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 March 31,June 30, 2021
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, Virginia 23219 (804) 819-2000 |
|
|
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 |
| DRUA | 2016 Series A 5.25% Enhanced Junior Subordinated Notes | New York Stock Exchange |
| DCUE | 2019 Series A Corporate Units | 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 ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Dominion Energy, Inc. Yes ☒ No ☐ Virginia Electric and Power Company 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. ☐
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 ☒
At April 23,July 30, 2021, the latest practicable date for determination, Dominion Energy, Inc. had 806,524,337808,487,324 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.
This combined Form 10-Q represents separate filings by Dominion Energy, Inc. and Virginia Electric and Power Company. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Virginia Electric and Power Company makes no representation as to the information relating to Dominion Energy, Inc.’s other operations.
VIRGINIA ELECTRIC AND POWER COMPANY MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND IS FILING THIS FORM 10-Q UNDER THE REDUCED DISCLOSURE FORMAT.
1
COMBINED INDEX
|
| 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 5. | 97 | |
Item 6. |
| |
|
|
|
2
GLOSSARY OF TERMS
The following abbreviations or acronyms used in this Form 10-Q are defined below:
Abbreviation or Acronym |
| Definition |
2019 Equity Units |
| Dominion Energy’s 2019 Series A Equity Units issued in June 2019, initially in the form of 2019 Series A Corporate Units, consisting of a stock purchase contract and a 1/10 interest in a share of the Series A Preferred Stock |
2017 Tax Reform Act |
| An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (previously known as The Tax Cuts and Jobs Act) enacted on December 22, 2017 |
2021 Triennial Review |
| Virginia Commission review of Virginia Power’s earned return on base rate generation and distribution services for the four successive 12-month test periods beginning January 1, 2017 and ending December 31, 2020 |
ACE Rule |
| Affordable Clean Energy Rule |
AFUDC |
| Allowance for funds used during construction |
Align RNG |
| Align RNG, LLC, a joint venture between Dominion Energy and Smithfield Foods, Inc. |
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 Energy |
Atlantic Coast Pipeline Project |
| A previously proposed approximately 600-mile natural gas pipeline running from West Virginia through Virginia to North Carolina which would have been owned by Dominion Energy and Duke Energy |
bcf |
| Billion cubic feet |
Birdseye | Birdseye Renewable Energy, LLC | |
Bear Garden |
| A 590 MW combined-cycle, natural gas-fired power station in Buckingham County, Virginia |
BHE |
| The legal entity, Berkshire Hathaway Energy Company, one or more of its consolidated subsidiaries (including Dominion Energy Gas, Dominion Energy Midstream and Cove Point effective November 1, 2020), or the entirety of Berkshire Hathaway Energy Company and its consolidated subsidiaries |
Brookfield |
| Brookfield Super-Core Infrastructure Partners, an infrastructure fund managed by Brookfield Asset Management Inc. |
Brunswick County | A 1,376 MW combined-cycle, natural gas-fired power station in Brunswick County, Virginia | |
CAA |
| Clean Air Act |
CCR |
| Coal combustion residual |
CCRO |
| Customer credit reinvestment offset |
CEO |
| Chief Executive Officer |
CEP |
| Capital Expenditure Program, as established by House Bill 95, Ohio legislation enacted in 2011, deployed by East Ohio to recover certain costs associated with capital investment |
CERCLA |
| Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as Superfund |
CFO |
| Chief Financial Officer |
CO2 |
| Carbon dioxide |
Colonial Trail West |
| A 142 MW utility-scale solar power station located in Surry County, Virginia |
Companies |
| Dominion Energy and Virginia Power, collectively |
Contracted Assets |
| Contracted Assets operating segment |
3
Cooling degree days |
| Units measuring the extent to which the average daily temperature is greater than 65 degrees Fahrenheit, or 75 degrees Fahrenheit in DESC’s service territory, calculated as the difference between 65 or 75 degrees, as applicable, and the average temperature for that day |
Cove Point |
| Cove Point LNG, LP (formerly known as Dominion Energy Cove Point LNG, LP) |
3
CPCN |
| Certificate of Public Convenience and Necessity |
CWA |
| Clean Water Act |
DCP |
| The legal entity, CPMLP Holding Company, LLC (formerly known as Dominion Cove Point, LLC), one or more of its consolidated subsidiaries (including Dominion Energy Midstream), or the entirety of CPMLP Holding Company, LLC and its consolidated subsidiaries |
DECGS |
| Carolina Gas Services, Inc. (formerly known as Dominion Energy Carolina Gas Services, Inc.) |
DEQPS |
| Dominion Energy Questar Pipeline Services, Inc. |
DES |
| Dominion Energy Services, Inc. |
DESC |
| The legal entity, Dominion Energy South Carolina, Inc., one or more of its consolidated entities or operating segment, or the entirety of Dominion Energy South Carolina, Inc. and its consolidated entities |
DETI |
| Eastern Gas Transmission and Storage, Inc. (formerly known as Dominion Energy Transmission, Inc.) |
DGI |
| Dominion Generation, Inc. |
DGP |
| Eastern Gathering and Processing, Inc. (formerly known as Dominion Gathering and Processing, Inc.) |
DMLPHCII |
| Eastern MLP Holding Company II, LLC (formerly known as Dominion MLP Holding Company II, LLC) |
DOE |
| U.S. Department of Energy |
Dominion Energy |
| The legal entity, Dominion Energy, Inc., one or more of its consolidated subsidiaries (other than Virginia Power) or operating segments, or the entirety of Dominion Energy, Inc. and its consolidated subsidiaries |
Dominion Energy Gas |
| The legal entity, Eastern Energy Gas Holdings, LLC (formerly known as Dominion Energy Gas Holdings, LLC), one or more of its consolidated subsidiaries (consisting of DETI, DCP, DMLPHCII and Dominion Iroquois), or the entirety of Eastern Energy Gas Holdings, LLC and its consolidated subsidiaries |
Dominion Energy Midstream |
| The legal entity, Northeast Midstream Partners, LP (formerly known as Dominion Energy Midstream Partners, LP), one or more of its consolidated subsidiaries, or the entirety of Northeast Midstream Partners, LP and its consolidated subsidiaries |
Dominion Energy Questar Pipeline |
| The legal entity, Dominion Energy Questar Pipeline, LLC, one or more of its consolidated subsidiaries (including its 50% noncontrolling interest in White River Hub), or the entirety of Dominion Energy Questar Pipeline, LLC and its consolidated subsidiaries |
Dominion Energy South Carolina |
| Dominion Energy South Carolina operating segment |
Dominion Energy Virginia |
| Dominion Energy Virginia operating segment |
Dominion Iroquois |
| The legal entity Iroquois, Inc. (formerly known as Dominion Iroquois, Inc.), one or more of its consolidated subsidiaries, or the entirety of Iroquois, Inc. and its consolidated subsidiaries, which held a 50% noncontrolling interest in Iroquois |
DSM |
| Demand-side management |
Dth |
| Dekatherm |
Duke Energy |
| The legal entity, Duke Energy Corporation, one or more of its consolidated subsidiaries, or the entirety of Duke Energy Corporation and its consolidated subsidiaries |
East Ohio |
| The East Ohio Gas Company, doing business as Dominion Energy Ohio |
EnergySolutions | EnergySolutions, LLC |
4
EPA |
| U.S. Environmental Protection Agency |
EPS |
| Earnings per common share |
FERC |
| Federal Energy Regulatory Commission |
FILOT |
| Fee in lieu of taxes |
4
Four Brothers |
| Four Brothers Solar, LLC, a limited liability company owned by Dominion Energy and Four Brothers Holdings, LLC, a subsidiary of GIP |
Fowler Ridge |
| Fowler I Holdings LLC, a wind-turbine facility in Benton County, Indiana |
FTRs |
| Financial transmission rights |
GAAP |
| U.S. generally accepted accounting principles |
Gas Distribution |
| Gas Distribution operating segment |
GENCO |
| South Carolina Generating Company, Inc. |
GHG |
| Greenhouse gas |
GIP |
| The legal entity, Global Infrastructure Partners, one or more of its consolidated subsidiaries, or the entirety of Global Infrastructure Partners and its consolidated subsidiaries |
Granite Mountain |
| Granite Mountain Holdings, LLC, a limited liability company owned by Dominion Energy and Granite Mountain Renewables, LLC, a subsidiary of GIP |
Grassfield Solar |
| A proposed 20 MW utility-scale solar power station located in Chesapeake, Virginia |
Greensville County |
| A 1,588 MW combined-cycle, natural gas-fired power station in Greensville County, Virginia |
GT&S Transaction |
| The sale by Dominion Energy to BHE of Dominion Energy Gas, DGP, DECGS, Eastern Energy Field Services, Inc. (formerly known as Dominion Energy Field Services, Inc.) and Modular LNG Holdings, Inc. (formerly known as Dominion Modular LNG Holdings, Inc.) (which holds a 50% noncontrolling interest in JAX LNG) pursuant to a purchase and sale agreement entered into on July 3, 2020, which was completed on November 1, 2020 |
GTSA |
| Virginia Grid Transformation and Security Act of 2018 |
Heating degree days |
| Units measuring the extent to which the average daily temperature is less than 65 degrees Fahrenheit, or 60 degrees Fahrenheit in DESC’s service territory, calculated as the difference between 65 or 60 degrees, as applicable, and the average temperature for that day |
Hope | Hope Gas, Inc., doing business as Dominion Energy West Virginia | |
Iron Springs |
| Iron Springs Holdings, LLC, a limited liability company owned by Dominion Energy and Iron Springs Renewables, LLC, a subsidiary of GIP |
Iroquois |
| Iroquois Gas Transmission System, L.P. |
ISO |
| Independent system operator |
JAX LNG |
| JAX LNG, LLC, an LNG supplier in Florida serving the marine and LNG markets |
Kewaunee |
| Kewaunee nuclear power station |
kV |
| Kilovolt |
LIBOR | London Interbank Offered Rate | |
LNG |
| Liquefied natural gas |
MD&A |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations |
MGD |
| Million gallons a day |
Millstone |
| Millstone nuclear power station |
Millstone 2019 power purchase agreements |
| Power purchase agreements with Eversource Energy and The United Illuminating Company for Millstone to provide nine million MWh per year of electricity for ten years |
MW |
| Megawatt |
5
MWh |
| Megawatt hour |
NAV |
| Net asset value |
NND Project |
| V.C. Summer Units 2 and 3 nuclear development project under which DESC and Santee Cooper undertook to construct two Westinghouse AP1000 Advanced Passive Safety nuclear units in Jenkinsville, South Carolina |
Norge Solar |
| A proposed 20 MW utility-scale solar power station located in James City County, Virginia |
5
North Anna | North Anna nuclear power station | |
North Carolina Commission |
| North Carolina Utilities Commission |
|
| |
NRC |
| U.S. Nuclear Regulatory Commission |
Order 1000 |
| Order issued by FERC adopting requirements for electric transmission planning, cost allocation and development |
PIR |
| Pipeline Infrastructure Replacement program deployed by East Ohio |
PJM |
| PJM Interconnection, LLC |
PREP | Pipeline Replacement and Expansion Program, a program of replacing, upgrading and expanding natural gas utility infrastructure deployed by Hope | |
PSD |
| Prevention of significant deterioration |
PSNC |
| Public Service Company of North Carolina, Incorporated, doing business as Dominion Energy North Carolina |
Q-Pipe |
|
|
Q-Pipe Transaction | A previously proposed sale by Dominion Energy to BHE of the Q-Pipe Group pursuant to a purchase and sale agreement entered into on October 5, 2020 and terminated on July 9, 2021 | |
Questar Gas |
| Questar Gas Company, doing business as Dominion Energy Utah, Dominion Energy Wyoming and Dominion Energy Idaho |
Regulation Act |
| Legislation effective July 1, 2007, that amended the Virginia Electric Utility Restructuring Act and fuel factor statute, which legislation is also known as the Virginia Electric Utility Regulation Act, as amended in 2015 and 2018 |
RGGI | Regional Greenhouse Gas Initiative | |
RICO |
| Racketeer Influenced and Corrupt Organizations Act |
Rider B |
| A rate adjustment clause associated with the recovery of costs related to the conversion of three of Virginia Power’s coal-fired power stations to biomass |
Rider BW | A rate adjustment clause associated with the recovery of costs related to Brunswick County | |
Rider CCR |
| A rate adjustment clause associated with the recovery of costs related to the removal of CCR at certain power stations |
Rider CE |
| A rate adjustment clause associated with the recovery of costs related to certain renewable generation facilities in Virginia |
Rider GV |
| A rate adjustment clause associated with the recovery of costs related to Greensville County |
Rider R |
| A rate adjustment clause associated with the recovery of costs related to Bear Garden |
Rider RGGI | A rate adjustment clause associated with the recovery of costs related to the purchase of allowances through the RGGI market-based trading program for CO2 | |
Rider RPS | A rate adjustment clause associated with the recovery of costs related to the mandatory renewable portfolio standard program established by the VCEA | |
Rider S |
| A rate adjustment clause associated with the recovery of costs related to the Virginia City Hybrid Energy Center |
6
Rider T1 | A rate adjustment clause to recover the difference between revenues produced from transmission rates included in base rates, and the new total revenue requirement developed annually for the rate years effective September 1 | |
Rider U |
| A rate adjustment clause associated with the recovery of costs of new underground distribution facilities |
Rider US-2 | A rate adjustment clause associated with the recovery of costs related to Woodland Solar, Scott Solar and Whitehouse Solar | |
Rider US-3 |
| A rate adjustment clause associated with the recovery of costs related to Colonial Trail West and Spring Grove 1 |
Rider US-4 |
| A rate adjustment clause associated with the recovery of costs related to Sadler Solar |
Rider W |
| A rate adjustment clause associated with the recovery of costs related to Warren County |
ROE |
| Return on equity |
RTO |
| Regional transmission organization |
Sadler Solar |
|
|
Santee Cooper |
| South Carolina Public Service Authority |
SBL Holdco |
| SBL Holdco, LLC, a wholly-owned subsidiary of DGI |
SCANA |
| The legal entity, SCANA Corporation, one or more of its consolidated subsidiaries, or the entirety of SCANA Corporation and its consolidated subsidiaries |
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 |
6
SCANA Merger Approval Order |
| Final order issued by the South Carolina Commission on December 21, 2018 setting forth its approval of the SCANA Combination |
SCDHEC |
| South Carolina Department of Health and Environmental Control |
SCDOR |
| South Carolina Department of Revenue |
Scott Solar | A 17 MW utility-scale solar power station in Powhatan County, Virginia | |
SEC |
| U.S. Securities and Exchange Commission |
Series A Preferred Stock |
| Dominion Energy’s 1.75% Series A Cumulative Perpetual Convertible Preferred Stock, without par value, with a liquidation preference of $1,000 per share |
Series B Preferred Stock |
| Dominion Energy’s 4.65% Series B Fixed-Rate 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 |
Spring Grove 1 |
| A 98 MW utility-scale solar power station located in Surry County, Virginia |
Standard & Poor’s |
| Standard & Poor’s Ratings Services, a division of S&P Global Inc. |
Summer |
| V.C. Summer nuclear power station |
Supply Header Project | A project previously intended for DETI to provide approximately 1,500,000 Dths of firm transportation service to various customers in connection with the Atlantic Coast Pipeline Project | |
Surry |
| Surry nuclear power station |
Sycamore Solar |
| A proposed 42 MW utility-scale solar power station located in Pittsylvania County, Virginia |
Terra Nova Renewable Partners |
|
|
Three Cedars |
| Granite Mountain and Iron Springs, collectively |
UEX Rider | Uncollectible Expense Rider deployed by East Ohio | |
Utah Commission |
| Utah Public Service Commission |
7
VCEA |
| Virginia Clean Economy Act of March 2020 |
VEBA |
| Voluntary Employees’ Beneficiary Association |
VIE |
| Variable interest entity |
Virginia City Hybrid Energy Center |
| A 610 MW baseload carbon-capture compatible, clean coal powered electric generation facility in Wise County, Virginia |
Virginia Commission |
| Virginia State Corporation Commission |
Virginia Power |
| The legal entity, Virginia Electric and Power Company, one or more of its consolidated subsidiaries or operating segment, or the entirety of Virginia Electric and Power Company and its consolidated subsidiaries |
Warren County |
| A 1,350 MW combined-cycle, natural gas-fired power station in Warren County, Virginia |
WECTEC |
| WECTEC Global Project Services, Inc., a wholly-owned subsidiary of Westinghouse |
Westinghouse |
| Westinghouse Electric Company LLC |
Wexpro |
| The legal entity, Wexpro Company, one or more of its consolidated subsidiaries, or the entirety of Wexpro Company and its consolidated subsidiaries |
Whitehouse Solar | A 20 MW utility-scale solar power station in Louisa County, Virginia | |
White River Hub |
| White River Hub, LLC |
Wisconsin Commission | Public Services Commission of Wisconsin | |
Woodland Solar | A 19 MW utility-scale solar power station in Isle of Wight County, Virginia | |
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 and Interstate Gas Supply, Inc. |
8
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
| Three Months Ended March 31, |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||
(millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenue |
| $ | 3,870 |
|
| $ | 3,938 |
|
| $ | 3,038 |
|
| $ | 3,106 |
|
| $ | 6,908 |
|
| $ | 7,044 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric fuel and other energy-related purchases |
|
| 550 |
|
|
| 657 |
|
|
| 487 |
|
|
| 507 |
|
|
| 1,037 |
|
|
| 1,164 |
|
Purchased electric capacity |
|
| 11 |
|
|
| 2 |
|
|
| 25 |
|
|
| 11 |
|
|
| 36 |
|
|
| 13 |
|
Purchased gas |
|
| 484 |
|
|
| 434 |
|
|
| 121 |
|
|
| 90 |
|
|
| 605 |
|
|
| 524 |
|
Other operations and maintenance |
|
| 987 |
|
|
| 891 |
|
|
| 895 |
|
|
| 852 |
|
|
| 1,882 |
|
|
| 1,743 |
|
Depreciation, depletion and amortization |
|
| 608 |
|
|
| 578 |
|
|
| 604 |
|
|
| 578 |
|
|
| 1,212 |
|
|
| 1,156 |
|
Other taxes |
|
| 257 |
|
|
| 240 |
|
|
| 222 |
|
|
| 220 |
|
|
| 479 |
|
|
| 460 |
|
Impairment of assets and other charges |
|
| 95 |
|
|
| 768 |
|
|
| 321 |
|
|
| 44 |
|
|
| 416 |
|
|
| 812 |
|
Total operating expenses |
|
| 2,992 |
|
|
| 3,570 |
|
|
| 2,675 |
|
|
| 2,302 |
|
|
| 5,667 |
|
|
| 5,872 |
|
Income from operations |
|
| 878 |
|
|
| 368 |
|
|
| 363 |
|
|
| 804 |
|
|
| 1,241 |
|
|
| 1,172 |
|
Other income (expense) |
|
| 367 |
|
|
| (454 | ) | ||||||||||||||||
Earnings from equity method investees |
|
| 65 |
|
|
| 2 |
|
|
| 145 |
|
|
| 5 |
| ||||||||
Other income |
|
| 312 |
|
|
| 498 |
|
|
| 599 |
|
|
| 41 |
| ||||||||
Interest and related charges |
|
| 53 |
|
|
| 432 |
|
|
| 518 |
|
|
| 398 |
|
|
| 571 |
|
|
| 830 |
|
Income (loss) from continuing operations including noncontrolling interests before income tax expense (benefit) |
|
| 1,192 |
|
|
| (518 | ) | ||||||||||||||||
Income from continuing operations including noncontrolling interests before income tax expense (benefit) |
|
| 222 |
|
|
| 906 |
|
|
| 1,414 |
|
|
| 388 |
| ||||||||
Income tax expense (benefit) |
|
| 212 |
|
|
| (50 | ) |
|
| (47 | ) |
|
| 37 |
|
|
| 165 |
|
|
| (13 | ) |
Net Income (Loss) From Continuing Operations Including Noncontrolling Interests |
|
| 980 |
|
|
| (468 | ) | ||||||||||||||||
Net Income From Discontinued Operations Including Noncontrolling Interests(1)(2) |
|
| 28 |
|
|
| 229 |
| ||||||||||||||||
Net Income From Continuing Operations Including Noncontrolling Interests |
|
| 269 |
|
|
| 869 |
|
|
| 1,249 |
|
|
| 401 |
| ||||||||
Net Income (Loss) From Discontinued Operations Including Noncontrolling Interests(1)(2) |
|
| 26 |
|
|
| (2,001 | ) |
|
| 54 |
|
|
| (1,772 | ) | ||||||||
Net Income (Loss) Including Noncontrolling Interests |
|
| 1,008 |
|
|
| (239 | ) |
|
| 295 |
|
|
| (1,132 | ) |
|
| 1,303 |
|
|
| (1,371 | ) |
Noncontrolling Interests |
|
| — |
|
|
| 31 |
|
|
| 10 |
|
|
| 37 |
|
|
| 10 |
|
|
| 68 |
|
Net Income (Loss) Attributable to Dominion Energy |
| $ | 1,008 |
|
| $ | (270 | ) |
| $ | 285 |
|
| $ | (1,169 | ) |
| $ | 1,293 |
|
| $ | (1,439 | ) |
Amounts attributable to Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) from continuing operations |
| $ | 980 |
|
| $ | (466 | ) | ||||||||||||||||
Net Income from discontinued operations |
|
| 28 |
|
|
| 196 |
| ||||||||||||||||
Net Income from continuing operations |
| $ | 259 |
|
| $ | 863 |
|
| $ | 1,239 |
|
| $ | 397 |
| ||||||||
Net Income (Loss) from discontinued operations |
|
| 26 |
|
|
| (2,032 | ) |
|
| 54 |
|
|
| (1,836 | ) | ||||||||
Net Income (Loss) attributable to Dominion Energy |
| $ | 1,008 |
|
| $ | (270 | ) |
| $ | 285 |
|
| $ | (1,169 | ) |
| $ | 1,293 |
|
| $ | (1,439 | ) |
EPS - Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations |
| $ | 1.19 |
|
| $ | (0.57 | ) | ||||||||||||||||
Net income from discontinued operations |
|
| 0.04 |
|
|
| 0.23 |
| ||||||||||||||||
Net income from continuing operations |
| $ | 0.30 |
|
| $ | 1.01 |
|
| $ | 1.49 |
|
| $ | 0.43 |
| ||||||||
Net income (loss) from discontinued operations |
|
| 0.03 |
|
|
| (2.42 | ) |
|
| 0.07 |
|
|
| (2.18 | ) | ||||||||
Net income (loss) attributable to Dominion Energy |
| $ | 1.23 |
|
| $ | (0.34 | ) |
| $ | 0.33 |
|
| $ | (1.41 | ) |
| $ | 1.56 |
|
| $ | (1.75 | ) |
EPS - Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations |
| $ | 1.19 |
|
| $ | (0.57 | ) | ||||||||||||||||
Net income from discontinued operations |
|
| 0.04 |
|
|
| 0.23 |
| ||||||||||||||||
Net income from continuing operations |
| $ | 0.30 |
|
| $ | 0.90 |
|
| $ | 1.49 |
|
| $ | 0.35 |
| ||||||||
Net income (loss) from discontinued operations |
|
| 0.03 |
|
|
| (2.42 | ) |
|
| 0.07 |
|
|
| (2.18 | ) | ||||||||
Net income (loss) attributable to Dominion Energy |
| $ | 1.23 |
|
| $ | (0.34 | ) |
| $ | 0.33 |
|
| $ | (1.52 | ) |
| $ | 1.56 |
|
| $ | (1.83 | ) |
(1) | See Note 10 for amounts attributable to related parties. |
(2) | Includes income tax expense (benefit) of |
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
89
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
| Three Months Ended March 31, |
|
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) including noncontrolling interests |
| $ | 1,008 |
|
| $ | (239 | ) |
|
| $ | 295 |
|
| $ | (1,132 | ) |
| $ | 1,303 |
|
| $ | (1,371 | ) |
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred gains (losses) on derivatives-hedging activities(1) |
|
| 39 |
|
|
| (266 | ) |
| ||||||||||||||||
Changes in unrealized net gains (losses) on investment securities(2) |
|
| (31 | ) |
|
| 9 |
|
| ||||||||||||||||
Changes in net unrecognized pension and other postretirement benefit costs(3) |
|
| 6 |
|
|
| — |
|
| ||||||||||||||||
Net deferred gains (losses) on derivatives-hedging activities(1) |
|
| (16 | ) |
|
| 2 |
|
|
| 23 |
|
|
| (264 | ) | |||||||||
Changes in unrealized net gains (losses) on investment securities(2) |
|
| 12 |
|
|
| 19 |
|
|
| (19 | ) |
|
| 28 |
| |||||||||
Changes in net unrecognized pension and other postretirement benefit costs(3) |
|
| 0 |
|
|
| (1 | ) |
|
| 6 |
|
|
| (1 | ) | |||||||||
Amounts reclassified to net income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net derivative losses-hedging activities(4) |
|
| 13 |
|
|
| 22 |
|
| ||||||||||||||||
Net realized (gains) losses on investment securities(5) |
|
| 1 |
|
|
| (9 | ) |
| ||||||||||||||||
Net pension and other postretirement benefit costs(6) |
|
| 18 |
|
|
| 19 |
|
| ||||||||||||||||
Net derivative (gains) losses-hedging activities(4) |
|
| 12 |
|
|
| 5 |
|
|
| 25 |
|
|
| 27 |
| |||||||||
Net realized (gains) losses on investment securities(5) |
|
| (3 | ) |
|
| (5 | ) |
|
| (2 | ) |
|
| (14 | ) | |||||||||
Net pension and other postretirement benefit costs(6) |
|
| 26 |
|
|
| 18 |
|
|
| 44 |
|
|
| 37 |
| |||||||||
Total other comprehensive income (loss) |
|
| 46 |
|
|
| (225 | ) |
|
|
| 31 |
|
|
| 38 |
|
|
| 77 |
|
|
| (187 | ) |
Comprehensive income (loss) including noncontrolling interests |
|
| 1,054 |
|
|
| (464 | ) |
|
|
| 326 |
|
|
| (1,094 | ) |
|
| 1,380 |
|
|
| (1,558 | ) |
Comprehensive income attributable to noncontrolling interests |
|
| — |
|
|
| 31 |
|
|
|
| 10 |
|
|
| 37 |
|
|
| 10 |
|
|
| 68 |
|
Comprehensive income (loss) attributable to Dominion Energy |
| $ | 1,054 |
|
| $ | (495 | ) |
|
| $ | 316 |
|
| $ | (1,131 | ) |
| $ | 1,370 |
|
| $ | (1,626 | ) |
(1) | Net of |
(2) | Net of |
(3) | Net of |
(4) | Net of $(4) million and |
(5) | Net of $1 million and $0 million tax for the three months ended June 30, 2021 and 2020, respectively, and net of $1 million and $4 million tax for the |
(6) | Net of |
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
910
DOMINION ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| March 31, 2021 |
|
| December 31, 2020(1) |
|
| June 30, 2021 |
|
| December 31, 2020(1) |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 477 |
|
| $ | 172 |
|
| $ | 240 |
|
| $ | 172 |
|
Customer receivables (less allowance for doubtful accounts of $39 and $42) |
|
| 1,841 |
|
|
| 2,295 |
| ||||||||
Other receivables (less allowance for doubtful accounts of $3 at both dates) |
|
| 239 |
|
|
| 212 |
| ||||||||
Customer receivables (less allowance for doubtful accounts of $38 and $42) |
|
| 1,728 |
|
|
| 2,295 |
| ||||||||
Other receivables (less allowance for doubtful accounts of $4 and $3) |
|
| 247 |
|
|
| 212 |
| ||||||||
Inventories |
|
| 1,476 |
|
|
| 1,550 |
|
|
| 1,538 |
|
|
| 1,550 |
|
Prepayments |
|
| 450 |
|
|
| 309 |
| ||||||||
Regulatory assets |
|
| 650 |
|
|
| 699 |
|
|
| 873 |
|
|
| 699 |
|
Other |
|
| 479 |
|
|
| 476 |
|
|
| 340 |
|
|
| 167 |
|
Current assets held for sale |
|
| 1,500 |
|
|
| 1,482 |
|
|
| 1,507 |
|
|
| 1,482 |
|
Total current assets |
|
| 6,662 |
|
|
| 6,886 |
|
|
| 6,923 |
|
|
| 6,886 |
|
Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trust funds |
|
| 7,139 |
|
|
| 6,900 |
|
|
| 7,521 |
|
|
| 6,900 |
|
Investment in equity method affiliates |
|
| 2,949 |
|
|
| 2,934 |
|
|
| 2,951 |
|
|
| 2,934 |
|
Other |
|
| 405 |
|
|
| 404 |
|
|
| 384 |
|
|
| 404 |
|
Total investments |
|
| 10,493 |
|
|
| 10,238 |
|
|
| 10,856 |
|
|
| 10,238 |
|
Property, Plant and Equipment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
| 84,035 |
|
|
| 82,959 |
|
|
| 85,293 |
|
|
| 82,959 |
|
Accumulated depreciation, depletion and amortization |
|
| (25,614 | ) |
|
| (25,111 | ) |
|
| (26,067 | ) |
|
| (25,111 | ) |
Total property, plant and equipment, net |
|
| 58,421 |
|
|
| 57,848 |
|
|
| 59,226 |
|
|
| 57,848 |
|
Deferred Charges and Other Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
| 7,381 |
|
|
| 7,381 |
|
|
| 7,405 |
|
|
| 7,381 |
|
Regulatory assets |
|
| 8,793 |
|
|
| 9,133 |
|
|
| 8,763 |
|
|
| 9,133 |
|
Other |
|
| 4,953 |
|
|
| 4,419 |
|
|
| 4,790 |
|
|
| 4,419 |
|
Total deferred charges and other assets |
|
| 21,127 |
|
|
| 20,933 |
|
|
| 20,958 |
|
|
| 20,933 |
|
Total assets |
| $ | 96,703 |
|
| $ | 95,905 |
|
| $ | 97,963 |
|
| $ | 95,905 |
|
(1) | Dominion Energy’s Consolidated Balance Sheet at December 31, 2020 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.
1011
DOMINION ENERGY, INC.
CONSOLIDATED BALANCE SHEETS—(Continued)
(Unaudited)
|
| March 31, 2021 |
|
| December 31, 2020(1) |
|
| June 30, 2021 |
|
| December 31, 2020(1) |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities due within one year |
| $ | 2,639 |
|
| $ | 1,937 |
|
| $ | 2,096 |
|
| $ | 1,937 |
|
Supplemental 364-Day credit facility borrowings |
|
| — |
|
|
| 225 |
|
|
| — |
|
|
| 225 |
|
Short-term debt |
|
| 2,815 |
|
|
| 895 |
|
|
| 3,028 |
|
|
| 895 |
|
Accounts payable |
|
| 848 |
|
|
| 944 |
|
|
| 774 |
|
|
| 944 |
|
Accrued interest, payroll and taxes |
|
| 957 |
|
|
| 1,133 |
|
|
| 997 |
|
|
| 1,133 |
|
Regulatory liabilities |
|
| 641 |
|
|
| 809 |
|
|
| 631 |
|
|
| 809 |
|
Liability to Atlantic Coast Pipeline |
|
| 97 |
|
|
| 1,052 |
|
|
| 115 |
|
|
| 1,052 |
|
Q-Pipe Transaction deposit |
|
| 1,290 |
|
|
| 1,290 |
|
|
| 1,290 |
|
|
| 1,290 |
|
Other(2) |
|
| 1,924 |
|
|
| 1,933 |
| ||||||||
Other(2) |
|
| 2,114 |
|
|
| 1,933 |
| ||||||||
Current liabilities held for sale |
|
| 625 |
|
|
| 625 |
|
|
| 631 |
|
|
| 625 |
|
Total current liabilities |
|
| 11,836 |
|
|
| 10,843 |
|
|
| 11,676 |
|
|
| 10,843 |
|
Long-Term Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
| 30,209 |
|
|
| 30,915 |
|
|
| 31,288 |
|
|
| 30,915 |
|
Junior subordinated notes |
|
| 2,162 |
|
|
| 2,161 |
|
|
| 2,162 |
|
|
| 2,161 |
|
Supplemental credit facility borrowings |
|
| 250 |
|
|
| — |
| ||||||||
Other |
|
| 877 |
|
|
| 881 |
|
|
| 885 |
|
|
| 881 |
|
Total long-term debt |
|
| 33,248 |
|
|
| 33,957 |
|
|
| 34,585 |
|
|
| 33,957 |
|
Deferred Credits and Other Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes and investment tax credits |
|
| 6,202 |
|
|
| 5,953 |
|
|
| 6,261 |
|
|
| 5,953 |
|
Regulatory liabilities |
|
| 10,202 |
|
|
| 10,187 |
|
|
| 10,292 |
|
|
| 10,187 |
|
Other |
|
| 8,177 |
|
|
| 8,504 |
|
|
| 8,265 |
|
|
| 8,504 |
|
Total deferred credits and other liabilities |
|
| 24,581 |
|
|
| 24,644 |
|
|
| 24,818 |
|
|
| 24,644 |
|
Total liabilities |
|
| 69,665 |
|
|
| 69,444 |
|
|
| 71,079 |
|
|
| 69,444 |
|
Commitments and Contingencies (see Note 17) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock (See Note 16) |
|
| 2,387 |
|
|
| 2,387 |
|
|
| 2,387 |
|
|
| 2,387 |
|
Common stock – no par(3) |
|
| 21,310 |
|
|
| 21,258 |
| ||||||||
Common stock – no par(3) |
|
| 21,369 |
|
|
| 21,258 |
| ||||||||
Retained earnings |
|
| 4,673 |
|
|
| 4,189 |
|
|
| 4,434 |
|
|
| 4,189 |
|
Accumulated other comprehensive loss |
|
| (1,671 | ) |
|
| (1,717 | ) |
|
| (1,640 | ) |
|
| (1,717 | ) |
Total shareholders' equity |
|
| 26,699 |
|
|
| 26,117 |
|
|
| 26,550 |
|
|
| 26,117 |
|
Noncontrolling interests |
|
| 339 |
|
|
| 344 |
|
|
| 334 |
|
|
| 344 |
|
Total equity |
|
| 27,038 |
|
|
| 26,461 |
|
|
| 26,884 |
|
|
| 26,461 |
|
Total liabilities and equity |
| $ | 96,703 |
|
| $ | 95,905 |
|
| $ | 97,963 |
|
| $ | 95,905 |
|
(1) | Dominion Energy’s Consolidated Balance Sheet at December 31, 2020 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; 807 million and 806 million shares outstanding at |
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
1112
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
QUARTER-TO-DATE
|
| Preferred Stock |
|
| Common Stock |
|
| Dominion Energy Shareholders |
|
| Total |
|
|
|
|
|
|
|
|
|
| Preferred Stock |
|
| Common Stock |
|
| Dominion Energy Shareholders |
|
| Total |
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Retained Earnings |
|
| AOCI |
|
| Shareholders' Equity |
|
| Noncontrolling Interests |
|
| Total Equity |
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Retained Earnings |
|
| AOCI |
|
| Shareholders' Equity |
|
| Noncontrolling Interests |
|
| Total Equity |
| ||||||||||||||||||
(millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
|
| 2 |
|
| $ | 2,387 |
|
|
| 838 |
|
| $ | 23,824 |
|
| $ | 7,576 |
|
| $ | (1,793 | ) |
| $ | 31,994 |
|
| $ | 2,039 |
|
| $ | 34,033 |
| ||||||||||||||||||||||||||||||||||||
Cumulative-effect of changes in accounting principles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (48 | ) |
|
|
|
|
|
| (48 | ) |
|
|
|
|
|
| (48 | ) | ||||||||||||||||||||||||||||||||||||
March 31, 2020 |
|
| 2 |
|
| $ | 2,387 |
|
|
| 839 |
|
| $ | 23,902 |
|
| $ | 6,455 |
|
| $ | (2,018 | ) |
| $ | 30,726 |
|
| $ | 2,026 |
|
| $ | 32,752 |
| ||||||||||||||||||||||||||||||||||||
Net income (loss) including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (270 | ) |
|
|
|
|
|
| (270 | ) |
|
| 31 |
|
|
| (239 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,169 | ) |
|
|
|
|
|
| (1,169 | ) |
|
| 37 |
|
|
| (1,132 | ) |
Issuance of stock |
|
|
|
|
|
|
|
|
|
| 1 |
|
|
| 78 |
|
|
|
|
|
|
|
|
|
|
| 78 |
|
|
|
|
|
|
| 78 |
|
|
|
|
|
|
|
|
|
|
| 1 |
|
|
| 70 |
|
|
|
|
|
|
|
|
|
|
| 70 |
|
|
|
|
|
|
| 70 |
|
Stock awards (net of change in unearned compensation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 13 |
|
|
|
|
|
|
|
|
|
|
| 13 |
|
|
|
|
|
|
| 13 |
| ||||||||||||||||||||||||||||||||||||
Preferred stock dividends (See Note 16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (16 | ) |
|
|
|
|
|
| (16 | ) |
|
|
|
|
|
| (16 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (16 | ) |
|
|
|
|
|
| (16 | ) |
|
|
|
|
|
| (16 | ) |
Common stock dividends ($0.940 per share) and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (788 | ) |
|
|
|
|
|
| (788 | ) |
|
| (44 | ) |
|
| (832 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (789 | ) |
|
|
|
|
|
| (789 | ) |
|
| (50 | ) |
|
| (839 | ) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (225 | ) |
|
| (225 | ) |
|
|
|
|
|
| (225 | ) | ||||||||||||||||||||||||||||||||||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 38 |
|
|
| 38 |
|
|
|
|
|
|
| 38 |
| ||||||||||||||||||||||||||||||||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1 |
|
|
|
|
|
|
| 1 |
|
|
|
|
|
|
| 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1 | ) |
|
| (1 | ) |
|
|
|
|
|
| (2 | ) |
|
|
|
|
|
| (2 | ) |
March 31, 2020 |
|
| 2 |
|
| $ | 2,387 |
|
|
| 839 |
|
| $ | 23,902 |
|
| $ | 6,455 |
|
| $ | (2,018 | ) |
| $ | 30,726 |
|
| $ | 2,026 |
|
| $ | 32,752 |
| ||||||||||||||||||||||||||||||||||||
June 30, 2020 |
|
| 2 |
|
| $ | 2,387 |
|
|
| 840 |
|
| $ | 23,984 |
|
| $ | 4,480 |
|
| $ | (1,980 | ) |
| $ | 28,871 |
|
| $ | 2,013 |
|
| $ | 30,884 |
| ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
| 2 |
|
| $ | 2,387 |
|
|
| 806 |
|
| $ | 21,258 |
|
| $ | 4,189 |
|
| $ | (1,717 | ) |
| $ | 26,117 |
|
| $ | 344 |
|
| $ | 26,461 |
| ||||||||||||||||||||||||||||||||||||
March 31, 2021 |
|
| 2 |
|
| $ | 2,387 |
|
|
| 806 |
|
| $ | 21,310 |
|
| $ | 4,673 |
|
| $ | (1,671 | ) |
| $ | 26,699 |
|
| $ | 339 |
|
| $ | 27,038 |
| ||||||||||||||||||||||||||||||||||||
Net income including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,008 |
|
|
|
|
|
|
| 1,008 |
|
|
| — |
|
|
| 1,008 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 285 |
|
|
|
|
|
|
| 285 |
|
|
| 10 |
|
|
| 295 |
|
Issuance of stock |
|
|
|
|
|
|
|
|
|
| — |
|
|
| 48 |
|
|
|
|
|
|
|
|
|
|
| 48 |
|
|
|
|
|
|
| 48 |
|
|
|
|
|
|
|
|
|
|
| 1 |
|
|
| 49 |
|
|
|
|
|
|
|
|
|
|
| 49 |
|
|
|
|
|
|
| 49 |
|
Stock awards (net of change in unearned compensation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 4 |
|
|
|
|
|
|
|
|
|
|
| 4 |
|
|
|
|
|
|
| 4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 11 |
|
|
|
|
|
|
|
|
|
|
| 11 |
|
|
|
|
|
|
| 11 |
|
Preferred stock dividends (See Note 16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (16 | ) |
|
|
|
|
|
| (16 | ) |
|
|
|
|
|
| (16 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (16 | ) |
|
|
|
|
|
| (16 | ) |
|
|
|
|
|
| (16 | ) |
Common stock dividends ($0.630 per share) and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (508 | ) |
|
|
|
|
|
| (508 | ) |
|
| (6 | ) |
|
| (514 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (508 | ) |
|
|
|
|
|
| (508 | ) |
|
| (15 | ) |
|
| (523 | ) |
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 46 |
|
|
| 46 |
|
|
|
|
|
|
| 46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 31 |
|
|
| 31 |
|
|
|
|
|
|
| 31 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| 1 |
|
|
| 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1 | ) |
|
|
|
|
|
|
|
|
|
| (1 | ) |
|
|
|
|
|
| (1 | ) |
March 31, 2021 |
|
| 2 |
|
| $ | 2,387 |
|
|
| 806 |
|
| $ | 21,310 |
|
| $ | 4,673 |
|
| $ | (1,671 | ) |
| $ | 26,699 |
|
| $ | 339 |
|
| $ | 27,038 |
| ||||||||||||||||||||||||||||||||||||
June 30, 2021 |
|
| 2 |
|
| $ | 2,387 |
|
|
| 807 |
|
| $ | 21,369 |
|
| $ | 4,434 |
|
| $ | (1,640 | ) |
| $ | 26,550 |
|
| $ | 334 |
|
| $ | 26,884 |
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial StatementsStatements.
12
13
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
YEAR-TO-DATE
|
| Preferred Stock |
|
| Common Stock |
|
| Dominion Energy Shareholders |
|
| Total |
|
|
|
|
|
|
|
|
| ||||||||||||||||
|
| Shares |
|
| Amount |
|
| Shares |
|
| Amount |
|
| Retained Earnings |
|
| AOCI |
|
| Shareholders' Equity |
|
| Noncontrolling Interests |
|
| Total Equity |
| |||||||||
(millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
|
| 2 |
|
| $ | 2,387 |
|
|
| 838 |
|
| $ | 23,824 |
|
| $ | 7,576 |
|
| $ | (1,793 | ) |
| $ | 31,994 |
|
| $ | 2,039 |
|
| $ | 34,033 |
|
Cumulative-effect of changes in accounting principles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | (48 | ) |
|
|
|
|
|
| (48 | ) |
|
|
|
|
|
| (48 | ) |
Net income (loss) including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,439 | ) |
|
|
|
|
|
| (1,439 | ) |
|
| 68 |
|
|
| (1,371 | ) |
Issuance of stock |
|
|
|
|
|
|
|
|
|
| 2 |
|
|
| 148 |
|
|
|
|
|
|
|
|
|
|
| 148 |
|
|
|
|
|
|
| 148 |
|
Stock awards (net of change in unearned compensation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 13 |
|
|
|
|
|
|
|
|
|
|
| 13 |
|
|
|
|
|
|
| 13 |
|
Preferred stock dividends (See Note 16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (32 | ) |
|
|
|
|
|
| (32 | ) |
|
|
|
|
|
| (32 | ) |
Common stock dividends ($1.880 per common share) and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,577 | ) |
|
|
|
|
|
| (1,577 | ) |
|
| (94 | ) |
|
| (1,671 | ) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (187 | ) |
|
| (187 | ) |
|
|
|
|
|
| (187 | ) |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1 | ) |
|
|
|
|
|
|
|
|
|
| (1 | ) |
|
|
|
|
|
| (1 | ) |
June 30, 2020 |
|
| 2 |
|
| $ | 2,387 |
|
|
| 840 |
|
| $ | 23,984 |
|
| $ | 4,480 |
|
| $ | (1,980 | ) |
| $ | 28,871 |
|
| $ | 2,013 |
|
| $ | 30,884 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
| 2 |
|
| $ | 2,387 |
|
|
| 806 |
|
| $ | 21,258 |
|
| $ | 4,189 |
|
| $ | (1,717 | ) |
| $ | 26,117 |
|
| $ | 344 |
|
| $ | 26,461 |
|
Net income including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,293 |
|
|
|
|
|
|
| 1,293 |
|
|
| 10 |
|
|
| 1,303 |
|
Issuance of stock |
|
|
|
|
|
|
|
|
|
| 1 |
|
|
| 97 |
|
|
|
|
|
|
|
|
|
|
| 97 |
|
|
|
|
|
|
| 97 |
|
Stock awards (net of change in unearned compensation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 15 |
|
|
|
|
|
|
|
|
|
|
| 15 |
|
|
|
|
|
|
| 15 |
|
Preferred stock dividends (See Note 16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (32 | ) |
|
|
|
|
|
| (32 | ) |
|
|
|
|
|
| (32 | ) |
Common stock dividends ($1.260 per share) and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,016 | ) |
|
|
|
|
|
| (1,016 | ) |
|
| (20 | ) |
|
| (1,036 | ) |
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 77 |
|
|
| 77 |
|
|
|
|
|
|
| 77 |
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1 | ) |
|
|
|
|
|
|
|
|
|
| (1 | ) |
|
|
|
|
|
| (1 | ) |
June 30, 2021 |
|
| 2 |
|
| $ | 2,387 |
|
|
| 807 |
|
| $ | 21,369 |
|
| $ | 4,434 |
|
| $ | (1,640 | ) |
| $ | 26,550 |
|
| $ | 334 |
|
| $ | 26,884 |
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
14
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31, |
| 2021 |
|
| 2020 |
| ||||||||||
Six Months Ended June 30, |
| 2021 |
|
| 2020 |
| ||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) including noncontrolling interests |
| $ | 1,008 |
|
| $ | (239 | ) |
| $ | 1,303 |
|
| $ | (1,371 | ) |
Adjustments to reconcile net income (loss) including noncontrolling interests to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization (including nuclear fuel) |
|
| 685 |
|
|
| 759 |
|
|
| 1,358 |
|
|
| 1,497 |
|
Deferred income taxes and investment tax credits |
|
| 216 |
|
|
| (65 | ) |
|
| 211 |
|
|
| (231 | ) |
Impairment of assets and other charges |
|
| 95 |
|
|
| 768 |
|
|
| 416 |
|
|
| 1,297 |
|
Loss from investment in Atlantic Coast Pipeline |
|
| 22 |
|
|
| 2,315 |
| ||||||||
Net losses (gains) on nuclear decommissioning trust funds and other investments |
|
| (152 | ) |
|
| 526 |
|
|
| (364 | ) |
|
| 117 |
|
Other adjustments |
|
| 4 |
|
|
| 4 |
|
|
| 232 |
|
|
| 40 |
|
Changes in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
| 334 |
|
|
| 245 |
|
|
| 337 |
|
|
| 360 |
|
Inventories |
|
| 73 |
|
|
| 71 |
|
|
| 10 |
|
|
| 7 |
|
Deferred fuel and purchased gas costs, net |
|
| (149 | ) |
|
| 162 |
|
|
| (300 | ) |
|
| 237 |
|
Prepayments |
|
| 24 |
|
|
| 38 |
|
|
| (143 | ) |
|
| (193 | ) |
Accounts payable |
|
| 21 |
|
|
| (164 | ) |
|
| (42 | ) |
|
| (191 | ) |
Accrued interest, payroll and taxes |
|
| (177 | ) |
|
| (234 | ) |
|
| (135 | ) |
|
| (313 | ) |
Customer deposits |
|
| (9 | ) |
|
| (13 | ) |
|
| (15 | ) |
|
| (7 | ) |
Margin deposit assets and liabilities |
|
| (60 | ) |
|
| 46 |
|
|
| (176 | ) |
|
| 19 |
|
Net realized and unrealized changes related to derivative activities |
|
| (218 | ) |
|
| 36 |
|
|
| 119 |
|
|
| 84 |
|
Pension and other postretirement benefits |
|
| (150 | ) |
|
| (105 | ) | ||||||||
Other operating assets and liabilities |
|
| (243 | ) |
|
| (307 | ) |
|
| (443 | ) |
|
| (426 | ) |
Net cash provided by operating activities |
|
| 1,452 |
|
|
| 1,633 |
|
|
| 2,240 |
|
|
| 3,136 |
|
Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant construction and other property additions (including nuclear fuel) |
|
| (1,328 | ) |
|
| (1,462 | ) |
|
| (2,664 | ) |
|
| (2,915 | ) |
Acquisition of solar development projects |
|
| (23 | ) |
|
| (8 | ) |
|
| (36 | ) |
|
| (187 | ) |
Proceeds from sales of securities |
|
| 1,765 |
|
|
| 602 |
|
|
| 2,710 |
|
|
| 1,660 |
|
Purchases of securities |
|
| (1,765 | ) |
|
| (631 | ) |
|
| (2,683 | ) |
|
| (1,710 | ) |
Contributions to equity method affiliates |
|
| (977 | ) |
|
| (11 | ) |
|
| (983 | ) |
|
| (39 | ) |
Acquisition of equity method investments |
|
| 0 |
|
|
| (178 | ) |
|
| 0 |
|
|
| (178 | ) |
Other |
|
| 20 |
|
|
| 47 |
|
|
| (112 | ) |
|
| 35 |
|
Net cash used in investing activities |
|
| (2,308 | ) |
|
| (1,641 | ) |
|
| (3,768 | ) |
|
| (3,334 | ) |
Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of short-term debt, net |
|
| 1,921 |
|
|
| 1,279 |
| ||||||||
Issuance (repayment) of short-term debt, net |
|
| 2,133 |
|
|
| (525 | ) | ||||||||
Issuance of short-term notes |
|
| 0 |
|
|
| 500 |
|
|
| 0 |
|
|
| 1,125 |
|
Repayment of short-term notes |
|
| 0 |
|
|
| (625 | ) | ||||||||
Supplemental 364-Day credit facility borrowings |
|
| 0 |
|
|
| 225 |
| ||||||||
Repayment of supplemental 364-day credit facility borrowings |
|
| (225 | ) |
|
| 0 |
|
|
| (225 | ) |
|
| 0 |
|
Issuance of long-term debt |
|
| 150 |
|
|
| 950 |
|
|
| 1,250 |
|
|
| 4,355 |
|
Repayment of long-term debt, including redemption premiums |
|
| (161 | ) |
|
| (932 | ) |
|
| (722 | ) |
|
| (2,210 | ) |
Supplemental credit facility borrowings |
|
| 250 |
|
|
| 0 |
| ||||||||
Issuance of common stock |
|
| 48 |
|
|
| 78 |
|
|
| 97 |
|
|
| 148 |
|
Common dividend payments |
|
| (508 | ) |
|
| (788 | ) |
|
| (1,016 | ) |
|
| (1,577 | ) |
Other |
|
| (54 | ) |
|
| (81 | ) |
|
| (182 | ) |
|
| (245 | ) |
Net cash provided by financing activities |
|
| 1,171 |
|
|
| 1,006 |
|
|
| 1,585 |
|
|
| 671 |
|
Increase in cash, restricted cash and equivalents |
|
| 315 |
|
|
| 998 |
|
|
| 57 |
|
|
| 473 |
|
Cash, restricted cash and equivalents at beginning of period |
|
| 247 |
|
|
| 269 |
|
|
| 247 |
|
|
| 269 |
|
Cash, restricted cash and equivalents at end of period |
| $ | 562 |
|
| $ | 1,267 |
|
| $ | 304 |
|
| $ | 742 |
|
See Note 2 for disclosure of supplemental cash flow information.
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
1315
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
| Three Months Ended March 31, |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenue(1) |
| $ | 1,830 |
|
| $ | 1,930 |
| ||||||||||||||||
Operating Revenue(1) |
| $ | 1,741 |
|
| $ | 1,805 |
|
| $ | 3,571 |
|
| $ | 3,735 |
| ||||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric fuel and other energy-related purchases(1) |
|
| 406 |
|
|
| 492 |
| ||||||||||||||||
Excess electric capacity |
|
| (3 | ) |
|
| (9 | ) | ||||||||||||||||
Electric fuel and other energy-related purchases(1) |
|
| 349 |
|
|
| 366 |
|
|
| 755 |
|
|
| 858 |
| ||||||||
Purchased (excess) electric capacity |
|
| 4 |
|
|
| (8 | ) |
|
| 1 |
|
|
| (17 | ) | ||||||||
Other operations and maintenance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliated suppliers |
|
| 87 |
|
|
| 87 |
|
|
| 78 |
|
|
| 80 |
|
|
| 165 |
|
|
| 167 |
|
Other |
|
| 426 |
|
|
| 331 |
|
|
| 321 |
|
|
| 296 |
|
|
| 747 |
|
|
| 627 |
|
Depreciation and amortization |
|
| 324 |
|
|
| 311 |
|
|
| 323 |
|
|
| 307 |
|
|
| 647 |
|
|
| 618 |
|
Other taxes |
|
| 93 |
|
|
| 87 |
|
|
| 83 |
|
|
| 85 |
|
|
| 176 |
|
|
| 172 |
|
Impairment of assets and other charges (benefit) |
|
| (51 | ) |
|
| 764 |
|
|
| 12 |
|
|
| 44 |
|
|
| (39 | ) |
|
| 808 |
|
Total operating expenses |
|
| 1,282 |
|
|
| 2,063 |
|
|
| 1,170 |
|
|
| 1,170 |
|
|
| 2,452 |
|
|
| 3,233 |
|
Income (loss) from operations |
|
| 548 |
|
|
| (133 | ) | ||||||||||||||||
Other income (expense) |
|
| 32 |
|
|
| (52 | ) | ||||||||||||||||
Interest and related charges(1) |
|
| 136 |
|
|
| 126 |
| ||||||||||||||||
Income (loss) before income tax expense |
|
| 444 |
|
|
| (311 | ) | ||||||||||||||||
Income tax expense (benefit) |
|
| 70 |
|
|
| (31 | ) | ||||||||||||||||
Net Income (Loss) |
| $ | 374 |
|
| $ | (280 | ) | ||||||||||||||||
Income from operations |
|
| 571 |
|
|
| 635 |
|
|
| 1,119 |
|
|
| 502 |
| ||||||||
Other income |
|
| 40 |
|
|
| 52 |
|
|
| 72 |
|
|
| — |
| ||||||||
Interest and related charges(1) |
|
| 128 |
|
|
| 137 |
|
|
| 264 |
|
|
| 263 |
| ||||||||
Income before income tax expense |
|
| 483 |
|
|
| 550 |
|
|
| 927 |
|
|
| 239 |
| ||||||||
Income tax expense |
|
| 69 |
|
|
| 60 |
|
|
| 139 |
|
|
| 29 |
| ||||||||
Net Income |
| $ | 414 |
|
| $ | 490 |
|
| $ | 788 |
|
| $ | 210 |
|
(1) | See Note 19 for amounts attributable to affiliates. |
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
16
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
| Three Months Ended March 31, |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | 374 |
|
| $ | (280 | ) | ||||||||||||||||
Net income |
| $ | 414 |
|
| $ | 490 |
|
| $ | 788 |
|
| $ | 210 |
| ||||||||
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred gains (losses) on derivatives-hedging activities(1) |
|
| 32 |
|
|
| (45 | ) | ||||||||||||||||
Changes in unrealized net losses on nuclear decommissioning trust funds(2) |
|
| (5 | ) |
|
| (2 | ) | ||||||||||||||||
Net deferred gains (losses) on derivatives-hedging activities(1) |
|
| (12 | ) |
|
| 1 |
|
|
| 20 |
|
|
| (44 | ) | ||||||||
Changes in unrealized net gains (losses) on nuclear decommissioning trust funds(2) |
|
| 3 |
|
|
| 6 |
|
|
| (2 | ) |
|
| 4 |
| ||||||||
Amounts reclassified to net income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net derivative losses-hedging activities(3) |
|
| 1 |
|
|
| 0 |
| ||||||||||||||||
Net realized losses on nuclear decommissioning trust funds(4) |
|
| 1 |
|
|
| 1 |
| ||||||||||||||||
Net derivative (gains) losses-hedging activities(3) |
|
| 0 |
|
|
| 0 |
|
|
| 1 |
|
|
| 0 |
| ||||||||
Net realized (gains) losses on nuclear decommissioning trust funds(4) |
|
| (1 | ) |
|
| (2 | ) |
|
| 0 |
|
|
| (1 | ) | ||||||||
Total other comprehensive income (loss) |
|
| 29 |
|
|
| (46 | ) |
|
| (10 | ) |
|
| 5 |
|
|
| 19 |
|
|
| (41 | ) |
Comprehensive income (loss) |
| $ | 403 |
|
| $ | (326 | ) | ||||||||||||||||
Comprehensive income |
| $ | 404 |
|
| $ | 495 |
|
| $ | 807 |
|
| $ | 169 |
|
(1) | Net of |
(2) | Net of $0 million and |
(3) | Net of $0 million and |
(4) | Net of $0 million and |
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
17
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| March 31, 2021 |
|
| December 31, 2020(1) |
|
| June 30, 2021 |
|
| December 31, 2020(1) |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 56 |
|
| $ | 35 |
|
| $ | 49 |
|
| $ | 35 |
|
Customer receivables (less allowance for doubtful accounts of $18 and $23) |
|
| 926 |
|
|
| 1,315 |
| ||||||||
Customer receivables (less allowance for doubtful accounts of $22 and $23) |
|
| 1,019 |
|
|
| 1,315 |
| ||||||||
Other receivables (less allowance for doubtful accounts of $2 at both dates) |
|
| 86 |
|
|
| 91 |
|
|
| 77 |
|
|
| 91 |
|
Affiliated receivables |
|
| 10 |
|
|
| 5 |
|
|
| 198 |
|
|
| 5 |
|
Inventories (average cost method) |
|
| 840 |
|
|
| 862 |
|
|
| 837 |
|
|
| 862 |
|
Regulatory assets |
|
| 292 |
|
|
| 295 |
|
|
| 462 |
|
|
| 295 |
|
Other(2) |
|
| 52 |
|
|
| 59 |
| ||||||||
Other(2) |
|
| 108 |
|
|
| 59 |
| ||||||||
Total current assets |
|
| 2,262 |
|
|
| 2,662 |
|
|
| 2,750 |
|
|
| 2,662 |
|
Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nuclear decommissioning trust funds |
|
| 3,322 |
|
|
| 3,197 |
|
|
| 3,511 |
|
|
| 3,197 |
|
Other |
|
| 3 |
|
|
| 3 |
|
|
| 4 |
|
|
| 3 |
|
Total investments |
|
| 3,325 |
|
|
| 3,200 |
|
|
| 3,515 |
|
|
| 3,200 |
|
Property, Plant and Equipment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
| 47,431 |
|
|
| 46,736 |
|
|
| 48,212 |
|
|
| 46,736 |
|
Accumulated depreciation and amortization |
|
| (14,446 | ) |
|
| (14,167 | ) |
|
| (14,717 | ) |
|
| (14,167 | ) |
Total property, plant and equipment, net |
|
| 32,985 |
|
|
| 32,569 |
|
|
| 33,495 |
|
|
| 32,569 |
|
Deferred Charges and Other Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory assets |
|
| 3,235 |
|
|
| 3,509 |
|
|
| 3,454 |
|
|
| 3,509 |
|
Other(2) |
|
| 1,977 |
|
|
| 1,714 |
| ||||||||
Other(2) |
|
| 1,942 |
|
|
| 1,714 |
| ||||||||
Total deferred charges and other assets |
|
| 5,212 |
|
|
| 5,223 |
|
|
| 5,396 |
|
|
| 5,223 |
|
Total assets |
| $ | 43,784 |
|
| $ | 43,654 |
|
| $ | 45,156 |
|
| $ | 43,654 |
|
(1) | Virginia Power’s Consolidated Balance Sheet at December 31, 2020 has been derived from the audited Consolidated Balance Sheet at that date. |
(2) | See Note 19 for amounts attributable to affiliates. |
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
1618
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETS—(Continued)
(Unaudited)
|
| March 31, 2021 |
|
| December 31, 2020(1) |
|
| June 30, 2021 |
|
| December 31, 2020(1) |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDER’S EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities due within one year |
| $ | 458 |
|
| $ | 8 |
|
| $ | 461 |
|
| $ | 8 |
|
Short-term debt |
|
| 420 |
|
|
| 45 |
|
|
| 814 |
|
|
| 45 |
|
Accounts payable |
|
| 311 |
|
|
| 332 |
|
|
| 311 |
|
|
| 332 |
|
Payables to affiliates |
|
| 125 |
|
|
| 266 |
|
|
| 250 |
|
|
| 266 |
|
Affiliated current borrowings |
|
| 177 |
|
|
| 380 |
|
|
| 348 |
|
|
| 380 |
|
Accrued interest, payroll and taxes |
|
| 307 |
|
|
| 253 |
|
|
| 297 |
|
|
| 253 |
|
Asset retirement obligations |
|
| 159 |
|
|
| 166 |
| ||||||||
Regulatory liabilities |
|
| 272 |
|
|
| 425 |
|
|
| 254 |
|
|
| 425 |
|
Derivative liabilities(2) |
|
| 171 |
|
|
| 390 |
| ||||||||
Derivative liabilities(2) |
|
| 296 |
|
|
| 390 |
| ||||||||
Other |
|
| 591 |
|
|
| 562 |
|
|
| 715 |
|
|
| 728 |
|
Total current liabilities |
|
| 2,991 |
|
|
| 2,827 |
|
|
| 3,746 |
|
|
| 2,827 |
|
Long-Term Debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
| 12,759 |
|
|
| 13,207 |
|
|
| 12,760 |
|
|
| 13,207 |
|
Other |
|
| 481 |
|
|
| 480 |
|
|
| 492 |
|
|
| 480 |
|
Total long-term debt |
|
| 13,240 |
|
|
| 13,687 |
|
|
| 13,252 |
|
|
| 13,687 |
|
Deferred Credits and Other Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred income taxes and investment tax credits |
|
| 2,873 |
|
|
| 2,779 |
|
|
| 3,027 |
|
|
| 2,779 |
|
Asset retirement obligations |
|
| 3,681 |
|
|
| 3,654 |
|
|
| 3,691 |
|
|
| 3,654 |
|
Regulatory liabilities |
|
| 5,402 |
|
|
| 5,338 |
|
|
| 5,552 |
|
|
| 5,338 |
|
Other(2) |
|
| 786 |
|
|
| 812 |
| ||||||||
Other(2) |
|
| 824 |
|
|
| 812 |
| ||||||||
Total deferred credits and other liabilities |
|
| 12,742 |
|
|
| 12,583 |
|
|
| 13,094 |
|
|
| 12,583 |
|
Total liabilities |
|
| 28,973 |
|
|
| 29,097 |
|
|
| 30,092 |
|
|
| 29,097 |
|
Commitments and Contingencies (see Note 17) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shareholder’s Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock – no par(3) |
|
| 5,738 |
|
|
| 5,738 |
| ||||||||
Common stock – no par(3) |
|
| 5,738 |
|
|
| 5,738 |
| ||||||||
Other paid-in capital |
|
| 1,113 |
|
|
| 1,113 |
|
|
| 1,113 |
|
|
| 1,113 |
|
Retained earnings |
|
| 7,983 |
|
|
| 7,758 |
|
|
| 8,246 |
|
|
| 7,758 |
|
Accumulated other comprehensive loss |
|
| (23 | ) |
|
| (52 | ) |
|
| (33 | ) |
|
| (52 | ) |
Total common shareholder’s equity |
|
| 14,811 |
|
|
| 14,557 |
|
|
| 15,064 |
|
|
| 14,557 |
|
Total liabilities and shareholder’s equity |
| $ | 43,784 |
|
| $ | 43,654 |
|
| $ | 45,156 |
|
| $ | 43,654 |
|
(1) | Virginia Power’s Consolidated Balance Sheet at December 31, 2020 has been derived from the audited Consolidated Balance Sheet at that date. |
(2) | See Note 19 for amounts attributable to affiliates. |
(3) | 500,000 shares authorized; 274,723 shares outstanding at |
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
1719
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER’S EQUITY
(Unaudited)
QUARTER-TO-DATE
|
| Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| Shares |
|
| Amount |
|
| Other Paid-In Capital |
|
| Retained Earnings |
|
| AOCI |
|
| Total |
|
| Shares |
|
| Amount |
|
| Other Paid-In Capital |
|
| Retained Earnings |
|
| AOCI |
|
| Total |
| ||||||||||||
(millions, except for shares) |
| (thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
December 31, 2019 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 7,167 |
|
| $ | (29 | ) |
| $ | 13,989 |
| ||||||||||||||||||||||||
Net loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (280 | ) |
|
|
|
|
|
| (280 | ) | ||||||||||||||||||||||||
March 31, 2020 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 6,780 |
|
| $ | (75 | ) |
| $ | 13,556 |
| ||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 490 |
|
|
|
|
|
|
| 490 |
| ||||||||||||||||||||||||
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (107 | ) |
|
|
|
|
|
| (107 | ) | ||||||||||||||||||||||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5 |
|
|
| 5 |
| ||||||||||||||||||||||||
June 30, 2020 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 7,163 |
|
| $ | (70 | ) |
| $ | 13,944 |
| ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
March 31, 2021 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 7,983 |
|
| $ | (23 | ) |
| $ | 14,811 |
| ||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 414 |
|
|
|
|
|
|
| 414 |
| ||||||||||||||||||||||||
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (108 | ) |
|
|
|
|
|
| (108 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (150 | ) |
|
|
|
|
|
| (150 | ) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (46 | ) |
|
| (46 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (10 | ) |
|
| (10 | ) |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1 |
|
|
|
|
|
|
| 1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1 | ) |
|
|
|
|
|
| (1 | ) |
March 31, 2020 |
|
| 275 |
|
|
| 5,738 |
|
|
| 1,113 |
|
|
| 6,780 |
|
|
| (75 | ) |
|
| 13,556 |
| ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
December 31, 2020 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 7,758 |
|
| $ | (52 | ) |
| $ | 14,557 |
| ||||||||||||||||||||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 374 |
|
|
|
|
|
|
| 374 |
| ||||||||||||||||||||||||
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (150 | ) |
|
|
|
|
|
| (150 | ) | ||||||||||||||||||||||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 29 |
|
|
| 29 |
| ||||||||||||||||||||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1 |
|
|
|
|
|
|
| 1 |
| ||||||||||||||||||||||||
March 31, 2021 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 7,983 |
|
| $ | (23 | ) |
| $ | 14,811 |
| ||||||||||||||||||||||||
June 30, 2021 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 8,246 |
|
| $ | (33 | ) |
| $ | 15,064 |
|
YEAR-TO-DATE
|
| Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
| Shares |
|
| Amount |
|
| Other Paid-In Capital |
|
| Retained Earnings |
|
| AOCI |
|
| Total |
| ||||||
(millions, except for shares) |
| (thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
December 31, 2019 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 7,167 |
|
| $ | (29 | ) |
| $ | 13,989 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 210 |
|
|
|
|
|
|
| 210 |
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (215 | ) |
|
|
|
|
|
| (215 | ) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (41 | ) |
|
| (41 | ) |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1 |
|
|
|
|
|
|
| 1 |
|
June 30, 2020 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 7,163 |
|
| $ | (70 | ) |
| $ | 13,944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 7,758 |
|
| $ | (52 | ) |
| $ | 14,557 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 788 |
|
|
|
|
|
|
| 788 |
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (300 | ) |
|
|
|
|
|
| (300 | ) |
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 19 |
|
|
| 19 |
|
June 30, 2021 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 8,246 |
|
| $ | (33 | ) |
| $ | 15,064 |
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
1820
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31, |
| 2021 |
|
| 2020 |
| ||||||||||
Six Months Ended June 30, |
| 2021 |
|
| 2020 |
| ||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | 374 |
|
| $ | (280 | ) | ||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
| ||||||||
Net income |
| $ | 788 |
|
| $ | 210 |
| ||||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
| ||||||||
Depreciation and amortization (including nuclear fuel) |
|
| 365 |
|
|
| 357 |
|
|
| 723 |
|
|
| 702 |
|
Deferred income taxes and investment tax credits |
|
| 87 |
|
|
| (135 | ) |
|
| 218 |
|
|
| (220 | ) |
Impairment of assets and other charges (benefit) |
|
| (51 | ) |
|
| 764 |
|
|
| (39 | ) |
|
| 806 |
|
Other adjustments |
|
| (29 | ) |
|
| 53 |
|
|
| 81 |
|
|
| 24 |
|
Changes in: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
| 317 |
|
|
| 123 |
|
|
| 88 |
|
|
| (21 | ) |
Affiliated receivables and payables |
|
| (144 | ) |
|
| 24 |
|
|
| (208 | ) |
|
| 220 |
|
Inventories |
|
| 21 |
|
|
| 5 |
|
|
| 25 |
|
|
| (1 | ) |
Prepayments |
|
| (4 | ) |
|
| (5 | ) |
|
| (4 | ) |
|
| 0 |
|
Deferred fuel expenses, net |
|
| (159 | ) |
|
| 70 |
|
|
| (277 | ) |
|
| 136 |
|
Accounts payable |
|
| 0 |
|
|
| 99 |
|
|
| 15 |
|
|
| (9 | ) |
Accrued interest, payroll and taxes |
|
| 54 |
|
|
| 13 |
|
|
| 43 |
|
|
| 18 |
|
Net realized and unrealized changes related to derivative activities |
|
| 18 |
|
|
| (12 | ) |
|
| 51 |
|
|
| (20 | ) |
Other operating assets and liabilities |
|
| (65 | ) |
|
| 73 |
|
|
| (220 | ) |
|
| 47 |
|
Net cash provided by operating activities |
|
| 784 |
|
|
| 1,149 |
|
|
| 1,284 |
|
|
| 1,892 |
|
Investing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plant construction and other property additions |
|
| (766 | ) |
|
| (764 | ) |
|
| (1,575 | ) |
|
| (1,474 | ) |
Purchases of nuclear fuel |
|
| (46 | ) |
|
| (25 | ) |
|
| (73 | ) |
|
| (154 | ) |
Acquisition of solar development projects |
|
| (10 | ) |
|
| (6 | ) |
|
| (19 | ) |
|
| (19 | ) |
Proceeds from sales of securities |
|
| 789 |
|
|
| 294 |
|
|
| 1,249 |
|
|
| 530 |
|
Purchases of securities |
|
| (791 | ) |
|
| (310 | ) |
|
| (1,262 | ) |
|
| (549 | ) |
Other |
|
| 41 |
|
|
| 37 |
|
|
| (22 | ) |
|
| 18 |
|
Net cash used in investing activities |
|
| (783 | ) |
|
| (774 | ) |
|
| (1,702 | ) |
|
| (1,648 | ) |
Financing Activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance (repayment) of short-term debt, net |
|
| 375 |
|
|
| (108 | ) |
|
| 769 |
|
|
| (243 | ) |
Repayment of affiliated current borrowings, net |
|
| (203 | ) |
|
| (106 | ) | ||||||||
Issuance (repayment) of affiliated current borrowings, net |
|
| (32 | ) |
|
| 233 |
| ||||||||
Issuance of long-term debt, net |
|
| 0 |
|
|
| 105 |
| ||||||||
Repayment of long-term debt, net |
|
| 0 |
|
|
| (105 | ) | ||||||||
Common dividend payments to parent |
|
| (150 | ) |
|
| (108 | ) |
|
| (300 | ) |
|
| (215 | ) |
Other |
|
| (2 | ) |
|
| (1 | ) |
|
| (5 | ) |
|
| (3 | ) |
Net cash provided by (used in) financing activities |
|
| 20 |
|
|
| (323 | ) |
|
| 432 |
|
|
| (228 | ) |
Increase in cash, restricted cash and equivalents |
|
| 21 |
|
|
| 52 |
|
|
| 14 |
|
|
| 16 |
|
Cash, restricted cash and equivalents at beginning of period |
|
| 35 |
|
|
| 24 |
|
|
| 35 |
|
|
| 24 |
|
Cash, restricted cash and equivalents at end of period |
| $ | 56 |
|
| $ | 76 |
|
| $ | 49 |
|
| $ | 40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Note 2 for disclosure of supplemental cash flow information.
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
21
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 distributors of energy. Dominion Energy’s operations are conducted through various subsidiaries, including Virginia Power. 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, following completion of the GT&S Transaction in November 2020, a noncontrolling interest in Cove Point. See Note 3 for a description of the sale of substantially all of Dominion Energy’s gas transmission and storage operations to BHE through the GT&S Transaction completed in November 2020 and the proposed Q-Pipe Transactionanticipated sale of Dominion Energy’s remaining regulated gas transmission and storage services in the Rocky Mountain region of the U.S.
Note 2. Significant Accounting Policies
As permitted by the rules and regulations of the SEC, the 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’ Annual Report on Form 10-K for the year ended December 31, 2020.
In the Companies’ opinion, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly their financial position at March 31,June 30, 2021, and their results of operations and changes in equity for the three and six months ended June 30, 2021 and 2020 and their cash flows for the threesix months ended March 31,June 30, 2021 and 2020. 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’ 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 March 31,June 30, 2021, Dominion Energy owns 50% of the voting interests in Four Brothers and Three Cedars and has a controlling financial interest over the entities through its right to control operations. GIP’s ownership interest in Four Brothers and Three Cedars, Terra Nova Renewable Partners’ 33% interest in certain Dominion Energy nonregulated solar projects and Brookfield’s 25% interest in Cove Point (effective December 2019 until November 2020) are reflected as noncontrolling interest in Dominion Energy’s Consolidated Financial Statements. In August 2021, Dominion Energy entered into an agreement with Terra Nova Renewable Partners has a future option to buy all or a portion of Dominion Energy’ssell its remaining 67% ownershipcontrolling financial interest in certain nonregulated solar projects upon the occurrence of certain events, including any proposed sale by Dominion Energy of its interest.projects. See Note 11 for more information.
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’ 2020 Consolidated Financial Statements and Notes have been reclassified to conform to the 2021 presentation for comparative purposes; however, such reclassifications did not affect the Companies’ net income, total assets, liabilities, equity or cash flows. Effective in the second quarter of 2021, the Companies updated their Statements of Cash Flows to present net charges for allowance for credit risk and write-offs of accounts receivables within other adjustments to reconcile net income to net cash provided by operating activities from the previous presentation within changes in accounts receivable. All prior period information has been conformed to this presentation, which does not result in a change to net cash provided by operating activities.
Amounts disclosed for Dominion Energy are inclusive of Virginia Power, where applicable. There have been no significant changes from Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, with the exception of the items described below.
2022
Cash, Restricted Cash and Equivalents
Restricted Cash and Equivalents
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 threesix months ended March 31,June 30, 2021 and 2020:
|
| Cash, Restricted Cash and Equivalents at End of Period |
|
| Cash, Restricted Cash and Equivalents at Beginning of Period |
|
| Cash, Restricted Cash and Equivalents at End of Period |
|
| Cash, Restricted Cash and Equivalents at Beginning of Period |
| ||||||||||||||||||||
|
| March 31, 2021 |
|
| March 31, 2020 |
|
| December 31, 2020 |
|
| December 31, 2019 |
|
| June 30, 2021 |
|
| June 30, 2020 |
|
| December 31, 2020 |
|
| December 31, 2019 |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents(1) |
| $ | 491 |
|
| $ | 1,192 |
|
| $ | 179 |
|
| $ | 166 |
| ||||||||||||||||
Restricted cash and equivalents(2)(3) |
|
| 71 |
|
|
| 75 |
|
|
| 68 |
|
|
| 103 |
| ||||||||||||||||
Cash and cash equivalents(1) |
| $ | 259 |
|
| $ | 675 |
|
| $ | 179 |
|
| $ | 166 |
| ||||||||||||||||
Restricted cash and equivalents(2)(3) |
|
| 45 |
|
|
| 67 |
|
|
| 68 |
|
|
| 103 |
| ||||||||||||||||
Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows |
| $ | 562 |
|
| $ | 1,267 |
|
| $ | 247 |
|
| $ | 269 |
|
| $ | 304 |
|
| $ | 742 |
|
| $ | 247 |
|
| $ | 269 |
|
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 56 |
|
| $ | 71 |
|
| $ | 35 |
|
| $ | 17 |
|
| $ | 49 |
|
| $ | 37 |
|
| $ | 35 |
|
| $ | 17 |
|
Restricted cash and equivalents(3) |
|
| 0 |
|
|
| 5 |
|
|
| 0 |
|
|
| 7 |
| ||||||||||||||||
Restricted cash and equivalents(3) |
|
| 0 |
|
|
| 3 |
|
|
| 0 |
|
|
| 7 |
| ||||||||||||||||
Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows |
| $ | 56 |
|
| $ | 76 |
|
| $ | 35 |
|
| $ | 24 |
|
| $ | 49 |
|
| $ | 40 |
|
| $ | 35 |
|
| $ | 24 |
|
(1) | At |
(2) | At |
(3) | Restricted cash and equivalent balances are presented within other current assets in the Companies’ Consolidated Balance Sheets. |
Supplemental Cash Flow Information
The following table provides supplemental disclosure of cash flow information related to Dominion Energy:
|
| Three Months Ended March 31, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant noncash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued capital expenditures |
| $ | 341 |
|
| $ | 343 |
|
| $ | 327 |
|
| $ | 346 |
|
Leases(1) |
|
| 9 |
|
|
| 17 |
| ||||||||
Accrued contributions to equity method affiliates |
|
| 20 |
|
|
| 5 |
| ||||||||
Leases(1) |
|
| 29 |
|
|
| 35 |
|
(1) | Includes |
The following table provides supplemental disclosure of cash flow information related to Virginia Power:
|
| Three Months Ended March 31, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant noncash investing and financing activities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued capital expenditures |
| $ | 262 |
|
| $ | 210 |
|
| $ | 207 |
|
| $ | 239 |
|
Financing leases |
|
| 1 |
|
|
| 10 |
|
|
| 17 |
|
|
| 20 |
|
Property, Plant and Equipment
In March 2020, Virginia Power committed to retire certain coal- and oil-fired generating units before the end of their useful lives based on economic and other factors, including but not limited to market power prices and the VCEA. These units will be retired after they meet their capacity obligations to PJM in 2023. As a result, Virginia Power recorded a charge of $754 million ($561 million after-tax) in the first quarter of 2020, primarily included in impairment of assets and other charges in its Consolidated Statements of Income. This charge is considered a component of Virginia Power’s base rates deemed recovered under the GTSA, subject to review as
23
discussed in Note 13 to the Consolidated Financial Statements in Virginia Power’s Annual Report on Form 10-K for the year ended December 31, 2020.
In the second quarter of 2020, Virginia Power recorded charges of $30 million ($22 million after-tax) associated with dismantling certain of these electric generation facilities, recorded in impairment of assets and other charges in its Consolidated Statements of Income.
Asset Retirement Obligations
In the second quarter of 2021, Dominion Energy revised its estimated cash flow projections associated with the recovery of spent nuclear fuel costs for its AROs associated with the decommissioning of Kewaunee. As a result, Dominion Energy recorded a charge of $44 million ($35 million after-tax) within other operations and maintenance expense in its Consolidated Statements of Income.
Note 3. Acquisitions and Dispositions
Disposition of Gas Transmission & Storage Operations to BHE
In July 2020, Dominion Energy entered into an agreement with BHE with a total value of approximately $10 billion, comprised of approximately $4.0 billion of cash consideration (subject to customary closing adjustments) plus the assumption of long-term debt, to sell substantially all of its gas transmission and storage operations, including processing assets, as well as noncontrolling partnership interests in Iroquois, JAX LNG and White River Hub and a controlling interest in Cove Point (consisting of 100% of the general partner interest and 25% of the total limited partner interests). The agreement provides that Dominion Energy retains the assets and obligations of the pension and other postretirement employee benefit plans associated with the operations included in the transaction and relating to services provided through closing. In October 2020, pursuant to a provision in the agreement with BHE, Dominion Energy elected to exclude Dominion Energy Questar Pipeline and certain other affiliated entitiesthe Q-Pipe Group from the transaction as approval under the Hart-Scott-Rodino Act had not been obtained by mid-September 2020. Concurrently in October 2020, Dominion Energy and BHE entered into a separate agreement under which Dominion Energy willwould sell Dominion Energy Questar Pipeline and certain other affiliated entitiesthe Q-Pipe Group for cash consideration of $1.3 billion and the assumption of related long-term debt. In November 2020, Dominion Energy completed the GT&S Transaction as discussed in Note 3 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
In connection with closing of the GT&S Transaction, Dominion Energy and BHE entered into a transition services agreement under which Dominion Energy will continue to provide specified administrative services to support the operations of the disposed business for up to 24 months after closing. In addition, BHE will provide certain administrative services to Dominion Energy. Dominion Energy recorded revenue of $5$6 million and $11 million associated with the transition service agreement in operating revenue in its Consolidated Statements of Income for the three and six months ended March 31, 2021.June 30, 2021, respectively.
Also in November 2020, BHE provided a $1.3 billion deposit to Dominion Energy on the Q-Pipe Transaction. In July 2021, Dominion Energy will be requiredand BHE mutually agreed to repay all or substantially allterminate the Q-Pipe Transaction as a result of this deposit, or issue to BHE an equivalent value in shares ofongoing uncertainty associated with receiving approval under the Hart-Scott-Rodino Act. Dominion Energy common stocksimultaneously announced its intention to pursue the divestiture of the Q-Pipe Group to an alternative buyer via competitive sales process with targeted closing, subject to applicable regulatory approval, by the end of 2021. Also in July 2021, Dominion Energy entered into an approximately $1.3 billion term loan credit agreement and borrowed the full amount available thereunder. The agreement matures in December 2021, which can be extended at Dominion Energy’s option ifto June 2022, and bears interest at a variable rate. The proceeds were utilized to repay the deposit received from BHE on the Q-Pipe Transaction does not close by December 30, 2021. Dominion Energy may, effective April 1, 2021, solicit or accept offers from alternative buyers for all orTransaction. Upon completion of a material portionsale of the Q-Pipe Transaction and either party may terminate the Q-Pipe Transaction if closing has not occurred on or before June 30, 2021. If the Hart-Scott-Rodino Act approval has not been obtained by June 30, 2021, upon BHE’s request,Group, Dominion Energy will seek an alternative buyer for all or a material portionis required to utilize the net proceeds to repay any outstanding balances under the term loan agreement. The operations of the Q-Pipe Transaction. The Q-Pipe Transaction is structuredGroup continue to meet the classification as an assetheld-for-sale based on Dominion Energy’s plan to complete a sale for tax purposes and is expected to close in 2021, contingent on clearance or approval underof the Hart-Scott-Rodino Act, and other customary closing and regulatory conditions. Based on the recorded balances at March 31, 2021, Dominion Energy expects to recognize a pre-tax gain of approximately $450 million ($320 million after-tax) upon closing, including the write-off of $191 million of goodwill, but excluding the effects of any closing adjustments.entities.
The operations included in both the GT&S Transaction and the Q-Pipe TransactionGroup are presented in held-for-sale and discontinued operations effective July 2020. As a result, the previously reported amounts have been recast to reflect this presentation and depreciation and amortization ceased on the applicable assets. As Cove Point had previously been consolidated within Dominion Energy’s financial statements, balances associated with Cove Point prior to the closing of the GT&S Transaction are presented within held-for-sale and discontinued operations. See Note 10 for further information regarding Dominion Energy’s equity method investment in Cove Point.
24
The following table represents selected information regarding the results of operations, which are reported within discontinued operations in Dominion Energy’s Consolidated Statements of Income:
|
| Three Months Ended March 31, 2021 |
|
| Three Months Ended March 31, 2020 |
|
| Three Months Ended June 30, 2021 |
|
| Three Months Ended June 30, 2020 |
|
| Six Months Ended June 30, 2021 |
|
| Six Months Ended June 30, 2020 |
| ||||||||||||||||||
|
| Q-Pipe Transaction |
|
| GT&S Transaction |
|
| Q-Pipe Transaction |
|
| Q-Pipe Group |
|
| GT&S Transaction |
|
| Q-Pipe Group |
|
| Q-Pipe Group |
|
| GT&S Transaction |
|
| Q-Pipe Group |
| |||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
| $ | 67 |
|
| $ | 563 |
|
| $ | 65 |
|
| $ | 59 |
|
| $ | 480 |
|
| $ | 58 |
|
| $ | 126 |
|
| $ | 1,043 |
|
| $ | 123 |
|
Operating expense |
|
| 19 |
|
|
| 333 |
|
|
| 33 |
|
|
| 9 |
|
|
| 770 |
|
|
| 29 |
|
|
| 28 |
|
|
| 1,103 |
|
|
| 62 |
|
Other income |
|
| 0 |
|
|
| 20 |
|
|
| 1 |
|
|
| 1 |
|
|
| 12 |
|
|
| 1 |
|
|
| 1 |
|
|
| 32 |
|
|
| 2 |
|
Interest and related charges |
|
| 5 |
|
|
| 53 |
|
|
| 4 |
|
|
| 5 |
|
|
| 46 |
|
|
| 6 |
|
|
| 10 |
|
|
| 99 |
|
|
| 10 |
|
Income before income taxes |
|
| 43 |
|
|
| 197 |
|
|
| 29 |
| ||||||||||||||||||||||||
Income tax expense |
|
| 8 |
|
|
| 27 |
|
|
| 4 |
| ||||||||||||||||||||||||
Net income including noncontrolling interests |
|
| 35 |
|
|
| 170 |
|
|
| 25 |
| ||||||||||||||||||||||||
Income (loss) before income taxes |
|
| 46 |
|
|
| (324 | ) |
|
| 24 |
|
|
| 89 |
|
|
| (127 | ) |
|
| 53 |
| ||||||||||||
Income tax expense (benefit) |
|
| 9 |
|
|
| (78 | ) |
|
| 10 |
|
|
| 17 |
|
|
| (51 | ) |
|
| 14 |
| ||||||||||||
Net income (loss) including noncontrolling interests |
|
| 37 |
|
|
| (246 | ) |
|
| 14 |
|
|
| 72 |
|
|
| (76 | ) |
|
| 39 |
| ||||||||||||
Noncontrolling interests |
|
| — |
|
|
| 33 |
|
|
| — |
|
|
| — |
|
|
| 32 |
|
|
| — |
|
|
| — |
|
|
| 65 |
|
|
| — |
|
Net income attributable to Dominion Energy |
| $ | 35 |
|
| $ | 137 |
|
| $ | 25 |
| ||||||||||||||||||||||||
Net income (loss) attributable to Dominion Energy |
| $ | 37 |
|
| $ | (278 | ) |
| $ | 14 |
|
| $ | 72 |
|
| $ | (141 | ) |
| $ | 39 |
|
(1) | GT&S Transaction includes a charge of $482 million ($359 million after-tax) recorded in the second quarter of 2020 associated with the probable abandonment of a significant portion of the Supply Header Project, as well as the establishment of a $75 million ARO as a result of the cancellation of the Atlantic Coast Pipeline Project. |
The carrying amounts of major classes of assets and liabilities relating to the disposal groups, which are reported as held for sale in Dominion Energy’s Consolidated Balance Sheets were as follows:
|
| At March 31, 2021 |
|
| At December 31, 2020 |
|
| At June 30, 2021 |
|
| At December 31, 2020 |
| ||||
|
| Q-Pipe Transaction |
|
| Q-Pipe Transaction |
|
| Q-Pipe Group |
|
| Q-Pipe Group |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets(1) |
| $ | 49 |
|
| $ | 47 |
| ||||||||
Equity method investments(2) |
|
| 35 |
|
|
| 35 |
| ||||||||
Current assets(1) |
| $ | 51 |
|
| $ | 47 |
| ||||||||
Equity method investments(2) |
|
| 35 |
|
|
| 35 |
| ||||||||
Property, plant and equipment, net |
|
| 1,120 |
|
|
| 1,113 |
|
|
| 1,138 |
|
|
| 1,113 |
|
Other deferred charges and other assets, including goodwill and intangible assets(3) |
|
| 224 |
|
|
| 224 |
| ||||||||
Other deferred charges and other assets, including goodwill and intangible assets(3) |
|
| 223 |
|
|
| 224 |
| ||||||||
Current liabilities |
|
| 30 |
|
|
| 30 |
|
|
| 34 |
|
|
| 30 |
|
Long-term debt |
|
| 426 |
|
|
| 426 |
|
|
| 426 |
|
|
| 426 |
|
Other deferred credits and liabilities |
|
| 154 |
|
|
| 154 |
|
|
| 154 |
|
|
| 154 |
|
| (1) | Includes cash and cash equivalents of |
| (2) | Comprised of an equity method investment in White River |
| (3) | Includes goodwill of $191 million at both |
Capital expenditures and significant noncash items relating to the disposal groups included the following:
|
| Three Months Ended March 31, 2021 |
|
| Three Months Ended March 31, 2020 |
|
| Six Months Ended June 30, 2021 |
|
| Six Months Ended June 30, 2020 |
| ||||||||||||
|
| Q-Pipe Transaction |
|
| GT&S Transaction |
|
| Q-Pipe Transaction |
|
| Q-Pipe Group |
|
| GT&S Transaction |
|
| Q-Pipe Group |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
| $ | 3 |
|
| $ | 73 |
|
| $ | 6 |
|
| $ | 15 |
|
| $ | 138 |
|
| $ | 15 |
|
Significant noncash items |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Significant noncash items: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Impairment of assets and other charges |
|
| 0 |
|
|
| 482 |
|
|
| 1 |
| ||||||||||||
Depreciation, depletion and amortization |
|
| 0 |
|
|
| 82 |
|
|
| 13 |
|
|
| 0 |
|
|
| 164 |
|
|
| 26 |
|
Accrued capital expenditures |
|
| 2 |
|
|
| 16 |
|
|
| 0 |
|
|
| 4 |
|
|
| 28 |
|
|
| 1 |
|
Sale of Kewaunee
In May 2021, Dominion Energy entered into an agreement to sell 100% of the equity interests in Dominion Energy Kewaunee, Inc. to EnergySolutions, including the transfer of all decommissioning obligations associated with Kewaunee, which ceased operations in
25
2013. The agreement provides that Dominion Energy retains the assets and obligations of the pension and other postretirement employee benefit plans. In addition, Dominion Energy may continue to withdraw funds prior to closing from the nuclear decommissioning trust to recover certain spent nuclear fuel and other permitted costs, subject to certain conditions. The sale will be treated as an asset sale for tax purposes and is subject to termination by either party if not completed by December 2022. Closing is contingent on approval from the Wisconsin Commission as well as the NRC for the transfer of control of applicable licenses. The purchase agreement requires that EnergySolutions be subject to the Wisconsin regulatory conditions agreed to by Dominion Energy upon 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 May 2021, Dominion Energy and EnergySolutions submitted a license transfer application to the NRC. Also in May 2021, Dominion Energy submitted an application to the Wisconsin Commission for approval. In July 2021, WPSC and WP&L submitted a joint request to the Wisconsin Commission for the waiver of both of their rights of first refusal to purchase Kewaunee, such rights having been granted as the former owners of Kewaunee. At June 30, 2021, Dominion Energy determined that the assets and liabilities associated with the Kewaunee sale did not meet the criteria to be classified as held for sale due to the significant uncertainty surrounding the timing of or ability to obtain necessary regulatory approvals.
Dominion Energy expects to record a loss if and when it determines that criteria for the classification as held for sale have been met. If such classification had been made at June 30, 2021, Dominion Energy would have recognized a loss of approximately $725 million ($570 million after-tax). If the sale is ultimately completed, the final net loss will primarily depend on the value of the nuclear decommissioning trust and AROs at closing.
Acquisition of Birdseye
In May 2021, Dominion Energy acquired 100% of the ownership interest in Birdseye from BRE Holdings, LLC for total consideration of $46 million, consisting of $28 million in cash and $18 million, measured at fair value at closing, of consideration contingent on the achievement of certain revenue targets and future development project sales. Birdseye is primarily engaged in the development of solar energy projects in southeastern states in the U.S. with 2.5 GW of solar generation projects under development. The allocation of the purchase price resulted in $25 million of development project assets, primarily reflected in other deferred charges and other assets in Dominion Energy’s Consolidated Balance Sheets, and $24 million of goodwill, which is not deductible for tax purposes. The goodwill reflects the value associated with enhancing Dominion Energy's development of regulated and long-term contracted solar generating and electric storage projects. The fair value measurements, including of the assets acquired, were determined using the income approach and are considered Level 3 fair value measurements due to the use of significant judgmental and unobservable inputs, including projected timing and amount of future cash flows. Birdseye is included in Contracted Assets.
26
Note 4. Operating Revenue
The Companies’ operating revenue consists of the following:
|
| Three Months Ended March 31, |
|
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
| $ | 1,155 |
|
| $ | 1,158 |
|
|
| $ | 1,017 |
|
| $ | 1,091 |
|
| $ | 2,172 |
|
| $ | 2,249 |
|
Commercial |
|
| 719 |
|
|
| 798 |
|
|
|
| 761 |
|
|
| 728 |
|
|
| 1,480 |
|
|
| 1,526 |
|
Industrial |
|
| 178 |
|
|
| 182 |
|
|
|
| 175 |
|
|
| 176 |
|
|
| 353 |
|
|
| 358 |
|
Government and other retail |
|
| 189 |
|
|
| 219 |
|
|
|
| 223 |
|
|
| 193 |
|
|
| 412 |
|
|
| 412 |
|
Wholesale |
|
| 43 |
|
|
| 33 |
|
|
|
| 36 |
|
|
| 29 |
|
|
| 79 |
|
|
| 62 |
|
Nonregulated electric sales |
|
| 249 |
|
|
| 232 |
|
|
|
| 217 |
|
|
| 177 |
|
|
| 466 |
|
|
| 409 |
|
Regulated gas sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
|
| 630 |
|
|
| 548 |
|
|
|
| 188 |
|
|
| 182 |
|
|
| 818 |
|
|
| 730 |
|
Commercial |
|
| 206 |
|
|
| 191 |
|
|
|
| 79 |
|
|
| 63 |
|
|
| 285 |
|
|
| 254 |
|
Other |
|
| 34 |
|
|
| 28 |
|
|
|
| 23 |
|
|
| 17 |
|
|
| 57 |
|
|
| 45 |
|
Nonregulated gas sales |
|
| 52 |
|
|
| 83 |
|
|
|
| 15 |
|
|
| 29 |
|
|
| 67 |
|
|
| 112 |
|
Regulated gas transportation and storage |
|
| 271 |
|
|
| 232 |
|
|
|
| 219 |
|
|
| 182 |
|
|
| 490 |
|
|
| 414 |
|
Other regulated revenues |
|
| 66 |
|
|
| 92 |
|
|
|
| 74 |
|
|
| 96 |
|
|
| 140 |
|
|
| 151 |
|
Other nonregulated revenues(1)(2) |
|
| 48 |
|
|
| 31 |
|
| ||||||||||||||||
Other nonregulated revenues(1) |
|
| 57 |
|
|
| 39 |
|
|
| 105 |
|
|
| 70 |
| |||||||||
Total operating revenue from contracts with customers |
|
| 3,840 |
|
|
| 3,827 |
|
|
|
| 3,084 |
|
|
| 3,002 |
|
|
| 6,924 |
|
|
| 6,792 |
|
Other revenues(3)(4) |
|
| 30 |
|
|
| 111 |
|
| ||||||||||||||||
Other revenues(2)(3) |
|
| (46 | ) |
|
| 104 |
|
|
| (16 | ) |
|
| 252 |
| |||||||||
Total operating revenue |
| $ | 3,870 |
|
| $ | 3,938 |
|
|
| $ | 3,038 |
|
| $ | 3,106 |
|
| $ | 6,908 |
|
| $ | 7,044 |
|
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
| $ | 889 |
|
| $ | 896 |
|
|
| $ | 748 |
|
| $ | 818 |
|
| $ | 1,637 |
|
| $ | 1,714 |
|
Commercial |
|
| 547 |
|
|
| 614 |
|
|
|
| 564 |
|
|
| 546 |
|
|
| 1,111 |
|
|
| 1,160 |
|
Industrial |
|
| 91 |
|
|
| 97 |
|
|
|
| 83 |
|
|
| 89 |
|
|
| 174 |
|
|
| 186 |
|
Government and other retail |
|
| 176 |
|
|
| 203 |
|
|
|
| 208 |
|
|
| 177 |
|
|
| 384 |
|
|
| 380 |
|
Wholesale |
|
| 26 |
|
|
| 24 |
|
|
|
| 22 |
|
|
| 21 |
|
|
| 48 |
|
|
| 45 |
|
Other regulated revenues |
|
| 57 |
|
|
| 62 |
|
|
|
| 71 |
|
|
| 94 |
|
|
| 128 |
|
|
| 156 |
|
Other nonregulated revenues(1)(2) |
|
| 21 |
|
|
| 13 |
|
| ||||||||||||||||
Other nonregulated revenues(1)(4) |
|
| 27 |
|
|
| 20 |
|
|
| 48 |
|
|
| 33 |
| |||||||||
Total operating revenue from contracts with customers |
|
| 1,807 |
|
|
| 1,909 |
|
|
|
| 1,723 |
|
|
| 1,765 |
|
|
| 3,530 |
|
|
| 3,674 |
|
Other revenues(2)(3) |
|
| 23 |
|
|
| 21 |
|
| ||||||||||||||||
Other revenues(2)(4) |
|
| 18 |
|
|
| 40 |
|
|
| 41 |
|
|
| 61 |
| |||||||||
Total operating revenue |
| $ | 1,830 |
|
| $ | 1,930 |
|
|
| $ | 1,741 |
|
| $ | 1,805 |
|
| $ | 3,571 |
|
| $ | 3,735 |
|
(1) |
|
(2) |
|
|
|
|
|
(4) See Note 19 for amounts attributable to affiliates.
The table below discloses the aggregate amount of the transaction price allocated to fixed-price performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period and when the Companies expect to recognize this revenue. These revenues relate to contracts containing fixed prices where the Companies will earn the associated revenue over time as they stand ready to perform services provided. This disclosure does not include revenue related to performance obligations that are part of a contract with original durations of one year or less. In addition, this disclosure does not include expected consideration related to performance obligations for which the Companies elect to recognize revenue in the amount they have a right to invoice.
27
Revenue expected to be recognized on multi-year contracts in place at March 31, 2021 |
| 2021 |
|
| 2022 |
|
| 2023 |
|
| 2024 |
|
| 2025 |
|
| Thereafter |
|
| Total |
| |||||||||||||||||||||||||||||||||||
Revenue expected to be recognized on multi-year contracts in place at June 30, 2021 |
| 2021 |
|
| 2022 |
|
| 2023 |
|
| 2024 |
|
| 2025 |
|
| Thereafter |
|
| Total |
| |||||||||||||||||||||||||||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy |
| $ | 51 |
|
| $ | 68 |
|
| $ | 66 |
|
| $ | 59 |
|
| $ | 51 |
|
| $ | 493 |
|
| $ | 788 |
|
| $ | 34 |
|
| $ | 68 |
|
| $ | 66 |
|
| $ | 59 |
|
| $ | 51 |
|
| $ | 493 |
|
| $ | 771 |
|
At March 31,June 30, 2021 and December 31, 2020, Dominion Energy’s contract liability balances were $74$91 million and $130 million, respectively, and are recorded in other current liabilities and other deferred credits and other liabilities in the Consolidated Balance Sheets. At March 31,June 30, 2021 and December 31, 2020, Virginia Power’s contract liability balances were $32$43 million and $36 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 threesix months ended March 31,June 30, 2021 and 2020, Dominion Energy recognized revenue of $122$123 million and $93$106 million, respectively, from the beginning contract liability balances. During the threesix months ended March 31,June 30, 2021 and 2020, Virginia Power recognized $36 million and $24 million, respectively, from the beginning contract liability balance.
Note 5. Income Taxes
For continuing operations, including noncontrolling interests, the statutory U.S. federal income tax rate reconciles to the Companies’ effective income tax rate as follows:
|
| Dominion Energy |
|
| Virginia Power |
|
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||||
Three Months Ended March 31, |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||||||||||||||
Six Months Ended June 30, |
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||||||||||||||||
U.S. statutory rate |
|
| 21.0 | % |
|
| 21.0 | % |
|
| 21.0 | % |
|
| 21.0 | % |
|
| 21.0 | % |
|
| 21.0 | % |
|
| 21.0 | % |
|
| 21.0 | % |
Increases (reductions) resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State taxes, net of federal benefit |
|
| 3.5 |
|
|
| 3.3 |
|
|
| 4.5 |
|
|
| 4.8 |
|
|
| 2.3 |
|
|
| 4.1 |
|
|
| 4.5 |
|
|
| 4.9 |
|
Investment tax credits |
|
| (3.8 | ) |
|
| (7.0 | ) |
|
| (6.6 | ) |
|
| (6.4 | ) |
|
| (5.3 | ) |
|
| (19.5 | ) |
|
| (5.8 | ) |
|
| (11.3 | ) |
Production tax credits |
|
| (0.3 | ) |
|
| (0.8 | ) |
|
| (0.6 | ) |
|
| (0.8 | ) |
|
| (0.4 | ) |
|
| (1.6 | ) |
|
| (0.6 | ) |
|
| (2.0 | ) |
Reversal of excess deferred income taxes |
|
| (2.2 | ) |
|
| (7.8 | ) |
|
| (2.2 | ) |
|
| (8.1 | ) |
|
| (3.5 | ) |
|
| (6.5 | ) |
|
| (2.1 | ) |
|
| (0.8 | ) |
State legislative change |
|
| (1.5 | ) |
|
| — |
|
|
| (1.7 | ) |
|
| — |
| ||||||||||||||||
AFUDC - equity |
|
| (0.4 | ) |
|
| (0.7 | ) |
|
| (0.7 | ) |
|
| (0.7 | ) |
|
| (0.5 | ) |
|
| (2.1 | ) |
|
| (0.6 | ) |
|
| (0.6 | ) |
Other, net |
|
| — |
|
|
| 1.7 |
|
|
| 0.3 |
|
|
| 0.3 |
|
|
| (0.4 | ) |
|
| 1.2 |
|
|
| 0.3 |
|
|
| 1.1 |
|
Effective tax rate |
|
| 17.8 | % |
|
| 9.7 | % |
|
| 15.7 | % |
|
| 10.1 | % |
|
| 11.7 | % |
|
| (3.4 | )% |
|
| 15.0 | % |
|
| 12.3 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Companies’ rate-regulated entities, deferred taxes will reverse at the weighted average rate used to originate the deferred tax liability, which in some cases will be 35%. The Companies have recorded an estimate of excess deferred income tax amortization in 2021. The reversal of these excess deferred income taxes will impact the effective tax rate and rates charged to customers. See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 for more information.
As of March 31,June 30, 2021, there have been no material changes in the 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’ Annual Report on Form 10-K for the year ended December 31, 2020, for a discussion of these unrecognized tax benefits.
In April 2021,The Companies’ effective tax rates reflect the benefit of a state legislative change was enacted in April 2021 for tax years beginning January 1, 2022. Dominion Energy expects to record an approximate $20Energy’s effective tax rate reflects a $21 million deferred tax benefit, inclusive of an approximate $15a $16 million deferred tax benefit at Virginia Power, in the second quarter of 2021.Power.
Discontinued operations
Income tax expense reflected(benefit) included in discontinued operations is $7$11 million and $31$(562) million for the threesix months ended March 31,June 30, 2021 and 2020, respectively. 2020 income taxes reflect a charge of $81 million for the write-off of tax-related regulatory assets associated with the Atlantic Coast Pipeline Project.
28
The following table presents the calculation of Dominion Energy’s basic and diluted EPS:
|
| Three Months Ended March 31, |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Dominion Energy from continuing operations |
| $ | 980 |
|
| $ | (466 | ) | ||||||||||||||||
Net income attributable to Dominion Energy from continuing operations |
| $ | 259 |
|
| $ | 863 |
|
| $ | 1,239 |
|
| $ | 397 |
| ||||||||
Preferred stock dividends (see Note 16) |
|
| (16 | ) |
|
| (16 | ) |
|
| (16 | ) |
|
| (16 | ) |
|
| (32 | ) |
|
| (32 | ) |
Net income (loss) attributable to Dominion Energy from continuing operations – Basic |
|
| 964 |
|
|
| (482 | ) | ||||||||||||||||
Net income attributable to Dominion Energy from continuing operations – Basic |
|
| 243 |
|
|
| 847 |
|
|
| 1,207 |
|
|
| 365 |
| ||||||||
Dilutive effect of Series A Preferred Stock |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (92 | ) |
|
| — |
|
|
| (64 | ) |
Net income (loss) attributable to Dominion Energy from continuing operations - Diluted |
| $ | 964 |
|
| $ | (482 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||
Net income attributable to Dominion Energy from discontinued operations - Basic & Diluted |
| $ | 28 |
|
| $ | 196 |
| ||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||
Average shares of common stock outstanding – Basic & Diluted |
|
| 805.9 |
|
|
| 838.2 |
| ||||||||||||||||
Net income attributable to Dominion Energy from continuing operations - Diluted |
| $ | 243 |
|
| $ | 755 |
|
| $ | 1,207 |
|
| $ | 301 |
| ||||||||
Net income (loss) attributable to Dominion Energy from discontinued operations - Basic & Diluted |
| $ | 26 |
|
| $ | (2,032 | ) |
| $ | 54 |
|
| $ | (1,836 | ) | ||||||||
Average shares of common stock outstanding – Basic |
|
| 806.6 |
|
|
| 839.4 |
|
|
| 806.2 |
|
|
| 838.8 |
| ||||||||
Net effect of dilutive securities |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 0.1 |
|
|
| — |
|
Average shares of common stock outstanding – Diluted |
|
| 805.9 |
|
|
| 838.2 |
|
|
| 806.6 |
|
|
| 839.4 |
|
|
| 806.3 |
|
|
| 838.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS from continuing operations – Basic |
| $ | 1.19 |
|
| $ | (0.57 | ) |
| $ | 0.30 |
|
| $ | 1.01 |
|
| $ | 1.49 |
|
| $ | 0.43 |
|
EPS from discontinued operations – Basic |
|
| 0.04 |
|
|
| 0.23 |
|
|
| 0.03 |
|
|
| (2.42 | ) |
|
| 0.07 |
|
|
| (2.18 | ) |
EPS attributable to Dominion Energy – Basic |
| $ | 1.23 |
|
| $ | (0.34 | ) |
| $ | 0.33 |
|
| $ | (1.41 | ) |
| $ | 1.56 |
|
| $ | (1.75 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS from continuing operations – Diluted |
|
| 1.19 |
|
| $ | (0.57 | ) |
| $ | 0.30 |
|
| $ | 0.90 |
|
| $ | 1.49 |
|
| $ | 0.35 |
|
EPS from discontinued operations – Diluted |
|
| 0.04 |
|
|
| 0.23 |
|
|
| 0.03 |
|
|
| (2.42 | ) |
|
| 0.07 |
|
|
| (2.18 | ) |
EPS attributable to Dominion Energy – Diluted |
| $ | 1.23 |
|
| $ | (0.34 | ) |
| $ | 0.33 |
|
| $ | (1.52 | ) |
| $ | 1.56 |
|
| $ | (1.83 | ) |
The 2019 Equity Units and the Q-Pipe Transaction deposit, prior to being settled in cash in July 2021, are potentially dilutive securities. See Note 3 in this report and Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 and Note 3, respectively, for moreadditional information. The forward stock purchase contracts included within the 2019 Equity Units were excluded from the calculation of diluted EPS from continuing operations for the three and six months ended March 31,June 30, 2021 and 2020, as the dilutive stock price threshold was not met. The Series A Preferred Stock included within the 2019 Equity Units is excluded from the calculation of diluted EPS from continuing operations based upon the expectation that the conversion will be settled in cash rather than through the issuance of Dominion Energy common stock. For the three and six months ended March 31,June 30, 2021, a fair value adjustment related to the Series A Preferred Stock included within the 2019 Equity Units is excluded from the calculation of diluted EPS from continuing operations, as such fair value adjustment was not dilutive during the period. As a result of a net loss attributable to Dominion Energy from continuing operations for the three months ended March 31, 2020, any adjustments to earnings or shares would be considered antidilutive and are therefore excluded from the calculation of diluted EPS from continuing operations.periods. The impact of settling the deposit associated with the Q-Pipe Transaction in shares is excluded from the calculation of diluted EPS from continuing operations for the three and six months ended March 31,June 30, 2021 based upon the expectation Dominion Energy would settle in cash rather than through the issuance of Dominion Energy common stock.
29
Note 7. Accumulated Other Comprehensive Income (Loss)
Dominion Energy
The following table presents Dominion Energy’s changes in AOCI by component, net of tax:
|
| Deferred gains and losses on derivatives- hedging activities |
|
| Unrealized gains and losses on investment securities |
|
| Unrecognized pension and other postretirement benefit costs |
|
| Other comprehensive loss from equity method investees |
|
| Total |
|
| Deferred gains and losses on derivatives- hedging activities |
|
| Unrealized gains and losses on investment securities |
|
| Unrecognized pension and other postretirement benefit costs |
|
| Other comprehensive loss from equity method investees |
|
| Total |
| ||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Beginning balance |
| $ | (419 | ) |
| $ | 62 |
|
| $ | (1,359 | ) |
| $ | (1 | ) |
| $ | (1,717 | ) |
| $ | (367 | ) |
| $ | 32 |
|
| $ | (1,335 | ) |
| $ | (1 | ) |
| $ | (1,671 | ) |
Other comprehensive income before reclassifications: gains (losses) |
|
| 39 |
|
|
| (31 | ) |
|
| 6 |
|
|
| 0 |
|
|
| 14 |
|
|
| (16 | ) |
|
| 12 |
|
|
| — |
|
|
| 0 |
|
|
| (4 | ) |
Amounts reclassified from AOCI: (gains) losses(1) |
|
| 13 |
|
|
| 1 |
|
|
| 18 |
|
|
| 0 |
|
|
| 32 |
| ||||||||||||||||||||
Amounts reclassified from AOCI: (gains) losses(1) |
|
| 12 |
|
|
| (3 | ) |
|
| 26 |
|
|
| 0 |
|
|
| 35 |
| ||||||||||||||||||||
Net current period other comprehensive income (loss) |
|
| 52 |
|
|
| (30 | ) |
|
| 24 |
|
|
| 0 |
|
|
| 46 |
|
|
| (4 | ) |
|
| 9 |
|
|
| 26 |
|
|
| 0 |
|
|
| 31 |
|
Ending balance |
| $ | (367 | ) |
| $ | 32 |
|
| $ | (1,335 | ) |
| $ | (1 | ) |
| $ | (1,671 | ) |
| $ | (371 | ) |
| $ | 41 |
|
| $ | (1,309 | ) |
| $ | (1 | ) |
| $ | (1,640 | ) |
Three Months Ended March 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Three Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Beginning balance |
| $ | (407 | ) |
| $ | 37 |
|
| $ | (1,421 | ) |
| $ | (2 | ) |
| $ | (1,793 | ) |
| $ | (651 | ) |
| $ | 37 |
|
| $ | (1,402 | ) |
| $ | (2 | ) |
| $ | (2,018 | ) |
Other comprehensive income before reclassifications: gains (losses) |
|
| (266 | ) |
|
| 9 |
|
|
| — |
|
|
| 0 |
|
|
| (257 | ) |
|
| 2 |
|
|
| 19 |
|
|
| (1 | ) |
|
| 0 |
|
|
| 20 |
|
Amounts reclassified from AOCI: (gains) losses(1) |
|
| 22 |
|
|
| (9 | ) |
|
| 19 |
|
|
| 0 |
|
|
| 32 |
| ||||||||||||||||||||
Amounts reclassified from AOCI: (gains) losses(1) |
|
| 5 |
|
|
| (5 | ) |
|
| 18 |
|
|
| 0 |
|
|
| 18 |
| ||||||||||||||||||||
Net current period other comprehensive income (loss) |
|
| (244 | ) |
|
| — |
|
|
| 19 |
|
|
| 0 |
|
|
| (225 | ) |
|
| 7 |
|
|
| 14 |
|
|
| 17 |
|
|
| 0 |
|
|
| 38 |
|
Ending balance |
| $ | (651 | ) |
| $ | 37 |
|
| $ | (1,402 | ) |
| $ | (2 | ) |
| $ | (2,018 | ) |
| $ | (644 | ) |
| $ | 51 |
|
| $ | (1,385 | ) |
| $ | (2 | ) |
| $ | (1,980 | ) |
Six Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Beginning balance |
| $ | (419 | ) |
| $ | 62 |
|
| $ | (1,359 | ) |
| $ | (1 | ) |
| $ | (1,717 | ) | ||||||||||||||||||||
Other comprehensive income before reclassifications: gains (losses) |
|
| 23 |
|
|
| (19 | ) |
|
| 6 |
|
|
| 0 |
|
|
| 10 |
| ||||||||||||||||||||
Amounts reclassified from AOCI: (gains) losses(1) |
|
| 25 |
|
|
| (2 | ) |
|
| 44 |
|
|
| 0 |
|
|
| 67 |
| ||||||||||||||||||||
Net current period other comprehensive income (loss) |
|
| 48 |
|
|
| (21 | ) |
|
| 50 |
|
|
| 0 |
|
|
| 77 |
| ||||||||||||||||||||
Ending balance |
| $ | (371 | ) |
| $ | 41 |
|
| $ | (1,309 | ) |
| $ | (1 | ) |
| $ | (1,640 | ) | ||||||||||||||||||||
Six Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Beginning balance |
| $ | (407 | ) |
| $ | 37 |
|
| $ | (1,421 | ) |
| $ | (2 | ) |
| $ | (1,793 | ) | ||||||||||||||||||||
Other comprehensive income before reclassifications: gains (losses) |
|
| (264 | ) |
|
| 28 |
|
|
| (1 | ) |
|
| 0 |
|
|
| (237 | ) | ||||||||||||||||||||
Amounts reclassified from AOCI: (gains) losses(1) |
|
| 27 |
|
|
| (14 | ) |
|
| 37 |
|
|
| 0 |
|
|
| 50 |
| ||||||||||||||||||||
Net current period other comprehensive income (loss) |
|
| (237 | ) |
|
| 14 |
|
|
| 36 |
|
|
| 0 |
|
|
| (187 | ) | ||||||||||||||||||||
Ending balance |
| $ | (644 | ) |
| $ | 51 |
|
| $ | (1,385 | ) |
| $ | (2 | ) |
| $ | (1,980 | ) |
(1) | See table below for details about these reclassifications. |
30
The following table presents Dominion Energy’s reclassifications out of AOCI by component:
Details about AOCI components |
| Amounts reclassified from AOCI |
|
| Affected line item in the Consolidated Statements of Income | |
(millions) |
|
|
|
|
|
|
Three Months Ended March 31, 2021 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
| $ | 1 |
|
| Purchased gas |
Interest rate contracts |
|
| 16 |
|
| Interest and related charges |
Total |
|
| 17 |
|
|
|
Tax |
|
| (4 | ) |
| Income tax expense (benefit) |
Total, net of tax |
| $ | 13 |
|
|
|
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
|
Realized (gains) losses on sale of securities |
| $ | 1 |
|
| Other income (expense) |
Total |
|
| 1 |
|
|
|
Tax |
|
| — |
|
| Income tax expense (benefit) |
Total, net of tax |
| $ | 1 |
|
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Amortization of prior-service costs (credits) |
| $ | (5 | ) |
| Other income (expense) |
Amortization of actuarial losses |
|
| 30 |
|
| Other income (expense) |
Total |
|
| 25 |
|
|
|
Tax |
|
| (7 | ) |
| Income tax expense (benefit) |
Total, net of tax |
| $ | 18 |
|
|
|
Three Months Ended March 31, 2020 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
| $ | (6 | ) |
| Operating revenue |
|
|
| 3 |
|
| Purchased gas |
|
|
| (1 | ) |
| Discontinued operations |
Interest rate contracts |
|
| 25 |
|
| Interest and related charges |
|
|
| 2 |
|
| Discontinued operations |
Foreign currency contracts |
|
| 6 |
|
| Discontinued operations |
Total |
|
| 29 |
|
|
|
Tax |
|
| (7 | ) |
| Income tax expense (benefit) |
Total, net of tax |
| $ | 22 |
|
|
|
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
|
Realized (gains) losses on sale of securities |
| $ | (13 | ) |
| Other income (expense) |
Total |
|
| (13 | ) |
|
|
Tax |
|
| 4 |
|
| Income tax expense (benefit) |
Total, net of tax |
| $ | (9 | ) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Amortization of prior-service costs (credits) |
| $ | (6 | ) |
| Other income (expense) |
Amortization of actuarial losses |
|
| 30 |
|
| Other income (expense) |
Total |
|
| 24 |
|
|
|
Tax |
|
| (5 | ) |
| Income tax expense (benefit) |
Total, net of tax |
| $ | 19 |
|
|
|
Details about AOCI components | Amounts reclassified from AOCI | Affected line item in the Consolidated Statements of Income | ||||
(millions) | ||||||
Three Months Ended June 30, 2021 | ||||||
Deferred (gains) and losses on derivatives-hedging activities: | ||||||
Interest rate contracts | $ | 16 | Interest and related charges | |||
Total | 16 | |||||
Tax | (4 | ) | Income tax expense (benefit) | |||
Total, net of tax | $ | 12 | ||||
Unrealized (gains) and losses on investment securities: | ||||||
Realized (gains) losses on sale of securities | $ | (4 | ) | Other income | ||
Total | (4 | ) | ||||
Tax | 1 | Income tax expense (benefit) | ||||
Total, net of tax | $ | (3 | ) | |||
Unrecognized pension and other postretirement benefit costs: | ||||||
Amortization of prior-service costs (credits) | $ | (5 | ) | Other income | ||
Amortization of actuarial losses | 40 | Other income | ||||
Total | 35 | |||||
Tax | (9 | ) | Income tax expense (benefit) | |||
Total, net of tax | $ | 26 | ||||
Three Months Ended June 30, 2020 | ||||||
Deferred (gains) and losses on derivatives-hedging activities: | ||||||
Commodity contracts | $ | (8 | ) | Operating revenue | ||
(1 | ) | Discontinued operations | ||||
Interest rate contracts | 18 | Interest and related charges | ||||
4 | Discontinued operations | |||||
Foreign currency contracts | (6 | ) | Discontinued operations | |||
Total | 7 | |||||
Tax | (2 | ) | Income tax expense (benefit) | |||
Total, net of tax | $ | 5 | ||||
Unrealized (gains) and losses on investment securities: | ||||||
Realized (gains) losses on sale of securities | $ | (5 | ) | Other income (expense) | ||
Total | (5 | ) | ||||
Tax | — | Income tax expense (benefit) | ||||
Total, net of tax | $ | (5 | ) | |||
Unrecognized pension and other postretirement benefit costs: | ||||||
Amortization of prior-service costs (credits) | $ | (5 | ) | Other income (expense) | ||
Amortization of actuarial losses | 31 | Other income (expense) | ||||
Total | 26 | |||||
Tax | (8 | ) | Income tax expense (benefit) | |||
Total, net of tax | $ | 18 | ||||
Details about AOCI components | Amounts reclassified from AOCI | Affected line item in the Consolidated Statements of Income | ||||
(millions) | ||||||
Six Months Ended June 30, 2021 | ||||||
Deferred (gains) and losses on derivatives-hedging activities: | ||||||
Commodity contracts | $ | 1 | Purchased gas | |||
Interest rate contracts | 32 | Interest and related charges | ||||
Total | 33 | |||||
Tax | (8 | ) | Income tax expense (benefit) | |||
Total, net of tax | $ | 25 | ||||
Unrealized (gains) and losses on investment securities: | ||||||
Realized (gains) losses on sale of securities | $ | (3 | ) | Other income |
31
Total |
|
| (3 | ) |
|
|
Tax |
|
| 1 |
|
| Income tax expense (benefit) |
Total, net of tax |
| $ | (2 | ) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Amortization of prior-service costs (credits) |
| $ | (10 | ) |
| Other income |
Amortization of actuarial losses |
|
| 70 |
|
| Other income |
Total |
|
| 60 |
|
|
|
Tax |
|
| (16 | ) |
| Income tax expense (benefit) |
Total, net of tax |
| $ | 44 |
|
|
|
Six Months Ended June 30, 2020 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
| $ | (14 | ) |
| Operating revenue |
|
|
| 3 |
|
| Purchased gas |
|
|
| (2 | ) |
| Discontinued operations |
Interest rate contracts |
|
| 43 |
|
| Interest and related charges |
|
|
| 6 |
|
| Discontinued operations |
Total |
|
| 36 |
|
|
|
Tax |
|
| (9 | ) |
| Income tax expense (benefit) |
Total, net of tax |
| $ | 27 |
|
|
|
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
|
Realized (gains) losses on sale of securities |
| $ | (18 | ) |
| Other income (expense) |
Total |
|
| (18 | ) |
|
|
Tax |
|
| 4 |
|
| Income tax expense (benefit) |
Total, net of tax |
| $ | (14 | ) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Amortization of prior-service costs (credits) |
| $ | (11 | ) |
| Other income (expense) |
Amortization of actuarial losses |
|
| 61 |
|
| Other income (expense) |
Total |
|
| 50 |
|
|
|
Tax |
|
| (13 | ) |
| Income tax expense (benefit) |
Total, net of tax |
| $ | 37 |
|
|
|
32
Virginia Power
The following table presents Virginia Power’s changes in AOCI by component, net of tax:
|
| Deferred gains and losses on derivatives- hedging activities |
|
| Unrealized gains and losses on investment securities |
|
| Total |
|
| Deferred gains and losses on derivatives- hedging activities |
|
| Unrealized gains and losses on investment securities |
|
| Total |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Beginning balance |
| $ | (60 | ) |
| $ | 8 |
|
| $ | (52 | ) |
| $ | (27 | ) |
| $ | 4 |
|
| $ | (23 | ) |
Other comprehensive income before reclassifications: gains (losses) |
|
| 32 |
|
|
| (5 | ) |
|
| 27 |
|
|
| (12 | ) |
|
| 3 |
|
|
| (9 | ) |
Amounts reclassified from AOCI: losses(1) |
|
| 1 |
|
|
| 1 |
|
|
| 2 |
| ||||||||||||
Amounts reclassified from AOCI: (gains) losses(1) |
|
| — |
|
|
| (1 | ) |
|
| (1 | ) | ||||||||||||
Net current period other comprehensive income (loss) |
|
| 33 |
|
|
| (4 | ) |
|
| 29 |
|
|
| (12 | ) |
|
| 2 |
|
|
| (10 | ) |
Ending balance |
| $ | (27 | ) |
| $ | 4 |
|
| $ | (23 | ) |
| $ | (39 | ) |
| $ | 6 |
|
| $ | (33 | ) |
Three Months Ended March 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Three Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Beginning balance |
| $ | (34 | ) |
| $ | 5 |
|
| $ | (29 | ) |
| $ | (79 | ) |
| $ | 4 |
|
| $ | (75 | ) |
Other comprehensive income before reclassifications: losses |
|
| (45 | ) |
|
| (2 | ) |
|
| (47 | ) |
|
| 1 |
|
|
| 6 |
|
|
| 7 |
|
Amounts reclassified from AOCI: losses(1) |
|
| — |
|
|
| 1 |
|
|
| 1 |
| ||||||||||||
Amounts reclassified from AOCI: (gains) losses(1) |
|
| — |
|
|
| (2 | ) |
|
| (2 | ) | ||||||||||||
Net current period other comprehensive income (loss) |
|
| (45 | ) |
|
| (1 | ) |
|
| (46 | ) |
|
| 1 |
|
|
| 4 |
|
|
| 5 |
|
Ending balance |
| $ | (79 | ) |
| $ | 4 |
|
| $ | (75 | ) |
| $ | (78 | ) |
| $ | 8 |
|
| $ | (70 | ) |
Six Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Beginning balance |
| $ | (60 | ) |
| $ | 8 |
|
| $ | (52 | ) | ||||||||||||
Other comprehensive income before reclassifications: gains (losses) |
|
| 20 |
|
|
| (2 | ) |
|
| 18 |
| ||||||||||||
Amounts reclassified from AOCI: (gains) losses(1) |
|
| 1 |
|
|
| — |
|
|
| 1 |
| ||||||||||||
Net current period other comprehensive income (loss) |
|
| 21 |
|
|
| (2 | ) |
|
| 19 |
| ||||||||||||
Ending balance |
| $ | (39 | ) |
| $ | 6 |
|
| $ | (33 | ) | ||||||||||||
Six Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Beginning balance |
| $ | (34 | ) |
| $ | 5 |
|
| $ | (29 | ) | ||||||||||||
Other comprehensive income before reclassifications: gains (losses) |
|
| (44 | ) |
|
| 4 |
|
|
| (40 | ) | ||||||||||||
Amounts reclassified from AOCI: (gains) losses(1) |
|
| — |
|
|
| (1 | ) |
|
| (1 | ) | ||||||||||||
Net current period other comprehensive income (loss) |
|
| (44 | ) |
|
| 3 |
|
|
| (41 | ) | ||||||||||||
Ending balance |
| $ | (78 | ) |
| $ | 8 |
|
| $ | (70 | ) |
(1) | See table below for details about these reclassifications. |
33
The following table presents Virginia Power’s reclassifications out of AOCI by component:
Details about AOCI components |
| Amounts reclassified from AOCI |
|
| Affected line item in the Consolidated Statements of Income |
| Amounts reclassified from AOCI |
|
| Affected line item in the Consolidated Statements of Income | ||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2021 |
|
|
|
|
|
| ||||||
(Gains) losses on cash flow hedges: |
|
|
|
|
|
| ||||||
Three Months Ended June 30, 2021 |
|
|
|
|
|
| ||||||
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
| ||||||
Realized (gains) losses on sale of securities |
| $ | (1 | ) |
| Other income | ||||||
Total |
|
| (1 | ) |
|
| ||||||
Tax |
|
| — |
|
| Income tax expense | ||||||
Total, net of tax |
| $ | (1 | ) |
|
| ||||||
Three Months Ended June 30, 2020 |
|
|
|
|
|
| ||||||
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
| ||||||
Interest rate contracts |
| $ | 1 |
|
| Interest and related charges |
| $ | 1 |
|
| Interest and related charges |
Total |
|
| 1 |
|
|
|
|
| 1 |
|
|
|
Tax |
|
| — |
|
| Income tax expense (benefit) |
|
| (1 | ) |
| Income tax expense (benefit) |
Total, net of tax |
| $ | 1 |
|
|
|
| $ | — |
|
|
|
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Realized (gains) losses on sale of securities |
| $ | 1 |
|
| Other income (expense) | ||||||
Realized (gain) loss on sale of securities |
| $ | (4 | ) |
| Other income (loss) | ||||||
Total |
|
| 1 |
|
|
|
|
| (4 | ) |
|
|
Tax |
|
| — |
|
| Income tax expense (benefit) |
|
| 2 |
|
| Income tax expense (benefit) |
Total, net of tax |
| $ | 1 |
|
|
|
| $ | (2 | ) |
|
|
Three Months Ended March 31, 2020 |
|
|
|
|
|
| ||||||
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
| ||||||
Realized (gains) losses on sale of securities |
| $ | 2 |
|
| Other income (expense) | ||||||
Six Months Ended June 30, 2021 |
|
|
|
|
|
| ||||||
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
| ||||||
Interest rate contracts |
| $ | 1 |
|
| Interest and related charges | ||||||
Total |
|
| 2 |
|
|
|
|
| 1 |
|
|
|
Tax |
|
| (1 | ) |
| Income tax expense (benefit) |
|
| — |
|
| Income tax expense |
Total, net of tax |
| $ | 1 |
|
|
|
| $ | 1 |
|
|
|
Six Months Ended June 30, 2020 |
|
|
|
|
|
| ||||||
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
| ||||||
Interest rate contracts |
| $ | 1 |
|
| Interest and related charges | ||||||
Total |
|
| 1 |
|
|
| ||||||
Tax |
|
| (1 | ) |
| Income tax expense (benefit) | ||||||
Total, net of tax |
| $ | — |
|
|
| ||||||
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
| ||||||
Realized (gain) loss on sale of securities |
| $ | (2 | ) |
| Other income (loss) | ||||||
Total |
|
| (2 | ) |
|
| ||||||
Tax |
|
| 1 |
|
| Income tax expense (benefit) | ||||||
Total, net of tax |
| $ | (1 | ) |
|
|
Note 8. Fair Value Measurements
The Companies’ fair value measurements are made in accordance with the policies discussed in Note 6 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020. See Note 9 in this report for further information about the Companies’ derivatives and hedge accounting activities.
29
The Companies enter into certain physical and financial forwards, futures, options and swaps, which are considered Level 3 as they have one or more inputs that are not observable and are significant to the valuation. The discounted cash flow method is used to value Level 3 physical and financial forwards, futures and swaps contracts. An option model is used to value Level 3 physical options. The discounted cash flow model for forwards, futures and swaps 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.
34
The following table presents Dominion Energy’s quantitative information about Level 3 fair value measurements at March 31,June 30, 2021. The range and weighted average are presented in dollars for market price inputs.inputs and percentages for price volatility.
|
| Fair Value (millions) |
|
| Valuation Techniques |
| Unobservable Input |
|
| Range |
| Weighted Average(1) |
|
| Fair Value (millions) |
|
| Valuation Techniques |
| Unobservable Input |
|
| Range |
| Weighted Average(1) |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas(2) |
| $ | 56 |
|
| Discounted cash flow |
| Market price (per Dth) | (3) |
| (2) - 3 |
|
| (1 | ) | |||||||||||||||
Natural gas(2) |
| $ | 53 |
|
| Discounted cash flow |
| Market price (per Dth) | (3) |
| (2) - 4 |
|
| (1 | ) | |||||||||||||||
FTRs |
|
| 2 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| (2) - 3 |
|
| 0 |
|
|
| 30 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| 0 - 6 |
|
| 1 |
|
Electricity |
|
| 12 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| 22 - 83 |
|
| 35 |
| |||||||||||||||
Physical options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Natural gas |
|
| 1 |
|
| Option model |
| Market price (per Dth) | (3) |
| 2 - 7 |
|
| 4 |
| |||||||||||||||
|
|
|
|
|
|
|
| Price volatility | (4) |
| 4% - 27% |
|
| 16 | % | |||||||||||||||
Total assets |
| $ | 58 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 96 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Natural gas(2) |
| $ | 7 |
|
| Discounted cash flow |
| Market price (per Dth) | (3) |
| (2) - 3 |
|
| (1 | ) | |||||||||||||||
FTRs |
| $ | 2 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| (2) - 2 |
|
| 0 |
|
|
| 3 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| (3) - 4 |
|
| 1 |
|
Electricity |
|
| 24 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| 23 - 96 |
|
| 35 |
| |||||||||||||||
Total liabilities |
| $ | 2 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 34 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Averages weighted by volume. |
(2) | Includes basis. |
(3) | Represents market prices beyond defined terms for Levels 1 and 2. |
(4) Represents volatilities unrepresented in published markets.
Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:
Significant Unobservable Inputs |
| Position |
| Change to Input |
| Impact on Fair Value Measurement |
Market price |
| Buy |
| 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) |
35
Nonrecurring Fair Value Measurements
In the second quarter of 2021, Dominion Energy recorded a charge of $20 million ($15 million after-tax) in impairment of assets and other charges in its Consolidated Statements of Income to write off substantially all of the long-lived assets of its nonregulated retail software development operations to their estimated fair value, using a market approach, of less than $1 million. The valuation is considered a Level 2 fair value measurement given that it is based on bids received.
See Note 3 for information on the nonrecurring fair value measurement associated with the acquisition of Birdseye.
Recurring Fair Value Measurements
Dominion Energy
The following table presents Dominion Energy’s assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
At June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 0 |
|
| $ | 51 |
|
| $ | 58 |
|
| $ | 109 |
|
| $ | 0 |
|
| $ | 52 |
|
| $ | 96 |
|
| $ | 148 |
|
Interest rate |
|
| 0 |
|
|
| 740 |
|
|
| 0 |
|
|
| 740 |
|
|
| 0 |
|
|
| 468 |
|
|
| 0 |
|
|
| 468 |
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
U.S. |
|
| 4,730 |
|
|
| 0 |
|
|
| 0 |
|
|
| 4,730 |
| ||||||||||||||||
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Corporate debt instruments |
|
| 0 |
|
|
| 871 |
|
|
| 0 |
|
|
| 871 |
| ||||||||||||||||
Government securities |
|
| 783 |
|
|
| 744 |
|
|
| 0 |
|
|
| 1,527 |
| ||||||||||||||||
Total assets |
| $ | 5,513 |
|
| $ | 2,135 |
|
| $ | 96 |
|
| $ | 7,744 |
| ||||||||||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Commodity |
| $ | 0 |
|
| $ | 211 |
|
| $ | 34 |
|
| $ | 245 |
| ||||||||||||||||
Interest rate |
|
| 0 |
|
|
| 329 |
|
|
| 0 |
|
|
| 329 |
| ||||||||||||||||
Total liabilities |
| $ | 0 |
|
| $ | 540 |
|
| $ | 34 |
|
| $ | 574 |
| ||||||||||||||||
At December 31, 2020 |
|
|
|
|
|
|
|
|
| �� |
|
|
|
|
|
| ||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Commodity |
| $ | 0 |
|
| $ | 57 |
|
| $ | 110 |
|
| $ | 167 |
| ||||||||||||||||
Interest rate |
|
| 0 |
|
|
| 230 |
|
|
| 0 |
|
|
| 230 |
| ||||||||||||||||
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
| 4,569 |
|
|
| 0 |
|
|
| 0 |
|
|
| 4,569 |
|
|
| 4,648 |
|
|
| 0 |
|
|
| 0 |
|
|
| 4,648 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| 0 |
|
|
| 722 |
|
|
| 0 |
|
|
| 722 |
|
|
| 0 |
|
|
| 629 |
|
|
| 0 |
|
|
| 629 |
|
Government securities |
|
| 728 |
|
|
| 727 |
|
|
| 0 |
|
|
| 1,455 |
|
|
| 508 |
|
|
| 730 |
|
|
| 0 |
|
|
| 1,238 |
|
Cash equivalents and other |
|
| 18 |
|
|
| 0 |
|
|
| 0 |
|
|
| 18 |
|
|
| 32 |
|
|
| 15 |
|
|
| 0 |
|
|
| 47 |
|
Total assets |
| $ | 5,315 |
|
| $ | 2,240 |
|
| $ | 58 |
|
| $ | 7,613 |
|
| $ | 5,188 |
|
| $ | 1,661 |
|
| $ | 110 |
|
| $ | 6,959 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 0 |
|
| $ | 76 |
|
| $ | 2 |
|
| $ | 78 |
|
| $ | 0 |
|
| $ | 48 |
|
| $ | 7 |
|
| $ | 55 |
|
Interest rate |
|
| 0 |
|
|
| 186 |
|
|
| 0 |
|
|
| 186 |
|
|
| 0 |
|
|
| 431 |
|
|
| 0 |
|
|
| 431 |
|
Total liabilities |
| $ | 0 |
|
| $ | 262 |
|
| $ | 2 |
|
| $ | 264 |
|
| $ | 0 |
|
| $ | 479 |
|
| $ | 7 |
|
| $ | 486 |
|
At December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Commodity |
| $ | 0 |
|
| $ | 57 |
|
| $ | 110 |
|
| $ | 167 |
| ||||||||||||||||
Interest rate |
|
| 0 |
|
|
| 230 |
|
|
| 0 |
|
|
| 230 |
| ||||||||||||||||
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
U.S. |
|
| 4,648 |
|
|
| 0 |
|
|
| 0 |
|
|
| 4,648 |
| ||||||||||||||||
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Corporate debt instruments |
|
| 0 |
|
|
| 629 |
|
|
| 0 |
|
|
| 629 |
| ||||||||||||||||
Government securities |
|
| 508 |
|
|
| 730 |
|
|
| 0 |
|
|
| 1,238 |
| ||||||||||||||||
Cash equivalents and other |
|
| 32 |
|
|
| 15 |
|
|
| 0 |
|
|
| 47 |
| ||||||||||||||||
Total assets |
| $ | 5,188 |
|
| $ | 1,661 |
|
| $ | 110 |
|
| $ | 6,959 |
| ||||||||||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Commodity |
| $ | 0 |
|
| $ | 48 |
|
| $ | 7 |
|
| $ | 55 |
| ||||||||||||||||
Interest rate |
|
| 0 |
|
|
| 431 |
|
|
| 0 |
|
|
| 431 |
| ||||||||||||||||
Total liabilities |
| $ | 0 |
|
| $ | 479 |
|
| $ | 7 |
|
| $ | 486 |
|
(1) |
31
Includes investments held in the nuclear decommissioning and rabbi trusts. Excludes |
36
The following table presents the net change in Dominion Energy's assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:
|
| Three Months Ended |
|
| Three Months Ended |
|
| Six Months Ended |
| |||||||||||||||
|
| March 31, |
|
| June 30, |
|
| June 30, |
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | 103 |
|
| $ | (37 | ) |
| $ | 56 |
|
| $ | 43 |
|
| $ | 103 |
|
| $ | (37 | ) |
Total realized and unrealized gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
| (2 | ) |
|
| 0 |
|
|
| (2 | ) |
|
| 0 |
| ||||||||
Electric fuel and other energy-related purchases |
|
| (21 | ) |
|
| (22 | ) |
|
| 4 |
|
|
| (4 | ) |
|
| (17 | ) |
|
| (26 | ) |
Included in regulatory assets/liabilities |
|
| (47 | ) |
|
| 80 |
|
|
| 8 |
|
|
| 80 |
|
|
| (39 | ) |
|
| 160 |
|
Settlements |
|
| 21 |
|
|
| 22 |
|
|
| (4 | ) |
|
| 4 |
|
|
| 17 |
|
|
| 26 |
|
Ending balance |
| $ | 56 |
|
| $ | 43 |
|
| $ | 62 |
|
| $ | 123 |
|
| $ | 62 |
|
| $ | 123 |
|
There are less than $1$(2) million of unrealized gains and losses included in earningsoperating revenue in the Level 3 fair value category related to assets/liabilities still held at the reporting date for the three and six months ended March 31,June 30, 2021. There were 0 unrealized gains and losses included in earnings in the Level 3 fair value category related to assets/liabilities still held at the reporting date for the three and six months ended March 31,June 30, 2020.
Virginia Power
The following table presents Virginia Power’s quantitative information about Level 3 fair value measurements at March 31,June 30, 2021. The range and weighted average are presented in dollars for market price inputs.
|
| Fair Value (millions) |
|
| Valuation Techniques |
| Unobservable Input |
|
| Range |
| Weighted Average(1) |
|
| Fair Value (millions) |
|
| Valuation Techniques |
| Unobservable Input |
|
| Range |
| Weighted Average(1) |
| ||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas(2) |
| $ | 56 |
|
| Discounted cash flow |
| Market price (per Dth) | (3) |
| (2) - 3 |
|
| (1 | ) | |||||||||||||||
Natural gas(2) |
| $ | 53 |
|
| Discounted cash flow |
| Market price (per Dth) | (3) |
| (2) - 4 |
|
| (1 | ) | |||||||||||||||
FTRs |
|
| 2 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| (2) - 3 |
|
| 0 |
|
|
| 30 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| 0 - 6 |
|
| 1 |
|
Physical options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Natural gas |
|
| 1 |
|
| Option model |
| Market price (per Dth) | (3) |
| 2 - 7 |
|
| 4 |
| |||||||||||||||
|
|
|
|
|
|
|
| Price volatility | (4) |
| 4% - 27% |
|
| 16 | % | |||||||||||||||
Total assets |
| $ | 58 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 84 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Natural gas(2) |
| $ | 7 |
|
| Discounted cash flow |
| Market price (per Dth) | (3) |
| (2) - 3 |
|
| (1 | ) | |||||||||||||||
FTRs |
| $ | 2 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| (2) - 2 |
|
| 0 |
|
|
| 3 |
|
| Discounted cash flow |
| Market price (per MWh) | (3) |
| (3) - 4 |
|
| 1 |
|
Total liabilities |
| $ | 2 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 10 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Averages weighted by volume. |
(2) | Includes basis. |
(3) | Represents market prices beyond defined terms for Levels 1 and 2. |
(4) Represents volatilities unrepresented in published markets.
Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:
Significant Unobservable Inputs |
| Position |
| Change to Input |
| Impact on Fair Value Measurement |
Market price |
| Buy |
| 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) |
37
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 |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
|
| Total |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
At June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 0 |
|
| $ | 18 |
|
| $ | 58 |
|
| $ | 76 |
|
| $ | 0 |
|
| $ | 27 |
|
| $ | 84 |
|
| $ | 111 |
|
Interest rate |
|
| 0 |
|
|
| 283 |
|
|
| 0 |
|
|
| 283 |
|
|
| 0 |
|
|
| 172 |
|
|
| 0 |
|
|
| 172 |
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
| 2,132 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,132 |
|
|
| 2,186 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,186 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| 0 |
|
|
| 400 |
|
|
| 0 |
|
|
| 400 |
|
|
| 0 |
|
|
| 486 |
|
|
| 0 |
|
|
| 486 |
|
Government securities |
|
| 340 |
|
|
| 277 |
|
|
| 0 |
|
|
| 617 |
|
|
| 387 |
|
|
| 282 |
|
|
| 0 |
|
|
| 669 |
|
Total assets |
| $ | 2,472 |
|
| $ | 978 |
|
| $ | 58 |
|
| $ | 3,508 |
|
| $ | 2,573 |
|
| $ | 967 |
|
| $ | 84 |
|
| $ | 3,624 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 0 |
|
| $ | 26 |
|
| $ | 2 |
|
| $ | 28 |
|
| $ | 0 |
|
| $ | 42 |
|
| $ | 10 |
|
| $ | 52 |
|
Interest rate |
|
| 0 |
|
|
| 150 |
|
|
| 0 |
|
|
| 150 |
|
|
| 0 |
|
|
| 283 |
|
|
| 0 |
|
|
| 283 |
|
Total liabilities |
| $ | 0 |
|
| $ | 176 |
|
| $ | 2 |
|
| $ | 178 |
|
| $ | 0 |
|
| $ | 325 |
|
| $ | 10 |
|
| $ | 335 |
|
At December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 0 |
|
| $ | 5 |
|
| $ | 110 |
|
| $ | 115 |
|
| $ | 0 |
|
| $ | 5 |
|
| $ | 110 |
|
| $ | 115 |
|
Interest rate |
|
| 0 |
|
|
| 66 |
|
|
| 0 |
|
|
| 66 |
|
|
| 0 |
|
|
| 66 |
|
|
| 0 |
|
|
| 66 |
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
| 2,171 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,171 |
|
|
| 2,171 |
|
|
| 0 |
|
|
| 0 |
|
|
| 2,171 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| 0 |
|
|
| 348 |
|
|
| 0 |
|
|
| 348 |
|
|
| 0 |
|
|
| 348 |
|
|
| 0 |
|
|
| 348 |
|
Government securities |
|
| 201 |
|
|
| 309 |
|
|
| 0 |
|
|
| 510 |
|
|
| 201 |
|
|
| 309 |
|
|
| 0 |
|
|
| 510 |
|
Cash equivalents and other |
|
| 13 |
|
|
| 0 |
|
|
| 0 |
|
|
| 13 |
|
|
| 13 |
|
|
| 0 |
|
|
| 0 |
|
|
| 13 |
|
Total assets |
| $ | 2,385 |
|
| $ | 728 |
|
| $ | 110 |
|
| $ | 3,223 |
|
| $ | 2,385 |
|
| $ | 728 |
|
| $ | 110 |
|
| $ | 3,223 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 0 |
|
| $ | 22 |
|
| $ | 7 |
|
| $ | 29 |
|
| $ | 0 |
|
| $ | 22 |
|
| $ | 7 |
|
| $ | 29 |
|
Interest rate |
|
| 0 |
|
|
| 376 |
|
|
| 0 |
|
|
| 376 |
|
|
| 0 |
|
|
| 376 |
|
|
| 0 |
|
|
| 376 |
|
Total liabilities |
| $ | 0 |
|
| $ | 398 |
|
| $ | 7 |
|
| $ | 405 |
|
| $ | 0 |
|
| $ | 398 |
|
| $ | 7 |
|
| $ | 405 |
|
(1) |
33
Includes investments held in the nuclear decommissioning trusts. Excludes |
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 |
|
| Three Months Ended |
|
| Six Months Ended |
| |||||||||||||||
|
| March 31, |
|
| June 30, |
|
| June 30, |
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
| $ | 103 |
|
| $ | (37 | ) |
| $ | 56 |
|
| $ | 43 |
|
| $ | 103 |
|
| $ | (37 | ) |
Total realized and unrealized gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric fuel and other energy-related purchases |
|
| (21 | ) |
|
| (22 | ) |
|
| 4 |
|
|
| (4 | ) |
|
| (17 | ) |
|
| (26 | ) |
Included in regulatory assets/liabilities |
|
| (47 | ) |
|
| 80 |
|
|
| 18 |
|
|
| 80 |
|
|
| (29 | ) |
|
| 160 |
|
Settlements |
|
| 21 |
|
|
| 22 |
|
|
| (4 | ) |
|
| 4 |
|
|
| 17 |
|
|
| 26 |
|
Ending balance |
| $ | 56 |
|
| $ | 43 |
|
| $ | 74 |
|
| $ | 123 |
|
| $ | 74 |
|
| $ | 123 |
|
38
There were 0 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 six months ended March 31,June 30, 2021 and 2020.
Fair Value of Financial Instruments
Substantially all of the Companies’ financial instruments are recorded at fair value, with the exception of the instruments described below, which are reported at historical cost. Estimated fair values have been determined using available market information and valuation methodologies considered appropriate by management. The carrying amount of cash, restricted cash and equivalents, customer and other receivables, affiliated receivables, short-term debt, affiliated current borrowings, payables to affiliates and accounts payable are representative of fair value because of the short-term nature of these instruments. For the Companies' financial instruments that are not recorded at fair value, the carrying amounts and estimated fair values are as follows:
|
| March 31, 2021 |
|
| December 31, 2020 |
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||||||||||||||||||||
|
| Carrying Amount |
|
| Estimated Fair Value(1) |
|
| Carrying Amount |
|
| Estimated Fair Value(1) |
|
| Carrying Amount |
|
| Estimated Fair Value(1) |
|
| Carrying Amount |
|
| Estimated Fair Value(1) |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt(2)(3) |
| $ | 31,991 |
|
| $ | 36,334 |
|
| $ | 31,996 |
|
| $ | 38,773 |
| ||||||||||||||||
Supplemental 364-Day credit facility borrowings |
|
| 0 |
|
|
| 0 |
|
|
| 225 |
|
|
| 225 |
| ||||||||||||||||
Junior subordinated notes(4) |
|
| 3,412 |
|
|
| 3,579 |
|
|
| 3,411 |
|
|
| 3,633 |
| ||||||||||||||||
Long-term debt(2)(3) |
| $ | 33,076 |
|
| $ | 38,558 |
|
| $ | 31,996 |
|
| $ | 38,773 |
| ||||||||||||||||
Supplemental credit facility borrowings(4) |
|
| 250 |
|
|
| 250 |
|
|
| 225 |
|
|
| 225 |
| ||||||||||||||||
Junior subordinated notes(5) |
|
| 2,862 |
|
|
| 3,024 |
|
|
| 3,411 |
|
|
| 3,633 |
| ||||||||||||||||
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt(4) |
| $ | 13,209 |
|
| $ | 15,174 |
|
| $ | 13,207 |
|
| $ | 16,455 |
| ||||||||||||||||
Long-term debt(5) |
| $ | 13,210 |
|
| $ | 15,668 |
|
| $ | 13,207 |
|
| $ | 16,455 |
|
(1) | Fair value is estimated using market prices, where available, and interest rates currently available for issuance of debt with similar terms and remaining maturities. All fair value measurements are classified as Level 2. The carrying amount of debt issuances with short-term maturities and variable rates refinanced at current market rates is a reasonable estimate of their fair value. |
(2) | Carrying amount includes current portions included in securities due within one year and amounts which represent the unamortized debt issuance costs and discount or premium. At both |
(3) | Includes amounts classified as held for sale, see Note 3. |
(4) | Also includes Supplemental 364-Day credit facility borrowings. |
(5) | Carrying amount includes current portions included in securities due within one year and amounts which represent the unamortized debt issuance costs, discount or premium. |
Note 9. Derivatives and Hedge Accounting Activities
The Companies’ accounting policies, objectives and strategies for using derivative instruments are discussed in Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020. See Note 8 in this report for further information about fair value measurements and associated valuation methods for derivatives.
Derivative assets and liabilities are presented gross on the Companies’ Consolidated Balance Sheets. The Companies’ 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. Over-the-counter contracts are bilateral contracts that are transacted directly with a third party. Exchange contracts utilize a financial intermediary, exchange, or clearinghouse to enter, execute or clear the transactions. Certain over-the-counter and exchange contracts contain contractual rights of setoff through master netting arrangements, derivative clearing
34
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 securities, none of which are subject to restrictions. Cash collateral, as presented in the table below, is used to offset derivative assets and liabilities. Certain accounts receivable and accounts payable recognized on the Companies’ Consolidated Balance Sheets, letters of credit and other forms of securities, as well as certain long-term debt, all of which are not included in the tables below, are subject to offset under master netting or similar arrangements and would reduce the net exposure. See Note 18 for further information regarding credit-related contingent features for the Companies’ derivative instruments.
39
Dominion Energy
Balance Sheet Presentation
The tables below present Dominion Energy’s derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in its Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:
|
| March 31, 2021 |
|
| December 31, 2020 |
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Gross Assets Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
|
| Gross Assets Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
|
| Gross Assets Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
|
| Gross Assets Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
| ||||||||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 76 |
|
| $ | 18 |
|
| $ | 0 |
|
| $ | 58 |
|
| $ | 117 |
|
| $ | 9 |
|
| $ | 0 |
|
| $ | 108 |
|
| $ | 114 |
|
| $ | 13 |
|
| $ | 0 |
|
| $ | 101 |
|
| $ | 117 |
|
| $ | 9 |
|
| $ | 0 |
|
| $ | 108 |
|
Exchange |
|
| 33 |
|
|
| 33 |
|
|
| 0 |
|
|
| 0 |
|
|
| 49 |
|
|
| 24 |
|
|
| 0 |
|
|
| 25 |
|
|
| 22 |
|
|
| 18 |
|
|
| 0 |
|
|
| 4 |
|
|
| 49 |
|
|
| 24 |
|
|
| 0 |
|
|
| 25 |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 740 |
|
|
| 19 |
|
|
| 0 |
|
|
| 721 |
|
|
| 230 |
|
|
| 13 |
|
|
| 0 |
|
|
| 217 |
|
|
| 468 |
|
|
| 26 |
|
|
| 0 |
|
|
| 442 |
|
|
| 230 |
|
|
| 13 |
|
|
| 0 |
|
|
| 217 |
|
Total derivatives, subject to a master netting or similar arrangement |
| $ | 849 |
|
| $ | 70 |
|
| $ | 0 |
|
| $ | 779 |
|
| $ | 396 |
|
| $ | 46 |
|
| $ | 0 |
|
| $ | 350 |
|
| $ | 604 |
|
| $ | 57 |
|
| $ | 0 |
|
| $ | 547 |
|
| $ | 396 |
|
| $ | 46 |
|
| $ | 0 |
|
| $ | 350 |
|
(1) | Excludes |
|
| March 31, 2021 |
|
| December 31, 2020 |
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Gross Liabilities Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
|
| Gross Liabilities Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
|
| Gross Liabilities Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
|
| Gross Liabilities Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
| ||||||||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 28 |
|
| $ | 18 |
|
| $ | 0 |
|
| $ | 10 |
|
| $ | 30 |
|
| $ | 9 |
|
| $ | 0 |
|
| $ | 21 |
|
| $ | 49 |
|
| $ | 13 |
|
| $ | 9 |
|
| $ | 27 |
|
| $ | 30 |
|
| $ | 9 |
|
| $ | 0 |
|
| $ | 21 |
|
Exchange |
|
| 50 |
|
|
| 33 |
|
|
| 17 |
|
|
| 0 |
|
|
| 24 |
|
|
| 24 |
|
|
| 0 |
|
|
| 0 |
|
|
| 168 |
|
|
| 18 |
|
|
| 150 |
|
|
| 0 |
|
|
| 24 |
|
|
| 24 |
|
|
| 0 |
|
|
| 0 |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 186 |
|
|
| 19 |
|
|
| 11 |
|
|
| 156 |
|
|
| 431 |
|
|
| 13 |
|
|
| 17 |
|
|
| 401 |
|
|
| 329 |
|
|
| 26 |
|
|
| 11 |
|
|
| 292 |
|
|
| 431 |
|
|
| 13 |
|
|
| 17 |
|
|
| 401 |
|
Total derivatives, subject to a master netting or similar arrangement |
| $ | 264 |
|
| $ | 70 |
|
| $ | 28 |
|
| $ | 166 |
|
| $ | 485 |
|
| $ | 46 |
|
| $ | 17 |
|
| $ | 422 |
|
| $ | 546 |
|
| $ | 57 |
|
| $ | 170 |
|
| $ | 319 |
|
| $ | 485 |
|
| $ | 46 |
|
| $ | 17 |
|
| $ | 422 |
|
(1) |
35
Excludes |
40
Volumes
The following table presents the volume of Dominion Energy’s derivative activity at March 31,June 30, 2021. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.
|
| Current |
|
| Noncurrent |
|
| Current |
|
| Noncurrent |
| ||||
Natural Gas (bcf): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price(1) |
|
| 60 |
|
|
| 19 |
| ||||||||
Fixed price(1) |
|
| 59 |
|
|
| 14 |
| ||||||||
Basis |
|
| 202 |
|
|
| 496 |
|
|
| 202 |
|
|
| 471 |
|
Electricity (MWh): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price |
|
| 10,745,307 |
|
|
| 9,789,934 |
|
|
| 12,116,472 |
|
|
| 30,423,292 |
|
FTRs |
|
| 18,264,727 |
|
|
| 0 |
|
|
| 98,414,736 |
|
|
| 0 |
|
Interest rate(2) (millions) |
| $ | 1,250 |
|
| $ | 5,407 |
| ||||||||
Interest rate(2) (millions) |
| $ | 1,250 |
|
| $ | 8,000 |
|
(1) | Includes options. |
(2) | Maturity is determined based on final settlement period. |
AOCI
The following table presents selected information related to losses on cash flow hedges included in AOCI in Dominion Energy’s Consolidated Balance Sheet at March 31,June 30, 2021:
|
| AOCI After-Tax |
|
| Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax |
|
| Maximum Term |
| AOCI After-Tax |
|
| Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax |
|
| Maximum Term | ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
| $ | (367 | ) |
| $ | (40 | ) |
| 393 months |
| $ | (371 | ) |
| $ | (43 | ) |
| 390 months |
Total |
| $ | (367 | ) |
| $ | (40 | ) |
|
|
| $ | (371 | ) |
| $ | (43 | ) |
|
|
The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interest rate 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.
Fair Value Hedges
For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings and presented in the same line item. There were 0 derivative instruments designated as fair value hedges during the three and six months ended March 31,June 30, 2021 and March 31, 2020.
The following table presents the amounts recorded on the balance sheet related to cumulative basis adjustments for fair value hedges:
|
| Carrying Amount of the Hedged Asset (Liability)(1) |
|
| Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Assets (Liabilities)(2) |
|
| Carrying Amount of the Hedged Asset (Liability)(1) |
|
| Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Assets (Liabilities)(2) |
| ||||||||||||||||||||
|
| March 31, 2021 |
|
| December 31, 2020 |
|
| March 31, 2021 |
|
| December 31, 2020 |
|
| June 30, 2021 |
|
| December 31, 2020 |
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
| $ | (1,153 | ) |
| $ | (1,153 | ) |
| $ | (3 | ) |
| $ | (3 | ) |
| $ | (1,153 | ) |
| $ | (1,153 | ) |
| $ | (3 | ) |
| $ | (3 | ) |
(1) | Includes $(1.2) billion related to discontinued hedging relationships at both |
(2) | Includes $(3) million of hedging adjustments on discontinued hedging relationships at both |
41
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 |
|
| Fair Value – Derivatives under Hedge Accounting |
|
| Fair Value – Derivatives not under Hedge Accounting |
|
| Total Fair Value |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 0 |
|
| $ | 24 |
|
| $ | 24 |
|
| $ | 0 |
|
| $ | 76 |
|
| $ | 76 |
|
Interest rate |
|
| 0 |
|
|
| 12 |
|
|
| 12 |
|
|
| 0 |
|
|
| 24 |
|
|
| 24 |
|
Total current derivative assets(1) |
|
| 0 |
|
|
| 36 |
|
|
| 36 |
| ||||||||||||
Total current derivative assets(1) |
|
| 0 |
|
|
| 100 |
|
|
| 100 |
| ||||||||||||
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
| 0 |
|
|
| 85 |
|
|
| 85 |
|
|
| 0 |
|
|
| 72 |
|
|
| 72 |
|
Interest rate |
|
| 287 |
|
|
| 441 |
|
|
| 728 |
|
|
| 172 |
|
|
| 272 |
|
|
| 444 |
|
Total noncurrent derivative assets(2) |
|
| 287 |
|
|
| 526 |
|
|
| 813 |
| ||||||||||||
Total noncurrent derivative assets(2) |
|
| 172 |
|
|
| 344 |
|
|
| 516 |
| ||||||||||||
Total derivative assets |
| $ | 287 |
|
| $ | 562 |
|
| $ | 849 |
|
| $ | 172 |
|
| $ | 444 |
|
| $ | 616 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 0 |
|
| $ | 61 |
|
| $ | 61 |
|
| $ | 0 |
|
| $ | 172 |
|
| $ | 172 |
|
Interest rate |
|
| 150 |
|
|
| 10 |
|
|
| 160 |
|
|
| 253 |
|
|
| 10 |
|
|
| 263 |
|
Total current derivative liabilities(3) |
|
| 150 |
|
|
| 71 |
|
|
| 221 |
| ||||||||||||
Total current derivative liabilities(3) |
|
| 253 |
|
|
| 182 |
|
|
| 435 |
| ||||||||||||
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
| 0 |
|
|
| 17 |
|
|
| 17 |
|
|
| 0 |
|
|
| 73 |
|
|
| 73 |
|
Interest rate |
|
| 0 |
|
|
| 26 |
|
|
| 26 |
|
|
| 31 |
|
|
| 35 |
|
|
| 66 |
|
Total noncurrent derivative liabilities(4) |
|
| 0 |
|
|
| 43 |
|
|
| 43 |
| ||||||||||||
Total noncurrent derivative liabilities(4) |
|
| 31 |
|
|
| 108 |
|
|
| 139 |
| ||||||||||||
Total derivative liabilities |
| $ | 150 |
|
| $ | 114 |
|
| $ | 264 |
|
| $ | 284 |
|
| $ | 290 |
|
| $ | 574 |
|
December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 0 |
|
| $ | 58 |
|
| $ | 58 |
|
| $ | 0 |
|
| $ | 58 |
|
| $ | 58 |
|
Interest rate |
|
| 0 |
|
|
| 9 |
|
|
| 9 |
|
|
| 0 |
|
|
| 9 |
|
|
| 9 |
|
Total current derivative assets(1) |
|
| 0 |
|
|
| 67 |
|
|
| 67 |
| ||||||||||||
Total current derivative assets(1) |
|
| 0 |
|
|
| 67 |
|
|
| 67 |
| ||||||||||||
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
| 0 |
|
|
| 109 |
|
|
| 109 |
|
|
| 0 |
|
|
| 109 |
|
|
| 109 |
|
Interest rate |
|
| 66 |
|
|
| 155 |
|
|
| 221 |
|
|
| 66 |
|
|
| 155 |
|
|
| 221 |
|
Total noncurrent derivative assets(2) |
|
| 66 |
|
|
| 264 |
|
|
| 330 |
| ||||||||||||
Total noncurrent derivative assets(2) |
|
| 66 |
|
|
| 264 |
|
|
| 330 |
| ||||||||||||
Total derivative assets |
| $ | 66 |
|
| $ | 331 |
|
| $ | 397 |
|
| $ | 66 |
|
| $ | 331 |
|
| $ | 397 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 0 |
|
| $ | 42 |
|
| $ | 42 |
|
| $ | 0 |
|
| $ | 42 |
|
| $ | 42 |
|
Interest rate |
|
| 363 |
|
|
| 10 |
|
|
| 373 |
|
|
| 363 |
|
|
| 10 |
|
|
| 373 |
|
Total current derivative liabilities(3) |
|
| 363 |
|
|
| 52 |
|
|
| 415 |
| ||||||||||||
Total current derivative liabilities(3) |
|
| 363 |
|
|
| 52 |
|
|
| 415 |
| ||||||||||||
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
| 0 |
|
|
| 13 |
|
|
| 13 |
|
|
| 0 |
|
|
| 13 |
|
|
| 13 |
|
Interest rate |
|
| 19 |
|
|
| 39 |
|
|
| 58 |
|
|
| 19 |
|
|
| 39 |
|
|
| 58 |
|
Total noncurrent derivative liabilities(4) |
|
| 19 |
|
|
| 52 |
|
|
| 71 |
| ||||||||||||
Total noncurrent derivative liabilities(4) |
|
| 19 |
|
|
| 52 |
|
|
| 71 |
| ||||||||||||
Total derivative liabilities |
| $ | 382 |
|
| $ | 104 |
|
| $ | 486 |
|
| $ | 382 |
|
| $ | 104 |
|
| $ | 486 |
|
(1) | Current derivative assets include |
(2) | Noncurrent derivative assets are presented in other deferred charges and other assets in Dominion Energy’s Consolidated Balance Sheets. |
(3) | Current derivative liabilities include |
(4) | Noncurrent derivative liabilities are presented in other deferred credits and other liabilities in Dominion Energy’s Consolidated Balance Sheets. |
42
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(1) |
|
| Amount of Gain (Loss) Reclassified From AOCI to Income |
|
| Increase (Decrease) in Derivatives Subject to Regulatory Treatment(2) |
|
| Amount of Gain (Loss) Recognized in AOCI on Derivatives(1) |
|
| Amount of Gain (Loss) Reclassified From AOCI to Income |
|
| Increase (Decrease) in Derivatives Subject to Regulatory Treatment(2) |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Interest rate(3) |
| $ | (21 | ) |
| $ | (16 | ) |
| $ | (219 | ) | ||||||||||||
Total |
| $ | (21 | ) |
| $ | (16 | ) |
| $ | (219 | ) | ||||||||||||
Three Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Operating revenue |
|
|
|
|
| $ | 8 |
|
|
|
|
| ||||||||||||
Discontinued operations |
|
|
|
|
|
| 1 |
|
|
|
|
| ||||||||||||
Total commodity |
| $ | — |
|
| $ | 9 |
|
| $ | — |
| ||||||||||||
Interest rate: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Interest and related charges |
|
|
|
|
|
| (18 | ) |
|
|
|
| ||||||||||||
Discontinued operations |
|
|
|
|
|
| (4 | ) |
|
|
|
| ||||||||||||
Total interest rate |
|
| — |
|
|
| (22 | ) |
|
| 14 |
| ||||||||||||
Foreign currency(4) |
|
| 6 |
|
|
| 6 |
|
|
| — |
| ||||||||||||
Total |
| $ | 6 |
|
| $ | (7 | ) |
| $ | 14 |
| ||||||||||||
Six Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased gas |
| $ | — |
|
| $ | (1 | ) |
| $ | — |
|
|
|
|
|
| $ | (1 | ) |
|
|
|
|
Interest rate: |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Interest and related charges |
|
| 52 |
|
|
| (16 | ) |
|
| 408 |
| ||||||||||||
Total commodity |
| $ | — |
|
| $ | (1 | ) |
| $ | — |
| ||||||||||||
Interest rate (3) |
|
| 31 |
|
|
| (32 | ) |
|
| 189 |
| ||||||||||||
Total |
| $ | 52 |
|
| $ | (17 | ) |
| $ | 408 |
|
| $ | 31 |
|
| $ | (33 | ) |
| $ | 189 |
|
Three Months Ended March 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Six Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
|
|
|
| $ | 6 |
|
|
|
|
|
|
|
|
|
| $ | 14 |
|
|
|
|
|
Purchased gas |
|
|
|
|
|
| (3 | ) |
|
|
|
|
|
|
|
|
|
| (3 | ) |
|
|
|
|
Discontinued operations |
|
|
|
|
|
| 1 |
|
|
|
|
|
|
|
|
|
|
| 2 |
|
|
|
|
|
Total Commodity |
| $ | — |
|
| $ | 4 |
|
| $ | — |
| ||||||||||||
Total commodity |
| $ | — |
|
| $ | 13 |
|
| $ | — |
| ||||||||||||
Interest rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and related charges |
|
|
|
|
|
| (25 | ) |
|
|
|
|
|
|
|
|
|
| (43 | ) |
|
|
|
|
Discontinued operations |
|
|
|
|
|
| (2 | ) |
|
|
|
|
|
|
|
|
|
| (6 | ) |
|
|
|
|
Total interest rate |
|
| (336 | ) |
|
| (27 | ) |
|
| (563 | ) |
|
| (336 | ) |
|
| (49 | ) |
|
| (550 | ) |
Foreign currency(3) |
|
| (23 | ) |
|
| (6 | ) |
|
| — |
| ||||||||||||
Foreign currency (4) |
|
| (17 | ) |
|
| — |
|
|
| — |
| ||||||||||||
Total |
| $ | (359 | ) |
| $ | (29 | ) |
| $ | (563 | ) |
| $ | (353 | ) |
| $ | (36 | ) |
| $ | (550 | ) |
(1) | Amounts deferred into AOCI have no associated effect in Dominion Energy’s Consolidated Statements of Income. |
(2) | Represents net derivative activity deferred into and amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Dominion Energy’s Consolidated Statements of Income. |
(3) Amounts recorded in Dominion Energy’s Consolidated Statement of Income are classified in interest and related charges.
(4) Amounts recorded in Dominion Energy’s Consolidated Statement of Income are classified in discontinued operations.
43
Derivatives not designated as hedging instruments |
| Amount of Gain (Loss) Recognized in Income on Derivatives(1) |
| Amount of Gain (Loss) Recognized in Income on Derivatives(1) |
|
| ||||||||||||||||||||
|
| Three Months Ended |
|
|
| Three Months Ended |
|
| Six Months Ended |
|
| |||||||||||||||
|
| March 31, |
|
|
| June 30, |
|
| June 30, |
|
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
| $ | (41 | ) |
| $ | 51 |
|
|
| $ | (146 | ) |
| $ | (5 | ) |
| $ | (187 | ) |
| $ | 46 |
|
|
Purchased gas |
|
| 0 |
|
|
| (11 | ) |
|
|
| 7 |
|
|
| 1 |
|
|
| 7 |
|
|
| (10 | ) |
|
Electric fuel and other energy-related purchases |
|
| (44 | ) |
|
| (65 | ) |
|
|
| 7 |
|
|
| (8 | ) |
|
| (37 | ) |
|
| (73 | ) |
|
Discontinued operations |
|
| 0 |
|
|
| 11 |
|
|
|
| 0 |
|
|
| (6 | ) |
|
| 0 |
|
|
| 5 |
|
|
Interest rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and related charges |
|
| 319 |
|
|
| (53 | ) |
|
|
| (157 | ) |
|
| (25 | ) |
|
| 162 |
|
|
| (78 | ) |
|
Discontinued operations |
|
| 0 |
|
|
| (8 | ) |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| (8 | ) |
|
Total |
| $ | 234 |
|
| $ | (75 | ) |
|
| $ | (289 | ) |
| $ | (43 | ) |
| $ | (55 | ) |
| $ | (118 | ) |
|
(1) | Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Dominion Energy’s Consolidated Statements of Income. |
Virginia Power
Balance Sheet Presentation
The tables below present Virginia Power’s derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in its Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:
|
| March 31, 2021 |
|
| December 31, 2020 |
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Gross Assets Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
|
| Gross Assets Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
|
| Gross Assets Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
|
| Gross Assets Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Received |
|
| Net Amounts |
| ||||||||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 71 |
|
| $ | 15 |
|
| $ | 0 |
|
| $ | 56 |
|
| $ | 111 |
|
| $ | 6 |
|
| $ | 0 |
|
| $ | 105 |
|
| $ | 84 |
|
| $ | 10 |
|
| $ | 0 |
|
| $ | 74 |
|
| $ | 111 |
|
| $ | 6 |
|
| $ | 0 |
|
| $ | 105 |
|
Exchange |
|
| 3 |
|
|
| 3 |
|
|
| 0 |
|
|
| 0 |
|
| 1 |
|
| 1 |
|
|
| 0 |
|
|
| 0 |
|
|
| 1 |
|
|
| 1 |
|
|
| 0 |
|
|
| 0 |
|
| 1 |
|
| 1 |
|
|
| 0 |
|
|
| 0 |
| ||||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 283 |
|
|
| 19 |
|
|
| 0 |
|
|
| 264 |
|
| 66 |
|
| 7 |
|
|
| 0 |
|
|
| 59 |
|
|
| 172 |
|
|
| 19 |
|
|
| 0 |
|
|
| 153 |
|
| 66 |
|
| 7 |
|
|
| 0 |
|
|
| 59 |
| ||||
Total derivatives, subject to a master netting or similar arrangement |
| $ | 357 |
|
| $ | 37 |
|
| $ | 0 |
|
| $ | 320 |
|
| $ | 178 |
|
| $ | 14 |
|
| $ | 0 |
|
| $ | 164 |
|
| $ | 257 |
|
| $ | 30 |
|
| $ | 0 |
|
| $ | 227 |
|
| $ | 178 |
|
| $ | 14 |
|
| $ | 0 |
|
| $ | 164 |
|
(1) | Excludes |
44
|
| March 31, 2021 |
|
| December 31, 2020 |
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
| Gross Amounts Not Offset in the Consolidated Balance Sheet |
| ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| Gross Liabilities Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
|
| Gross Liabilities Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
|
| Gross Liabilities Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
|
| Gross Liabilities Presented in the Consolidated Balance Sheet(1) |
|
| Financial Instruments |
|
| Cash Collateral Paid |
|
| Net Amounts |
| ||||||||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
| $ | 19 |
|
| $ | 15 |
|
| $ | 0 |
|
| $ | 4 |
|
| $ | 6 |
|
| $ | 6 |
|
| $ | 0 |
|
| $ | 0 |
|
| $ | 42 |
|
| $ | 10 |
|
| $ | 9 |
|
| $ | 23 |
|
| $ | 6 |
|
| $ | 6 |
|
| $ | 0 |
|
| $ | 0 |
|
Exchange |
|
| 4 |
|
|
| 3 |
|
|
| 1 |
|
|
| 0 |
|
| 1 |
|
| 1 |
|
|
| 0 |
|
|
| 0 |
|
|
| 8 |
|
|
| 1 |
|
|
| 7 |
|
|
| 0 |
|
| 1 |
|
| 1 |
|
|
| 0 |
|
|
| 0 |
| ||||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
| 150 |
|
|
| 19 |
|
|
| 0 |
|
|
| 131 |
|
| 376 |
|
| 7 |
|
|
| 0 |
|
|
| 369 |
|
|
| 283 |
|
|
| 19 |
|
|
| 0 |
|
|
| 264 |
|
| 376 |
|
| 7 |
|
|
| 0 |
|
|
| 369 |
| ||||
Total derivatives, subject to a master netting or similar arrangement |
| $ | 173 |
|
| $ | 37 |
|
| $ | 1 |
|
| $ | 135 |
|
| $ | 383 |
|
| $ | 14 |
|
| $ | 0 |
|
| $ | 369 |
|
| $ | 333 |
|
| $ | 30 |
|
| $ | 16 |
|
| $ | 287 |
|
| $ | 383 |
|
| $ | 14 |
|
| $ | 0 |
|
| $ | 369 |
|
(1) |
39
Excludes |
Volumes
The following table presents the volume of Virginia Power’s derivative activity at March 31,June 30, 2021. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.
|
| Current |
|
| Noncurrent |
|
| Current |
|
| Noncurrent |
| ||||
Natural Gas (bcf): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price(1) |
|
| 35 |
|
|
| 18 |
| ||||||||
Fixed price(1) |
|
| 29 |
|
|
| 14 |
| ||||||||
Basis |
|
| 151 |
|
|
| 495 |
|
|
| 143 |
|
|
| 464 |
|
Electricity (MWh): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed price |
|
| 3,770,002 |
|
|
| 3,029,859 |
|
|
| 3,852,994 |
|
|
| 3,271,323 |
|
FTRs |
|
| 18,264,727 |
|
|
| 0 |
|
|
| 98,414,736 |
|
|
| 0 |
|
Interest rate(2) (millions) |
| $ | 850 |
|
| $ | 1,200 |
| ||||||||
Interest rate(2) (millions) |
| $ | 850 |
|
| $ | 1,900 |
|
(1) | Includes options. |
(2) | Maturity is determined based on final settlement period. |
AOCI
The following table presents selected information related to losses on cash flow hedges included in AOCI in Virginia Power’s Consolidated Balance Sheet at March 31,June 30, 2021:
|
| AOCI After-Tax |
|
| Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax |
|
| Maximum Term |
| AOCI After-Tax |
|
| Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax |
|
| Maximum Term | ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
| $ | (27 | ) |
| $ | (2 | ) |
| 393 months |
| $ | (39 | ) |
| $ | (2 | ) |
| 390 months |
Total |
| $ | (27 | ) |
| $ | (2 | ) |
|
|
| $ | (39 | ) |
| $ | (2 | ) |
|
|
The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interest payments) in earnings, thereby achieving the realization of interest rates contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in interest rates.
4045
Fair Value and Gains and Losses on Derivative Instruments
The following table presents the fair values of Virginia Power’s derivatives and where they are presented in its Consolidated Balance Sheets:
|
| Fair Value – Derivatives under Hedge Accounting |
|
| Fair Value – Derivatives not under Hedge Accounting |
|
| Total Fair Value |
|
| Fair Value – Derivatives under Hedge Accounting |
|
| Fair Value – Derivatives not under Hedge Accounting |
|
| Total Fair Value |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 0 |
|
| $ | 11 |
|
| $ | 11 |
|
| $ | 0 |
|
| $ | 52 |
|
| $ | 52 |
|
Total current derivative assets(1) |
|
| 0 |
|
|
| 11 |
|
|
| 11 |
| ||||||||||||
Total current derivative assets(1) |
|
| 0 |
|
|
| 52 |
|
|
| 52 |
| ||||||||||||
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
| 0 |
|
|
| 65 |
|
|
| 65 |
|
|
| 0 |
|
|
| 59 |
|
|
| 59 |
|
Interest rate |
|
| 283 |
|
|
| 0 |
|
|
| 283 |
|
|
| 172 |
|
|
| 0 |
|
|
| 172 |
|
Total noncurrent derivative assets(2) |
|
| 283 |
|
|
| 65 |
|
|
| 348 |
| ||||||||||||
Total derivative assets |
| $ | 283 |
|
| $ | 76 |
|
| $ | 359 |
| ||||||||||||
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Commodity |
| $ | 0 |
|
| $ | 21 |
|
| $ | 21 |
| ||||||||||||
Interest rate |
|
| 150 |
|
|
| 0 |
|
|
| 150 |
| ||||||||||||
Total current derivative liabilities |
|
| 150 |
|
|
| 21 |
|
|
| 171 |
| ||||||||||||
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Commodity |
|
| 0 |
|
|
| 7 |
|
|
| 7 |
| ||||||||||||
Total noncurrent derivative liabilities(3) |
|
| 0 |
|
|
| 7 |
|
|
| 7 |
| ||||||||||||
Total derivative liabilities |
| $ | 150 |
|
| $ | 28 |
|
| $ | 178 |
| ||||||||||||
December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Commodity |
| $ | 0 |
|
| $ | 22 |
|
| $ | 22 |
| ||||||||||||
Total current derivative assets(1) |
|
| 0 |
|
|
| 22 |
|
|
| 22 |
| ||||||||||||
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Commodity |
|
| 0 |
|
|
| 93 |
|
|
| 93 |
| ||||||||||||
Interest rate |
|
| 66 |
|
|
| 0 |
|
|
| 66 |
| ||||||||||||
Total noncurrent derivative assets(2) |
|
| 66 |
|
|
| 93 |
|
|
| 159 |
| ||||||||||||
Total noncurrent derivative assets(2) |
|
| 172 |
|
|
| 59 |
|
|
| 231 |
| ||||||||||||
Total derivative assets |
| $ | 66 |
|
| $ | 115 |
|
| $ | 181 |
|
| $ | 172 |
|
| $ | 111 |
|
| $ | 283 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
| $ | 0 |
|
| $ | 28 |
|
| $ | 28 |
|
| $ | 0 |
|
| $ | 43 |
|
| $ | 43 |
|
Interest rate |
|
| 362 |
|
|
| 0 |
|
|
| 362 |
|
|
| 253 |
|
|
| 0 |
|
|
| 253 |
|
Total current derivative liabilities |
|
| 362 |
|
|
| 28 |
|
|
| 390 |
|
|
| 253 |
|
|
| 43 |
|
|
| 296 |
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
| 0 |
|
|
| 1 |
|
|
| 1 |
|
|
| 0 |
|
|
| 9 |
|
|
| 9 |
|
Interest rate |
|
| 14 |
|
|
| 0 |
|
|
| 14 |
|
|
| 30 |
|
|
| 0 |
|
|
| 30 |
|
Total noncurrent derivative liabilities(3) |
|
| 14 |
|
|
| 1 |
|
|
| 15 |
| ||||||||||||
Total noncurrent derivative liabilities(3) |
|
| 30 |
|
|
| 9 |
|
|
| 39 |
| ||||||||||||
Total derivative liabilities |
| $ | 376 |
|
| $ | 29 |
|
| $ | 405 |
|
| $ | 283 |
|
| $ | 52 |
|
| $ | 335 |
|
December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Commodity |
| $ | 0 |
|
| $ | 22 |
|
| $ | 22 |
| ||||||||||||
Total current derivative assets(1) |
|
| 0 |
|
|
| 22 |
|
|
| 22 |
| ||||||||||||
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Commodity |
|
| 0 |
|
|
| 93 |
|
|
| 93 |
| ||||||||||||
Interest rate |
|
| 66 |
|
|
| 0 |
|
|
| 66 |
| ||||||||||||
Total noncurrent derivative assets(2) |
|
| 66 |
|
|
| 93 |
|
|
| 159 |
| ||||||||||||
Total derivative assets |
| $ | 66 |
|
| $ | 115 |
|
| $ | 181 |
| ||||||||||||
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Commodity |
| $ | 0 |
|
| $ | 28 |
|
| $ | 28 |
| ||||||||||||
Interest rate |
|
| 362 |
|
|
| 0 |
|
|
| 362 |
| ||||||||||||
Total current derivative liabilities |
|
| 362 |
|
|
| 28 |
|
|
| 390 |
| ||||||||||||
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Commodity |
|
| 0 |
|
|
| 1 |
|
|
| 1 |
| ||||||||||||
Interest rate |
|
| 14 |
|
|
| 0 |
|
|
| 14 |
| ||||||||||||
Total noncurrent derivative liabilities(3) |
|
| 14 |
|
|
| 1 |
|
|
| 15 |
| ||||||||||||
Total derivative liabilities |
| $ | 376 |
|
| $ | 29 |
|
| $ | 405 |
|
(1) | Current derivative assets are presented in other current assets in Virginia Power’s Consolidated Balance Sheets. |
(2) | Noncurrent derivative assets are presented in other deferred charges and other assets in Virginia Power’s Consolidated Balance Sheets. |
(3) | Noncurrent derivative liabilities are presented in other deferred credits and other liabilities in Virginia Power’s Consolidated Balance Sheets. |
46
The following tables present the gains and losses on Virginia Power’s derivatives, as well as where the associated activity is presented in its Consolidated Balance Sheets and Statements of Income:
Derivatives in cash flow hedging relationships |
| Amount of Gain (Loss) Recognized in AOCI on Derivatives(1) |
|
| Amount of Gain (Loss) Reclassified From AOCI to Income |
|
| Increase (Decrease) in Derivatives Subject to Regulatory Treatment(2) |
|
| Amount of Gain (Loss) Recognized in AOCI on Derivatives(1) |
|
| Amount of Gain (Loss) Reclassified From AOCI to Income |
|
| Increase (Decrease) in Derivatives Subject to Regulatory Treatment(2) |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Three Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate(3) |
| $ | 43 |
|
| $ | (1 | ) |
| $ | 407 |
| ||||||||||||
Interest rate(3) |
| $ | (17 | ) |
| $ | — |
|
| $ | (221 | ) | ||||||||||||
Total |
| $ | 43 |
|
| $ | (1 | ) |
| $ | 407 |
|
| $ | (17 | ) |
| $ | — |
|
| $ | (221 | ) |
Three Months Ended March 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Three Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate(3) |
| $ | (61 | ) |
| $ | 0 |
|
| $ | (565 | ) | ||||||||||||
Interest rate(3) |
| $ | 2 |
|
| $ | (1 | ) |
| $ | 13 |
| ||||||||||||
Total |
| $ | (61 | ) |
| $ | 0 |
|
| $ | (565 | ) |
| $ | 2 |
|
| $ | (1 | ) |
| $ | 13 |
|
Six Months Ended June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Interest rate(3) |
| $ | 26 |
|
| $ | (1 | ) |
| $ | 186 |
| ||||||||||||
Total |
| $ | 26 |
|
| $ | (1 | ) |
| $ | 186 |
| ||||||||||||
Six Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||
Interest rate(3) |
| $ | (59 | ) |
| $ | (1 | ) |
| $ | (552 | ) | ||||||||||||
Total |
| $ | (59 | ) |
| $ | (1 | ) |
| $ | (552 | ) |
(1) | Amounts deferred into AOCI have no associated effect in Virginia Power’s Consolidated Statements of Income. |
(2) | Represents net derivative activity deferred into and amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Virginia Power’s Consolidated Statements of Income. |
(3) | Amounts recorded in Virginia Power’s Consolidated Statements of Income are classified in interest and related charges. |
Derivatives not designated as hedging instruments |
| Amount of Gain (Loss) Recognized in Income on Derivatives(1) |
| Amount of Gain (Loss) Recognized in Income on Derivatives(1) |
|
| ||||||||||||||||||||
|
| Three Months Ended |
|
|
| Three Months Ended |
|
| Six Months Ended |
|
| |||||||||||||||
|
| March 31, |
|
|
| June 30, |
|
| June 30, |
|
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
| $ | (4 | ) |
| $ | 0 |
|
| $ | (6 | ) |
| $ | 0 |
|
| |||||||||
Electric fuel and other energy-related purchases |
| $ | (44 | ) |
| $ | (65 | ) |
|
|
| 7 |
|
|
| (8 | ) |
|
| (37 | ) |
|
| (73 | ) |
|
Operating revenue |
|
| (2 | ) |
|
| 0 |
|
| |||||||||||||||||
Total |
| $ | (46 | ) |
| $ | (65 | ) |
|
| $ | 3 |
|
| $ | (8 | ) |
| $ | (43 | ) |
| $ | (73 | ) |
|
(1) | Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Virginia Power’s Consolidated Statements of Income. |
Note 10. Investments
Dominion Energy
Equity and Debt Securities
Rabbi Trust Securities
Equity and fixed income securities and cash equivalents in Dominion Energy’s rabbi trusts and classified as trading totaled $139$117 million and $134 million at March 31,June 30, 2021 and December 31, 2020, respectively.
4247
Decommissioning Trust Securities
Dominion Energy holds equity and fixed income securities, insurance contracts and cash equivalents in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Dominion Energy’s decommissioning trust funds are summarized below:
|
| Amortized Cost |
|
| Total Unrealized Gains |
|
| Total Unrealized Losses |
|
| Allowance for Credit Losses |
|
| Fair Value |
|
| Amortized Cost |
|
| Total Unrealized Gains |
|
| Total Unrealized Losses |
|
| Allowance for Credit Losses |
|
| Fair Value |
| ||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 1,573 |
|
| $ | 3,036 |
|
| $ | (10 | ) |
|
|
|
|
| $ | 4,599 |
|
| $ | 1,529 |
|
| $ | 3,251 |
|
| $ | (9 | ) |
|
|
|
|
| $ | 4,771 |
|
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| 698 |
|
|
| 32 |
|
|
| (8 | ) |
| $ | 0 |
|
|
| 722 |
|
|
| 830 |
|
|
| 43 |
|
|
| (2 | ) |
| $ | 0 |
|
|
| 871 |
|
Government securities |
|
| 1,369 |
|
|
| 47 |
|
|
| (14 | ) |
|
| 0 |
|
|
| 1,402 |
|
|
| 1,435 |
|
|
| 60 |
|
|
| (5 | ) |
|
| 0 |
|
|
| 1,490 |
|
Common/collective trust funds |
|
| 221 |
|
|
| 6 |
|
|
| 0 |
|
|
| 0 |
|
|
| 227 |
|
|
| 171 |
|
|
| 5 |
|
|
| 0 |
|
|
| 0 |
|
|
| 176 |
|
Insurance contracts |
|
| 237 |
|
|
| — |
|
|
| — |
|
|
|
|
|
|
| 237 |
|
|
| 246 |
|
|
| — |
|
|
| — |
|
|
|
|
|
|
| 246 |
|
Cash equivalents and other(3) |
|
| (51 | ) |
|
| 3 |
|
|
| — |
|
|
| 0 |
|
|
| (48 | ) | ||||||||||||||||||||
Cash equivalents and other(3) |
|
| (22 | ) |
|
| 5 |
|
|
| (16 | ) |
|
| 0 |
|
|
| (33 | ) | ||||||||||||||||||||
Total |
| $ | 4,047 |
|
| $ | 3,124 |
|
| $ | (32 | ) | (4) | $ | 0 |
|
| $ | 7,139 |
|
| $ | 4,189 |
|
| $ | 3,364 |
|
| $ | (32 | ) | (4) | $ | 0 |
|
| $ | 7,521 |
|
December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 1,756 |
|
| $ | 2,948 |
|
| $ | (24 | ) |
|
|
|
|
| $ | 4,680 |
|
| $ | 1,756 |
|
| $ | 2,948 |
|
| $ | (24 | ) |
|
|
|
|
| $ | 4,680 |
|
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| 572 |
|
|
| 58 |
|
|
| (1 | ) |
| $ | 0 |
|
|
| 629 |
|
|
| 572 |
|
|
| 58 |
|
|
| (1 | ) |
| $ | 0 |
|
|
| 629 |
|
Government securities |
|
| 1,119 |
|
|
| 66 |
|
|
| (1 | ) |
|
| 0 |
|
|
| 1,184 |
|
|
| 1,119 |
|
|
| 66 |
|
|
| (1 | ) |
|
| 0 |
|
|
| 1,184 |
|
Common/collective trust funds |
|
| 170 |
|
|
| 5 |
|
|
| 0 |
|
|
| 0 |
|
|
| 175 |
|
|
| 170 |
|
|
| 5 |
|
|
| 0 |
|
|
| 0 |
|
|
| 175 |
|
Insurance contracts |
|
| 237 |
|
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
| 237 |
|
|
| 237 |
|
|
| 0 |
|
|
| 0 |
|
|
|
|
|
|
| 237 |
|
Cash equivalents and other(3) |
|
| (8 | ) |
|
| 4 |
|
|
| (1 | ) |
|
| 0 |
|
|
| (5 | ) | ||||||||||||||||||||
Cash equivalents and other(3) |
|
| (8 | ) |
|
| 4 |
|
|
| (1 | ) |
|
| 0 |
|
|
| (5 | ) | ||||||||||||||||||||
Total |
| $ | 3,846 |
|
| $ | 3,081 |
|
| $ | (27 | ) | (4) | $ | 0 |
|
| $ | 6,900 |
|
| $ | 3,846 |
|
| $ | 3,081 |
|
| $ | (27 | ) | (4) | $ | 0 |
|
| $ | 6,900 |
|
(1) | Unrealized gains and losses on equity securities are included in other income and the nuclear decommissioning trust regulatory liability. |
(2) | Unrealized gains and losses on fixed income securities are included in AOCI and the nuclear decommissioning trust regulatory liability. Changes in allowance for credit losses are included in other income. |
(3) | Includes pending purchases of securities of |
(4) | The fair value of securities in an unrealized loss position was |
The portion of unrealized gains and losses that relates to equity securities held within Dominion Energy’s nuclear decommissioning trusts is summarized below:
|
| Three Months Ended March 31, |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) recognized during the period |
| $ | 279 |
|
| $ | (898 | ) |
| $ | 352 |
|
| $ | 610 |
|
| $ | 631 |
|
| $ | (288 | ) |
Less: Net (gains) losses recognized during the period on securities sold during the period |
|
| (178 | ) |
|
| 14 |
|
|
| (134 | ) |
|
| (5 | ) |
|
| (312 | ) |
|
| 9 |
|
Unrealized gains (losses) recognized during the period on securities still held at period end(1) |
| $ | 101 |
|
| $ | (884 | ) | ||||||||||||||||
Unrealized gains (losses) recognized during the period on securities still held at period end(1) |
| $ | 218 |
|
| $ | 605 |
|
| $ | 319 |
|
| $ | (279 | ) |
(1) | Included in other income and the nuclear decommissioning trust regulatory liability. |
48
The fair value of Dominion Energy’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at March 31,June 30, 2021 by contractual maturity is as follows:
|
| Amount |
|
| Amount |
| ||
(millions) |
|
|
|
|
|
|
|
|
Due in one year or less |
| $ | 292 |
|
| $ | 293 |
|
Due after one year through five years |
|
| 640 |
|
|
| 673 |
|
Due after five years through ten years |
|
| 614 |
|
|
| 677 |
|
Due after ten years |
|
| 805 |
|
|
| 894 |
|
Total |
| $ | 2,351 |
|
| $ | 2,537 |
|
Presented below is selected information regarding Dominion Energy’s equity and fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds.
|
| Three Months Ended March 31, |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales |
| $ | 1,765 |
|
| $ | 602 |
|
| $ | 945 |
|
| $ | 1,058 |
|
| $ | 2,710 |
|
| $ | 1,660 |
|
Realized gains(1) |
|
| 232 |
|
|
| 66 |
| ||||||||||||||||
Realized losses(1) |
|
| 59 |
|
|
| 69 |
| ||||||||||||||||
Realized gains(1) |
|
| 148 |
|
|
| 74 |
|
|
| 380 |
|
|
| 140 |
| ||||||||
Realized losses(1) |
|
| 15 |
|
|
| 61 |
|
|
| 74 |
|
|
| 130 |
|
(1) | Includes realized gains and losses recorded to the nuclear decommissioning trust regulatory liability. |
Virginia Power
Virginia Power holds equity and fixed income securities and cash equivalents in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Virginia Power’s decommissioning trust funds are summarized below:
|
| Amortized Cost |
|
| Total Unrealized Gains |
|
| Total Unrealized Losses |
|
| Allowance for Credit Losses |
|
| Fair Value |
|
| Amortized Cost |
|
| Total Unrealized Gains |
|
| Total Unrealized Losses |
|
| Allowance for Credit Losses |
|
| Fair Value |
| ||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
June 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 839 |
|
| $ | 1,414 |
|
| $ | (9 | ) |
|
|
|
|
| $ | 2,244 |
|
| $ | 817 |
|
| $ | 1,497 |
|
| $ | (8 | ) |
|
|
|
|
| $ | 2,306 |
|
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| 385 |
|
|
| 18 |
|
|
| (3 | ) |
| $ | 0 |
|
|
| 400 |
|
|
| 463 |
|
|
| 24 |
|
|
| (1 | ) |
| $ | 0 |
|
|
| 486 |
|
Government securities |
|
| 601 |
|
|
| 18 |
|
|
| (3 | ) |
|
| 0 |
|
|
| 616 |
|
|
| 645 |
|
|
| 24 |
|
|
| (1 | ) |
|
| 0 |
|
|
| 668 |
|
Common/collective trust funds |
|
| 86 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 86 |
|
|
| 55 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 55 |
|
Cash equivalents and other(3) |
|
| (24 | ) |
|
| — |
|
|
| — |
|
|
| 0 |
|
|
| (24 | ) | ||||||||||||||||||||
Cash equivalents and other(3) |
|
| (4 | ) |
|
| — |
|
|
| — |
|
|
| 0 |
|
|
| (4 | ) | ||||||||||||||||||||
Total |
| $ | 1,887 |
|
| $ | 1,450 |
|
| $ | (15 | ) | (4) | $ | 0 |
|
| $ | 3,322 |
|
| $ | 1,976 |
|
| $ | 1,545 |
|
| $ | (10 | ) | (4) | $ | 0 |
|
| $ | 3,511 |
|
December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
| $ | 929 |
|
| $ | 1,371 |
|
| $ | (21 | ) |
|
|
|
|
| $ | 2,279 |
|
| $ | 929 |
|
| $ | 1,371 |
|
| $ | (21 | ) |
|
|
|
|
| $ | 2,279 |
|
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
| 315 |
|
|
| 33 |
|
|
| 0 |
|
| $ | 0 |
|
|
| 348 |
|
|
| 315 |
|
|
| 33 |
|
|
| 0 |
|
| $ | 0 |
|
|
| 348 |
|
Government securities |
|
| 484 |
|
|
| 25 |
|
|
| — |
|
|
| 0 |
|
|
| 509 |
|
|
| 484 |
|
|
| 25 |
|
|
| — |
|
|
| 0 |
|
|
| 509 |
|
Common/collective trust funds |
|
| 58 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 58 |
|
|
| 58 |
|
|
| 0 |
|
|
| 0 |
|
|
| 0 |
|
|
| 58 |
|
Cash equivalents and other(3) |
|
| 3 |
|
|
| — |
|
|
| — |
|
|
| 0 |
|
|
| 3 |
| ||||||||||||||||||||
Cash equivalents and other(3) |
|
| 3 |
|
|
| — |
|
|
| — |
|
|
| 0 |
|
|
| 3 |
| ||||||||||||||||||||
Total |
| $ | 1,789 |
|
| $ | 1,429 |
|
| $ | (21 | ) | (4) | $ | 0 |
|
| $ | 3,197 |
|
| $ | 1,789 |
|
| $ | 1,429 |
|
| $ | (21 | ) | (4) | $ | 0 |
|
| $ | 3,197 |
|
(1) | Unrealized gains and losses on equity securities are included in other income and the nuclear decommissioning trust regulatory liability. |
(2) | Unrealized gains and losses on fixed income securities are included in AOCI and the nuclear decommissioning trust regulatory liability. Changes in allowance for credit losses are included in other income. |
(3) | Includes pending purchases of securities of |
(4) | The fair value of securities in an unrealized loss position was |
49
The portion of unrealized gains and losses that relates to equity securities held within Virginia Power’s nuclear decommissioning trusts is summarized below:
|
| Three Months Ended March 31, |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) recognized during the period |
| $ | 143 |
|
| $ | (423 | ) |
| $ | 170 |
|
| $ | 269 |
|
| $ | 313 |
|
| $ | (154 | ) |
Less: Net (gains) losses recognized during the period on securities sold during the period |
|
| (88 | ) |
|
| 6 |
|
|
| (85 | ) |
|
| (3 | ) |
|
| (173 | ) |
|
| 3 |
|
Unrealized gains (losses) recognized during the period on securities still held at period end(1) |
| $ | 55 |
|
| $ | (417 | ) | ||||||||||||||||
Unrealized gains (losses) recognized during the period on securities still held at period end(1) |
| $ | 85 |
|
| $ | 266 |
|
| $ | 140 |
|
| $ | (151 | ) |
(1) | Included in other income and the nuclear decommissioning trust regulatory liability. |
The fair value of Virginia Power’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at March 31,June 30, 2021 by contractual maturity is as follows:
|
| Amount |
|
| Amount |
| ||
(millions) |
|
|
|
|
|
|
|
|
Due in one year or less |
| $ | 111 |
|
| $ | 82 |
|
Due after one year through five years |
|
| 314 |
|
|
| 340 |
|
Due after five years through ten years |
|
| 365 |
|
|
| 401 |
|
Due after ten years |
|
| 312 |
|
|
| 386 |
|
Total |
| $ | 1,102 |
|
| $ | 1,209 |
|
Presented below is selected information regarding Virginia Power’s equity and fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds.
|
| Three Months Ended March 31, |
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| |||||||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales |
| $ | 789 |
|
| $ | 294 |
|
| $ | 460 |
|
| $ | 236 |
|
| $ | 1,249 |
|
| $ | 530 |
|
Realized gains(1) |
|
| 106 |
|
|
| 31 |
| ||||||||||||||||
Realized losses(1) |
|
| 23 |
|
|
| 31 |
| ||||||||||||||||
Realized gains(1) |
|
| 90 |
|
|
| 24 |
|
|
| 196 |
|
|
| 55 |
| ||||||||
Realized losses(1) |
|
| 3 |
|
|
| 17 |
|
|
| 26 |
|
|
| 48 |
|
(1) | Includes realized gains and losses recorded to the nuclear decommissioning trust regulatory liability. |
Equity Method Investments
Dominion Energy
Dominion Energy recorded equity earnings on its investments of $80$145 million and $4$5 million for the threesix months ended March 31,June 30, 2021 and 2020, respectively, in other incomeearnings from equity method investees in its Consolidated Statements of Income. In addition, Dominion Energy recorded equity earnings (losses)losses of $(8)$22 million and $35 million$2.3 billion for the threesix months ended March 31,June 30, 2021 and 2020, respectively, in discontinued operations related to its investment in Atlantic Coast Pipeline. Dominion Energy received distributions of $73$166 million and $5$46 million for the threesix months ended March 31,June 30, 2021 and 2020, respectively. Dominion Energy made contributions of $1.0 billion and $37 million for the six months ended June 30, 2021 and 2020 respectively. At March 31,June 30, 2021, Dominion Energy had $20 million of contributions payable to equity method affiliates included within other current liabilities in its Consolidated Balance Sheet. At June 30, 2021 and December 31, 2020, the net difference between the carrying amount of Dominion Energy’s investments and its share of underlying equity in net assets was $224$234 million and $213 million, respectively. At March 31,June 30, 2021, these differences are comprised of $27$27 million of equity method goodwill that is not being amortized, a $226$224 million basis difference from Dominion Energy’s investmentsinvestment in Cove Point, which is being amortized over the useful lives of the underlying assets, and a net $(29)$(17) million basis difference primarily attributable to an unfunded commitment made to Align RNG. At December 31, 2020, these differences are comprised of $27 million of equity method goodwill that is not being amortized, a $227 million basis difference from Dominion Energy’s investmentsinvestment in Cove Point, which is being amortized over the useful lives of the underlying assets, and a net $(41) million basis difference primarily attributable to an unfunded commitment made to Align RNG.
Cove Point
In November 2020, in conjunction with the GT&S Transaction, Dominion Energy sold 100% of its general partner interest and 25% of the total limited partner interest in Cove Point. Dominion Energy retained a 50% noncontrolling limited partnership interest in Cove
4550
Point 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, 2020.
Income before income taxes recorded by Cove Point was $136 million and $131 million for the three months ended March 31,June 30, 2021 and 2020, was $138respectively, and $274 million and $133$264 million for the six months ended June 30, 2021 and 2020, respectively. For the periods prior to closing of the GT&S Transaction, earnings attributable to Dominion Energy are presented in discontinued operations and subsequent to the closing, earnings attributable to Dominion Energy are presented within other income earnings from equity method investees in its Consolidated Statements of Income.
Dominion Energy recorded distributions from Cove Point of $73$77 million and $150 million for the three and six months ended March 31, 2021.June 30, 2021, respectively. NaN contributions were made to Cove Point for the three and six months ended March 31,June 30, 2021.
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 Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
At March 31,June 30, 2021 and December 31, 2020, Dominion Energy has recorded a liability of $97$115 million and $1.1 billion, respectively, 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 credit facility, through February 2021, and AROs.
In February 2021, Atlantic Coast Pipeline repaid the outstanding borrowed amounts and terminated its revolving credit facility. As of December 31, 2020, Atlantic Coast Pipeline had borrowed $1.8 billion against the revolving credit facility. Concurrently, Dominion Energy’s related guarantee agreement to support its portion of Atlantic Coast Pipeline’s borrowings was also terminated. Dominion Energy’s Consolidated Balance Sheets included a liability of $6 million associated with this guarantee agreement at December 31, 2020.
Dominion Energy recorded contributions of $965 million and $16$13 million during the three months ended March 31,June 30, 2020, and $965 million and $29 million during the six months ended June 30, 2021 and 2020, respectively, to Atlantic Coast Pipeline. Dominion Energy recorded 0 contributions during the three months ended June 30, 2021 to Atlantic Coast Pipeline.
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.
DETI provided services to Atlantic Coast Pipeline which totaled $20$17 million and $37 million for the three and six months ended March 31,June 30, 2020, respectively, included in discontinued operations in Dominion Energy’s Consolidated Statements of Income.
Wrangler
A description of Dominion Energy’s investment in Wrangler is included in Note 9 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. At March 31,June 30, 2021 and December 31, 2020, $72$60 million and $63 million of assets and $15$17 million and $15 million of liabilities, respectively, associated with the remaining nonregulated retail energy marketing operations expected to be contributed to Wrangler by December 2021 were classified as held for sale and were included in current assets held for sale and current liabilities held for sale on Dominion Energy’s Consolidated Balance Sheets, respectively.Sheets. The related disposal group is primarily comprised of customer receivables, goodwill, inventories and accounts payable.
Note 11. Property, Plant and Equipment
Acquisitions of Nonregulated Solar Projects
Other than the items discussed below, there have been no 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, 2020.
51
The following table presents acquisitions by Virginia Power of non-jurisdictional solar projects. Virginia Power has claimed or expects to claim federal investment tax credits on the projects.
Date Agreement Entered |
| Date Agreement Closed |
| Project Location |
| Project Name |
| Project Cost (millions)(1) |
|
| Date of Commercial Operations |
| MW Capacity |
| ||
February 2021 |
| Expected 2021 |
| Virginia |
| Bookers Mill |
| $ | 200 |
|
| Expected 2023 |
|
| 127 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Project Name |
| Date Agreement Entered |
| Date Agreement Closed |
| Project Location |
| Project Cost (millions)(1) |
|
| Date of Commercial Operations |
| MW Capacity |
| ||
Bookers Mill |
| February 2021 |
| June 2021 |
| Virginia |
| $ | 200 |
|
| Expected 2023 |
|
| 127 |
|
Belcher |
| June 2019 |
| August 2019 |
| Virginia |
|
| 164 |
|
| June 2021 |
|
| 88 |
|
(1) | Includes acquisition |
The following table presents acquisitions by Dominion Energy of solar projects. Dominion Energy has claimed or expects to claim federal investment tax credits on the projects.
Date Agreement Entered |
| Date Agreement Closed |
| Project Location |
| Project Name |
| Project Cost (millions)(1) |
|
| Date of Commercial Operations |
| MW Capacity |
| ||
May 2020 |
| October 2020 |
| South Carolina |
| Trask |
| $ | 22 |
|
| March 2021 |
|
| 12 |
|
August 2020 |
| Expected 2021 |
| Ohio |
| Hardin II |
|
| 300 |
|
| Expected 2023 |
|
| 150 |
|
Project Name |
| Date Agreement Entered |
| Date Agreement Closed |
| Project Location |
| Project Cost (millions)(1) |
|
| Date of Commercial Operations |
| MW Capacity |
| ||
Trask |
| May 2020 |
| October 2020 |
| South Carolina |
| $ | 22 |
|
| March 2021 |
|
| 12 |
|
Hardin II |
| August 2020 |
| Expected 2021 |
| Ohio |
|
| 305 |
|
| Expected 2022 |
|
| 150 |
|
(1) | Includes acquisition |
In addition to the facilities discussed above, Dominion Energy has also entered into various agreements to install solar facilities, primarily at schools in Virginia, with in-service dates throughout 2021.through 2022. As of MarchJune 30, 2021, Dominion Energy anticipates a total projected cost of approximately $59$65 million under these agreements with an associated aggregate generation capacity of 2931 MW. Dominion Energy has claimed or expects to claim federal investment tax credits on the projects.
Non-Wholly-Owned Nonregulated Solar Facilities
Sale to Terra Nova Renewable Partners
In August 2021, Dominion Energy entered into an agreement with Terra Nova Renewable Partnersto sell SBL Holdco, which holds Dominion Energy’s remaining 67% controlling interest in certain nonregulated solar projects for consideration of approximately $450 million, subject to customary closing adjustments, with the amount of cash reduced by the amount of SBL Holdco’s debt outstanding at closing. The transaction is expected to close in the fourth quarter of 2021, contingent on clearance or approval under the Hart-Scott-Rodino Act and by FERC as well as other customary closing and regulatory conditions.
Dominion Energy will reclassify the assets and liabilities to be disposed of as held for sale in the third quarter of 2021. Dominion Energy expects to record a gain of approximately $25 million ($27 million after-tax) upon closing.
52
Note 12. Regulatory Assets and Liabilities
Regulatory assets and liabilities include the following:
|
| March 31, 2021 |
|
| December 31, 2020 |
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred project costs and DSM programs for gas utilities(1) |
| $ | 17 |
|
| $ | 35 |
| ||||||||
Unrecovered gas costs(2) |
|
| 63 |
|
|
| 78 |
| ||||||||
Deferred rider costs for Virginia electric utility(3) |
|
| 123 |
|
|
| 98 |
| ||||||||
Deferred nuclear refueling outage costs(4) |
|
| 54 |
|
|
| 53 |
| ||||||||
NND Project costs(5) |
|
| 138 |
|
|
| 138 |
| ||||||||
PJM transmission rates(6) |
|
| 48 |
|
|
| 71 |
| ||||||||
Deferred cost of fuel used in electric generation(1) |
| $ | 165 |
|
| $ | — |
| ||||||||
Deferred project costs and DSM programs for gas utilities(2) |
|
| 52 |
|
|
| 35 |
| ||||||||
Unrecovered gas costs(3) |
|
| 86 |
|
|
| 78 |
| ||||||||
Deferred rider costs for Virginia electric utility(4) |
|
| 87 |
|
|
| 98 |
| ||||||||
Deferred nuclear refueling outage costs(5) |
|
| 86 |
|
|
| 53 |
| ||||||||
NND Project costs(6) |
|
| 138 |
|
|
| 138 |
| ||||||||
PJM transmission rates(7) |
|
| 24 |
|
|
| 71 |
| ||||||||
Other |
|
| 207 |
|
|
| 226 |
|
|
| 235 |
|
|
| 226 |
|
Regulatory assets-current |
|
| 650 |
|
|
| 699 |
|
|
| 873 |
|
|
| 699 |
|
Pension and other postretirement benefit costs(7) |
|
| 1,304 |
|
|
| 1,363 |
| ||||||||
Deferred rider costs for Virginia electric utility(3) |
|
| 347 |
|
|
| 311 |
| ||||||||
Deferred project costs for gas utilities(1) |
|
| 658 |
|
|
| 632 |
| ||||||||
Interest rate hedges(8) |
|
| 624 |
|
|
| 1,042 |
| ||||||||
AROs and related funding(9) |
|
| 340 |
|
|
| 331 |
| ||||||||
Cost of reacquired debt(10) |
|
| 242 |
|
|
| 245 |
| ||||||||
NND Project costs(5) |
|
| 2,330 |
|
|
| 2,364 |
| ||||||||
Ash pond and landfill closure costs(11) |
|
| 2,317 |
|
|
| 2,301 |
| ||||||||
Deferred cost of fuel used in electric generation(12) |
|
| 82 |
|
|
| — |
| ||||||||
Pension and other postretirement benefit costs(8) |
|
| 1,292 |
|
|
| 1,363 |
| ||||||||
Deferred rider costs for Virginia electric utility(4) |
|
| 409 |
|
|
| 311 |
| ||||||||
Deferred project costs for gas utilities(2) |
|
| 642 |
|
|
| 632 |
| ||||||||
Interest rate hedges(9) |
|
| 848 |
|
|
| 1,042 |
| ||||||||
AROs and related funding(10) |
|
| 336 |
|
|
| 331 |
| ||||||||
Cost of reacquired debt(11) |
|
| 12 |
|
|
| 245 |
| ||||||||
NND Project costs(6) |
|
| 2,295 |
|
|
| 2,364 |
| ||||||||
Ash pond and landfill closure costs(12) |
|
| 2,339 |
|
|
| 2,301 |
| ||||||||
Other |
|
| 549 |
|
|
| 544 |
|
|
| 590 |
|
|
| 544 |
|
Regulatory assets-noncurrent |
|
| 8,793 |
|
|
| 9,133 |
|
|
| 8,763 |
|
|
| 9,133 |
|
Total regulatory assets |
| $ | 9,443 |
|
| $ | 9,832 |
|
| $ | 9,636 |
|
| $ | 9,832 |
|
Regulatory liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred cost of fuel used in electric generation(12) |
| $ | 33 |
|
| $ | 58 |
| ||||||||
Provision for future cost of removal and AROs(13) |
|
| 183 |
|
|
| 183 |
| ||||||||
Reserve for refunds to electric utility customers(14) |
|
| 127 |
|
|
| 128 |
| ||||||||
Reserve for future credits to Virginia electric customers(15) |
|
| — |
|
|
| 120 |
| ||||||||
Cost-of-service impact of 2017 Tax Reform Act(16) |
|
| — |
|
|
| 12 |
| ||||||||
Income taxes refundable through future rates(17) |
|
| 119 |
|
|
| 124 |
| ||||||||
Monetization of guarantee settlement(18) |
|
| 67 |
|
|
| 67 |
| ||||||||
Deferred cost of fuel used in electric generation(1) |
| $ | 39 |
|
| $ | 58 |
| ||||||||
Provision for future cost of removal and AROs(13) |
|
| 183 |
|
|
| 183 |
| ||||||||
Reserve for refunds to electric utility customers(14) |
|
| 123 |
|
|
| 128 |
| ||||||||
Reserve for future credits to Virginia electric customers(15) |
|
| — |
|
|
| 120 |
| ||||||||
Cost-of-service impact of 2017 Tax Reform Act(16) |
|
| — |
|
|
| 12 |
| ||||||||
Income taxes refundable through future rates(17) |
|
| 135 |
|
|
| 124 |
| ||||||||
Monetization of guarantee settlement(18) |
|
| 67 |
|
|
| 67 |
| ||||||||
Other |
|
| 112 |
|
|
| 117 |
|
|
| 84 |
|
|
| 117 |
|
Regulatory liabilities-current |
|
| 641 |
|
|
| 809 |
|
|
| 631 |
|
|
| 809 |
|
Income taxes refundable through future rates(17) |
|
| 4,365 |
|
|
| 4,376 |
| ||||||||
Provision for future cost of removal and AROs(13) |
|
| 2,180 |
|
|
| 2,150 |
| ||||||||
Nuclear decommissioning trust(19) |
|
| 1,805 |
|
|
| 1,719 |
| ||||||||
Monetization of guarantee settlement(18) |
|
| 886 |
|
|
| 903 |
| ||||||||
Reserve for refunds to electric utility customers(14) |
|
| 505 |
|
|
| 540 |
| ||||||||
Overrecovered other postretirement benefit costs(20) |
|
| 84 |
|
|
| 111 |
| ||||||||
Income taxes refundable through future rates(17) |
|
| 4,299 |
|
|
| 4,376 |
| ||||||||
Provision for future cost of removal and AROs(13) |
|
| 2,223 |
|
|
| 2,150 |
| ||||||||
Nuclear decommissioning trust(19) |
|
| 1,954 |
|
|
| 1,719 |
| ||||||||
Monetization of guarantee settlement(18) |
|
| 869 |
|
|
| 903 |
| ||||||||
Reserve for refunds to electric utility customers(14) |
|
| 475 |
|
|
| 540 |
| ||||||||
Overrecovered other postretirement benefit costs(20) |
|
| 89 |
|
|
| 111 |
| ||||||||
Other |
|
| 377 |
|
|
| 388 |
|
|
| 383 |
|
|
| 388 |
|
Regulatory liabilities-noncurrent |
|
| 10,202 |
|
|
| 10,187 |
|
|
| 10,292 |
|
|
| 10,187 |
|
Total regulatory liabilities |
| $ | 10,843 |
|
| $ | 10,996 |
|
| $ | 10,923 |
|
| $ | 10,996 |
|
(1) | Reflects deferred fuel expenses for the Virginia, North Carolina and South Carolina jurisdictions of Dominion Energy’s electric generation operations. |
(2) | Primarily reflects amounts expected to be collected from or owed to gas customers in Dominion Energy’s service territories associated with current and prospective rider projects, including CEP, PIR and pipeline integrity management. See Note 13 for more information. |
| Reflects unrecovered |
|
48
Reflects deferrals under Virginia Power’s electric transmission FERC formula rate and the deferral of costs associated with certain current and prospective rider projects. See Note 13 |
| Legislation enacted in Virginia in April 2014 requires Virginia Power to defer operation and maintenance costs incurred in connection with the refueling of any nuclear-powered generating plant. These deferred costs will be amortized over the refueling cycle, not to exceed 18 months. |
| Reflects expenditures by DESC associated with the NND Project, which pursuant to the SCANA Merger Approval Order, will be recovered from DESC electric service customers over a 20-year period ending in 2039. See Note 3 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 for more information. |
| Reflects current portion of amounts to be recovered through retail rates in Virginia for payments Virginia Power expects to make to PJM through 2026 under the terms of a FERC settlement agreement in May 2018 resolving a PJM cost allocation matter. |
| Represents unrecognized pension and other postretirement employee benefit costs expected to be recovered or refunded through future rates generally over the expected remaining service period of plan participants by certain of Dominion Energy's rate-regulated subsidiaries. |
| Reflects interest rate hedges recoverable from or refundable to customers. Certain of these instruments are settled and any related payments are being amortized into interest expense over the life of the related debt, which has a weighted-average useful life of approximately 27 years as of |
| Represents deferred depreciation and accretion expense related to legal obligations associated with the future retirement of generation, transmission and distribution properties. The AROs primarily relate to DESC’s electric generating facilities, including Summer, and are expected to be recovered over the related property lives and periods of decommissioning which may range up to approximately 105 years. |
|
|
(12) |
54
(1) Reflects deferred fuel expenses for the Virginia and North Carolina jurisdictions of Virginia Power’s generation operations.
At
55 Note 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 that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the regulatory process such that the Companies are able to estimate a range of possible loss. For regulatory matters that the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any estimated range is based on currently available information, involves elements of judgment and significant uncertainties and may not represent the Companies’ maximum possible loss exposure. The circumstances of such regulatory matters will change from time to time and actual results may vary significantly from the current estimate. For current matters not specifically reported below, management does not anticipate that the outcome from such matters would have a material effect on the Companies’ financial position, liquidity or results of operations. 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, 2020.
Virginia Regulation 2021 Triennial Review
In March 2021, Virginia Power filed its base rate case and accompanying schedules in support of the 2021 Triennial Review. In its filing, 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. Virginia Power’s earnings test analysis, as filed, demonstrates it earned a combined ROE of 10.85% on its generation and distribution services for the test period, before accounting for forgiven customer balances. Pursuant to Virginia legislation, forgiven customer balances are excluded from the cost of service in determining test period revenues as part of the 2021 Triennial Review. To the extent that the Virginia Commission determines total earnings for the test period to be above Virginia Power’s authorized earnings band, the forgiven balance amounts are offset against the available revenues in the determination of any customer bill credits, or utilization of a CCRO. Test period earnings may be further reduced by Virginia Commission approved investment amounts in qualifying solar or wind generation facilities or electric distribution grid transformation projects that Virginia Power elects to include as a CCRO under the GTSA. In its filing, Virginia Power has elected to utilize $26 million of the Coastal Virginia Offshore Wind Pilot project investment as a CCRO to offset available revenues. 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 9.2%. Should the Virginia Commission determine that there are additional available revenues for earnings sharing, then Virginia Power has contingently elected to offset those revenues with additional Virginia Commission approved qualifying CCRO investments. The Virginia Commission will also authorize an ROE for Virginia Power that will be applied to Virginia Power’s riders prospectively and that will also be utilized to measure base rate earnings as of January 1, 2021. Virginia Power is requesting authorization of an ROE of 10.8% based on Virginia Power’s current cost of equity. Pursuant to the Regulation Act, Virginia Power’s authorized ROE shall not be set lower than the average of either (i) the returns reported for the three previous years by not less than a majority of comparable utilities in the Southeastern U.S., with certain limitations as described in the Regulation Act, or (ii) the authorized returns that are set by the applicable regulatory commissions for the same select peer group. In May 2021, Virginia Power filed supplemental testimony to reflect updated test period earnings, including an earned ROE of 10.42%, before accounting for forgiven customer balances, and that no amount of eligible CCRO is necessary to be elected to be utilized. This matter is pending. In the third and fourth quarters of 2020, Virginia Power recorded a net charge of $130 million related to the use of a CCRO in accordance with the GTSA. In the first quarter of 2021, Virginia Power recorded a benefit of $130 million ($97 million after-tax) in impairment of assets and other charges in its Consolidated Statements of Income to adjust its reserve related to the use of a CCRO in accordance with the GTSA. These amounts reflect the impact related to jurisdictional customers as a result of the 2021 Triennial Review as well as the impact on certain non-jurisdictional customers which follow Virginia Power’s jurisdictional customer rate methodology.
Utility Disconnection Moratorium Legislation In November 2020, legislation was enacted in Virginia relating to the moratorium on utility disconnections during the COVID-19 pandemic and resulted in Virginia Power forgiving Virginia jurisdictional retail electric customer balances that were more than 30 days past due as of September 30, 2020. As a result, Virginia Power recorded a charge of $127 million in the fourth quarter of 2020. 56 In connection with the Virginia 2021 budget process, in the first quarter of 2021 Virginia Power recorded a charge of $76 million ($56
million after-tax) in impairment of assets and other charges in its Consolidated Statements of Income for Virginia jurisdictional retail electric customer balances that were more than 30 days past due as of December 31, 2020 that Virginia Power is required to forgive. These forgiven customer balances are factored into Virginia Power’s 2021 Triennial Review as discussed above. Grid Transformation and Security Act of 2018 In June 2021, Virginia Power filed a petition with the Virginia Commission for approval of a plan for electric distribution grid transformation projects as authorized by the GTSA. The plan includes 14 projects covering 6 components: (i) smart meters; (ii) customer information platform; (iii) grid improvement projects; (iv) physical and cyber security; (v) telecommunications infrastructure and (vi) customer education (Phase II). For Phase II, the total proposed capital investment during 2022 – 2023 is $669 million and the proposed operations and maintenance investment is $110 million. This matter is pending. Virginia Fuel Expenses In May 2021, Virginia Power filed its annual fuel factor with the Virginia Commission to recover an estimated $1.4 billion in Virginia jurisdictional projected fuel expenses for the rate year beginning July 1, 2021 and $72 million of estimated net under-recovered balances through June 30, 2021. In June 2021, the Virginia Commission approved the annual fuel factor. Solar Facility Projects In May 2020 and July 2020, Virginia Power entered into and closed on separate agreements to acquire Grassfield Solar, Norge Solar and Sycamore Solar. The projects are expected to cost approximately $170 million in aggregate once constructed, including the initial acquisition cost. The facilities are expected to generate 82 MW combined and be placed into service in Riders Below is a discussion of significant riders associated with various Virginia Power projects:
In June 2021, Virginia Power proposed a $96 million total revenue requirement consisting of $61 million for previously approved phases and $35 million for phase six costs for Rider U for the rate year beginning April 1, 2022. This total revenue requirement represents a $16 million increase over the previous year. This matter is pending.
57
Additional significant riders associated with various Virginia Power projects are as follows:
Electric Transmission Projects
North Carolina Regulation PSNC Base Rate Case In April 2021, PSNC filed its general rate case application, direct testimony, exhibits, and schedules with the North Carolina Commission. PSNC proposed a non-fuel, base rate increase of $53 million to be effective November 1, 2021. After considering the benefits of the 2017 Tax Reform Act, the net revenue increase to customers would be approximately $42 million. The base rate increase was proposed to recover the significant investment in infrastructure to serve a growing customer base, improve safety and reliability of the transmission and distribution system and enhance energy efficiency and sustainability. The proposed rates would provide for an ROE of 10.25% compared to the currently authorized ROE of 9.7%. This matter is pending.
South Carolina In August 2020, DESC filed its retail electric base rate case and schedules with the South Carolina Commission. DESC proposed a non-fuel, base rate increase of $178 million, or 7.75%, based on an adjusted test year data, effective on or after the first billing cycle of 58 March 2021. The base rate increase was proposed to recover the significant investment in assets and operating resources required to serve an expanding customer base, maintain the safety, reliability and efficiency of DESC’s system and meet increasingly stringent reliability, security and environmental requirements for the benefit of South Carolina customers. DESC presented an earned ROE of 5.90% based upon a fully-adjusted test period. The proposed rates would provide for an earned ROE equal to the current authorized earned ROE of 10.25% established in the previous rate case in 2012. In January 2021, the South Carolina Commission approved a proposal made by the South Carolina Office of Regulatory Staff, and agreed to by DESC and other intervenors, to stay the base rate case due to the current economic conditions and to allow the parties more time to negotiate a settlement with a final order to be issued no later than August 2021. In July 2021, DESC, the South Carolina Office of Regulatory Staff and other parties of record filed a comprehensive settlement agreement with the South Carolina Commission for approval. The comprehensive settlement agreement provides for a non-fuel, base rate increase of $62 million (resulting in a net increase of $36 million after considering an accelerated amortization of certain excess deferred income taxes) commencing with bills issued on September 1, 2021 and an authorized earned ROE of 9.50%. Additionally, DESC has agreed to commit up to $15 million to forgive retail electric customer balances that were more than 60 days past due as of May 31, 2021, and provide $15 million for energy efficiency upgrades and critical health and safety repairs to customer homes. Pursuant to the comprehensive settlement agreement, DESC would not filea retail electric base rate case prior to July 1, 2023, such that new rates would not be effective prior to January 1, 2024, absent unforeseen extraordinary economic or financial conditions that may include changes in corporate tax rates. In July 2021, the South Carolina Commission voted to approve the comprehensive settlement agreement with a final order expected to be issued in August 2021. In connection with this matter, Dominion Energy recorded charges for both the three and six months ended June 30, 2021, of $249 million ($187 million after-tax) reflected within impairment of assets and other charges, including $237 million of regulatory assets associated with DESC’s purchases of its first mortgage bonds during 2019 that are no longer probable of recovery under the settlement agreement, and $18 million ($14 million after-tax) reflected within other income in its Consolidated Statements of Income. DSM Programs DESC has approval for a DSM rider through which it recovers expenditures related to its DSM programs. In January 2021, DESC filed an application with the South Carolina Commission seeking approval to recover $48 million of costs and net lost revenues associated with these programs, along with an incentive to invest in such programs. In April 2021, the South Carolina Commission approved the filing. In connection with the approval of the comprehensive settlement agreement in the South Carolina base rate case discussed above, the net lost revenue component of the DSM rider will be adjusted resulting in a recovery of $43 million commencing with bills issued on September 1, 2021. 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 2021, DESC filed a proposal with the South Carolina Commission to increase the total fuel cost component of retail electric rates. DESC’s proposed adjustment would increase annual base fuel component recoveries by $36 million and is designed to recover DESC’s current base fuel costs, net of the existing over-collected balance, over the 12-month period beginning with the first billing cycle of May 2021. In addition, DESC proposed a decrease to its variable environmental component and an increase to its distributed energy resource component. In April 2021, the South Carolina Commission approved the filing. Natural Gas Rates In June 2021, DESC filed with the South Carolina Commission its monitoring report for the 12-month period ended March 31, 2021 with a total revenue requirement of $426 million. This represents a $9 million overall annual increase to its natural gas rates under the terms of the Natural Gas Rate Stabilization Act effective with the first billing cycle of November 2021. This matter is pending. Ohio Regulation PIR Program In 2008, East Ohio began PIR, aimed at replacing approximately 25% of its pipeline system. In CEP Program In 2011, East Ohio began CEP which enables East Ohio to defer depreciation expense, property tax expense and carrying costs associated with CEP investments. In April 2021, East Ohio filed an application requesting approval to adjust the CEP cost recovery rates for 2019 and 2020 costs. The filing reflects gross plant investment for 2019 of $137 million, gross plant investment for 2020 of $99 million, cumulative gross plant investment of $957 million and a revenue requirement of $119 million. This matter is pending. UEX Rider 59 East Ohio has approval for a UEX Rider through which it recovers the bad debt expense of most customers not participating in the PIPP Plus Program. The UEX Rider is adjusted annually to achieve dollar for dollar recovery of East Ohio’s actual write-offs of uncollectible amounts. In May 2021, East Ohio filed an application with the Ohio Commission requesting approval of its UEX Rider to reflect an increased annual revenue requirement of $20 million to provide for an under-recovered accumulated bad debt expense of $7 million as of March 31, 2021, and recovery of net bad debt expense projected to total $13 million for the twelve-month period ending March 2022. In July 2021, the Ohio Commission approved the filing. West Virginia Regulation West Virginia Base Rate Case In September 2020, Hope filed its base rate case and schedules with the West Virginia Commission. Hope proposed a non-fuel, base rate increase of $28 million. The base rate increase was proposed to recover the significant investment in distribution infrastructure and costs associated with the acquisition of over 2,000 miles of gathering assets, both for the benefit of West Virginia customers. The proposed rates would provide for an ROE of 10.25% compared to the authorized ROE of 9.45%. In July 2021, the West Virginia Commission approved a non-fuel, base rate increase of $13 million for rates effective July 2021 with an ROE of 9.54%. PREP In May 2021, Hope filed a PREP application with the West Virginia Commission requesting approval to recover PREP costs related to $54 million and $56 million of projected capital investment for 2021 and 2022, respectively. The application also includes a true-up of PREP costs related to the 2020 actual capital investment of $34 million and sets forth $9 million of annual PREP costs to be recovered in proposed rates effective November 1, 2021. This matter is pending. Utah Regulation Purchased Gas In
Note 14. Leases Other than the items discussed below, there have been no significant changes regarding the Companies’ leases as described in Note 15 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020.
Dominion Energy’s Consolidated Statements of Income include
Corporate Office Leasing Arrangement
In December 2019, Dominion Energy signed an agreement with a lessor, as amended in May 2020, to construct and lease a new corporate office property in Richmond, Virginia. The lessor provided equity and had obtained financing commitments from debt investors, totaling $465 million, to fund the estimated project costs. In March 2021, Dominion Energy notified the lessor of its intention to terminate the leasing arrangement effective April 2021. As a result, Dominion Energy recorded a charge of $71 million ($53 million after-tax) in the first quarter of 2021, included in impairments of assets and other charges in its Consolidated Statements of Income, primarily for amounts required to be repaid to the lessor.
Note 15. Variable Interest Entities There have been no significant changes regarding the entities the Companies consider VIEs as described in Note 16 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020.
Dominion Energy At
Virginia Power 60 Virginia Power purchased shared services from DES, an affiliated VIE, of
Note 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. Dominion Energy In June 2021, Dominion Energy amended its $6.0 billion joint revolving credit facility to provide 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. In addition, the amended facility incorporates certain administrative changes with respect to the anticipated transition from LIBOR to an alternative benchmark rate. The key financial covenants are unchanged from the previous facility. At
DESC and Questar Gas’ short-term financings are supported through access as co-borrowers to the joint revolving credit facility discussed above with the Companies. At In January 2021, DESC and GENCO applied to FERC for a two-year short-term borrowing authorization. In March 2021, FERC granted DESC authority through March 2023 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 2021, FERC granted GENCO authority through March 2023 to issue short-term indebtedness not to exceed $200 million outstanding with maturity dates of one year or less. In addition to the credit In addition to the credit facilities mentioned above, SBL Holdco has $30 million of credit facilities which had an original stated maturity date of December 2017 with automatic one-year renewals through the maturity of the SBL Holdco term loan agreement in 2023. Dominion Solar Projects III, Inc. has $25 million of credit facilities which had an original stated maturity date of May 2018 with automatic one-year renewals through the maturity of the Dominion Solar Projects III, Inc. term loan agreement in 2024. At both
In March 2020, Dominion Energy entered into a $900 million 364-Day Revolving Credit Agreement that bore interest at a variable rate. At December 31, 2020, $225 million was outstanding under the agreement. In March 2021, the agreement reached maturity and Dominion Energy repaid the outstanding borrowed amount in full.
61 In July 2021, Dominion Energy entered into an approximately $1.3 billion term loan credit agreement following the termination of the Q-Pipe Transaction as discussed in Note 3. 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 31, 2020. At
Virginia Power Virginia Power’s short-term financing is supported through its access as co-borrower to At
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 2021, PSNC issued, through private placement, $150 million of 3.10% senior notes that mature in 2051. In April 2021, Dominion Energy issued $600 million of 1.45% senior notes and $500 million of 3.30% senior notes that mature in 2026 and 2041, respectively. In June 2021, Questar Gas entered into an agreement with certain investors to issue through private placement in August 2021, $125 million 2.21% 10-year senior notes and $125 million 3.15% 30-year senior notes. In June 2021, Dominion Energy entered into a $900 million Sustainability Revolving Credit Agreement. This supplemental credit facility, which matures in June 2024 and bears interest at a variable rate, offers a reduced interest rate margin with respect to borrowed amounts allocated to certain environmental sustainability or social investment initiatives. Proceeds of the supplemental credit facility also may be used for general corporate purposes, but such proceeds are not eligible for a reduced interest rate margin. At June 30, 2021, $250 million was outstanding under the supplemental credit facility. The proceeds from these borrowings were used to support environmental sustainability and social investment initiatives. The maximum allowed total debt to total capital ratio under this supplemental credit facility is consistent with such allowed ratio under Dominion Energy’s joint revolving credit facility. In July 2021, DESC redeemed the remaining principal outstanding of $30 million of its 3.22% first mortgage bonds, plus accrued interest. The bonds would have otherwise matured in October 2021. In July 2021, Dominion Energy redeemed the remaining principal outstanding of $400 million of its 2.0% senior notes, plus accrued interest. The notes would have otherwise matured in August 2021. Preferred Stock
62 Dominion Energy is authorized to issue up to 20 million shares of preferred stock, which may be designated into separate classes. At both
Dominion Energy recorded dividends of $7 million ($4.375 per share)
Issuance of Common Stock Dominion Energy recorded, net of fees and commissions, In July 2021, Dominion Energy issued 1.4 million shares of its common stock, valued at $104 million, to satisfy DESC’s obligation under a settlement agreement for the FILOT litigation discussed in Note 17. In August 2021, Dominion Energy issued 0.6 million shares of its common stock, valued at $45 million, to satisfy DESC’s obligation for the initial payment under a settlement agreement with the SCDOR discussed in Note 17. At-the-Market Program
In August 2020, Dominion Energy entered into 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,
2020. As of Repurchase of Common Stock In November 2020, the Board of Directors authorized the repurchase of up to $1.0 billion of Dominion Energy’s common stock as discussed in Note 20 to the Consolidated Financial Statements in the Companies’ Annual Report Form 10-K for the year ended December 31, 2020. Dominion Energy did 0t repurchase any shares of common stock during the
Note 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 that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the litigation or investigative processes such that the Companies are able to estimate a range of possible loss. For legal proceedings and governmental examinations that the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any accrued liability is recorded on a gross basis with a receivable also recorded for any probable insurance recoveries. Estimated ranges of loss are inclusive of legal fees and net of any anticipated insurance recoveries. Any estimated range is based on currently available information and involves elements of judgment and significant uncertainties. Any estimated range of possible loss may not represent the Companies’ maximum possible loss exposure. The circumstances of such legal proceedings and governmental examinations will change from time to time and actual results may vary significantly from the current estimate. For current proceedings not specifically reported below, management does not anticipate that the liabilities, if any, arising from such proceedings would have a material effect on the Companies’ financial position, liquidity or results of operations.
63 Environmental Matters The Companies are subject to costs resulting from a number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of compliance, remediation, containment and monitoring obligations.
Air The CAA, as amended, is a comprehensive program utilizing a broad range of regulatory tools to protect and preserve the nation's air quality. At a minimum, states are required to establish regulatory programs to meet applicable requirements of the CAA. However, states may choose to develop regulatory programs that are more restrictive. Many of the Companies’ facilities are subject to the CAA’s permitting and other requirements. Ozone Standards The EPA published final non-attainment designations for the October 2015 ozone standard in June ACE Rule In July 2019, the EPA published the final rule informally referred to as the ACE Rule, as a replacement for the Clean Power Plan. The ACE Rule regulated GHG emissions from existing coal-fired power plants pursuant to Section 111(d) of the CAA and required states to develop plans by July 2022 establishing unit-specific performance standards for existing coal-fired power plants. In January 2021, the U.S. Court of Appeals for the D.C. Circuit vacated the ACE Rule and remanded it to the EPA. This decision would take effect upon issuance of the court’s mandate. In March 2021, the court issued a partial mandate vacating and remanding all parts of the ACE Rule except for the portion of the ACE Rule that repealed the Clean Power Plan. While the EPA has stated its intention to replace the ACE Rule, it is unknown at this time if or how the EPA will issue a replacement for the ACE Rule and how that replacement will affect the Companies’ operations, financial condition and/or 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 exceed a significant emissions rate of 75,000 tons per year of CO2 equivalent emissions. Until the EPA ultimately takes final action on this rulemaking, the Companies cannot predict the impact to their results of operations, financial condition and/or cash flows. In December 2018, the EPA proposed revised Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources. The proposed rule would amend the previous determination that the best system of emission reduction for newly constructed coal-fired steam generating units is no longer partial carbon capture and storage. Instead, the proposed revised best system of emission reduction for this source category is the most efficient demonstrated steam cycle (e.g., supercritical steam conditions for large units and subcritical steam conditions for small units) in combination with best operating practices. In January 2021, the EPA published a final rule affirming that fossil fuel-fired electric generating units meet the requirement that a source category “significantly contribute” to endangering air pollution for the purposes of regulating GHG emissions from new, modified and reconstructed stationary sources. The January 2021 rule also established a threshold for the “significant contribution” threshold that would have meant that no other source category, such as oil and gas facilities, petroleum refineries, and boilers, would meet that requirement at this time. In April 2021, the U.S. Court of Appeals for the D.C. Circuit granted an unopposed motion by the EPA to vacate and remand the January 2021 rule. The proposed revision to the performance standards for coal-fired steam generating units remains pending. Until the EPA ultimately takes final action on this rulemaking, the Companies cannot predict the impact to their results of operations, financial condition and/or cash flows. 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. 64 Regulation 316(b) In October 2014, the final regulations under Section 316(b) of the CWA that govern existing facilities and new units at existing facilities that employ a cooling water intake structure and that have flow levels exceeding a minimum threshold became effective. 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 5 mandatory facility-specific factors, including a social cost-benefit test, and 6 optional facility-specific factors. The rule governs all electric generating stations with water withdrawals above two MGD, with a heightened entrainment analysis for those facilities over 125 MGD. Dominion Energy and Virginia Power currently have 15 and 9 facilities, respectively, that are subject to the final regulations. Dominion Energy is also working with the EPA and state regulatory agencies to assess the applicability of Section 316(b) to eight hydroelectric facilities, including three Virginia Power facilities. The Companies anticipate that they may have to install impingement control technologies at certain of these stations that have once-through cooling systems. The Companies are currently evaluating the need or potential for entrainment controls under the final rule as these decisions will be made on a case-by-case basis after a thorough review of detailed biological, technology, cost and benefit studies. DESC is conducting studies and implementing plans as required by the rule to determine appropriate intake structure modifications at certain facilities to ensure compliance with this rule. While the impacts of this rule could be material to the Companies’ results of operations, financial condition and/or cash flows, the existing regulatory frameworks in South Carolina and Virginia provide rate recovery mechanisms that could substantially mitigate any such impacts for the regulated electric utilities.
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 established updated standards for wastewater discharges that apply primarily at coal and oil steam generating stations. Affected facilities are required to convert from wet to dry or closed cycle coal ash management, improve existing wastewater treatment systems and/or install new wastewater treatment technologies in order to meet the new discharge limits. In April 2017, the EPA granted 2 separate petitions for reconsideration of the Effluent Limitations Guidelines final rule and stayed future compliance dates in the rule. Also in April 2017, the U.S. Court of Appeals for the Fifth Circuit granted the EPA’s request for a stay of the pending consolidated litigation challenging the rule while the EPA addresses the petitions for reconsideration. In September 2017, the EPA signed a rule to postpone the earliest compliance dates for certain waste streams regulations in the Effluent Limitations Guidelines final rule from November 2018 to November 2020; however, the latest date for compliance for these regulations was December 2023. In October 2020, the EPA released the final rule that extends the latest dates for compliance. Individual facilities’
compliance dates will vary based on circumstances and the determination by state regulators and may range from 2021 to 2028. While the impacts of this rule could be material to the Companies’ results of operations, financial condition and/or cash flows, the existing regulatory frameworks in South Carolina and Virginia provide rate recovery mechanisms that could substantially mitigate any such impacts for the regulated electric utilities.
Waste Management and Remediation The operations of the Companies are subject to a variety of state and federal laws and regulations governing the management and disposal of solid and hazardous waste, and release of hazardous substances associated with current and/or historical operations. The CERCLA, as amended, and similar state laws, may impose joint, several and strict liability for cleanup on potentially responsible parties who owned, operated or arranged for disposal at facilities affected by a release of hazardous substances. In addition, many states have created programs to incentivize voluntary remediation of sites where historical releases of hazardous substances are identified and property owners or responsible parties decide to initiate cleanups.
From time to time, the Companies may be identified as a potentially responsible party in connection with the alleged release of hazardous substances or wastes at a site. Under applicable federal and state laws, the Companies could be responsible for costs associated with the investigation or remediation of impacted sites, or subject to contribution claims by other responsible parties for their costs incurred at such sites. The Companies also may identify, evaluate and remediate other potentially impacted sites under voluntary state programs. Remediation costs may be subject to reimbursement under the Companies’ insurance policies, rate recovery mechanisms, or both. Except as described below, the Companies do not believe these matters will have a material effect on results of operations, financial condition and/or cash flows.
Dominion Energy has determined that it is associated with former manufactured gas plant sites, including certain sites associated with Virginia Power. At 12 sites associated with Dominion Energy, including certain sites acquired in the SCANA Combination, remediation work has been substantially completed under federal or state oversight. Where required, the sites are following state-approved groundwater monitoring programs. Dominion Energy has proposed 65 Power had $25 million and $26 million, respectively, of reserves recorded. In addition, for 1 site associated with Dominion Energy, an updated work plan submitted to SCDHEC in September 2018, would increase costs by approximately $11 million if approved by federal and state agencies. In September 2020, this plan was submitted to the Army Corps of Engineers. Dominion Energy is associated with 12 additional sites, including 2 associated with Virginia Power, which are not under investigation by any state or federal environmental agency nor the subject of any current or proposed plans to perform remediation activities. Due to the uncertainty surrounding such sites, the Companies are unable to make an estimate of the potential financial statement impacts. Other Legal Matters The Companies are defendants in a number of lawsuits and claims involving unrelated incidents of property damage and personal injury. Due to the uncertainty surrounding these matters, the Companies are unable to make an estimate of the potential financial statement impacts; however, they could have a material impact on results of operations, financial condition and/or cash flows.
SCANA Legal Proceedings The following describes certain legal proceedings involving Dominion Energy, SCANA or DESC relating to events occurring before closing of the SCANA Combination. No reference to, or disclosure of, any proceeding, item or matter described below shall be construed as an admission or indication that such proceeding, item or matter is material. For certain of these matters, and unless otherwise noted therein, Dominion Energy is unable to estimate a reasonable range of possible loss and the related financial statement impacts, but for any such matter there could be a material impact to its results of operations, financial condition and/or cash flows. For the matters for which Dominion Energy is able to reasonably estimate a probable loss, Dominion Energy’s Consolidated Balance Sheets at Ratepayer Class Actions In May 2018, a consolidated complaint against DESC, SCANA and the State of South Carolina was filed in the State Court of Common Pleas in Hampton County, South Carolina (the DESC Ratepayer Case). The plaintiffs alleged, among other things, that DESC was negligent and unjustly enriched, breached alleged fiduciary and contractual duties and committed fraud and
misrepresentation in failing to properly manage the NND Project, and that DESC committed unfair trade practices and violated state anti-trust laws. In December 2018, the State Court of Common Pleas in Hampton County entered an order granting preliminary approval of a class action settlement. The court entered an order granting final approval of the settlement in June 2019, which became effective in July 2019. The settlement agreement, contingent upon the closing of the SCANA Combination, provided that SCANA and DESC establish an escrow account and proceeds from the escrow account would be distributed to the plaintiffs, after payment of certain taxes, attorneys' fees and other expenses and administrative costs. The escrow account would include (1) up to $2.0 billion, net of a credit of up to $2.0 billion in future electric bill relief, which would inure to the benefit of the escrow account in favor of class members over a period of time established by the South Carolina Commission in its order related to matters before the South Carolina Commission related to the NND Project, (2) a cash payment of $115 million and (3) the transfer of certain DESC-owned real estate or sales proceeds from the sale of such properties, which counsel for the plaintiffs estimated to have an aggregate value between $60 million and $85 million. At the closing of the SCANA Combination, SCANA and DESC funded the cash payment portion of the escrow account. In July 2019, DESC transferred $117 million representing the cash payment, plus accrued interest, to the plaintiffs. Through August 2020, property, plant and equipment with a net recorded value of $27 million had been transferred to the plaintiffs in coordination with the court-appointed real estate trustee to satisfy the settlement agreement. In September 2020, the court entered an order approving a final resolution of the transfer of real estate or sales proceeds with a cash contribution of $38.5 million by DESC and the conveyance of property, plant and equipment with a net recorded value of $3 million, which was completed by DESC in October 2020. In September 2017, a purported class action was filed by Santee Cooper ratepayers against Santee Cooper, DESC, Palmetto Electric Cooperative, Inc. and Central Electric Power Cooperative, Inc. in the State Court of Common Pleas in Hampton County, South Carolina (the Santee Cooper Ratepayer Case). The allegations were substantially similar to those in the DESC Ratepayer Case. In March 2020, the parties executed a settlement agreement relating to this matter as well as the Luquire Case and the Glibowski Case described below. The settlement agreement provided that Dominion Energy and Santee Cooper establish a fund for the benefit of class members in the amount of $520 million, of which Dominion Energy’s portion was $320 million of shares of Dominion Energy common stock. In July 2020, the court issued a final approval of the settlement agreement. In September 2020, Dominion Energy issued $322 million of shares of Dominion Energy common stock to satisfy its obligation under the settlement agreement, including interest charges. 66 In July 2019, a similar purported class action was filed by certain Santee Cooper ratepayers against DESC, SCANA, Dominion Energy and former directors and officers of SCANA in the State Court of Common Pleas in Orangeburg, South Carolina (the Luquire Case). In August 2019, DESC, SCANA and Dominion Energy were voluntarily dismissed from the case. The claims were similar to the Santee Cooper Ratepayer Case. In March 2020, the parties executed a settlement agreement as described above relating to this matter as well as the Santee Cooper Ratepayer Case and the Glibowski Case. This case was dismissed as part of the Santee Cooper Ratepayer Case settlement described above. RICO Class Action In January 2018, a purported class action was filed, and subsequently amended, against SCANA, DESC and certain former executive officers in the U.S. District Court for the District of South Carolina (the Glibowski Case). The plaintiff alleged, among other things, that SCANA, DESC and the individual defendants participated in an unlawful racketeering enterprise in violation of RICO and conspired to violate RICO by fraudulently inflating utility bills to generate unlawful proceeds. In March 2020, the parties executed a settlement agreement as described above relating to this matter as well as the Santee Cooper Ratepayer Case and the Luquire Case. This case was dismissed as part of the Santee Cooper Ratepayer Case settlement described above. SCANA Shareholder Litigation In September 2017, a purported class action was filed against SCANA and certain former executive officers and directors in the U.S. District Court for the District of South Carolina. Subsequent additional purported class actions were separately filed against all or nearly all of these defendants (collectively the SCANA Securities Class Action). In January 2018, the U.S. District Court for the District of South Carolina consolidated these suits, and the plaintiffs filed a consolidated amended complaint in March 2018. The plaintiffs alleged, among other things, that the defendants violated §10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, and that the individually named defendants are liable under §20(a) of the same act. In December 2019, the parties executed a settlement agreement pursuant to which SCANA would pay $192.5 million, up to $32.5 million of which could be satisfied through the issuance of shares of Dominion Energy common stock, subject to court approval. In February 2020, the U.S. District Court for the District of South Carolina granted preliminary approval of the settlement agreement, pending a fairness hearing, and granted final approval in July 2020. In March 2020, SCANA funded an escrow account with $160 million in cash and paid the balance of $32.5 million in cash in August 2020 to satisfy the settlement. In September 2017, a shareholder derivative action was filed against certain former executive officers and directors of SCANA in the State Court of Common Pleas in Richland County, South
action in the Business Court Pilot Program in Richland County. The plaintiffs allege, among other things, that the defendants breached their fiduciary duties to shareholders by their gross mismanagement of the NND Project, and that the defendants were unjustly enriched by bonuses they were paid in connection with the project. In January 2019, the defendants filed a motion to dismiss the consolidated action. In February 2019, one action was voluntarily dismissed. In March 2020, the court denied the defendants’ motion to dismiss. In April 2020, the defendants filed a notice of appeal with the South Carolina Court of Appeals and a petition with the Supreme Court of South Carolina seeking appellate review of the denial of the motion to dismiss. In June 2020, the plaintiffs filed a motion to dismiss the appeal with the South Carolina Court of Appeals, which was granted in July 2020. In August 2020, the Supreme Court of South Carolina denied the defendants’ petition seeking appellate review. Also in August 2020, the defendants filed a petition for rehearing with the South Carolina Court of Appeals relating to the July 2020 ruling by the court, which was denied in October 2020. In November 2020, SCANA filed a petition of certiorari with the Supreme Court of South Carolina seeking appellate review of the denial of SCANA’s motion to dismiss. This In January 2018, a purported class action was filed against SCANA, Dominion Energy and certain former executive officers and directors of SCANA in the State Court of Common Pleas in Lexington County, South Carolina (the City of Warren Lawsuit). The plaintiff alleges, among other things, that defendants violated their fiduciary duties to shareholders by executing a merger agreement that would unfairly deprive plaintiffs of the true value of their SCANA stock, and that Dominion Energy aided and abetted these actions. Among other remedies, the plaintiff seeks to enjoin and/or rescind the merger. In February 2018, a purported class action was filed against Dominion Energy and certain former directors of SCANA and DESC in the State Court of Common Pleas in Richland County, South Carolina (the Metzler Lawsuit). The allegations made and the relief sought by the plaintiffs are substantially similar to that described for the City of Warren Lawsuit. In September 2019, the U.S. District Court for the District of South Carolina granted the plaintiffs’ motion to consolidate the City of Warren Lawsuit and the Metzler 67 September 2020, SCANA filed a notice of appeal with the U.S. Court of Appeals for the Fourth Circuit. In June 2021, the parties reached an agreement in principle in the amount of $63 million to resolve this matter as well as the State Court Merger Case described below, subject to court approval. This In May 2019, a case was filed against certain former executive officers and directors of SCANA in the State Court of Common Pleas in Richland County, South
Employment Class Actions and Indemnification In August 2017, a case was filed in the U.S. District Court for the District of South Carolina on behalf of persons who were formerly employed at the NND Project. In July 2018, the court certified this case as a class action. In February 2019, certain of these plaintiffs filed an additional case, which case has been dismissed and the plaintiffs have joined the case filed August 2017. The plaintiffs allege, among other things, that SCANA, DESC, Fluor Corporation and Fluor Enterprises, Inc. violated the Worker Adjustment and Retraining Notification Act in connection with the decision to stop construction at the NND Project. The plaintiffs allege that the defendants failed to provide adequate advance written notice of their terminations of employment and are seeking damages, which could be as much as $100 million for 100% of the NND Project. In January 2021, the U.S. District Court for the District of South Carolina granted summary judgment in favor of SCANA, DESC, Fluor Corporation and Fluor Enterprises, Inc. In February 2021, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Fourth Circuit. This case is pending. In September 2018, a case was filed in the State Court of Common Pleas in Fairfield County, South Carolina by Fluor Enterprises, Inc. and Fluor Daniel Maintenance Services, Inc. against DESC and Santee Cooper. The plaintiffs make claims for indemnification, breach of contract and promissory estoppel arising from, among other things, the defendants' alleged failure and refusal to defend and indemnify the Fluor defendants in the aforementioned case. This case is pending.
FILOT Litigation and Related Matters In November 2017, Fairfield County filed a complaint and a motion for temporary injunction against DESC in the State Court of Common Pleas in Fairfield County, South Carolina, making allegations of breach of contract, fraud, negligent misrepresentation, breach of fiduciary duty, breach of implied duty of good faith and fair dealing and unfair trade practices related to DESC’s termination of the FILOT agreement between DESC and Fairfield County related to the NND Project. The plaintiff sought a temporary and permanent injunction to prevent DESC from terminating the FILOT agreement. The plaintiff withdrew the motion for temporary injunction in December 2017. 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 September and October 2017, SCANA was served with subpoenas issued by the U.S. Attorney’s Office for the District of South Carolina and the Staff of the SEC’s Division of Enforcement seeking documents related to the NND Project. In February 2020, the SEC filed a complaint against SCANA, two of its former executive officers and DESC in the U.S. District Court for the District of South Carolina alleging that the defendants violated federal securities laws by making false and misleading statements about the NND Project. In April 2020, SCANA and DESC reached an agreement in principle with the Staff of the SEC’s Division of Enforcement to settle, without admitting or denying the allegations in the complaint. In December 2020, the U.S. District Court for the District of 68 South Carolina issued an order approving the settlement which required SCANA to pay a civil monetary penalty totaling $25 million, and SCANA and DESC to pay disgorgement and prejudgment interest totaling $112.5 million, which disgorgement and prejudgment interest amount were deemed satisfied by the settlements in the SCANA Securities Class Action and the DESC Ratepayer Case. SCANA paid the civil penalty in December 2020. The SEC civil action against two former executive officers of SCANA remains pending and is currently subject to a stay granted by the court in June 2020 at the request of the U.S. Attorney’s Office for the District of South Carolina. In addition, the South Carolina Law Enforcement Division is conducting a criminal investigation into the handling of the NND Project by SCANA and DESC. Dominion Energy is cooperating fully with the investigations by the U.S. Attorney’s Office and the South Carolina Law Enforcement Division, including responding to additional subpoenas and document requests. Dominion Energy has also entered into a cooperation agreement with the U.S. Attorney’s Office and the South Carolina Attorney General’s Office. The cooperation agreement provides that in consideration of its full cooperation with these investigations to the satisfaction of both agencies, neither such agency will criminally prosecute or bring any civil action against Dominion Energy or any of its current, previous, or future direct or indirect subsidiaries related to the NND Project. A former executive officer of SCANA entered a plea agreement with the U.S. Attorney’s Office and the South Carolina Attorney General’s Office in June 2020 and entered a guilty plea with the U.S. District Court for the District of South Carolina in July 2020. Another former executive officer of SCANA entered a plea agreement with the U.S. Attorney's Office and the South Carolina Attorney General's Office in November 2020 and entered guilty pleas in the U.S. District Court for the District of South Carolina and in South Carolina state court in February 2021. As a result of the pleas, Dominion Energy has terminated indemnity for these former executive officers related to these two cases. Abandoned NND Project DESC, for itself and as agent for Santee Cooper, entered into an engineering, construction and procurement contract with Westinghouse and WECTEC in 2008 for the design and construction of the NND Project, of which DESC’s ownership share is 55%. Various difficulties were encountered in connection with the project. The ability of Westinghouse and WECTEC to adhere to established budgets and construction schedules was affected by many variables, including unanticipated difficulties encountered in connection with project engineering and the construction of project components, constrained financial resources of the contractors, regulatory, legal, training and construction processes associated with securing approvals, permits and licenses and necessary amendments to them within projected time frames, the availability of labor and materials at estimated costs and the efficiency of project labor. There were also contractor and supplier performance issues, difficulties in timely meeting critical regulatory requirements, contract disputes, and changes in key contractors or subcontractors. These matters preceded the filing for bankruptcy protection by Westinghouse and WECTEC in March 2017, and were the subject of comprehensive analyses performed by SCANA and Santee Cooper. Based on the results of SCANA’s analysis, and in light of Santee Cooper's decision to suspend construction on the NND Project, in July 2017, SCANA determined to stop the construction of the units and to pursue recovery of costs incurred in connection with the construction under the abandonment provisions of the Base Load Review Act or through other means. This decision by SCANA
became the focus of numerous legislative, regulatory and legal proceedings. Some of these proceedings remain unresolved and are described above.
In September 2017, DESC, for itself and as agent for Santee Cooper, filed with the U.S. Bankruptcy Court for the Southern District of New York Proofs of Claim for unliquidated damages against each of Westinghouse and WECTEC. These Proofs of Claim were based upon the anticipatory repudiation and material breach by Westinghouse and WECTEC of the contract, and assert against Westinghouse and WECTEC any and all claims that are based thereon or that may be related thereto. Westinghouse’s reorganization plan was confirmed by the U.S. Bankruptcy Court for the Southern District of New York and became effective in August 2018. In connection with the effectiveness of the reorganization plan, the contract associated with the NND Project was deemed rejected. DESC is contesting approximately $285 million of filed liens in Fairfield County, South Carolina. Most of these asserted liens are claims that relate to work performed by Westinghouse subcontractors before the Westinghouse bankruptcy, although some of them are claims arising from work performed after the Westinghouse bankruptcy.
Westinghouse has indicated that some unsecured creditors have sought or may seek amounts beyond what Westinghouse allocated when it submitted its reorganization plan to the U.S. Bankruptcy Court for the Southern District of New York. If any unsecured creditor is successful in its attempt to include its claim as part of the class of general unsecured creditors beyond the amounts in the bankruptcy reorganization plan allocated by Westinghouse, it is possible that the reorganization plan will not provide for payment in full or nearly in full to its pre-petition trade creditors. The shortfall could be significant.
DESC and Santee Cooper were responsible for amounts owed to Westinghouse for valid work performed by Westinghouse subcontractors on the NND Project after the Westinghouse bankruptcy filing until termination of the interim assessment agreement. In 69 December 2019, DESC and Santee Cooper entered into a confidential settlement agreement with W Wind Down Co LLC resolving claims relating to the interim assessment agreement.
Further, some Westinghouse subcontractors who have made claims against Westinghouse in the bankruptcy proceeding also filed against DESC and Santee Cooper in South Carolina state court for damages. Many of these claimants have also asserted construction liens against the NND Project site. DESC also intends to oppose these claims and liens. With respect to claims of Westinghouse subcontractors, DESC believes there were sufficient amounts previously funded during the interim assessment agreement period to pay such validly asserted claims. With respect to the Westinghouse subcontractor claims which relate to other periods, DESC understands that such claims will be paid pursuant to Westinghouse’s confirmed bankruptcy reorganization plan. DESC further understands that the amounts paid under the plan may satisfy such claims in full. Therefore, DESC believes that the Westinghouse subcontractors may be paid substantially (and potentially in full) by Westinghouse. While Dominion Energy cannot be assured that it will not have any exposure on account of unpaid Westinghouse subcontractor claims, which DESC is presently disputing, Dominion Energy believes it is unlikely that it will be required to make payments on account of such
Nuclear Operations Nuclear Insurance Other than the items discussed below, there have been no significant changes regarding the Companies’ nuclear insurance as described in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020. In March 2021, the total liability protection per nuclear incident available to all participants in the Secondary Financial Protection Program decreased from $13.8 billion to $13.7 billion. Effective June 2021, Dominion Energy reduced the levels of nuclear property insurance coverage for each of the reactor sites at Millstone, North Anna and Surry from $1.70 billion to the NRC minimum requirement of $1.06 billion. As a result of this reduction in nuclear property insurance coverage, Dominion Energy and Virginia Power’s maximum retrospective premium assessment for the current annual policy period was reduced to $76 million and $35 million, respectively. 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, 2020, the Companies entered into contracts with the DOE for the disposal of spent nuclear fuel under provisions of the Nuclear Waste Policy Act of 1982. In June 2018, a lawsuit for Kewaunee was filed in the U.S. Court of Federal Claims for recovery of spent nuclear fuel storage costs incurred after 2013. In March 2019, Dominion Energy amended its filing for recovery of spent nuclear fuel storage to include costs incurred for the year ended December 31, 2018. This matter is pending.
Guarantees, Surety Bonds and Letters of Credit Upon the closing of the GT&S Transaction, Dominion Energy retained its 4 guarantees related to Cove Point, an equity method investment, in support of terminal services, transportation and construction. NaN of the Cove Point guarantees have a cumulative
maximum exposure of $1.9 billion while the other 2 guarantees have 0 maximum limit. No amounts related to these guarantees have been recorded. In addition, at
70 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
Additionally, at Note 18. Credit Risk The Companies’ accounting policies for credit risk are discussed in Note 24 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020. At
Credit-Related Contingent Provisions Certain of Dominion Energy’s derivative instruments contain credit-related contingent provisions. These provisions require Dominion Energy to provide collateral upon the occurrence of specific events, primarily a credit rating downgrade. If the credit-related contingent features underlying these instruments that are in a liability position and not fully collateralized with cash were fully triggered as of
If the credit-related contingent features underlying these instruments that are in a liability position and not fully collateralized with cash were fully triggered, Virginia Power would 0t have been required to post any additional collateral to its counterparties at See Note 9 for further information about derivative instruments. Note 19. Related-Party Transactions Virginia Power engages in related-party transactions primarily with other Dominion Energy subsidiaries (affiliates). Virginia 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 is included in Dominion Energy's consolidated federal income tax return and, where applicable, combined income tax returns for Dominion Energy are filed in various states. Dominion Energy’s transactions with equity method investments are described in Note 10. A discussion of significant related-party transactions follows. Virginia Power Transactions with Affiliates Virginia Power transacts with affiliates for certain quantities of natural gas and other commodities in the ordinary course of business. Virginia Power also enters into certain commodity derivative contracts with affiliates. Virginia Power uses these contracts, which are principally comprised of forward commodity purchases, to manage commodity price risks associated with purchases of natural gas. At Virginia Power participates in certain Dominion Energy benefit plans described in Note 22 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020. At DES and other affiliates provide accounting, legal, finance and certain administrative and technical services to Virginia Power. In addition, Virginia Power provides certain services to affiliates, including charges for facilities and equipment usage. The financial statements for all years presented include costs for certain general, administrative and corporate expenses assigned by DES to Virginia Power on the basis of direct and allocated methods in accordance with Virginia Power’s services agreements with DES. Where costs incurred cannot be determined by specific identification, the costs are allocated based on the proportional level of effort devoted by DES resources that is attributable to the entity, determined by reference to number of employees, salaries and wages and other similar measures for the relevant DES service. Management believes the assumptions and methodologies underlying the allocation of general corporate overhead expenses are reasonable.
Presented below are Virginia Power’s significant transactions with DES and other affiliates:
Virginia Power has borrowed funds from Dominion Energy under short-term borrowing arrangements. There were There were 0 issuances of Virginia Power’s common stock to Dominion Energy for the three and six months ended
Note 20. Employee Benefit Plans
Net Periodic Benefit (Credit) Cost The service cost component of net periodic benefit (credit) cost is reflected in other operations and maintenance expense in Dominion Energy’s Consolidated Statements of Income, except for
Employer Contributions During the three and six months ended
73 Note 21. Operating Segments The Companies are organized primarily on the basis of products and services sold in the U.S. A description of the operations included in the Companies’ primary operating segments is as follows:
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 nonregulated retail energy marketing operations, including Dominion Energy’s noncontrolling interest in Wrangler. In addition, Corporate and Other includes specific items attributable to Dominion Energy’s operating segments that are not included in profit measures evaluated by executive management in assessing the segments’ performance or in allocating resources as well as the net impact of the gas transmission and storage operations In the The net expenses for specific items attributable to Dominion Energy’s operating segments in 2021 primarily related to the impact of the following items:
74
The net expense for specific items attributable to Dominion Energy’s operating segments in 2020 primarily related to the impact of the following items:
In September 2020, Dominion Energy updated its segments. The historical information presented herein has been recast to reflect the current segment presentation. The following table presents segment information pertaining to Dominion Energy’s operations:
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, 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 segment that are not included in profit measures evaluated by executive management in assessing the segment’s performance or in allocating resources. 76 In the
The net expenses for specific items attributable to Virginia Power’s operating segment in 2021 primarily related to the impact of the following items:
The net
The following table presents segment information pertaining to Virginia Power’s operations:
77 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 results of operations. MD&A should be read in conjunction with the Companies’ Consolidated Financial Statements. Virginia Power meets the conditions to file under the reduced disclosure format, and therefore has omitted certain sections of MD&A. Contents of MD&A MD&A consists of the following information:
Forward-Looking Statements This report contains statements concerning the Companies’ expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, the reader can identify these forward-looking statements by such words as “anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,” “could,” “plan,” “may,” “continue,” “target” or other similar words. The Companies make forward-looking statements with full knowledge that risks and uncertainties exist that may cause actual results to differ materially from predicted results. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Additionally, other factors may cause actual results to differ materially from those indicated in any forward-looking statement. These factors include but are not limited to:
79
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’ Annual Report on Form 10-K for the year ended December 31, 2020. The Companies’ forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. The Companies caution the reader not to place undue reliance on their forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. The Companies undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made. Accounting Matters Critical Accounting Policies and Estimates As of Held for sale classification Dominion Energy recognizes the assets and liabilities of a disposal group as held for sale in the period (i) it has approved and committed to a plan to sell the disposal group, (ii) the disposal group is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the disposal group have been initiated, (iv) the sale of the disposal group is probable, (v) the disposal group is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Dominion Energy initially measures a disposal group that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a disposal group until closing. Upon designation as held for sale, Dominion Energy stops recording depreciation expense and assesses the fair value of the disposal group less any costs to sell at each reporting period and until it is no longer classified as held for sale. The determination as to whether the sale of the disposal group is probable may include significant judgments from management related to the expectation of obtaining approvals from applicable regulatory agencies such as state utility regulatory commissions, FERC or the U.S. Federal Trade Commission. This analysis is generally based on orders issued by regulatory commissions, past experience and discussions with applicable regulatory authorities and legal counsel. In May 2021, Dominion Energy entered into an agreement to sell Kewaunee, subject to termination by either party if not completed by December 2022. The consideration as to whether the sale is probable includes judgments related to the ability to obtain the approvals, in a timely manner, of the NRC and the Wisconsin Commission. Due to the uncertainty surrounding the timing of or ability to obtain approval by the Wisconsin Commission, at June 30, 2021 Dominion Energy did not conclude that the sale is probable and, as a result, the disposal group was not classified as held for sale. Dominion Energy would have recognized a loss of approximately $725 million ($570 million after-tax) if such classification had been met. This loss primarily represents the difference between the nuclear decommissioning trust and AROs at June 30, 2021. The Wisconsin Commission requires that any excess decommissioning funds be returned to WPSC and WP&L customers following completion of all decommissioning activities. See Note 3 to the Consolidated Financial Statements for additional information. 80 Dominion Energy Results of Operations Presented below is a summary of Dominion Energy’s consolidated results:
Overview
Net income attributable to Dominion Energy increased Year-To-Date 2021 vs. 2020 Net income attributable to Dominion Energy increased $2.7 billion, primarily due to the absence of charges presented in discontinued operations associated with the cancellation of the Atlantic Coast Pipeline Project and related portions of the Supply Header Project, the absence of charges related to the planned early retirements of certain electric generation facilities in Virginia and an increase in net investment earnings on nuclear decommissioning trust
Analysis of Consolidated Operations Presented below are selected amounts related to Dominion Energy’s results of operations:
An analysis of Dominion Energy’s results of operations follows:
Operating revenue decreased 2%, primarily reflecting:
81
These decreases were partially offset by:
Electric fuel and other energy-related purchases decreased 4%, primarily due to a decrease in PJM off-system sales. Purchased gas increased 34%, primarily due to an increase in commodity costs for gas utilities, which are offset in operating revenue and do not impact net income. Other operations and maintenance increased 5%, primarily reflecting:
Impairment of assets and other charges increased $277 million, primarily due to charges associated with the settlement of the South Carolina electric base rate case ($249 million), litigation acquired in the SCANA Combination ($40 million) and the write-off of nonregulated retail software development assets ($20 million), partially offset by the absence of dismantling costs associated with certain Virginia Power electric generation facilities ($30 million). Earnings from equity method investees increased $63 million, primarily due to an increase in equity method earnings from Cove Point following closing of the GT&S Transaction. Other income decreased 37%, primarily due to a decrease in net investment gains on nuclear decommissioning trust funds ($200 million) and charges associated with the settlement of the South Carolina electric base rate case ($18 million) partially offset by an increase in non-service components of pension and other postretirement employee benefit plan credits ($28 million). Interest and related charges increased 30%, primarily due to unrealized losses in 2021 compared to unrealized gains in 2020 associated with freestanding derivatives ($142 million) partially offset by the absence of borrowings in response to COVID-19 in 2020 ($24 million). Income tax expense decreased $84 million, primarily due to lower pre-tax income ($190 million) and the benefit of a state legislative change ($21 million) partially offset by reduced interim period tax allocation benefits ($140 million). Net income from discontinued operations including noncontrolling interests increased $2.0 billion, primarily due to a decrease in charges associated with the Atlantic Coast Pipeline Project and related Supply Header Project ($2.1 billion) partially offset by the absence of operations sold in the GT&S Transaction ($81 million). 82 Noncontrolling interests decreased 73%, primarily due to the closing of the GT&S Transaction in November 2020. Year-To-Date 2021 vs. 2020 Operating revenue decreased 2%, primarily reflecting:
These decreases were partially offset by:
Electric fuel and other energy-related purchases decreased Purchased electric capacity increased $23 million, primarily due to an increase in expense related to the annual PJM capacity performance market effective June 2020. Purchased gas increased
Other operations and maintenance increased • A $62 million increase in storm damage and restoration costs in Virginia Power’s service territory; • A $47 million increase in certain Virginia Power expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income; • A $44 million charge related to a revision in estimated recovery of spent nuclear fuel costs associated with the decommissioning of Kewaunee; • A $33 million increase in costs of employer-provided healthcare; and • A $32 million increase in outside services; partially offset by • A $23 million decrease in merger and integration-related costs associated with the SCANA Combination; and • The absence of a $22 million charge associated with credit risk on customer accounts related to COVID-19. Impairment of assets and other charges decreased • The absence of charges associated with the planned early retirements of certain electric generation facilities in Virginia ($750 million); • A decrease to the CCRO reserve associated with the 2021 Triennial Review ($130 million); and 83 • The absence of dismantling costs associated with certain Virginia Power electric generation facilities ($30 million); partially offset by • Charges associated with the settlement of the South Carolina electric base rate case ($249 million); • Charges associated with litigation acquired in the SCANA Combination ($100 million); • A charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to Virginia’s 2021 budget process ($77 million); • A charge for corporate office lease termination ($71 million); and • A charge for the write-off of nonregulated retail software development assets ($20 million). Earnings from equity method investees increased $140 million, primarily due to an increase in equity method earnings from Cove Point following closing of the Other income increased Interest and related charges decreased Income tax expense increased Net income from discontinued operations including noncontrolling interests Noncontrolling interests decreased 85% 84 Segment Results of Operations Segment results include the impact of intersegment revenues and expenses, which may result in intersegment profit and loss. In September 2020, Dominion Energy updated its operating segments following the July 2020 agreement to sell substantially all of its gas transmission and storage operations to BHE. The historical information presented herein has been recast to reflect the current segment presentation. Presented below is a summary of contributions by Dominion Energy’s operating segments to net income (loss) attributable to Dominion Energy: Net Income (Loss) Attributable to Dominion Energy Diluted EPS Net Income (Loss) Attributable to Dominion Energy Diluted EPS 2021 2020 $ Change 2021 2020 $ Change 2021 2020 $ Change 2021 2020 $ Change (millions, except EPS) First Quarter Second Quarter Dominion Energy Virginia $ 434 $ 429 $ 5 $ 0.54 $ 0.51 $ 0.03 $ 431 $ 437 $ (6 ) $ 0.53 $ 0.52 $ 0.01 Gas Distribution 251 224 27 0.31 0.27 0.04 95 87 8 0.12 0.10 0.02 Dominion Energy South Carolina 102 94 8 0.13 0.11 0.02 84 75 9 0.10 0.09 0.01 Contracted Assets 150 111 39 0.18 0.13 0.05 104 72 32 0.13 0.09 0.04 Corporate and Other 71 (1,128 ) 1,199 0.07 (1.36 ) 1.43 (429 ) (1,840 ) 1,411 (0.55 ) (2.32 ) 1.77 Consolidated $ 1,008 $ (270 ) $ 1,278 $ 1.23 $ (0.34 ) $ 1.57 $ 285 $ (1,169 ) $ 1,454 $ 0.33 $ (1.52 ) $ 1.85 Year-To-Date Dominion Energy Virginia $ 865 $ 866 $ (1 ) $ 1.07 $ 1.03 $ 0.04 Gas Distribution 346 311 35 0.43 0.37 0.06 Dominion Energy South Carolina 186 169 17 0.23 0.20 0.03 Contracted Assets 254 183 71 0.31 0.22 0.09 Corporate and Other (358 ) (2,968 ) 2,610 (0.48 ) (3.65 ) 3.17 Consolidated $ 1,293 $ (1,439 ) $ 2,732 $ 1.56 $ (1.83 ) $ 3.39 Dominion Energy Virginia Presented below are selected operating statistics related to Dominion Energy Virginia’s operations: First Quarter Second Quarter Year-To-Date 2021 2020 % Change 2021 2020 % Change 2021 2020 % Change Electricity delivered (million MWh) 21.7 20.8 4 % 19.3 18.7 3 % 41.0 39.5 4 % Electricity supplied (million MWh): Utility 21.9 22.3 (2 ) 19.5 19.9 (2 ) 41.4 42.2 (2 ) Non-Jurisdictional 0.2 0.1 100 0.3 0.2 50 0.5 0.3 67 Degree days (electric distribution and utility service area): Cooling 11 14 (21 ) 509 438 16 520 452 15 Heating 1,889 1,518 24 285 371 (23 ) 2,174 1,889 15 Average electric distribution customer accounts (thousands) 2,684 2,647 1 2,693 2,656 1 2,688 2,652 1 85 Presented below, on an after-tax basis, are the key factors impacting Dominion Energy Virginia’s net income contribution: First Quarter 2021 vs. 2020 Increase (Decrease) Second Quarter 2021 vs. 2020 Increase (Decrease) Year-To-Date 2021 vs. 2020 Increase (Decrease) Amount EPS Amount EPS Amount EPS (millions, except EPS) Regulated electric sales: Weather $ 51 $ 0.06 $ 14 $ 0.02 $ 65 $ 0.08 Other (1 ) — (28 ) (0.03 ) (40 ) (0.05 ) Rider equity return 6 0.01 10 0.01 Electric capacity (5 ) (0.01 ) (8 ) (0.01 ) (13 ) (0.02 ) Planned outage costs (10 ) (0.01 ) (14 ) (0.02 ) Depreciation and amortization (6 ) (0.01 ) (5 ) (0.01 ) (11 ) (0.01 ) Renewable energy investment tax credits (32 ) (0.03 ) 36 0.04 4 0.01 Other (2 ) — (11 ) (0.02 ) (2 ) — Share accretion — 0.02 — 0.02 — 0.04 Change in net income contribution $ 5 $ 0.03 $ (6 ) $ 0.01 $ (1 ) $ 0.04 Gas Distribution Presented below are selected operating statistics related to Gas Distribution’s operations: First Quarter Second Quarter Year-To-Date 2021 2020 % Change 2021 2020 % Change 2021 2020 % Change Gas distribution throughput (bcf): Sales 86 80 8 % 24 24 — % 110 104 6 % Transportation 273 250 9 216 190 14 489 440 11 Heating degree days (gas distribution service area): North Carolina 1,692 1,334 27 281 314 (11 ) 1,973 1,648 20 Ohio and West Virginia 2,758 2,442 13 691 804 (14 ) 3,449 3,246 6 Utah, Wyoming and Idaho 2,398 2,332 3 535 547 (2 ) 2,933 2,879 2 Average gas distribution customer accounts (thousands): Sales 1,922 1,891 2 1,926 1,885 2 1,925 1,888 2 Transportation 1,137 1,115 2 1,137 1,130 1 1,135 1,122 1 Presented below, on an after-tax basis, are the key factors impacting Gas Distribution’s net income contribution: First Quarter 2021 vs. 2020 Increase (Decrease) Second Quarter 2021 vs. 2020 Increase (Decrease) Year-To-Date 2021 vs. 2020 Increase (Decrease) Amount EPS Amount EPS Amount EPS (millions, except EPS) Regulated gas sales: Weather $ 4 $ 0.01 $ (1 ) $ — $ 3 $ — Other 3 — 4 — 7 0.01 Rider equity return 11 0.01 10 0.01 21 0.03 Interest expense, net 9 0.01 7 0.01 16 0.02 Other (12 ) (0.01 ) (12 ) (0.02 ) Share accretion — 0.01 — 0.01 — 0.02 Change in net income contribution $ 27 $ 0.04 $ 8 $ 0.02 $ 35 $ 0.06 86 Dominion Energy South Carolina Presented below are selected operating statistics related to Dominion Energy South Carolina’s operations: First Quarter Second Quarter Year-To-Date 2021 2020 % Change 2021 2020 % Change 2021 2020 % Change Electricity delivered (million MWh) 5.3 5.1 4 % 5.4 5.2 4 % 10.7 10.3 4 % Electricity supplied (million MWh) 5.6 5.3 6 5.7 5.4 6 11.3 10.7 6 Degree days (electric distribution service areas): Cooling 1 5 (80 ) 171 171 — 172 176 (2 ) Heating 786 578 36 53 32 66 839 610 38 Average electric distribution customer accounts (thousands) 761 746 2 764 750 2 762 748 2 Gas distribution throughput (bcf): Sales 20 19 5 15 14 7 35 33 6 Average gas distribution customer accounts (thousands) 408 394 4 411 397 4 409 396 3 Presented below, on an after-tax basis, are the key factors impacting Dominion Energy South Carolina’s net income contribution: First Quarter 2021 vs. 2020 Increase (Decrease) Second Quarter 2021 vs. 2020 Increase (Decrease) Year-To-Date 2021 vs. 2020 Increase (Decrease) Amount EPS Amount EPS Amount EPS (millions, except EPS) Regulated electric sales: Weather $ 13 $ 0.02 $ 2 $ — $ 15 $ 0.02 Other (4 ) — 16 0.02 12 0.01 Capital cost rider (1 ) — (3 ) — Regulated gas sales 4 — 1 — 5 0.01 Interest expense, net 4 — 6 0.01 Other (5 ) (0.01 ) (13 ) (0.01 ) (18 ) (0.03 ) Share accretion — 0.01 — — — 0.01 Change in net income contribution $ 8 $ 0.02 $ 9 $ 0.01 $ 17 $ 0.03 Contracted Assets Presented below are selected operating statistics related to Contracted Asset’s operations: First Quarter 2021 2020 % Change Electricity supplied (million MWh) 5.1 5.3 (4 %) Second Quarter Year-To-Date 2021 2020 % Change 2021 2020 % Change Electricity supplied (million MWh) 5.6 4.5 24 % 10.7 9.8 9 % Presented below, on an after-tax basis, are the key factors impacting Contracted Asset’s net income contribution: First Quarter 2021 vs. 2020 Increase (Decrease) Second Quarter 2021 vs. 2020 Increase (Decrease) Year-To-Date 2021 vs. 2020 Increase (Decrease) Amount EPS Amount EPS Amount EPS (millions, except EPS) Margin(1) $ 17 $ 0.02 $ 21 $ 0.02 Planned outage costs 23 0.03 25 0.03 Renewable energy investment tax credits $ 29 $ 0.03 (6 ) (0.01 ) 23 0.03 Absence of contract associated with Fowler Ridge 5 0.01 6 0.01 11 0.01 Other 5 — (8 ) (0.01 ) (9 ) (0.01 ) Share accretion — 0.01 — — — 0.01 Change in net income contribution $ 39 $ 0.05 $ 32 $ 0.04 $ 71 $ 0.09 87 (1) Includes earnings associated with a 50% noncontrolling interest in Cove Point. Corporate and Other Presented below are the Corporate and Other segment’s after-tax results: First Quarter Second Quarter Year-To-Date 2021 2020 $ Change 2021 2020 $ Change 2021 2020 $ Change (millions, except EPS) Specific items attributable to operating segments $ (87 ) $ (1,004 ) $ 917 $ (227 ) $ 224 $ (451 ) $ (314 ) $ (780 ) $ 466 Specific items attributable to Corporate and Other segment 202 (54 ) 256 (116 ) (2,024 ) 1,908 86 (2,078 ) 2,164 Total specific items 115 (1,058 ) 1,173 (343 ) (1,800 ) 1,457 (228 ) (2,858 ) 2,630 Other corporate operations: Interest expense, net (111 ) (92 ) (19 ) (106 ) (85 ) (21 ) (217 ) (177 ) (40 ) Other 67 22 45 20 45 (25 ) 87 67 20 Total other corporate operations (44 ) (70 ) 26 (86 ) (40 ) (46 ) (130 ) (110 ) (20 ) Total net income (expense) $ 71 $ (1,128 ) $ 1,199 Total net expense $ (429 ) $ (1,840 ) $ 1,411 $ (358 ) $ (2,968 ) $ 2,610 EPS impact $ 0.07 $ (1.36 ) $ 1.43 $ (0.55 ) $ (2.32 ) $ 1.77 $ (0.48 ) $ (3.65 ) $ 3.17 Total Specific Items Corporate and Other includes specific items attributable to Dominion Energy’s primary operating segments that are not included in profit measures evaluated by executive management in assessing the segments' performance or in allocating resources. See Note 21 to the Consolidated Financial Statements in this report for discussion of these items in more detail. Corporate and Other also includes items attributable to the Corporate and Other segment. For the three months ended June 30, 2020, other than the effects of required interim period provision for income taxes, this primarily included Virginia Power Results of Operations Presented below is a summary of Virginia Power’s consolidated results: First Quarter Second Quarter Year-To-Date 2021 2020 $ Change 2021 2020 $ Change 2021 2020 $ Change (millions) Net income (loss) $ 374 $ (280 ) $ 654 Net income $ 414 $ 490 $ (76 ) $ 788 $ 210 $ 578 Overview Net income decreased 16%, primarily due to a decrease in sales to electric utility retail customers associated with economic and other usage factors. Year-To-Date 2021 vs. 2020 Net income increased Analysis of Consolidated Operations Presented below are selected amounts related to Virginia Power’s results of operations: First Quarter Second Quarter Year-To-Date 2021 2020 $ Change 2021 2020 $ Change 2021 2020 $ Change (millions) Operating revenue $ 1,830 $ 1,930 $ (100 ) $ 1,741 $ 1,805 $ (64 ) $ 3,571 $ 3,735 $ (164 ) Electric fuel and other energy-related purchases 406 492 (86 ) 349 366 (17 ) 755 858 (103 ) Excess electric capacity (3 ) (9 ) 6 Purchased (excess) electric capacity 4 (8 ) 12 1 (17 ) 18 Other operations and maintenance 513 418 95 399 376 23 912 794 118 Depreciation and amortization 324 311 13 323 307 16 647 618 29 Other taxes 93 87 6 83 85 (2 ) 176 172 4 Impairment of assets and other charges (benefit) (51 ) 764 (815 ) 12 44 (32 ) (39 ) 808 (847 ) Other income (expense) 32 (52 ) 84 Other income 40 52 (12 ) 72 — 72 Interest and related charges 136 126 10 128 137 (9 ) 264 263 1 Income tax expense (benefit) 70 (31 ) 101 Income tax expense 69 60 9 139 29 110 An analysis of Virginia Power’s results of operations follows: Operating revenue decreased • A $49 million decrease in sales to electric utility retail customers associated with economic and other usage factors; • A $22 million decrease from riders; and • An $18 million decrease in PJM off-system sales; partially offset by • A $20 million increase in sales to retail customers, primarily due to an increase in cooling degree days. Electric fuel and other energy-related purchases decreased 5%, primarily due to a decrease in PJM off-system sales. Purchased electric capacity increased $12 million, primarily due to an increase in expense related to the annual PJM capacity performance market effective June 2020. Other operations and maintenance increased 6%, primarily reflecting: • A $15 million increase in outside services; • A $14 million increase in storm damage and service restoration costs; • A $14 million increase in planned outage costs; and • A $14 million increase in salaries, wages and benefits and administrative costs; partially offset by • A $15 million decrease in certain expenses which are primarily recovered through state- and FERC-regulated rates and do not impact net income; and • The absence of a $13 million charge associated with credit risk on customer accounts related to COVID-19. Impairment of assets and other charges decreased 73%, primarily due to the absence of charges for dismantling costs associated with certain electric generation facilities ($30 million). Other income decreased 23%, primarily due to a decrease in net investment gains on nuclear decommissioning trust funds. Income tax expense increased 15%, primarily due to reduced interim period tax allocation benefits ($45 million) partially offset by lower pre-tax income ($19 million) and the benefit of a state legislative change ($16 million). Year-To-Date 2021 vs. 2020 Operating revenue decreased 4%, primarily reflecting: • A $151 million decrease from an unbilled revenue reduction; • A $77 million decrease in sales to electric utility retail customers associated with economic and other usage factors; • A • A • A $88 million increase in sales to retail customers from an increase in cooling degree days during the cooling season ($20 million) and an increase in heating degree days during the heating season ($68 million); • A • A Electric fuel and other energy-related purchases decreased Purchased electric capacity increased $18 million, primarily due to an increase in expense related to the annual PJM capacity performance market effective June 2020. Other operations and maintenance increased • A $62 million increase in storm damage and service restoration costs; • A $47 million increase in certain expenses which are primarily recovered through state- and FERC-regulated rates and do not impact net income; • A $22 million increase in outside services; • A $19 million increase in planned outage costs; and • A $13 million increase in salaries, wages and benefits; partially offset by • The absence of a $13 million charge associated with credit risk on customer accounts related to COVID-19; and • A $10 million reduction in bad debt expense due to the forgiveness of Virginia retail electric customer accounts in arrears pursuant to Virginia’s 2021 budget process. Impairment of assets and other charges decreased • The absence of charges associated with the planned early retirements of certain electric generation facilities ($750 million); • A decrease to the CCRO reserve associated with the 2021 Triennial Review ($130 million); and • The absence of charges for dismantling costs associated with certain electric generation facilities ($30 million); partially offset by • A charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to Virginia’s 2021 budget process ($77 million). Other income increased Income tax expense increased 90 Liquidity and Capital Resources Dominion Energy depends on both internal and external sources of liquidity to provide working capital and as a bridge to long-term debt financings. Short-term cash requirements not met by cash provided by operations are generally satisfied with proceeds from short-term borrowings. Long-term cash needs are met through issuances of debt and/or equity securities. At A summary of Dominion Energy’s cash flows is presented below: 2021 2020 2021 2020 (millions) Cash, restricted cash and equivalents at January 1 $ 247 $ 269 $ 247 $ 269 Cash flows provided by (used in): Operating activities(1) 1,452 1,633 Investing activities(2) (2,308 ) (1,641 ) Financing activities(3) 1,171 1,006 Operating activities(1) 2,240 3,136 Investing activities(2) (3,768 ) (3,334 ) Financing activities(3) 1,585 671 Net increase in cash, restricted cash and equivalents 315 998 57 473 Cash, restricted cash and equivalents at March 31 $ 562 $ 1,267 Cash, restricted cash and equivalents at June 30 $ 304 $ 742 (1) Includes (2) Includes (3) Includes Operating Cash Flows Net cash provided by Dominion Energy’s operating activities decreased 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 Part I. Item 1A. Risk Factors in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020. Credit Risk Dominion Energy’s exposure to potential concentrations of credit risk results primarily from its energy marketing and price risk management activities. Presented below is a summary of Dominion Energy’s credit exposure as of Gross Credit Exposure Credit Collateral Net Credit Exposure Gross Credit Exposure Credit Collateral Net Credit Exposure (millions) Investment grade(1) $ 52 $ — $ 52 Non-investment grade(2) 2 — 2 Investment grade(1) $ 78 $ — $ 78 Non-investment grade(2) 4 — 4 No external ratings: Internally rated—investment grade(3) 60 4 56 Internally rated—non-investment grade(4) 14 — 14 Total(5) $ 128 $ 4 $ 124 Internally rated—investment grade(3) 22 2 20 Internally rated—non-investment grade(4) 21 — 21 Total(5) $ 125 $ 2 $ 123 (1) Designations as investment grade are based upon minimum credit ratings assigned by Moody’s Investors Service and Standard & Poor’s. The five largest counterparty exposures, combined, for this category represented approximately (2) The five largest counterparty exposures, combined, for this category represented less than (3) The five largest counterparty exposures, combined, for this category represented approximately 91 (4) The five largest counterparty exposures, combined, for this category represented approximately (5) Excludes the Millstone 2019 power purchase agreements. Investing Cash Flows Net cash used in Dominion Energy’s investing activities increased Financing Cash Flows and Liquidity Dominion Energy relies on capital markets as significant sources of funding for capital requirements not satisfied by cash provided by its operations. As discussed further in Credit Ratings and Debt Covenants in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, the ability to borrow funds or issue securities and the return demanded by investors are affected by credit ratings. In addition, the raising of external capital is subject to certain regulatory requirements, including registration with the SEC for certain issuances. Dominion Energy currently meets the definition of a well-known seasoned issuer under SEC rules governing the registration, communication 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 by Dominion Energy's financing activities increased 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 See Note 16 to the Consolidated Financial Statements 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’ Annual Report on Form 10-K for the year ended December 31, 2020, there is a discussion on the use of capital markets by Dominion Energy as well as the impact of credit ratings on the accessibility and costs of using these markets. As of Debt Covenants In the Debt Covenants section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, there is a discussion on the various covenants present in the enabling agreements underlying Dominion Energy’s debt. As of Subsidiary Dividend Restrictions As of Future Cash Payments for Contractual Obligations and Planned Capital Expenditures As of Use of Off-Balance Sheet Arrangements As of Future Issues and Other Matters The following 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 Consolidated Financial Statements that may impact future results of operations, financial condition and/or cash flows. This section should be read in conjunction with Item 1. Business and Future Issues and Other Matters in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020,Future Issues and Other Matters in MD&A in the Companies’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and Note 17 to the Consolidated Financial Statements in this report. Environmental Matters Dominion Energy is subject to costs resulting from a number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of compliance, remediation, containment and monitoring obligations. See Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 and Note 17 to the Consolidated Financial Statements in this report for additional information on various environmental matters. Legal Matters See Notes 13 and 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 and Notes 13 and 17 to the Consolidated Financial Statements and Item 1. Legal Proceedings in this report for additional information on various legal matters. Regulatory Matters See Notes 3 and 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 and Note 13 to the Consolidated Financial Statements in this report for additional information on various regulatory matters. Coastal Virginia Offshore Wind Commercial Project In September 2019, Virginia Power filed applications with PJM for the Coastal Virginia Offshore Wind Commercial project to interconnect 2,640 MW of wind energy off the coast of Virginia adjacent to the Coastal Virginia Offshore Wind Pilot project. The project is expected to be placed in service by the end of 2026 with preliminary cost estimates from late 2019 of approximately $8 billion. Throughout project development, certain planning inputs and assumptions may vary from initial and preliminary estimates. During 2021, inflationary pressure on certain raw materials including steel have been observed which may impact project costs. In addition, Virginia Power has moved into the detailed design phase for the project’s onshore electric transmission facilities including final route selection with consideration given for resiliency and minimizing environmental impacts. Although total costs for this component cannot be more precisely estimated until a final route is selected, these design factors will likely result in an increase in costs. While certain cost inputs may increase, further evaluation of turbine design and wind resource in addition to the performance to-date of the Coastal Virginia Offshore Wind Pilot project, is likely to result in a revised assumption of higher lifetime capacity factors which is expected to mitigate potential increases in development costs such that there is no expected change to Virginia Power’s preliminary estimate for the project’s projected levelized cost of energy. Virginia Power expects to file with the Virginia Commission a request for CPCN and related rider, which filing will include an updated cost estimate for the project, by the end of 2021. 93 Dominion Energy Virginia Virginia Power has continued to identify projects to meet its renewable generation targets and currently has plans to acquire or construct several solar facilities, including the facilities currently under development, totaling approximately 3.6 GW of expected generating capacity and approximately $7.0 billion of investments. Dominion Energy Virginia Battery Storage Projects To support its development of solar generation facilities, Virginia Power plans to acquire or construct multiple battery storage facilities in Virginia, with facilities currently under development totaling approximately 86 MW of storage capacity and approximately $160 million of investment. These facilities are expected to be placed in service in 2022 through 2024. Gas Distribution Non-Utility Renewable Natural Gas Projects In 94 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., 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’ financial instruments, commodity contracts and related financial derivative instruments are exposed to potential losses due to adverse changes in commodity prices, interest rates and equity security prices as described below. Commodity price risk is present in the Companies’ electric operations and Dominion Energy’s natural gas procurement and marketing operations due to the exposure to market shifts in prices received and paid for electricity, natural gas and other commodities. The Companies use commodity derivative contracts to manage price risk exposures for these operations. Interest rate risk is generally related to their outstanding debt and future issuances of debt. In addition, the Companies are exposed to investment price risk through various portfolios of equity and debt securities. The following sensitivity analysis estimates the potential loss of future earnings or fair value from market risk sensitive instruments over a selected time period due to a 10% change in commodity prices or interest rates. Commodity Price Risk To manage price risk, the Companies hold commodity-based derivative instruments held for non-trading purposes associated with purchases and sales of electricity, natural gas and other energy-related products. 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% A hypothetical 10% decrease in commodity prices would have resulted in a decrease in fair value of The impact of a change in energy commodity prices on the Companies' commodity-based derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net losses from commodity-based financial derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction, such as revenue from physical sales of the commodity. Interest Rate Risk The Companies manage their interest rate risk exposure predominantly by maintaining a balance of fixed and variable rate debt. They also enter into interest rate sensitive derivatives, including interest rate swaps and interest rate lock agreements. For variable rate debt outstanding for Dominion Energy and Virginia Power, a hypothetical 10% increase in market interest rates would not have resulted in a material change in earnings at The Companies also use interest rate derivatives, including forward-starting swaps, interest rate swaps and interest rate block agreements to manage interest rate risk. As of The impact of a change in interest rates on the Companies’ interest rate-based financial derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net gains and/or losses from 95 interest rate derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction. Investment Price Risk The Companies are subject to investment price risk due to securities held as investments in nuclear decommissioning and rabbi trust funds that are managed by third-party investment managers. These trust funds primarily hold marketable securities that are reported in the Companies’ Consolidated Balance Sheets at fair value. Dominion Energy recognized net investment gains (including investment income) on nuclear decommissioning and rabbi trust investments of Virginia Power recognized net investment gains (including investment income) on nuclear decommissioning and rabbi trust investments of Dominion Energy sponsors pension and other postretirement employee benefit plans that hold investments in trusts to fund employee benefit payments. Virginia Power 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 both Dominion Energy and Virginia Power, including Dominion Energy and Virginia Power’s CEO and CFO, evaluated the effectiveness of each company’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 and Virginia Power’s CEO and CFO have concluded that each company’s disclosure controls and procedures are effective. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS From time to time, the Companies are parties to various legal, environmental or other regulatory proceedings, including in the ordinary course of 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 reasonably 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 23 to the Consolidated Financial Statements and Future Issues and Other Matters in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020. • Notes 13 and 17 to the Consolidated Financial Statements in this report. ITEM 1A. RISK FACTORS The Companies’ businesses are influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond the Companies’ control. A number of these risk factors have been identified in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, 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’ Annual Report on Form 10-K for the year ended December 31, 2020. 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 Purchases of Equity Securities Period Total Number of Shares (or Units) Purchased(1) Average Price Paid per Share (or Unit)(2) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased under the Plans or Programs(3) 1/1/21-1/31/21 12,193 $ 75.20 — $ 0.92 billion 2/1/21-2/28/21 72,389 72.68 — 0.92 billion 3/1/21-3/31/21 — — — 0.92 billion Total 84,582 $ 73.04 — $ 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) 4/1/21 - 4/30/21 2,181 $ 75.70 — $ 0.92 billion 5/1/21 - 5/31/21 — — — 0.92 billion 6/1/21 - 6/30/21 — — — 0.92 billion Total 2,181 $ 75.70 — $ 0.92 billion (1) Represents shares of common stock that were tendered by employees to satisfy tax withholding obligations on vested restricted stock. (2) Represents the weighted-average price paid per share. (3) In November 2020, the Dominion Energy Board of Directors authorized the repurchase of up to $1.0 billion of shares of common stock. This repurchase program has no expiration date or price or volume targets and may be modified, suspended or terminated at any time. Shares may be purchased through open market or privately negotiated transactions or otherwise at the discretion of management subject to prevailing market conditions, applicable securities laws and other factors. ITEM 5. OTHER INFORMATION On August 6, 2021, Dominion Energy filed a prospectus supplement to its effective registration statement on Form S-3 (File No. 333-239467) filed with the SEC on June 26, 2020 for purposes of registering the offer and resale of certain shares of its common stock previously issued and delivered to SCDOR in accordance with the terms of a settlement agreement as discussed in Note 17 to the Consolidated Financial Statements in this report. The registration rights agreement and opinion of counsel relating to the registration and validity of such shares are filed as Exhibits 4.1 and 5.1, respectively, to this Quarterly Report on Form 10-Q for the purpose of incorporating such exhibits by reference into the registration statement and the related prospectus contained therein, as supplemented by the prospectus supplement. 97 ITEM 6. EXHIBITS 98 Exhibit Number Description Dominion Energy Virginia Power 99 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 iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101. X X 99 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 |