|
| 258 |
|
|
|
| 258 |
|
| — |
|
| 258 |
| |||||
Issuance of stock |
|
|
|
|
| 22 |
|
| 1,803 |
|
|
|
|
|
| 1,803 |
|
|
|
| 1,803 |
| |||||
Stock awards (net of change in |
|
|
|
|
|
|
| 14 |
|
|
|
|
|
| 14 |
|
|
|
| 14 |
| ||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
| (52 | ) |
|
|
| (52 | ) |
|
|
| (52 | ) | ||||||
Common stock dividends ($1.335 |
|
|
|
|
|
|
|
|
| (1,096 | ) |
|
|
| (1,096 | ) |
| — |
|
| (1,096 | ) | |||||
Other comprehensive income, net of |
|
|
|
|
|
|
|
|
|
|
| 62 |
|
| 62 |
|
|
|
| 62 |
| ||||||
June 30, 2022 |
| 2 |
| $ | 1,783 |
|
| 832 |
| $ | 23,427 |
| $ | 4,483 |
| $ | (1,396 | ) | $ | 28,297 |
| $ | — |
| $ | 28,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
December 31, 2022 |
| 2 |
| $ | 1,783 |
|
| 835 |
| $ | 23,605 |
| $ | 4,065 |
| $ | (1,572 | ) | $ | 27,881 |
| $ | — |
| $ | 27,881 |
|
Net income including noncontrolling |
|
|
|
|
|
|
|
|
| 1,596 |
|
|
|
| 1,596 |
|
| — |
|
| 1,596 |
| |||||
Issuance of stock |
|
|
|
|
| 2 |
|
| 85 |
|
|
|
|
|
| 85 |
|
|
|
| 85 |
| |||||
Stock awards (net of change in |
|
|
|
|
|
|
| 14 |
|
|
|
|
|
| 14 |
|
|
|
| 14 |
| ||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
| (40 | ) |
|
|
| (40 | ) |
|
|
| (40 | ) | ||||||
Common stock dividends ($1.335 |
|
|
|
|
|
|
|
|
| (1,115 | ) |
|
|
| (1,115 | ) |
| — |
|
| (1,115 | ) | |||||
Other comprehensive income, net of |
|
|
|
|
|
|
|
|
|
|
| 6 |
|
| 6 |
|
|
|
| 6 |
| ||||||
Other |
|
|
|
|
|
|
|
|
| 1 |
|
|
|
| 1 |
|
|
|
| 1 |
| ||||||
June 30, 2023 |
| 2 |
| $ | 1,783 |
|
| 837 |
| $ | 23,704 |
| $ | 4,507 |
| $ | (1,566 | ) | $ | 28,428 |
| $ | — |
| $ | 28,428 |
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30, |
| 2023 |
|
| 2022 |
| ||
(millions) |
|
|
|
|
|
| ||
Operating Activities |
|
|
|
|
|
| ||
Net income including noncontrolling interests |
| $ | 1,596 |
|
| $ | 258 |
|
Adjustments to reconcile net income including noncontrolling interests to net cash |
|
|
|
|
|
| ||
Depreciation, depletion and amortization (including nuclear fuel) |
|
| 1,555 |
|
|
| 1,535 |
|
Deferred income taxes and investment tax credits |
|
| 305 |
|
|
| 145 |
|
Impairment of assets and other charges |
|
| 150 |
|
|
| 392 |
|
Losses (gains) on sales of assets and equity method investments |
|
| (31 | ) |
|
| 601 |
|
Net (gains) losses on nuclear decommissioning trust funds and other investments |
|
| (308 | ) |
|
| 556 |
|
Other adjustments |
|
| 62 |
|
|
| (56 | ) |
Changes in: |
|
|
|
|
|
| ||
Accounts receivable |
|
| 590 |
|
|
| (115 | ) |
Inventories |
|
| (101 | ) |
|
| (12 | ) |
Deferred fuel and purchased gas costs, net |
|
| 416 |
|
|
| (858 | ) |
Prepayments |
|
| (35 | ) |
|
| (81 | ) |
Accounts payable |
|
| (694 | ) |
|
| 69 |
|
Accrued interest, payroll and taxes |
|
| (200 | ) |
|
| (155 | ) |
Margin deposit assets and liabilities |
|
| 311 |
|
|
| (291 | ) |
Net realized and unrealized changes related to derivative activities |
|
| 176 |
|
|
| (87 | ) |
Pension and other postretirement benefits |
|
| (239 | ) |
|
| (231 | ) |
Other operating assets and liabilities |
|
| (359 | ) |
|
| (309 | ) |
Net cash provided by operating activities |
|
| 3,194 |
|
|
| 1,361 |
|
Investing Activities |
|
|
|
|
|
| ||
Plant construction and other property additions (including nuclear fuel) |
|
| (4,850 | ) |
|
| (3,219 | ) |
Acquisition of solar development projects |
|
| (12 | ) |
|
| (121 | ) |
Proceeds from sales of securities |
|
| 1,138 |
|
|
| 2,081 |
|
Purchases of securities |
|
| (1,301 | ) |
|
| (1,851 | ) |
Proceeds from sale of assets and equity method investments |
|
| 11 |
|
|
| 146 |
|
Contributions to equity method affiliates |
|
| (48 | ) |
|
| (31 | ) |
Short-term deposit |
|
| — |
|
|
| (2,000 | ) |
Other |
|
| 48 |
|
|
| (153 | ) |
Net cash used in investing activities |
|
| (5,014 | ) |
|
| (5,148 | ) |
Financing Activities |
|
|
|
|
|
| ||
Issuance of short-term debt, net |
|
| 1,152 |
|
|
| 765 |
|
364-day term loan facility borrowings |
|
| 2,500 |
|
|
| — |
|
Issuance and remarketing of long-term debt |
|
| 1,660 |
|
|
| 2,338 |
|
Repayment and repurchase of long-term debt |
|
| (2,394 | ) |
|
| (221 | ) |
Supplemental credit facility borrowings |
|
| 450 |
|
|
| 900 |
|
Repayment of supplemental credit facility borrowings |
|
| (450 | ) |
|
| (450 | ) |
Issuance of common stock |
|
| 85 |
|
|
| 1,701 |
|
Common dividend payments |
|
| (1,115 | ) |
|
| (1,096 | ) |
Other |
|
| (94 | ) |
|
| (151 | ) |
Net cash provided by financing activities |
|
| 1,794 |
|
|
| 3,786 |
|
Decrease in cash, restricted cash and equivalents |
|
| (26 | ) |
|
| (1 | ) |
Cash, restricted cash and equivalents at beginning of period |
|
| 341 |
|
|
| 408 |
|
Cash, restricted cash and equivalents at end of period |
| $ | 315 |
|
| $ | 407 |
|
See Note 2 for disclosure of supplemental cash flow information.
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
14
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating Revenue(1) |
| $ | 2,251 |
|
| $ | 2,175 |
|
| $ | 4,635 |
|
| $ | 4,342 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Electric fuel and other energy-related purchases(1) |
|
| 706 |
|
|
| 533 |
|
|
| 1,505 |
|
|
| 1,049 |
|
Purchased electric capacity |
|
| 10 |
|
|
| 11 |
|
|
| 18 |
|
|
| 22 |
|
Other operations and maintenance: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Affiliated suppliers |
|
| 99 |
|
|
| 84 |
|
|
| 192 |
|
|
| 175 |
|
Other |
|
| 344 |
|
|
| 394 |
|
|
| 692 |
|
|
| 873 |
|
Depreciation and amortization |
|
| 432 |
|
|
| 425 |
|
|
| 879 |
|
|
| 854 |
|
Other taxes |
|
| 67 |
|
|
| 83 |
|
|
| 152 |
|
|
| 158 |
|
Impairment of assets and other charges |
|
| 38 |
|
|
| 409 |
|
|
| 45 |
|
|
| 413 |
|
Total operating expenses |
|
| 1,696 |
|
|
| 1,939 |
|
|
| 3,483 |
|
|
| 3,544 |
|
Income from operations |
|
| 555 |
|
|
| 236 |
|
|
| 1,152 |
|
|
| 798 |
|
Other income (expense) |
|
| 48 |
|
|
| (44 | ) |
|
| 84 |
|
|
| (40 | ) |
Interest and related charges(1) |
|
| 182 |
|
|
| 145 |
|
|
| 363 |
|
|
| 293 |
|
Income before income tax expense |
|
| 421 |
|
|
| 47 |
|
|
| 873 |
|
|
| 465 |
|
Income tax expense |
|
| 89 |
|
|
| — |
|
|
| 188 |
|
|
| 61 |
|
Net Income |
| $ | 332 |
|
| $ | 47 |
|
| $ | 685 |
|
| $ | 404 |
|
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenue(1) |
| $ | 2,154 |
|
| $ | 2,211 |
|
| $ | 5,732 |
|
| $ | 5,877 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric fuel and other energy-related purchases(1) |
|
| 549 |
|
|
| 516 |
|
|
| 1,414 |
|
|
| 1,527 |
|
Purchased (excess) electric capacity |
|
| 21 |
|
|
| (6 | ) |
|
| (8 | ) |
|
| 107 |
|
Other operations and maintenance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliated suppliers |
|
| 76 |
|
|
| 73 |
|
|
| 229 |
|
|
| 238 |
|
Other |
|
| 297 |
|
|
| 370 |
|
|
| 897 |
|
|
| 1,041 |
|
Depreciation and amortization |
|
| 288 |
|
|
| 270 |
|
|
| 854 |
|
|
| 765 |
|
Other taxes |
| �� | 76 |
|
|
| 74 |
|
|
| 233 |
|
|
| 218 |
|
Total operating expenses |
|
| 1,307 |
|
|
| 1,297 |
|
|
| 3,619 |
|
|
| 3,896 |
|
Income from operations |
|
| 847 |
|
|
| 914 |
|
|
| 2,113 |
|
|
| 1,981 |
|
Other income |
|
| 13 |
|
|
| 13 |
|
|
| 57 |
|
|
| 47 |
|
Interest and related charges(1) |
|
| 128 |
|
|
| 118 |
|
|
| 373 |
|
|
| 345 |
|
Income before income tax expense |
|
| 732 |
|
|
| 809 |
|
|
| 1,797 |
|
|
| 1,683 |
|
Income tax expense |
|
| 273 |
|
|
| 306 |
|
|
| 664 |
|
|
| 637 |
|
Net Income |
| $ | 459 |
|
| $ | 503 |
|
| $ | 1,133 |
|
| $ | 1,046 |
|
|
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
15
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETSSTATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income |
| $ | 332 |
|
| $ | 47 |
|
| $ | 685 |
|
| $ | 404 |
|
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net deferred gains (losses) on derivatives-hedging |
|
| 6 |
|
|
| 25 |
|
|
| (3 | ) |
|
| 44 |
|
Changes in unrealized net gains (losses) on investment |
|
| (1 | ) |
|
| (3 | ) |
|
| 3 |
|
|
| (10 | ) |
Amounts reclassified to net income: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net derivative (gains) losses-hedging activities(3) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1 |
|
Net realized (gains) losses on investment securities(4) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
Total other comprehensive income (loss) |
|
| 5 |
|
|
| 22 |
|
|
| — |
|
|
| 34 |
|
Comprehensive income |
| $ | 337 |
|
| $ | 69 |
|
| $ | 685 |
|
| $ | 438 |
|
|
| September 30, 2017 |
|
| December 31, 2016(1) |
| ||
(millions) |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 16 |
|
| $ | 11 |
|
Customer receivables (less allowance for doubtful accounts of $9 and $10) |
|
| 920 |
|
|
| 892 |
|
Other receivables (less allowance for doubtful accounts of $1 at both dates) |
|
| 36 |
|
|
| 99 |
|
Affiliated receivables |
|
| 1 |
|
|
| 112 |
|
Inventories (average cost method) |
|
| 853 |
|
|
| 853 |
|
Other(2) |
|
| 309 |
|
|
| 281 |
|
Total current assets |
|
| 2,135 |
|
|
| 2,248 |
|
Investments |
|
|
|
|
|
|
|
|
Nuclear decommissioning trust funds |
|
| 2,292 |
|
|
| 2,106 |
|
Other |
|
| 3 |
|
|
| 3 |
|
Total investments |
|
| 2,295 |
|
|
| 2,109 |
|
Property, Plant and Equipment |
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
| 41,813 |
|
|
| 40,030 |
|
Accumulated depreciation and amortization |
|
| (13,144 | ) |
|
| (12,436 | ) |
Total property, plant and equipment, net |
|
| 28,669 |
|
|
| 27,594 |
|
Deferred Charges and Other Assets |
|
|
|
|
|
|
|
|
Regulatory assets |
|
| 838 |
|
|
| 770 |
|
Pension and other postretirement benefit assets(2) |
|
| 182 |
|
|
| 130 |
|
Other(2) |
|
| 462 |
|
|
| 457 |
|
Total deferred charges and other assets |
|
| 1,482 |
|
|
| 1,357 |
|
Total assets |
| $ | 34,581 |
|
| $ | 33,308 |
|
|
|
|
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
16
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETS—(Continued)SHEETS
(Unaudited)
|
| June 30, 2023 |
|
| December 31, 2022(1) |
| ||
(millions) |
|
|
|
|
|
| ||
ASSETS |
|
|
|
|
|
| ||
Current Assets |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 19 |
|
| $ | 22 |
|
Customer receivables (less allowance for doubtful accounts of $24 and $21) |
|
| 1,693 |
|
|
| 1,578 |
|
Other receivables (less allowance for doubtful accounts of $1 and $2) |
|
| 201 |
|
|
| 204 |
|
Affiliated receivables |
|
| 72 |
|
|
| 7 |
|
Inventories (average cost method) |
|
| 1,009 |
|
|
| 924 |
|
Margin deposit assets |
|
| 32 |
|
|
| 310 |
|
Derivative assets(2) |
|
| 61 |
|
|
| 765 |
|
Regulatory assets |
|
| 627 |
|
|
| 1,140 |
|
Other |
|
| 48 |
|
|
| 52 |
|
Total current assets |
|
| 3,762 |
|
|
| 5,002 |
|
Investments |
|
|
|
|
|
| ||
Nuclear decommissioning trust funds |
|
| 3,508 |
|
|
| 3,202 |
|
Other |
|
| 4 |
|
|
| 3 |
|
Total investments |
|
| 3,512 |
|
|
| 3,205 |
|
Property, Plant and Equipment |
|
|
|
|
|
| ||
Property, plant and equipment |
|
| 57,554 |
|
|
| 54,697 |
|
Accumulated depreciation and amortization |
|
| (16,760 | ) |
|
| (16,218 | ) |
Total property, plant and equipment, net |
|
| 40,794 |
|
|
| 38,479 |
|
Deferred Charges and Other Assets |
|
|
|
|
|
| ||
Regulatory assets |
|
| 4,151 |
|
|
| 4,247 |
|
Other(2) |
|
| 2,485 |
|
|
| 2,261 |
|
Total deferred charges and other assets |
|
| 6,636 |
|
|
| 6,508 |
|
Total assets |
| $ | 54,704 |
|
| $ | 53,194 |
|
|
| September 30, 2017 |
|
| December 31, 2016(1) |
| ||
(millions) |
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDER’S EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Securities due within one year |
| $ | 851 |
|
| $ | 678 |
|
Short-term debt |
|
| 320 |
|
|
| 65 |
|
Accounts payable |
|
| 337 |
|
|
| 444 |
|
Payables to affiliates |
|
| 167 |
|
|
| 109 |
|
Affiliated current borrowings |
|
| 36 |
|
|
| 262 |
|
Accrued interest, payroll and taxes |
|
| 307 |
|
|
| 239 |
|
Other(2) |
|
| 536 |
|
|
| 725 |
|
Total current liabilities |
|
| 2,554 |
|
|
| 2,522 |
|
Long-Term Debt |
|
| 10,495 |
|
|
| 9,852 |
|
Deferred Credits and Other Liabilities |
|
|
|
|
|
|
|
|
Deferred income taxes and investment tax credits |
|
| 5,357 |
|
|
| 5,103 |
|
Asset retirement obligations |
|
| 1,300 |
|
|
| 1,262 |
|
Regulatory liabilities |
|
| 2,202 |
|
|
| 1,962 |
|
Other(2) |
|
| 863 |
|
|
| 742 |
|
Total deferred credits and other liabilities |
|
| 9,722 |
|
|
| 9,069 |
|
Total liabilities |
|
| 22,771 |
|
|
| 21,443 |
|
Commitments and Contingencies (see Note 15) |
|
|
|
|
|
|
|
|
Common Shareholder’s Equity |
|
|
|
|
|
|
|
|
Common stock – no par(3) |
|
| 5,738 |
|
|
| 5,738 |
|
Other paid-in capital |
|
| 1,113 |
|
|
| 1,113 |
|
Retained earnings |
|
| 4,904 |
|
|
| 4,968 |
|
Accumulated other comprehensive income |
|
| 55 |
|
|
| 46 |
|
Total common shareholder’s equity |
|
| 11,810 |
|
|
| 11,865 |
|
Total liabilities and shareholder’s equity |
| $ | 34,581 |
|
| $ | 33,308 |
|
|
|
|
|
|
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWSBALANCE SHEETS—(Continued)
(Unaudited)
|
| June 30, 2023 |
|
| December 31, 2022(1) |
| ||
(millions) |
|
|
|
|
|
| ||
LIABILITIES AND SHAREHOLDER’S EQUITY |
|
|
|
|
|
| ||
Current Liabilities |
|
|
|
|
|
| ||
Securities due within one year |
| $ | 379 |
|
| $ | 1,164 |
|
Short-term debt |
|
| 1,265 |
|
|
| 941 |
|
Accounts payable |
|
| 540 |
|
|
| 600 |
|
Payables to affiliates |
|
| 97 |
|
|
| 255 |
|
Affiliated current borrowings |
|
| 2,330 |
|
|
| 2,024 |
|
Accrued interest, payroll and taxes |
|
| 298 |
|
|
| 270 |
|
Regulatory liabilities |
|
| 231 |
|
|
| 506 |
|
Derivative liabilities(2) |
|
| 126 |
|
|
| 298 |
|
Other |
|
| 1,103 |
|
|
| 1,176 |
|
Total current liabilities |
|
| 6,369 |
|
|
| 7,234 |
|
Long-Term Debt |
|
|
|
|
|
| ||
Long-term debt |
|
| 16,050 |
|
|
| 14,916 |
|
Other |
|
| 69 |
|
|
| 65 |
|
Total long-term debt |
|
| 16,119 |
|
|
| 14,981 |
|
Deferred Credits and Other Liabilities |
|
|
|
|
|
| ||
Deferred income taxes and investment tax credits |
|
| 3,588 |
|
|
| 3,452 |
|
Regulatory liabilities |
|
| 5,799 |
|
|
| 5,499 |
|
Other(2) |
|
| 4,899 |
|
|
| 4,783 |
|
Total deferred credits and other liabilities |
|
| 14,286 |
|
|
| 13,734 |
|
Total liabilities |
|
| 36,774 |
|
|
| 35,949 |
|
Commitments and Contingencies (see Note 17) |
|
|
|
|
|
| ||
Common Shareholder’s Equity |
|
|
|
|
|
| ||
Common stock – no par(3) |
|
| 5,738 |
|
|
| 5,738 |
|
Other paid-in capital |
|
| 1,113 |
|
|
| 1,113 |
|
Retained earnings |
|
| 11,070 |
|
|
| 10,385 |
|
Accumulated other comprehensive income |
|
| 9 |
|
|
| 9 |
|
Total common shareholder’s equity |
|
| 17,930 |
|
|
| 17,245 |
|
Total liabilities and shareholder’s equity |
| $ | 54,704 |
|
| $ | 53,194 |
|
Nine Months Ended September 30, |
| 2017 |
|
| 2016 |
| ||
(millions) |
|
|
|
|
|
|
|
|
Operating Activities |
|
|
|
|
|
|
|
|
Net income |
| $ | 1,133 |
|
| $ | 1,046 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization (including nuclear fuel) |
|
| 999 |
|
|
| 903 |
|
Deferred income taxes and investment tax credits |
|
| 262 |
|
|
| 369 |
|
Proceeds from assignment of tower rental portfolio |
|
| 91 |
|
|
| — |
|
Other adjustments |
|
| (28 | ) |
|
| (15 | ) |
Changes in: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| 32 |
|
|
| (99 | ) |
Affiliated receivables and payables |
|
| 159 |
|
|
| 306 |
|
Inventories |
|
| 1 |
|
|
| 37 |
|
Prepayments |
|
| (3 | ) |
|
| 15 |
|
Deferred fuel expenses, net |
|
| (48 | ) |
|
| 79 |
|
Accounts payable |
|
| (33 | ) |
|
| 4 |
|
Accrued interest, payroll and taxes |
|
| 67 |
|
|
| 131 |
|
Other operating assets and liabilities |
|
| (162 | ) |
|
| 8 |
|
Net cash provided by operating activities |
|
| 2,470 |
|
|
| 2,784 |
|
Investing Activities |
|
|
|
|
|
|
|
|
Plant construction and other property additions |
|
| (1,917 | ) |
|
| (1,835 | ) |
Purchases of nuclear fuel |
|
| (133 | ) |
|
| (106 | ) |
Proceeds from sales of securities |
|
| 654 |
|
|
| 478 |
|
Purchases of securities |
|
| (681 | ) |
|
| (513 | ) |
Other |
|
| (29 | ) |
|
| (11 | ) |
Net cash used in investing activities |
|
| (2,106 | ) |
|
| (1,987 | ) |
Financing Activities |
|
|
|
|
|
|
|
|
Issuance (repayment) of short-term debt, net |
|
| 255 |
|
|
| (691 | ) |
Repayment of affiliated current borrowings, net |
|
| (226 | ) |
|
| (376 | ) |
Issuance of long-term debt |
|
| 1,500 |
|
|
| 750 |
|
Repayment of long-term debt |
|
| (679 | ) |
|
| (476 | ) |
Common dividend payments to parent |
|
| (1,199 | ) |
|
| — |
|
Other |
|
| (10 | ) |
|
| (4 | ) |
Net cash used in financing activities |
|
| (359 | ) |
|
| (797 | ) |
Increase in cash and cash equivalents |
|
| 5 |
|
|
| — |
|
Cash and cash equivalents at beginning of period |
|
| 11 |
|
|
| 18 |
|
Cash and cash equivalents at end of period |
| $ | 16 |
|
| $ | 18 |
|
Supplemental Cash Flow Information |
|
|
|
|
|
|
|
|
Significant noncash investing activities: |
|
|
|
|
|
|
|
|
Accrued capital expenditures |
| $ | 158 |
|
| $ | 209 |
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
18
VIRGINIA ELECTRIC AND POWER COMPANY
DOMINION ENERGY GAS HOLDINGS, LLC
CONSOLIDATED STATEMENTS OF INCOMECOMMON SHAREHOLDER’S EQUITY
(Unaudited)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenue(1) |
| $ | 401 |
|
| $ | 382 |
|
| $ | 1,313 |
|
| $ | 1,181 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased gas(1) |
|
| 19 |
|
|
| 21 |
|
|
| 100 |
|
|
| 71 |
|
Other energy-related purchases |
|
| 4 |
|
|
| 4 |
|
|
| 11 |
|
|
| 8 |
|
Other operations and maintenance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliated suppliers |
|
| 20 |
|
|
| 20 |
|
|
| 65 |
|
|
| 63 |
|
Other |
|
| 53 |
|
|
| 113 |
|
|
| 312 |
|
|
| 268 |
|
Depreciation and amortization |
|
| 57 |
|
|
| 55 |
|
|
| 167 |
|
|
| 150 |
|
Other taxes |
|
| 42 |
|
|
| 36 |
|
|
| 139 |
|
|
| 127 |
|
Total operating expenses |
|
| 195 |
|
|
| 249 |
|
|
| 794 |
|
|
| 687 |
|
Income from operations |
|
| 206 |
|
|
| 133 |
|
|
| 519 |
|
|
| 494 |
|
Earnings from equity method investee |
|
| 4 |
|
|
| 5 |
|
|
| 15 |
|
|
| 14 |
|
Other income |
|
| 6 |
|
|
| 2 |
|
|
| 16 |
|
|
| 8 |
|
Interest and related charges(1) |
|
| 25 |
|
|
| 23 |
|
|
| 72 |
|
|
| 68 |
|
Income from operations before income taxes |
|
| 191 |
|
|
| 117 |
|
|
| 478 |
|
|
| 448 |
|
Income tax expense |
|
| 74 |
|
|
| 34 |
|
|
| 176 |
|
|
| 162 |
|
Net Income |
| $ | 117 |
|
| $ | 83 |
|
| $ | 302 |
|
| $ | 286 |
|
|
|
QUARTER-TO-DATE
|
| Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
| Shares |
|
| Amount |
|
| Other Paid-In Capital |
|
| Retained Earnings |
|
| AOCI |
|
| Total |
| ||||||
(millions, except for shares) |
| (thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
March 31, 2022 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 9,526 |
|
| $ | (29 | ) |
| $ | 16,348 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
| 47 |
|
|
|
|
|
| 47 |
| ||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 22 |
|
|
| 22 |
| ||||
Other |
|
|
|
|
|
|
|
|
|
|
| 1 |
|
|
|
|
|
| 1 |
| ||||
June 30, 2022 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 9,574 |
|
| $ | (7 | ) |
| $ | 16,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
March 31, 2023 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 10,738 |
|
| $ | 4 |
|
| $ | 17,593 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
| 332 |
|
|
|
|
|
| 332 |
| ||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5 |
|
|
| 5 |
| ||||
June 30, 2023 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 11,070 |
|
| $ | 9 |
|
| $ | 17,930 |
|
YEAR-TO-DATE
|
| Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
| Shares |
|
| Amount |
|
| Other Paid-In Capital |
|
| Retained Earnings |
|
| AOCI |
|
| Total |
| ||||||
(millions, except for shares) |
| (thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
December 31, 2021 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 9,170 |
|
| $ | (41 | ) |
| $ | 15,980 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
| 404 |
|
|
|
|
|
| 404 |
| ||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 34 |
|
|
| 34 |
| ||||
June 30, 2022 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 9,574 |
|
| $ | (7 | ) |
| $ | 16,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
December 31, 2022 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 10,385 |
|
| $ | 9 |
|
| $ | 17,245 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
| 685 |
|
|
|
|
|
| 685 |
| ||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| — |
| ||||
June 30, 2023 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 11,070 |
|
| $ | 9 |
|
| $ | 17,930 |
|
The accompanying notes are an integral part of Dominion Energy Gas'Virginia Power’s Consolidated Financial Statements.
DOMINION ENERGY GAS HOLDINGS, LLC
19
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMECASH FLOWS
(Unaudited)
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| $ | 117 |
|
| $ | 83 |
|
| $ | 302 |
|
| $ | 286 |
|
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred gains (losses) on derivatives-hedging activities(1) |
|
| 1 |
|
|
| 9 |
|
|
| 3 |
|
|
| (6 | ) |
Amounts reclassified to net income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net derivative gains-hedging activities(2) |
|
| (4 | ) |
|
| (1 | ) |
|
| (5 | ) |
|
| (3 | ) |
Net pension and other postretirement benefit costs(3) |
|
| 1 |
|
|
| 1 |
|
|
| 3 |
|
|
| 2 |
|
Total other comprehensive income (loss) |
|
| (2 | ) |
|
| 9 |
|
|
| 1 |
|
|
| (7 | ) |
Comprehensive income |
| $ | 115 |
|
| $ | 92 |
|
| $ | 303 |
|
| $ | 279 |
|
|
|
|
|
|
|
Six Months Ended June 30, |
| 2023 |
|
| 2022 |
| ||
(millions) |
|
|
|
|
|
| ||
Operating Activities |
|
|
|
|
|
| ||
Net income |
| $ | 685 |
|
| $ | 404 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
| ||
Depreciation and amortization (including nuclear fuel) |
|
| 961 |
|
|
| 937 |
|
Deferred income taxes and investment tax credits |
|
| 107 |
|
|
| 147 |
|
Impairment of assets and other charges |
|
| 44 |
|
|
| 400 |
|
Net (gains) losses on nuclear decommissioning trust funds and other investments |
|
| (45 | ) |
|
| 75 |
|
Other adjustments |
|
| (5 | ) |
|
| (50 | ) |
Changes in: |
|
|
|
|
|
| ||
Accounts receivable |
|
| 4 |
|
|
| (302 | ) |
Affiliated receivables and payables |
|
| (224 | ) |
|
| (27 | ) |
Inventories |
|
| (88 | ) |
|
| 22 |
|
Prepayments |
|
| (1 | ) |
|
| 4 |
|
Deferred fuel expenses, net |
|
| 386 |
|
|
| (780 | ) |
Accounts payable |
|
| (27 | ) |
|
| 116 |
|
Accrued interest, payroll and taxes |
|
| 27 |
|
|
| 42 |
|
Margin deposit assets and liabilities |
|
| 278 |
|
|
| (311 | ) |
Net realized and unrealized changes related to derivative activities |
|
| 472 |
|
|
| 84 |
|
Other operating assets and liabilities |
|
| (121 | ) |
|
| (72 | ) |
Net cash provided by operating activities |
|
| 2,453 |
|
|
| 689 |
|
Investing Activities |
|
|
|
|
|
| ||
Plant construction and other property additions |
|
| (3,236 | ) |
|
| (1,996 | ) |
Purchases of nuclear fuel |
|
| (100 | ) |
|
| (118 | ) |
Acquisition of solar development projects |
|
| (12 | ) |
|
| (38 | ) |
Proceeds from sales of securities |
|
| 719 |
|
|
| 864 |
|
Purchases of securities |
|
| (824 | ) |
|
| (892 | ) |
Other |
|
| 55 |
|
|
| (21 | ) |
Net cash used in investing activities |
|
| (3,398 | ) |
|
| (2,201 | ) |
Financing Activities |
|
|
|
|
|
| ||
Issuance (repayment) of short-term debt, net |
|
| 324 |
|
|
| (20 | ) |
Issuance (repayment) of affiliated current borrowings, net |
|
| 306 |
|
|
| (587 | ) |
Issuance and remarketing of long-term debt |
|
| 1,660 |
|
|
| 2,338 |
|
Repayment and repurchase of long-term debt |
|
| (1,308 | ) |
|
| (138 | ) |
Other |
|
| (42 | ) |
|
| (49 | ) |
Net cash provided by financing activities |
|
| 940 |
|
|
| 1,544 |
|
Increase (decrease) in cash, restricted cash and equivalents |
|
| (5 | ) |
|
| 32 |
|
Cash, restricted cash and equivalents at beginning of period |
|
| 24 |
|
|
| 26 |
|
Cash, restricted cash and equivalents at end of period |
| $ | 19 |
|
| $ | 58 |
|
|
|
|
|
|
|
|
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.
DOMINION ENERGY GAS HOLDINGS, LLC
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| September 30, 2017 |
|
| December 31, 2016(1) |
| ||
(millions) |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 13 |
|
| $ | 23 |
|
Restricted cash |
|
| 29 |
|
|
| 20 |
|
Customer receivables (less allowance for doubtful accounts of $1 at both dates) |
|
| 190 |
|
|
| 281 |
|
Other receivables (less allowance for doubtful accounts of $1 at both dates)(2) |
|
| 72 |
|
|
| 13 |
|
Affiliated receivables |
|
| 17 |
|
|
| 17 |
|
Inventories |
|
| 90 |
|
|
| 70 |
|
Other(2) |
|
| 110 |
|
|
| 158 |
|
Total current assets |
|
| 521 |
|
|
| 582 |
|
Investments |
|
| 97 |
|
|
| 99 |
|
Property, Plant and Equipment |
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
| 10,971 |
|
|
| 10,475 |
|
Accumulated depreciation and amortization |
|
| (2,978 | ) |
|
| (2,851 | ) |
Total property, plant and equipment, net |
|
| 7,993 |
|
|
| 7,624 |
|
Deferred Charges and Other Assets |
|
|
|
|
|
|
|
|
Pension and other postretirement benefit assets(2) |
|
| 1,714 |
|
|
| 1,557 |
|
Other(2) |
|
| 1,303 |
|
|
| 1,280 |
|
Total deferred charges and other assets |
|
| 3,017 |
|
|
| 2,837 |
|
Total assets |
| $ | 11,628 |
|
| $ | 11,142 |
|
|
|
|
|
The accompanying notes are an integral part of Dominion Energy Gas' Consolidated Financial Statements.
DOMINION ENERGY GAS HOLDINGS, LLC
CONSOLIDATED BALANCE SHEETS—(Continued)
(Unaudited)
|
| September 30, 2017 |
|
| December 31, 2016(1) |
| ||
(millions) |
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Short-term debt |
| $ | 620 |
|
| $ | 460 |
|
Accounts payable |
|
| 161 |
|
|
| 221 |
|
Payables to affiliates |
|
| 18 |
|
|
| 29 |
|
Affiliated current borrowings |
|
| 34 |
|
|
| 118 |
|
Accrued interest, payroll and taxes |
|
| 197 |
|
|
| 225 |
|
Other(2) |
|
| 157 |
|
|
| 162 |
|
Total current liabilities |
|
| 1,187 |
|
|
| 1,215 |
|
Long-Term Debt |
|
| 3,564 |
|
|
| 3,528 |
|
Deferred Credits and Other Liabilities |
|
|
|
|
|
|
|
|
Deferred income taxes and investment tax credits |
|
| 2,622 |
|
|
| 2,438 |
|
Other(2) |
|
| 429 |
|
|
| 425 |
|
Total deferred credits and other liabilities |
|
| 3,051 |
|
|
| 2,863 |
|
Total liabilities |
|
| 7,802 |
|
|
| 7,606 |
|
Commitments and Contingencies (see Note 15) |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
Membership interests |
|
| 3,948 |
|
|
| 3,659 |
|
Accumulated other comprehensive loss |
|
| (122 | ) |
|
| (123 | ) |
Total equity |
|
| 3,826 |
|
|
| 3,536 |
|
Total liabilities and equity |
| $ | 11,628 |
|
| $ | 11,142 |
|
|
|
|
|
The accompanying notes are an integral part of Dominion Energy Gas' Consolidated Financial Statements.
DOMINION ENERGY GAS HOLDINGS, LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30, |
| 2017 |
|
| 2016 |
| ||
(millions) |
|
|
|
|
|
|
|
|
Operating Activities |
|
|
|
|
|
|
|
|
Net income |
| $ | 302 |
|
| $ | 286 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Gains on the sales of assets and equity method investment in Iroquois |
|
| (61 | ) |
|
| (50 | ) |
Depreciation and amortization |
|
| 167 |
|
|
| 150 |
|
Deferred income taxes and investment tax credits |
|
| 176 |
|
|
| 204 |
|
Other adjustments |
|
| (9 | ) |
|
| 3 |
|
Changes in: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| 88 |
|
|
| 56 |
|
Affiliated receivables and payables |
|
| (11 | ) |
|
| 91 |
|
Inventories |
|
| (20 | ) |
|
| (17 | ) |
Deferred purchased gas costs, net |
|
| 11 |
|
|
| 7 |
|
Prepayments |
|
| 39 |
|
|
| 15 |
|
Accounts payable |
|
| (68 | ) |
|
| (76 | ) |
Accrued interest, payroll and taxes |
|
| (28 | ) |
|
| (7 | ) |
Pension and other postretirement benefits |
|
| (98 | ) |
|
| (97 | ) |
Other operating assets and liabilities |
|
| (13 | ) |
|
| (62 | ) |
Net cash provided by operating activities |
|
| 475 |
|
|
| 503 |
|
Investing Activities |
|
|
|
|
|
|
|
|
Plant construction and other property additions |
|
| (535 | ) |
|
| (610 | ) |
Proceeds from sale of equity method investment in Iroquois |
|
| — |
|
|
| 7 |
|
Proceeds from assignments of shale development rights |
|
| 5 |
|
|
| 10 |
|
Other |
|
| (16 | ) |
|
| (10 | ) |
Net cash used in investing activities |
|
| (546 | ) |
|
| (603 | ) |
Financing Activities |
|
|
|
|
|
|
|
|
Issuance (repayment) of short-term debt, net |
|
| 160 |
|
|
| (331 | ) |
Issuance of long-term debt |
|
| — |
|
|
| 680 |
|
Repayment of affiliated current borrowings, net |
|
| (84 | ) |
|
| (95 | ) |
Distribution payments to parent |
|
| (15 | ) |
|
| (150 | ) |
Other |
|
| — |
|
|
| (9 | ) |
Net cash provided by financing activities |
|
| 61 |
|
|
| 95 |
|
Decrease in cash and cash equivalents |
|
| (10 | ) |
|
| (5 | ) |
Cash and cash equivalents at beginning of period |
|
| 23 |
|
|
| 13 |
|
Cash and cash equivalents at end of period |
| $ | 13 |
|
| $ | 8 |
|
Supplemental Cash Flow Information |
|
|
|
|
|
|
|
|
Significant noncash investing activities: |
|
|
|
|
|
|
|
|
Accrued capital expenditures |
| $ | 54 |
|
| $ | 42 |
|
The accompanying notes are an integral part of Dominion Energy Gas' Consolidated Financial Statements.
20
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Nature of Operations
Dominion Energy, headquartered in Richmond, Virginia, is one of the nation’s largest producers and transportersdistributors of energy. Dominion Energy’s operations are conducted through various subsidiaries, including Virginia PowerPower. Dominion Energy’s operations also include DESC, regulated gas distribution operations primarily in the eastern and Rocky Mountain regions of the U.S., nonregulated electric generation and a noncontrolling interest in Cove Point. In July 2023, Dominion Energy Gas. Virginia Power is a regulated public utility that generates, transmits and distributes electricity for saleentered into an agreement to sell its remaining 50% noncontrolling partnership interest in Virginia and northeastern North Carolina. Dominion Energy Gas is a holding company that conducts business activities through a regulated interstate natural gas transmission pipeline and underground storage system in the Northeast, mid-Atlantic and Midwest states, regulated gas transportation and distribution operations in Ohio, and gas gathering and processing activities primarily in West Virginia, Ohio and Pennsylvania.Cove Point to BHE. See Note 310 for a description of operations acquired in the Dominion Energy Questar Combination.additional information.
Note 2. Significant Accounting Policies
As permitted by the rules and regulations of the SEC, the Companies'Companies’ accompanying unaudited Consolidated Financial Statements contain certain condensed financial information and exclude certain footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with GAAP. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016.2022.
In the Companies'Companies’ opinion, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly their financial position as of Septemberat June 30, 2017,2023, their results of operations and changes in equity for the three and ninesix months ended SeptemberJune 30, 20172023 and 2016,2022 and their cash flows for the ninesix months ended SeptemberJune 30, 20172023 and 2016 and Dominion Energy's changes in equity for the nine months ended September 30, 2017 and 2016.2022. Such adjustments are normal and recurring in nature unless otherwise noted.
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 and expenses for the periods presented. Actual results may differ from those estimates.
The Companies'Companies’ accompanying unaudited 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 September 30, 2017, Dominion Energy owns the general partner, 50.9% of the common and subordinated units and 37.5% of the convertible preferred interests in Dominion Energy Midstream. The public’s ownership interest in Dominion Energy Midstream is reflected as noncontrolling interest in Dominion Energy’s Consolidated Financial Statements. Also, at September 30, 2017, Dominion Energy owns 50% of the units in and consolidates Four Brothers and Three Cedars. NRG's ownership interest in Four Brothers and Three Cedars, as well as Terra Nova Renewable Partners' 33% interest in certain Dominion Energy merchant solar projects, is reflected as noncontrolling interest in Dominion Energy’s Consolidated Financial Statements.
The results of operations for interim periods are not necessarily indicative of the results expected for the full year. Information for quarterly periods is affected by seasonal variations in sales, rate changes, electric fuel and other energy-related purchases, purchased gas expenses and other factors.
Certain amounts in the Companies' 2016Companies’ 2022 Consolidated Financial Statements and Notes have been reclassified to conform to the 20172023 presentation for comparative purposes. Thepurposes; 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. With the exception of the items described below, thereThere have been no significant changes from Note 2 to the Consolidated Financial Statements in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016.2022, with the exception of the items described below.
21
Cash, Restricted Cash and Equivalents
Property, PlantRestricted Cash and EquipmentEquivalents
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 six months ended June 30, 2023 and 2022:
In
|
| Cash, Restricted Cash and Equivalents |
|
| Cash, Restricted Cash and Equivalents |
| ||||||||||
|
| June 30, 2023 |
|
| June 30, 2022 |
|
| December 31, 2022 |
|
| December 31, 2021 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents(1) |
| $ | 137 |
|
| $ | 273 |
|
| $ | 153 |
|
| $ | 283 |
|
Restricted cash and equivalents(2) |
|
| 178 |
|
|
| 134 |
|
|
| 188 |
|
|
| 125 |
|
Cash, restricted cash and equivalents shown in the |
| $ | 315 |
|
| $ | 407 |
|
| $ | 341 |
|
| $ | 408 |
|
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
| $ | 19 |
|
| $ | 56 |
|
| $ | 22 |
|
| $ | 26 |
|
Restricted cash and equivalents(2) |
|
| — |
|
|
| 2 |
|
|
| 2 |
|
|
| — |
|
Cash, restricted cash and equivalents shown in the |
| $ | 19 |
|
| $ | 58 |
|
| $ | 24 |
|
| $ | 26 |
|
Supplemental Cash Flow Information
The following table provides supplemental disclosure of 2017, Virginia Power revisedcash flow information related to Dominion Energy:
Six Months Ended June 30, |
| 2023 |
|
| 2022 |
| ||
(millions) |
|
|
|
|
|
| ||
Significant noncash investing and financing activities:(1) |
|
|
|
|
|
| ||
Accrued capital expenditures |
| $ | 713 |
|
| $ | 512 |
|
Leases(2) |
|
| 279 |
|
|
| 57 |
|
The following table provides supplemental disclosure of cash flow information related to increase annual depreciation by approximately $40Virginia Power:
Six Months Ended June 30, |
| 2023 |
|
| 2022 |
| ||
(millions) |
|
|
|
|
|
| ||
Significant noncash investing and financing activities: |
|
|
|
|
|
| ||
Accrued capital expenditures |
| $ | 550 |
|
| $ | 240 |
|
Leases(1) |
|
| 242 |
|
|
| 47 |
|
In January 2017, the Financial Accounting Standards Board issued revised accounting guidance to clarify the definition of a business. The revised guidance affects the evaluation of whether a transaction should be accounted for as an acquisition or disposition of an asset or a business, which may impact goodwill and related financial statement disclosures. The Companies have adopted this guidance on a prospective basis effective October 1, 2017. The adoption of the pronouncement will result in additional transactions being accounted for as asset acquisitions or dispositions.
In March 2017, the Financial Accounting Standards Board issued revised accounting guidance for the presentation of net periodic pension and other postretirement benefit costs. The update 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 benefit costs would be classified outside of income from operations. In addition, only the service cost component will be eligible for capitalization during construction. The standard also recognized 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. The guidance is effective for the Companies’ interim and annual reporting periods beginning January 1, 2018, with a retrospective adoption for income statement presentation and a prospective adoption for capitalization. The Companies are currently evaluating the impact the adoption of the standard will have on their consolidated financial statements and disclosures. The Companies are also evaluating industry issues that could potentially create a regulatory accounting difference in the event that any of our state commissions do not adopt the change in capitalization requirements for regulatory reporting.
Note 3. Acquisitions and Dispositions
Dominion EnergyDisposition of Gas Transmission & Storage Operations
Acquisition of Dominion Energy Questar
In September 2016,December 2021, Dominion Energy completed the Dominion Energy Questar Combination and Dominion Energy Questar became a wholly-owned subsidiary of Dominion Energy. Dominion Energy Questar, a Rockies-based integrated natural gas company, included Questar Gas, Wexpro Company and Dominion Energy Questar Pipeline at closing. Questar Gas has regulated gas distribution operations in Utah, southwestern Wyoming and southeastern Idaho. Wexpro Company develops and produces natural gas from reserves that are supplied to Questar Gas under a cost-of-service framework. Dominion Energy Questar Pipeline provides FERC-regulated interstate natural gas transportation and storage services in Utah, Wyoming and western Colorado. The Dominion Energy Questar Combination provides Dominion Energy with pipeline infrastructure that provides a principal source of gas supply to Western states. Dominion Energy Questar’s regulated businesses also provide further balance between Dominion Energy’s electric and gas operations.
In accordance with the termssale of the Dominion Energy Questar Combination, at closing, each share of issued and outstanding Dominion Energy Questar common stock was converted into the rightQ-Pipe Group to receive $25.00 per share in cash. The total consideration was $4.4 billion based on 175.5 million shares of Dominion Energy Questar outstanding at closing.
Dominion Energy financed the Dominion Energy Questar Combination through the: (1) August 2016 issuance of $1.4 billion of 2016 Equity Units, (2) August 2016 issuance of $1.3 billion of senior notes, (3) September 2016 borrowing of $1.2 billion under a term loan agreement and (4) $500 million of the proceeds from the April 2016 issuance of common stock. See Notes 17 and 19 to the Consolidated Financial Statements in the Companies' Annual Report on Form 10-K for the year ended December 31, 2016 for more information.
See Note 3 to the Consolidated Financial Statements in the Companies' Annual Report on Form 10-K for the year ended December 31, 2016 for more information on the Dominion Energy Questar Combination including purchase price allocation, regulatory matters and the contribution of Dominion Energy Questar Pipeline to Dominion Energy Midstream. During the third quarter of 2017, certain modifications were made to the valuation amounts for regulatory liabilities, current liabilities and deferred income taxes, resulting in a $6 million net increase to goodwill recorded in Dominion Energy’s Consolidated Balance Sheets. The modifications relate primarily to the finalization of Dominion Energy Questar’s 2016 tax return for the period January 1, 2016 through the Dominion Energy Questar Combination,Southwest Gas, as well as certain regulatory adjustments.
Results of Operations and Pro Forma Information
The impact of the Dominion Energy Questar Combination on Dominion Energy’s operating revenue and net income attributable to Dominion Energy in the Consolidated Statements of Income for both the three and nine months ended September 30, 2016, was an increase of $23 million and $5 million, respectively.
Dominion Energy incurred transaction and transition costs, of which $14 million and $34 million was recorded in other operations and maintenance expense for the three and nine months ended September 30, 2017, respectively, in Dominion Energy’s Consolidated Statements of Income. Dominion Energy incurred transaction and transition costs, of which $40 million and $47 million was recorded in other operations and maintenance expense for the three and nine months ended September 30, 2016, respectively, and $13 million was recorded in interest and related charges for both the three and nine months ended September 30, 2016, in Dominion Energy’s Consolidated Statements of Income. These costs consist of the amortization of financing costs, the charitable contribution commitment describeddiscussed in Note 3 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2016, employee-related expenses, professional fees and other miscellaneous costs.2022. In the first
The following unaudited pro forma financial information reflects the consolidated results22
quarter of operations of2022, Dominion Energy assuming the Dominion Energy Questar Combination had taken place on January 1, 2015. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicativerecognized a gain of the consolidated results$27 million ($20 million after-tax) in discontinued operations in its Consolidated Statements of operations that would have been achieved or the future consolidated resultsIncome associated with finalization of operationsworking capital adjustments.
Sale of the combined company.Kewaunee
|
| Three Months Ended September 30, 2016(1) |
|
| Nine Months Ended September 30, 2016(1) |
| ||
(millions, except EPS) |
|
|
|
|
|
|
|
|
Operating Revenue |
| $ | 3,261 |
|
| $ | 9,410 |
|
Net income attributable to Dominion Energy |
|
| 732 |
|
|
| 1,835 |
|
Earnings Per Common Share – Basic |
| $ | 1.17 |
|
| $ | 2.99 |
|
Earnings Per Common Share – Diluted |
| $ | 1.17 |
|
| $ | 2.99 |
|
|
|
Wholly-Owned Merchant Solar Projects
In January 2017, Dominion Energy entered into an agreement to acquire 100% of the equity interests of a solar project in North Carolina from Cypress Creek Renewables, LLC for cash consideration. In May 2017, Dominion Energy closed on the acquisition for $154 million, all of which was allocated to property, plant and equipment. The facility commenced commercial operations in June 2017, at a cost of $160 million, including the initial acquisition cost, and generates approximately 79 MW.
In September 2016, Dominion Energy entered into an agreement to acquire 100% of the equity interests of a solar project in Virginia from Community Energy Solar, LLC for cash consideration. In February 2017, Dominion Energy closed on the acquisition for $29 million, all of which was allocated to property, plant and equipment. The project is expected to cost approximately $205 million once constructed, including the initial acquisition cost. The facility is expected to begin commercial operations during the fourth quarter of 2017 and to generate approximately 100 MW.
In August 2016, Dominion Energy entered into an agreement to acquire 100% of the equity interests of two solar projects in California from Solar Frontier Americas Holding LLC for cash consideration. In March 2017, Dominion Energy closed on the acquisition of one of the solar projects for $77 million, all of which was allocated to property, plant and equipment. The facility commenced commercial operations in June 2017, at a cost of $78 million, including the initial acquisition cost, and generates approximately 30 MW. In April 2017, Dominion Energy discontinued efforts on the acquisition of the additional 20 MW solar project from Solar Frontier Americas Holding LLC.
In May 2017, Dominion Energy entered into an agreement to acquire 100% of the equity interests of two solar projects in Virginia from Hecate Energy Virginia C&C LLC for cash consideration of $56 million. Dominion Energy completed the acquisition of one of the projects in June 2017 for $16 million and the facility commenced commercial operations in August 2017. The second acquisition was completed in September 2017 for $40 million with commencement of commercial operations expected to occur by the end of 2017. The projects are expected to cost approximately $60 million once constructed, including the initial acquisition costs, and to generate approximately 30 MW combined.
In June 2017, Dominion Energy entered into an agreement to acquire 100% of the equity interests of four solar projects in North Carolina from Strata Solar Development, LLC and Moorings Farm 2 Holdco, LLC for cash consideration of $40 million. Dominion Energy completed the acquisition of two of the projects in June 2017 for $20 million. The final two acquisitions were completed in October 2017 for $20 million. Commencement of commercial operations of all the projects is expected to occur by the end of 2017. The projects are expected to cost approximately $45 million once constructed, including the initial acquisition costs, and to generate approximately 19 MW combined.
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 Power Generation. Dominion Energy has claimed or will claim federal investment tax credits on these solar projects.
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 currently wholly-owned merchant solar projects, 24 solar projects totaling approximately 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. Terra Nova Renewable Partners has a future option to buy all or a portion of Dominion Energy’s remaining 67% ownership in the projects upon the occurrence of certain events, none of which had occurred at September 30, 2017 nor are expected to occur in the remainder of 2017.
Sale of Certain Retail Energy Marketing Assets
In October 2017,2021, 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. Pursuant to the agreement, Dominion Energy will enter into a commission agreement with the buyer upon the first closing 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. Dominion Energy is expected to recognize a benefit in other operations and maintenance expense upon each phase of closing, approximately $78 million ($48 million after-tax) in the fourth quarter of 2017 and approximately $65 million ($40 million after-tax) in 2018.
Virginia Power
Acquisition of Solar Projects
In September 2017, Virginia Power entered into agreements to acquire two solar development projects in North Carolina. The first acquisition is expected to close prior to the project commencing commercial operations, which is expected by the end of 2018, and cost approximately $140 million once constructed, including the initial acquisition cost. The second acquisition is expected to close prior to the project commencing commercial operations, which is expected by the end of 2019, and cost approximately $140 million once constructed, including the initial acquisition cost. The projects are expected to generate approximately 155 MW combined. Virginia Power anticipates claiming federal investment tax credits on these solar projects.
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. The proceeds are subject to Virginia Power's FERC-regulated tariff, under which it is required to return half100% of the proceeds to customers. Virginia Power recognized $2 million and $10 million in other income for the three and nine months ended September 30, 2017, respectively, with the remaining $36 million to be recognized ratably through 2023.
Dominion Energy Gas
Assignment of Shale Development Rights
In December 2013, Dominion Energy Gas closed an agreement with a natural gas producer to convey over time approximately 79,000 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 up to approximately $200 million over a period of nine years, and an overriding royalty interest in gas produced from the acreage. In March 2015, Dominion Energy Gas and the natural gas producer closed on an amendment to the 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. 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 $35 million ($21 million after-tax) of previously deferred revenue to other operations and maintenance expenseequity interests in Dominion Energy Gas’ Consolidated StatementsKewaunee, Inc. to EnergySolutions, including the transfer of Income. In August 2017,all decommissioning obligations associated with Kewaunee, which ceased operations in 2013. The sale closed in June 2022 following approval from the Wisconsin Commission in May 2022 and NRC approval of a requested license transfer in March 2022. The sale was treated as an asset sale for tax purposes and Dominion Energy Gasretained the assets and obligations of the natural gas producer signed an amendmentpension and other postretirement employee benefit plans. EnergySolutions is subject to the agreement, which included the finalization of contractual matters on previous conveyances, the conveyance ofWisconsin regulatory conditions agreed to by Dominion Energy Gas’ remaining 68% interest in approximately 70,000 acresupon its acquisition of Kewaunee, including the return of any excess decommissioning funds to WPSC and WP&L customers following completion of all decommissioning activities.
In the eliminationsecond quarter of 2022, Dominion Energy Gas’ overriding royalty interestrecorded a loss of $649 million ($513 million after-tax), recorded in gas produced from all acreage. Dominion Energy Gas will receive total considerationlosses (gains) on sales of $130 million, with $65 million to be received by the end of the fourth quarter 2017 and $65 million to be received by the end of the third quarter of 2018assets in connection with the final conveyance. As
a result of this amendment in the third quarter of 2017, Dominion Energy Gas recognized a $56 million ($33 million after-tax) gain included in other operations and maintenance expense in Dominion Energy Gas’its Consolidated Statements of Income, associated withprimarily related to the finalizationdifference between the nuclear decommissioning trust and AROs. Prior to its receipt, there had been uncertainty as to the timing of or ability to obtain approval from the contractual matters on previous conveyances. Additionally,Wisconsin Commission. Prior to closing, Dominion Energy Gas is expected to recognize an approximately $9withdrew $80 million ($5 million after-tax) gain in the fourth quarter of 2017 associated with the elimination of its overriding royalty interest and an approximately $65 million ($40 million after-tax) gain associated with the final conveyance of 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. In connection with that agreement, in January 2016, Dominion Energy Gas conveyed approximately 2,000 acres of Marcellus Shale development rights and received proceeds of $5 million and an overriding royalty interest in gas produced from the acreage. This transaction resulted in a $5 million ($3 million after-tax) gain, included innuclear decommissioning trust to recover certain spent nuclear fuel and other operations and maintenance expense in Dominion Energy Gas’ Consolidated Statements of Income. In July 2016, in connection with the existing agreement, Dominion Energy Gas conveyed approximately 2,000 acres of Marcellus Shale development rights and received proceeds of $5 million and an overriding royalty interest in gas produced from the acreage. This transaction resulted in a $5 million ($3 million after-tax) gain, included in other operations and maintenance expense in Dominion Energy Gas’ Consolidated Statements of Income. In July 2017, in connection with the existing agreement, Dominion Energy Gas conveyed an additional approximately 2,000 acres of Marcellus Shale development rights and received proceeds of $5 million and an overriding royalty interest in gas produced from the acreage. This transaction resulted in a $5 million ($3 million after-tax) gain, included in other operations and maintenance expense in Dominion Energy Gas’ Consolidated Statements of Income. permitted costs.
Note 4. Operating Revenue
The Companies’ operating revenue consists of the following:
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||||||||||
| Quarter-to-Date |
|
| Year-to-Date |
|
| Quarter-to-Date |
|
| Year-to-Date |
| ||||||||||||||||||||
Period Ended June 30, | 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Residential | $ | 1,124 |
|
| $ | 1,117 |
|
| $ | 2,410 |
|
| $ | 2,404 |
|
| $ | 832 |
|
| $ | 816 |
|
| $ | 1,842 |
|
| $ | 1,831 |
|
Commercial |
| 1,147 |
|
|
| 1,089 |
|
|
| 2,217 |
|
|
| 1,987 |
|
|
| 917 |
|
|
| 874 |
|
|
| 1,783 |
|
|
| 1,591 |
|
Industrial |
| 211 |
|
|
| 220 |
|
|
| 431 |
|
|
| 417 |
|
|
| 99 |
|
|
| 110 |
|
|
| 215 |
|
|
| 213 |
|
Government and other retail |
| 232 |
|
|
| 297 |
|
|
| 476 |
|
|
| 569 |
|
|
| 213 |
|
|
| 281 |
|
|
| 442 |
|
|
| 539 |
|
Wholesale |
| 36 |
|
|
| 68 |
|
|
| 80 |
|
|
| 115 |
|
|
| 22 |
|
|
| 31 |
|
|
| 51 |
|
|
| 63 |
|
Nonregulated electric sales |
| 125 |
|
|
| 236 |
|
|
| 382 |
|
|
| 603 |
|
|
| 22 |
|
|
| 31 |
|
|
| 33 |
|
|
| 45 |
|
Regulated gas sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Residential |
| 285 |
|
|
| 231 |
|
|
| 1,147 |
|
|
| 1,000 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial |
| 117 |
|
|
| 106 |
|
|
| 431 |
|
|
| 379 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other |
| 23 |
|
|
| 51 |
|
|
| 58 |
|
|
| 96 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Nonregulated gas sales |
| 6 |
|
|
| 4 |
|
|
| 7 |
|
|
| 5 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Regulated gas transportation and storage |
| 252 |
|
|
| 241 |
|
|
| 563 |
|
|
| 538 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other regulated revenues |
| 68 |
|
|
| 73 |
|
|
| 130 |
|
|
| 119 |
|
|
| 62 |
|
|
| 80 |
|
|
| 136 |
|
|
| 131 |
|
Other nonregulated revenues(1)(2) |
| 59 |
|
|
| 61 |
|
|
| 109 |
|
|
| 109 |
|
|
| 22 |
|
|
| 16 |
|
|
| 33 |
|
|
| 22 |
|
Total operating revenue from contracts with customers |
| 3,685 |
|
|
| 3,794 |
|
|
| 8,441 |
|
|
| 8,341 |
|
|
| 2,189 |
|
|
| 2,239 |
|
|
| 4,535 |
|
|
| 4,435 |
|
Other revenues(1)(3) |
| 109 |
|
|
| (198 | ) |
|
| 605 |
|
|
| (466 | ) |
|
| 62 |
|
|
| (64 | ) |
|
| 100 |
|
|
| (93 | ) |
Total operating revenue | $ | 3,794 |
|
| $ | 3,596 |
|
| $ | 9,046 |
|
| $ | 7,875 |
|
| $ | 2,251 |
|
| $ | 2,175 |
|
| $ | 4,635 |
|
| $ | 4,342 |
|
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated |
| $ | 2,108 |
|
| $ | 2,147 |
|
| $ | 5,590 |
|
| $ | 5,707 |
|
Nonregulated |
|
| 380 |
|
|
| 399 |
|
|
| 1,114 |
|
|
| 1,123 |
|
Gas sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated |
|
| 97 |
|
|
| 46 |
|
|
| 696 |
|
|
| 137 |
|
Nonregulated |
|
| 69 |
|
|
| 87 |
|
|
| 323 |
|
|
| 259 |
|
Gas transportation and storage |
|
| 406 |
|
|
| 378 |
|
|
| 1,328 |
|
|
| 1,162 |
|
Other |
|
| 119 |
|
|
| 75 |
|
|
| 325 |
|
|
| 263 |
|
Total operating revenue |
| $ | 3,179 |
|
| $ | 3,132 |
|
| $ | 9,376 |
|
| $ | 8,651 |
|
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated electric sales |
| $ | 2,108 |
|
| $ | 2,147 |
|
| $ | 5,590 |
|
| $ | 5,707 |
|
Other |
|
| 46 |
|
|
| 64 |
|
|
| 142 |
|
|
| 170 |
|
Total operating revenue |
| $ | 2,154 |
|
| $ | 2,211 |
|
| $ | 5,732 |
|
| $ | 5,877 |
|
Dominion Energy Gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gas sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated |
| $ | 12 |
|
| $ | 28 |
|
| $ | 59 |
|
| $ | 69 |
|
Nonregulated |
|
| 2 |
|
|
| 1 |
|
|
| 12 |
|
|
| 8 |
|
Gas transportation and storage |
|
| 324 |
|
|
| 303 |
|
|
| 1,062 |
|
|
| 955 |
|
Other |
|
| 63 |
|
|
| 50 |
|
|
| 180 |
|
|
| 149 |
|
Total operating revenue |
| $ | 401 |
|
| $ | 382 |
|
| $ | 1,313 |
|
| $ | 1,181 |
|
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 Dominion Energy expects to recognize this revenue. These revenues relate to contracts containing fixed prices where Dominion Energy will earn the associated revenue over time as it stands ready to perform services provided. This disclosure does not include revenue related to performance obligations that are part of
23
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 Dominion Energy elects to recognize revenue in the amount it has a right to invoice.
Revenue expected to be recognized on multi-year |
| 2023 |
|
| 2024 |
|
| 2025 |
|
| 2026 |
|
| 2027 |
|
| Thereafter |
|
| Total |
| |||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Dominion Energy(1) |
| $ | 33 |
|
| $ | 61 |
|
| $ | 54 |
|
| $ | 48 |
|
| $ | 46 |
|
| $ | 402 |
|
| $ | 644 |
|
At June 30, 2023 and December 31, 2022, Dominion Energy’s contract liability balances were $133 million and $150 million, respectively, and are recorded in other current liabilities and other deferred credits and other liabilities in its Consolidated Balance Sheets. At June 30, 2023 and December 31, 2022, Virginia Power’s contract liability balances were $74 million and $39 million, respectively, and are recorded in other current liabilities and other deferred credits and other liabilities in its Consolidated Balance Sheets.
The Companies recognize revenue as they fulfill their obligations to provide service to their customers. During the six months ended June 30, 2023 and 2022, Dominion Energy recognized revenue of $146 million and $119 million, respectively, from the beginning contract liability balances. During the six months ended June 30, 2023 and 2022, Virginia Power recognized $39 million and $33 million, respectively, from the beginning contract liability balances.
For continuing operations, including noncontrolling interests, the statutory U.S. federal income tax rate reconciles to the Companies'Companies’ effective income tax rate as follows:
|
| Dominion Energy |
|
| Virginia Power |
|
| Dominion Energy Gas |
| |||||||||||||||||||||||||||||||
Nine Months Ended September 30, |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||||||||||||||||||||
|
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||||||||||||||||||||||
U.S. statutory rate |
|
| 35.0 | % |
|
| 35.0 | % |
|
| 35.0 | % |
|
| 35.0 | % |
|
| 35.0 | % |
|
| 35.0 | % |
|
| 21.0 | % |
|
| 21.0 | % |
|
| 21.0 | % |
|
| 21.0 | % |
Increases (reductions) resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Recognition of taxes - sale of |
|
| — |
|
|
| 25.0 |
|
|
|
|
|
| |||||||||||||||||||||||||||
State taxes, net of federal benefit |
|
| 2.9 |
|
|
| 3.7 |
|
|
| 3.7 |
|
|
| 3.9 |
|
|
| 2.7 |
|
|
| 0.8 |
|
|
| 3.3 |
|
|
| 7.9 |
|
|
| 4.6 |
|
|
| 4.4 |
|
Investment tax credits |
|
| (5.7 | ) |
|
| (10.4 | ) |
|
| (0.8 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (2.6 | ) |
|
| (9.8 | ) |
|
| (0.3 | ) |
|
| (6.9 | ) |
Production tax credits |
|
| (0.7 | ) |
|
| (0.8 | ) |
|
| (0.5 | ) |
|
| (0.5 | ) |
|
| — |
|
|
| — |
|
|
| (0.4 | ) |
|
| (1.1 | ) |
|
| (0.8 | ) |
|
| (1.0 | ) |
State legislative change |
|
| — |
|
|
| (0.8 | ) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
| ||||||||||||||||
Reversal of excess deferred income |
|
| (2.6 | ) |
|
| (10.2 | ) |
|
| (2.3 | ) |
|
| (3.9 | ) | ||||||||||||||||||||||||
Changes in state deferred taxes associated |
|
| — |
|
|
| 1.4 |
|
|
|
|
|
|
| ||||||||||||||||||||||||||
AFUDC - equity |
|
| (1.3 | ) |
|
| (0.7 | ) |
|
| (0.6 | ) |
|
| (0.6 | ) |
|
| (0.8 | ) |
|
| (0.1 | ) |
|
| (0.1 | ) |
|
| (1.3 | ) |
|
| (0.1 | ) |
|
| (1.0 | ) |
Other, net |
|
| (2.6 | ) |
|
| (1.4 | ) |
|
| 0.2 |
|
|
| 0.1 |
|
|
| (0.1 | ) |
|
| 0.5 |
|
|
| (0.9 | ) |
|
| 0.2 |
|
|
| (0.5 | ) |
|
| 0.6 |
|
Effective tax rate |
|
| 27.6 | % |
|
| 24.6 | % |
|
| 37.0 | % |
|
| 37.9 | % |
|
| 36.8 | % |
|
| 36.2 | % |
|
| 17.7 | % |
|
| 33.1 | % |
|
| 21.6 | % |
|
| 13.2 | % |
The effectiveIn the first quarter of 2022, Dominion Energy entered into an agreement to sell 100% of the equity interests in Hope in a stock sale for income tax ratespurposes. As of June 30, 2022, Dominion had established $90 million of deferred tax liabilities reflecting the excess of the financial reporting basis over the tax basis in 2017Hope’s stock. These deferred taxes reversed upon closing of the sale in August 2022 and became a component of current income tax expense on the sale. See Note 3 to the Consolidated Financial Statements in Dominion Energy's Annual Report on Form 10-K for the Companies reflect the completion of audits by state tax authorities that resulted in the recognition of previously unrecognized tax benefits. Atyear ended December 31, 2016, Virginia Power’s unrecognized tax benefits included state refund claims2022 for open tax years through 2011. Management believed settlementadditional information regarding the sale of the claims, including interest thereon, within the next twelve months was remote. InHope.
As of 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 connection with this settlement, Virginia Power realized interest income of $11 million, which is reflected in other income in the Consolidated Statements of Income. Otherwise, at September 30, 2017,2023, there have been no material changes in the Companies'Companies’ unrecognized tax benefits or possible changes that could reasonably be expected to occur during the next twelve months. See Note 5 to the Consolidated Financial Statements in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 20162022, for a discussion of these unrecognized tax benefits.
Discontinued operations
Income tax expense reflected in discontinued operations is $3 million and $4 million for the six months ended June 30, 2023 and 2022, respectively.
24
The following table presents the calculation of Dominion Energy’s basic and diluted EPS:
|
| Quarter-to-Date |
|
| Year-to-Date |
| ||||||||||
Period Ended June 30, |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) attributable to Dominion Energy from |
| $ | 586 |
|
| $ | (452 | ) |
| $ | 1,588 |
|
| $ | 240 |
|
Preferred stock dividends (see Note 16) |
|
| (20 | ) |
|
| (25 | ) |
|
| (40 | ) |
|
| (52 | ) |
Net income (loss) attributable to Dominion Energy from |
|
| 566 |
|
|
| (477 | ) |
|
| 1,548 |
|
|
| 188 |
|
Dilutive effect of 2019 Equity Units(1)(2) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Net income (loss) attributable to Dominion Energy from |
| $ | 566 |
|
| $ | (477 | ) |
| $ | 1,548 |
|
| $ | 188 |
|
Net income (loss) attributable to Dominion Energy from |
| $ | 13 |
|
| $ | (1 | ) |
| $ | 8 |
|
| $ | 18 |
|
Average shares of common stock outstanding – Basic |
|
| 836.0 |
|
|
| 818.4 |
|
|
| 835.6 |
|
|
| 814.5 |
|
Net effect of dilutive securities(1)(3) |
|
| 0.2 |
|
|
| — |
|
|
| 0.3 |
|
|
| 1.4 |
|
Average shares of common stock outstanding – Diluted |
|
| 836.2 |
|
|
| 818.4 |
|
|
| 835.9 |
|
|
| 815.9 |
|
EPS from continuing operations – Basic |
| $ | 0.67 |
|
| $ | (0.58 | ) |
| $ | 1.85 |
|
| $ | 0.23 |
|
EPS from discontinued operations – Basic |
|
| 0.02 |
|
|
| — |
|
|
| 0.01 |
|
|
| 0.02 |
|
EPS attributable to Dominion Energy – Basic |
| $ | 0.69 |
|
| $ | (0.58 | ) |
| $ | 1.86 |
|
| $ | 0.25 |
|
EPS from continuing operations – Diluted |
| $ | 0.67 |
|
| $ | (0.58 | ) |
| $ | 1.85 |
|
| $ | 0.23 |
|
EPS from discontinued operations – Diluted |
|
| 0.02 |
|
|
| — |
|
|
| 0.01 |
|
|
| 0.02 |
|
EPS attributable to Dominion Energy – Diluted |
| $ | 0.69 |
|
| $ | (0.58 | ) |
| $ | 1.86 |
|
| $ | 0.25 |
|
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Dominion Energy |
| $ | 665 |
|
| $ | 690 |
|
| $ | 1,687 |
|
| $ | 1,666 |
|
Average shares of common stock outstanding – Basic |
|
| 642.5 |
|
|
| 625.9 |
|
|
| 633.4 |
|
|
| 612.8 |
|
Net effect of dilutive securities(1) |
|
| — |
|
|
| 0.1 |
|
|
| — |
|
|
| 1.0 |
|
Average shares of common stock outstanding – Diluted |
|
| 642.5 |
|
|
| 626.0 |
|
|
| 633.4 |
|
|
| 613.8 |
|
Earnings Per Common Share – Basic |
| $ | 1.03 |
|
| $ | 1.10 |
|
| $ | 2.66 |
|
| $ | 2.72 |
|
Earnings Per Common Share – Diluted |
| $ | 1.03 |
|
| $ | 1.10 |
|
| $ | 2.66 |
|
| $ | 2.71 |
|
|
|
The 20142019 Equity Units, prior to settlement in June 2022, were a potentially dilutive instrument. See Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 and 2016Note 16 in this report for additional information.
For the six months ended June 30, 2022, the 2019 Equity Units, are potentially dilutive securities butapplying the if converted method for the period prior to settlement in June 2022, were excluded from the calculation of diluted EPS for the three and nine months ended September 30, 2017 and 2016,from continuing operations as the dilutive stock price threshold was not met. The Dominion Energy Midstream convertible preferred units are potentially dilutive securities but had no effect on the calculation of diluted EPS for the three and nine months ended September 30, 2017.effects were anti-dilutive.
25
Note 7. Accumulated Other Comprehensive Income (Loss)
Dominion Energy
The following table presents Dominion Energy’s changes in AOCI by component, net(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 Income (Loss) From Equity Method Investee |
|
| Total |
| |||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | (250 | ) |
| $ | 630 |
|
| $ | (1,058 | ) |
| $ | (4 | ) |
| $ | (682 | ) |
Other comprehensive income before reclassifications: gains |
|
| 11 |
|
|
| 48 |
|
|
| — |
|
|
| — |
|
|
| 59 |
|
Amounts reclassified from AOCI(1): (gains) losses |
|
| (15 | ) |
|
| (4 | ) |
|
| 14 |
|
|
| — |
|
|
| (5 | ) |
Net current-period other comprehensive income (loss) |
|
| (4 | ) |
|
| 44 |
|
|
| 14 |
|
|
| — |
|
|
| 54 |
|
Ending balance |
| $ | (254 | ) |
| $ | 674 |
|
| $ | (1,044 | ) |
| $ | (4 | ) |
| $ | (628 | ) |
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | (241 | ) |
| $ | 535 |
|
| $ | (781 | ) |
| $ | (6 | ) |
| $ | (493 | ) |
Other comprehensive income before reclassifications: gains |
|
| 14 |
|
|
| 31 |
|
|
| 15 |
|
|
| — |
|
|
| 60 |
|
Amounts reclassified from AOCI(1): (gains) losses |
|
| (34 | ) |
|
| (13 | ) |
|
| 9 |
|
|
| — |
|
|
| (38 | ) |
Net current-period other comprehensive income (loss) |
|
| (20 | ) |
|
| 18 |
|
|
| 24 |
|
|
| — |
|
|
| 22 |
|
Ending balance |
| $ | (261 | ) |
| $ | 553 |
|
| $ | (757 | ) |
| $ | (6 | ) |
| $ | (471 | ) |
Nine Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | (280 | ) |
| $ | 569 |
|
| $ | (1,082 | ) |
| $ | (6 | ) |
| $ | (799 | ) |
Other comprehensive income before reclassifications: gains |
|
| 82 |
|
|
| 141 |
|
|
| — |
|
|
| 2 |
|
|
| 225 |
|
Amounts reclassified from AOCI(1): (gains) losses |
|
| (56 | ) |
|
| (36 | ) |
|
| 38 |
|
|
| — |
|
|
| (54 | ) |
Net current-period other comprehensive income |
|
| 26 |
|
|
| 105 |
|
|
| 38 |
|
|
| 2 |
|
|
| 171 |
|
Ending balance |
| $ | (254 | ) |
| $ | 674 |
|
| $ | (1,044 | ) |
| $ | (4 | ) |
| $ | (628 | ) |
Nine Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | (176 | ) |
| $ | 504 |
|
| $ | (797 | ) |
| $ | (5 | ) |
| $ | (474 | ) |
Other comprehensive income before reclassifications: gains (losses) |
|
| 56 |
|
|
| 72 |
|
|
| 15 |
|
|
| (1 | ) |
|
| 142 |
|
Amounts reclassified from AOCI(1): (gains) losses |
|
| (141 | ) |
|
| (23 | ) |
|
| 25 |
|
|
| — |
|
|
| (139 | ) |
Net current-period other comprehensive income (loss) |
|
| (85 | ) |
|
| 49 |
|
|
| 40 |
|
|
| (1 | ) |
|
| 3 |
|
Ending balance |
| $ | (261 | ) |
| $ | 553 |
|
| $ | (757 | ) |
| $ | (6 | ) |
| $ | (471 | ) |
|
|
The following table presents Dominion Energy’stax) and reclassifications out of AOCI by component:
|
| Total Derivative-Hedging Activities(1)(2) |
|
| Investment |
|
| Pension |
|
| Equity Method Investees(5) |
|
| Total |
| |||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Three Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning balance |
| $ | (250 | ) |
| $ | (26 | ) |
| $ | (1,287 | ) |
| $ | (2 | ) |
| $ | (1,565 | ) |
Other comprehensive income (loss) before |
|
| 6 |
|
|
| (1 | ) |
|
| — |
|
|
| — |
|
|
| 5 |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Interest and related charges |
|
| 10 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 10 |
|
Other income (expense) |
|
| — |
|
|
| (3 | ) |
|
| (16 | ) |
|
| — |
|
|
| (19 | ) |
Total |
|
| 10 |
|
|
| (3 | ) |
|
| (16 | ) |
|
| — |
|
|
| (9 | ) |
Income tax expense (benefit) |
|
| (2 | ) |
|
| 1 |
|
|
| 4 |
|
|
| — |
|
|
| 3 |
|
Total, net of tax |
|
| 8 |
|
|
| (2 | ) |
|
| (12 | ) |
|
| — |
|
|
| (6 | ) |
Net current period other comprehensive |
|
| 14 |
|
|
| (3 | ) |
|
| (12 | ) |
|
| — |
|
|
| (1 | ) |
Ending balance |
| $ | (236 | ) |
| $ | (29 | ) |
| $ | (1,299 | ) |
| $ | (2 | ) |
| $ | (1,566 | ) |
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning balance |
| $ | (323 | ) |
| $ | (22 | ) |
| $ | (1,088 | ) |
| $ | (3 | ) |
| $ | (1,436 | ) |
Other comprehensive income (loss) before |
|
| 29 |
|
|
| (27 | ) |
|
| 2 |
|
|
| — |
|
|
| 4 |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Interest and related charges |
|
| 14 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 14 |
|
Other income (expense) |
|
| — |
|
|
| 12 |
|
|
| 22 |
|
|
| — |
|
|
| 34 |
|
Total |
|
| 14 |
|
|
| 12 |
|
|
| 22 |
|
|
| — |
|
|
| 48 |
|
Income tax expense (benefit) |
|
| (3 | ) |
|
| (3 | ) |
|
| (6 | ) |
|
| — |
|
|
| (12 | ) |
Total, net of tax |
|
| 11 |
|
|
| 9 |
|
|
| 16 |
|
|
| — |
|
|
| 36 |
|
Net current period other comprehensive |
|
| 40 |
|
|
| (18 | ) |
|
| 18 |
|
|
| — |
|
|
| 40 |
|
Ending balance |
| $ | (283 | ) |
| $ | (40 | ) |
| $ | (1,070 | ) |
| $ | (3 | ) |
| $ | (1,396 | ) |
26
|
| Total Derivative-Hedging Activities(1)(2) |
|
| Investment |
|
| Pension |
|
| Equity Method Investees(5) |
|
| Total |
| |||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning balance |
| $ | (249 | ) |
| $ | (44 | ) |
| $ | (1,276 | ) |
| $ | (3 | ) |
| $ | (1,572 | ) |
Other comprehensive income (loss) before |
|
| (3 | ) |
|
| 16 |
|
|
| — |
|
|
| 1 |
|
|
| 14 |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Interest and related charges |
|
| 21 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 21 |
|
Other income (expense) |
|
| — |
|
|
| (1 | ) |
|
| (31 | ) |
|
| — |
|
|
| (32 | ) |
Total |
|
| 21 |
|
|
| (1 | ) |
|
| (31 | ) |
|
| — |
|
|
| (11 | ) |
Income tax expense (benefit) |
|
| (5 | ) |
|
| — |
|
|
| 8 |
|
|
| — |
|
|
| 3 |
|
Total, net of tax |
|
| 16 |
|
|
| (1 | ) |
|
| (23 | ) |
|
| — |
|
|
| (8 | ) |
Net current period other comprehensive |
|
| 13 |
|
|
| 15 |
|
|
| (23 | ) |
|
| 1 |
|
|
| 6 |
|
Ending balance |
| $ | (236 | ) |
| $ | (29 | ) |
| $ | (1,299 | ) |
| $ | (2 | ) |
| $ | (1,566 | ) |
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning balance |
| $ | (358 | ) |
| $ | 37 |
|
| $ | (1,133 | ) |
| $ | (4 | ) |
| $ | (1,458 | ) |
Other comprehensive income (loss) before |
|
| 54 |
|
|
| (89 | ) |
|
| 30 |
|
|
| 1 |
|
|
| (4 | ) |
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Interest and related charges |
|
| 28 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 28 |
|
Other income (expense) |
|
| — |
|
|
| 16 |
|
|
| 45 |
|
|
| — |
|
|
| 61 |
|
Total |
|
| 28 |
|
|
| 16 |
|
|
| 45 |
|
|
| — |
|
|
| 89 |
|
Income tax expense (benefit) |
|
| (7 | ) |
|
| (4 | ) |
|
| (12 | ) |
|
| — |
|
|
| (23 | ) |
Total, net of tax |
|
| 21 |
|
|
| 12 |
|
|
| 33 |
|
|
| — |
|
|
| 66 |
|
Net current period other comprehensive |
|
| 75 |
|
|
| (77 | ) |
|
| 63 |
|
|
| 1 |
|
|
| 62 |
|
Ending balance |
| $ | (283 | ) |
| $ | (40 | ) |
| $ | (1,070 | ) |
| $ | (3 | ) |
| $ | (1,396 | ) |
27
Virginia Power
Details About AOCI Components |
| Amounts Reclassified From AOCI |
|
| Affected Line Item in the Consolidated Statements of Income | |
(millions) |
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
| $ | (32 | ) |
| Operating revenue |
|
|
| 1 |
|
| Electric fuel and other energy-related purchases |
Interest rate contracts |
|
| 16 |
|
| Interest and related charges |
Foreign currency contracts |
|
| (10 | ) |
| Other income |
|
|
| (25 | ) |
|
|
Tax |
|
| 10 |
|
| Income tax expense |
|
| $ | (15 | ) |
|
|
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
|
Realized (gain) loss on sale of securities |
| $ | (10 | ) |
| Other income |
Impairment |
|
| 4 |
|
| Other income |
|
|
| (6 | ) |
|
|
Tax |
|
| 2 |
|
| Income tax expense |
|
| $ | (4 | ) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Prior service (credit) costs |
| $ | (5 | ) |
| Other operations and maintenance |
Actuarial (gains) losses |
|
| 26 |
|
| Other operations and maintenance |
|
|
| 21 |
|
|
|
Tax |
|
| (7 | ) |
| Income tax expense |
|
| $ | 14 |
|
|
|
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
| $ | (64 | ) |
| Operating revenue |
|
|
| 1 |
|
| Purchased gas |
|
|
| 1 |
|
| Electric fuel and other energy-related purchases |
Interest rate contracts |
|
| 10 |
|
| Interest and related charges |
Foreign currency contracts |
|
| (3 | ) |
| Other income |
|
|
| (55 | ) |
|
|
Tax |
|
| 21 |
|
| Income tax expense |
|
| $ | (34 | ) |
|
|
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
|
Realized (gain) loss on sale of securities |
| $ | (25 | ) |
| Other income |
Impairment |
|
| 5 |
|
| Other income |
|
|
| (20 | ) |
|
|
Tax |
|
| 7 |
|
| Income tax expense |
|
| $ | (13 | ) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Prior service (credit) costs |
| $ | (4 | ) |
| Other operations and maintenance |
Actuarial (gains) losses |
|
| 17 |
|
| Other operations and maintenance |
|
|
| 13 |
|
|
|
Tax |
|
| (4 | ) |
| Income tax expense |
|
| $ | 9 |
|
|
|
Nine Months Ended September 30, 2017 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
| $ | (114 | ) |
| Operating revenue |
|
|
| (1 | ) |
| Electric fuel and other energy-related purchases |
Interest rate contracts |
|
| 39 |
|
| Interest and related charges |
Details About AOCI Components |
| Amounts Reclassified From AOCI |
|
| Affected Line Item in the Consolidated Statements of Income | |
|
| (15 | ) |
| Other income | |
|
|
| (91 | ) |
|
|
Tax |
|
| 35 |
|
| Income tax expense |
|
| $ | (56 | ) |
|
|
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
|
Realized (gain) loss on sale of securities |
| $ | (74 | ) |
| Other income |
Impairment |
|
| 18 |
|
| Other income |
|
|
| (56 | ) |
|
|
Tax |
|
| 20 |
|
| Income tax expense |
|
| $ | (36 | ) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Prior service (credit) costs |
| $ | (16 | ) |
| Other operations and maintenance |
Actuarial (gains) losses |
|
| 79 |
|
| Other operations and maintenance |
|
|
| 63 |
|
|
|
Tax |
|
| (25 | ) |
| Income tax expense |
|
| $ | 38 |
|
|
|
Nine Months Ended September 30, 2016 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
| $ | (266 | ) |
| Operating revenue |
|
|
| 9 |
|
| Purchased gas |
|
|
| 8 |
|
| Electric fuel and other energy-related purchases |
Interest rate contracts |
|
| 21 |
|
| Interest and related charges |
Foreign currency contracts |
|
| (1 | ) |
| Other income |
|
|
| (229 | ) |
|
|
Tax |
|
| 88 |
|
| Income tax expense |
|
| $ | (141 | ) |
|
|
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
|
Realized (gain) loss on sale of securities |
| $ | (55 | ) |
| Other income |
Impairment |
|
| 19 |
|
| Other income |
|
|
| (36 | ) |
|
|
Tax |
|
| 13 |
|
| Income tax expense |
|
| $ | (23 | ) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Prior service (credit) costs |
| $ | (11 | ) |
| Other operations and maintenance |
Actuarial (gains) losses |
|
| 52 |
|
| Other operations and maintenance |
|
|
| 41 |
|
|
|
Tax |
|
| (16 | ) |
| Income tax expense |
|
| $ | 25 |
|
|
|
The following table presents Dominion Energy Gas’Virginia Power’s changes in AOCI by component, net(net of tax:
|
| Deferred Gains and Losses on Derivatives-Hedging Activities |
|
| Unrecognized Pension and Other Postretirement Benefit Costs |
|
| Total |
| |||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | (23 | ) |
| $ | (97 | ) |
| $ | (120 | ) |
Other comprehensive income before reclassifications: gains |
|
| 1 |
|
|
| — |
|
|
| 1 |
|
Amounts reclassified from AOCI(1): (gains) losses |
|
| (4 | ) |
|
| 1 |
|
|
| (3 | ) |
Net current-period other comprehensive income (loss) |
|
| (3 | ) |
|
| 1 |
|
|
| (2 | ) |
Ending balance |
| $ | (26 | ) |
| $ | (96 | ) |
| $ | (122 | ) |
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | (34 | ) |
| $ | (81 | ) |
| $ | (115 | ) |
Other comprehensive income before reclassifications: gains |
|
| 9 |
|
|
| — |
|
|
| 9 |
|
Amounts reclassified from AOCI(1): (gains) losses |
|
| (1 | ) |
|
| 1 |
|
|
| — |
|
Net current-period other comprehensive income |
|
| 8 |
|
|
| 1 |
|
|
| 9 |
|
Ending balance |
| $ | (26 | ) |
| $ | (80 | ) |
| $ | (106 | ) |
Nine Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | (24 | ) |
| $ | (99 | ) |
| $ | (123 | ) |
Other comprehensive income before reclassifications: gains |
|
| 3 |
|
|
| — |
|
|
| 3 |
|
Amounts reclassified from AOCI(1): (gains) losses |
|
| (5 | ) |
|
| 3 |
|
|
| (2 | ) |
Net current-period other comprehensive income (loss) |
|
| (2 | ) |
|
| 3 |
|
|
| 1 |
|
Ending balance |
| $ | (26 | ) |
| $ | (96 | ) |
| $ | (122 | ) |
Nine Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | (17 | ) |
| $ | (82 | ) |
| $ | (99 | ) |
Other comprehensive income before reclassifications: losses |
|
| (6 | ) |
|
| — |
|
|
| (6 | ) |
Amounts reclassified from AOCI(1): (gains) losses |
|
| (3 | ) |
|
| 2 |
|
|
| (1 | ) |
Net current-period other comprehensive income (loss) |
|
| (9 | ) |
|
| 2 |
|
|
| (7 | ) |
Ending balance |
| $ | (26 | ) |
| $ | (80 | ) |
| $ | (106 | ) |
|
|
The following table presents Dominion Energy Gas'tax) and reclassifications out of AOCI by component:
|
| Total Derivative-Hedging Activities(1)(2) |
|
| Investment |
|
| Total |
| |||
(millions) |
|
|
|
|
|
|
|
|
| |||
Three Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
| |||
Beginning balance |
| $ | 7 |
|
| $ | (3 | ) |
| $ | 4 |
|
Other comprehensive income (loss) before |
|
| 6 |
|
|
| (1 | ) |
|
| 5 |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
| |||||
Total |
|
| — |
|
|
| — |
|
|
| — |
|
Income tax expense (benefit) |
|
| — |
|
|
| — |
|
|
| — |
|
Total, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
Net current period other comprehensive income (loss) |
|
| 6 |
|
|
| (1 | ) |
|
| 5 |
|
Ending balance |
| $ | 13 |
|
| $ | (4 | ) |
| $ | 9 |
|
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
| |||
Beginning balance |
| $ | (25 | ) |
| $ | (4 | ) |
| $ | (29 | ) |
Other comprehensive income (loss) before |
|
| 25 |
|
|
| (3 | ) |
|
| 22 |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
| |||||
Total |
|
| — |
|
|
| — |
|
|
| — |
|
Income tax expense (benefit) |
|
| — |
|
|
| — |
|
|
| — |
|
Total, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
Net current period other comprehensive income (loss) |
|
| 25 |
|
|
| (3 | ) |
|
| 22 |
|
Ending balance |
| $ | — |
|
| $ | (7 | ) |
| $ | (7 | ) |
Details About AOCI Components |
| Amounts Reclassified From AOCI |
|
| Affected Line Item in the Consolidated Statements of Income | |
(millions) |
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
| $ | 2 |
|
| Operating revenue |
Interest rate contracts |
|
| 1 |
|
| Interest and related charges |
Foreign currency contracts |
|
| (10 | ) |
| Other income |
|
|
| (7 | ) |
|
|
Tax |
|
| 3 |
|
| Income tax expense |
|
| $ | (4 | ) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Actuarial (gains) losses |
| $ | 2 |
|
| Other operations and maintenance |
|
|
| 2 |
|
|
|
Tax |
|
| (1 | ) |
| Income tax expense |
|
| $ | 1 |
|
|
|
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
| $ | (1 | ) |
| Operating revenue |
Interest rate contracts |
|
| 1 |
|
| Interest and related charges |
Foreign currency contracts |
|
| (3 | ) |
| Other income |
|
|
| (3 | ) |
|
|
Tax |
|
| 2 |
|
| Income tax expense |
|
| $ | (1 | ) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Actuarial (gains) losses |
| $ | 2 |
|
| Other operations and maintenance |
|
|
| 2 |
|
|
|
Tax |
|
| (1 | ) |
| Income tax expense |
|
| $ | 1 |
|
|
|
Nine Months Ended September 30, 2017 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
| $ | 4 |
|
| Operating revenue |
Interest rate contracts |
|
| 3 |
|
| Interest and related charges |
Foreign currency contracts |
|
| (15 | ) |
| Other income |
|
|
| (8 | ) |
|
|
Tax |
|
| 3 |
|
| Income tax expense |
|
| $ | (5 | ) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Actuarial (gains) losses |
| $ | 5 |
|
| Other operations and maintenance |
|
|
| 5 |
|
|
|
Tax |
|
| (2 | ) |
| Income tax expense |
|
| $ | 3 |
|
|
|
Nine Months Ended September 30, 2016 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
| $ | (6 | ) |
| Operating revenue |
Interest rate contracts |
|
| 2 |
|
| Interest and related charges |
Foreign currency contracts |
|
| (1 | ) |
| Other income |
|
|
| (5 | ) |
|
|
Tax |
|
| 2 |
|
| Income tax expense |
|
| $ | (3 | ) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Actuarial (gains) losses |
| $ | 4 |
|
| Other operations and maintenance |
|
|
| 4 |
|
|
|
Tax |
|
| (2 | ) |
| Income tax expense |
|
| $ | 2 |
|
|
|
|
| Total Derivative-Hedging Activities(1)(2) |
|
| Investment |
|
| Total |
| |||
(millions) |
|
|
|
|
|
|
|
|
| |||
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
| |||
Beginning balance |
| $ | 16 |
|
| $ | (7 | ) |
| $ | 9 |
|
Other comprehensive income (loss) before |
|
| (3 | ) |
|
| 3 |
|
|
| — |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
| |||||
Total |
|
| — |
|
|
| — |
|
|
| — |
|
Income tax expense (benefit) |
|
| — |
|
|
| — |
|
|
| — |
|
Total, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
Net current period other comprehensive income (loss) |
|
| (3 | ) |
|
| 3 |
|
|
| — |
|
Ending balance |
| $ | 13 |
|
| $ | (4 | ) |
| $ | 9 |
|
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
| |||
Beginning balance |
| $ | (45 | ) |
| $ | 4 |
|
| $ | (41 | ) |
Other comprehensive income (loss) before |
|
| 44 |
|
|
| (10 | ) |
|
| 34 |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
| |||||
Interest and related charges |
|
| 1 |
|
|
| — |
|
|
| 1 |
|
Other income (expense) |
|
| — |
|
|
| (1 | ) |
|
| (1 | ) |
Total |
|
| 1 |
|
|
| (1 | ) |
|
| — |
|
Income tax expense (benefit) |
|
| — |
|
|
| — |
|
|
| — |
|
Total, net of tax |
|
| 1 |
|
|
| (1 | ) |
|
| — |
|
Net current period other comprehensive income (loss) |
|
| 45 |
|
|
| (11 | ) |
|
| 34 |
|
Ending balance |
| $ | — |
|
| $ | (7 | ) |
| $ | (7 | ) |
28
Note 8. Fair Value Measurements
The Companies'Companies’ fair value measurements are made in accordance with the policies discussed in Note 62 to the Consolidated Financial Statements in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016.2022. See Note 9 in this report for furtheradditional information about the Companies'Companies’ derivatives and hedge accounting activities.
The Companies enter into certain physical and financial forwards, futures options and swaps,options, 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 futures, and swapsfutures contracts. An option model is used to value Level 3 physical and financial options. The discounted cash flow model for forwards futures, and swapsfutures 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 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 pricing sources.
The following table presents Dominion Energy'sthe Companies' quantitative information about Level 3 fair value measurements at SeptemberJune 30, 2017.2023. The range and weighted average are presented in dollars for market price inputs and percentages for price volatility.
|
|
|
| Dominion Energy |
| Virginia Power | ||||||||
| Valuation | Unobservable |
| Fair Value (millions) |
| Range | Weighted |
| Fair Value (millions) |
| Range | Weighted | ||
Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
| |||
Electricity | Discounted | Market price | (3) | $ | 141 |
| 25-138 | 47 |
|
| — |
| — | — |
Physical options: |
|
|
|
|
|
|
|
|
|
|
| |||
Natural gas(2) | Option model | Market price | (3) |
| 15 |
| 1-8 | 4 |
|
| 15 |
| 1-8 | 4 |
| Price volatility | (4) |
|
| 19%-72% | 51% |
|
|
| 19%-72% | 51% | |||
Total assets |
|
|
| $ | 156 |
|
|
|
| $ | 15 |
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
| |||
Natural gas(2) | Discounted | Market price | (3) | $ | 18 |
| (2)-2 | (1) |
| $ | 18 |
| (2)-2 | (1) |
Electricity | Discounted | Market price | (3) |
| 4 |
| 32-138 | 64 |
|
| — |
| — | — |
Total |
|
|
| $ | 22 |
|
|
|
| $ | 18 |
|
|
|
|
| Fair Value (millions) |
|
| Valuation Techniques |
| Unobservable Input |
|
| Range |
| Weighted Average(1) |
| ||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Physical and financial forwards and futures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas(2) |
| $ | 91 |
|
| Discounted cash flow |
| Market price (per Dth) | (3) |
| (2) - 7 |
|
| — |
|
FTRs |
|
| 19 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| (3) - 7 |
|
| 1 |
|
Physical options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas |
|
| 2 |
|
| Option model |
| Market price (per Dth) | (3) |
| 2 - 7 |
|
| 4 |
|
|
|
|
|
|
|
|
| Price volatility | (4) |
| 24% - 46% |
|
| 32 | % |
Electricity |
|
| 42 |
|
| Option model |
| Market price (per MWh) | (3) |
| 21 - 50 |
|
| 34 |
|
|
|
|
|
|
|
|
| Price volatility | (4) |
| 0% - 78% |
|
| 28 | % |
Total assets |
| $ | 154 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FTRs |
| $ | 1 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| (5) - 7 |
|
| 1 |
|
Total liabilities |
| $ | 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 | Increase (decrease) | Gain (loss) | |||
Market price | Sell | Increase (decrease) | Loss (gain) | |||
Price volatility | Buy | Increase (decrease) | Gain (loss) | |||
Price volatility | Sell | Increase (decrease) | Loss (gain) |
Nonrecurring Fair Value Measurements
See Note 10 for information regarding nonrecurring fair value measurements associated with Dominion Energy’s noncontrolling ownership interest in Dominion Privatization.
29
In the first quarter of 2023, Dominion Energy recorded a charge of $91 million ($68 million after-tax) in impairment of assets and other charges in its Consolidated Statements of Income to adjust a corporate office building down to its estimated fair value, using a market approach, of $35 million. The valuation is considered a Level 3 fair value measurement as it is based on unobservable inputs due to limited comparable market activity. The corporate office building is reflected in the Corporate and Other segment and presented as held for sale in Dominion Energy’s Consolidated Balance Sheets at June 30, 2023.
In the second quarter of 2023, Dominion Energy recorded a charge of $15 million ($11 million after-tax) in impairment of assets and other charges in its Consolidated Statements of Income to adjust certain nonregulated solar assets down to their estimated fair value, using a market approach, of $22 million. The valuation is considered a Level 2 fair value measurement given that it is based on bids received. These assets are reflected in the Corporate and Other segment and presented as held for sale in Dominion Energy’s Consolidated Balance Sheets at June 30, 2023.
Recurring Fair Value Measurements
Dominion Energy
The following table presents Dominion Energy’sthe Companies' assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:
|
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||||||||||
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Commodity |
| $ | 1 |
|
| $ | 194 |
|
| $ | 156 |
|
| $ | 351 |
|
| $ | 1 |
|
| $ | 73 |
|
| $ | 15 |
|
| $ | 89 |
|
Interest rate |
|
| — |
|
|
| 904 |
|
|
| — |
|
|
| 904 |
|
|
| — |
|
|
| 135 |
|
|
| — |
|
|
| 135 |
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
U.S. |
|
| 4,354 |
|
|
| — |
|
|
| — |
|
|
| 4,354 |
|
|
| 2,317 |
|
|
| — |
|
|
| — |
|
|
| 2,317 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Corporate debt instruments |
|
| — |
|
|
| 539 |
|
|
| — |
|
|
| 539 |
|
|
| — |
|
|
| 323 |
|
|
| — |
|
|
| 323 |
|
Government securities |
|
| 170 |
|
|
| 1,144 |
|
|
| — |
|
|
| 1,314 |
|
|
| 90 |
|
|
| 619 |
|
|
| — |
|
|
| 709 |
|
Cash equivalents and other |
|
| 27 |
|
|
| — |
|
|
| — |
|
|
| 27 |
|
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| 1 |
|
Total assets |
| $ | 4,552 |
|
| $ | 2,781 |
|
| $ | 156 |
|
| $ | 7,489 |
|
| $ | 2,409 |
|
| $ | 1,150 |
|
| $ | 15 |
|
| $ | 3,574 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Commodity |
| $ | — |
|
| $ | 332 |
|
| $ | 22 |
|
| $ | 354 |
|
| $ | — |
|
| $ | 150 |
|
| $ | 18 |
|
| $ | 168 |
|
Interest rate |
|
| — |
|
|
| 381 |
|
|
| — |
|
|
| 381 |
|
|
| — |
|
|
| 11 |
|
|
| — |
|
|
| 11 |
|
Foreign currency exchange rate |
|
| — |
|
|
| 59 |
|
|
| — |
|
|
| 59 |
|
|
| — |
|
|
| 59 |
|
|
| — |
|
|
| 59 |
|
Total liabilities |
| $ | — |
|
| $ | 772 |
|
| $ | 22 |
|
| $ | 794 |
|
| $ | — |
|
| $ | 220 |
|
| $ | 18 |
|
| $ | 238 |
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Commodity |
| $ | — |
|
| $ | 332 |
|
| $ | 437 |
|
| $ | 769 |
|
| $ | — |
|
| $ | 32 |
|
| $ | 236 |
|
| $ | 268 |
|
Interest rate |
|
| — |
|
|
| 1,407 |
|
|
| — |
|
|
| 1,407 |
|
|
| — |
|
|
| 614 |
|
|
| — |
|
|
| 614 |
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
U.S. |
|
| 3,810 |
|
|
| — |
|
|
| — |
|
|
| 3,810 |
|
|
| 2,028 |
|
|
| — |
|
|
| — |
|
|
| 2,028 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Corporate debt instruments |
|
| — |
|
|
| 576 |
|
|
| — |
|
|
| 576 |
|
|
| — |
|
|
| 360 |
|
|
| — |
|
|
| 360 |
|
Government securities |
|
| 161 |
|
|
| 1,059 |
|
|
| — |
|
|
| 1,220 |
|
|
| 90 |
|
|
| 542 |
|
|
| — |
|
|
| 632 |
|
Total assets |
| $ | 3,971 |
|
| $ | 3,374 |
|
| $ | 437 |
|
| $ | 7,782 |
|
| $ | 2,118 |
|
| $ | 1,548 |
|
| $ | 236 |
|
| $ | 3,902 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Commodity |
| $ | — |
|
| $ | 911 |
|
| $ | 15 |
|
| $ | 926 |
|
| $ | — |
|
| $ | 333 |
|
| $ | 15 |
|
| $ | 348 |
|
Interest rate |
|
| — |
|
|
| 377 |
|
|
| — |
|
|
| 377 |
|
|
| — |
|
|
| 7 |
|
|
| — |
|
|
| 7 |
|
Foreign currency exchange rate |
|
| — |
|
|
| 101 |
|
|
| — |
|
|
| 101 |
|
|
| — |
|
|
| 101 |
|
|
| — |
|
|
| 101 |
|
Total liabilities |
| $ | — |
|
| $ | 1,389 |
|
| $ | 15 |
|
| $ | 1,404 |
|
| $ | — |
|
| $ | 441 |
|
| $ | 15 |
|
| $ | 456 |
|
30
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 59 |
|
| $ | 154 |
|
| $ | 213 |
|
Interest rate |
|
| — |
|
|
| 11 |
|
|
| — |
|
|
| 11 |
|
Foreign currency |
|
| — |
|
|
| 25 |
|
|
| — |
|
|
| 25 |
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
| 3,288 |
|
|
| — |
|
|
| — |
|
|
| 3,288 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| — |
|
|
| 452 |
|
|
| — |
|
|
| 452 |
|
Government securities |
|
| 475 |
|
|
| 631 |
|
|
| — |
|
|
| 1,106 |
|
Cash equivalents and other |
|
| 7 |
|
|
| — |
|
|
| — |
|
|
| 7 |
|
Total assets |
| $ | 3,770 |
|
| $ | 1,178 |
|
| $ | 154 |
|
| $ | 5,102 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 41 |
|
| $ | 1 |
|
| $ | 42 |
|
Interest rate |
|
| — |
|
|
| 72 |
|
|
| — |
|
|
| 72 |
|
Foreign currency |
|
| — |
|
|
| 4 |
|
|
| — |
|
|
| 4 |
|
Total liabilities |
| $ | — |
|
| $ | 117 |
|
| $ | 1 |
|
| $ | 118 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 115 |
|
| $ | 147 |
|
| $ | 262 |
|
Interest rate |
|
| — |
|
|
| 17 |
|
|
| — |
|
|
| 17 |
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
| 2,913 |
|
|
| — |
|
|
| — |
|
|
| 2,913 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| — |
|
|
| 487 |
|
|
| — |
|
|
| 487 |
|
Government securities |
|
| 424 |
|
|
| 614 |
|
|
| — |
|
|
| 1,038 |
|
Cash equivalents and other |
|
| 5 |
|
|
| — |
|
|
| — |
|
|
| 5 |
|
Total assets |
| $ | 3,342 |
|
| $ | 1,233 |
|
| $ | 147 |
|
| $ | 4,722 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 88 |
|
| $ | 8 |
|
| $ | 96 |
|
Interest rate |
|
| — |
|
|
| 53 |
|
|
| — |
|
|
| 53 |
|
Foreign currency |
|
| — |
|
|
| 6 |
|
|
| — |
|
|
| 6 |
|
Total liabilities |
| $ | — |
|
| $ | 147 |
|
| $ | 8 |
|
| $ | 155 |
|
|
|
The following table presents the net change in Dominion Energy'sthe Companies' assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | 152 |
|
| $ | 124 |
|
| $ | 139 |
|
| $ | 95 |
|
Total realized and unrealized gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings |
|
| (11 | ) |
|
| (7 | ) |
|
| (36 | ) |
|
| (23 | ) |
Included in other comprehensive income |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 2 |
|
Included in regulatory assets/liabilities |
|
| 11 |
|
|
| (37 | ) |
|
| 34 |
|
|
| (5 | ) |
Settlements |
|
| 1 |
|
|
| 9 |
|
|
| 13 |
|
|
| 27 |
|
Transfers out of Level 3 |
|
| — |
|
|
| — |
|
|
| 3 |
|
|
| (7 | ) |
Ending balance |
| $ | 153 |
|
| $ | 89 |
|
| $ | 153 |
|
| $ | 89 |
|
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets/liabilities still held at the reporting date |
| $ | 1 |
|
| $ | — |
|
| $ | 1 |
|
| $ | — |
|
The following table presents
|
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||||||||||
|
| Quarter-to-Date |
|
| Year-to-Date |
|
| Quarter-to-Date |
|
| Year-to-Date |
| ||||||||||||||||||||
Period Ended June 30, |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Beginning balance |
| $ | 206 |
|
| $ | 202 |
|
| $ | 422 |
|
| $ | 222 |
|
| $ | 55 |
|
| $ | 22 |
|
| $ | 221 |
|
| $ | 102 |
|
Total realized and unrealized gains |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Included in earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Operating revenue |
|
| 2 |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Electric fuel and other energy- |
|
| (36 | ) |
|
| 117 |
|
|
| (87 | ) |
|
| 165 |
|
|
| (36 | ) |
|
| 106 |
|
|
| (88 | ) |
|
| 151 |
|
Included in regulatory assets/ |
|
| (74 | ) |
|
| 261 |
|
|
| (290 | ) |
|
| 241 |
|
|
| (58 | ) |
|
| 206 |
|
|
| (224 | ) |
|
| 126 |
|
Settlements |
|
| 36 |
|
|
| (117 | ) |
|
| 71 |
|
|
| (165 | ) |
|
| 36 |
|
|
| (106 | ) |
|
| 72 |
|
|
| (151 | ) |
Purchases |
|
| — |
|
|
| 17 |
|
|
| 16 |
|
|
| 17 |
|
|
| — |
|
|
| 17 |
|
|
| 16 |
|
|
| 17 |
|
Ending balance |
| $ | 134 |
|
| $ | 480 |
|
| $ | 134 |
|
| $ | 480 |
|
| $ | (3 | ) |
| $ | 245 |
|
| $ | (3 | ) |
| $ | 245 |
|
Dominion Energy’s classificationEnergy had $2 million of unrealized gains and losses included in earnings in the Level 3 fair value category.
|
| Operating Revenue |
|
| Electric Fuel and Other Energy - Related Purchases |
|
| Total |
| |||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Total gains (losses) included in earnings |
| $ | 1 |
|
| $ | (12 | ) |
| $ | (11 | ) |
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets/liabilities still held at the reporting date |
|
| 1 |
|
|
| — |
|
|
| 1 |
|
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Total gains (losses) included in earnings |
| $ | — |
|
| $ | (7 | ) |
| $ | (7 | ) |
Nine Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Total gains (losses) included in earnings |
| $ | 1 |
|
| $ | (37 | ) |
| $ | (36 | ) |
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets/liabilities still held at the reporting date |
|
| 1 |
|
|
| — |
|
|
| 1 |
|
Nine Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Total gains (losses) included in earnings |
| $ | — |
|
| $ | (23 | ) |
| $ | (23 | ) |
The following table presents Virginia Power's quantitative information about Level 3 fair value measurements at September 30, 2017. 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 and futures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas(2) |
| $ | 91 |
|
| Discounted cash flow |
| Market price (per Dth) | (3) |
| (2) - 7 |
|
| (1 | ) |
FTRs |
|
| 19 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| (1) - 7 |
|
| 1 |
|
Physical options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas |
|
| 1 |
|
| Option model |
| Market price (per Dth) | (3) |
| 2 - 7 |
|
| 4 |
|
|
|
|
|
|
|
|
| Price volatility | (4) |
| 24% - 46% |
|
| 32 | % |
Electricity |
|
| 42 |
|
| Option model |
| Market price (per MWh) | (3) |
| 21 - 50 |
|
| 34 |
|
|
|
|
|
|
|
|
| Price volatility | (4) |
| 0% - 78% |
|
| 28 | % |
Total assets |
| $ | 153 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FTRs |
| $ | 1 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| (5) - 7 |
|
| 1 |
|
Total liabilities |
| $ | 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:
|
|
|
| |||
|
|
|
| |||
|
|
|
| |||
|
|
|
| |||
|
|
|
|
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 15 |
|
| $ | 153 |
|
| $ | 168 |
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
| 1,471 |
|
|
| — |
|
|
| — |
|
|
| 1,471 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| — |
|
|
| 234 |
|
|
| — |
|
|
| 234 |
|
Government securities |
|
| 193 |
|
|
| 302 |
|
|
| — |
|
|
| 495 |
|
Total assets |
| $ | 1,664 |
|
| $ | 551 |
|
| $ | 153 |
|
| $ | 2,368 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 5 |
|
| $ | 1 |
|
| $ | 6 |
|
Interest rate |
|
| — |
|
|
| 55 |
|
|
| — |
|
|
| 55 |
|
Total liabilities |
| $ | — |
|
| $ | 60 |
|
| $ | 1 |
|
| $ | 61 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 43 |
|
| $ | 145 |
|
| $ | 188 |
|
Interest rate |
|
| — |
|
|
| 6 |
|
|
| — |
|
|
| 6 |
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
| 1,302 |
|
|
| — |
|
|
| — |
|
|
| 1,302 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| — |
|
|
| 277 |
|
|
| — |
|
|
| 277 |
|
Government securities |
|
| 136 |
|
|
| 291 |
|
|
| — |
|
|
| 427 |
|
Total assets |
| $ | 1,438 |
|
| $ | 617 |
|
| $ | 145 |
|
| $ | 2,200 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 8 |
|
| $ | 2 |
|
| $ | 10 |
|
Interest rate |
|
| — |
|
|
| 21 |
|
|
| — |
|
|
| 21 |
|
Total liabilities |
| $ | — |
|
| $ | 29 |
|
| $ | 2 |
|
| $ | 31 |
|
|
|
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:
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | 152 |
|
| $ | 125 |
|
| $ | 143 |
|
| $ | 93 |
|
Total realized and unrealized gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings |
|
| (12 | ) |
|
| (7 | ) |
|
| (37 | ) |
|
| (24 | ) |
Included in regulatory assets/liabilities |
|
| 11 |
|
|
| (37 | ) |
|
| 34 |
|
|
| (5 | ) |
Settlements |
|
| 1 |
|
|
| 7 |
|
|
| 12 |
|
|
| 24 |
|
Ending balance |
| $ | 152 |
|
| $ | 88 |
|
| $ | 152 |
|
| $ | 88 |
|
The gains and losses included in earnings in the Level 3 fair value category were classified in electric fuel and other energy-related purchases in Virginia Power's Consolidated Statements of Income for the three and nine months ended September 30, 2017 and 2016. There were no unrealized gains or losses included in earnings in the Level 3 fair value category relatingrelated to assets/liabilities still held at the reporting date for the three and ninesix months ended SeptemberJune 30, 20172023 and 2016.
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 1 |
|
| $ | — |
|
| $ | 1 |
|
Foreign currency |
|
| — |
|
|
| 25 |
|
|
| — |
|
|
| 25 |
|
Total assets |
| $ | — |
|
| $ | 26 |
|
| $ | — |
|
| $ | 26 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 6 |
|
| $ | — |
|
| $ | 6 |
|
Foreign currency |
|
| — |
|
|
| 4 |
|
|
| — |
|
|
| 4 |
|
Total liabilities |
| $ | — |
|
| $ | 10 |
|
| $ | — |
|
| $ | 10 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 3 |
|
| $ | 2 |
|
| $ | 5 |
|
Foreign currency |
|
| — |
|
|
| 6 |
|
|
| — |
|
|
| 6 |
|
Total liabilities |
| $ | — |
|
| $ | 9 |
|
| $ | 2 |
|
| $ | 11 |
|
The following table presents the net change in Dominion Energy Gas' assets and liabilities for derivatives measured at fair value on a recurring basis and included in the Level 3 fair value category. There were no net changes in assets and liabilities for derivatives measured at fair value on a recurring basis and included in the Level 3 fair value category for the three months ended September 30, 2017 and 2016.
|
| Nine Months Ended September 30, |
| |||||
|
| 2017 |
|
| 2016 |
| ||
(millions) |
|
|
|
|
|
|
|
|
Beginning balance |
| $ | (2 | ) |
| $ | 6 |
|
Total realized and unrealized gains (losses): |
|
|
|
|
|
|
|
|
Included in other comprehensive income (loss) |
|
| (1 | ) |
|
| 2 |
|
Transfers out of Level 3 |
|
| 3 |
|
|
| (8 | ) |
Ending balance |
| $ | — |
|
| $ | — |
|
There were no unrealized gains or losses included in earnings in the Level 3 fair value category for the three and ninesix months ended SeptemberJune 30, 2017 and 2016. There were 2022. Virginia Power had no unrealized gains or losses included in earnings in the Level 3 fair value category relating to assets/liabilities still held at the reporting date for the three and ninesix months ended SeptemberJune 30, 20172023 and 2016.June 30, 2022.
Fair Value of Financial Instruments
Substantially all of the Companies'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, and cash equivalents, restricted cash (which is recorded in Dominion Energy’s other current assets),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:
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||||||||||
|
| Carrying Amount |
|
| Estimated Fair Value(1) |
|
| Carrying Amount |
|
| Estimated Fair Value(1) |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, including securities due within one year(2) |
| $ | 28,317 |
|
| $ | 30,639 |
|
| $ | 26,587 |
|
| $ | 28,273 |
|
Junior subordinated notes(3) |
|
| 3,980 |
|
|
| 4,128 |
|
|
| 2,980 |
|
|
| 2,893 |
|
Remarketable subordinated notes(3) |
|
| 1,377 |
|
|
| 1,421 |
|
|
| 2,373 |
|
|
| 2,418 |
|
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt, including securities due within one year(3) |
| $ | 11,346 |
|
| $ | 12,686 |
|
| $ | 10,530 |
|
| $ | 11,584 |
|
Dominion Energy Gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt(4) |
| $ | 3,564 |
|
| $ | 3,705 |
|
| $ | 3,528 |
|
| $ | 3,603 |
|
|
| Dominion Energy |
|
| Virginia Power |
| ||||||||||
|
| Carrying |
|
| Estimated |
|
| Carrying |
|
| Estimated |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Long-term debt(2) |
| $ | 41,887 |
|
| $ | 38,876 |
|
| $ | 16,399 |
|
| $ | 14,909 |
|
Supplemental credit facility borrowings |
|
| 450 |
|
|
| 450 |
|
|
|
|
|
|
| ||
Junior subordinated notes(2) |
|
| 1,387 |
|
|
| 1,349 |
|
|
|
|
|
|
| ||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Long-term debt(2) |
| $ | 39,680 |
|
| $ | 36,426 |
|
| $ | 15,616 |
|
| $ | 14,067 |
|
Supplemental credit facility borrowings |
|
| 450 |
|
|
| 450 |
|
|
|
|
|
|
| ||
Junior subordinated notes(2) |
|
| 1,387 |
|
|
| 1,340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 9. Derivatives and Hedge Accounting Activities
The Companies'Companies’ accounting policies, objectives and strategies for using derivative instruments are discussed in Note 2 to the Consolidated Financial Statements in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016.2022. See Note 8 in this report for furtheradditional information about fair value measurements and associated valuation methods for derivatives.
31
Derivative assets and liabilities are presented gross on the Companies' Consolidated Balance Sheets. Dominion Energy'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's and Dominion Energy Gas' derivative contracts consist of over-the-counter transactions. Over-the-counter contracts are bilateral contracts that are transacted directly with a counterparty. 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. In February 2022, Dominion Energy entered into contracts representing offsetting positions to certain existing exchange contracts with collateral requirements as well as new over-the-counter transactions that are not subject to collateral requirements. These contracts resulted in positions which limit the risk of increased cash collateral requirements. Certain accounts receivable and accounts payable recognized on the Companies'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 additional information regarding credit-related contingent features for the Companies’ derivative instruments.
Balance Sheet Presentation
The tables below present Dominion Energy'sthe Companies' derivative asset and liability balances by type of financial instrument, beforeif the gross amounts recognized in their Consolidated Balance Sheets were netted with derivative instruments and after the effectscash collateral received or paid:
|
| Dominion Energy Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Virginia Power Gross Amounts Not Offset in the Consolidated Balance Sheet |
| ||||||||||||||||||||||||||
|
| Gross Assets |
|
| Financial |
|
| Cash |
|
| Net |
|
| Gross Assets |
|
| Financial |
|
| Cash |
|
| Net |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
| $ | 162 |
|
| $ | 55 |
|
| $ | — |
|
| $ | 107 |
|
| $ | 78 |
|
| $ | 32 |
|
| $ | — |
|
| $ | 46 |
|
Exchange |
|
| 55 |
|
|
| 55 |
|
|
| — |
|
|
| — |
|
|
| 10 |
|
|
| 10 |
|
|
| — |
|
|
| — |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
|
| 904 |
|
|
| 214 |
|
|
| — |
|
|
| 690 |
|
|
| 135 |
|
|
| 2 |
|
|
| — |
|
|
| 133 |
|
Total derivatives, |
| $ | 1,121 |
|
| $ | 324 |
|
| $ | — |
|
| $ | 797 |
|
| $ | 223 |
|
| $ | 44 |
|
| $ | — |
|
| $ | 179 |
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
| $ | 408 |
|
| $ | 28 |
|
| $ | — |
|
| $ | 380 |
|
| $ | 238 |
|
| $ | 7 |
|
| $ | — |
|
| $ | 231 |
|
Exchange |
|
| 160 |
|
|
| 159 |
|
|
| — |
|
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
|
| 1,407 |
|
|
| 248 |
|
|
| — |
|
|
| 1,159 |
|
|
| 614 |
|
|
| 38 |
|
|
| — |
|
|
| 576 |
|
Total derivatives, |
| $ | 1,975 |
|
| $ | 435 |
|
| $ | — |
|
| $ | 1,540 |
|
| $ | 852 |
|
| $ | 45 |
|
| $ | — |
|
| $ | 807 |
|
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||||||||||||||||||
|
| Gross Amounts of Recognized Assets |
|
| Gross Amounts Offset in the Consolidated Balance Sheet |
|
| Net Amounts of Assets Presented in the Consolidated Balance Sheet |
|
| Gross Amounts of Recognized Assets |
|
| Gross Amounts Offset in the Consolidated Balance Sheet |
|
| Net Amounts of Assets Presented in the Consolidated Balance Sheet |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 186 |
|
| $ | — |
|
| $ | 186 |
|
| $ | 211 |
|
| $ | — |
|
| $ | 211 |
|
Exchange |
|
| 24 |
|
|
| — |
|
|
| 24 |
|
|
| 44 |
|
|
| — |
|
|
| 44 |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 11 |
|
|
| — |
|
|
| 11 |
|
|
| 17 |
|
|
| — |
|
|
| 17 |
|
Foreign currency contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 25 |
|
|
| — |
|
|
| 25 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total derivatives, subject to a master netting or similar arrangement |
|
| 246 |
|
|
| — |
|
|
| 246 |
|
|
| 272 |
|
|
| — |
|
|
| 272 |
|
Total derivatives, not subject to a master netting or similar arrangement |
|
| 3 |
|
|
| — |
|
|
| 3 |
|
|
| 7 |
|
|
| — |
|
|
| 7 |
|
Total |
| $ | 249 |
|
| $ | — |
|
| $ | 249 |
|
| $ | 279 |
|
| $ | — |
|
| $ | 279 |
|
|
|
|
|
| September 30, 2017 |
|
|
|
|
|
|
|
|
|
| December 31, 2016 |
|
|
|
|
| |||||||||||
|
|
|
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
|
|
|
|
|
|
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
|
|
| |||||||||||
|
| Net Amounts of Assets Presented in the Consolidated Balance Sheet |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
|
| Net Amounts of Assets Presented in the Consolidated Balance Sheet |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 186 |
|
| $ | 8 |
|
| $ | — |
|
| $ | 178 |
|
| $ | 211 |
|
| $ | 14 |
|
| $ | — |
|
| $ | 197 |
|
Exchange |
|
| 24 |
|
|
| 21 |
|
|
| — |
|
|
| 3 |
|
|
| 44 |
|
|
| 44 |
|
|
| — |
|
|
| — |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 11 |
|
|
| 6 |
|
|
| — |
|
|
| 5 |
|
|
| 17 |
|
|
| 9 |
|
|
| — |
|
|
| 8 |
|
Foreign currency contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 25 |
|
|
| 4 |
|
|
| — |
|
|
| 21 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
| $ | 246 |
|
| $ | 39 |
|
| $ | — |
|
| $ | 207 |
|
| $ | 272 |
|
| $ | 67 |
|
| $ | — |
|
| $ | 205 |
|
| September 30, 2017 |
|
| December 31, 2016 |
| |||||||||||||||||||
|
| Gross Amounts of Recognized Liabilities |
|
| Gross Amounts Offset in the Consolidated Balance Sheet |
|
| Net Amounts of Liabilities Presented in the Consolidated Balance Sheet |
|
| Gross Amounts of Recognized Liabilities |
|
| Gross Amounts Offset in the Consolidated Balance Sheet |
|
| Net Amounts of Liabilities Presented in the Consolidated Balance Sheet |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 19 |
|
| $ | — |
|
| $ | 19 |
|
| $ | 23 |
|
| $ | — |
|
| $ | 23 |
|
Exchange |
|
| 21 |
|
|
| — |
|
|
| 21 |
|
|
| 71 |
|
|
| — |
|
|
| 71 |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 72 |
|
|
| — |
|
|
| 72 |
|
|
| 53 |
|
|
| — |
|
|
| 53 |
|
Foreign currency contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 4 |
|
|
| — |
|
|
| 4 |
|
|
| 6 |
|
|
| — |
|
|
| 6 |
|
Total derivatives, subject to a master netting or similar arrangement |
|
| 116 |
|
|
| — |
|
|
| 116 |
|
|
| 153 |
|
|
| — |
|
|
| 153 |
|
Total derivatives, not subject to a master netting or similar arrangement |
|
| 2 |
|
|
| — |
|
|
| 2 |
|
|
| 2 |
|
|
| — |
|
|
| 2 |
|
Total |
| $ | 118 |
|
| $ | — |
|
| $ | 118 |
|
| $ | 155 |
|
| $ | — |
|
| $ | 155 |
|
|
|
|
|
| September 30, 2017 |
|
|
|
|
|
|
|
|
|
| December 31, 2016 |
|
|
|
|
| |||||||||||
|
|
|
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
|
|
|
|
|
|
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
|
|
| |||||||||||
|
| Net Amounts of Liabilities Presented in the Consolidated Balance Sheet |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
|
| Net Amounts of Liabilities Presented in the Consolidated Balance Sheet |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 19 |
|
| $ | 8 |
|
| $ | — |
|
| $ | 11 |
|
| $ | 23 |
|
| $ | 14 |
|
| $ | — |
|
| $ | 9 |
|
Exchange |
|
| 21 |
|
|
| 21 |
|
|
| — |
|
|
| — |
|
|
| 71 |
|
|
| 44 |
|
|
| 27 |
|
|
| — |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 72 |
|
|
| 6 |
|
|
| — |
|
|
| 66 |
|
|
| 53 |
|
|
| 9 |
|
|
| — |
|
|
| 44 |
|
Foreign currency contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 4 |
|
|
| 4 |
|
|
| — |
|
|
| — |
|
|
| 6 |
|
|
| — |
|
|
| — |
|
|
| 6 |
|
Total |
| $ | 116 |
|
| $ | 39 |
|
| $ | — |
|
| $ | 77 |
|
| $ | 153 |
|
| $ | 67 |
|
| $ | 27 |
|
| $ | 59 |
|
32
|
| Dominion Energy Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Virginia Power Gross Amounts Not Offset in the Consolidated Balance Sheet |
| ||||||||||||||||||||||||||
|
| Gross Liabilities |
|
| Financial |
|
| Cash |
|
| Net |
|
| Gross Liabilities |
|
| Financial |
|
| Cash |
|
| Net |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
| $ | 209 |
|
| $ | 55 |
|
| $ | — |
|
| $ | 154 |
|
| $ | 67 |
|
| $ | 32 |
|
| $ | — |
|
| $ | 35 |
|
Exchange |
|
| 145 |
|
|
| 55 |
|
|
| 90 |
|
|
| — |
|
|
| 23 |
|
|
| 10 |
|
|
| 13 |
|
|
| — |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
|
| 381 |
|
|
| 214 |
|
|
| 1 |
|
|
| 166 |
|
|
| 11 |
|
|
| 2 |
|
|
| — |
|
|
| 9 |
|
Foreign currency exchange rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Over-the-counter |
|
| 59 |
|
|
| — |
|
|
| — |
|
|
| 59 |
|
|
| 59 |
|
|
| — |
|
|
| — |
|
|
| 59 |
|
Total derivatives, |
| $ | 794 |
|
| $ | 324 |
|
| $ | 91 |
|
| $ | 379 |
|
| $ | 160 |
|
| $ | 44 |
|
| $ | 13 |
|
| $ | 103 |
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
| $ | 443 |
|
| $ | 34 |
|
| $ | 71 |
|
| $ | 338 |
|
| $ | 146 |
|
| $ | 13 |
|
| $ | 71 |
|
| $ | 62 |
|
Exchange |
|
| 483 |
|
|
| 159 |
|
|
| 324 |
|
|
| — |
|
|
| 176 |
|
|
| — |
|
|
| 176 |
|
|
| — |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
|
| 377 |
|
|
| 210 |
|
|
| 1 |
|
|
| 166 |
|
|
| 7 |
|
|
| — |
|
|
| — |
|
|
| 7 |
|
Foreign currency exchange rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Over-the-counter |
|
| 101 |
|
|
| 32 |
|
|
| — |
|
|
| 69 |
|
|
| 101 |
|
|
| 32 |
|
|
| — |
|
|
| 69 |
|
Total derivatives, |
| $ | 1,404 |
|
| $ | 435 |
|
| $ | 396 |
|
| $ | 573 |
|
| $ | 430 |
|
| $ | 45 |
|
| $ | 247 |
|
| $ | 138 |
|
Volumes
The following table presents the volume of Dominion Energy’sthe Companies' derivative activity at SeptemberJune 30, 2017.2023. These volumes are based on open derivative positions and represent the combined absolute value of itstheir long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.
|
| Dominion Energy |
|
| Virginia Power |
| ||||||||||
|
| Current |
|
| Noncurrent |
|
| Current |
|
| Noncurrent |
| ||||
Natural Gas (bcf): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fixed price(1) |
|
| 43 |
|
|
| 14 |
|
|
| 40 |
|
|
| 14 |
|
Basis(2) |
|
| 157 |
|
|
| 375 |
|
|
| 138 |
|
|
| 372 |
|
Electricity (MWh in millions): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fixed price |
|
| 17 |
|
|
| 44 |
|
|
| 8 |
|
|
| 13 |
|
Oil (Gal in millions) |
|
| 6 |
|
|
| — |
|
|
| 6 |
|
|
| — |
|
Interest rate(3) (in millions) |
| $ | 524 |
|
| $ | 11,758 |
|
| $ | 125 |
|
| $ | 2,750 |
|
Foreign currency exchange rate(3) (in millions) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Danish Krone |
| 1,004 kr. |
|
| 3,468 kr. |
|
| 1,004 kr. |
|
| 3,468 kr. |
| ||||
Euro |
| €453 |
|
| €2,131 |
|
| €453 |
|
| €2,131 |
|
|
| Current |
|
| Noncurrent |
| ||
Natural Gas (bcf): |
|
|
|
|
|
|
|
|
Fixed price(1) |
|
| 62 |
|
|
| 17 |
|
Basis |
|
| 165 |
|
|
| 612 |
|
Electricity (MWh): |
|
|
|
|
|
|
|
|
Fixed price |
|
| 6,749,288 |
|
|
| 902,069 |
|
FTRs |
|
| 72,126,361 |
|
|
| — |
|
Liquids (Gal)(2) |
|
| 36,940,288 |
|
|
| — |
|
Interest rate(3) |
| $ | 1,100,000,000 |
|
| $ | 5,049,890,127 |
|
Foreign currency(3)(4) |
| $ | — |
|
| $ | 280,000,000 |
|
|
|
|
|
|
|
|
|
33
AOCI
For the three and nine months ended September 30, 2017 and 2016, gains or losses on hedging instruments determined to be ineffective and amounts excluded from the assessment of effectiveness were not material. Amounts excluded from the assessment of effectiveness include changes in the differences between spot prices and forward prices.
The following table presents selected information related to gains (losses)and losses on cash flow hedges included in AOCI in Dominion Energy’sthe Companies' Consolidated Balance SheetSheets at SeptemberJune 30, 2017:2023:
|
| AOCI After-Tax |
|
| Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax |
|
| Maximum Term | ||
(millions) |
|
|
|
|
|
|
|
|
|
|
Commodities: |
|
|
|
|
|
|
|
|
|
|
Gas |
| $ | (1 | ) |
| $ | (1 | ) |
| 37 months |
Electricity |
|
| 7 |
|
|
| 7 |
|
| 15 months |
Other |
|
| (4 | ) |
|
| (4 | ) |
| 6 months |
Interest rate |
|
| (260 | ) |
|
| (11 | ) |
| 387 months |
Foreign currency |
|
| 4 |
|
|
| (2 | ) |
| 105 months |
Total |
| $ | (254 | ) |
| $ | (11 | ) |
|
|
|
| Dominion Energy |
| Virginia Power | ||||||||||||||||
|
| AOCI After-Tax |
|
| Amounts Expected to be |
|
| Maximum Term |
| AOCI After-Tax |
|
| Amounts Expected to be |
|
| Maximum Term | ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest rate |
| $ | (236 | ) |
| $ | (33 | ) |
| 390 months |
| $ | 13 |
|
| $ | — |
|
| 390 months |
Total |
| $ | (236 | ) |
| $ | (33 | ) |
|
|
| $ | 13 |
|
| $ | — |
|
|
|
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 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’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) |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 19 |
|
| $ | 83 |
|
| $ | 102 |
|
Interest rate |
|
| 9 |
|
|
| — |
|
|
| 9 |
|
Total current derivative assets(1) |
|
| 28 |
|
|
| 83 |
|
|
| 111 |
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
| 1 |
|
|
| 110 |
|
|
| 111 |
|
Interest rate |
|
| 2 |
|
|
| — |
|
|
| 2 |
|
Foreign currency |
|
| 25 |
|
|
| — |
|
|
| 25 |
|
Total noncurrent derivative assets(2) |
|
| 28 |
|
|
| 110 |
|
|
| 138 |
|
Total derivative assets |
| $ | 56 |
|
| $ | 193 |
|
| $ | 249 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 15 |
|
| $ | 25 |
|
| $ | 40 |
|
Interest rate |
|
| 21 |
|
|
| — |
|
|
| 21 |
|
Foreign currency |
|
| 4 |
|
|
| — |
|
|
| 4 |
|
Total current derivative liabilities(3) |
|
| 40 |
|
|
| 25 |
|
|
| 65 |
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
| — |
|
|
| 2 |
|
|
| 2 |
|
Interest rate |
|
| 51 |
|
|
| — |
|
|
| 51 |
|
Total noncurrent derivative liabilities(4) |
|
| 51 |
|
|
| 2 |
|
|
| 53 |
|
Total derivative liabilities |
| $ | 91 |
|
| $ | 27 |
|
| $ | 118 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 29 |
|
| $ | 101 |
|
| $ | 130 |
|
Interest rate |
|
| 10 |
|
|
| — |
|
|
| 10 |
|
Total current derivative assets(1) |
|
| 39 |
|
|
| 101 |
|
|
| 140 |
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
| — |
|
|
| 132 |
|
|
| 132 |
|
Interest rate |
|
| 7 |
|
|
| — |
|
|
| 7 |
|
Total noncurrent derivative assets(2) |
|
| 7 |
|
|
| 132 |
|
|
| 139 |
|
Total derivative assets |
| $ | 46 |
|
| $ | 233 |
|
| $ | 279 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 51 |
|
| $ | 41 |
|
| $ | 92 |
|
Interest rate |
|
| 33 |
|
|
| — |
|
|
| 33 |
|
Foreign currency |
|
| 3 |
|
|
| — |
|
|
| 3 |
|
Total current derivative liabilities(3) |
|
| 87 |
|
|
| 41 |
|
|
| 128 |
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
| 1 |
|
|
| 3 |
|
|
| 4 |
|
Interest rate |
|
| 20 |
|
|
| — |
|
|
| 20 |
|
Foreign currency |
|
| 3 |
|
|
| — |
|
|
| 3 |
|
Total noncurrent derivative liabilities(4) |
|
| 24 |
|
|
| 3 |
|
|
| 27 |
|
Total derivative liabilities |
| $ | 111 |
|
| $ | 44 |
|
| $ | 155 |
|
|
|
|
|
|
|
|
|
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) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
|
|
|
| $ | 32 |
|
|
|
|
|
Electric fuel and other energy-related purchases |
|
|
|
|
|
| (1 | ) |
|
|
|
|
Total commodity |
| $ | 8 |
|
| $ | 31 |
|
| $ | — |
|
Interest rate(3) |
|
| (4 | ) |
|
| (16 | ) |
|
| (26 | ) |
Foreign currency(4) |
|
| 12 |
|
|
| 10 |
|
|
| — |
|
Total |
| $ | 16 |
|
| $ | 25 |
|
| $ | (26 | ) |
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
|
|
|
| $ | 64 |
|
|
|
|
|
Purchased gas |
|
|
|
|
|
| (1 | ) |
|
|
|
|
Electric fuel and other energy-related purchases |
|
|
|
|
|
| (1 | ) |
|
|
|
|
Total commodity |
| $ | 7 |
|
| $ | 62 |
|
| $ | — |
|
Interest rate(3) |
|
| 3 |
|
|
| (10 | ) |
|
| (16 | ) |
Foreign currency(4) |
|
| 12 |
|
|
| 3 |
|
|
| — |
|
Total |
| $ | 22 |
|
| $ | 55 |
|
| $ | (16 | ) |
Nine Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
|
|
|
| $ | 114 |
|
|
|
|
|
Electric fuel and other energy-related purchases |
|
|
|
|
|
| 1 |
|
|
|
|
|
Total commodity |
| $ | 139 |
|
| $ | 115 |
|
| $ | — |
|
Interest rate(3) |
|
| (18 | ) |
|
| (39 | ) |
|
| (60 | ) |
Foreign currency(4) |
|
| 10 |
|
|
| 15 |
|
|
| — |
|
Total |
| $ | 131 |
|
| $ | 91 |
|
| $ | (60 | ) |
Nine Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
|
|
|
| $ | 266 |
|
|
|
|
|
Purchased gas |
|
|
|
|
|
| (9 | ) |
|
|
|
|
Electric fuel and other energy-related purchases |
|
|
|
|
|
| (8 | ) |
|
|
|
|
Total commodity |
| $ | 193 |
|
| $ | 249 |
|
| $ | — |
|
Interest rate(3) |
|
| (107 | ) |
|
| (21 | ) |
|
| (258 | ) |
Foreign currency(4) |
|
| 4 |
|
|
| 1 |
|
|
| — |
|
Total |
| $ | 90 |
|
| $ | 229 |
|
| $ | (258 | ) |
|
|
|
|
|
|
|
|
|
| Amount of Gain (Loss) Recognized in Income on Derivatives(1) |
| |||||||||||||
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
Derivatives Not Designated as Hedging Instruments |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
| $ | 7 |
|
| $ | 25 |
|
| $ | 22 |
|
| $ | 19 |
|
Purchased gas |
|
| (6 | ) |
|
| (21 | ) |
|
| 2 |
|
|
| (14 | ) |
Electric fuel and other energy-related purchases |
|
| (19 | ) |
|
| (12 | ) |
|
| (51 | ) |
|
| (43 | ) |
Other operations and maintenance |
|
| 1 |
|
|
| — |
|
|
| (1 | ) |
|
| — |
|
Total |
| $ | (17 | ) |
| $ | (8 | ) |
| $ | (28 | ) |
| $ | (38 | ) |
|
|
Virginia Power
Balance Sheet Presentation
The tables below present Virginia Power's derivative asset and liability balances by type of financial instrument, before and after the effects of offsetting:
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||||||||||||||||||
|
| Gross Amounts of Recognized Assets |
|
| Gross Amounts Offset in the Consolidated Balance Sheet |
|
| Net Amounts of Assets Presented in the Consolidated Balance Sheet |
|
| Gross Amounts of Recognized Assets |
|
| Gross Amounts Offset in the Consolidated Balance Sheet |
|
| Net Amounts of Assets Presented in the Consolidated Balance Sheet |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 156 |
|
| $ | — |
|
| $ | 156 |
|
| $ | 147 |
|
| $ | — |
|
| $ | 147 |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6 |
|
|
| — |
|
|
| 6 |
|
Total derivatives, subject to a master netting or similar arrangement |
|
| 156 |
|
|
| — |
|
|
| 156 |
|
|
| 153 |
|
|
| — |
|
|
| 153 |
|
Total derivatives, not subject to a master netting or similar arrangement |
|
| 12 |
|
|
| — |
|
|
| 12 |
|
|
| 41 |
|
|
| — |
|
|
| 41 |
|
Total |
| $ | 168 |
|
| $ | — |
|
| $ | 168 |
|
| $ | 194 |
|
| $ | — |
|
| $ | 194 |
|
|
|
|
|
|
| September 30, 2017 |
|
|
|
|
|
|
|
|
|
| December 31, 2016 |
|
|
|
|
| ||||||||||
|
|
|
|
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
|
|
|
|
|
|
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
|
|
| ||||||||||
|
| Net Amounts of Assets Presented in the Consolidated Balance Sheet |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
|
| Net Amounts of Assets Presented in the Consolidated Balance Sheet |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 156 |
|
| $ | 1 |
|
| $ | — |
|
| $ | 155 |
|
| $ | 147 |
|
| $ | 2 |
|
| $ | — |
|
| $ | 145 |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 6 |
|
|
| — |
|
|
| — |
|
|
| 6 |
|
Total |
| $ | 156 |
|
| $ | 1 |
|
| $ | — |
|
| $ | 155 |
|
| $ | 153 |
|
| $ | 2 |
|
| $ | — |
|
| $ | 151 |
|
| September 30, 2017 |
|
| December 31, 2016 |
| |||||||||||||||||||
|
| Gross Amounts of Recognized Liabilities |
|
| Gross Amounts Offset in the Consolidated Balance Sheet |
|
| Net Amounts of Liabilities Presented in the Consolidated Balance Sheet |
|
| Gross Amounts of Recognized Liabilities |
|
| Gross Amounts Offset in the Consolidated Balance Sheet |
|
| Net Amounts of Liabilities Presented in the Consolidated Balance Sheet |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 1 |
|
| $ | — |
|
| $ | 1 |
|
| $ | 2 |
|
| $ | — |
|
| $ | 2 |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 55 |
|
|
| — |
|
|
| 55 |
|
|
| 21 |
|
|
| — |
|
|
| 21 |
|
Total derivatives, subject to a master netting or similar arrangement |
|
| 56 |
|
|
| — |
|
|
| 56 |
|
|
| 23 |
|
|
| — |
|
|
| 23 |
|
Total derivatives, not subject to a master netting or similar arrangement |
|
| 5 |
|
|
| — |
|
|
| 5 |
|
|
| 8 |
|
|
| — |
|
|
| 8 |
|
Total |
| $ | 61 |
|
| $ | — |
|
| $ | 61 |
|
| $ | 31 |
|
| $ | — |
|
| $ | 31 |
|
|
|
|
|
|
| September 30, 2017 |
|
|
|
|
|
|
|
|
|
| December 31, 2016 |
|
|
|
|
| ||||||||||
|
|
|
|
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
|
|
|
|
|
|
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
|
|
| ||||||||||
|
| Net Amounts of Liabilities Presented in the Consolidated Balance Sheet |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
|
| Net Amounts of Liabilities Presented in the Consolidated Balance Sheet |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 1 |
|
| $ | 1 |
|
| $ | — |
|
| $ | — |
|
| $ | 2 |
|
| $ | 2 |
|
| $ | — |
|
| $ | — |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 55 |
|
|
| — |
|
|
| — |
|
|
| 55 |
|
|
| 21 |
|
|
| — |
|
|
| — |
|
|
| 21 |
|
Total |
| $ | 56 |
|
| $ | 1 |
|
| $ | — |
|
| $ | 55 |
|
| $ | 23 |
|
| $ | 2 |
|
| $ | — |
|
| $ | 21 |
|
Volumes
The following table presents the volume of Virginia Power’s derivative activity at September 30, 2017. These volumes are based on open derivative positions and represent the combined absolute value of its long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.
|
| Current |
|
| Noncurrent |
| ||
Natural Gas (bcf): |
|
|
|
|
|
|
|
|
Fixed price(1) |
|
| 28 |
|
|
| 6 |
|
Basis |
|
| 85 |
|
|
| 562 |
|
Electricity (MWh): |
|
|
|
|
|
|
|
|
Fixed price(1) |
|
| 1,426,093 |
|
|
| 611,629 |
|
FTRs |
|
| 68,673,158 |
|
|
| — |
|
Interest rate(2) |
| $ | 300,000,000 |
|
| $ | 1,150,000,000 |
|
|
|
|
|
Ineffectiveness and AOCI
For the three and nine months ended September 30, 2017 and 2016, gains or losses on hedging instruments determined to be ineffective were not material.
The following table presents selected information related to losses on cash flow hedges included in AOCI in Virginia Power’s Consolidated Balance Sheet at September 30, 2017:
|
| AOCI After-Tax |
|
| Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax |
|
| Maximum Term | ||
(millions) |
|
|
|
|
|
|
|
|
|
|
Interest rate |
| $ | (12 | ) |
| $ | (1 | ) |
| 387 months |
Total |
| $ | (12 | ) |
| $ | (1 | ) |
|
|
The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interestrate payments) 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 interest rates.
34
Fair Value and Gains and Losses on Derivative Instruments
The following table presents the fair values of Virginia Power’sthe Companies' derivatives and where they are presented in itstheir Consolidated Balance Sheets:
|
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||
|
| Fair Value – |
|
| Fair Value – |
|
| Total Fair |
|
| Fair Value – |
|
| Fair Value – |
|
| Total Fair |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
At June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
| $ | — |
|
| $ | 129 |
|
| $ | 129 |
|
| $ | — |
|
| $ | 43 |
|
| $ | 43 |
|
Interest rate |
|
| 18 |
|
|
| 113 |
|
|
| 131 |
|
|
| 18 |
|
|
| — |
|
|
| 18 |
|
Total current derivative assets |
|
| 18 |
|
|
| 242 |
|
|
| 260 |
|
|
| 18 |
|
|
| 43 |
|
|
| 61 |
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
|
| — |
|
|
| 222 |
|
|
| 222 |
|
|
| — |
|
|
| 46 |
|
|
| 46 |
|
Interest rate |
|
| 117 |
|
|
| 656 |
|
|
| 773 |
|
|
| 117 |
|
|
| — |
|
|
| 117 |
|
Total noncurrent derivative assets(1) |
|
| 117 |
|
|
| 878 |
|
|
| 995 |
|
|
| 117 |
|
|
| 46 |
|
|
| 163 |
|
Total derivative assets |
| $ | 135 |
|
| $ | 1,120 |
|
| $ | 1,255 |
|
| $ | 135 |
|
| $ | 89 |
|
| $ | 224 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
| $ | — |
|
| $ | 240 |
|
| $ | 240 |
|
| $ | — |
|
| $ | 117 |
|
| $ | 117 |
|
Interest rate |
|
| — |
|
|
| 83 |
|
|
| 83 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Foreign currency exchange rate |
|
| — |
|
|
| 9 |
|
|
| 9 |
|
|
| — |
|
|
| 9 |
|
|
| 9 |
|
Total current derivative liabilities |
|
| — |
|
|
| 332 |
|
|
| 332 |
|
|
| — |
|
|
| 126 |
|
|
| 126 |
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
|
| — |
|
|
| 114 |
|
|
| 114 |
|
|
| — |
|
|
| 51 |
|
|
| 51 |
|
Interest rate |
|
| 11 |
|
|
| 287 |
|
|
| 298 |
|
|
| 11 |
|
|
| — |
|
|
| 11 |
|
Foreign currency exchange rate |
|
| — |
|
|
| 50 |
|
|
| 50 |
|
|
| — |
|
|
| 50 |
|
|
| 50 |
|
Total noncurrent derivative liabilities(2) |
|
| 11 |
|
|
| 451 |
|
|
| 462 |
|
|
| 11 |
|
|
| 101 |
|
|
| 112 |
|
Total derivative liabilities |
| $ | 11 |
|
| $ | 783 |
|
| $ | 794 |
|
| $ | 11 |
|
| $ | 227 |
|
| $ | 238 |
|
At December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
| $ | — |
|
| $ | 532 |
|
| $ | 532 |
|
| $ | — |
|
| $ | 264 |
|
| $ | 264 |
|
Interest rate |
|
| 501 |
|
|
| 104 |
|
|
| 605 |
|
|
| 501 |
|
|
| — |
|
|
| 501 |
|
Total current derivative assets |
|
| 501 |
|
|
| 636 |
|
|
| 1,137 |
|
|
| 501 |
|
|
| 264 |
|
|
| 765 |
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
|
| — |
|
|
| 237 |
|
|
| 237 |
|
|
| — |
|
|
| 4 |
|
|
| 4 |
|
Interest rate |
|
| 113 |
|
|
| 689 |
|
|
| 802 |
|
|
| 113 |
|
|
| — |
|
|
| 113 |
|
Total noncurrent derivative assets(1) |
|
| 113 |
|
|
| 926 |
|
|
| 1,039 |
|
|
| 113 |
|
|
| 4 |
|
|
| 117 |
|
Total derivative assets |
| $ | 614 |
|
| $ | 1,562 |
|
| $ | 2,176 |
|
| $ | 614 |
|
| $ | 268 |
|
| $ | 882 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
| $ | — |
|
| $ | 700 |
|
| $ | 700 |
|
| $ | — |
|
| $ | 290 |
|
| $ | 290 |
|
Interest rate |
|
| — |
|
|
| 70 |
|
|
| 70 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Foreign currency exchange rate |
|
| — |
|
|
| 8 |
|
|
| 8 |
|
|
| — |
|
|
| 8 |
|
|
| 8 |
|
Total current derivative liabilities |
|
| — |
|
|
| 778 |
|
|
| 778 |
|
|
| — |
|
|
| 298 |
|
|
| 298 |
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
|
| — |
|
|
| 226 |
|
|
| 226 |
|
|
| — |
|
|
| 58 |
|
|
| 58 |
|
Interest rate |
|
| 7 |
|
|
| 300 |
|
|
| 307 |
|
|
| 7 |
|
|
| — |
|
|
| 7 |
|
Foreign currency exchange rate |
|
| — |
|
|
| 93 |
|
|
| 93 |
|
|
| — |
|
|
| 93 |
|
|
| 93 |
|
Total noncurrent derivative liabilities(2) |
|
| 7 |
|
|
| 619 |
|
|
| 626 |
|
|
| 7 |
|
|
| 151 |
|
|
| 158 |
|
Total derivative liabilities |
| $ | 7 |
|
| $ | 1,397 |
|
| $ | 1,404 |
|
| $ | 7 |
|
| $ | 449 |
|
| $ | 456 |
|
35
|
| Fair Value – Derivatives under Hedge Accounting |
|
| Fair Value – Derivatives not under Hedge Accounting |
|
| Total Fair Value |
| |||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 61 |
|
| $ | 61 |
|
Total current derivative assets(1) |
|
| — |
|
|
| 61 |
|
|
| 61 |
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
| — |
|
|
| 107 |
|
|
| 107 |
|
Total noncurrent derivative assets(2) |
|
| — |
|
|
| 107 |
|
|
| 107 |
|
Total derivative assets |
| $ | — |
|
| $ | 168 |
|
| $ | 168 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 6 |
|
| $ | 6 |
|
Interest rate |
|
| 17 |
|
|
| — |
|
|
| 17 |
|
Total current derivative liabilities(3) |
|
| 17 |
|
|
| 6 |
|
|
| 23 |
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
| 38 |
|
|
| — |
|
|
| 38 |
|
Total noncurrent derivatives liabilities (4) |
|
| 38 |
|
|
| — |
|
|
| 38 |
|
Total derivative liabilities |
| $ | 55 |
|
| $ | 6 |
|
| $ | 61 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 60 |
|
| $ | 60 |
|
Interest rate |
|
| 6 |
|
|
| — |
|
|
| 6 |
|
Total current derivative assets(1) |
|
| 6 |
|
|
| 60 |
|
|
| 66 |
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
| — |
|
|
| 128 |
|
|
| 128 |
|
Total noncurrent derivative assets(2) |
|
| — |
|
|
| 128 |
|
|
| 128 |
|
Total derivative assets |
| $ | 6 |
|
| $ | 188 |
|
| $ | 194 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 10 |
|
| $ | 10 |
|
Interest rate |
|
| 8 |
|
|
| — |
|
|
| 8 |
|
Total current derivative liabilities(3) |
|
| 8 |
|
|
| 10 |
|
|
| 18 |
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
| 13 |
|
|
| — |
|
|
| 13 |
|
Total noncurrent derivative liabilities(4) |
|
| 13 |
|
|
| — |
|
|
| 13 |
|
Total derivative liabilities |
| $ | 21 |
|
| $ | 10 |
|
| $ | 31 |
|
|
|
|
|
|
|
|
|
The following tables present the gains and losses on Virginia Power'sthe Companies' derivatives, as well as where the associated activity is presented in itstheir Consolidated Balance Sheets and Statements of Income:Income.
|
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||
Derivatives in |
| Amount of Gain |
|
| Amount of Gain |
|
| Increase (Decrease) |
|
| Amount of Gain |
|
| Amount of Gain |
|
| Increase (Decrease) |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Three Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest rate(3) |
| $ | 8 |
|
| $ | (10 | ) |
| $ | 88 |
|
| $ | 8 |
|
| $ | — |
|
| $ | 88 |
|
Total |
| $ | 8 |
|
| $ | (10 | ) |
| $ | 88 |
|
| $ | 8 |
|
| $ | — |
|
| $ | 88 |
|
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest rate(3) |
| $ | 39 |
|
|
| (14 | ) |
| $ | 354 |
|
| $ | 33 |
|
| $ | — |
|
| $ | 353 |
|
Total |
| $ | 39 |
|
| $ | (14 | ) |
| $ | 354 |
|
| $ | 33 |
|
| $ | — |
|
| $ | 353 |
|
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest rate(3) |
| $ | (4 | ) |
| $ | (21 | ) |
| $ | (32 | ) |
| $ | (4 | ) |
| $ | — |
|
| $ | (32 | ) |
Total |
| $ | (4 | ) |
| $ | (21 | ) |
| $ | (32 | ) |
| $ | (4 | ) |
| $ | — |
|
| $ | (32 | ) |
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest rate(3) |
| $ | 72 |
|
| $ | (28 | ) |
| $ | 633 |
|
| $ | 59 |
|
| $ | (1 | ) |
| $ | 632 |
|
Total |
| $ | 72 |
|
| $ | (28 | ) |
| $ | 633 |
|
| $ | 59 |
|
| $ | (1 | ) |
| $ | 632 |
|
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) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate(3) |
| $ | (3 | ) |
| $ | — |
|
| $ | (26 | ) |
Total |
| $ | (3 | ) |
| $ | — |
|
| $ | (26 | ) |
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate(3) |
| $ | (2 | ) |
| $ | — |
|
| $ | (16 | ) |
Total |
| $ | (2 | ) |
| $ | — |
|
| $ | (16 | ) |
Nine Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate(3) |
| $ | (8 | ) |
| $ | (1 | ) |
| $ | (60 | ) |
Total |
| $ | (8 | ) |
| $ | (1 | ) |
| $ | (60 | ) |
Nine Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate(3) |
| $ | (26 | ) |
| $ | (1 | ) |
| $ | (258 | ) |
Total |
| $ | (26 | ) |
| $ | (1 | ) |
| $ | (258 | ) |
|
|
|
|
|
|
|
| Amount of Gain (Loss) Recognized in Income on Derivatives(1) |
| |||||||||||||
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
Derivatives Not Designated as Hedging Instruments |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity(2) |
| $ | (18 | ) |
| $ | (10 | ) |
| $ | (42 | ) |
| $ | (40 | ) |
Total |
| $ | (18 | ) |
| $ | (10 | ) |
| $ | (42 | ) |
| $ | (40 | ) |
|
|
|
|
|
| Amount of Gain (Loss) Recognized in Income on Derivatives(1)(2) |
| |||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments |
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||||||||||
|
| Quarter-to-Date |
|
| Year-to-Date |
|
| Quarter-to-Date |
|
| Year-to-Date |
| ||||||||||||||||||||
Period Ended June 30, |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Operating revenue |
| $ | 26 |
|
| $ | (272 | ) |
| $ | 421 |
|
| $ | (602 | ) |
| $ | 10 |
|
| $ | (88 | ) |
| $ | 19 |
|
| $ | (129 | ) |
Purchased gas |
|
| — |
|
|
| 3 |
|
|
| 94 |
|
|
| 5 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Electric fuel and other energy-related |
|
| (73 | ) |
|
| 137 |
|
|
| (118 | ) |
|
| 196 |
|
|
| (73 | ) |
|
| 125 |
|
|
| (119 | ) |
|
| 182 |
|
Operations and maintenance |
|
| 2 |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
Interest rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Interest and related charges |
|
| 79 |
|
|
| 340 |
|
|
| (23 | ) |
|
| 536 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ | 34 |
|
| $ | 208 |
|
| $ | 376 |
|
| $ | 135 |
|
| $ | (61 | ) |
| $ | 37 |
|
| $ | (98 | ) |
| $ | 53 |
|
Balance Sheet Presentation
The tables below present Dominion Energy Gas' derivative asset and liability balances by type of financial instrument, before and after the effects of offsetting.
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||||||||||||||||||
|
| Gross Amounts of Recognized Assets |
|
| Gross Amounts Offset in the Consolidated Balance Sheet |
|
| Net Amounts of Assets Presented in the Consolidated Balance Sheet |
|
| Gross Amounts of Recognized Assets |
|
| Gross Amounts Offset in the Consolidated Balance Sheet |
|
| Net Amounts of Assets Presented in the Consolidated Balance Sheet |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 1 |
|
| $ | — |
|
| $ | 1 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
Foreign currency contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 25 |
|
|
| — |
|
|
| 25 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total derivatives, subject to a master netting or similar arrangement |
|
| 26 |
|
|
| — |
|
|
| 26 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
| $ | 26 |
|
| $ | — |
|
| $ | 26 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
|
|
|
|
| September 30, 2017 |
|
|
|
|
|
|
|
|
|
| December 31, 2016 |
|
|
|
|
| |||||||||||
|
|
|
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
|
|
|
|
|
|
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
|
|
| |||||||||||
|
| Net Amounts of Assets Presented in the Consolidated Balance Sheet |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
|
| Net Amounts of Assets Presented in the Consolidated Balance Sheet |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 1 |
|
| $ | — |
|
| $ | — |
|
| $ | 1 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
Foreign currency contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 25 |
|
|
| 4 |
|
|
| — |
|
|
| 21 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Total |
| $ | 26 |
|
| $ | 4 |
|
| $ | — |
|
| $ | 22 |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
| $ | — |
|
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||||||||||||||||||
|
| Gross Amounts of Recognized Liabilities |
|
| Gross Amounts Offset in the Consolidated Balance Sheet |
|
| Net Amounts of Liabilities Presented in the Consolidated Balance Sheet |
|
| Gross Amounts of Recognized Liabilities |
|
| Gross Amounts Offset in the Consolidated Balance Sheet |
|
| Net Amounts of Liabilities Presented in the Consolidated Balance Sheet |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 6 |
|
| $ | — |
|
| $ | 6 |
|
| $ | 5 |
|
| $ | — |
|
| $ | 5 |
|
Foreign currency contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 4 |
|
|
| — |
|
|
| 4 |
|
|
| 6 |
|
|
| — |
|
|
| 6 |
|
Total derivatives, subject to a master netting or similar arrangement |
|
| 10 |
|
|
| — |
|
|
| 10 |
|
|
| 11 |
|
|
| — |
|
|
| 11 |
|
Total |
| $ | 10 |
|
| $ | — |
|
| $ | 10 |
|
| $ | 11 |
|
| $ | — |
|
| $ | 11 |
|
|
|
|
|
| September 30, 2017 |
|
|
|
|
|
|
|
| December 31, 2016 |
|
|
| |||||||||||||||
|
|
|
|
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
|
|
|
|
|
|
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
|
|
| ||||||||||
|
| Net Amounts of Liabilities Presented in the Consolidated Balance Sheet |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
|
| Net Amounts of Liabilities Presented in the Consolidated Balance Sheet |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 6 |
|
| $ | — |
|
| $ | — |
|
| $ | 6 |
|
| $ | 5 |
|
| $ | — |
|
| $ | — |
|
| $ | 5 |
|
Foreign currency contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 4 |
|
|
| 4 |
|
|
| — |
|
|
| — |
|
|
| 6 |
|
|
| — |
|
|
| — |
|
|
| 6 |
|
Total |
| $ | 10 |
|
| $ | 4 |
|
| $ | — |
|
| $ | 6 |
|
| $ | 11 |
|
| $ | — |
|
| $ | — |
|
| $ | 11 |
|
Volumes
The following table presents the volume of Dominion Energy Gas'Includes derivative activity at September 30, 2017. These volumes are based on open derivative positions and represent the combined absolute valueamortized out of its long and short positions, exceptregulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in the caseCompanies' Consolidated Statements of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.
|
| Current |
|
| Noncurrent |
| ||
Natural Gas (bcf): |
|
|
|
|
|
|
|
|
Fixed price |
|
| 2 |
|
|
| — |
|
Basis |
|
| 2 |
|
|
| — |
|
NGLs (Gal) |
|
| 30,514,288 |
|
|
| — |
|
Foreign currency(1) |
| $ | — |
|
| $ | 280,000,000 |
|
|
|
Ineffectiveness and AOCI
For the three and nine months ended September 30, 2017 and 2016, gains or losses on hedging instruments determined to be ineffective were not material.
The following table presents selected information(2)
|
| AOCI After-Tax |
|
| Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax |
|
| Maximum Term | ||
(millions) |
|
|
|
|
|
|
|
|
|
|
Commodities: |
|
|
|
|
|
|
|
|
|
|
NGLs |
| $ | (4 | ) |
| $ | (4 | ) |
| 6 months |
Interest rate |
|
| (26 | ) |
|
| (3 | ) |
| 327 months |
Foreign currency |
|
| 4 |
|
|
| (2 | ) |
| 105 months |
Total |
| $ | (26 | ) |
| $ | (9 | ) |
|
|
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 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 tables present the fair values of Dominion Energy Gas' derivatives and where they are presented in its Consolidated Balance Sheets:36
|
| Fair Value-Derivatives Under Hedge Accounting |
|
| Fair Value-Derivatives Not Under Hedge Accounting |
|
| Total Fair Value |
| |||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | — |
|
| $ | 1 |
|
| $ | 1 |
|
Total current derivative assets(1) |
|
| — |
|
|
| 1 |
|
|
| 1 |
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
| 25 |
|
|
| — |
|
|
| 25 |
|
Total noncurrent derivative assets(2) |
|
| 25 |
|
|
| — |
|
|
| 25 |
|
Total derivative assets |
| $ | 25 |
|
| $ | 1 |
|
| $ | 26 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 6 |
|
| $ | — |
|
| $ | 6 |
|
Foreign currency |
|
| 4 |
|
|
| — |
|
|
| 4 |
|
Total current derivative liabilities(3) |
|
| 10 |
|
|
| — |
|
|
| 10 |
|
Total derivative liabilities |
| $ | 10 |
|
| $ | — |
|
| $ | 10 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 4 |
|
| $ | — |
|
| $ | 4 |
|
Foreign currency |
|
| 3 |
|
|
| — |
|
|
| 3 |
|
Total current derivative liabilities(3) |
|
| 7 |
|
|
| — |
|
|
| 7 |
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
| 1 |
|
|
| — |
|
|
| 1 |
|
Foreign currency |
|
| 3 |
|
|
| — |
|
|
| 3 |
|
Total noncurrent derivative liabilities(4) |
|
| 4 |
|
|
| — |
|
|
| 4 |
|
Total derivative liabilities |
| $ | 11 |
|
| $ | — |
|
| $ | 11 |
|
|
|
|
|
|
|
|
|
The following table presents 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) |
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
Derivative Type and Location of Gains (Losses): |
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
Operating revenue |
|
|
|
|
| $ | (2 | ) |
Total commodity |
| $ | (10 | ) |
| $ | (2 | ) |
Interest rate(2) |
|
| — |
|
|
| (1 | ) |
Foreign currency(3) |
|
| 12 |
|
|
| 10 |
|
Total |
| $ | 2 |
|
| $ | 7 |
|
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
Derivative Type and Location of Gains (Losses): |
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
Operating revenue |
|
|
|
|
| $ | 1 |
|
Total commodity |
| $ | — |
|
| $ | 1 |
|
Interest rate(2) |
|
| — |
|
|
| (1 | ) |
Foreign currency(3) |
|
| 12 |
|
|
| 3 |
|
Total |
| $ | 12 |
|
| $ | 3 |
|
Nine Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
Derivative Type and Location of Gains (Losses): |
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
Operating revenue |
|
|
|
|
| $ | (4 | ) |
Total commodity |
| $ | (5 | ) |
| $ | (4 | ) |
Interest rate(2) |
|
| — |
|
|
| (3 | ) |
Foreign currency(3) |
|
| 10 |
|
|
| 15 |
|
Total |
| $ | 5 |
|
| $ | 8 |
|
Nine Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
Derivative Type and Location of Gains (Losses): |
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
Operating revenue |
|
|
|
|
| $ | 6 |
|
Total commodity |
| $ | (7 | ) |
| $ | 6 |
|
Interest rate(2) |
|
| (8 | ) |
|
| (2 | ) |
Foreign currency(3) |
|
| 4 |
|
|
| 1 |
|
Total |
| $ | (11 | ) |
| $ | 5 |
|
|
|
|
|
|
|
|
| Amount of Gain (Loss) Recognized in Income on Derivatives |
| |||||||||||||
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
Derivatives Not Designated as Hedging Instruments |
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
| $ | — |
|
| $ | 5 |
|
| $ | — |
|
| $ | 3 |
|
Total |
| $ | — |
|
| $ | 5 |
|
| $ | — |
|
| $ | 3 |
|
Dominion Energy
Equity and Debt Securities
Short-Term Deposit
In May 2022, Dominion Energy entered into an agreement with a financial institution and committed to make a short-term deposit of at least $1.6 billion but not more than $2.0 billion to be posted as collateral to secure its $1.6 billion redemption obligation of the Series A Preferred Stock as described in Note 16. In May 2022, Dominion Energy funded the short-term deposit in the amount of $2.0 billion, which earned interest income at an annual rate of 1.75% through its maturity in September 2022.
Rabbi Trust Securities
Marketable equityEquity and debtfixed income securities and cash equivalents held in Dominion Energy’s rabbi trusts and classified as trading totaled $109$113 million and $104$111 million at SeptemberJune 30, 20172023 and December 31, 2016,2022, respectively.
Decommissioning Trust Securities
Dominion Energy holds marketableThe Companies hold equity and debtfixed income securities (classified as available-for-sale),and cash equivalents, and cost method investmentsDominion Energy also holds insurance contracts, in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Dominion Energy’sThe Companies' decommissioning trust funds are summarized below:
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||||||||||||
| Amortized |
| Total |
| Total |
|
| Allowance for Credit Losses |
| Fair |
|
| Amortized |
| Total |
| Total |
|
| Allowance for Credit Losses |
| Fair |
| ||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
U.S. | $ | 1,397 |
| $ | 2,999 |
| $ | (22 | ) |
|
|
| $ | 4,374 |
|
| $ | 872 |
| $ | 1,562 |
| $ | (21 | ) |
|
|
| $ | 2,413 |
| ||
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Corporate debt |
| 577 |
|
| 1 |
|
| (47 | ) |
| $ | — |
|
| 531 |
|
|
| 356 |
|
| 1 |
|
| (34 | ) |
| $ | — |
|
| 323 |
|
Government |
| 1,332 |
|
| 5 |
|
| (49 | ) |
|
| — |
|
| 1,288 |
|
|
| 731 |
|
| 3 |
|
| (25 | ) |
|
| — |
|
| 709 |
|
Common/ |
| 71 |
|
| — |
|
| — |
|
|
| — |
|
| 71 |
|
|
| 54 |
|
| — |
|
| — |
|
|
| — |
|
| 54 |
|
Insurance contracts |
| 236 |
|
| — |
|
| — |
|
|
|
|
| 236 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash equivalents |
| 53 |
|
| — |
|
| — |
|
|
| — |
|
| 53 |
|
|
| 9 |
|
| — |
|
| — |
|
|
| — |
|
| 9 |
|
Total | $ | 3,666 |
| $ | 3,005 |
| $ | (118 | ) | (4) | $ | — |
| $ | 6,553 |
|
| $ | 2,022 |
| $ | 1,566 |
| $ | (80 | ) | (4) | $ | — |
| $ | 3,508 |
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
U.S. | $ | 1,378 |
| $ | 2,501 |
| $ | (46 | ) |
|
|
| $ | 3,833 |
|
| $ | 858 |
| $ | 1,304 |
| $ | (35 | ) |
|
|
| $ | 2,127 |
| ||
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Corporate debt |
| 640 |
|
| 1 |
|
| (65 | ) |
| $ | — |
|
| 576 |
|
|
| 406 |
|
| 1 |
|
| (47 | ) |
| $ | — |
|
| 360 |
|
Government |
| 1,252 |
|
| 4 |
|
| (70 | ) |
|
| — |
|
| 1,186 |
|
|
| 664 |
|
| 2 |
|
| (35 | ) |
|
| — |
|
| 631 |
|
Common/ |
| 98 |
|
| — |
|
| — |
|
|
| — |
|
| 98 |
|
|
| 61 |
|
| — |
|
| — |
|
|
| — |
|
| 61 |
|
Insurance contracts |
| 221 |
|
| — |
|
| — |
|
|
|
|
| 221 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash equivalents |
| 43 |
|
| — |
|
| — |
|
|
| — |
|
| 43 |
|
|
| 23 |
|
| — |
|
| — |
|
|
| — |
|
| 23 |
|
Total | $ | 3,632 |
| $ | 2,506 |
| $ | (181 | ) | (4) | $ | — |
| $ | 5,957 |
|
| $ | 2,012 |
| $ | 1,307 |
| $ | (117 | ) | (4) | $ | — |
| $ | 3,202 |
|
37
The portion of unrealized gains and losses that relates to equity securities held within Dominion Energy and Virginia Power’s nuclear decommissioning trusts is summarized below:
|
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||||||||||
|
| Quarter-to-Date |
|
| Year-to-Date |
|
| Quarter-to-Date |
|
| Year-to-Date |
| ||||||||||||||||||||
Period Ended June 30, |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net gains (losses) recognized during |
| $ | 294 |
|
| $ | (712 | ) |
| $ | 520 |
|
| $ | (918 | ) |
| $ | 153 |
|
| $ | (361 | ) |
| $ | 269 |
|
| $ | (463 | ) |
Less: Net (gains) losses recognized |
|
| 1 |
|
|
| 6 |
|
|
| 3 |
|
|
| 5 |
|
|
| 2 |
|
|
| — |
|
|
| 3 |
|
|
| (4 | ) |
Unrealized gains (losses) recognized |
| $ | 295 |
|
| $ | (706 | ) |
| $ | 523 |
|
| $ | (913 | ) |
| $ | 155 |
|
| $ | (361 | ) |
| $ | 272 |
|
| $ | (467 | ) |
|
| Amortized Cost |
|
| Total Unrealized Gains(1) |
|
| Total Unrealized Losses(1) |
|
|
| Fair Value |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 1,562 |
|
| $ | 1,664 |
|
| $ | — |
|
|
| $ | 3,226 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| 438 |
|
|
| 15 |
|
|
| (1 | ) |
|
|
| 452 |
|
Government securities |
|
| 1,041 |
|
|
| 28 |
|
|
| (4 | ) |
|
|
| 1,065 |
|
Common/collective trust funds |
|
| 66 |
|
|
| — |
|
|
| — |
|
|
|
| 66 |
|
Cost method investments |
|
| 67 |
|
|
| — |
|
|
| — |
|
|
|
| 67 |
|
Cash equivalents and other(2) |
|
| 5 |
|
|
| — |
|
|
| — |
|
|
|
| 5 |
|
Total |
| $ | 3,179 |
|
| $ | 1,707 |
|
| $ | (5 | ) | (3) |
| $ | 4,881 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 1,449 |
|
| $ | 1,408 |
|
| $ | — |
|
|
| $ | 2,857 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| 478 |
|
|
| 13 |
|
|
| (4 | ) |
|
|
| 487 |
|
Government securities |
|
| 978 |
|
|
| 22 |
|
|
| (8 | ) |
|
|
| 992 |
|
Common/collective trust funds |
|
| 67 |
|
|
| — |
|
|
| — |
|
|
|
| 67 |
|
Cost method investments |
|
| 69 |
|
|
| — |
|
|
| — |
|
|
|
| 69 |
|
Cash equivalents and other(2) |
|
| 12 |
|
|
| — |
|
|
| — |
|
|
|
| 12 |
|
Total |
| $ | 3,053 |
|
| $ | 1,443 |
|
| $ | (12 | ) | (3) |
| $ | 4,484 |
|
|
|
|
|
|
|
The fair value of Dominion Energy’s marketable debtEnergy and Virginia Power’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at SeptemberJune 30, 20172023 by contractual maturity is as follows:
|
| Dominion Energy |
|
| Virginia Power |
| ||
(millions) |
|
|
|
|
|
| ||
Due in one year or less |
| $ | 91 |
|
| $ | 59 |
|
Due after one year through five years |
|
| 482 |
|
|
| 260 |
|
Due after five years through ten years |
|
| 422 |
|
|
| 248 |
|
Due after ten years |
|
| 895 |
|
|
| 519 |
|
Total |
| $ | 1,890 |
|
| $ | 1,086 |
|
|
| Amount |
| |
(millions) |
|
|
|
|
Due in one year or less |
| $ | 183 |
|
Due after one year through five years |
|
| 410 |
|
Due after five years through ten years |
|
| 366 |
|
Due after ten years |
|
| 624 |
|
Total |
| $ | 1,583 |
|
Presented below is selected information regarding Dominion Energy’s marketableEnergy and Virginia Power’s equity and debtfixed income securities with readily determinable fair values held in nuclear decommissioning trust funds.
|
|
|
|
|
|
| ||||||||||||||||||||||||||
|
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||||||||||
|
| Quarter-to-Date |
|
| Year-to-Date |
|
| Quarter-to-Date |
|
| Year-to-Date |
| ||||||||||||||||||||
Period Ended June 30, |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Proceeds from sales |
| $ | 594 |
|
| $ | 1,267 |
|
| $ | 1,138 |
|
| $ | 2,081 |
|
| $ | 346 |
|
| $ | 472 |
|
| $ | 719 |
|
| $ | 864 |
|
Realized gains(1) |
|
| 22 |
|
|
| 75 |
|
|
| 43 |
|
|
| 115 |
|
|
| 8 |
|
|
| 10 |
|
|
| 25 |
|
|
| 26 |
|
Realized losses(1) |
|
| 36 |
|
|
| 143 |
|
|
| 77 |
|
|
| 197 |
|
|
| 14 |
|
|
| 33 |
|
|
| 45 |
|
|
| 52 |
|
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales |
| $ | 377 |
|
| $ | 300 |
|
| $ | 1,496 |
|
| $ | 1,009 |
|
Realized gains(1) |
|
| 25 |
|
|
| 40 |
|
|
| 142 |
|
|
| 102 |
|
Realized losses(1) |
|
| 16 |
|
|
| 9 |
|
|
| 52 |
|
|
| 43 |
|
|
|
Equity Method Investments
Dominion Energy recorded other-than-temporary impairment lossesequity earnings on its investments held in nuclear decommissioning trust funds as follows:
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other-than-temporary impairment losses(1) |
| $ | 7 |
|
| $ | 9 |
|
| $ | 33 |
|
| $ | 34 |
|
Losses recorded to the nuclear decommissioning trust regulatory liability |
|
| (2 | ) |
|
| (4 | ) |
|
| (13 | ) |
|
| (15 | ) |
Losses recognized in other comprehensive income (before taxes) |
|
| (1 | ) |
|
| — |
|
|
| (2 | ) |
|
| (1 | ) |
Net impairment losses recognized in earnings |
| $ | 4 |
|
| $ | 5 |
|
| $ | 18 |
|
| $ | 18 |
|
|
|
Virginia Power
Virginia Power holds marketable equity and debt securities (classified as available-for-sale), cash equivalents and cost method investments in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Virginia Power’s decommissioning trust funds are summarized below:
|
| Amortized Cost |
|
| Total Unrealized Gains(1) |
|
| Total Unrealized Losses(1) |
|
|
| Fair Value |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 729 |
|
| $ | 741 |
|
| $ | — |
|
|
| $ | 1,470 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| 226 |
|
|
| 8 |
|
|
| — |
|
|
|
| 234 |
|
Government securities |
|
| 483 |
|
|
| 13 |
|
|
| (2 | ) |
|
|
| 494 |
|
Common/collective trust funds |
|
| 29 |
|
|
| — |
|
|
| — |
|
|
|
| 29 |
|
Cost method investments |
|
| 67 |
|
|
| — |
|
|
| — |
|
|
|
| 67 |
|
Cash equivalents and other(2) |
|
| (2 | ) |
|
| — |
|
|
| — |
|
|
|
| (2 | ) |
Total |
| $ | 1,532 |
|
| $ | 762 |
|
| $ | (2 | ) | (3) |
| $ | 2,292 |
|
December 31, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 677 |
|
| $ | 624 |
|
| $ | — |
|
|
| $ | 1,301 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| 274 |
|
|
| 6 |
|
|
| (4 | ) |
|
|
| 276 |
|
Government securities |
|
| 420 |
|
|
| 9 |
|
|
| (2 | ) |
|
|
| 427 |
|
Common/collective trust funds |
|
| 26 |
|
|
| — |
|
|
| — |
|
|
|
| 26 |
|
Cost method investments |
|
| 69 |
|
|
| — |
|
|
| — |
|
|
|
| 69 |
|
Cash equivalents and other(2) |
|
| 7 |
|
|
| — |
|
|
| — |
|
|
|
| 7 |
|
Total |
| $ | 1,473 |
|
| $ | 639 |
|
| $ | (6 | ) | (3) |
| $ | 2,106 |
|
|
|
|
|
|
|
The fair value of Virginia Power’s marketable debt securities held in nuclear decommissioning trust funds at September 30, 2017 by contractual maturity is as follows:
|
| Amount |
| |
(millions) |
|
|
|
|
Due in one year or less |
| $ | 60 |
|
Due after one year through five years |
|
| 192 |
|
Due after five years through ten years |
|
| 189 |
|
Due after ten years |
|
| 316 |
|
Total |
| $ | 757 |
|
Presented below is selected information regarding Virginia Power’s marketable equity and debt securities held in nuclear decommissioning trust funds.
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales |
| $ | 156 |
|
| $ | 131 |
|
| $ | 654 |
|
| $ | 478 |
|
Realized gains(1) |
|
| 9 |
|
|
| 18 |
|
|
| 64 |
|
|
| 48 |
|
Realized losses(1) |
|
| 6 |
|
|
| 4 |
|
|
| 24 |
|
|
| 21 |
|
|
|
Other-than-temporary impairment losses on investments held in nuclear decommissioning trust funds recognized in earnings for Virginia Power were not materialfrom equity method investees in its Consolidated Statements of Income. In addition, Dominion Energy recorded equity earnings of $17 million and equity losses of $4 million for the three and ninesix months ended SeptemberJune 30, 20172023 and 2016.
Equity Method Investments
Dominion Energy
Atlantic Coast Pipeline
In October 2016, Dominion Energy purchased an additional 3% membership interest2022, respectively, in discontinued operations related to its investment in Atlantic Coast Pipeline from Duke for $14 million, which adjusted Dominion Energy’s and Duke’s membership interest to 48% and 47%, respectively.
Pipeline. Dominion Energy contributed $84received distributions of $185 million and $286 million during the three and nine months ended September 30, 2017 and $74 million and $143 million during the three and nine months ended September 30, 2016, respectively, to Atlantic Coast Pipeline.
Dominion Energy Gas
Iroquois
Dominion Energy Gas' equity earnings totaled $15 million and $14$167 million for the ninesix months ended SeptemberJune 30, 20172023 and 2016,2022, respectively. Dominion Energy Gas received distributions from this investmentmade contributions of $17$48 million and $90 million for both the ninesix months ended SeptemberJune 30, 20172023 and 2016.2022, respectively. At SeptemberJune 30, 20172023 and December 31, 2016,2022, the net difference between the carrying amount of Dominion Energy Gas' investment of $96 millionEnergy’s investments and $98 million, respectively, exceeded its share of underlying equity in net assets by $8 million. The difference reflectswas $221 million and $223 million, respectively. At June 30, 2023, these differences are primarily comprised of $9 million of equity method goodwill andthat is not being amortized. In May 2016, amortized and a $212 million basis difference from Dominion Energy’s
38
investment in Cove Point, which is being amortized over the useful lives of the underlying assets. At December 31, 2022, these differences are comprised of $9 million of equity method goodwill that is not being amortized, $215 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 $(1) million basis difference primarily attributable to capitalized interest.
Cove Point
Dominion Energy Gas sold 0.65% of the non-controllingholds a 50% noncontrolling limited partnership interest in IroquoisCove Point which is accounted for as an equity method investment, as discussed in Note 9 to TransCanada Corporationthe Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dominion Energy recorded distributions from Cove Point of $95 million and $85 million for the three months ended June 30, 2023 and 2022, respectively, and $178 million and $161 million for the six months ended June 30, 2023 and 2022, respectively.
In June 2023, Dominion Energy entered into an agreement with Cove Point for transportation and storage services [at market rates] for a 20-year period commencing in August 2023.
In July 2023, Dominion Energy entered into an agreement to sell its 50% noncontrolling limited partnership interest in Cove Point to BHE for cash consideration of $3.3 billion. In addition, Dominion Energy expects to receive proceeds from the settlement of related interest rate derivatives, which had a fair value of $218 million at June 30, 2023. DECP Holding's term loan secured by its noncontrolling interest in Cove Point, which had an outstanding balance of $2.3 billion at June 30, 2023, is required to be repaid in connection with closing. In addition, remaining after-tax proceeds associated with the transaction are required to be utilized to repay any outstanding borrowings under Dominion Energy’s two $600 million 364-day term loan facilities entered in July 2023. See Note 16 for additional information on these facilities. The sale will be treated as an asset sale for tax purposes and is expected to close by the end of 2023, contingent on clearance or approval under the Hart-Scott-Rodino Act and from the DOE, and other customary closing and regulatory conditions. The agreement is subject to termination by either party if not completed by the end of 2023, subject to a potential three-month extension for receipt of regulatory approvals, with a $150 million termination fee due to Dominion Energy under certain conditions. Dominion Energy expects to record a gain on the sale of its noncontrolling interest in Cove Point of approximately $7 million, which resulted in a $5$650 million ($3415 million after-tax) upon closing.
Atlantic Coast Pipeline
A description of Dominion Energy’s investment in Atlantic Coast Pipeline, including events that led to the cancellation of the Atlantic Coast Pipeline Project in July 2020, is included in Note 9 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
At June 30, 2023 and December 31, 2022, Dominion Energy has recorded a liability of $52 million and $114 million, respectively, in other current liabilities in its Consolidated Balance Sheets as a result of its share of equity losses exceeding its investment which reflects Dominion Energy’s obligations on behalf of Atlantic Coast Pipeline related to its AROs.
Dominion Energy recorded $41 million of contributions to Atlantic Coast Pipeline during the six months ended June 30, 2023. Dominion Energy made no contributions to Atlantic Coast Pipeline during the six months ended June 30, 2022.
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 results of operations, financial position or statement of cash flows.
Wrangler
A description of Dominion Energy’s investment in Wrangler (through March 2022) is included in Note 9 to the Consolidated Financial Statements in Dominion Energy’s Annual Report on Form 10-K for the year ended December 31, 2022.
In March 2022, Dominion Energy sold its remaining 15% noncontrolling partnership interest in Wrangler to Interstate Gas Supply, Inc. for cash consideration of $85 million. Dominion Energy recognized a gain of $11 million ($8 million after-tax), included in other income (expense), in its Consolidated Statements of Income for the six months ended June 30, 2022.
Dominion Privatization
Dominion Energy holds a 50% noncontrolling ownership interest in Dominion Privatization which is accounted for as an equity method investment, as discussed in Note 9 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
In March 2022, Dominion Energy Gas’completed its initial contribution of privatization operations in South Carolina (excluding contracts held by DESC), Texas and Pennsylvania to Dominion Privatization for total consideration of $120 million, subject to customary closing adjustments, comprised of $60 million in cash proceeds and a 50% noncontrolling ownership interest in Dominion
39
Privatization with an initial fair value of $60 million, estimated using the market approach. This was considered a Level 2 fair value measurement given that it was based on the agreed-upon sales price. In the first quarter of 2022, Dominion Energy recorded a gain of $23 million ($16 million after-tax), presented in losses (gains) on sales of assets in its Consolidated StatementStatements of Income.
Note 11. Property, Plant and Equipment
Acquisitions of Nonregulated Solar Projects
Other than the item discussed below, there have been no significant updates to acquisitions of solar projects by the Companies from those discussed in Note 10 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
In March 2023, Dominion Energy entered into an agreement to acquire the Foxhound solar development project in Virginia (reflected in Contracted Assets) with closing on the agreement expected in 2024. The project is expected to cost approximately $205 million, including the initial acquisition cost, and commence commercial operations in 2024 with a generating capacity of 83 MW. Dominion Energy expects to claim production tax credits on the energy generated and sold by the project. Dominion Energy anticipates that an impairment charge may be required upon closing given its expectation that it is more likely than not that the nonregulated solar generation projects within Contracted Assets will be sold before the end of their useful lives as described in Note 10 to the Consolidated Financial Statements in Dominion Energy’s Annual Report on Form 10-K for the year ended December 31, 2022.
Sale of Utility Property
In June 2022, Dominion Energy completed the sale of certain utility property in South Carolina, as approved by the South Carolina Commission in May 2022, for total cash consideration of $16 million. In connection with the sale, Dominion Energy recognized a gain of $16 million ($12 million after-tax), recorded in losses (gains) on sales of assets, in its Consolidated Statements of Income for the three and six months ended June 30, 2022.
40
Note 11.12. Regulatory Assets and Liabilities
Regulatory assets and liabilities include the following:
|
| Dominion Energy |
|
| Virginia Power |
| ||||||||
|
| June 30, |
| December 31, |
|
| June 30, |
| December 31, |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
| ||||
Regulatory assets: |
|
|
|
|
|
|
|
|
|
| ||||
Deferred cost of fuel used in electric generation(1) |
| $ | 401 |
| $ | 603 |
|
| $ | 50 |
| $ | 133 |
|
Deferred project costs and DSM programs for gas utilities(2) |
|
| 96 |
|
| 68 |
|
|
|
|
|
| ||
Unrecovered gas costs(3) |
|
| 491 |
|
| 374 |
|
|
|
|
|
| ||
Deferred rider costs for Virginia electric utility(4) |
|
| 57 |
|
| 152 |
|
|
| 57 |
|
| 152 |
|
Ash pond and landfill closure costs(5) |
|
| 181 |
|
| 221 |
|
|
| 181 |
|
| 221 |
|
Deferred nuclear refueling outage costs(6) |
|
| 84 |
|
| 83 |
|
|
| 82 |
|
| 83 |
|
NND Project costs(7) |
|
| 138 |
|
| 138 |
|
|
|
|
|
| ||
Deferred early plant retirement charges(8) |
|
| 113 |
|
| 226 |
|
|
| 113 |
|
| 226 |
|
Derivatives(9) |
|
| 97 |
|
| 262 |
|
|
| 81 |
|
| 251 |
|
Other |
|
| 287 |
|
| 213 |
|
|
| 63 |
|
| 74 |
|
Regulatory assets-current |
|
| 1,945 |
|
| 2,340 |
|
|
| 627 |
|
| 1,140 |
|
Unrecognized pension and other postretirement benefit costs(10) |
|
| 958 |
|
| 989 |
|
|
| — |
|
| 4 |
|
Deferred rider costs for Virginia electric utility(4) |
|
| 610 |
|
| 363 |
|
|
| 610 |
|
| 363 |
|
Deferred project costs for gas utilities(2) |
|
| 694 |
|
| 703 |
|
|
|
|
|
| ||
Interest rate hedges(11) |
|
| 169 |
|
| 169 |
|
|
| — |
|
| — |
|
AROs and related funding(12) |
|
| 400 |
|
| 398 |
|
|
|
|
|
| ||
NND Project costs(7) |
|
| 2,018 |
|
| 2,088 |
|
|
|
|
|
| ||
Ash pond and landfill closure costs(5) |
|
| 2,024 |
|
| 2,051 |
|
|
| 2,021 |
|
| 2,049 |
|
Deferred cost of fuel used in electric generation(1) |
|
| 1,310 |
|
| 1,551 |
|
|
| 1,310 |
|
| 1,551 |
|
Derivatives(9) |
|
| 184 |
|
| 255 |
|
|
| 79 |
|
| 148 |
|
Other |
|
| 496 |
|
| 520 |
|
|
| 131 |
|
| 132 |
|
Regulatory assets-noncurrent |
|
| 8,863 |
|
| 9,087 |
|
|
| 4,151 |
|
| 4,247 |
|
Total regulatory assets |
| $ | 10,808 |
| $ | 11,427 |
|
| $ | 4,778 |
| $ | 5,387 |
|
Regulatory liabilities: |
|
|
|
|
|
|
|
|
|
| ||||
Provision for future cost of removal and AROs(13) |
|
| 127 |
|
| 127 |
|
|
| 111 |
|
| 111 |
|
Reserve for refunds and rate credits to electric utility customers(14) |
|
| 102 |
|
| 125 |
|
|
| 10 |
|
| 25 |
|
Income taxes refundable through future rates(15) |
|
| 152 |
|
| 152 |
|
|
| 65 |
|
| 65 |
|
Monetization of guarantee settlement(16) |
|
| 67 |
|
| 67 |
|
|
|
|
|
| ||
Derivatives(9) |
|
| 12 |
|
| 327 |
|
|
| — |
|
| 176 |
|
Other |
|
| 123 |
|
| 148 |
|
|
| 45 |
|
| 129 |
|
Regulatory liabilities-current |
|
| 583 |
|
| 946 |
|
|
| 231 |
|
| 506 |
|
Income taxes refundable through future rates(15) |
|
| 3,984 |
|
| 4,054 |
|
|
| 2,243 |
|
| 2,272 |
|
Provision for future cost of removal and AROs(13) |
|
| 2,565 |
|
| 2,510 |
|
|
| 1,164 |
|
| 1,135 |
|
Nuclear decommissioning trust(17) |
|
| 1,936 |
|
| 1,685 |
|
|
| 1,936 |
|
| 1,685 |
|
Monetization of guarantee settlement(16) |
|
| 669 |
|
| 702 |
|
|
|
|
|
| ||
Interest rate hedges(11) |
|
| 196 |
|
| 240 |
|
|
| 196 |
|
| 240 |
|
Reserve for refunds and rate credits to electric utility customers(14) |
|
| 274 |
|
| 325 |
|
|
| — |
|
| — |
|
Unrecognized pension and other postretirement benefit costs(10) |
|
| 13 |
|
| 22 |
|
|
|
|
|
| ||
Overrecovered other postretirement benefit costs(18) |
|
| 152 |
|
| 140 |
|
|
|
|
|
| ||
Derivatives(9) |
|
| 189 |
|
| 235 |
|
|
| — |
|
| — |
|
Other |
|
| 277 |
|
| 194 |
|
|
| 260 |
|
| 167 |
|
Regulatory liabilities-noncurrent |
|
| 10,255 |
|
| 10,107 |
|
|
| 5,799 |
|
| 5,499 |
|
Total regulatory liabilities |
| $ | 10,838 |
| $ | 11,053 |
|
| $ | 6,030 |
| $ | 6,005 |
|
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||
(millions) |
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
|
|
|
|
|
|
Regulatory assets: |
|
|
|
|
|
|
|
|
Deferred rate adjustment clause costs(1) |
| $ | 67 |
|
| $ | 63 |
|
Deferred nuclear refueling outage costs(2) |
|
| 67 |
|
|
| 71 |
|
Unrecovered gas costs(3) |
|
| 51 |
|
|
| 19 |
|
Deferred cost of fuel used in electric generation(4) |
|
| 30 |
|
|
| — |
|
Other |
|
| 96 |
|
|
| 91 |
|
Regulatory assets-current |
|
| 311 |
|
|
| 244 |
|
Unrecognized pension and other postretirement benefit costs(5) |
|
| 1,296 |
|
|
| 1,401 |
|
Deferred rate adjustment clause costs(1) |
|
| 333 |
|
|
| 329 |
|
Derivatives(6) |
|
| 230 |
|
|
| 174 |
|
PJM transmission rates(7) |
|
| 215 |
|
|
| 192 |
|
Income taxes recoverable through future rates(8) |
|
| 157 |
|
|
| 123 |
|
Utility reform legislation(9) |
|
| 134 |
|
|
| 99 |
|
Other |
|
| 138 |
|
|
| 155 |
|
Regulatory assets-noncurrent |
|
| 2,503 |
|
|
| 2,473 |
|
Total regulatory assets |
| $ | 2,814 |
|
| $ | 2,717 |
|
Regulatory liabilities: |
|
|
|
|
|
|
|
|
PIPP(10) |
| $ | 20 |
|
| $ | 28 |
|
Deferred cost of fuel used in electric generation(4) |
|
| 5 |
|
|
| 61 |
|
Other |
|
| 63 |
|
|
| 74 |
|
Regulatory liabilities-current |
|
| 88 |
|
|
| 163 |
|
Provision for future cost of removal and AROs(11) |
|
| 1,477 |
|
|
| 1,427 |
|
Nuclear decommissioning trust(12) |
|
| 1,034 |
|
|
| 902 |
|
Unrecognized pension and other postretirement benefit costs(5) |
|
| 106 |
|
|
| 105 |
|
Derivatives(6) |
|
| 78 |
|
|
| 69 |
|
Other |
|
| 211 |
|
|
| 119 |
|
Regulatory liabilities-noncurrent |
|
| 2,906 |
|
|
| 2,622 |
|
Total regulatory liabilities |
| $ | 2,994 |
|
| $ | 2,785 |
|
Virginia Power |
|
|
|
|
|
|
|
|
Regulatory assets: |
|
|
|
|
|
|
|
|
Deferred nuclear refueling outage costs(2) |
| $ | 67 |
|
| $ | 71 |
|
Deferred rate adjustment clause costs(1) |
|
| 47 |
|
|
| 51 |
|
Deferred cost of fuel used in electric generation(4) |
|
| 30 |
|
|
| — |
|
Other |
|
| 62 |
|
|
| 57 |
|
Regulatory assets-current(13) |
|
| 206 |
|
|
| 179 |
|
Deferred rate adjustment clause costs(1) |
|
| 256 |
|
|
| 246 |
|
PJM transmission rates(7) |
|
| 215 |
|
|
| 192 |
|
Derivatives(6) |
|
| 197 |
|
|
| 133 |
|
Income taxes recoverable through future rates(8) |
|
| 67 |
|
|
| 76 |
|
Other |
|
| 103 |
|
|
| 123 |
|
Regulatory assets-noncurrent |
|
| 838 |
|
|
| 770 |
|
Total regulatory assets |
| $ | 1,044 |
|
| $ | 949 |
|
Regulatory liabilities: |
|
|
|
|
|
|
|
|
Deferred cost of fuel used in electric generation(4) |
| $ | 5 |
|
| $ | 61 |
|
Other |
|
| 38 |
|
|
| 54 |
|
Regulatory liabilities-current(14) |
|
| 43 |
|
|
| 115 |
|
Nuclear decommissioning trust(12) |
|
| 1,034 |
|
|
| 902 |
|
Provision for future cost of removal(11) |
|
| 985 |
|
|
| 946 |
|
Derivatives(6) |
|
| 78 |
|
|
| 69 |
|
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||
(millions) |
|
|
|
|
|
|
|
|
|
| 105 |
|
|
| 45 |
| |
Regulatory liabilities-noncurrent |
|
| 2,202 |
|
|
| 1,962 |
|
Total regulatory liabilities |
| $ | 2,245 |
|
| $ | 2,077 |
|
Dominion Energy Gas |
|
|
|
|
|
|
|
|
Regulatory assets: |
|
|
|
|
|
|
|
|
Deferred rate adjustment clause costs(1) |
| $ | 20 |
|
| $ | 12 |
|
Unrecovered gas costs(3) |
|
| — |
|
|
| 12 |
|
Other |
|
| 2 |
|
|
| 2 |
|
Regulatory assets-current(13) |
|
| 22 |
|
|
| 26 |
|
Unrecognized pension and other postretirement benefit costs(5) |
|
| 300 |
|
|
| 358 |
|
Utility reform legislation(9) |
|
| 134 |
|
|
| 99 |
|
Deferred rate adjustment clause costs(1) |
|
| 77 |
|
|
| 79 |
|
Income taxes recoverable through future rates(8) |
|
| 32 |
|
|
| 23 |
|
Other |
|
| 13 |
|
|
| 18 |
|
Regulatory assets-noncurrent(15) |
|
| 556 |
|
|
| 577 |
|
Total regulatory assets |
| $ | 578 |
|
| $ | 603 |
|
Regulatory liabilities: |
|
|
|
|
|
|
|
|
PIPP(10) |
| $ | 20 |
|
| $ | 28 |
|
Other |
|
| 19 |
|
|
| 7 |
|
Regulatory liabilities-current(14) |
|
| 39 |
|
|
| 35 |
|
Provision for future cost of removal and AROs(11) |
|
| 178 |
|
|
| 174 |
|
Other |
|
| 74 |
|
|
| 45 |
|
Regulatory liabilities-noncurrent(16) |
|
| 252 |
|
|
| 219 |
|
Total regulatory liabilities |
| $ | 291 |
|
| $ | 254 |
|
|
|
41
|
|
|
|
|
|
| (9) Represents changes in the fair value of derivatives, excluding separately presented interest rate hedges, that following settlement are expected to be recovered from or refunded to customers. (10) 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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2017, $323 million of Dominion Energy's rate-regulated subsidiaries.
At June 30, 2023, Dominion Energy and Virginia Power regulatory assets represented past expendituresinclude $5.6 billion and $2.7 billion, respectively, on which they do not currentlyexpect to earn a return.return during the applicable recovery period. With the exception of the $215 million PJM transmission cost allocation matter,certain items discussed above, the majority of these expenditures are expected to be recovered within the next two years.years.
Note 12.13. 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 for whichthat the Companies cannot estimate, a range of possible loss, 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 for whichthat 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
Under the Federal Power Act, FERC regulates wholesale sales and transmission of electricity in interstate commerce by public utilities. Dominion Energy’s merchant generators sell electricity in the PJM, MISO, CAISO and ISO-NE wholesale markets, and to wholesale purchasers in the states of Virginia, North Carolina, Indiana, 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. Virginia Power purchases and, under its FERC market-based rate authority, sells electricity in the wholesale market. 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 of 11.4%, 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 March 2010, Old Dominion Electric Cooperative 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. Parties have until November 2017 to seek rehearing. Virginia Power is evaluating the order, which is not expected to have a material effect on results of operations.
In April 2007, FERC issued an order regarding its transmission rate design for the allocation of costs among PJM transmission customers, including Virginia Power, for transmission service provided by PJM. For new PJM-planned transmission facilities that operate at or above 500 kV, FERC established a PJM regional rate design where customers pay according to each customer’s share of the region’s load. For recovery of costs of existing facilities, FERC approved the existing methodology whereby a customer pays the cost of facilities located in the same zone as the customer. A number of parties appealed the order to the U.S. Court of Appeals for the Seventh Circuit.
In August 2009, the court issued its decision affirming the FERC order with regard to the existing facilities, but remanded to FERC the issue of the cost allocation associated with the new facilities 500 kV and above for further consideration by FERC. On remand, FERC reaffirmed its earlier decision to allocate the costs of new facilities 500 kV and above according to the customer’s share of the region’s load. A number of parties filed appeals of the order to the U.S. Court of Appeals for the Seventh Circuit. In June 2014, the court again remanded the cost allocation issue to FERC. In December 2014, FERC issued an order setting an evidentiary hearing and settlement proceeding regarding the cost allocation issue. The hearing only concerns the costs of new facilities approved by PJM prior to February 1, 2013. Transmission facilities approved after February 1, 2013 are allocated on a hybrid cost allocation method approved by FERC and not subject to any court review.
In June 2016, PJM, the PJM transmission owners and state commissions representing substantially all of the load in the PJM market submitted a settlement to FERC to resolve the outstanding issues regarding this matter. Under the terms of the settlement, Virginia Power would be required to pay in excess of $200 million to PJM over the next 10 years. Although the settlement agreement has not been accepted by FERC, and the settlement is opposed by a small group of parties to the proceeding, Virginia Power believes it is probable it will be required to make payment as an outcome of the settlement. Accordingly, as of September 30, 2017, Virginia Power has recorded a contingent liability of $223 million in other deferred credits and other liabilities, which is offset by a $215 million regulatory asset for the amount that will be recovered through retail rates in Virginia.
FERC – Gas
DETI
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 that have the potential to result in adjustments which could be material to Dominion Energy and Dominion Energy Gas’ results of operations. DETI submitted its initial response to the audit staff in September 2017. In connection with one preliminary recommendation that management did not challenge, DETI recognized in the second quarter of 2017, a charge of $15 million ($9 million after-tax) recorded within other operations and maintenance expense in Dominion Energy’s and Dominion Energy Gas’ Consolidated Statements of Income to write-off the balance of a regulatory asset, originally established in 2008, that is no longer considered probable of recovery. Pending final resolution of the audit process and a determination by FERC, management is unable to estimate the potential impact of the other preliminary recommendations and no amounts have been recognized.
Other Regulatory Matters
Other than the following matters, there have been no significant developments regarding the pending regulatory matters disclosed in Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 20162022.
42
Virginia Regulation - Key Legislation Affecting Operations
Virginia 2023 Legislation
In April 2023, legislation was enacted that amended several key provisions of the Regulation Act, as previously amended by the GTSA, and revised portions of the existing regulatory framework affecting Virginia Power’s operations. See Note 1213 to the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, for additional information on the Regulation Act and GTSA.
The legislation resets the frequency of base rate reviews from a triennial period, as established under the GTSA, to a biennial period commencing with the 2023 Biennial Review. Such biennial reviews shall include the establishment of an authorized ROE to be utilized for base rates and riders, prospective base rates for the upcoming two-year period based on projected cost of service and a determination by the Virginia Commission as to Virginia Power’s base rate earned return for the most recently completed two-year period against the previously authorized ROE, including any potential credits to customers’ bills.
The legislation provides that the Virginia Commission will establish an authorized ROE of 9.70% for Virginia Power in the 2023 Biennial Review, reflecting the average authorized ROE of vertically integrated electric utilities by the applicable regulatory commissions in the peer group jurisdictions of Florida, Georgia, Texas, Tennessee, West Virginia, Kentucky and North Carolina. Subsequent to the 2023 Biennial Review, all provisions related to this peer group benchmarking expire and the Virginia Commission is authorized to utilize any methodology it deems to be consistent with the public interest to make future ROE determinations. In all future biennial reviews, if the Virginia Commission determines that Virginia Power’s existing base rates will, on a going-forward basis, produce revenues that are either in excess of or below its authorized rate of return, the Virginia Commission is authorized to reduce or increase such base rates, as applicable and necessary, to ensure that Virginia Power’s base rates are just and reasonable while still allowing Virginia Power to recover its costs and earn a fair rate of return. In addition, beginning with the biennial review to be filed in 2025, the Virginia Commission may, at its discretion, increase or decrease Virginia Power’s authorized ROE by up to 50 basis points based on factors that may include reliability, generating plant performance, customer service and operating efficiency, with the provisions applying to such adjustments to be determined in a future proceeding.
The legislation directs that if the Virginia Commission determines as part of the 2023 Biennial Review that Virginia Power has earned more than 70 basis points above its authorized ROE of 9.35% established in the 2021 Triennial Review that 85% of the amount of such earnings above this level be credited to customers’ bills. In future biennial reviews, beginning with the biennial review to be filed in 2025, 85% of any earnings determined by the Virginia Commission to be up to 150 basis points above Virginia Power’s authorized ROE shall be credited to customers’ bills as well as 100% of any earnings that are more than 150 basis points above Virginia Power’s authorized ROE. For the purposes of measuring any bill credits due to customers, associated income taxes are factored into the determination of such amounts. In addition, the legislation eliminates Virginia Power’s ability to utilize Virginia Commission-approved investment amounts in qualifying solar or wind generation facilities or electric distribution grid transformation projects as a CCRO to reduce or offset any earnings otherwise eligible for customer credits as previously permitted under the GTSA.
In addition to the biennial review mechanisms discussed above, the legislation also includes provisions related to other aspects of Virginia Power’s ratemaking framework.
In addition, in May 2023 legislation was enacted that amended certain portions of the VCEA to qualify generation produced by Virginia Power’s biomass electric generating stations as renewable energy and eliminate the mandated retirement of such facilities by the end of 2028.
43
Virginia Regulation - Recent Developments
2023 Biennial Review
In July 2023, Virginia Power filed its base rate case and accompanying schedules in support of the 2023 Biennial Review in accordance with legislation enacted in Virginia in April 2023 as discussed above. Virginia Power’s earnings test analysis, as filed, demonstrated it earned a combined ROE of 9.04% on its generation and distribution services for the test period, within 70 basis points of its authorized ROE of 9.35% established in the 2021 Triennial Review. Virginia Power did not request an increase in base rates for generation and distribution services and proposed that base rates remain at their existing level utilizing an ROE of 9.70% for the prospective test periods and a common equity capitalization to total capitalization ratio of 52.10%. Virginia Power noted that while its prospective test periods would result in a revenue deficiency, it did not request an increase to base rates given that the combination of certain riders with an aggregate annual revenue requirement of at least $350 million into base rates effective July 2023 cannot serve as the basis for an increase in base rates as part of the 2023 Biennial Review. The Virginia Commission will determine whether Virginia Power’s earnings for the test period, considered as a whole, were within 70 basis points above or below the authorized ROE of 9.35%. The Virginia Commission will also authorize an ROE of 9.70%, as directed by legislation enacted in Virginia in April 2023, for Virginia Power that will be applied to Virginia Power’s riders prospectively and that will also be utilized to measure base rate earnings for the 2025 Biennial Review. This matter is pending.
Virginia Fuel Expenses
In May 2023, Virginia Power filed its annual fuel factor filing with the Virginia Commission to recover an estimated $2.3 billion in Virginia jurisdictional projected fuel expense for the rate year beginning July 1, 2023 and a projected $1.3 billion under-recovered balance as of June 30, 2023. The projected under-recovered balance includes $578 million representing the remaining two years of under-recovered balance as of June 30, 2022 being collected over a three-year period in accordance with the Virginia Commission’s approval of Virginia Power’s 2022 annual fuel factor as described in Note 13 to the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. Virginia Power proposed two alternatives to recover these under-collected fuel costs. The first option reflects recovery of the total $3.3 billion fuel cost requirement over the July 2023 through June 2024 fuel period and results in an increase in Virginia Power’s fuel revenues of $631 million when applied to projected kilowatt-hour sales for the period. The second option proposed by Virginia Power incorporates its anticipated July 2023 application to the Virginia Commission for approval of a financing order to securitize up to the projected $1.3 billion under-recovered balance as of June 30, 2023 as permitted under legislation enacted in Virginia in April 2023. Under this option, Virginia Power proposed implementation of the current period fuel factor rate only effective July 2023 on an interim basis, while suspending implementation of the prior-period fuel factor rate pending the Virginia Commission’s consideration of the securitization petition. If approved by the Virginia Commission, the securitization option results in a net decrease in Virginia Power’s fuel revenues for the rate year of approximately $541 million. In addition, Virginia Power has proposed to alter the order in which revenue from certain customers who elect to pay market-based rates would be allocated between base rates and fuel, which if approved would result in a reduction to fuel revenue of $13 million. In May 2023, the Virginia Commission ordered that, in accordance with Virginia Power’s second proposed option, only the current period fuel factor rate be implemented effective July 2023 on an interim basis. In accordance with legislation enacted in Virginia in April 2023 discussed above, in July 2023, Virginia Power filed an application with the Virginia Commission for approval of a financing order to securitize the projected $1.3 billion under-recovered fuel balance as of June 30, 2023 through the issuance of one or more tranches of bonds with tenors up to approximately ten years. These matters are pending.
Virginia Power Equity Application
In July 2023, Virginia Power requested approval from the Virginia Commission to issue and sell to Dominion Energy up to $3.25 billion of authorized but unissued shares of its common stock, no par value, through the end of 2023 in order to maintain a common equity capitalization to total capitalization ratio of 52.10% through December 2024 in accordance with legislation enacted in Virginia in April 2023 as discussed above. This matter is pending.
GTSA Filing
In March 2023, Virginia Power filed a petition with the Virginia Commission for approval of Phase III, covering 2024 through 2026, of its plan for electric distribution grid transformation projects as authorized by the GTSA. The plan includes 14 projects covering six components (i) AMI; (ii) customer information platform; (iii) grid improvement projects; (iv) physical and cyber security; (v) telecommunications infrastructure and (vi) customer education. For Phase III, the total proposed capital investment is $1.1 billion and the proposed operations and maintenance investment is $71 million. This matter is pending.
Renewable Generation Projects
In October 2022, Virginia Power filed a petition with the Virginia Commission for CPCNs to construct and operate eight utility-scale projects totaling approximately 474 MW of solar generation and 16 MW of energy storage as part of its efforts to meet the renewable generation development requirements under the VCEA. The projects, as of October 2022, are expected to cost approximately $1.2 billion in the aggregate, excluding financing costs, and be placed into service between 2024 through 2025. In April 2023, the Virginia Commission approved the petition.
44
Riders
Developments for significant riders associated with various Virginia Power projects are as follows:
Rider Name |
| Application Date |
| Approval Date |
| Rate Year |
| Total Revenue |
|
| Increase (Decrease) |
| ||
Rider CCR |
| February 2023 |
| Pending |
| December 2023 |
| $ | 194 |
|
| $ | (37 | ) |
Rider CE(1) |
| October 2022 |
| April 2023 |
| May 2023 |
|
| 89 |
|
|
| 18 |
|
Rider GT |
| August 2022 |
| April 2023 |
| June 2023 |
|
| 14 |
|
|
| (42 | ) |
Rider GT |
| August 2023 |
| Pending |
| June 2024 |
|
| 145 |
|
|
| 131 |
|
Rider GV(2) |
| June 2023 |
| Pending |
| April 2024 |
|
| 132 |
|
|
| 5 |
|
Rider GV(2) |
| June 2023 |
| Pending |
| April 2025 |
|
| 135 |
|
|
| 3 |
|
Rider OSW |
| November 2022 |
| July 2023 |
| September 2023 |
|
| 271 |
|
|
| 192 |
|
Rider PPA |
| December 2022 |
| July 2023 |
| September 2023 |
|
| (22 | ) |
|
| (17 | ) |
Rider R |
| June 2021 |
| March 2022 |
| April 2023 |
|
| 55 |
| (8) |
| (4 | ) |
Rider RGGI(3) |
| December 2022 |
| July 2023 |
| September 2023 |
|
| 356 |
|
| N/A |
| |
Rider RPS |
| December 2022 |
| July 2023 |
| September 2023 |
|
| 96 |
|
|
| (44 | ) |
Rider S |
| June 2021 |
| February 2022 |
| April 2023 |
|
| 191 |
| (8) |
| (1 | ) |
Rider SNA(4) |
| October 2022 |
| June 2023 |
| September 2023 |
|
| 50 |
|
|
| (57 | ) |
Rider T1(5) |
| May 2023 |
| July 2023 |
| September 2023 |
|
| 879 |
|
|
| 173 |
|
Rider U(6) |
| June 2022 |
| February 2023 |
| April 2023 |
|
| 74 |
|
|
| (21 | ) |
Rider US-3 |
| August 2022 |
| April 2023 |
| June 2023 |
|
| 40 |
|
|
| (10 | ) |
Rider US-3 |
| August 2023 |
| Pending |
| June 2024 |
|
| 37 |
|
|
| (3 | ) |
Rider US-4 |
| August 2022 |
| April 2023 |
| June 2023 |
|
| 16 |
|
|
| 1 |
|
Rider US-4 |
| August 2023 |
| Pending |
| June 2024 |
|
| 14 |
|
|
| (2 | ) |
Rider W(7) |
| June 2022 |
| February 2023 |
| April 2023 |
|
| 105 |
| (8) |
| (16 | ) |
45
Electric Transmission Projects
Developments for significant Virginia Power electric transmission projects approved or applied for are as follows:
Description and Location |
| Application Date |
| Approval Date |
| Type of |
| Miles of |
| Cost Estimate |
| |
Partial rebuild of Bristers-Ox 115 kV line in |
| August 2022 |
| April 2023 |
| 230 kV |
| 15 |
| $ | 40 |
|
Construct new switching station, substations, |
| October 2022 |
| June 2023 |
| 230 kV |
| 18 |
|
| 230 |
|
Construct new switching station, substation, |
| October 2022 |
| May 2023 |
| 230 kV |
| 26 |
|
| 215 |
|
Construct new Mars and Wishing Star substations, |
| October 2022 |
| April 2023 |
| 500/230 kV |
| 4 |
|
| 720 |
|
Construct new Altair switching station, transmission |
| November 2022 |
| June 2023 |
| 230 kV |
| 2 |
|
| 50 |
|
Rebuild of Lines #2019 and #2007 in the City of |
| February 2023 |
| Pending |
| 230 kV |
| 5 |
|
| 95 |
|
Install transformer at Possum Point substation, |
| March 2023 |
| Pending |
| 230 kV |
| 2 |
|
| 35 |
|
Partial rebuild of Line #2011 in the Cities of |
| March 2023 |
| Pending |
| 230 kV |
| 7 |
|
| 35 |
|
Construct new transmission lines and convert Jeffress |
| May 2023 |
| Pending |
| 230 kV |
| 18 |
|
| 135 |
|
Construct new transmission lines and expand White |
| June 2023 |
| Pending |
| 230 kV |
| 5 |
|
| 45 |
|
Virginia Regulation – Select Prior Year Events
The following items were disclosed in Note 13 to the Consolidated Financial Statements in the Companies’ Quarterly ReportsAnnual Report on Form 10-Q10-K for the quartersyear ended MarchDecember 31, 20172022 and are included in this report as they had an impact to the Companies’ Consolidated Statements of Income for the three and/or six months ended June 30, 2017.2022.
Virginia RegulationFuel Expenses
Regulation Act Legislation
The Supreme Court of Virginia previously granted appeals to certain industrial customers of Appalachian Power Company that challenged the constitutionality of legislation enacted in 2015 keeping Appalachian Power Company’s base rates unchanged until at least 2020. This legislation also keeps Virginia Power’s base rates unchanged until at least 2022. In September 2017, the Supreme Court of Virginia affirmed that the legislation is constitutional.
Below is a discussion of significant riders associated with variousMay 2022, Virginia Power projects:
Virginia Power previously filed an applicationits annual fuel factor filing with the Virginia Commission to recover through Rider U costs for the first and second phases of a program to underground outage-prone overhead distribution lines. In September 2017, thean estimated $2.3 billion in Virginia Commission approved a total $22 million annual revenue requirement effective October 1, 2017, using a 9.4% ROE, and a total capital investment of $40 million for second phase conversions.
The Virginia Commission previously approved Riders C1A and C2A in connection with cost recovery for DSM programs. In October 2017, Virginia Power requested approval to extend one existing energy efficiency program for five years with a new $25 million cost cap, and proposed a total $31 million revenue requirementjurisdictional projected fuel expense for the rate year beginning July 1, 2018,2022 and a projected $1.0 billion under-recovered balance as of June 30, 2022. In July 2022, Virginia Power, the Virginia Commission staff and another party filed a comprehensive settlement agreement, approved by the Virginia Commission in September 2022, which representsprovided for the collection of the requested under-recovered projected fuel expense over a $3 million increasethree-year period beginning July 1, 2022 and required that Virginia Power exclude from recovery through base rates one half of the related financing costs over the previous year. This case is pending.three year period. In addition, the settlement agreement affirmed Virginia Power’s proposal regarding fuel cost recovery for market-based customers. As a result, Virginia Power recorded a $191 million ($142 million after-tax) charge in the second quarter of 2022 within impairment of assets and other charges in its Consolidated Statements of Income. See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 for additional information.
Rider RGGI
In May 2022, Virginia Power filed a petition with the Virginia Commission requesting suspension of Rider RGGI approved in August 2021. Virginia Power also requested that RGGI compliance costs incurred and unrecovered through July 2022 be recovered through existing base rates in effect during the period incurred. The Virginia Commission previously approved Rider BWthe request in conjunction with Brunswick County.June 2022. In October 2017,the second quarter of 2022, Virginia Power proposedrecorded a $132charge of $180 million revenue requirement($134 million after-tax) in impairment of assets and other charges for the amount deemed recovered through base rates through June 30, 2022, including the impact of certain non-jurisdictional customers which follow Virginia Power’s jurisdictional rate methodology. See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year beginning September 1, 2018, which representsended December 31, 2022 for additional information.
46
North Carolina Regulation
PSNC Rider D
Rider D allows PSNC to recover from customers all prudently incurred gas costs and the related portion of uncollectible expenses as well as losses on negotiated gas and transportation sales. In February 2023, PSNC submitted a $5 million increase over the previous year. This case is pending.
The Virginia Commission previously approved Rider US-2 in conjunctionfiling with the Scott Solar, Whitehouse,North Carolina Commission for a $56 million gas cost decrease with rates effective March 2023. The North Carolina Commission approved the filing in March 2023.
PSNC Customer Usage Tracker
PSNC utilizes a customer usage tracker, a decoupling mechanism, which allows it to adjust its base rates semi-annually for residential and Woodland solar facilities.commercial customers based on average per customer consumption. In October 2017, Virginia Power proposedMarch 2023, PSNC submitted a $15filing with the North Carolina Commission for a $23 million revenue requirementdecrease relating to the customer usage tracker. The North Carolina Commission approved the filing in March 2023 with rates effective April 2023.
South Carolina Regulation
DSM Programs
DESC has approval for the rate year beginning September 1, 2018,a DSM rider through which represents a $5 million increase over the previous year. This case is pending.
Electric Transmission Projects
Virginia Power previouslyit recovers expenditures related to its DSM programs. In January 2023, DESC filed an application with the VirginiaSouth Carolina Commission seeking approval to recover $46 million of costs and net lost revenues associated with these programs, along with an incentive to invest in such programs. DESC requested that rates be effective with the first billing cycle of May 2023. In April 2023, the South Carolina Commission approved the request, effective with the first billing cycle of May 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 February 2023, DESC filed with the South Carolina Commission a proposal to increase the total fuel cost component of retail electric rates. DESC's proposed adjustment is designed to recover DESC's current base fuel costs, including its existing under-collected balance, over the 12-month period beginning with the first billing cycle of May 2023, along with a requested decrease to DESC's variable environmental and avoided capacity cost component. The net effect of the proposal is an annual increase of $176 million. In March 2023, DESC, the South Carolina Office of Regulatory Staff and another party of record filed a stipulation with the South Carolina Commission for approval to reduce the base fuel cost component reflecting a CPCNsubsequent decrease in current fuel prices, resulting in a net annual increase of $121 million. In April 2023, the South Carolina Commission voted to rebuild and rearrange its Idylwood substation in Fairfax County, Virginia. approve the stipulation, with rates effective May 2023.
Electric Transmission Project
In September 2017, the Virginia Commission granted a CPCN for the project. The total estimated cost of the project is approximately $110 million.
Virginia Power previouslyMarch 2023, DESC filed an application with the VirginiaSouth Carolina Commission for a CPCNrequesting approval to construct and operate in multiple Virginia counties an approximately 38-mile overhead 19 miles of 230 kV transmission line betweenlines, a substation and associated facilities in Jasper County, South Carolina estimated to cost approximately $55 million. In July 2023, the RemingtonSouth Carolina Commission voted to approve the request.
Electric - Other
DESC utilizes a pension costs rider approved by the South Carolina Commission which is designed to allow recovery of projected pension costs, including under-collected balances or net of over-collected balances, as applicable. The rider is typically reviewed for adjustment every 12 months with any resulting increase or decrease going into effect beginning with the first billing cycle in May. In February 2023, DESC requested that the South Carolina Commission approve an adjustment to this rider to increase annual revenue by $24 million. In April 2023, the South Carolina Commission approved the request.
Natural Gas Base Rate Case
In March 2023, DESC filed its natural gas base rate case and Gordonsville substations, alongschedules with associated facilities. In August 2017, the Virginia Commission grantedSouth Carolina Commission. DESC proposed a CPCNnon-fuel, base rate increase of $19 million effective October 2023. The base rate increase was proposed to recover significant investment in distribution infrastructure for the project.benefit of customers. The total estimated costproposed rates would provide for an ROE of 10.38% compared to the currently authorized ROE of 10.25%. In addition, DESC elected to continue applicability of the projectNatural Gas Rate Stabilization Act, which allows for the adjustment of natural gas base rates annually, to its future rates and charges. This matter is pending.
47
Ohio Regulation
PIR Program
In 2008, East Ohio began PIR, aimed at replacing approximately $105 million.25% of its pipeline system. The Ohio Commission has approved East Ohio’s PIR program for capital investments through 2026 with 3% increases of annual capital expenditures per year.
In November 2013, the Virginia Commission issuedFebruary 2023, East Ohio filed 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. As of July 2017, Virginia Power has received all major required permits and approvals and is proceeding with construction of the project. In connectionapplication with the receipt of the permit from the U.S. Army Corps of Engineers in July 2017, Virginia Power was required to make payments totaling approximately $90 million to fund improvements to historical and cultural resources near the project. Accordingly, in July 2017, Virginia Power recorded an increase to property, plant and equipment and a corresponding liability for these payment obligations. Through September 30, 2017, Virginia Power had made $70 million of such payments, with the remaining $20 million paid in October 2017. Also in July 2017, the National Parks Conservation Association filed a lawsuit in U.S. District Court for the D.C. Circuit seeking to set aside the permit granted by the U.S. Army Corps of Engineers for the project and requested a preliminary injunction against the permit. In August 2017, the National Trust for Historic Preservation and Preservation Virginia filed a similar lawsuit in U.S. District Court for the D.C. Circuit. In October 2017, the preliminary injunction requests were denied. These lawsuits are pending.
North Carolina Regulation
In August 2017, Virginia Power submitted its annual filing to the North Carolina UtilitiesOhio Commission requesting approval to adjust the fuel componentPIR recovery. The filing reflects gross plant investment for 2022 of $225 million, cumulative gross plant investment of $2.4 billion and a revenue requirement of $305 million. In April 2023, the Ohio Commission approved the request.
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 electric rates. Virginia Power proposed a total $15 million increasePIR program to expand, upgrade or replace its infrastructure and information technology systems as well as investments necessary to comply with the fuel componentOhio Commission or other government regulations. In April 2022, certain parties filed an appeal with the Supreme Court of its electricOhio appealing the Ohio Commission’s December 2020 order establishing the CEP rider, including the rate of return utilized in determining the revenue requirement. This matter is pending.
In March 2023, East Ohio filed an application with the Ohio Commission requesting approval to adjust CEP cost recovery rates for the rate year beginning January 1, 2018.2022 costs. The filing reflects gross plant investment for 2022 of $195 million, cumulative gross plant investment of $1.3 billion and a revenue requirement of $151 million. This casematter is pending.
UEX Rider
East Ohio has approval for a UEX Riderrider through which it recovers the bad debt expense of most customers not participating in the PIPP Plus Program. The UEX Riderrider is adjusted annually to achieve dollar for dollar recovery of East Ohio’sOhio's actual write-offs of uncollectible amounts. In September 2017,July 2023, the Ohio Commission approved East Ohio’sOhio's application requesting approval ofto adjust its UEX Riderrider to reflect a refundan annual revenue requirement of over-recovered$23 million to provide for recovery of an under-recovered accumulated bad debt expense of approximately $12$9 million as of March 31, 2017,2023, and recovery of prospective net bad debt expense projected to total approximately $22$14 million for the twelve-month period from April 2017 toending March 2018.2024.
Utah and Wyoming Regulation
Purchased Gas
In October 2017,February 2023, Questar Gas submitted filingsfiled an application with both the Public ServiceUtah Commission ofseeking approval for a $92 million gas cost increase with rates effective March 2023. Subsequently in February 2023, the Utah and the Wyoming Public Service Commission for an approximately $25approved a $164 million gas cost increase reflecting forecasted increasesadditional undercollected gas costs incurred in commodity and transportation costs. The Public Service Commission of Utah andJanuary 2023.
Note 14. Leases
Other than the Wyoming Public Service Commission both approveditems discussed below, there have been no significant changes regarding the filingsCompanies’ leases as described in October 2017 with rates effective November 2017.
West Virginia Regulation
In October 2017,Note 15 to the Public Service Commission of West Virginia approved Hope’s application for new PREP customer rates,Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year beginning November 1, 2017, that provideended December 31, 2022.
Dominion Energy’s Consolidated Statements of Income include $6million and $11 million for projectedthe three and six months ended June 30, 2023, respectively, and $7 million and $11 million for the three and six months ended June 30, 2022, respectively, of rental revenue included in operating revenue. Dominion Energy’s Consolidated Statements of $4Income include $2 million and $3 million for the three and six months ended June 30, 2023, respectively, and $8 million and $17 million for the three and six months ended June 30, 2022, respectively, of depreciation expense included in depreciation, depletion and amortization related to capital investments of $21 million, $27 million and $31 million for 2016, 2017 and 2018, respectively.facilities subject to power purchase agreements under which Dominion Energy is the lessor.
FERC – GasOffshore Wind Vessel Leasing Arrangement
DETI
In December 2014, DETI entered into2020, Dominion Energy signed an agreement (subsequently amended in December 2022 and May 2023) with a precedent agreement with Atlantic Coast Pipeline forlessor 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 $625 million, to fund the Supply Header Project, aestimated project to provide approximately 1,500,000 Dths per day of firm transportation service to various customers. Thiscosts. The project is expected to be placed into servicecompleted in late 20192024 or early 2025. 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 cost approximately $550debt investors to fund all project costs, which totaled $367 million to $600 million to construct, excluding financing costs. In October 2017, DETI received FERC authorization to construct and operateas of June 30, 2023. If the project facilities.is terminated under certain events of default, Dominion Energy could be required to pay up to 100% of the then funded amount.
In September 2017, DETI submitted its annual transportation cost rate adjustment to FERC requesting approval to recover $39 million. AlsoThe initial lease term will commence once construction is substantially complete and the vessel is delivered and will mature in September 2017, DETI submitted its annual electric power cost adjustment to FERC requesting approval to recover $6 million. In October 2017, FERC approved these adjustments.
Cove Point
In November 2016, pursuant2027. 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 terms of a previous settlement, Cove Point filed a general rate case for its FERC-jurisdictional services, with 23 proposed rates to be effective January 1, 2017. Cove Point proposed an annual cost-of-service of approximately $140 million. In December 2016, FERC accepted a January 1, 2017 effective date for all proposed rates but five which were suspended to be effective June 1, 2017. In August 2017, Cove Point filed a proposed stipulation and settlement agreement with FERC, which was supported or not opposed by the active parties. Under the terms of the settlement agreement, Cove Point’s rates effective October 2017 would result in decreases to annual revenues and depreciation expense of approximately $18 million and $3 million, respectively, compared to the rates in effect through December 2016. In September 2017, the Presiding Administrative Law Judge certified the uncontested settlement to FERC. Cove Point is awaiting final FERC approval of the settlement. This caseparticipants, at current market terms, (ii) purchase the property for an amount equal to the outstanding
48
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 pending.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.
Note 13.15. Variable Interest Entities
There have been no significant changes regarding the entities the Companies consider VIEs as described in Note 1516 to the Consolidated Financial Statements in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016.2022.
Dominion Energy
Dominion Energy’s securities due within one year and long-term debt include $29 million and $356 million, respectively, of debt issued in 2016 by SBL Holdco, a VIE, net of issuance costs that is nonrecourse to Dominion Energy and is secured by SBL Holdco’s interest in certain merchant solar facilities.
Virginia Power had long-term power and capacity contracts with three non-utility generators. Contracts with two of these non-utility generators expired during the third quarter of 2017 leaving a remaining aggregate summer generation capacity of approximately 218 MW. Virginia Power is not subject to any risk of loss from this remaining potential VIE other than its remaining purchase commitments which totaled $213 million as of September 30, 2017. Virginia Power paid $17 million and $37 million for electric capacity and $5 million and $11 million for electric energy to these entities for the three months ended September 30, 2017 and 2016, respectively. Virginia Power paid $73 million and $111 million for electric capacity and $20 million and $23 million for electric energy to these entities for the nine months ended September 30, 2017 and 2016, respectively.
Virginia Power and Dominion Energy Gas
Virginia Power and Dominion Energy Gas purchased shared services from DES, an affiliated VIE, of $83$113 million and $31$96 million for the three months ended SeptemberJune 30, 2017, $802023 and 2022, respectively and $226 million and $31$194 million for the threesix months ended SeptemberJune 30, 2016, $2512023 and 2022, respectively. Virginia Power’s Consolidated Balance Sheets include amounts due to DES of $27 million and $93$28 million for the nine months ended Septemberat June 30, 20172023 and $268 million and $95 million for the nine months ended September 30, 2016, respectively.December 31, 2022, respectively, recorded in payables to affiliates.
Note 14.16. Significant Financing Transactions
Credit Facilities and Short-term Debt
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. Other than the items discussed below, there have been no significant changes regarding the Companies’ credit facilities and short-term debt as described in Note 17 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dominion Energy
Dominion Energy’s short-term financing is supported by its $6.0 billion joint revolving credit facility that provides for a discount in the pricing of certain annual fees and amounts borrowed by Dominion Energy under the facility if Dominion Energy achieves certain annual renewable electric generation and diversity and inclusion objectives.
At SeptemberJune 30, 2017,2023, Dominion Energy’s commercial paper and letters of credit outstanding, as well as its capacity available under the credit facilities,facility, were as follows:
|
| Facility |
|
| Outstanding |
|
| Outstanding |
|
| Facility |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Joint revolving credit facility(1) |
| $ | 6,000 |
|
| $ | 4,172 |
|
| $ | 16 |
|
| $ | 1,812 |
|
|
| Facility Limit |
|
| Outstanding Commercial Paper |
|
| Outstanding Letters of Credit |
|
| Facility Capacity Available |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint revolving credit facility(1) |
| $ | 5,000 |
|
| $ | 3,060 |
|
| $ | — |
|
| $ | 1,940 |
|
Joint revolving credit facility(1) |
|
| 500 |
|
|
| — |
|
|
| 73 |
|
|
| 427 |
|
Total |
| $ | 5,500 |
|
| $ | 3,060 |
|
| $ | 73 |
|
| $ | 2,367 |
|
|
49 DESC and |
Questar Gas’ short-term financing isfinancings are supported through its access as co-borrowerco-borrowers to the two joint revolving credit facilitiesfacility discussed above with Dominion Energy, Virginia Powerthe Companies. At June 30, 2023, the sub-limits for DESC and Dominion Energy Gas. At September 30, 2017 the aggregate sub-limit for Questar Gas was $250 million.were $500 million and $250 million, respectively.
In March 2023, FERC granted DESC authority through March 2025 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 March 2023, FERC granted GENCO authority through March 2025 to issue short-term indebtedness not to exceed $200 million outstanding with maturity dates of one year or less.
In addition to the credit facilitiesfacility mentioned above SBL Holdco has $30 millionand Virginia Power's letter of credit facilities mentioned below, Dominion Energy also has a credit facility which haveallows Dominion Energy to issue up to approximately $30 million in letters of credit and will mature in June 2024. At both June 30, 2023 and December 31, 2022, Dominion Energy had $25 million in letters of credit outstanding under this facility.
In March 2023, Dominion Energy entered into an agreement with a stated maturity datefinancial institution which it expects to allow it to issue up to $100 million in letters of credit. At June 30, 2023, $58 million in letters of credit were issued and outstanding under this agreement.
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 InvestmentSM as disclosed in Note 17 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 201731, 2022. At June 30, 2023 and December 31, 2022, Dominion Energy’s Consolidated Balance Sheets include $403 million and $347 million, respectively, with automatic one-year renewals through the maturity of the SBL Holdcorespect to such notes presented within short-term debt. The proceeds are used for general corporate purposes and to repay debt.
In January 2023, Dominion Energy entered into a $2.5 billion 364-Day term loan agreementfacility which bears interest at a variable rate and will mature in 2023.January 2024 with the proceeds to be used to repay existing long-term debt and short-term debt upon maturity and for other general corporate purposes. Concurrently, Dominion Solar Projects III, Inc. has $25Energy borrowed an initial $1.0 billion with the proceeds used to repay long-term debt. In February and March 2023, Dominion Energy borrowed $500 million ofand $1.0 billion, respectively, with the proceeds used for general corporate purposes and to repay long-term debt. At June 30, 2023, Dominion Energy's Consolidated Balance Sheet includes $2.5 billion with respect to such facility presented within securities due within one year. The maximum allowed total debt to total capital ratio under the facility is consistent with such allowed ratio under Dominion Energy’s joint revolving credit facility.
In July 2023, Dominion Energy entered into two $600 million 364-day term loan facilities which havebear interest at a statedvariable rate and will mature in July 2024 with the proceeds to be used to repay existing long-term debt and/or short-term debt upon maturity dateand for other general corporate purposes. Subsequently in July 2023, Dominion Energy borrowed an initial $750 million in the aggregate under these facilities with the proceeds used to repay short-term debt and for general corporate purposes. Dominion Energy is permitted to make up to three additional borrowings under each agreement through November 2023, at which point any unused capacity will cease to be available to Dominion Energy. The agreements contain certain mandatory early repayment provisions, including that any after-tax proceeds in connection with a sale of May 2018 with automatic one-year renewals throughDominion Energy’s noncontrolling interest in Cove Point, following the maturityrepayment of the Dominion Solar Projects III, Inc.DECP Holding’s term loan agreementsecured by its noncontrolling interest in 2024. At September 30, 2017, no amounts wereCove Point, be applied to any outstanding borrowings under either of thesethe facilities. The maximum allowed total debt to total capital ratio under the facilities is consistent with such allowed ratio under Dominion Energy’s joint revolving credit facility.
Virginia Power
Virginia Power’s short-term financing is supported through its access as co-borrower to the twoDominion Energy’s $6.0 billion joint revolving credit facilities. Thesefacility. The credit facilitiesfacility can be used for working capital, as support for the combined commercial paper programs of the Companiesborrowers under the credit facility and for other general corporate purposes.
At SeptemberJune 30, 2017,2023, Virginia Power’s share of commercial paper and letters of credit outstanding under itsthe joint revolving credit facilitiesfacility with Dominion Energy, Questar Gas and DESC was as follows:
|
| Facility |
|
| Outstanding |
|
| Outstanding |
| |||
(millions) |
|
|
|
|
|
|
|
|
| |||
Joint revolving credit facility(1) |
| $ | 6,000 |
|
| $ | 1,265 |
|
| $ | 10 |
|
|
| Facility Limit(1) |
|
| Outstanding Commercial Paper |
|
| Outstanding Letters of Credit |
| |||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Joint revolving credit facility(1) |
| $ | 5,000 |
|
| $ | 320 |
|
| $ | — |
|
Joint revolving credit facility(1) |
|
| 500 |
|
|
| — |
|
|
| 1 |
|
Total |
| $ | 5,500 |
|
| $ | 320 |
|
| $ | 1 |
|
| DESC. The |
In addition to the credit facility commitments mentioned above, Virginia Power also has a $100 million credit facility with a maturity date of April 2020. At September 30, 2017, this facility supports $100 million of certain variable rate tax-exempt financings of Virginia Power.
Dominion Energy Gas
Dominion Energy Gas’ short-term financing is supported by its access as co-borrower to the two joint revolving credit facilities. These credit facilities can be used for working capital, as support for the combined commercial paper programs of the Companies and for other general corporate purposes.
At September 30, 2017, Dominion Energy Gas' share of commercial paper and letters of credit outstanding under its joint credit facilities with Dominion Energy, Virginia Power and Questar Gas were as follows:
|
| Facility Limit(1) |
|
| Outstanding Commercial Paper |
|
| Outstanding Letters of Credit |
| |||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Joint revolving credit facility(1) |
| $ | 1,000 |
|
| $ | 620 |
|
| $ | — |
|
Joint revolving credit facility(1) |
|
| 500 |
|
|
| — |
|
|
| — |
|
Total |
| $ | 1,500 |
|
| $ | 620 |
|
| $ | — |
|
|
|
Long-term Debt
In January 2017, Dominion Energy issued $400 million of 1.875% senior notes and $400 million of 2.75% senior notes that mature in 2019 and 2022, respectively.
In March 2017, Dominion Energy issued through private placement $300 million of 3.496% senior notes that mature in 2024. Also in March 2017, Dominion Energy issued an additional $100 million of its 3.90% senior notes that mature in 2025.
In March 2017, Virginia Power issued $750 million of 3.50% senior notes that mature in 2027.
In May 2017, Dominion Solar Projects III, Inc. borrowed $280 million under a term loan agreement that bears interest at a variable rate. The term loan amortizes over an 18-year period and matures in May 2024. The debt is nonrecourse to Dominion Energy and is secured by Dominion Solar Projects III, Inc.’s interest in certain solar facilities.
In June 2017, Dominion Energy issued through private placement $500 million of variable rate senior notes that mature in 2019.
In August 2017, Dominion Energy retired its $75 million variable rate Massachusetts Development Finance Agency Solid Waste Disposal Revenue Bonds, Series 2010B that would otherwise have matured in December 2041.
In September 2017, Virginia Power issued $550 million of 3.80% senior notes that mature in 2047. Also in September 2017, Virginia Power issued an additional $200 million of its 2.75% senior notes that mature in 2023.
In October 2017, Questar Gas entered into an agreement with certain investors to issue through private placements in November 2017, $100 million of 3.38% 15-year senior notes and, in April 2018, $50 million of 3.30% 12-year senior notes and $100 million of 3.97% 30-year senior notes.
Remarketable Subordinated Notes
In May 2017, Dominion Energy successfully remarketed the $1.0 billion 2014 Series A 1.50% RSNs due in 2020 pursuant to the terms of the 2014 Equity Units. In connectionfacility but can be changed at the option of the borrowers multiple times per year. At June 30, 2023, the sub-limit for Virginia Power was $
50
In January 2023, Virginia Power entered into a semi-annual basisletter of credit facility which allows Virginia Power to issue up to $125 million in letters of credit and matures in January 2026. At June 30, 2023, less than $1 million in letters of credit were issued and outstanding under this facility with no amounts drawn under the letters of credit.
In March 2023, Virginia Power entered into an agreement with a financial institution, which it expects to allow it to issue up to $200 million in letters of credit. At June 30, 2023, $60 million in letters of credit were issued and outstanding under this agreement.
Long-term Debt
Unless otherwise noted, the proceeds of long-term debt issuances were used for general corporate purposes and/or to repay short-term debt.
In March 2023, Dominion Energy ceasedborrowed $450 million under its Sustainability Revolving Credit Agreement, which, as described in Note 18 to have the ability to redeemConsolidated Financial Statements in the notesCompanies’ Annual Report on Form 10-K for the year ended December 31, 2022, matures in 2024 and bears interest at its option or defer interest payments.a variable rate with the proceeds used for general corporate purposes. In April 2023 Dominion Energy repaid $450 million borrowed for general corporate purposes. At Septemberboth June 30, 2017, these securities are included in junior subordinated notes in2023 and December 31, 2022, Dominion Energy’s Consolidated Balance Sheets. Dominion Energy did not receive any proceeds from the remarketing. Remarketing proceeds belongedSheets include $450 million with respect to the investors holding the related 2014 Equity Unitsthis facility.
In March 2023, Virginia Power issued $750 million of 5.00% senior notes and were temporarily used$750 million of 5.45% senior notes that mature in 2033 and 2053, respectively.
In June 2023, Virginia Power remarketed three series of tax-exempt bonds, with an aggregate outstanding principal of $160 million to purchasenew investors. All three bonds will bear interest at a coupon of 3.65% until October 2027, after which they will bear interest at a market rate to be determined at that time.
Derivative Restructuring
In August 2020, Virginia Power amended a portfolio of treasury securities. Upon maturityinterest rate swaps with a notional value of $900 million, extending the mandatory termination dates, as discussed in Note 18 to the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. In March 2023, Virginia Power settled the remaining outstanding interest rate swaps which would have otherwise matured in December 2023, resulting in a $448 million reduction in securities due within one year.
Preferred Stock
Dominion Energy is authorized to issue up to 20 million shares of preferred stock, which may be designated into separate classes. At June 30, 2023 and December 31, 2022, Dominion Energy had issued and outstanding 1.8 million shares of preferred stock, 0.8 million and 1.0 million of which were designated as the Series B Preferred Stock and the Series C Preferred Stock, respectively.
Dominion Energy recorded dividends of $5 million ($2.917 per share) for the three months ended June 30, 2022 and $12 million ($7.292 per share) for the six months ended June 30, 2022, on the Series A Preferred Stock. In addition, Dominion Energy recorded interest expense of $2 million on the Series A Preferred Stock for the three and six months ended June 30, 2022, following the reclassification of these shares to a mandatorily redeemable liability effective June 2022. Dominion Energy recorded dividends of $9 million ($11.625 per share) for both the three months ended June 30, 2023 and 2022 and $18 million ($23.250 per share) for both the six months ended June 30, 2023 and 2022 on the Series B Preferred Stock. Dominion Energy recorded dividends of $11 million ($10.875 per share) for both the three months ended June 30, 2023 and 2022 and $22 million ($21.750 per share) for both the six months ended June 30, 2023 and 2022 on the Series C Preferred Stock.
There have been no significant changes to Dominion Energy’s Series B Preferred Stock and Series C Preferred Stock as described in Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
2019 Corporate Units
The 2019 Equity Units, initially issued in the form of 2019 Series A Corporate Units, are described in Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Pursuant to the terms of the portfolio,2019 Equity Units, Dominion Energy conducted a final remarketing of substantially all shares of Series A Preferred Stock in May 2022 which resulted in the proceedsdividend rate for all shares of Series A Preferred Stock being reset to 1.75% for the
51
June 2022 through August 2022 dividend period and 6.75% effective September 2022. The conversion rate on the Series A Preferred Stock did not increase as a result of the remarketing. In May 2022, Dominion Energy received a commitment from a financial institution to purchase up to 1.6 million shares of the Series A Preferred Stock in the final remarketing. Accordingly, following the settlement of the successful remarketing and approval from its Board of Directors in June 2022, Dominion Energy became obligated to redeem all outstanding shares of Series A Preferred Stock in September 2022. As such, effective June 2022, the Series A Preferred Stock was considered to be mandatorily redeemable and was classified as a current liability. In addition, Dominion Energy made a short-term deposit at the financial institution as described further in Note 10. Proceeds from the final remarketing were appliedused on behalf of investors onholders of 2019 Series A Corporate Units at the related stock purchase contracts settlement date in July 2017time of the remarketing to pay the purchase price to Dominion Energy for the issuance of 12.5its common stock under the stock purchase contracts included in such corporate units in June 2022.
Issuance of Common Stock
Dominion Energy recorded, net of fees and commissions, $85 million from the issuance of 2 million shares of common stock for the six months ended June 30, 2023 and $91 million from the issuance of 1 million shares of common stock for the six months ended June 30, 2022, through various programs including Dominion Energy Direct® and employee savings plans as described in Note 20 to the Consolidated Financial Statements to the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
In May 2022, Dominion Energy issued 0.9 million shares of its common stock, relatedvalued at $72 million, to Dominion Energy’s 2014 Equity Units. partially satisfy DESC’s remaining obligation under a settlement agreement with the SCDOR discussed in Note 17.
Issuance of Common Stock
In June 2017,2022, Dominion Energy filed an SEC shelf registrationissued 0.4 million shares of its common stock, valued at $30 million, to partially satisfy its obligation under a settlement agreement for the saleState Court Merger Case discussed in Note 17.
In June 2022, Dominion Energy issued 19.4 million shares to settle the stock purchase contract component of debtthe 2019 Equity Units and equity securities including the ability to sell common stock through an at-the-market program. Also in June 2017,received proceeds of $1.6 billion.
At-the-Market Program
In August 2020, Dominion Energy entered into three separate sales agency agreements to effect sales under an at-the-market program as discussed in Note 20 to the Consolidated Financial Statements in the Companies’ Annual Report Form 10-K for the year ended December 31, 2022. Dominion Energy did not issue any shares or enter into any forward sale agreements under this program during the three and pursuantsix months ended June 30, 2023, prior to which it may offer from time to timeits expiration in June 2023.
Repurchase of Common Stock
In November 2020, the Board of Directors authorized the repurchase of up to $500 million aggregate amount$1.0 billion of itsDominion Energy’s common stock. Salesstock in addition to the $3.0 billion repurchase program authorized in July 2020 and completed in December 2020 as discussed in Note 20 to the Consolidated Financial Statements in the Companies’ Annual Report Form 10-K for the year ended December 31, 2022.
Dominion Energy did not repurchase any shares of common stock can be madeduring the six months ended June 30, 2023, except for shares tendered by means of privately negotiated transactions, as transactionsemployees to satisfy tax withholding obligations on the New York Stock Exchange 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. No issuances have occurred under these agreements in 2017.
In July 2017, Dominion Energy issued 12.5 million shares under the relatedvested restricted stock, purchase contracts entered into as part of Dominion Energy’s 2014 Equity Units.which do not count against its stock repurchase authorization.
Note 15.17. 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 for whichthat the Companies cannot estimate, a range of possible loss, 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 for whichthat 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. The Companies maintain various insurance programs, including general liability insurance coverage which provides coverage for personal injury or wrongful death cases. 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'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
52
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 of the Companies.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.
CAAAir
The CAA, as amended, is a comprehensive program utilizing a broad range of regulatory tools to protect and preserve the nation'snation’s air quality. At a minimum, states are required to establish regulatory programs to address allmeet applicable requirements of the CAA. However, states may choose to develop regulatory programs that are more restrictive. Many of the Companies'Companies’ facilities are subject to the CAA'sCAA’s permitting and other requirements.
MATSOzone Standards
In December 2011,The EPA published final non-attainment designations for the EPA issued MATS for coal- and oil-fired electric utility steam generating units. The rule establishes strict emission limits for mercury, particulate matter as a surrogate for toxic metals and hydrogen chloride as a surrogate for acid gases. The rule includes a limited use provision for oil-fired units with annual capacity factors under 8% that provides an exemption from emission limits, and allows compliance with operational work practice standards. Compliance was required by April 16,October 2015 with certain limited exceptions. However,ozone standards in June 2014, the VDEQ granted a one-year MATS compliance extension for two coal-fired units at Yorktown power station to defer planned retirements and allow for continued operation of the units to address reliability concerns while necessary electric transmission upgrades are being completed. These coal units needed to continue operating through at least April 2017 due to delays in transmission upgrades needed to maintain electric reliability. Therefore, in October 2015, Virginia Power submitted a request to the EPA for an additional one year compliance extension under an EPA Administrative Order. The order was signed by the EPA in April 2016 allowing the Yorktown power station units to operate for up to one additional year, as2018 with states required to maintain reliable power availability while transmission upgrades are being made. Virginia Power ceased operating the coal units at Yorktown power station in April 2017 as planned.
In June 2017, the U.S. DOE issued an order to PJM to direct Virginia Power to operate Yorktown power station’s Units 1 and 2 as needed to avoid reliability issues on the Virginia Peninsula. The order was effective for 90 days and can be reissued upon PJM’s request, if necessary, until required electricity transmission upgrades are completed approximately 23 months following the receipt in July 2017 of final permits and approvals for construction. In July 2017, the Sierra Club filed a petition for rehearing of the U.S. DOE order, which was denied by the U.S. DOE in September 2017. In August 2017, PJM filed a request for a 90-day renewal of the U.S. DOE order, which the U.S. DOE subsequently granted in September 2017. In October 2017, the Sierra Club filed a petition for rehearing of the U.S. DOE order granted in September 2017. This matter is pending.
In June 2015, the U.S. Supreme Court issued a decision holding that the EPA failed to take cost into account when the agency first decided to regulate the emissions from coal- and oil-fired plants, and remanded the MATS rule back to the U.S. Court of Appeals for the D.C. Circuit. However, the Supreme Court did not vacate or stay the effective date and implementation of the MATS rule. In November 2015, in response to the Supreme Court decision, the EPA proposed a supplemental finding that consideration of cost does not alter the agency’s previous conclusion that it is appropriate and necessary to regulate coal- and oil-fired electric utility steam generating units under Section 112 of the CAA. In December 2015, the U.S. Court of Appeals for the D.C. Circuit issued an order remanding the MATS rulemaking proceeding back to the EPA without setting aside judgment, noting that EPA had represented it was on track to issue a final finding regarding its consideration of cost. In April 2016, the EPA issued a final supplemental finding that consideration of costs does not alter its conclusion regarding appropriateness and necessity for the regulation. This regulation has been challenged in court. In April 2017, the EPA requested that the U.S. Court of Appeals for the D.C. Circuit delay oral arguments in the case to allow agency review of the rule. Since the MATS rule remains in effect and Dominion Energy is complying with the applicable requirements of the rule, Dominion Energy does not expect any adverse impacts to its operations at this time.
Ozone Standards
In October 2015, the EPA issued a final rule tightening the ozone standard from 75-ppb to 70-ppb. To comply with this standard, in April 2016 Virginia Power submitted the NOX Reasonable Available Control Technology analysis for Unit 5 at Possum Point power station. In December 2016, the VDEQ determined that NOX controls are required on Unit 5. Installation and operation of these NOX controls including an associated water treatment system will be required by mid-2019 with an expected cost in the range of $25 million to $35 million.
The statutory deadline for the EPA to complete attainment designations for a new standard was October 2017. While it is uncertain when the EPA will make final designations, states will have up to three years to develop plans to address the new standard. UntilCertain states in which the statesCompanies operate have developed plans, and had such plans approved or partially approved by the EPA, which are not expected to have a material impact on the Companies’ results of operations or cash flows. In March 2023, the EPA issued a final rule specifying an interstate federal implementation plan to comply with certain aspects of planning for the 2015 ozone standards which is applicable in August 2023 for certain states, including Virginia. The interstate federal implementation plan imposes tighter NOX emissions limits during the ozone season and includes provisions for the use of allowances to cover such emissions. Until implementation plans for the 2015 ozone standards are fully developed and approved for all states in which the Companies operate, the Companies are unable to predict whether or to what extent the new rules will ultimately require additional controls. However, if significantThe expenditures are required to implement additional controls it could adversely affecthave a material impact on the Companies’ results of operations, andfinancial condition and/or cash flows.
ACE Rule
In August 2012, the EPA issued the first 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 a final 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 April 2017, the EPA issued a notice that it is reviewing and, if appropriate, will issue a rulemaking to suspend, revise or rescind the June 2016 final NSPS for certain oil and gas facilities. In June 2017,July 2019, the EPA published notice of reconsideration and partial staythe final rule informally referred to as the ACE Rule, as a replacement for the Clean Power Plan. The ACE Rule regulated GHG emissions from existing coal-fired power plants pursuant to Section 111(d) of the ruleCAA and required states to develop plans by July 2022 establishing unit-specific performance standards for 90 days and proposed extending the stay for two years.existing coal-fired power plants. In July 2017,January 2021, the U.S. Court of Appeals for the D.C. Circuit vacated the 90-day stay. Dominion EnergyACE Rule and Dominion Energy Gas are implementingremanded it to the final regulation. Dominion EnergyEPA. This decision would take effect upon issuance of the court’s mandate. In March 2021, the court issued a partial mandate vacating and Dominion Energy Gas are still evaluating whether potential impacts on resultsremanding all parts of operations, financial condition and/or cash flows related to this matter will be material.
Climate Change Regulation
Carbon Regulations
the ACE Rule except for the portion of the ACE Rule that repealed the Clean Power Plan. In October 2013,2021, the U.S. Supreme Court granted petitions filed by several industry groups, states, and the U.S. Chamber of Commerce seeking reviewagreed to hear a challenge of the U.S. Court of Appeals for the D.C. Circuit’s June 2012 decision upholdingon the EPA’s regulation of GHG emissions from stationary sources under the CAA’s permitting programs.ACE Rule. In June 2014,2022, the U.S. Supreme Court ruled thatreversed the D.C. Circuit’s decision on the ACE Rule and remanded the case back to the D.C. Circuit. In May 2023, the EPA lackedproposed to repeal the authority underACE Rule as part of a package of proposed rules addressing CO2 emissions from new and existing fossil fuel-fired electric generating units. Until the CAAEPA takes final action on this proposed rulemaking, the Companies cannot predict an impact to require PSD its operations, financial condition and/or Title V permits for stationary sources based solely on GHG emissions. However, the Court upheld the EPA’s ability to require BACT for GHG for sources that are otherwise subject to PSD or Title V permitting for conventional pollutants. cash 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 setexceed a significant emissions rate at of 75,000 tons per year of 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 statements.condition and/or cash flows.
In July 2011,December 2018, the EPA signed a finalproposed revised Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources. The proposed rule deferringwould amend the needprevious determination that the best system of emission reduction for PSDnewly constructed coal-fired steam generating units is no longer partial carbon capture and Title V permittingstorage. Instead, the proposed revised best system of emission reduction for CO2 emissionsthis source category is the most efficient demonstrated steam cycle (e.g., supercritical steam conditions for biomass projects. This rule temporarily deferredlarge units and subcritical steam conditions for a period of upsmall units) in combination with best operating practices. The proposed revision to three years the consideration of CO2 emissions from biomass projects when determining whether a stationary source meets the PSD and Title V applicability thresholds, including thoseperformance standards for the application of BACT. The deferral policy expired in July 2014. In July 2013, the U.S. Court of Appeals for the D.C. Circuit vacated this rule; however, a mandate making this decision effective has not been issued. Virginia Power converted three coal-fired steam generating stations, Altavista, Hopewell and Southampton, to biomass during the CO2 deferral period. It is unclear how the court's decision or the EPA's final policy regarding the treatment of specific feedstock will affect biomass sources that were permitted during the deferral period; however, the expenditures to comply with any new requirements could be material to Dominion Energy's and Virginia Power's financial statements.
Methane Emissions
In July 2015,units remains pending. Until the EPA announcedultimately takes final action on this rulemaking, the next generation of its voluntary Natural Gas STAR Program,Companies cannot predict the Natural Gas STAR Methane Challenge Program. The program covers the entire natural gas sector from productionimpact to distribution, with more emphasis on transparency and increased reporting for both annual emissions and reductions achieved through implementation measures. In March 2016, East Ohio, Hope, DETI and Questar Gas (prior to the Dominion Energy Questar Combination) joined the EPA as founding partners in the new Methane Challenge program and submitted implementation plans in September 2016. DECG joined the EPA’s voluntary Natural Gas STAR Program in July 2016 and submitted an implementation plan in September 2016. 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.
53
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.
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. 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 mandatory facility-specific factors, including a social cost-benefit test, and six 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 1415 and 11nine facilities, respectively, that may beare subject to the final regulations. Dominion Energy anticipatesis 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 it willthey may have to install impingement control technologies at manycertain of these stations that have once-through cooling systems. Dominion Energy and Virginia PowerThe 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,technological, and 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’s and Virginia Power’sthe Companies’ results of operations, financial condition and/or cash flows, the existing regulatory frameworkframeworks in South Carolina and Virginia providesprovide rate recovery mechanisms that could substantially mitigate any such impacts for Virginia Power.the regulated electric 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 establishesestablished 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. Virginia Power has eight facilities that may be subject to additional wastewater treatment requirements associated with the final rule. In April 2017, the EPA granted two 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 U.S.’sEPA’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 offor certain waste streams regulations in the Effluent Limitations Guidelines final rule for compliance with certain wastewater regulations from November 2018 to November 2020; however, the latest date for compliance for these regulations remainswas December 2023. TheIn October 2020, the EPA is proposingreleased 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 complete new rulemaking for these waste streams.2028. While the impacts of this rule could be material to Dominion Energy’s and Virginia Power’sthe Companies’ results of operations, financial condition and/or cash flows, the existing regulatory frameworkframeworks in South Carolina and Virginia providesprovide rate recovery mechanisms that could substantially mitigate any such impacts for Virginia Power.the regulated electric utilities.
SolidWaste Management and Hazardous WasteRemediation
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, providesand similar state laws, may impose joint, several and strict liability for immediate response and removal actions coordinatedcleanup on potentially responsible parties who owned, operated or arranged for disposal at facilities affected by the EPA in the eventa release of threatenedhazardous substances. In addition, many states have created programs to incentivize voluntary remediation of sites where historical releases of hazardous substances into the environmentare identified and authorizes the U.S. government either to clean up sites at which hazardous substances have created actualproperty owners or potential environmental hazards or to order persons responsible for the situation to do so. Under the CERCLA, as amended, generators and transporters of hazardous substances, as well as past and present owners and operators of contaminated sites, can be jointly, severally and strictly liable for the cost of cleanup. These potentially responsible parties can be ordereddecide to perform a cleanup, be sued for costs associated with an EPA-directed cleanup, voluntarily settle with the U.S. government concerning their liability for cleanup costs, or voluntarily begin a site investigation and site remediation under state oversight.initiate cleanups.
From time to time, Dominion Energy, Virginia Power, or Dominion Energy Gasthe Companies may be identified as a potentially responsible party toin connection with the alleged release of hazardous substances or wastes at a Superfund site. The EPA (or a state) can either allow such a party to conductUnder applicable federal and pay for a remedial investigation, feasibility study and remedial action or conductstate laws, the remedial investigation and action itself and then seek reimbursement from the potentially responsible parties. Each party can be held jointly, severally and strictly liable for the cleanup costs. These parties can also bring contribution actions against each other and seek reimbursement from their insurance companies. As a result, Dominion Energy, Virginia Power, or Dominion Energy Gas mayCompanies 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 of remedial investigationincurred at such sites. The Companies also may identify, evaluate and actionsremediate other potentially impacted sites under voluntary state programs. Remediation costs may be subject to reimbursement under the Superfund lawCompanies’ insurance policies, rate recovery mechanisms, or other laws or regulations regardingboth. Except as described below, the remediation of waste. The Companies do not believe these matters will have a material effect on results of operations, financial condition and/or cash flows.
54
Dominion Energy has determined that it is associated with 19 former manufactured gas plant sites, threeincluding certain sites associated with Virginia Power. At 13 sites associated with Dominion Energy, remediation work has been substantially completed under federal or state oversight. Where required, the sites are following state-approved groundwater monitoring programs. Dominion Energy commenced remediation activities at one site in the second quarter of which pertain to2022. In addition, Dominion Energy has proposed remediation plans for one site at Virginia Power and 12expects to commence remediation activities in 2023 depending on receipt of which pertain tofinal permits and approvals. At June 30, 2023 and December 31, 2022, Dominion Energy Gas. Studies conducted by other utilitieshad $46 million and $47 million, respectively, and Virginia Power had $25 million at their former manufactured gas plantboth periods, of reserves recorded. Dominion Energy is associated with 12 additional sites, have indicated that those sites contain coal tar and other potentially harmful materials. None of the former sitesincluding two associated with Virginia Power, which the Companies are associated isnot under investigation by any state or federal environmental agency. At oneagency nor the subject of the former sites, Dominion Energy is conducting a state-approved post closure groundwater monitoring program and an environmental land use restriction has been recorded. Another site has been accepted into a state-based voluntaryany current or proposed plans to perform remediation program. Virginia Power is currently evaluating the nature and extent of the contamination from this site as well as potential remedial options. Preliminary costs for options under evaluation for the site range from $1 million to $22 million.activities. Due to the uncertainty surrounding the othersuch sites, the Companies are unable to make an estimate of the potential financial statement impacts.
See below for discussion on ash pond and landfill closure costs.
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.
Appalachian GatewaySCANA Legal Proceedings
Pipeline Contractor Litigation
Following the completionThe following describes certain legal proceedings involving Dominion Energy, SCANA or DESC relating primarily to events occurring before closing of the Appalachian Gateway projectSCANA Combination. In addition, certain legal matters which have been resolved are discussed in 2012, DETI received multiple change order requests and other claims for additional payments from a pipeline contractorNote 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the project. In July 2013, DETI filed a complaint in U.S. District Court for the Eastern Districtyear ended December 31, 2022. No reference to, or disclosure of, Virginia for breachany 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 contract as well as accountingthese matters, and declaratory relief. The contractor filed a motion to dismiss, or in the alternative, a motion to transfer venue to Pennsylvania and/or West Virginia, where the pipelines were constructed. DETI filed an opposition to the contractor’s motion in August 2013. In November 2013, the court granted the contractor’s motion on the basis that DETI must first comply with the dispute resolution process. In July 2015, the contractor filed a complaint against DETI in U.S. District Court for the Western District of Pennsylvania. In August 2015, DETI filed a motion to dismiss, or in the alternative, a motion to transfer venue to Virginia. In March 2016, the Pennsylvania court granted the motion to dismiss and transferred the case to the U.S. District Court for the Eastern District of Virginia. In April 2016, the Virginia court issued an order staying the proceedings and ordering mediation. A mediation occurred in May 2016 but was unsuccessful. In July 2016, DETI filed a motion to dismiss. In March 2017, the court dismissed three of eight counts in the complaint. In May 2017, the contractor withdrew one of the counts in the complaint. This case is pending. DETI has accrued a liability of $6 million for this matter.unless otherwise noted therein, Dominion Energy Gas cannot currentlyis unable to estimate additionala 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.
Gas Producers Litigation
In connection with For the Appalachian Gateway project,matters for which Dominion Energy Field Services, Inc. (formerly knownis able to reasonably estimate a probable loss, Dominion Energy’s Consolidated Balance Sheets at June 30, 2023 and December 31, 2022 include reserves of $66 million and $94 million, respectively, included in other current liabilities, and insurance receivables of $72 million and $68 million, respectively, included within other receivables. These balances at June 30, 2023 and December 31, 2022 include $62 million and $68 million, respectively, of offsetting reserves and insurance receivables related to personal injury or wrongful death cases which are currently pending. During both the three and six months ended June 30, 2023 and 2022, charges included in Dominion Energy's Consolidated Statements of Income were inconsequential.
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 use tax exemption for the NND Project does not apply because the facility will not become operational. In December 2020, the parties reached an agreement in principle in the amount of $165 million to resolve this matter. In June 2021, the parties executed a settlement agreement which allows DESC to fund the settlement amount through a combination of cash, shares of Dominion Energy common stock or real estate with an initial payment of at least $43 million in shares of Dominion Energy common stock. In August 2021, Dominion Energy issued 0.6 million shares of its common stock to satisfy DESC’s obligation for the initial payment under the settlement agreement. In May 2022, Dominion Energy issued an additional 0.9 million shares of its common stock to partially satisfy DESC’s remaining obligation under the settlement agreement. In June 2022, DESC requested approval from the South Carolina Commission to transfer certain real estate with a total settlement value of $51 million to satisfy its remaining obligation under the settlement agreement. In July 2022, the South Carolina Commission voted to approve the request and issued its final order in August 2022. In September 2022, DESC transferred certain non-utility property with a fair value of $28 million to the SCDOR under the settlement agreement. In December 2022, DESC transferred additional utility property with a fair value of $3 million to the SCDOR. In October 2022, DESC filed for approval to transfer the remaining real estate with FERC which was received in November 2022. In March 2023, DESC transferred utility property with a fair value of $10 million to the SCDOR resulting in a gain of $9 million ($7 million after-tax), recorded in losses (gains) on sales of assets in Dominion Energy’s Consolidated Statements of Income for the six months ended June 30, 2023. In June 2023, DESC transferred the remaining utility property with a fair value of $11 million to the SCDOR resulting in a gain of $11 million ($8 million after-tax), recorded in losses (gains) on sales of assets in Dominion Energy's Consolidated Statements of Income for the three and six months ended June 30, 2023. In July 2023, DESC made a less than $1 million cash payment to the SCDOR to fully satisfy its remaining obligation, including applicable interest, under the settlement agreement.
55
Nuclear Operations
Nuclear Insurance
There have been no significant changes regarding the Companies’ nuclear insurance as Dominion Field Services, Inc.)described in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Spent Nuclear Fuel
As discussed in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, the Companies entered into contracts with the DOE for firm purchase rights with a groupthe disposal of small gas producers. In June 2016, certainspent nuclear fuel under provisions of the gas producers filed a complaint in the Circuit CourtNuclear Waste Policy Act 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. 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. remain parties to the matter. In April 2017, the case was transferred to the Business Court Division of West Virginia. This case is pending. Dominion Energy and Dominion Energy Gas cannot currently estimate financial statement impacts, but there could be a material impact to their financial condition and/or cash flows.1982.
Ash Pond and Landfill Closure Costs
In September 2014, Virginia Power received a notice from the Southern Environmental Law Center on behalf of the Potomac Riverkeeper and Sierra Club alleging CWA violations at Possum Point power station. The notice alleges unpermitted discharges to surface water and groundwater from Possum Point power station’s historical and active ash storage facilities. A similar notice from the Southern Environmental Law Center on behalf of the Sierra Club was subsequently received related to Chesapeake power station. In December 2014, Virginia Power offered to close all of its coal ash ponds and landfills at Possum Point power station, Chesapeake and Bremo power stations as settlement of the potential litigation. The Southern Environmental Law Center declined the offer as presented in January 2015 and, in March 2015, filed a lawsuit related to its claims of the alleged CWA violations at Chesapeake power station. In March 2017, the U.S. District Court for the Eastern District of Virginia ruled that impacted groundwater associated with the on-site coal ash storage units was migrating to adjacent surface water, which constituted an unpermitted point source discharge in violation of the CWA. The court, however, rejected Sierra Club’s claims that Virginia Power had violated specific conditions of its water discharge permit. Finding no harm to the environment, the court further declined to impose civil penalties or require excavation of the ash from the site as Sierra Club had sought. On remedy, the court ordered the parties to submit within 30 days a remedial plan (or separate plans) incorporating certain prescribed sediment, water and aquatic life monitoring. The court also ordered Virginia Power to reopen its solid waste permit application for closure of the coal ash storage units at Chesapeake power station. In April 2017, Virginia Power submitted its remedial plan to the court, which included a timetable for submitting a revised solid waste permit application to the VDEQ. The revised application will include a proposed remedial alternative to address groundwater impacts associated with coal ash storage at Chesapeake power station. Sierra Club submitted a separate remedial plan to the court. In July 2017, the court issued a final order requiring Virginia Power to perform additional specific sediment, water and aquatic life monitoring at and around the
Chesapeake power station for a period of at least two years. The court further directed Virginia Power to apply for a solid waste permit from VDEQ that includes corrective measures to address on-site groundwater impacts. In July 2017, Virginia Power appealed the court’s July 2017 final order to the U.S. Court of Appeals for the Fourth Circuit. In August 2017, the Sierra Club filed a cross appeal. This case is pending.
In April 2015, the EPA’s final rule regulating the management of CCRs stored in impoundments (ash ponds) and landfills was published in the Federal Register. The final rule regulates CCR landfills, existing ash ponds that still receive and manage CCRs, and inactive ash ponds that do not receive, but still store CCRs. Virginia Power currently operates inactive ash ponds, existing ash ponds, and CCR landfills subject to the final rule at eight different facilities. The enactment of the final rule in April 2015 created a legal obligation for Virginia Power to retrofit or close all of its inactive and existing ash ponds over a certain period of time, as well as perform required monitoring, corrective action, and post-closure care activities as necessary. In April 2016, the EPA announced a partial settlement with certain environmental and industry organizations that had challenged the final CCR rule in the U.S. Court of Appeals for the D.C. Circuit. As part of the settlement, certain exemptions included in the final rule for inactive ponds that closed by April 2018 will be removed, resulting in inactive ponds ultimately being subject to the same requirements as existing ponds. In June 2016, the court issued an order approving the settlement, which requires the EPA to modify provisions in the final CCR rule concerning inactive ponds. In August 2016, the EPA issued a final rule, effective October 2016, extending certain compliance deadlines in the final CCR rule for inactive ponds. Virginia Power does not believe these changes will substantially impact its closure plans for inactive ponds.
In December 2016, the U.S. Congress passed and the President signed legislation that creates a framework for EPA- approved state CCR permit programs. Under this legislation, an approved state CCR permit program functions in lieu of the self-implementing Federal CCR rule. The legislation allows states more flexibility in developing permit programs to implement the environmental criteria in the CCR rule. 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. Dominion Energy 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 April 2017, the Governor of Virginia signed legislation into law that places 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 requires 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. The assessments are due by December 1, 2017. Virginia Power has initiated a third-party evaluation of closure alternatives consistent with the legislation and is unable to estimate the potential financial statement impacts. The actual AROs related to the CCR rule may vary substantially from the estimates used to record the obligation.
Cove Point
Dominion Energy is constructing the Liquefaction Project at the Cove Point facility, which would enable the facility to liquefy domestically-produced natural gas and export it as LNG. In September 2014, FERC issued an order granting authorization for Cove Point to construct, modify and operate the Liquefaction Project. In October 2014, several parties filed a motion with FERC to stay the order and requested rehearing. In May 2015, FERC denied the requests for stay and rehearing.
Two parties have separately filed petitions for review of the FERC order in the U.S. Court of Appeals for the D.C. Circuit, which petitions were consolidated. Separately, one party requested a stay of the FERC order until the judicial proceedings are complete, which the court denied in June 2015. In July 2016, the court denied one party’s petition for review of the FERC order authorizing the Liquefaction Project. The court also issued a decision remanding the other party’s petition for review of the FERC order to FERC for further explanation of FERC’s decision that a previous transaction with an existing import shipper was not unduly discriminatory. In September 2017, FERC issued its order on remand from the U.S. Court of Appeals for the D.C. Circuit, and reaffirmed its ruling in its prior orders that Cove Point did not violate the prohibition against undue discrimination by agreeing to a capacity reduction and early contract termination with the existing import shipper.
In September 2013, the U.S. DOE granted Non-FTA Authorization approval for the export of up to 0.77 bcfe/day of natural gas to countries that do not have an FTA for trade in natural gas. In June 2016, a party filed a petition for review of this approval in the U.S. Court of Appeals for the D.C. Circuit. This case is pending.
In July 2017, Cove Point submitted an application for a temporary operating permit to the Maryland Department of the Environment, as required prior to the date of first production of LNG for commercial purposes of exporting LNG. In August 2017, Cove Point submitted an application to amend the CPCN issued by the Public Service Commission of Maryland in May 2014 to make necessary updates. These cases are pending.
FERC
FERC staff in the Office of Enforcement, Division of Investigations, is conducting 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 has provided its response to FERC staff's preliminary findings letter explaining why Virginia Power's conduct was lawful and refuting any allegation of wrongdoing. Virginia Power is cooperating fully with the investigation; however, it cannot currently predict whether or to what extent it may incur a material liability.
Greensville County
Virginia Power is constructing Greensville County and related transmission interconnection facilities. In August 2016, the Sierra Club filed an administrative appeal in the Circuit Court for the City of Richmond challenging certain provisions in Greensville County’s PSD air permit issued by the VDEQ in June 2016. In August 2017, the Circuit Court upheld the air permit, and no appeals were filed.
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 have resulted in significant nuclear safety reviews required by the NRC and industry groups such as the Institute of Nuclear Power Operations. Like other U.S. nuclear operators, Dominion Energy has been gathering supporting data and participating 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, with the Tier 1 recommendations consisting of actions which the staff determined should be started without unnecessary delay. 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 reactors, 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 to respond 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 request each reactor to reevaluate the seismic and external flooding hazards at their site using present-day methods and information, conduct walkdowns of their facilities to ensure protection against the 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 and external flooding hazards is expected to continue through 2018. Dominion Energy and Virginia Power do not currently expect that compliance with the NRC's information requests will materially impact their financial position, results of operations or cash flows during the implementation period. The NRC staff is evaluating the implementation of the longer term Tier 2 and Tier 3 recommendations. Dominion Energy and Virginia Power do not expect material financial impacts related to compliance with Tier 2 and Tier 3 recommendations.
Guarantees, Surety Bonds and Letters of Credit
Dominion Energy
At SeptemberJune 30, 2017,2023, Dominion Energy had issued $48 million offour guarantees primarilyrelated to supportCove Point, an equity method investees.investment, in support of terminal services, transportation and construction. Two of the Cove Point guarantees have a cumulative maximum exposure of $1.9 billion while the other two guarantees have no maximum limit. No significant amounts related to these guarantees have been recorded.
In October 2017,addition, at June 30, 2023, Dominion Energy entered into a guarantee agreementhad issued an additional $20 million of guarantees, primarily to support a portion of Atlantic Coast Pipeline’s obligation under a $3.3 billion revolving credit facility, also entered in October 2017, with a stated maturity date of October 2021. Dominion Energy’s maximum potential loss exposure under the terms of the guarantee is limitedthird parties. No amounts related to 48% of the outstanding borrowings under the revolving credit facility, an equal percentage to Dominion Energy’s ownership in Atlantic Coast Pipeline. In October 2017, Dominion Energy recorded a liability of $30 million associated with this guarantee agreement. Through October 2017, Atlantic Coast Pipeline has borrowed $570 million against the revolving credit facility.these 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 SeptemberJune 30, 2017,2023, Dominion Energy had issued the following subsidiary guarantees:
|
| Maximum |
| |
(millions) |
|
|
| |
Commodity transactions(1) |
| $ | 2,861 |
|
Nuclear obligations(2) |
|
| 245 |
|
Solar(3) |
|
| 214 |
|
Other(4) |
|
| 1,269 |
|
Total(5)(6) |
| $ | 4,589 |
|
|
| Maximum Exposure |
| |
(millions) |
|
|
|
|
Commodity transactions(1) |
| $ | 1,967 |
|
Nuclear obligations(2) |
|
| 227 |
|
Cove Point(3) |
|
| 1,900 |
|
Solar(4) |
|
| 1,054 |
|
Other(5) |
|
| 538 |
|
Total(6) |
| $ | 5,686 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Additionally, at SeptemberJune 30, 2017,2023, Dominion Energy had purchased $141$282 million of surety bonds, including $63$198 million at Virginia Power, and $24 million at Dominion Energy Gas, and authorized the issuance of letters of credit by financial institutions of $73$16 million to facilitate commercial transactions by
56
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.
Note 16.18. Credit Risk
The Companies'Companies’ accounting policies for credit risk are discussed in Note 2324 to the Consolidated Financial Statements in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016. During the second quarter of 2017, Virginia Power recorded a $162022.
At June 30, 2023, Dominion Energy’s credit exposure totaled $208 million, ($10 million after-tax) chargeprimarily related to a proposed settlement with a customer renting space on certainprice risk management activities. Of this amount, investment grade counterparties, including those internally rated, represented 86%. No single counterparty, whether investment grade or non-investment grade, exceeded $47 million of exposure. At June 30, 2023, Virginia Power’s electric distribution poles. This matter was settled during the third quarter of 2017.
At September 30, 2017, Dominion Energy's credit exposure related to energy marketing and price risk management activitieswholesale customers totaled $70$63 million. Of this amount, investment grade counterparties, including those internally rated, represented 49%75%. No single counterparty, whether investment grade or non-investment grade, exceeded $7$12 million of exposure. At September 30, 2017, Virginia Power's exposure related to sales to wholesale customers totaled $23 million. Of this amount, investment grade counterparties, including those internally rated, represented 52%. No single counterparty, whether investment grade or non-investment grade, exceeded $6 million of exposure.
Credit-Related Contingent Provisions
The majorityCertain of Dominion Energy'sEnergy and Virginia Power's derivative instruments contain credit-related contingent provisions. These provisions require Dominion Energy and Virginia Power 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 September 30, 2017Dominion Energy and December 31, 2016, Dominion EnergyVirginia Power would have been required to post additional collateral to its counterparties of $6$89 million and $3$35 million, respectively.respectively, as of June 30, 2023, and $140 million and $28 million, respectively, as of December 31, 2022. 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 not posted any collateral of $1 million at SeptemberJune 30, 2017 or2023, and both Dominion Energy and Virginia Power had posted $72 million at December 31, 20162022, related to derivatives with credit-related contingent provisions that are in a liability position and not fully collateralized with cash. TheVirginia Power had no such collateral posted includes any amounts paid related to non-derivative contractsat June 30, 2023. In addition, Dominion Energy and derivatives elected under the normal purchasesVirginia Power had both posted letters of credit as collateral with counterparties covering $4 million and normal sales exception, per contractual terms.$20 million of fair value of derivative instruments in a liability position at June 30, 2023 and December 31, 2022, respectively. The aggregate fair value of all derivative instruments with credit-relatedcredit related contingent provisions that are in a liability position and not fully collateralized with cash at both Septemberfor Dominion Energy and Virginia Power was $90 million and $35 million, respectively, as of June 30, 20172023 and $212 million and $99 million, respectively, as of December 31, 2016 was $9 million,2022, which does not include the impact of any offsetting asset positions. Credit-related contingent provisions for Virginia Power and Dominion Energy Gas were not material as of September 30, 2017 and December 31, 2016.
See Note 9 for furtheradditional information about derivative instruments.
Note 17.19. Related-Party Transactions
Dominion Energy’s transactions with equity method investments are described in Note 10. Virginia Power and Dominion Energy Gas engageengages in related-party transactions primarily with other Dominion Energy subsidiaries (affiliates). Virginia Power's 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 areis 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. Dominion Energy's transactions with equity method investments are described in Note 10. A discussion of Virginia Power's 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 swaps,purchases, to manage commodity price risks associated with purchases of natural gas. At SeptemberJune 30, 2017,2023, Virginia Power’s derivative assets and liabilities with affiliates were $13$1 million and $5$89 million, respectively. At December 31, 2016,2022, Virginia Power’s derivative assets and liabilities with affiliates were $41$33 million and $8$31 million, respectively. See Note 9 for moreadditional information.
Virginia Power participates in certain Dominion Energy benefit plans described in Note 2122 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2016.2022. At SeptemberJune 30, 20172023 and December 31, 2016,2022, amounts due to Dominion Energy associated with the Dominion Energy Pension Plan and included in other deferred credits and other liabilities in the Consolidated Balance Sheets were $478$439 million and $396$422 million, respectively. At SeptemberJune 30, 20172023 and December 31, 2016,2022, Virginia Power's amounts due from Dominion Energy associated with the Dominion Energy Retiree Health and Welfare planPlan and included in pensionother deferred charges and other postretirement benefit assets in the Consolidated Balance Sheets were $182$550 million and $130$518 million, respectively.
DES and other affiliates provide accounting, legal, finance and certain administrative and technical services and licenses to Virginia Power. In addition, Virginia Power provides certain services to affiliates, including charges for facilities and equipment usage.
57
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'sPower’s significant transactions with DES and other affiliates:
|
|
|
|
|
|
|
|
|
| |||||||
|
| Quarter-to-Date |
|
| Year-to-Date |
| ||||||||||
Period Ended June 30, |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commodity purchases from affiliates |
| $ | 103 |
|
| $ | 291 |
|
| $ | 317 |
|
| $ | 584 |
|
Services provided by affiliates(1) |
|
| 145 |
|
|
| 123 |
|
|
| 292 |
|
|
| 253 |
|
Services provided to affiliates |
|
| 4 |
|
|
| 5 |
|
|
| 8 |
|
|
| 9 |
|
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity purchases from affiliates |
| $ | 170 |
|
| $ | 172 |
|
| $ | 519 |
|
| $ | 416 |
|
Services provided by affiliates(1) |
|
| 109 |
|
|
| 105 |
|
|
| 333 |
|
|
| 347 |
|
Services provided to affiliates |
|
| 5 |
|
|
| 5 |
|
|
| 17 |
|
|
| 17 |
|
|
|
Virginia Power has borrowed funds from Dominion Energy under short-term borrowing arrangements. There were $36 million$2.3 billion and $262 million$2.0 billion in short-term demand note borrowings from Dominion Energy as of SeptemberJune 30, 20172023 and December 31, 2016,2022, respectively. Virginia Power had no outstanding borrowings, net of repayments, under the Dominion Energy money pool for its nonregulated subsidiaries as of SeptemberJune 30, 20172023 and December 31, 2016.2022. Interest charges related to Virginia Power'sPower’s borrowings from Dominion Energy were immaterial$21 million and $45 million for the three and ninesix months ended SeptemberJune 30, 20172023, respectively, and 2016.inconsequential for the three and six months ended June 30, 2022.
There were no issuances of Virginia Power'sPower’s common stock to Dominion Energy for the three and ninesix months ended SeptemberJune 30, 20172023 and 2016.2022.
Dominion Energy Gas
TransactionsIn January 2023, Virginia Power entered into a lease contract 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, which are presented separately from contracts involving commodities or services. As of September 30, 2017 and December 31, 2016, all of Dominion Energy Gas' commodity derivatives were with affiliates. See Notes 7 and 9 for more information.
Dominion Energy Gas participates in certain Dominion Energy benefit plans as described in Note 18. At September 30, 2017 and December 31, 2016, amounts due from Dominion Energy associated with the Dominion Pension Plan included in noncurrent pension and other postretirement benefit assets in the Consolidated Balance Sheets were $725 million and $697 million, respectively. At September 30, 2017 and December 31, 2016, Dominion Energy Gas' amounts due from Dominion Energy associated with the Dominion Retiree Health and Welfare plan included in noncurrent pension and other postretirement benefit assets in the Consolidated Balance Sheets were $6 million and $2 million, respectively.
The financial statements for all years presented include costs for certain general, administrative and corporate expenses assigned by DES to Dominion Energy Gas on the basis of direct and allocated methods in accordance with Dominion Energy Gas’ 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 thean affiliated entity determined by reference to number of employees, salaries and wages and other similar measures for the relevant DES service. Management believesuse of a Jones Act compliant offshore wind installation vessel currently under development with commencement of the assumptions and methodologies underlying the allocation20-month lease term in August 2025 at a total cost of general corporate overhead expenses are reasonable. The costs of these services follow:approximately $240 million plus ancillary services.
|
| Three Months Ended September 30, |
|
| Nine Months Ended September 30, |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of natural gas and transportation and storage services from affiliates |
| $ | 2 |
|
| $ | 2 |
|
| $ | 4 |
|
| $ | 7 |
|
Sales of natural gas and transportation and storage services to affiliates |
|
| 15 |
|
|
| 16 |
|
|
| 51 |
|
|
| 51 |
|
Services provided by related parties(1) |
|
| 36 |
|
|
| 36 |
|
|
| 106 |
|
|
| 108 |
|
Services provided to related parties(2) |
|
| 37 |
|
|
| 34 |
|
|
| 113 |
|
|
| 94 |
|
|
|
|
|
The following table presents affiliated and related-party activity reflected in Dominion Energy Gas' Consolidated Balance Sheets:
|
| September 30, 2017 |
|
| December 31, 2016 |
| ||
(millions) |
|
|
|
|
|
|
|
|
Other receivables(1) |
| $ | 13 |
|
| $ | 10 |
|
Imbalances receivable from affiliates |
|
| — |
|
|
| 2 |
|
Imbalances payable to affiliates(2) |
|
| 1 |
|
|
| 4 |
|
Affiliated notes receivable(3) |
|
| 21 |
|
|
| 18 |
|
|
|
|
|
|
|
Dominion Energy Gas' borrowings under the intercompany revolving credit agreement with Dominion Energy were $34 million and $118 million as of September 30, 2017 and December 31, 2016, respectively. Interest charges related to Dominion Energy Gas' total borrowings from Dominion Energy were immaterial for the three and nine months ended September 30, 2017 and 2016.
Note 18.20. Employee Benefit Plans
In the first quarterNet Periodic Benefit (Credit) Cost
The service cost component of 2016, the Companies announced an organizational design initiative that reduced their total workforces during 2016. The goal of the organizational design initiative was to streamline leadership structure and push decision making lower while also improving efficiency. During the nine months ended September 30, 2016, Dominion Energy recorded a $65 million ($40 million after-tax) charge, including $33 million ($20 million after-tax) at Virginia Power and $8 million ($5 million after-tax) at Dominion Energy Gas, primarily reflected in other operations and maintenance expense in their Consolidated Statements of Income due to severance pay and other costs related to the organizational design initiative. The terms of the severance under the organizational design initiative were consistent with the Companies’ existing severance plans.
Plan Amendment and Remeasurement
In the first quarter of 2017, Dominion Energy and Dominion Energy Gas remeasured an other postretirementnet periodic benefit plan as a result of an amendment that changed post-65 retiree medical coverage for certain current and future Local 69 retirees effective July 1, 2017. The remeasurement resulted in a decrease in Dominion Energy's and Dominion Energy Gas' accumulated postretirement benefit obligation of $73 million and $61 million, respectively. As a result of regulatory accounting, the remeasurement will have an immaterial impact on net income for both Dominion Energy and Dominion Energy Gas. The discount rate used for the remeasurement was 4.30%. All other assumptions used were consistent with the measurement as of December 31, 2016.
During the nine months ended September 30, 2017, Dominion Energy recorded a $7 million ($4 million after-tax) charge, including $6 million ($4 million after-tax) at Dominion Energy Gas, as a result of additional payments associated with the new collective bargaining agreement, which(credit) cost is reflected in other operations and maintenance expense in theirDominion Energy’s Consolidated Statements of Income.
The non-service cost components of net periodic benefit (credit) cost are reflected in other income (expense) in Dominion Energy
Energy’s Consolidated Statements of Income. The components of Dominion Energy'sEnergy’s provision for net periodic benefit cost (credit) wereare as follows:
|
| Pension Benefits |
|
| Other Postretirement Benefits |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
| $ | 35 |
|
| $ | 30 |
|
| $ | 7 |
|
| $ | 7 |
|
Interest cost |
|
| 86 |
|
|
| 79 |
|
|
| 15 |
|
|
| 16 |
|
Expected return on plan assets |
|
| (160 | ) |
|
| (141 | ) |
|
| (32 | ) |
|
| (28 | ) |
Amortization of prior service credit |
|
| — |
|
|
| — |
|
|
| (13 | ) |
|
| (9 | ) |
Amortization of net actuarial loss |
|
| 40 |
|
|
| 29 |
|
|
| 3 |
|
|
| 2 |
|
Settlements |
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Net periodic benefit cost (credit) |
| $ | 2 |
|
| $ | (3 | ) |
| $ | (20 | ) |
| $ | (12 | ) |
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
| $ | 104 |
|
| $ | 87 |
|
| $ | 20 |
|
| $ | 23 |
|
Interest cost |
|
| 259 |
|
|
| 234 |
|
|
| 45 |
|
|
| 50 |
|
Expected return on plan assets |
|
| (480 | ) |
|
| (419 | ) |
|
| (95 | ) |
|
| (87 | ) |
Amortization of prior service cost (credit) |
|
| 1 |
|
|
| 1 |
|
|
| (38 | ) |
|
| (23 | ) |
Amortization of net actuarial loss |
|
| 121 |
|
|
| 84 |
|
|
| 9 |
|
|
| 5 |
|
Settlements |
|
| 2 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Net periodic benefit cost (credit) |
| $ | 7 |
|
| $ | (13 | ) |
| $ | (59 | ) |
| $ | (32 | ) |
|
| Pension Benefits |
|
| Other Postretirement Benefits |
| ||||||||||||||||||||||||||
|
| Quarter-to-Date |
|
| Year-to-Date |
|
| Quarter-to-Date |
|
| Year-to-Date |
| ||||||||||||||||||||
Period Ended June 30, |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Service cost |
| $ | 24 |
|
| $ | 35 |
|
| $ | 48 |
|
| $ | 71 |
|
| $ | 4 |
|
| $ | 5 |
|
| $ | 7 |
|
| $ | 11 |
|
Interest cost |
|
| 110 |
|
|
| 84 |
|
|
| 221 |
|
|
| 167 |
|
|
| 16 |
|
|
| 12 |
|
|
| 31 |
|
|
| 23 |
|
Expected return on plan assets |
|
| (216 | ) |
|
| (223 | ) |
|
| (432 | ) |
|
| (446 | ) |
|
| (38 | ) |
|
| (48 | ) |
|
| (76 | ) |
|
| (96 | ) |
Amortization of prior service |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9 | ) |
|
| (9 | ) |
|
| (18 | ) |
|
| (19 | ) |
Amortization of net actuarial |
|
| — |
|
|
| 40 |
|
|
| — |
|
|
| 80 |
|
|
| (2 | ) |
|
| (1 | ) |
|
| (3 | ) |
|
| (1 | ) |
Net periodic benefit |
| $ | (82 | ) |
| $ | (64 | ) |
| $ | (163 | ) |
| $ | (128 | ) |
| $ | (29 | ) |
| $ | (41 | ) |
| $ | (59 | ) |
| $ | (82 | ) |
Employer Contributions
During the ninethree and six months ended SeptemberJune 30, 2017,2023, Dominion Energy made no contributions to its defined benefit pension plans or other postretirement benefit plans, except for a $75 million contribution made in January 2017 to Dominion Energy Questar’s qualified pension plan to satisfy a regulatory condition to closing of the Dominion Energy Questar Combination. Dominion Energy expects to contribute approximately $12 million to its other postretirement benefit plans through VEBAs during the remainder of 2017.
Dominion Energy Gas
Dominion Energy Gas participates in certain Dominion Energy benefit plans as described in Note 21 to the Consolidated Financial Statements in the Companies' Annual Report on Form 10-K for the year ended December 31, 2016. See Note 17 for more information.
The components of Dominion Energy Gas' provision for net periodic benefit credit for employees represented by collective bargaining units were as follows:
|
| Pension Benefits |
|
| Other Postretirement Benefits |
| ||||||||||
|
| 2017 |
|
| 2016 |
|
| 2017 |
|
| 2016 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
| $ | 3 |
|
| $ | 3 |
|
| $ | 1 |
|
| $ | 1 |
|
Interest cost |
|
| 7 |
|
|
| 7 |
|
|
| 3 |
|
|
| 3 |
|
Expected return on plan assets |
|
| (34 | ) |
|
| (33 | ) |
|
| (7 | ) |
|
| (5 | ) |
Amortization of prior service credit |
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| — |
|
Amortization of net actuarial loss |
|
| 4 |
|
|
| 3 |
|
|
| 1 |
|
|
| — |
|
Net periodic benefit credit |
| $ | (20 | ) |
| $ | (20 | ) |
| $ | (3 | ) |
| $ | (1 | ) |
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
| $ | 11 |
|
| $ | 10 |
|
| $ | 3 |
|
| $ | 4 |
|
Interest cost |
|
| 22 |
|
|
| 22 |
|
|
| 9 |
|
|
| 10 |
|
Expected return on plan assets |
|
| (105 | ) |
|
| (100 | ) |
|
| (19 | ) |
|
| (17 | ) |
Amortization of prior service credit |
|
| — |
|
|
| — |
|
|
| (2 | ) |
|
| — |
|
Amortization of net actuarial loss |
|
| 12 |
|
|
| 10 |
|
|
| 2 |
|
|
| 1 |
|
Net periodic benefit credit |
| $ | (60 | ) |
| $ | (58 | ) |
| $ | (7 | ) |
| $ | (2 | ) |
During the nine months ended September 30, 2017, Dominion Energy Gas made no contributions to its defined benefit pension plans or other postretirement benefit plans. Dominion Energy Gas expectsis not required to contribute approximately $12 millionmake any contributions to its qualified defined benefit
58
pension plans or to VEBAs associated with its other postretirement benefit plans through VEBAs, for both employees represented by collective bargaining units and employees not represented by collective bargaining units, duringin 2023. Dominion Energy considers voluntary contributions from time to time, either in the remainderform of 2017.cash or equity securities.
Note 19.21. Operating Segments
The Companies are organized primarily on the basis of products and services sold in the U.S. In connection with its corporate rebranding, the Companies changed the names of their principal operating segments to Power Delivery, Power Generation and Gas Infrastructure from Dominion Virginia Power, Dominion Generation and Dominion Energy, respectively. A description of the operations included in the Companies’ primary operating segments is as follows:
Primary Operating Segment | Description of Operations | Dominion | Virginia |
| ||||
| Regulated electric distribution | X | X | |||||
Regulated electric transmission | X | X | ||||||
| Regulated electric generation fleet(1) | X | X | |||||
Gas Distribution |
| X | ||||||
|
| X |
| |||||
| X | |||||||
Regulated electric generation fleet | X | |||||||
Regulated gas distribution and storage | X |
| ||||||
Contracted Assets |
| X |
| |||||
| X | |||||||
|
|
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 company and other functions (including unallocated debt) as well as its noncontrolling interest in Dominion Privatization and the net impact of operations that are discontinued or sold.its noncontrolling interest in Wrangler (through March 2022). In addition, Corporate and Other includes specific items attributable to Dominion Energy'sEnergy’s operating segments that are not included in profit measures evaluated by executive management in assessing the segments'segments’ performance or in allocating resources.resources, as well as the net impact of the gas transmission and storage operations, including its noncontrolling interest in Atlantic Coast Pipeline, reported as discontinued operations which are discussed in Notes 3 and 9 to the Consolidated Financial Statements in Dominion Energy’s Annual Report on Form 10-K for the year ended December 31, 2022.
In the ninesix months ended SeptemberJune 30, 2017,2023, Dominion Energy reported after-tax net income of $112 million in the Corporate and Other segment, including $279 million of after-tax net income for specific items with $364 million of after-tax net income attributable to its operating segments. In the six months ended June 30, 2022, Dominion Energy reported after-tax net expenses of $17 million for specific items$1.5 billion in the Corporate and Other segment, including $1.4 billion of after-tax net expenses for specific items with $1 million$1.5 billion of after-tax net expenses attributable to its operating segments. In the nine months ended September 30, 2016, Dominion Energy reported after-tax net expenses of $63 million for specific items in the Corporate and Other segment, with $22 million of these net expenses attributable to its operating segments.
The net expenseincome for specific items attributable to Dominion Energy'sEnergy’s operating segments in 20162023 primarily related to the impact of the following item:items:
A $59$333 million ($36254 million after-tax) chargegain related to an organizational design initiative,economic hedging activities, attributable to:
Power Delivery ($5A $281 million after-tax);
Gas Infrastructure ($12 million after-tax); and
Power Generation ($19 million after-tax).
A $29 million ($18208 million after-tax) net gain onrelated to investments held in nuclear decommissioning trust funds, attributable to:
59
The net expenses for specific items attributable to Dominion Energy’s operating segments in 2022 primarily related to the impact of the following items:
60
The following table presents segment information pertaining to Dominion Energy’s operations:
|
| Power Delivery |
|
| Power Generation |
|
| Gas Infrastructure |
|
| Corporate and Other |
|
| Adjustments/ Eliminations |
|
| Consolidated Total |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue from external customers |
| $ | 580 |
|
| $ | 1,931 |
|
| $ | 459 |
|
| $ | 3 |
|
| $ | 206 |
|
| $ | 3,179 |
|
Intersegment revenue |
|
| 4 |
|
|
| 3 |
|
|
| 204 |
|
|
| 150 |
|
|
| (361 | ) |
|
| — |
|
Total operating revenue |
|
| 584 |
|
|
| 1,934 |
|
|
| 663 |
|
|
| 153 |
|
|
| (155 | ) |
|
| 3,179 |
|
Net income (loss) attributable to Dominion Energy |
|
| 138 |
|
|
| 369 |
|
|
| 187 |
|
|
| (29 | ) |
|
| — |
|
|
| 665 |
|
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue from external customers |
| $ | 614 |
|
| $ | 1,947 |
|
| $ | 359 |
|
| $ | 2 |
|
| $ | 210 |
|
| $ | 3,132 |
|
Intersegment revenue |
|
| 6 |
|
|
| 2 |
|
|
| 205 |
|
|
| 144 |
|
|
| (357 | ) |
|
| — |
|
Total operating revenue |
|
| 620 |
|
|
| 1,949 |
|
|
| 564 |
|
|
| 146 |
|
|
| (147 | ) |
|
| 3,132 |
|
Net income (loss) attributable to Dominion Energy |
|
| 139 |
|
|
| 650 |
|
|
| 135 |
|
|
| (234 | ) |
|
| — |
|
|
| 690 |
|
Nine Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue from external customers |
| $ | 1,664 |
|
| $ | 5,091 |
|
| $ | 1,949 |
|
| $ | 12 |
|
| $ | 660 |
|
| $ | 9,376 |
|
Intersegment revenue |
|
| 16 |
|
|
| 8 |
|
|
| 645 |
|
|
| 451 |
|
|
| (1,120 | ) |
|
| — |
|
Total operating revenue |
|
| 1,680 |
|
|
| 5,099 |
|
|
| 2,594 |
|
|
| 463 |
|
|
| (460 | ) |
|
| 9,376 |
|
Net income (loss) attributable to Dominion Energy |
|
| 390 |
|
|
| 870 |
|
|
| 613 |
|
|
| (186 | ) |
|
| — |
|
|
| 1,687 |
|
Nine Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue from external customers |
| $ | 1,682 |
|
| $ | 5,204 |
|
| $ | 1,235 |
|
| $ | 8 |
|
| $ | 522 |
|
| $ | 8,651 |
|
Intersegment revenue |
|
| 17 |
|
|
| 7 |
|
|
| 507 |
|
|
| 469 |
|
|
| (1,000 | ) |
|
| — |
|
Total operating revenue |
|
| 1,699 |
|
|
| 5,211 |
|
|
| 1,742 |
|
|
| 477 |
|
|
| (478 | ) |
|
| 8,651 |
|
Net income (loss) attributable to Dominion Energy |
|
| 363 |
|
|
| 1,066 |
|
|
| 483 |
|
|
| (246 | ) |
|
| — |
|
|
| 1,666 |
|
|
| Dominion |
|
| Gas |
|
| Dominion |
|
| Contracted |
|
| Corporate |
|
| Adjustments |
|
| Consolidated |
| |||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Three Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Total revenue from external |
| $ | 2,254 |
|
| $ | 626 |
|
| $ | 771 |
|
| $ | 127 |
|
| $ | 16 |
|
| $ | — |
|
| $ | 3,794 |
|
Intersegment revenue |
|
| (1 | ) |
|
| — |
|
|
| 2 |
|
|
| 5 |
|
|
| 245 |
|
|
| (251 | ) |
|
| — |
|
Total operating revenue |
|
| 2,253 |
|
|
| 626 |
|
|
| 773 |
|
|
| 132 |
|
|
| 261 |
|
|
| (251 | ) |
|
| 3,794 |
|
Net income from discontinued |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 13 |
|
|
| — |
|
|
| 13 |
|
Net income attributable to |
|
| 391 |
|
|
| 103 |
|
|
| 68 |
|
|
| 11 |
|
|
| 26 |
|
|
| — |
|
|
| 599 |
|
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Total revenue from external |
| $ | 2,175 |
|
| $ | 565 |
|
| $ | 812 |
|
| $ | 161 |
|
| $ | (117 | ) |
| $ | — |
|
| $ | 3,596 |
|
Intersegment revenue |
|
| (3 | ) |
|
| — |
|
|
| 3 |
|
|
| 6 |
|
|
| 225 |
|
|
| (231 | ) |
|
| — |
|
Total operating revenue |
|
| 2,172 |
|
|
| 565 |
|
|
| 815 |
|
|
| 167 |
|
|
| 108 |
|
|
| (231 | ) |
|
| 3,596 |
|
Net loss from discontinued |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
|
| — |
|
|
| (1 | ) |
Net income (loss) attributable to |
|
| 440 |
|
|
| 125 |
|
|
| 124 |
|
|
| 20 |
|
|
| (1,162 | ) |
|
| — |
|
|
| (453 | ) |
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Total revenue from external |
| $ | 4,643 |
|
| $ | 1,993 |
|
| $ | 1,615 |
|
| $ | 435 |
|
| $ | 360 |
|
| $ | — |
|
| $ | 9,046 |
|
Intersegment revenue |
|
| (2 | ) |
|
| 1 |
|
|
| 3 |
|
|
| 8 |
|
|
| 495 |
|
|
| (505 | ) |
|
| — |
|
Total operating revenue |
|
| 4,641 |
|
|
| 1,994 |
|
|
| 1,618 |
|
|
| 443 |
|
|
| 855 |
|
|
| (505 | ) |
|
| 9,046 |
|
Net income from discontinued |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 8 |
|
|
| — |
|
|
| 8 |
|
Net income attributable to |
|
| 777 |
|
|
| 381 |
|
|
| 159 |
|
|
| 167 |
|
|
| 112 |
|
|
| — |
|
|
| 1,596 |
|
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
Total revenue from external |
| $ | 4,347 |
|
| $ | 1,794 |
|
| $ | 1,610 |
|
| $ | 406 |
|
| $ | (282 | ) |
| $ | — |
|
| $ | 7,875 |
|
Intersegment revenue |
|
| (6 | ) |
|
| 1 |
|
|
| 4 |
|
|
| 10 |
|
|
| 462 |
|
|
| (471 | ) |
|
| — |
|
Total operating revenue |
|
| 4,341 |
|
|
| 1,795 |
|
|
| 1,614 |
|
|
| 416 |
|
|
| 180 |
|
|
| (471 | ) |
|
| 7,875 |
|
Net income from discontinued |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 18 |
|
|
| — |
|
|
| 18 |
|
Net income (loss) attributable to |
|
| 958 |
|
|
| 419 |
|
|
| 233 |
|
|
| 121 |
|
|
| (1,473 | ) |
|
| — |
|
|
| 258 |
|
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.consolidation, including amounts related to entities presented within discontinued operations.
Virginia Power
The Corporate and Other Segment of Virginia Power primarily includes specific items attributable to its operating segments that are not included in profit measures evaluated by executive management in assessing the segments' performance or in allocating resources.
In the nine months ended September 30, 2017, Virginia Power reported after-tax net expenses of $7 million for specific items in the Corporate and Other segment, all of which was attributable to its operating segments. In the nine months ended September 30, 2016, Virginia Power reported an after-tax net expense of $18 million for specific items in the Corporate and Other segment, all of which was attributable to its operating segments.
The net expense for specific items attributable to Virginia Power's operating segments in 2017 primarily related to the impact of the following item which was attributable to Power Delivery:
A $16 million ($10 million after-tax) charge arising from a customer settlement.
The net expense for specific items attributable to Virginia Power’s operating segments in 2016 primarily related to the impact of the following item:
A $33 million ($20 million after-tax) charge related to an organizational design initiative, attributable to:
Power Delivery ($5 million after-tax); and
Power Generation ($15 million after-tax).
The following table presents segment information pertaining to Virginia Power’s operations:
|
| Power Delivery |
|
| Power Generation |
|
| Corporate and Other |
|
| Consolidated Total |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
| $ | 580 |
|
| $ | 1,574 |
|
| $ | — |
|
| $ | 2,154 |
|
Net income |
|
| 137 |
|
|
| 314 |
|
|
| 8 |
|
|
| 459 |
|
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
| $ | 617 |
|
| $ | 1,594 |
|
| $ | — |
|
| $ | 2,211 |
|
Net income |
|
| 140 |
|
|
| 359 |
|
|
| 4 |
|
|
| 503 |
|
Nine Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
| $ | 1,670 |
|
| $ | 4,062 |
|
| $ | — |
|
| $ | 5,732 |
|
Net income |
|
| 387 |
|
|
| 735 |
|
|
| 11 |
|
|
| 1,133 |
|
Nine Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
| $ | 1,686 |
|
| $ | 4,191 |
|
| $ | — |
|
| $ | 5,877 |
|
Net income (loss) |
|
| 362 |
|
|
| 699 |
|
|
| (15 | ) |
|
| 1,046 |
|
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'ssegment’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.resources.
61
In the ninesix months ended SeptemberJune 30, 2017, Dominion Energy Gas2023, Virginia Power reported after-tax net expenses of $9$91 million for specific items in the Corporate and Other segment, including $87 million of after-tax net expenses for specific items all of which was attributable to its operating segment. In the ninesix months ended SeptemberJune 30, 2016, Dominion Energy Gas2022, Virginia Power reported an after-tax net benefitexpenses of $5$554 million for specific items in the Corporate and Other segment, withincluding $547 million of after-tax net expenseexpenses for specific items with $527 million of $7 millionafter-tax net expenses attributable to its operating segment.
The net expenseexpenses for specific items attributable to Virginia Power’s operating segment in 2017 was due2023 primarily related to a $15the impact of the following item:
The net expenseexpenses for specific items attributable to Virginia Power’s operating segment in 20162022 primarily related to an $8the impact of the following items:
The following table presents segment information pertaining to Dominion Energy Gas'Virginia Power’s operations:
|
| Gas Infrastructure |
|
| Corporate and Other |
|
| Consolidated Total |
|
| Dominion |
|
| Corporate |
|
| Consolidated |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Three Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Three Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
| |||||||||||||||
Operating revenue |
| $ | 401 |
|
| $ | — |
|
| $ | 401 |
|
| $ | 2,251 |
|
| $ | — |
|
| $ | 2,251 |
|
Net income (loss) |
|
| 121 |
|
|
| (4 | ) |
|
| 117 |
|
|
| 392 |
|
|
| (60 | ) |
|
| 332 |
|
Three Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Operating revenue |
| $ | 382 |
|
| $ | — |
|
| $ | 382 |
| ||||||||||||
Net income |
|
| 77 |
|
|
| 6 |
|
|
| 83 |
| ||||||||||||
Nine Months Ended September 30, 2017 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
| |||||||||||||||
Operating revenue |
| $ | 1,313 |
|
| $ | — |
|
| $ | 1,313 |
|
| $ | 2,170 |
|
| $ | 5 |
|
| $ | 2,175 |
|
Net income (loss) |
|
| 318 |
|
|
| (16 | ) |
|
| 302 |
|
|
| 442 |
|
|
| (395 | ) |
|
| 47 |
|
Nine Months Ended September 30, 2016 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
| |||||||||||||||
Operating revenue |
| $ | 1,181 |
|
| $ | — |
|
| $ | 1,181 |
|
| $ | 4,635 |
|
| $ | — |
|
| $ | 4,635 |
|
Net income (loss) |
|
| 288 |
|
|
| (2 | ) |
|
| 286 |
|
|
| 776 |
|
|
| (91 | ) |
|
| 685 |
|
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
| |||||||||||||||
Operating revenue |
| $ | 4,335 |
|
| $ | 7 |
|
| $ | 4,342 |
| ||||||||||||
Net income (loss) |
|
| 958 |
|
|
| (554 | ) |
|
| 404 |
|
62
ITEM 2. 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's and Dominion Energy Gas'Power’s results of operations. MD&A should be read in conjunction with the Companies’ Consolidated Financial Statements. Virginia Power and Dominion Energy Gas meetmeets the conditions to file under the reduced disclosure format, and therefore havehas omitted certain sections of MD&A.
Contents of MD&A
MD&A consists of the following information:
Forward-Looking Statements
Accounting Matters – 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 – Resources—Dominion Energy
Future Issues and Other Matters – Matters—Dominion Energy
Forward-Looking Statements
This report contains statements concerning the Companies'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;
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 and global supply chains;
63
Cost of environmental strategy and 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;
Fluctuations in energy-related commodity prices and the effect these could have on Dominion Energy’s and Dominion Energy Gas' earnings and the Companies' liquidity position and the underlying value of their assets;
Counterparty credit and performance risk;
Global capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms;
Risks associated with Virginia Power’s membership and participation in PJM, including risks related to obligations created by the default of other participants;
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 interest rates or foreign currency exchange rates;
Changes in rating agency requirements or credit ratingsoperating, maintenance and their effect on availability and cost of capital;
Changes in financial or regulatory accounting principles or policies imposed by governing bodies;
Employee workforce factors including collective bargaining agreements and labor negotiations with union employees;
Risks of operating businesses in regulated industries that are subject to changing regulatory structures;
Impacts of acquisitions, including the Dominion Energy Questar Combination, divestitures, transfers of assets to joint ventures or Dominion Energy Midstream, including the contribution of Dominion Energy Questar Pipeline to Dominion Energy Midstream, and retirements of assets based on asset portfolio reviews;
Receipt of approvals for, and timing of, closing dates for acquisitions and divestitures;
The timing and execution of Dominion Energy Midstream's growth strategy;
Changes in rules for regional transmission organizations and independent system operators in which Dominion Energy and Virginia Power participate, including changes in rate designs, changes in FERC's interpretation of market rules and new and evolving capacity models;
Political and economic conditions, including inflation and deflation;
Domestic terrorism and other threats to the Companies'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;
Additional competition in industries in whichReceipt of approvals for, and timing of, closing dates for acquisitions and divestitures;
Competition inobtain the development, construction and ownership of certain electric transmission facilities in Virginia Power's service territory in connection with FERC Order 1000;
Changes in technology, particularly with respect to new, developing or alternative sources of generation and smart grid technologies;
Changes to regulated electric rates collected by Virginia Power and regulated gas distribution, transportation and storage rates, including LNG storage, collected by Dominion Energy and Dominion Energy Gas;
Changes in operating, maintenance and construction costs;
Timing and receipt ofrequisite 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;
|
|
The impactFluctuations in the value of operational hazards, including adverse developments with respect to pipelineinvestments held in nuclear decommissioning trusts by the Companies and plant safety or integrity, equipment loss, malfunction or failure, operator error,in benefit plan trusts by Dominion Energy;
64
Additionally, other risks that could cause actual results to differ from predicted results are set forth in Part I. Item 1A. Risk Factors in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016.2022.
The Companies'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
Critical Accounting Policies and Estimates
As of SeptemberJune 30, 2017,2023, there have been no significant changes with regard to the critical accounting policies and estimates disclosed in MD&A in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016.2022. The policies disclosed included the accounting for regulated operations, AROs, income taxes, accounting for derivative contracts and otherfinancial instruments at fair value, use of estimates in goodwill andimpairment testing, use of estimates in long-lived asset and equity method investment impairment testing, held for sale classification and employee benefit plans.
Dominion Energy
Results of OperationsOperations—Dominion Energy
Presented below is a summary of Dominion Energy’s consolidated results:
|
| 2023 |
|
| 2022 |
|
| $ Change |
| |||
(millions, except EPS) |
|
|
|
|
|
|
|
|
| |||
Second Quarter |
|
|
|
|
|
|
|
|
| |||
Net income (loss) attributable to Dominion Energy |
| $ | 599 |
|
| $ | (453 | ) |
| $ | 1,052 |
|
Diluted EPS |
|
| 0.69 |
|
|
| (0.58 | ) |
|
| 1.27 |
|
Year-To-Date |
|
|
|
|
|
|
|
|
| |||
Net income attributable to Dominion Energy |
| $ | 1,596 |
|
| $ | 258 |
|
| $ | 1,338 |
|
Diluted EPS |
|
| 1.86 |
|
|
| 0.25 |
|
|
| 1.61 |
|
Overview
|
| 2017 |
|
| 2016 |
|
| $ Change |
| |||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Dominion Energy |
| $ | 665 |
|
| $ | 690 |
|
| $ | (25 | ) |
Diluted EPS |
|
| 1.03 |
|
|
| 1.10 |
|
|
| (0.07 | ) |
Year-To-Date |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Dominion Energy |
| $ | 1,687 |
|
| $ | 1,666 |
|
| $ | 21 |
|
Diluted EPS |
|
| 2.66 |
|
|
| 2.71 |
|
|
| (0.05 | ) |
OverviewSecond Quarter 2023 vs. 2022
Third Quarter 2017 vs. 2016
Net income attributable to Dominion Energy decreased 4%, primarily due to lower anticipated renewable energy investment tax credits, milder weather during 2017 in Dominion Energy’s electric utility service territory and a decrease in Cove Point import contracts. These decreases were partially offset by the Dominion Energy Questar Combination and an increase in gains from agreements to convey shale development rights underneath several natural gas storage fields.
Year-To-Date 2017 vs. 2016
Net income attributable to Dominion Energy increased 1%,$1.1 billion, primarily due to the absences of a loss associated with the sale of Kewaunee, a charge for RGGI compliance costs deemed recovered through base rates and a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses. In addition, there was an increase in net investment earnings on nuclear decommissioning trust funds and increased unrealized gains on economic hedging activities. These increases were partially offset by a decrease in sales to electric utility customers attributable to weather.
Year-To-Date 2023 vs. 2022
Net income attributable to Dominion Energy Questar Combination,increased $1.3 billion, primarily due to the absences of a loss associated with the sale of Kewaunee, a charge for RGGI compliance costs deemed recovered through base rates, a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses and a charge to reflect the recognition of deferred taxes on the outside basis of Hope’s stock upon meeting the classification as held for sale. In addition, there was an electric utility capacity benefitincrease in net investment earnings on nuclear decommissioning trust funds, increased unrealized gains on economic hedging activities and the absence of 2016 organizational design initiativea decrease in storm damage and service restoration costs. These increases were substantiallypartially offset by lower anticipated renewable energy investment tax credits, an increase in interest expense, milder weather in Dominion Energy’s electric utility service territorya charge associated with the impairment of a corporate office building and a decrease in Cove Point import contracts.sales to electric utility customers attributable to weather.
Analysis of Consolidated Operations
Presented below are selected amounts related to Dominion Energy’s results of operations:
| Third Quarter |
|
| Year-To-Date |
|
| Second Quarter |
| Year-To-Date |
| ||||||||||||||||||||||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| $ Change |
|
| 2017 |
|
| 2016 |
|
| $ Change |
|
| 2023 |
|
| 2022 |
|
| $ Change |
|
| 2023 |
|
| 2022 |
|
| $ Change |
| ||||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Operating revenue |
| $ | 3,179 |
|
| $ | 3,132 |
|
| $ | 47 |
|
| $ | 9,376 |
|
| $ | 8,651 |
|
| $ | 725 |
|
| $ | 3,794 |
|
| $ | 3,596 |
|
| $ | 198 |
|
| $ | 9,046 |
|
| $ | 7,875 |
|
| $ | 1,171 |
|
Electric fuel and other energy-related purchases |
|
| 638 |
|
|
| 606 |
|
|
| 32 |
|
|
| 1,711 |
|
|
| 1,791 |
|
|
| (80 | ) |
|
| 939 |
|
|
| 730 |
|
|
| 209 |
|
|
| 1,961 |
|
|
| 1,408 |
|
|
| 553 |
|
Purchased (excess) electric capacity |
|
| 21 |
|
|
| (6 | ) |
|
| 27 |
|
|
| (8 | ) |
|
| 107 |
|
|
| (115 | ) | ||||||||||||||||||||||||
Purchased electric capacity |
|
| 15 |
|
|
| 16 |
|
|
| (1 | ) |
|
| 23 |
|
|
| 29 |
|
|
| (6 | ) | ||||||||||||||||||||||||
Purchased gas |
|
| 24 |
|
|
| 77 |
|
|
| (53 | ) |
|
| 441 |
|
|
| 252 |
|
|
| 189 |
|
|
| 227 |
|
|
| 202 |
|
|
| 25 |
|
|
| 991 |
|
|
| 847 |
|
|
| 144 |
|
Net revenue |
|
| 2,496 |
|
|
| 2,455 |
|
|
| 41 |
|
|
| 7,232 |
|
|
| 6,501 |
|
|
| 731 |
| ||||||||||||||||||||||||
Other operations and maintenance |
|
| 649 |
|
|
| 765 |
|
|
| (116 | ) |
|
| 2,166 |
|
|
| 2,133 |
|
|
| 33 |
|
|
| 932 |
|
|
| 985 |
|
|
| (53 | ) |
|
| 1,853 |
|
|
| 2,039 |
|
|
| (186 | ) |
Depreciation, depletion and amortization |
|
| 485 |
|
|
| 400 |
|
|
| 85 |
|
|
| 1,421 |
|
|
| 1,112 |
|
|
| 309 |
|
|
| 706 |
|
|
| 695 |
|
|
| 11 |
|
|
| 1,426 |
|
|
| 1,393 |
|
|
| 33 |
|
Other taxes |
|
| 162 |
|
|
| 145 |
|
|
| 17 |
|
|
| 519 |
|
|
| 448 |
|
|
| 71 |
|
|
| 222 |
|
|
| 235 |
|
|
| (13 | ) |
|
| 497 |
|
|
| 488 |
|
|
| 9 |
|
Other income |
|
| 73 |
|
|
| 63 |
|
|
| 10 |
|
|
| 249 |
|
|
| 189 |
|
|
| 60 |
| ||||||||||||||||||||||||
Impairment of assets and other charges |
|
| 53 |
|
|
| 415 |
|
|
| (362 | ) |
|
| 151 |
|
|
| 405 |
|
|
| (254 | ) | ||||||||||||||||||||||||
Losses (gains) on sales of assets |
|
| (22 | ) |
|
| 636 |
|
|
| (658 | ) |
|
| (23 | ) |
|
| 608 |
|
|
| (631 | ) | ||||||||||||||||||||||||
Earnings from equity method investees |
|
| 90 |
|
|
| 83 |
|
|
| 7 |
|
|
| 170 |
|
|
| 163 |
|
|
| 7 |
| ||||||||||||||||||||||||
Other income (expense) |
|
| 325 |
|
|
| (287 | ) |
|
| 612 |
|
|
| 609 |
|
|
| (241 | ) |
|
| 850 |
| ||||||||||||||||||||||||
Interest and related charges |
|
| 305 |
|
|
| 250 |
|
|
| 55 |
|
|
| 905 |
|
|
| 715 |
|
|
| 190 |
|
|
| 430 |
|
|
| 47 |
|
|
| 383 |
|
|
| 1,016 |
|
|
| 221 |
|
|
| 795 |
|
Income tax expense |
|
| 272 |
|
|
| 230 |
|
|
| 42 |
|
|
| 683 |
|
|
| 561 |
|
|
| 122 |
| ||||||||||||||||||||||||
Noncontrolling interests |
|
| 31 |
|
|
| 38 |
|
|
| (7 | ) |
|
| 100 |
|
|
| 55 |
|
|
| 45 |
| ||||||||||||||||||||||||
Income tax expense (benefit) |
|
| 121 |
|
|
| (117 | ) |
|
| 238 |
|
|
| 342 |
|
|
| 119 |
|
|
| 223 |
| ||||||||||||||||||||||||
Net income (loss) from discontinued operations |
|
| 13 |
|
|
| (1 | ) |
|
| 14 |
|
|
| 8 |
|
|
| 18 |
|
|
| (10 | ) |
An analysis of Dominion Energy’s results of operations follows:
ThirdSecond Quarter 20172023 vs. 20162022
NetOperating revenue increased 2%6%, primarily reflecting:
A $161$234 million increase in fuel-related revenue as a result of an increase in commodity costs associated with sales to electric utility retail customers ($206 million) and gas utility customers ($28 million);
These increases were partially offset by:
Electric fuel and other energy-related purchases increased 29%, primarily due to higher commodity costs for electric utilities ($206 million) and an increase in the use of purchased renewable energy credits at Virginia Power ($26 million), which are offset in operating revenue and do not impact net income.
Purchased gas increased 12%, primarily due to a net increase in commodity costs for gas utilities, which are offset in operating revenue and do not impact net income.
Other operations and maintenance decreased 5%, primarily due to a decrease in certain Virginia Power expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($32 million), partially offset by an increase in outside services ($17 million).
Impairment of assets and other charges decreased 87%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities at Virginia Power ($38 million), partially offset by a charge for the write-off of certain previously
66
deferred amounts related to the cessation of certain riders effective July 2023 ($36 million) and an impairment charge of certain nonregulated solar assets ($15 million).
Gains on sales of assets increased $658 million, primarily due to the absence of a loss associated with the sale of Kewaunee.
Other income increased $612 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.
Interest and related charges increased $383 million, primarily due to lower unrealized gains in 2023 compared to 2022 associated with freestanding derivatives ($239 million), higher interest rates on commercial paper and long-term debt ($60 million), increased commercial paper and long-term debt borrowings ($53 million) and higher interest rates on variable rate debt and cash flow interest rate swaps ($42 million).
Income tax expense increased $238 million, primarily due to higher pre-tax income ($309 million), partially offset by lower interim period allocation of investment tax credits ($20 million), excess deferred income tax amortization ($19 million) and decreased consolidated state deferred tax expense on pre-tax gains from nuclear decommissioning trusts and economic hedges ($18 million).
Year-To-Date 2023 vs. 2022
Operating revenue increased 15%, primarily reflecting:
These increases were partially offset by:
Electric fuel and other energy-related purchases increased 39%, primarily due to higher commodity costs for electric utilities ($522 million) and an increase in the Dominion Energy Questar Combination being included for alluse of 2017;purchased renewable energy credits at Virginia Power ($54 million), which are offset in operating revenue and do not impact net income.
A $29 million increasePurchased gas increased 17%, primarily due to additional generation output from merchant solar generating projects;a net increase in commodity costs for gas utilities ($192 million), which are offset in operating revenue and
A $16 million increase from regulated natural gas transmission growth projects placed into service; do not impact net income, partially offset by a decrease from the sale of Hope ($37 million).
Other operations and maintenance decreased 9%, primarily due to a decrease in storm damage and restoration costs in Virginia Power’s service territory ($111 million) and a decrease in certain Virginia Power expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($103 million), partially offset by an increase in outside services ($36 million).
Impairment of assets and other charges decreased 63%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain
67
retired electric generation facilities at Virginia Power ($39 million), partially offset by the impairment of a corporate office building ($91 million), a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million) and an impairment charge of certain nonregulated solar assets ($15 million).
Gains on sales of assets increased $631 million, primarily due to the absence of a loss associated with the sale of Kewaunee ($649 million) and a gain on the transfer of certain utility property in South Carolina ($20 million), partially offset by the absence of a gain on the contribution of certain privatization operations to Dominion Privatization ($23 million).
Other income increased $850 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.
Interest and related charges increased $795 million, primarily due to unrealized losses in 2023 compared to unrealized gains in 2022 associated with freestanding derivatives ($517 million), higher interest rates on commercial paper and long-term debt ($107 million),
increased commercial paper and long-term debt borrowings ($98 million), higher interest rates on variable rate debt and cash flow interest rate swaps ($88 million) and lower premiums received on interest rate derivatives ($24 million).
Income tax expense increased $223 million, primarily due to higher pre-tax income ($388 million), partially offset by the absence of a charge to reflect the recognition of deferred taxes on the outside basis of Hope’s stock upon meeting the classification as held for sale ($90 million) and decreased consolidated state deferred tax expense on pre-tax gains from nuclear decommissioning trusts and economic hedges ($25 million).
Results of Operations—Virginia Power
Presented below is a summary of Virginia Power’s consolidated results:
|
| Second Quarter |
|
| Year-To-Date |
| ||||||||||||||||||
|
| 2023 |
|
| 2022 |
|
| $ Change |
|
| 2023 |
|
| 2022 |
|
| $ Change |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Net income |
| $ | 332 |
|
| $ | 47 |
|
| $ | 285 |
|
| $ | 685 |
|
| $ | 404 |
|
| $ | 281 |
|
Overview
Second Quarter 2023 vs. 2022
Net income increased $285 million, primarily due to the absences of a charge for RGGI compliance costs deemed recovered through base rates and a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses as well as an increase in net investment earnings on nuclear decommissioning trust funds, partially offset by a decrease in sales to electric utility customers attributable to weather.
Year-To-Date 2023 vs. 2022
Net income increased 70%, primarily due to the absences of a charge for RGGI compliance costs deemed recovered through base rates and a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses as well as an increase in net investment earnings on nuclear decommissioning trust funds and a decrease in storm damage and service restoration costs, partially offset by a decrease in sales to electric utility customers attributable to weather.
Analysis of Consolidated Operations
Presented below are selected amounts related to Virginia Power’s results of operations:
|
| Second Quarter |
|
| Year-To-Date |
| ||||||||||||||||||
|
| 2023 |
|
| 2022 |
|
| $ Change |
|
| 2023 |
|
| 2022 |
|
| $ Change |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Operating revenue |
| $ | 2,251 |
|
| $ | 2,175 |
|
| $ | 76 |
|
| $ | 4,635 |
|
| $ | 4,342 |
|
| $ | 293 |
|
Electric fuel and other energy-related purchases |
|
| 706 |
|
|
| 533 |
|
|
| 173 |
|
|
| 1,505 |
|
|
| 1,049 |
|
|
| 456 |
|
Purchased electric capacity |
|
| 10 |
|
|
| 11 |
|
|
| (1 | ) |
|
| 18 |
|
|
| 22 |
|
|
| (4 | ) |
Other operations and maintenance |
|
| 443 |
|
|
| 478 |
|
|
| (35 | ) |
|
| 884 |
|
|
| 1,048 |
|
|
| (164 | ) |
Depreciation and amortization |
|
| 432 |
|
|
| 425 |
|
|
| 7 |
|
|
| 879 |
|
|
| 854 |
|
|
| 25 |
|
Other taxes |
|
| 67 |
|
|
| 83 |
|
|
| (16 | ) |
|
| 152 |
|
|
| 158 |
|
|
| (6 | ) |
Impairment of assets and other charges |
|
| 38 |
|
|
| 409 |
|
|
| (371 | ) |
|
| 45 |
|
|
| 413 |
|
|
| (368 | ) |
Other income (expense) |
|
| 48 |
|
|
| (44 | ) |
|
| 92 |
|
|
| 84 |
|
|
| (40 | ) |
|
| 124 |
|
Interest and related charges |
|
| 182 |
|
|
| 145 |
|
|
| 37 |
|
|
| 363 |
|
|
| 293 |
|
|
| 70 |
|
Income tax expense |
|
| 89 |
|
|
| — |
|
|
| 89 |
|
|
| 188 |
|
|
| 61 |
|
|
| 127 |
|
68
An analysis of Virginia Power’s results of operations follows:
Second Quarter 2023 vs. 2022
Operating revenue increased 3%, primarily reflecting:
A $76$54 million increase in sales to electric utility retail customers associated with economic and other usage factors.
These increases were partially offset by:
Electric fuel and other energy-related purchases increased 32%, primarily due to higher commodity costs for electric utilities ($169 million) and an increase in the use of purchased renewable energy credits ($26 million), which are offset in operating revenue and do not impact net income.
Other operations and maintenance decreased 7%, primarily due to a decrease in certain expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($32 million) and a decrease in bad debt expense ($10 million), partially offset by an increase in outside services ($13 million).
Other taxes decreased 19%, primarily due to lower property taxes.
Impairment of assets and other charges decreased 91%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities ($38 million), partially offset by a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million).
Other income increased $92 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.
Interest and related charges increased 26%, primarily due to increased commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($39 million) and higher interest rates on commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($11 million).
Income tax expense increased $89 million, primarily due to higher pre-tax income.
Year-To-Date 2023 vs. 2022
Operating revenue increased 7%, primarily reflecting:
These increases were partially offset by:
A $41 million decrease from Cove Point import contracts;
A $24 million increase in electric capacity related expenses due to the annual PJM capacity performance market effective June 2017 ($68 million), partially offset by a benefit related to non-utility generators ($44 million); and
A $20 million decrease due to unfavorable pricing at merchant generation facilities.
Other operations and maintenance decreased 15%, primarily reflecting:
A $56 million increase in gains from agreements to convey shale development rights underneath several natural gas storage fields;
A $30 million decrease in certain electric transmission-related expenditures. These expenses are primarily recovered through state and FERC rates and do not impact net income;
A $26 million decrease in transaction and transition costs related to the Dominion Energy Questar Combination; and
A $21 million decrease due to the absence of costs related to 2016 labor contract renegotiations as well as costs resulting from a union workforce temporary work stoppage; partially offset by
A $45 million increase from the operations acquired in the Dominion Energy Questar Combination being included for all of 2017.
Depreciation, depletion and amortization increased 21%, primarily due to the operations acquired in the Dominion Energy Questar Combination being included for all of 2017 ($47 million) and various growth projects being placed into service ($40 million).
Interest and related charges increased 22%, primarily due to higher long-term debt interest expense resulting from debt issuances in the fourth quarter of 2016 and the first nine months of 2017($41 million) and debt acquired in the Dominion Energy Questar Combination ($11 million).
Income tax expense increased 18%, primarily due to an increased effective tax rate, principally due to lower anticipated renewable energy investment tax credits.
Noncontrolling interests decreased 18% primarily due to a decrease in earnings attributable to merchant solar partners ($22 million), partially offset by an increase in Dominion Energy Midstream earnings attributable to public unit holders ($15 million).
Year-To-Date 2017 vs. 2016
Net revenue increased 11%, primarily reflecting:
A $663 million increase from the operations acquired in the Dominion Energy Questar Combination being included for all of 2017;
A $119 million electric capacity benefit due to the annual PJM capacity performance market effective June 2016 ($123 million) and a benefit related to non-utility generators ($86 million), partially offset by the annual PJM capacity performance market effective June 2017 ($90 million);
A $74 million increase due to additional generation output from merchant solar generating projects;
A $57 million increase in sales to electric utility retail customers due to the effect of changes in customer usage and other factors;
A $49 million increase from regulated natural gas transmission growth projects placed into service; and
A $36 million increase from rate adjustment clauses associated with electric utility operations; partially offset by
A $109 million decrease due to unfavorable pricing at merchant generation facilities;
A $104 million decrease from Cove Point import contracts; and
A decrease in sales to electric utility retail customers from a reduction in heating degree days during the heating season of 2017 ($5291 million) and a decrease in cooling degree days during the cooling season ($55 million); and
69
Electric fuel and other energy-related purchases increased 43%, primarily due to higher commodity costs for electric utilities ($418 million) and an increase in the use of purchased renewable energy credits ($54 million), which are offset in operating revenue and do not impact net income.
Other operations and maintenance increased 2% decreased 16%, primarily reflecting:
A $162 million increase from the operations acquireddue to a decrease in the Dominion Energy Questar Combination being included for all of 2017;storm damage and
A $35 million increase in salaries, wages restoration costs ($111 million) and benefits; partially offset by
An $88 milliona decrease in certain electric transmission-related expenditures. These expensesexpenditures which are primarily recovered through statestate- and FERCFERC-regulated rates and do not impact net income;income ($103 million), partially offset by an increase in outside services ($29 million) and
The absence of organizational design initiative an increase in salaries, wages and benefits and administrative costs ($6418 million).
Depreciation, depletion
Impairment of assets and amortization increased 28%other charges decreased 89%, primarily due to the operations acquiredabsence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the Dominion Energy Questar Combination being includedabsence of a charge for all of 2017RGGI compliance costs deemed recovered through base rates ($162180 million) and various growth projects being placed into servicea net decrease in dismantling costs and other activities associated with certain retired electric generation facilities ($12039 million), partially offset by a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million).
Other taxesincome increased 16%,$124 million, primarily due to the operations acquirednet investment gains in the Dominion Energy Questar Combination being included for all of 2017 ($35 million) and increased property taxes related2023 compared to growth projects placed into service ($31 million).
Other income increased 32%, primarily reflecting:
A $26 million increasenet investment losses in earnings from equity method investments;
A $19 million increase in AFUDC associated with rate-regulated projects;
An $11 million increase in interest income associated with the settlement of state income tax refund claims; and
An $11 million increase in net realized gains (including investment income)2022 on nuclear decommissioning trust funds.
Interest and related charges increased 27%24%, primarily due to higherincreased commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($72 million) and higher interest rates on commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($22 million), partially offset by decreased interest expense resulting from debt issuances in 2016 and the first nine months of 2017associated with rider deferrals ($14819 million) and debt acquired in the Dominion Energy Questar Combination ($39 million).
Income tax expense increased 22%,$127 million, primarily due to higher pre-tax income ($101 million) and an increased effective tax rate, principally due to lower anticipated renewable energy investment tax credits.
Noncontrolling interests increased 82%, primarily due to an increase in Dominion Energy Midstream earnings attributable to public unitholders.credits ($31 million).
Segment Results of Operations
Segment results include the impact of intersegment revenues and expenses, which may result in intersegment profit and loss. In connection with its corporate rebranding in May 2017, Dominion Energy changed the names of its principal operating segments to Power Delivery, Power Generation and Gas Infrastructure from Dominion Virginia Power, Dominion Generation and Dominion Energy, respectively. Presented below is a summary of contributions by Dominion Energy’s operating segments to net income (loss) attributable to Dominion Energy:
|
| Net Income attributable to Dominion Energy |
|
| Diluted EPS |
| ||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| $ Change |
|
| 2017 |
|
| 2016 |
|
| $ Change |
| ||||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Power Delivery |
| $ | 138 |
|
| $ | 139 |
|
| $ | (1 | ) |
| $ | 0.21 |
|
| $ | 0.22 |
|
| $ | (0.01 | ) |
Power Generation |
|
| 369 |
|
|
| 650 |
|
|
| (281 | ) |
|
| 0.57 |
|
|
| 1.04 |
|
|
| (0.47 | ) |
Gas Infrastructure |
|
| 187 |
|
|
| 135 |
|
|
| 52 |
|
|
| 0.29 |
|
|
| 0.21 |
|
|
| 0.08 |
|
Primary operating segments |
|
| 694 |
|
|
| 924 |
|
|
| (230 | ) |
|
| 1.07 |
|
|
| 1.47 |
|
|
| (0.40 | ) |
Corporate and Other |
|
| (29 | ) |
|
| (234 | ) |
|
| 205 |
|
|
| (0.04 | ) |
|
| (0.37 | ) |
|
| 0.33 |
|
Consolidated |
| $ | 665 |
|
| $ | 690 |
|
| $ | (25 | ) |
| $ | 1.03 |
|
| $ | 1.10 |
|
| $ | (0.07 | ) |
Year-To-Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Power Delivery |
| $ | 390 |
|
| $ | 363 |
|
| $ | 27 |
|
| $ | 0.62 |
|
| $ | 0.59 |
|
| $ | 0.03 |
|
Power Generation |
|
| 870 |
|
|
| 1,066 |
|
|
| (196 | ) |
|
| 1.37 |
|
|
| 1.74 |
|
|
| (0.37 | ) |
Gas Infrastructure |
|
| 613 |
|
|
| 483 |
|
|
| 130 |
|
|
| 0.97 |
|
|
| 0.78 |
|
|
| 0.19 |
|
Primary operating segments |
|
| 1,873 |
|
|
| 1,912 |
|
|
| (39 | ) |
|
| 2.96 |
|
|
| 3.11 |
|
|
| (0.15 | ) |
Corporate and Other |
|
| (186 | ) |
|
| (246 | ) |
|
| 60 |
|
|
| (0.30 | ) |
|
| (0.40 | ) |
|
| 0.10 |
|
Consolidated |
| $ | 1,687 |
|
| $ | 1,666 |
|
| $ | 21 |
|
| $ | 2.66 |
|
| $ | 2.71 |
|
| $ | (0.05 | ) |
|
| Net Income (Loss) Attributable to |
|
| EPS(1) |
| ||||||||||||||||||
|
| 2023 |
|
| 2022 |
|
| $ Change |
|
| 2023 |
|
| 2022 |
|
| $ Change |
| ||||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Second Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Dominion Energy Virginia |
| $ | 391 |
|
| $ | 440 |
|
| $ | (49 | ) |
| $ | 0.47 |
|
| $ | 0.54 |
|
| $ | (0.07 | ) |
Gas Distribution |
|
| 103 |
|
|
| 125 |
|
|
| (22 | ) |
|
| 0.12 |
|
|
| 0.15 |
|
|
| (0.03 | ) |
Dominion Energy South Carolina |
|
| 68 |
|
|
| 124 |
|
|
| (56 | ) |
|
| 0.08 |
|
|
| 0.15 |
|
|
| (0.07 | ) |
Contracted Assets |
|
| 11 |
|
|
| 20 |
|
|
| (9 | ) |
|
| 0.01 |
|
|
| 0.02 |
|
|
| (0.01 | ) |
Corporate and Other |
|
| 26 |
|
|
| (1,162 | ) |
|
| 1,188 |
|
|
| 0.01 |
|
|
| (1.44 | ) |
|
| 1.45 |
|
Consolidated |
| $ | 599 |
|
| $ | (453 | ) |
| $ | 1,052 |
|
| $ | 0.69 |
|
| $ | (0.58 | ) |
| $ | 1.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Year-To-Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Dominion Energy Virginia |
| $ | 777 |
|
| $ | 958 |
|
| $ | (181 | ) |
| $ | 0.93 |
|
| $ | 1.18 |
|
| $ | (0.25 | ) |
Gas Distribution |
|
| 381 |
|
|
| 419 |
|
|
| (38 | ) |
|
| 0.46 |
|
|
| 0.51 |
|
|
| (0.05 | ) |
Dominion Energy South Carolina |
|
| 159 |
|
|
| 233 |
|
|
| (74 | ) |
|
| 0.19 |
|
|
| 0.29 |
|
|
| (0.10 | ) |
Contracted Assets |
|
| 167 |
|
|
| 121 |
|
|
| 46 |
|
|
| 0.20 |
|
|
| 0.15 |
|
|
| 0.05 |
|
Corporate and Other |
|
| 112 |
|
|
| (1,473 | ) |
|
| 1,585 |
|
|
| 0.08 |
|
|
| (1.88 | ) |
|
| 1.96 |
|
Consolidated |
| $ | 1,596 |
|
| $ | 258 |
|
| $ | 1,338 |
|
| $ | 1.86 |
|
| $ | 0.25 |
|
| $ | 1.61 |
|
Power Delivery(1) Consolidated results are presented on a diluted EPS basis. The dilutive impacts, primarily consisting of potential shares which had not yet been issued, are included within the results of the Corporate and Other segment. EPS contributions for Dominion Energy’s operating segments are presented utilizing basic average shares outstanding for the period.
70
Dominion Energy Virginia
Presented below are selected operating statistics related to Power Delivery’sDominion Energy Virginia’s operations:
|
| Third Quarter |
|
| Year-To-Date |
| ||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| % Change |
|
| 2017 |
|
| 2016 |
|
| % Change |
| ||||||
Electricity delivered (million MWh) |
|
| 23.0 |
|
|
| 24.1 |
|
|
| (5 | )% |
|
| 63.2 |
|
|
| 64.2 |
|
|
| (2 | )% |
Degree days (electric distribution service area): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cooling |
|
| 1,124 |
|
|
| 1,326 |
|
|
| (15 | ) |
|
| 1,698 |
|
|
| 1,755 |
|
|
| (3 | ) |
Heating |
|
| 2 |
|
|
| — |
|
|
| 100 |
|
|
| 1,825 |
|
|
| 2,247 |
|
|
| (19 | ) |
Average electric distribution customer accounts (thousands)(1) |
|
| 2,576 |
|
|
| 2,552 |
|
|
| 1 |
|
|
| 2,570 |
|
|
| 2,546 |
|
|
| 1 |
|
|
|
|
| Second Quarter |
|
| Year-To-Date |
| ||||||||||||||||||
|
| 2023 |
|
| 2022 |
|
| % Change |
|
| 2023 |
|
| 2022 |
|
| % Change |
| ||||||
Electricity delivered (million MWh) |
|
| 21.8 |
|
|
| 20.7 |
|
|
| 5 | % |
|
| 43.5 |
|
|
| 43.0 |
|
|
| 1 | % |
Electricity supplied (million MWh): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Utility |
|
| 20.7 |
|
|
| 20.8 |
|
|
| — |
|
|
| 42.5 |
|
|
| 43.1 |
|
|
| (1 | ) |
Non-Jurisdictional |
|
| 0.6 |
|
|
| 0.5 |
|
|
| 20 |
|
|
| 0.9 |
|
|
| 0.8 |
|
|
| 13 |
|
Degree days (electric distribution and utility service area): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Cooling |
|
| 358 |
|
|
| 502 |
|
|
| (29 | ) |
|
| 361 |
|
|
| 513 |
|
|
| (30 | ) |
Heating |
|
| 204 |
|
|
| 297 |
|
|
| (31 | ) |
|
| 1,675 |
|
|
| 2,192 |
|
|
| (24 | ) |
Average electric distribution customer accounts |
|
| 2,746 |
|
|
| 2,720 |
|
|
| 1 |
|
|
| 2,743 |
|
|
| 2,718 |
|
|
| 1 |
|
Presented below, on an after-tax basis, are the key factors impacting Power Delivery’sDominion Energy Virginia’s net income contribution:
|
| Third Quarter 2017 vs. 2016 Increase (Decrease) |
|
| Year-To-Date 2017 vs. 2016 Increase (Decrease) |
|
| Second Quarter |
|
| Year-To-Date |
| ||||||||||||||||||||
|
| Amount |
|
| EPS |
|
| Amount |
|
| EPS |
|
| Amount |
|
| EPS |
|
| Amount |
|
| EPS |
| ||||||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Weather |
| $ | (13 | ) |
| $ | (0.02 | ) |
| $ | (19 | ) |
| $ | (0.03 | ) |
| $ | (42 | ) |
| $ | (0.05 | ) |
| $ | (109 | ) |
| $ | (0.13 | ) |
Other |
|
| 1 |
|
|
| — |
|
|
| 12 |
|
|
| 0.02 |
| ||||||||||||||||
FERC transmission equity return |
|
| 5 |
|
|
| 0.01 |
|
|
| 14 |
|
|
| 0.02 |
| ||||||||||||||||
Storm damage and service restoration |
|
| 3 |
|
|
| — |
|
|
| 17 |
|
|
| 0.03 |
| ||||||||||||||||
Customer usage and other factors |
|
| 42 |
|
|
| 0.05 |
|
|
| 75 |
|
|
| 0.09 |
| ||||||||||||||||
Customer-elected rate impacts |
|
| (57 | ) |
|
| (0.07 | ) |
|
| (78 | ) |
|
| (0.10 | ) | ||||||||||||||||
Rider equity return |
|
| 17 |
|
|
| 0.02 |
|
|
| 49 |
|
|
| 0.06 |
| ||||||||||||||||
Storm damage and restoration costs |
|
| 5 |
|
|
| 0.01 |
|
|
| 13 |
|
|
| 0.02 |
| ||||||||||||||||
Depreciation and amortization |
|
| (6 | ) |
|
| (0.01 | ) |
|
| (12 | ) |
|
| (0.01 | ) | ||||||||||||||||
Renewable energy investment tax credits |
|
| 4 |
|
|
| — |
|
|
| (53 | ) |
|
| (0.07 | ) | ||||||||||||||||
Interest expense, net |
|
| (10 | ) |
|
| (0.01 | ) |
|
| (23 | ) |
|
| (0.03 | ) | ||||||||||||||||
Other |
|
| 3 |
|
|
| — |
|
|
| 3 |
|
|
| — |
|
|
| (2 | ) |
|
| — |
|
|
| (43 | ) |
|
| (0.06 | ) |
Share dilution |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.01 | ) |
|
| — |
|
|
| (0.01 | ) |
|
| — |
|
|
| (0.02 | ) |
Change in net income contribution |
| $ | (1 | ) |
| $ | (0.01 | ) |
| $ | 27 |
|
| $ | 0.03 |
|
| $ | (49 | ) |
| $ | (0.07 | ) |
| $ | (181 | ) |
| $ | (0.25 | ) |
Power GenerationGas Distribution
Presented below are selected operating statistics related to Power Generation’s operations:
|
| Third Quarter |
|
| Year-To-Date |
| ||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| % Change |
|
| 2017 |
|
| 2016 |
|
| % Change |
| ||||||
Electricity supplied (million MWh): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility |
|
| 23.1 |
|
|
| 24.8 |
|
|
| (7 | )% |
|
| 64.7 |
|
|
| 67.1 |
|
|
| (4 | )% |
Merchant |
|
| 7.9 |
|
|
| 7.9 |
|
|
| — |
|
|
| 22.7 |
|
|
| 21.2 |
|
|
| 7 |
|
Degree days (electric utility service area): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cooling |
|
| 1,124 |
|
|
| 1,326 |
|
|
| (15 | ) |
|
| 1,698 |
|
|
| 1,755 |
|
|
| (3 | ) |
Heating |
|
| 2 |
|
|
| — |
|
| 100 |
|
|
| 1,825 |
|
|
| 2,247 |
|
|
| (19 | ) |
Presented below, on an after-tax basis, are the key factors impacting Power Generation’s net income contribution:
|
| Third Quarter 2017 vs. 2016 Increase (Decrease) |
|
| Year-To-Date 2017 vs. 2016 Increase (Decrease) |
| ||||||||||
|
| Amount |
|
| EPS |
|
| Amount |
|
| EPS |
| ||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weather |
| $ | (33 | ) |
| $ | (0.05 | ) |
| $ | (45 | ) |
| $ | (0.07 | ) |
Other |
|
| 6 |
|
|
| 0.01 |
|
|
| 27 |
|
|
| 0.04 |
|
Electric capacity |
|
| (16 | ) |
|
| (0.03 | ) |
|
| 70 |
|
|
| 0.11 |
|
Renewable energy investment tax credits(1) |
|
| (242 | ) |
|
| (0.39 | ) |
|
| (187 | ) |
|
| (0.31 | ) |
Merchant generation margin |
|
| 6 |
|
|
| 0.01 |
|
|
| (9 | ) |
|
| (0.02 | ) |
Noncontrolling interests(2) |
|
| 14 |
|
|
| 0.02 |
|
|
| 1 |
|
|
| — |
|
Depreciation and amortization |
|
| (12 | ) |
|
| (0.02 | ) |
|
| (38 | ) |
|
| (0.06 | ) |
Other |
|
| (4 | ) |
|
| (0.01 | ) |
|
| (15 | ) |
|
| (0.02 | ) |
Share dilution |
|
| — |
|
|
| (0.01 | ) |
|
| — |
|
|
| (0.04 | ) |
Change in net income contribution |
| $ | (281 | ) |
| $ | (0.47 | ) |
| $ | (196 | ) |
| $ | (0.37 | ) |
|
|
|
|
Presented below are selected operating statistics related to Gas Infrastructure’sDistribution’s operations:
|
| Second Quarter |
|
| Year-To-Date |
| ||||||||||||||||||
|
| 2023 |
|
| 2022(1) |
|
| % Change |
|
| 2023 |
|
| 2022(1) |
|
| % Change |
| ||||||
Gas distribution throughput (bcf): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Sales |
|
| 27 |
|
|
| 26 |
|
|
| 4 | % |
|
| 111 |
|
|
| 115 |
|
|
| (3 | %) |
Transportation |
|
| 193 |
|
|
| 217 |
|
|
| (11 | ) |
|
| 465 |
|
|
| 518 |
|
|
| (10 | ) |
Heating degree days (gas distribution service area): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
North Carolina |
|
| 189 |
|
|
| 189 |
|
|
| — |
|
|
| 1,377 |
|
|
| 1,772 |
|
|
| (22 | ) |
Ohio and West Virginia(1) |
|
| 658 |
|
|
| 622 |
|
|
| 6 |
|
|
| 3,055 |
|
|
| 3,534 |
|
|
| (14 | ) |
Utah, Wyoming and Idaho |
|
| 499 |
|
|
| 662 |
|
|
| (25 | ) |
|
| 3,154 |
|
|
| 3,140 |
|
|
| — |
|
Average gas distribution customer accounts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Sales |
|
| 1,899 |
|
|
| 1,971 |
|
|
| (4 | ) |
|
| 1,898 |
|
|
| 1,967 |
|
|
| (4 | ) |
Transportation |
|
| 1,138 |
|
|
| 1,136 |
|
|
| — |
|
|
| 1,137 |
|
|
| 1,137 |
|
|
| — |
|
|
| Third Quarter |
|
| Year-To-Date |
| ||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| % Change |
|
| 2017 |
|
| 2016 |
|
| % Change |
| ||||||
Gas distribution throughput (bcf)(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
| 10 |
|
|
| 2 |
|
|
| 400 | % |
|
| 85 |
|
|
| 18 |
|
|
| 372 | % |
Transportation |
|
| 143 |
|
|
| 106 |
|
|
| 35 |
|
|
| 469 |
|
|
| 364 |
|
|
| 29 |
|
Heating degree days (gas distribution service area): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eastern region |
|
| 66 |
|
|
| 22 |
|
|
| 200 |
|
|
| 2,940 |
|
|
| 3,435 |
|
|
| (14 | ) |
Western region(1) |
|
| 131 |
|
|
| 39 |
|
|
| 236 |
|
|
| 3,024 |
|
|
| 39 |
|
|
| 7,654 |
|
Average gas distribution customer accounts (thousands)(1)(2): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
| 1,234 |
|
|
| 472 |
|
|
| 161 |
|
|
| 1,234 |
|
|
| 329 |
|
|
| 275 |
|
Transportation |
|
| 1,082 |
|
|
| 1,069 |
|
|
| 1 |
|
|
| 1,089 |
|
|
| 1,072 |
|
|
| 2 |
|
Average retail energy marketing customer accounts (thousands)(2) |
|
| 1,463 |
|
|
| 1,377 |
|
|
| 6 |
|
|
| 1,447 |
|
|
| 1,368 |
|
|
| 6 |
|
|
|
|
|
71
Presented below, on an after-tax basis, are the key factors impacting Gas Infrastructure’sDistribution’s net income contribution:
|
| Second Quarter |
|
| Year-To-Date |
| ||||||||||
|
| Amount |
|
| EPS |
|
| Amount |
|
| EPS |
| ||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weather |
| $ | — |
|
| $ | — |
|
| $ | (4 | ) |
| $ | — |
|
Customer usage and other factors |
|
| 2 |
|
|
| — |
|
|
| 9 |
|
|
| 0.01 |
|
Base rate case impacts |
|
| 9 |
|
|
| 0.01 |
|
|
| 25 |
|
|
| 0.03 |
|
Rider equity return |
|
| 6 |
|
|
| 0.01 |
|
|
| 9 |
|
|
| 0.01 |
|
Wexpro cost saving sharing incentives |
|
| (7 | ) |
|
| (0.01 | ) |
|
| (4 | ) |
|
| — |
|
Sale of Hope |
|
| (3 | ) |
|
| — |
|
|
| (22 | ) |
|
| (0.03 | ) |
Depreciation and amortization |
|
| (6 | ) |
|
| (0.01 | ) |
|
| (11 | ) |
|
| (0.01 | ) |
Interest expense, net |
|
| (13 | ) |
|
| (0.02 | ) |
|
| (25 | ) |
|
| (0.03 | ) |
Other |
|
| (10 | ) |
|
| (0.01 | ) |
|
| (15 | ) |
|
| (0.02 | ) |
Share dilution |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.01 | ) |
Change in net income contribution |
| $ | (22 | ) |
| $ | (0.03 | ) |
| $ | (38 | ) |
| $ | (0.05 | ) |
Dominion Energy South Carolina
Presented below are selected operating statistics related to Dominion Energy South Carolina’s operations:
|
| Second Quarter |
|
| Year-To-Date |
| ||||||||||||||||||
|
| 2023 |
|
| 2022 |
|
| % Change |
|
| 2023 |
|
| 2022 |
|
| % Change |
| ||||||
Electricity delivered (million MWh) |
|
| 5.2 |
|
|
| 5.9 |
|
|
| (12 | %) |
|
| 10.2 |
|
|
| 11.1 |
|
|
| (8 | %) |
Electricity supplied (million MWh) |
|
| 5.5 |
|
|
| 6.2 |
|
|
| (11 | ) |
|
| 10.7 |
|
|
| 11.7 |
|
|
| (9 | ) |
Degree days (electric distribution service areas): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cooling |
|
| 113 |
|
|
| 253 |
|
|
| (55 | ) |
|
| 114 |
|
|
| 253 |
|
|
| (55 | ) |
Heating |
|
| 25 |
|
|
| 33 |
|
|
| (24 | ) |
|
| 484 |
|
|
| 783 |
|
|
| (38 | ) |
Gas distribution throughput (bcf): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Sales |
|
| 16 |
|
|
| 15 |
|
|
| 7 |
|
|
| 33 |
|
|
| 35 |
|
|
| (6 | ) |
Average distribution customer accounts (thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Electric |
|
| 789 |
|
|
| 776 |
|
|
| 2 |
|
|
| 786 |
|
|
| 774 |
|
|
| 2 |
|
Gas |
|
| 441 |
|
|
| 425 |
|
|
| 4 |
|
|
| 439 |
|
|
| 424 |
|
|
| 4 |
|
Presented below, on an after-tax basis, are the key factors impacting Dominion Energy South Carolina’s net income contribution:
|
| Second Quarter |
|
| Year-To-Date |
| ||||||||||
|
| Amount |
|
| EPS |
|
| Amount |
|
| EPS |
| ||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weather |
| $ | (26 | ) |
| $ | (0.03 | ) |
| $ | (45 | ) |
| $ | (0.06 | ) |
Customer usage and other factors |
|
| 3 |
|
|
| — |
|
|
| 10 |
|
|
| 0.01 |
|
Customer-elected rate impacts |
|
| (11 | ) |
|
| (0.01 | ) |
|
| (18 | ) |
|
| (0.02 | ) |
Base rate case & Natural Gas Rate Stabilization Act impacts |
|
| 1 |
|
|
| — |
|
|
| 6 |
|
|
| 0.01 |
|
Capital cost rider |
|
| (2 | ) |
|
| — |
|
|
| (4 | ) |
|
| — |
|
Gains on sales of property |
|
| (12 | ) |
|
| (0.01 | ) |
|
| (12 | ) |
|
| (0.01 | ) |
Depreciation and amortization |
|
| (4 | ) |
|
| — |
|
|
| (7 | ) |
|
| (0.01 | ) |
Interest expense, net |
|
| (8 | ) |
|
| (0.01 | ) |
|
| (14 | ) |
|
| (0.02 | ) |
Other |
|
| 3 |
|
|
| (0.01 | ) |
|
| 10 |
|
|
| 0.01 |
|
Share dilution |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.01 | ) |
Change in net income contribution |
| $ | (56 | ) |
| $ | (0.07 | ) |
| $ | (74 | ) |
| $ | (0.10 | ) |
72
Contracted Assets
Presented below are selected operating statistics related to Contracted Asset’s operations:
|
| Second Quarter |
|
| Year-To-Date |
|
| ||||||||||||||||||
|
| 2023 |
|
| 2022 |
|
| % Change |
|
| 2023 |
|
| 2022 |
|
| % Change |
|
| ||||||
Electricity supplied (million MWh) |
|
| 2.4 |
|
|
| 3.4 |
|
|
| (29 | %) |
|
| 7.0 |
|
|
| 8.0 |
|
|
| (13 | ) | % |
Presented below, on an after-tax basis, are the key factors impacting Contracted Asset’s net income contribution:
|
| Second Quarter |
|
| Year-To-Date |
| ||||||||||
|
| Amount |
|
| EPS |
|
| Amount |
|
| EPS |
| ||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Margin(1) |
| $ | (11 | ) |
| $ | (0.01 | ) |
| $ | 38 |
|
| $ | 0.05 |
|
Planned outage costs(2) |
|
| 3 |
|
|
| — |
|
|
| 6 |
|
|
| 0.01 |
|
Unplanned outage costs(2) |
|
| (3 | ) |
|
| — |
|
|
| (2 | ) |
|
| — |
|
Depreciation and amortization |
|
| 6 |
|
|
| 0.01 |
|
|
| 11 |
|
|
| 0.01 |
|
Interest expense, net |
|
| (2 | ) |
|
| — |
|
|
| (7 | ) |
|
| (0.01 | ) |
Other |
|
| (2 | ) |
|
| (0.01 | ) |
|
| — |
|
|
| — |
|
Share dilution |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.01 | ) |
Change in net income contribution |
| $ | (9 | ) |
| $ | (0.01 | ) |
| $ | 46 |
|
| $ | 0.05 |
|
|
| Third Quarter 2017 vs. 2016 Increase (Decrease) |
|
| Year-To-Date 2017 vs. 2016 Increase (Decrease) |
| ||||||||||
|
| Amount |
|
| EPS |
|
| Amount |
|
| EPS |
| ||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy Questar Combination |
| $ | 34 |
|
| $ | 0.05 |
|
| $ | 184 |
|
| $ | 0.30 |
|
Assignment of Marcellus acreage |
|
| 33 |
|
|
| 0.05 |
|
|
| 7 |
|
|
| 0.01 |
|
Cove Point import contracts |
|
| (27 | ) |
|
| (0.04 | ) |
|
| (63 | ) |
|
| (0.10 | ) |
Noncontrolling interests(1) |
|
| (9 | ) |
|
| (0.01 | ) |
|
| (28 | ) |
|
| (0.04 | ) |
Transportation and storage growth projects |
|
| 7 |
|
|
| 0.01 |
|
|
| 23 |
|
|
| 0.04 |
|
Other |
|
| 14 |
|
|
| 0.02 |
|
|
| 7 |
|
|
| 0.01 |
|
Share dilution |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (0.03 | ) |
Change in net income contribution |
| $ | 52 |
|
| $ | 0.08 |
|
| $ | 130 |
|
| $ | 0.19 |
|
|
|
Corporate and Other
Presented below are the Corporate and Other segment’s after-tax results:
|
| Third Quarter |
|
| Year-To-Date |
|
| Second Quarter |
|
| Year-To-Date |
| ||||||||||||||||||||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| $ Change |
|
| 2017 |
|
| 2016 |
|
| $ Change |
|
| 2023 |
|
| 2022 |
|
| $ Change |
|
| 2023 |
|
| 2022 |
|
| $ Change |
| ||||||||||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Specific items attributable to operating segments |
| $ | — |
|
| $ | 4 |
|
| $ | (4 | ) |
| $ | (1 | ) |
| $ | (22 | ) |
| $ | 21 |
|
| $ | 92 |
|
| $ | (1,254 | ) |
| $ | 1,346 |
|
| $ | 364 |
|
| $ | (1,523 | ) |
| $ | 1,887 |
|
Specific items attributable to corporate operations |
|
| (7 | ) |
|
| (30 | ) |
|
| 23 |
|
|
| (16 | ) |
|
| (41 | ) |
|
| 25 |
| ||||||||||||||||||||||||
Specific items attributable to Corporate and |
|
| 39 |
|
|
| 143 |
|
|
| (104 | ) |
|
| (85 | ) |
|
| 123 |
|
|
| (208 | ) | ||||||||||||||||||||||||
Total specific items |
|
| (7 | ) |
|
| (26 | ) |
|
| 19 |
|
|
| (17 | ) |
|
| (63 | ) |
|
| 46 |
|
|
| 131 |
|
|
| (1,111 | ) |
|
| 1,242 |
|
|
| 279 |
|
|
| (1,400 | ) |
|
| 1,679 |
|
Other corporate operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Renewable energy investment tax credits |
|
| 52 |
|
|
| (143 | ) |
|
| 195 |
|
|
| 79 |
|
|
| (11 | ) |
|
| 90 |
| ||||||||||||||||||||||||
Interest expense, net |
|
| (85 | ) |
|
| (63 | ) |
|
| (22 | ) |
|
| (258 | ) |
|
| (191 | ) |
|
| (67 | ) |
|
| (133 | ) |
|
| (82 | ) |
|
| (51 | ) |
|
| (253 | ) |
|
| (161 | ) |
|
| (92 | ) |
Other |
|
| 11 |
|
|
| (2 | ) |
|
| 13 |
|
|
| 10 |
|
|
| 19 |
|
|
| (9 | ) |
|
| 28 |
|
|
| 31 |
|
|
| (3 | ) |
|
| 86 |
|
|
| 88 |
|
|
| (2 | ) |
Total other corporate operations |
|
| (22 | ) |
|
| (208 | ) |
|
| 186 |
|
|
| (169 | ) |
|
| (183 | ) |
|
| 14 |
|
|
| (105 | ) |
|
| (51 | ) |
|
| (54 | ) |
|
| (167 | ) |
|
| (73 | ) |
|
| (94 | ) |
Total net expense |
| $ | (29 | ) |
| $ | (234 | ) |
| $ | 205 |
|
| $ | (186 | ) |
| $ | (246 | ) |
| $ | 60 |
| ||||||||||||||||||||||||
Total net income (expense) |
| $ | 26 |
|
| $ | (1,162 | ) |
| $ | 1,188 |
|
| $ | 112 |
|
| $ | (1,473 | ) |
| $ | 1,585 |
| ||||||||||||||||||||||||
EPS impact |
| $ | (0.04 | ) |
| $ | (0.37 | ) |
| $ | 0.33 |
|
| $ | (0.30 | ) |
| $ | (0.40 | ) |
| $ | 0.10 |
|
| $ | 0.01 |
|
| $ | (1.44 | ) |
| $ | 1.45 |
|
| $ | 0.08 |
|
| $ | (1.88 | ) |
| $ | 1.96 |
|
Corporate and Other includes specific items attributable to Dominion Energy'sEnergy’s primary operating segments that are not included in profit measures evaluated by executive management in assessing thosethe segments' performance or in allocating resources. See Note 1921 to the Consolidated Financial Statements in this report for discussion of these items in more detail. Corporate and otherOther also includes items attributable to the Corporate and Other segment.
Virginia Power
Results of Operations
Presented below is For the three months ended June 30, 2023, this primarily included a summary of Virginia Power’s consolidated results:
|
| Third Quarter |
|
| Year-To-Date |
| ||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| $ Change |
|
| 2017 |
|
| 2016 |
|
| $ Change |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| $ | 459 |
|
| $ | 503 |
|
| $ | (44 | ) |
| $ | 1,133 |
|
| $ | 1,046 |
|
| $ | 87 |
|
Overview
Third Quarter 2017 vs. 2016
Net income decreased 9%,$36 million after-tax gain for derivative mark-to-market changes. For the six months ended June 30, 2023, this primarily due to milder weather during 2017 and the annual PJM capacity performance market effective June 2017, partially offset byincluded a benefit related to non-utility generators.
Year-To-Date 2017 vs. 2016
Net income increased 8%, primarily due to the PJM capacity performance market, a benefit related to non-utility generators, an increase in customer usage and other factors and the absence of organizational design initiative costs, partially offset by milder weather during 2017.
Analysis of Consolidated Operations
Presented below are selected amounts related to Virginia Power’s results of operations:
|
| Third Quarter |
|
| Year-To-Date |
| ||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| $ Change |
|
| 2017 |
|
| 2016 |
|
| $ Change |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
| $ | 2,154 |
|
| $ | 2,211 |
|
| $ | (57 | ) |
| $ | 5,732 |
|
| $ | 5,877 |
|
| $ | (145 | ) |
Electric fuel and other energy-related purchases |
|
| 549 |
|
|
| 516 |
|
|
| 33 |
|
|
| 1,414 |
|
|
| 1,527 |
|
|
| (113 | ) |
Purchased (excess) electric capacity |
|
| 21 |
|
|
| (6 | ) |
|
| 27 |
|
|
| (8 | ) |
|
| 107 |
|
|
| (115 | ) |
Net revenue |
|
| 1,584 |
|
|
| 1,701 |
|
|
| (117 | ) |
|
| 4,326 |
|
|
| 4,243 |
|
|
| 83 |
|
Other operations and maintenance |
|
| 373 |
|
|
| 443 |
|
|
| (70 | ) |
|
| 1,126 |
|
|
| 1,279 |
|
|
| (153 | ) |
Depreciation and amortization |
|
| 288 |
|
|
| 270 |
|
|
| 18 |
|
|
| 854 |
|
|
| 765 |
|
|
| 89 |
|
Other taxes |
|
| 76 |
|
|
| 74 |
|
|
| 2 |
|
|
| 233 |
|
|
| 218 |
|
|
| 15 |
|
Other income |
|
| 13 |
|
|
| 13 |
|
|
| — |
|
|
| 57 |
|
|
| 47 |
|
|
| 10 |
|
Interest and related charges |
|
| 128 |
|
|
| 118 |
|
|
| 10 |
|
|
| 373 |
|
|
| 345 |
|
|
| 28 |
|
Income tax expense |
|
| 273 |
|
|
| 306 |
|
|
| (33 | ) |
|
| 664 |
|
|
| 637 |
|
|
| 27 |
|
An analysis of Virginia Power’s results of operations follows:
Third Quarter 2017 vs. 2016
Net revenue decreased 7%, primarily reflecting:
A $76$68 million decrease in sales to retail customers from a decrease in cooling degree days; and
A $24 million increase in electric capacity related expenses due to the annual PJM capacity performance market effective June 2017 ($68 million), partially offset by a benefit related to non-utility generators ($44 million).
Other operations and maintenance decreased 16%, primarily reflecting:
A $30 million decrease in certain electric transmission-related expenditures. These expenses are primarily recovered through state and FERC rates and do not impact net income;
An $11 million decrease due to the absence of 2016 union workforce contract renegotiations; and
A $9 million decrease in outside services due to the absence of certain utility projects.
Income tax expense decreased 11%, primarily due to lower pre-tax income.
Year-To-Date 2017 vs. 2016
Net revenue increased 2%, primarily reflecting:
A $119 million electric capacity benefit due to the annual PJM capacity performance market effective June 2016 ($123 million) and a benefit related to non-utility generators ($86 million), partially offset by the annual PJM capacity performance market effective June 2017 ($90 million);
An increase in sales to retail customers due to the effect of changes in customer usage and other factors ($57 million); and
An increase from rate adjustment clauses ($36 million); partially offset by
A decrease in sales to retail customers from a reduction in heating degree days during the heating season of 2017 ($52 million) and a decrease in cooling degree days during the cooling season of 2017 ($53 million).
Other operations and maintenance decreased 12%, primarily reflecting:
An $88 million decrease in certain electric transmission-related expenditures. These expenses are primarily recovered through state and FERC rates and do not impact net income;
The absence of organizational design initiative costs ($32 million); and
A $28 million decrease in storm damage and service restoration costs.
Depreciation and amortization increased 12%, primarily due to various growth projects being placed into service ($48 million) and revised depreciation rates ($32 million).
Other income increased 21%, primarily reflecting:
An $11 million increase in interest incomeafter-tax charge associated with the settlementimpairment of statea corporate office building.
For the three months ended June 30, 2022, other than the effects of required interim period provision for income tax refund claims; and
A $10taxes, this primarily included a $188 million increase fromafter-tax benefit for derivative mark-to-market changes. For the assignmentsix months ended June 30, 2022, other than the effects of Virginia Power’s electric transmission tower rental portfolio; partially offset by
A $16required interim period provision for income taxes, this primarily included a $240 million after-tax benefit for derivative mark-to-market changes, a $90 million charge to reflect the recognition of deferred taxes on the outside basis of Hope’s stock upon meeting the classification as held for sale and $18 million net income from discontinued operations, primarily associated with a customer settlement.
Dominion Energy Gasthe Q-Pipe Group.
Results
73
Outlook
As of Operations
Presented below is a summary of Dominion Energy Gas' consolidated results:
|
| Third Quarter |
|
| Year-To-Date |
| ||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| $ Change |
|
| 2017 |
|
| 2016 |
|
| $ Change |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
| $ | 117 |
|
| $ | 83 |
|
| $ | 34 |
|
| $ | 302 |
|
| $ | 286 |
|
| $ | 16 |
|
Overview
Third Quarter 2017 vs. 2016
Net income increased 41%, primarily due to gains from agreements to convey shale development rights underneath several natural gas storage fields.
Year-To-Date 2017 vs. 2016
Net income increased 6%, primarily due to gas transportation and storage activities from growth projects placed into service.
Analysis of Consolidated Operations
Presented below are selected amounts relatedJune 30, 2023, there have been no material changes to Dominion Energy Gas' results of operations:Energy’s 2023 outlook as described in Item 7. MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. As discussed in Future Issues and Other Matters, legislation enacted in Virginia in April 2023 is expected to decrease Dominion Energy’s 2023 net income for riders combined into base rates effective July 2023.
|
| Third Quarter |
|
| Year-To-Date |
| ||||||||||||||||||
|
| 2017 |
|
| 2016 |
|
| $ Change |
|
| 2017 |
|
| 2016 |
|
| $ Change |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
| $ | 401 |
|
| $ | 382 |
|
| $ | 19 |
|
| $ | 1,313 |
|
| $ | 1,181 |
|
| $ | 132 |
|
Purchased gas |
|
| 19 |
|
|
| 21 |
|
|
| (2 | ) |
|
| 100 |
|
|
| 71 |
|
|
| 29 |
|
Other energy-related purchases |
|
| 4 |
|
|
| 4 |
|
|
| — |
|
|
| 11 |
|
|
| 8 |
|
|
| 3 |
|
Net revenue |
|
| 378 |
|
|
| 357 |
|
|
| 21 |
|
|
| 1,202 |
|
|
| 1,102 |
|
|
| 100 |
|
Other operations and maintenance |
|
| 73 |
|
|
| 133 |
|
|
| (60 | ) |
|
| 377 |
|
|
| 331 |
|
|
| 46 |
|
Depreciation and amortization |
|
| 57 |
|
|
| 55 |
|
|
| 2 |
|
|
| 167 |
|
|
| 150 |
|
|
| 17 |
|
Other taxes |
|
| 42 |
|
|
| 36 |
|
|
| 6 |
|
|
| 139 |
|
|
| 127 |
|
|
| 12 |
|
Earnings from equity method investee |
|
| 4 |
|
|
| 5 |
|
|
| (1 | ) |
|
| 15 |
|
|
| 14 |
|
|
| 1 |
|
Other income |
|
| 6 |
|
|
| 2 |
|
|
| 4 |
|
|
| 16 |
|
|
| 8 |
|
|
| 8 |
|
Interest and related charges |
|
| 25 |
|
|
| 23 |
|
|
| 2 |
|
|
| 72 |
|
|
| 68 |
|
|
| 4 |
|
Income tax expense |
|
| 74 |
|
|
| 34 |
|
|
| 40 |
|
|
| 176 |
|
|
| 162 |
|
|
| 14 |
|
An analysis of Dominion Energy Gas' results of operations follows:
Third Quarter 2017 vs. 2016
Net revenue increased 6%, primarily reflecting:
A $13 million increase from regulated natural gas transmission growth projects placed into service;
A $6 million increase in PIR program revenues; and
A $6 million increase in services performed for Atlantic Coast Pipeline.
Other operations and maintenance decreased 45%, primarily reflecting:
The increase in gains from agreements to convey shale development rights underneath several natural gas storage fields ($56 million); and
The absence of a union workforce temporary work stoppage ($8 million); partially offset by
A $5 million increase in services performed for Atlantic Coast Pipeline. These expenses are billed to Atlantic Coast Pipeline and do not significantly impact net income.
Other taxes increased 17% primarily due to an increase in property taxes related to growth projects placed into service.
Income tax expense increased by $40 million due to higher pre-tax income ($28 million) and the absence of a 2016 settlement with a tax authority ($12 million).
Year-To-Date 2017 vs. 2016
Net revenue increased 9%, primarily reflecting:
A $38 million increase from regulated natural gas transmission growth projects placed into service;
A $22 million increase in services performed for Atlantic Coast Pipeline;
An $18 million increase in PIR program revenues; and
A $17 million increase in rate recovery for low income assistance programs associated with regulated natural gas distribution operations.
Other operations and maintenance increased 14%, primarily reflecting:
A $21 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 $17 million increase in bad debt expense at regulated natural gas distribution operations primarily related to low income assistance programs. These bad debt expenses are recovered through rates and do not impact net income;
A $15 million increase due to a charge to write-off the balance of a regulatory asset no longer considered probable of recovery; and
An $11 million increase in salaries, wages and benefits and general and administrative expenses; partially offset by
A $16 million increase in gains from agreements to convey shale development rights underneath several natural gas storage fields;
The absence of organizational design initiative costs ($10 million); and
The absence of a union workforce temporary work stoppage ($8 million).
Other income increased by $8 million primarily due to an increase in AFUDC associated with rate-regulated projects ($12 million), partially offset by the absence of a gain on the 2016 sale of a portion of Dominion Energy Gas’ interest in Iroquois ($5 million).
Liquidity and Capital Resources
Dominion Energy depends on both internalcash generated from operations and external sources of liquidity to provide working capital and as a bridge to long-term debt financings. Short-termDominion Energy’s material cash requirements not met by cash provided by operations are generally satisfiedinclude capital and investment expenditures, repaying short-term and long-term debt obligations and paying dividends on its common and preferred stock. This section should be read in conjunction with proceeds from short-term borrowings. Long-term cash needs are met through issuances of debt and/or equity securities.
At September 30, 2017, Dominion Energy had $2.4 billion of unused capacity under its credit facilities. See Note 14 to the Consolidated Financial Statements for more information.
A summary of Dominion Energy’s cash flows is presented below:
|
| 2017 |
|
| 2016 |
| ||
(millions) |
|
|
|
|
|
|
|
|
Cash and cash equivalents at January 1 |
| $ | 261 |
|
| $ | 607 |
|
Cash flows provided by (used in): |
|
|
|
|
|
|
|
|
Operating activities |
|
| 3,664 |
|
|
| 3,386 |
|
Investing activities |
|
| (4,873 | ) |
|
| (9,029 | ) |
Financing activities |
|
| 1,175 |
|
|
| 5,287 |
|
Net decrease in cash and cash equivalents |
|
| (34 | ) |
|
| (356 | ) |
Cash and cash equivalents at September 30 |
| $ | 227 |
|
| $ | 251 |
|
Net cash provided by Dominion Energy’s operating activities increased $278 million, primarily due to the operations acquiredItem 7. MD&A in the Dominion Energy Questar Combination being included for all of 2017, an electric utility capacity benefit, derivative activities and proceeds from the assignment of the electric transmission tower rental portfolio, partially offset by lower deferred fuel cost recoveries in the Virginia jurisdiction, milder weather in Dominion Energy’s electric utility service territory, higher interest expense, lower revenue from Cove Point’s import contracts and Dominion Energy’s contribution to Dominion Energy Questar’s pension plan.
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.
Dominion Energy's operations are subject to risks and uncertainties that may negatively impact the timing or amounts of operating cash flows, which are discussed in Item 1A. Risk Factors in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016.2022.
Credit Risk
Analysis of Cash Flows
Presented below are selected amounts related to Dominion Energy’s exposurecash flows:
|
| 2023 |
|
| 2022 |
| ||
(millions) |
|
|
|
|
|
| ||
Cash, restricted cash and equivalents at January 1 |
| $ | 341 |
|
| $ | 408 |
|
Cash flows provided by (used in): |
|
|
|
|
|
| ||
Operating activities |
|
| 3,194 |
|
|
| 1,361 |
|
Investing activities |
|
| (5,014 | ) |
|
| (5,148 | ) |
Financing activities |
|
| 1,794 |
|
|
| 3,786 |
|
Net increase (decrease) in cash, restricted cash and equivalents |
|
| (26 | ) |
|
| (1 | ) |
Cash, restricted cash and equivalents at June 30 |
| $ | 315 |
|
| $ | 407 |
|
Operating Cash Flows
Net cash provided by Dominion Energy's operating activities increased $1.8 billion, primarily due to potential concentrationshigher deferred fuel and purchased gas cost recoveries ($1.3 billion), lower margin deposits ($602 million), a decrease in refund payments to Virginia electric customers associated with the settlement of credit risk results primarily from its energy marketingthe 2021 Triennial Review ($282 million), partially offset by an increase in interest payments driven by higher interest rates and price risk management activities. Presented below is a summary of Dominion Energy’s credit exposure as of September 30, 2017 for these activities. Gross credit exposure for each counterparty is calculated prior to the application of collateralborrowings ($300 million) and represents outstanding receivables plus any unrealized on- or off-balance sheet exposure, taking into account contractual netting rights.changes in working capital ($147 million).
|
| Gross Credit Exposure |
|
| Credit Collateral |
|
| Net Credit Exposure |
| |||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Investment grade(1) |
| $ | 26 |
|
| $ | — |
|
| $ | 26 |
|
Non-investment grade(2) |
|
| 3 |
|
|
| — |
|
|
| 3 |
|
No external ratings: |
|
|
|
|
|
|
|
|
|
|
|
|
Internally rated—investment grade(3) |
|
| 8 |
|
|
| — |
|
|
| 8 |
|
Internally rated—non-investment grade(4) |
|
| 33 |
|
|
| — |
|
|
| 33 |
|
Total |
| $ | 70 |
|
| $ | — |
|
| $ | 70 |
|
|
|
|
|
|
|
|
|
Investing Cash Flows
Net cash used in Dominion Energy’s investing activities decreased $4.2 billion,$134 million, primarily due to the absence of the acquisitionan issuance of Dominion Energy Questara short-term deposit ($2.0 billion) and decreaseslower acquisitions of solar development projects ($109 million), substantially offset by an increase in plant construction and other property additions ($1.6 billion), a decrease in proceeds from the sale of assets and equity method investments ($135 million) and the absence of withdrawals from Kewaunee's nuclear decommissioning trust ($80 million).
Financing Cash Flows
Net cash provided by Dominion Energy's financing activities decreased $2.0 billion primarily due to a $2.9 billion decrease due to net repayments of long-term debt in 2023 versus net issuances in 2022, the absence of the settlement of the stock purchase contract component of the 2019 Equity Units in 2022 ($1.6 billion) and a decrease in supplemental credit facility borrowings ($450 million), partially offset by an increase in acquisitionsthe issuance of solar development projects364-day term loan facility borrowings ($2.5 billion) and increased investment in Atlantic Coast Pipeline.higher net issuances of short-term debt ($387 million).
Financing Cash FlowsCredit Facilities and LiquidityShort-Term Debt
Dominion Energy relies on capital markets as significant sources of funding for capital requirements not satisfied by cash provided by its operations. As discussed further in Credit Ratings and Debt Covenants in MD&A in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016,2022, Dominion Energy generally uses proceeds from short-term borrowings, including commercial paper, to satisfy short-term cash requirements not met through cash from operations. The levels of borrowing may vary significantly during the abilitycourse of the year, depending on the timing and amount of cash requirements not satisfied by cash from operations. There have been no significant changes to borrow funds Dominion Energy’s use of credit facilities and/or issue securitiesshort-term debt during the six months ended June 30, 2023.
Joint Revolving Credit Facility
Dominion Energy maintains a $6.0 billion joint revolving credit facility which provides for a discount in the pricing of certain annual fees and amounts borrowed by Dominion Energy under the return demanded by investors are affected byfacility if Dominion Energy achieves certain annual renewable electric generation and diversity and inclusion objectives. At June 30, 2023, Dominion Energy had $1.8 billion of unused capacity under its joint revolving credit ratings. In addition,facility. See Note 16 to the raisingConsolidated Financial Statements in this report for the balances of external capital is subject to certain regulatory requirements, includingcommercial paper and letters of credit outstanding.
74
Dominion Energy Reliability InvestmentSM Program
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 InvestmentSM. 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. At June 30, 2023, Dominion Energy’s Consolidated Balance Sheets include $403 million with respect to such notes presented within short-term debt. The proceeds are used for general corporate purposes and to repay debt.
Other Facilities
In addition to the primary sources of short-term liquidity discussed above, from time to time Dominion Energy enters into separate supplementary credit facilities or term loans as discussed in Note 16 to the Consolidated Financial Statements in this report.
In January 2023, Dominion Energy entered into a $2.5 billion 364-day term loan facility which bears interest at a variable rate and will mature in January 2024 with the proceeds to be used to repay existing long-term debt and short-term debt upon maturity and for other general corporate purposes. Concurrently, Dominion Energy borrowed an initial $1.0 billion with the proceeds used to repay long-term debt. In February and March 2023, Dominion Energy borrowed $500 million and $1.0 billion, respectively, with the proceeds used for general corporate purposes and to repay long-term debt.
In July 2023, Dominion Energy entered into two $600 million 364-day term loan facilities which bear interest at a variable rate and will mature in July 2024 with the proceeds to be used to repay existing long-term debt and/or short-term debt upon maturity and for other general corporate purposes. Subsequently in July 2023, Dominion Energy borrowed an initial $750 million in the aggregate under these facilities with the proceeds used to repay short-term debt and for general corporate purposes. Dominion Energy is permitted to make up to three additional borrowings under each agreement through November 2023, at which point any unused capacity will cease to be available to Dominion Energy. The agreements contain certain issuances.mandatory early repayment provisions, including that any after-tax proceeds in connection with a sale of Dominion Energy’s noncontrolling interest in Cove Point, following the repayment of DECP Holding’s term loan secured by its noncontrolling interest in Cove Point, be applied to any outstanding borrowings under the facilities.
Long-Term Debt
Sustainability Revolving Credit Agreement
Dominion Energy maintains a $900 million Sustainability Revolving Credit Agreement which matures in 2024 and bears interest at a variable rate. The facility offers a reduced interest rate margin with respect to borrowed amounts allocated to certain environmental sustainability or social investment initiatives. In March 2023, Dominion Energy borrowed $450 million with the proceeds used for general corporate purposes. In April 2023, Dominion Energy repaid $450 million borrowed for general corporate purposes. At June 30, 2023, Dominion Energy had $450 million borrowed to support environmental sustainability and social investment initiatives.
Issuances and Borrowings of Long-Term Debt
During the six months ended June 30, 2023, Dominion Energy issued or borrowed the following long-term debt. Unless otherwise noted, the proceeds were used for the repayment of existing indebtedness and for general corporate purposes.
Month | Type | Public / Private | Entity | Principal |
| Rate |
| Stated Maturity | |||||||||
|
|
|
| (millions) |
|
|
|
|
|
| |||||||
March | Senior notes | Public | Virginia Power | $ | 750 |
|
| 5.000 |
| % | 2033 | ||||||
March | Senior notes | Public | Virginia Power |
| 750 |
|
| 5.450 |
| % | 2053 | ||||||
Total issuances and borrowings | $ | 1,500 |
|
|
Dominion Energy currently meets the definition of a well-known seasoned issuer under SEC rules governing the registration, communicationscommunication 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.
Net cash provided byAs the comprehensive business review announced in November 2022 is still in progress, Dominion Energy's financing activities decreased $4.1 billion, primarily dueEnergy is uncertain as to the absenceamount of long-term debt it anticipates issuing in 2023. Dominion Energy expects to issue long-term debt to satisfy cash needs for capital expenditures and maturing long-term debt to the extent such amounts are not satisfied from cash available from operations
75
following the payment of dividends and any borrowings made from unused capacity of Dominion Energy’s credit facilities discussed above. The raising of external capital is subject to certain regulatory requirements, including registration with the SEC for certain issuances.
Repayments, Repurchases and Redemptions of Long-Term Debt
Dominion Energy may from time to time reduce its outstanding debt and level of interest expense through redemption of debt and common stock issuances utilizedsecurities prior to financematurity or repurchases of debt securities in the Dominion Energy Questar Combination.open market, in privately negotiated transactions, through tender offers or otherwise.
The following long-term debt was repaid, repurchased or redeemed during the six months ended June 30, 2023:
Month | Type |
| Entity | Principal (1) |
|
| Rate | Stated Maturity | ||||
| (millions) |
| ||||||||||
Debt scheduled to mature in 2023 | Multiple |
| $ | 1,787 |
|
| various | |||||
Early redemptions |
|
|
|
|
|
|
|
|
| |||
None |
|
|
|
|
|
|
|
|
|
|
| |
Total repayments, repurchases and redemptions |
| $ | 1,787 |
|
|
See Notes 3 and 14Note 18 to the Consolidated Financial Statements in this report for further information regarding Dominion Energy's credit facilities, liquidity and significant financing transactions.
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. In the Credit Ratings section of MD&A in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016, there2022 for additional information regarding scheduled maturities of Dominion Energy’s long-term debt, including related average interest rates.
As discussed in Note 10 to the Consolidated Financial Statements in this report, DECP Holding's term loan secured by its noncontrolling interest in Cove Point is required to be repaid in connection with closing of Dominion Energy's July 2023 agreement with BHE for the sale of its 50% noncontrolling limited partnership interest in Cove Point, which is expected to occur by the end of 2023.
Remarketing of Long-Term Debt
In June 2023, Virginia Power remarketed three series of tax-exempt bonds, with an aggregate outstanding principal of $160 million to new investors. All three bonds will bear interest at a discussion on the usecoupon of capital markets by3.65% until October 2027, after which they will bear interest at a market rate to be determined at that time. Dominion Energy as well as the impact of credit ratings on the accessibility and costs of using these markets. does not expect to remarket any other long-term debt in 2023.
Credit Ratings
As of September 30, 2017, there have been no changes in Dominion Energy's credit ratings.
Debt Covenants
In the Debt Covenants section of MD&Adiscussed in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016, there2022, 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 debt securities. 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 ratings agencies and event risk, if applicable, such as major acquisitions or dispositions. A credit rating is not a discussionrecommendation to buy, sell or hold securities and should be evaluated independently of any other rating. In April 2023, Standard & Poor’s affirmed its credit ratings but revised its outlook for Dominion Energy from stable to negative. Dominion Energy cannot predict the potential impact the negative outlook at Standard & Poor’s could have on its liquidity, cost of borrowing under credit facilities and collateral posting requirements under commodity contracts, as well as the various covenants present in the enabling agreements underlying Dominion Energy's debt. As of September 30, 2017, thererates at which it is able to offer debt securities. There have been no materialother changes to debt covenants, nor any events of default under Dominion Energy's debt covenants. Pursuant to a waiver received in April 2016 and in connection with the closing of the Dominion Energy Questar Combination, the 65% maximum debt to total capital ratio in Dominion Energy’s credit agreements was, with respect to Dominion Energy only, temporarily increased to 70% through the fiscal quarter ended June 30, 2017. Effective July 2017, the maximum debt to total capital ratio in Dominion Energy’s credit agreements was reset to 65%.
Future Cash Payments for Contractual Obligations and Planned Capital Expenditures
As of September 30, 2017, there have been no material changes outside the ordinary course of business to Dominion Energy's contractual obligations nor any material changes to planned capital expenditures as disclosed in MD&Aratings from those described in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016.2022.
Use of Off-Balance Sheet ArrangementsFinancial Covenants
As of September 30, 2017, there have been no material changesdiscussed in the off-balance sheet arrangements disclosed in MD&A in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016.2022, Dominion Energy is subject to various covenants present in the enabling agreements underlying Dominion Energy’s debt. As of June 30, 2023, there have been no material changes to covenants, nor any events of default under Dominion Energy’s covenants.
Future Issues76
Common Stock, Preferred Stock and Other MattersEquity Securities
The followingIn the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, there is a discussion of future issues and other information includes current developments of previously disclosed matters and new issues arising during the period covered by, and subsequent to, the dates of Dominion Energy’s existing equity financing programs, including an at-the-market program and Dominion Energy Direct®. During the six months ended June 30, 2023, Dominion Energy issued $85 million of stock through these programs. Dominion Energy's at-the-market program expired in June 2023. See Note 16 to the Consolidated Financial Statements in this report for additional information.
As the comprehensive business review announced in November 2022 is still in progress, Dominion Energy is uncertain as to the amount of common stock that may impact future resultsit anticipates issuing in 2023. However, Dominion Energy anticipates raising similar amounts of operations, financial condition and/capital through Dominion Energy Direct® in 2023 compared to 2022 and 2021. The raising of external capital is subject to certain regulatory requirements, including registration with the SEC for certain issuances.
As of June 30, 2023, there have been no material changes to the Board of Directors authorization to repurchase Dominion Energy stock, or cash flows. Thisthe remaining available capacity under this authorization, disclosed in the Repurchases of Equity Securities section should be read in conjunction with Item 1. Business and Future Issues and Other Matters inof MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 20162022. Dominion Energy has not repurchased through June 30 and Future Issues and Other Matters in MD&Adoes not plan to repurchase in the Companies’ Quarterly Reportsremainder of 2023 any shares of its common stock, except for shares tendered by employees to satisfy tax withholding obligations on Form 10-Q for the quarters ended March 31, 2017 andvested restricted stock.
Capital Expenditures
As of June 30, 2017.
Environmental Matters
2023, there have been no material changes to 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 increasedEnergy’s expectation for planned capital operating and other costsexpenditures as a result of compliance, remediation, containment and monitoring obligations. See Note 22 to the Consolidated Financial Statementsdisclosed in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016,2022.
Dividends
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. See Note 1516 to the Consolidated Financial Statements in the Companies’ Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017 and June 30, 2017, and in this report for additional information on various environmental matters.regarding Dominion Energy’s outstanding preferred stock and associated dividend rates.
AirSubsidiary Dividend Restrictions
In August 2015, the EPA issued final carbon standards for existing fossil fuel power plants. Known as the Clean Power Plan, the rule uses a setAs of measures for reducing emissions from existing sources that includes efficiency improvements at coal plants, displacing coal-fired generation with increased utilization of natural gas combined cycle units and expanding renewable resources. The new rule requires states to impose standards of performance limits for existing fossil fuel-fired electric generating units or equivalent statewide intensity-based or mass-based CO2 binding goals or limits. States are required to submit final plans identifying how they will comply with the rule by September 2018. The EPA also issued a proposed federal implementation plan and model trading rule that states can adopt or that would be put in place if, in responseJune 30, 2023, there have been no material changes to the final guidelines, a state either does not submit a state plan or its plan is not approved by the EPA. The
final rule has been challengedsubsidiary dividend restrictions disclosed in the U.S. CourtDividends section of Appeals for the D.C. Circuit. In February 2016, the U.S. Supreme Court issued a stay of the Clean Power Plan until the disposition of the petitions challenging the rule now before the Court of Appeals, and, if such petitions are filedMD&A in the future, before the U.S. Supreme Court. In June 2016, the Governor of Virginia signed an executive order directing the Virginia Natural Resources Secretary to convene a workgroup charged with recommending concrete steps to reduce carbon pollution from power plants which could include reductions at levels similar to the Clean Power Plan as an option. In March 2017, the President issued an Executive Order directing the EPA to undertake a review of the Clean Power Plan that could result in significant revisions to, or rescinding of, the rule. In April 2017, the U.S. Court of Appeals for the D.C. Circuit issued an order suspending the cases challenging the Clean Power Plan for 60 days to allow the EPA time to determine whether to revise or rescind the rule. Also in April 2017, the EPA issued a notice withdrawing the proposed federal implementation plan and model trading rules. In June 2017, the Governor of Virginia issued a directive for development of state carbon regulations with a December 2017 deadline for submittal of draft rules to the Virginia State Air Pollution Control Board for approval to notice for public comment. In October 2017, the EPA issued a proposed rule to repeal the Clean Power Plan on the basis that the rule promulgated in 2015 exceeds the EPA’s authority under the CAA. The proposal does not include a replacement rule. The proposal also does not impact the EPA’s regulation of GHG emissions from stationary sources under the CAA permitting programs or the GHG performance standards for new sources, which remain in place. Given these developments and associated federal and state regulatory and legal uncertainties, Dominion Energy cannot predict the potential financial statement impacts but believes the potential expenditures to comply could be material.
State Actions
In August 2017, the Ozone Transport Commission released a draft model rule for control of NOx 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 and Maryland, are moving ahead with state-specific climate change regulations, including methane. Dominion Energy cannot currently estimate the potential financial statements impacts on results of operations, financial condition and/or cash flows related to these matters.
Significant Power Delivery Project
In September 2017, Virginia Power filed an application with the Virginia Commission for a CPCN to rebuild and operate in Augusta County, Virginia approximately 18 miles of the existing 500 kV transmission line between the Dooms substation and the Valley substation, along with associated substation work, for a total estimated cost of approximately $65 million. This case is pending.
Significant Gas Infrastructure Projects
Eastern Market Access
In November 2016, Cove Point filed an application to request FERC authorization to construct the approximately $150 million Eastern Market Access Project. Construction on the project is expected to begin in the first quarter of 2018, and the project facilities are expected to be placed into service in late 2018.
In October 2017, Atlantic Coast Pipeline received the FERC order authorizing the construction and operation of an approximately 600-mile natural gas pipeline running from West Virginia through Virginia to North Carolina. The project remains subject to other pending federal and state approvals.
Other Matters
While management currently has no plans which may affect the carrying value of Millstone, based on potential future economic and other factors, including, but not limited to, market power prices, results of capacity auctions, legislative and regulatory solutions to ensure nuclear plants are fairly compensated for their carbon-free emissions, and the impact of final rules from the EPA and the efforts of states to implement those final rules; there is risk that Millstone may be evaluated for an early retirement date. Should management make any decision on a potential early retirement date, the precise date and the resulting financial statement impacts, which could be material to Dominion Energy, may be affected by a number of factors, including any potential regulatory or legislative solutions, results of any transmission system reliability study assessments, and decommissioning requirements, among other factors.
Legal Matters
See Notes 13 and 22 to the Consolidated Financial Statements and Item 3. Legal Proceedings in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016, Notes 122022.
Collateral and 15Credit Risk
As of June 30, 2023, there have been no material changes to the Consolidated Financial Statementscollateral requirements disclosed in the Companies’ Quarterly Reports on Form 10-Q for the quarters ended March 31, 2017Collateral and June 30, 2017, and Item 1. Legal Proceedings in this report for additional information on various legal matters.
Regulatory Matters
See Note 13 to the Consolidated Financial StatementsCredit Risk section of MD&A in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016,2022.
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 at June 30, 2023 for these activities. Gross credit exposure for each counterparty is calculated as outstanding receivables plus any unrealized on- or off-balance sheet exposure, taking into account contractual netting rights.
|
| Gross Credit |
|
| Credit |
|
| Net Credit |
| |||
(millions) |
|
|
|
|
|
|
|
|
| |||
Investment grade(1) |
| $ | 166 |
|
| $ | — |
|
| $ | 166 |
|
Non-investment grade(2) |
|
| 2 |
|
|
| — |
|
|
| 2 |
|
No external ratings: |
|
|
|
|
|
|
|
|
| |||
Internally rated—investment grade(3) |
|
| 15 |
|
|
| 2 |
|
|
| 13 |
|
Internally rated—non-investment grade(4) |
|
| 28 |
|
|
| 1 |
|
|
| 27 |
|
Total(5) |
| $ | 211 |
|
| $ | 3 |
|
| $ | 208 |
|
77
Fuel and Other Purchase Commitments
There have been no material changes outside of the ordinary course of business to Dominion Energy’s fuel and other purchase commitments included in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Other Material Cash Requirements
As of June 30, 2023, there have been no material changes outside of the ordinary course of business to Dominion Energy’s other material cash requirements included in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. Such obligations include:
Future Issues and Other Matters
See Item 1. Business, Future Issues and Other Matters in MD&A and Notes 13 and 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 and Notes 13 and 17 to the Consolidated Financial Statements in this report for additional information on various environmental, regulatory, matters.legal and other matters that may impact future results of operations, financial condition and/or cash flows.
Business Review
In November 2022, Dominion Energy announced the commencement of a business review of value-maximizing strategic business actions, alternatives to its current business mix and capital allocation and regulatory options which may assist customers to manage costs and provide greater predictability to its long-term, state-regulated utility value proposition. In April 2023, the legislative process in Virginia was substantially completed resulting in new legislation which will shift $350 million of annual revenue requirement for costs currently recovered through riders into base rates effective July 2023, eliminate the ability of Virginia Power to utilize CCROs and adjust the parameters for determining an authorized ROE and revenue sharing. In addition, new legislation allows Virginia Power to apply for the securitization of certain deferred fuel costs as well as seek approval for a noncontrolling equity financing partner for the CVOW Commercial Project. In July 2023, Dominion Energy entered an agreement to sell its 50% noncontrolling limited partner interest in Cove Point to BHE as discussed in Note 10 to the Consolidated Financial Statements in this report. As part of the on-going business review, Dominion Energy may consider additional divestiture of all or a portion of certain operations. While the ultimate impacts cannot be estimated until the review is completed, which is expected to occur in the third quarter of 2023, implementation of recommendations resulting from the business review could have a material impact on Dominion Energy's future results of operations, financial condition and/or cash flows.
Virginia Legislation
The 2023 General Assembly session in Virginia included several proposals, including those ultimately enacted into law, related to Virginia Power’s retail base rates and other cost recovery mechanisms. In April 2023, legislation was enacted that amended several key provisions of the Regulation Act, as previously amended by the GTSA. The new legislation will shift $350 million of annual revenue requirement for costs currently recovered under riders into base rates effective July 2023, eliminate the ability of Virginia Power to utilize CCROs and adjust the parameters for determining an authorized ROE and revenue sharing. In addition, this legislation reestablishes biennial base rate reviews, sets a target capitalization ratio and permits Virginia Power to apply for the securitization of certain deferred fuel costs. See Note 13 to the Consolidated Financial Statements for additional information. In March 2023, legislation was enacted that permits Virginia Power to seek approval for a noncontrolling equity financing partner for the CVOW Commercial Project. In addition, in May 2023 legislation was enacted that amended certain portions of the VCEA, which qualifies generation produced by Virginia Power’s biomass electric generating stations as renewable energy and eliminates the
78
mandated retirement by the end of 2028 of such facilities. While Dominion Energy is unable to estimate the ultimate financial statement impacts related to the newly enacted legislation, it expects there could be a material impact to its results of operations, financial condition and/or cash flows.
Future Environmental Regulations
In March 2023, the EPA released a proposed rule to further revise the Effluent Limitations Guidelines for the Steam Electric Power Generating Category, which apply primarily to wastewater discharges at coal and oil steam generating stations. Also in March 2023, the EPA released its first proposed rule to establish national drinking water standards for PFAS. Dominion Energy anticipates that the EPA will release additional rulemakings as part of an overall strategy to identify and mitigate PFAS exposure. In April 2023, the EPA released a proposal to tighten aspects of the Mercury and Air Toxics Standards, including the reduction of emissions limits for filterable particulate matter, and requiring the use of continuous emissions monitoring systems to demonstrate compliance. In May 2023, the EPA proposed a package of rules designed to reduce CO2 emissions from certain fossil fuel-fired electric generating units. The proposal sets standards of performance and emission guidelines for CO2 emissions from new gas-fired combustion turbines and modified coal-fired steam generating units. The proposed rulemaking package also proposes emission guidelines, including presumptive emission limits, for existing coal, oil and gas-fired steam generating units and certain gas-fired combustion turbines. Also in May 2023, the EPA released a proposed rule to regulate inactive surface impoundments located at retired generating stations that contained CCR and liquids after October 2015, and certain other inactive or previously closed surface impoundments, landfills or other areas that contain accumulations of CCR. Until the EPA ultimately takes final action on these rulemakings, Dominion Energy is 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 Dominion Energy’s financial condition and cash flows.
Federal Income Tax Laws
In April 2023, the IRS issued safe harbor guidance to taxpayers on the treatment of amounts paid to repair, maintain, replace, or improve natural gas distribution property, including whether expenditures should be deducted as repairs or capitalized and depreciated on tax returns. The guidance includes safe harbor tax accounting methods which a taxpayer may choose to elect and provides special transition rules and incentives that vary depending on which tax year is the year of change. Dominion Energy is evaluating this new guidance and cannot currently estimate the potential financial statement impacts, but there could be a material impact to its results of operations, financial condition and/or cash flows.
Offshore Wind Vessel Leasing Arrangement
In December 2020, Dominion Energy signed an agreement (subsequently amended in December 2022 and May 2023) 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 $625 million, to fund the estimated project costs. The project is expected to be completed in late 2024 or early 2025. The initial lease term will commence once construction is substantially complete and the vessel is delivered and will mature in November 2027. See Note 14 to the Consolidated Financial Statements in this report for additional information.
Southeast Energy Exchange Market
In July 2023, the U.S. Court of Appeals for the District of Columbia Circuit vacated certain of FERC’s previous orders authorizing the SEEM market, including the tariff amendments to provide transmission service for transactions in SEEM. Dominion Energy is evaluating this ruling and currently cannot estimate the potential financial statement impacts.
79
ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The matters discussed in this Item may contain “forward-looking statements” as described in the introductory paragraphs under Part I,I., Item 2. MD&A in this report. The reader’s attention is directed to those paragraphs for discussion of various risks and uncertainties that may impact the Companies.
Market Risk Sensitive Instruments and Risk Management
The Companies'Companies’ financial instruments, commodity contracts and related financial derivative instruments are exposed to potential losses due to adverse changes in commodity prices, interest rates, foreign currency exchange rates and equity securitysecurities prices as described below. Commodity price risk is present in Dominion Energy's and Virginia Power'sthe Companies’ electric operations and Dominion Energy's 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 Companies’ exposure to foreign currency exchange rate risk is related to certain fixed price contracts associated with the CVOW Commercial Project which it manages through foreign currency exchange rate derivatives. The contracts include services denominated in currencies other than the U.S. dollar for approximately €2.6 billion and 5.1 billion kr. In addition, certain of the fixed price contracts, approximately €0.7 billion, contain commodity indexing provisions linked to steel.
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, interest rates or interestforeign currency exchange rates.
Commodity Price Risk
To manage price risk, Dominion Energy and Virginia Powerthe 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 and Dominion Energy Gas holds commodity-based financial derivative instruments held for non-trading purposes associated with purchases and sales of natural gas and other energy-related products.
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 a decrease in fair value of $28 million and $27 million of Dominion Energy's commodity-based derivative instruments as of September 30, 2017 and December 31, 2016, respectively.
A hypothetical 10% decrease in commodity prices would have resulted in a decrease in the fair value of $48 million and $62 million of Virginia Power's commodity-based derivative instruments as of September 30, 2017 and December 31, 2016, respectively.
A hypothetical 10% increase in commodity prices would have resulted in a decrease of $98 million and $52 million in the fair value of $4 million of Dominion Energy Gas'Energy’s commodity-based derivative instruments as of both SeptemberJune 30, 20172023 and December 31, 2016.2022, respectively.
A hypothetical 10% increase in commodity prices would have resulted in a decrease of $45 million and $25 million in the fair value of Virginia Power’s commodity-based derivative instruments as of June 30, 2023 and December 31, 2022, 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 and interest rate swaps designated under fair value hedging and outstanding for the Companies,Dominion Energy, a hypothetical 10% increase in market interest rates would not have resultedresult in a material change$64 million and $37 million decrease in earnings at SeptemberJune 30, 20172023 and December 31, 2022, respectively. For variable rate debt outstanding for Virginia Power, a hypothetical 10% increase in market interest rates would result in a $20 million and $14 million decrease in earnings at June 30, 2023 or December 31, 2016.2022, respectively.
The Companies also use interest rate derivatives, including forward-starting swaps, as cash flow hedges of forecasted interest payments.rate swaps and interest rate lock agreements to manage interest rate risk. As of SeptemberJune 30, 2017,2023, Dominion Energy and Virginia Power had $3.5$12.3 billion and $1.5$2.9 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 $55$253 million and $42$121 million, respectively, in the fair value of Dominion Energy'sEnergy and Virginia Power'sPower’s interest rate derivatives at SeptemberJune 30, 2017.2023. As of December 31, 2016,2022, Dominion Energy and Virginia Power had $2.9$12.7 billion and $1.7$3.6 billion, respectively, in aggregate notional amounts of these interest rate derivatives outstanding. A hypothetical
80
10% decrease in market interest rates would have resulted in a decrease of $58$274 million and $45$156 million, respectively, in the fair value of Dominion Energy'sEnergy and Virginia Power'sPower’s interest rate derivatives at December 31, 2016.2022.
Dominion Energy Gas holds foreign currency swaps for the purpose of hedging the foreign currency exchange risk associated with Euro denominated debt. As of September 30, 2017 and December 31, 2016, Dominion Energy and Dominion Energy Gas had $280 million (€250 million) in aggregate notional amounts of these foreign currency swaps outstanding. A hypothetical 10% decrease in market interest rates would have resulted in a $3 million and $5 million decrease in the fair value of Dominion Energy Gas' foreign currency swaps at September 30, 2017 and December 31, 2016, respectively.
The impact of a change in interest rates on the Companies'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.
Foreign Currency Exchange Rate Risk
The Companies utilize foreign currency swaps to economically hedge the foreign currency exchange risk associated with fixed price contracts related to the CVOW Commercial Project denominated in foreign currencies. As of June 30, 2023 and December 31, 2022, Dominion Energy had €2.6 billion and €2.9 billion, respectively, in aggregate notional amounts of these foreign currency forward purchase agreements outstanding. A hypothetical 10% increase in exchange rates would have resulted in a decrease of $251 million and $284 million in the fair value of Dominion Energy’s foreign currency swaps at June 30, 2023 and December 31, 2022, respectively.
The impact of a change in exchange rates on the Companies’ foreign currency-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 foreign exchange 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 PowerThe 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 investment managers. These trust funds primarily hold marketable securities that are reported in Dominion Energy's and Virginia Power'sthe Companies’ Consolidated Balance Sheets at fair value.
Dominion Energy recognized net realizedinvestment gains (including investment income) on nuclear decommissioning and rabbi trust investments of $137 million and $113$562 million for the ninesix months ended SeptemberJune 30, 20172023, and 2016, respectively,net investment losses (including investment income) on nuclear decommissioning and $144rabbi trust investments of $981 million and $888 million for the six months ended June 30, 2022 and the year ended December 31, 2016.2022, 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 thesedebt investments of $271 million and $146$39 million for the ninesix months ended SeptemberJune 30, 20172023, and 2016, respectively,a net decrease in unrealized gains on debt investments of $191 million and $183$196 million for six months ended June 30, 2022 and the year ended December 31, 2016.2022, respectively.
Virginia Power recognized net realizedinvestment gains (including investment income) on nuclear decommissioning trust investments of $59 million and $51$283 million for the ninesix months ended SeptemberJune 30, 20172023, and 2016, respectively,net investment losses (including investment income) on nuclear decommissioning trust investments of $468 million and $67$426 million for the six months ended June 30, 2022 and the year ended December 31, 2016.2022, 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 thesedebt investments of $127 million and $77$24 million for the ninesix months ended SeptemberJune 30, 20172023, and 2016, respectively, and $93a net decrease in unrealized gains on debt investments of $106 million for both the six months ended June 30, 2022 and the year ended December 31, 2016.2022, 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. 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 employee benefit plans and will be included in the determination of the amount of cash to be contributed to the employee benefit plans.
ITEM 4. CONTROLS AND PROCEDURES
Senior management of each ofboth Dominion Energy and Virginia Power, andincluding Dominion Energy Gas, including Dominion Energy’s,and Virginia Power’s and Dominion Energy Gas' CEO and CFO, evaluated the effectiveness of each of their respective Company’scompany’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation process, each of Dominion Energy’s,Energy and Virginia Power’s and Dominion Energy Gas' CEO and CFO have concluded that each of their respective Company’scompany’s disclosure controls and procedures are effective.
ThereIn the second quarter of 2023, Virginia Power transitioned to a new customer engagement and billing system. Throughout this system implementation, Dominion Energy and Virginia Power appropriately considered internal controls over financial reporting.
81
Other than with respect to this item, there were no changes in Dominion Energy’s, Virginia Power’s, or Dominion Energy Gas' internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companies’Dominion Energy or Virginia Power’s internal control over financial reporting.
82
From time to time, the Companies are allegedparties to be in violationvarious 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 legalreasonably believe will exceed a specified threshold. Pursuant to the SEC regulations, the Companies use a threshold of $1 million for such proceedings.
See the following for discussions on various legal, environmental and other regulatory proceedings to which the Companies are a party, which information is incorporated herein by reference:
Notes 13 and 2223 to the Consolidated Financial Statements and Future Issues and Other Matters in MD&A in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016.
Notes 1213 and 1517 to the Consolidated Financial Statements and Future Issues and Other Matters in the Companies’ Quarterly Reports on Form 10-Q for the quarter ended March 31, 2017.
Notes 12 and 15 to the Consolidated Financial Statements in the Companies’ Quarterly Reports on Form 10-Q for the quarter ended June 30, 2017.
Notes 12 and 15 to the Consolidated Financial StatementsMD&A in this report.
The Companies'Companies’ businesses are influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond the Companies’ control. A number of these risk factors have been identified in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016,2022, which should be taken into consideration when reviewing the information contained in this report. There have been no material changes with regard to the risk factors previously disclosed in the Companies'Companies’ Annual Report on Form 10-K for the year ended December 31, 2016.2022. 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 MD&A in this report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Dominion Energy
ISSUER PURCHASES OF EQUITY SECURITIESPurchases of Equity Securities
Period |
| Total Number of |
|
| Average |
| Total Number of Shares (or |
| Maximum Number (or Approximate Dollar Value) | |||
4/1/23 - 4/30/23 |
|
| — |
|
| $ | — |
|
| — |
| $ 0.92 billion |
5/1/23 - 5/31/23 |
|
| 306 |
|
|
| 63.10 |
|
| — |
| 0.92 billion |
6/1/23 - 6/30/23 |
|
| 1,366 |
|
|
| 49.02 |
|
| — |
| 0.92 billion |
Total |
|
| 1,672 |
|
| $ | 51.60 |
|
| — |
| $ 0.92 billion |
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) | |||
7/1/17-7/31/17 |
|
| — |
|
| $ | — |
|
|
| — |
|
| 19,629,059 shares/ $1.18 billion |
8/1/17-8/31/17 |
|
| 217 |
|
|
| 77.30 |
|
|
| — |
|
| 19,629,059 shares/ $1.18 billion |
9/1/17-9/30/17 |
|
| 5,932 |
|
|
| 79.50 |
|
|
| — |
|
| 19,629,059 shares/ $1.18 billion |
Total |
|
| 6,149 |
|
| $ | 79.42 |
|
|
| — |
|
| 19,629,059 shares/ $1.18 billion |
|
|
|
|
|
|
ITEM 5. OTHER INFORMATION
During the last fiscal quarter, none of the Companies’ directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
83
|
|
|
|
| ||||
|
| |||||||
|
| |||||||
| X | |||||||
32.b | X | |||||||
|
| |||||||
| Condensed consolidated earnings statements (filed herewith). | X | X |
| ||||
101 | The following financial statements from Dominion Energy, Inc.’s Quarterly Report on Form 10-Q for the quarter ended | X | X | |||||
104 | Cover Page Interactive Data File formatted in | X | X | |||||
|
84
SIGNATURE
Pursuant to the requirements 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. Registrant | |
| /s/ Michele L. Cardiff |
Michele L. Cardiff Senior Vice President, Controller and Chief Accounting Officer | |
VIRGINIA ELECTRIC AND POWER COMPANY Registrant | |
| /s/ Michele L. Cardiff |
Michele L. Cardiff Senior Vice President, Controller and Chief Accounting Officer | |
| |
|
|
|
85
101