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VELPI Virginia Electric & Power

Filed: 6 Nov 20, 8:14am
0000715957 d:VirginiaElectricAndPowerCompanyMember us-gaap:FairValueMeasurementsRecurringMember 2020-09-30 0000715957 d:VirginiaElectricAndPowerCompanyMember us-gaap:DefinedBenefitPostretirementHealthCoverageMember d:AmountsAssociatedWithDominionRetireeHealthAndWelfarePlanMember 2020-09-30

 

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 September 30, 2020

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 October 16, 2020, the latest practicable date for determination, Dominion Energy, Inc. had 815,819,095 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

 

 

 

 

2


GLOSSARY OF TERMS

The following abbreviations or acronyms used in this Form 10-Q are defined below:

 

Abbreviation or Acronym

 

Definition

2016 Equity Units

 

Dominion Energy’s 2016 Series A Equity Units issued in August 2016, initially in the form of 2016 Series A Corporate Units, consisting of a stock purchase contract and a 1/40 interest in RSNs issued by Dominion Energy

2019 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

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.

Altavista

 

Altavista biomass power station

AMI

 

Advanced Metering Infrastructure

AOCI

 

Accumulated other comprehensive income (loss)

ARO

 

Asset retirement obligation

Atlantic Coast Pipeline

 

Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy and Duke 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 and constructed and operated by DETI

BACT

 

Best available control technology

bcf

 

Billion cubic feet

Bear Garden

 

A 590 MW combined-cycle, natural gas-fired power station in Buckingham County, Virginia

BHE

 

Berkshire Hathaway Energy Company

Blue Racer

 

Blue Racer Midstream, LLC, a joint venture between Caiman Energy II, LLC and FR BR Holdings, LLC

BP

 

BP Wind Energy North America Inc.

Brookfield

 

Brookfield Super-Core Infrastructure Partners, an infrastructure fund managed by Brookfield Asset Management Inc.

Brunswick County

 

A 1,376 MW combined-cycle, natural gas-fired power station in Brunswick County, Virginia

CAA

 

Clean Air Act

CARES Act

 

Coronavirus Aid, Relief and Economic Security Act, enacted on March 27, 2020

CCR

 

Coal combustion residual

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

3


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

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

 

Dominion Energy Cove Point LNG, LP

Cove Point LNG Facility

 

An LNG import/export and storage facility, including the Liquefaction Facility, located on the Chesapeake Bay in Lusby, Maryland

CPCN

 

Certificate of Public Convenience and Necessity

CWA

 

Clean Water Act

DCP

 

The legal entity, Dominion Cove Point, LLC, one or more of its consolidated subsidiaries (including Dominion Energy Midstream), or the entirety of Dominion Cove Point, LLC and its consolidated subsidiaries

DECG

 

Dominion Energy Carolina Gas Transmission, LLC

DECGS

 

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

 

Dominion Energy Transmission, Inc.

DGI

 

Dominion Generation, Inc.

DGP

 

Dominion Gathering and Processing, Inc.

DMLPHCII

 

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 Gas Restructuring

 

The acquisition of DCP and DMLPHCII from, and the disposition of East Ohio and DGP to, Dominion Energy by Dominion Energy Gas on November 6, 2019

Dominion Energy  Midstream

 

The legal entity, Dominion Energy Midstream Partners, LP, one or more of its consolidated subsidiaries (consisting effective November 2020 of DECG), or the entirety of Dominion Energy 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

4


Dominion Iroquois

 

The legal entity Dominion Iroquois, Inc., one or more of its consolidated subsidiaries, or the entirety of Dominion Iroquois, Inc. and its consolidated subsidiaries, which holds 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

EPA

 

U.S. Environmental Protection Agency

EPS

 

Earnings per common share

FASB

 

Financial Accounting Standards Board

FERC

 

Federal Energy Regulatory Commission

FILOT

 

Fee in lieu of taxes

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 joint venture through September 2020 with BP in Benton County, Indiana

FTRs

 

Financial transmission rights

GAAP

 

U.S. generally accepted accounting principles

Gal

 

Gallon

Gas Distribution

 

Gas Distribution operating segment

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, Dominion Energy Field Services, Inc. and Dominion Modular LNG Holdings, Inc. (which holds a 50% noncontrolling interest in JAX LNG) pursuant to a purchase and sale agreement entered into on July 3, 2020, which was completed on November 1, 2020

GTSA

 

Virginia Grid Transformation and Security Act of 2018

GW

 

Gigawatt

Heating degree days

 

Units measuring the extent to which the average daily temperature is less than 65 degrees Fahrenheit, or 60 degrees Fahrenheit in DESC’s service territory, calculated as the difference between 65 or 60 degrees, as applicable, and the average temperature for that day

Hope

 

Hope Gas, Inc., doing business as Dominion Energy West Virginia

Hopewell

 

Polyester biomass power station

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.

5


ISO

 

Independent system operator

JAX LNG

 

JAX LNG, LLC, an LNG supplier in Florida serving the marine and LNG markets

Jones Act

 

The Coastwise Merchandise Statute (commonly known as the Jones Act) 46 U.S.C. §55102 regulating U.S. maritime commerce

June 2006 hybrids

 

Dominion Energy’s 2006 Series A Enhanced Junior Subordinated Notes due 2066

Kewaunee

 

Kewaunee nuclear power station

kV

 

Kilovolt

Liquefaction Facility

 

A natural gas export/liquefaction facility at the Cove Point LNG Facility

LNG

 

Liquefied natural gas

MATS

 

Utility Mercury and Air Toxics Standard Rule

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

MWh

 

Megawatt hour

N2O

 

Nitrous oxide

NAV

 

Net asset value

NGL

 

Natural gas liquid

NND Project

 

V.C. Summer Units 2 and 3 nuclear development project under which DESC and Santee Cooper undertook to construct two Westinghouse AP1000 Advanced Passive Safety nuclear units in Jenkinsville, South Carolina

Norge Solar

 

A proposed 20 MW utility-scale solar power station located in James City County, Virginia

North Carolina    Commission

 

North Carolina Utilities Commission

NRC

 

U.S. Nuclear Regulatory Commission

NSPS

 

New Source Performance Standards

NWP 12

 

A nationwide permit from the Army Corps of Engineers authorizing activities required for the construction, maintenance, repair and removal of utility lines, including electric transmission, gas pipelines, water and communications conduit and associated facilities in waters of the U.S.

NYSE

 

New York Stock Exchange

Ohio Commission

 

Public Utilities Commission of Ohio

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, L.L.C.

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

6


Q-Pipe Transaction

 

The proposed sale by Dominion Energy to BHE of Dominion Energy Questar Pipeline, DEQPS and QPC Holding Company, LLC (including its subsidiary Questar Southern Trails Pipeline Company), pursuant to a purchase and sale agreement entered into on October 5, 2020

Questar Gas

 

Questar Gas Company, doing business as Dominion Energy Utah, Dominion Energy Wyoming and Dominion Energy Idaho

RCC

 

Replacement Capital Covenant

RGGI

 

Regional Greenhouse Gas Initiative

RICO

 

Racketeer Influenced and Corrupt Organizations Act

Rider B

 

A rate adjustment clause associated with the recovery of costs related to the conversion of three of Virginia Power’s coal-fired power stations to biomass

Rider BW

 

A rate adjustment clause associated with the recovery of costs related to Brunswick County

Rider CE

 

A rate adjustment clause associated with the recovery of the costs related to certain renewable generation facilities in Virginia

Rider E

 

A rate adjustment clause associated with the recovery of costs related to certain capital projects at Virginia Power’s electric generating stations to comply with federal and state environmental laws and regulations

Rider GV

 

A rate adjustment clause associated with the recovery of costs related to Greensville County

Rider R

 

A rate adjustment clause associated with the recovery of costs related to Bear Garden

Rider S

 

A rate adjustment clause associated with the recovery of costs related to the Virginia City Hybrid Energy Center

Rider T1

 

A rate adjustment clause to recover the difference between revenues produced from transmission rates included in base rates and the new total revenue requirement developed annually for the rate years effective September 1

Rider U

 

A rate adjustment clause associated with the recovery of costs of new underground distribution facilities

Rider US-2

 

A rate adjustment clause associated with the recovery of costs related to Woodland Solar, Scott Solar and Whitehouse Solar 

Rider US-3

 

A rate adjustment clause associated with the recovery of costs related to Colonial Trail West and Spring Grove 1

Rider US-4

 

A rate adjustment clause associated with the recovery of costs related to Sadler Solar

Rider W

 

A rate adjustment clause associated with the recovery of costs related to Warren County

Riders C1A, C2A and C3A

 

Rate adjustment clauses associated with the recovery of cost related to certain DSM programs approved in DSM cases

ROE

 

Return on equity

RSN

 

Remarketable subordinated note

RTO

 

Regional transmission organization

Sadler Solar

 

An approximately 100 MW proposed utility-scale solar power station located in Greensville County, Virginia

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

SCANA Merger Approval Order

 

Final order issued by the South Carolina Commission on December 21, 2018 setting forth its approval of the SCANA Combination

7


SCDHEC

 

South Carolina Department of Health and Environmental Control

SCDOR

 

South Carolina Department of Revenue

Scott Solar

 

A 17 MW utility-scale solar power station in Powhatan County, Virginia

SEC

 

U.S. Securities and Exchange Commission

SEMI

 

SCANA Energy Marketing, LLC (formerly known as SCANA Energy Marketing, Inc.), a subsidiary of SCANA through December 2019, and effective December 2019, a subsidiary of Wrangler

September 2006 hybrids

 

Dominion Energy’s 2006 Series B Enhanced Junior Subordinated Notes due 2066

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

SF6

 

Sulfur hexafluoride

South Carolina    Commission

 

Public Service Commission of South Carolina

Southampton

 

Southampton biomass power station

Southern

 

 

The legal entity, The Southern Company, one or more of its consolidated subsidiaries, or the entirety of The Southern Company and its consolidated subsidiaries

Spring Grove 1

 

An approximately 98 MW proposed 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

 

A partnership comprised primarily of institutional investors advised by J.P. Morgan Asset Management-Global Real Assets

Three Cedars

 

Granite Mountain and Iron Springs, collectively

Utah Commission

 

Utah Public Service Commission

VCEA

 

Virginia Clean Economy Act, passed by the Virginia General Assembly in March 2020 and enacted on April 11, 2020

VDEQ

 

Virginia Department of Environmental Quality

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

VOC

 

Volatile organic compounds

Warren County

 

A 1,350 MW combined-cycle, natural gas-fired power station in Warren County, Virginia

WECTEC

 

WECTEC Global Project Services, Inc., a wholly-owned subsidiary of Westinghouse

West Virginia Commission

 

Public Service Commission of West Virginia

8


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

Woodland Solar

 

A 19 MW utility-scale solar power station in Isle of Wight County, Virginia

Wrangler

 

Wrangler Retail Gas Holdings, LLC, a partnership between Dominion Energy and Interstate Gas Supply, Inc.

Wyoming Commission

 

Wyoming Public Service Commission

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

(millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue

 

$

3,607

 

 

$

3,782

 

 

$

10,651

 

 

$

10,506

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electric fuel and other energy-related purchases

 

 

594

 

 

 

769

 

 

 

1,758

 

 

 

2,250

 

Purchased electric capacity

 

 

23

 

 

 

11

 

 

 

36

 

 

 

74

 

Purchased gas

 

 

37

 

 

 

158

 

 

 

561

 

 

 

1,120

 

Other operations and maintenance

 

 

977

 

 

 

867

 

 

 

2,720

 

 

 

2,824

 

Depreciation, depletion and amortization

 

 

595

 

 

 

586

 

 

 

1,751

 

 

 

1,713

 

Other taxes

 

 

203

 

 

 

202

 

 

 

663

 

 

 

698

 

Impairment of assets and other charges

 

 

1,151

 

 

 

85

 

 

 

1,963

 

 

 

1,219

 

Total operating expenses

 

 

3,580

 

 

 

2,678

 

 

 

9,452

 

 

 

9,898

 

Income from operations

 

 

27

 

 

 

1,104

 

 

 

1,199

 

 

 

608

 

Other income

 

 

281

 

 

 

129

 

 

 

327

 

 

 

526

 

Interest and related charges

 

 

306

 

 

 

370

 

 

 

1,136

 

 

 

1,133

 

Income from continuing operations including noncontrolling interest

      before income tax expense (benefit)

 

 

2

 

 

 

863

 

 

 

390

 

 

 

1

 

Income tax expense (benefit)

 

 

(110

)

 

 

(84

)

 

 

(123

)

 

 

161

 

Net Income (Loss) From Continuing Operations Including

      Noncontrolling Interest

 

 

112

 

 

 

947

 

 

 

513

 

 

 

(160

)

Net Income (Loss) From Discontinued Operations Including

     Noncontrolling Interest(1)(2)

 

 

19

 

 

 

38

 

 

 

(1,753

)

 

 

526

 

Net Income (Loss) Including Noncontrolling Interest

 

 

131

 

 

 

985

 

 

 

(1,240

)

 

 

366

 

Noncontrolling Interest

 

 

(225

)

 

 

10

 

 

 

(157

)

 

 

17

 

Net Income (Loss) Attributable to Dominion Energy

 

$

356

 

 

$

975

 

 

$

(1,083

)

 

$

349

 

Amounts attributable to Dominion Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) from continuing operations

 

$

369

 

 

$

937

 

 

$

767

 

 

$

(171

)

Net Income (Loss) from discontinued operations

 

 

(13

)

 

 

38

 

 

 

(1,850

)

 

 

520

 

Net Income (Loss) attributable to Dominion Energy

 

$

356

 

 

$

975

 

 

$

(1,083

)

 

$

349

 

EPS - Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) from continuing operations

 

$

0.42

 

 

$

1.14

 

 

$

0.86

 

 

$

(0.22

)

Net Income (Loss) from discontinued operations

 

 

(0.01

)

 

 

0.05

 

 

 

(2.21

)

 

 

0.64

 

Net Income (Loss) attributable to Dominion Energy

 

$

0.41

 

 

$

1.19

 

 

$

(1.35

)

 

$

0.42

 

EPS - Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) from continuing operations

 

$

0.42

 

 

$

1.12

 

 

$

0.83

 

 

$

(0.22

)

Net Income (Loss) from discontinued operations

 

 

(0.01

)

 

 

0.05

 

 

 

(2.21

)

 

 

0.64

 

Net Income (Loss) attributable to Dominion Energy

 

$

0.41

 

 

$

1.17

 

 

$

(1.38

)

 

$

0.42

 

 

 

(1)

See Note 10 for amounts attributable to related parties.

 

(2)

Includes income tax expense (benefit) of $(10) million and $136 million for the three months ended September 30, 2020 and 2019, respectively and $(572) million and $47 million for the nine months ended September 30, 2020 and 2019, respectively.

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

10


DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) including noncontrolling interest

 

$

131

 

 

$

985

 

 

$

(1,240

)

 

$

366

 

Other comprehensive income (loss), net of taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net deferred gains (losses) on derivatives-hedging activities(1)

 

 

10

 

 

 

(107

)

 

 

(254

)

 

 

(209

)

Changes in unrealized net gains (losses) on investment

   securities(2)

 

 

4

 

 

 

8

 

 

 

32

 

 

 

37

 

Changes in net unrecognized pension and other postretirement

   benefit costs(3)

 

 

(261

)

 

 

(4

)

 

 

(262

)

 

 

109

 

Amounts reclassified to net income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net derivative (gains) losses-hedging activities(4)

 

 

188

 

 

 

(6

)

 

 

215

 

 

 

(58

)

Net realized (gains) losses on investment securities(5)

 

 

(1

)

 

 

(4

)

 

 

(15

)

 

 

(5

)

Net pension and other postretirement benefit costs(6)

 

 

23

 

 

 

20

 

 

 

60

 

 

 

50

 

Changes in other comprehensive income from equity

   method investees(7)

 

 

1

 

 

 

(1

)

 

 

1

 

 

 

(1

)

Total other comprehensive loss

 

 

(36

)

 

 

(94

)

 

 

(223

)

 

 

(77

)

Comprehensive income (loss) including noncontrolling interest

 

 

95

 

 

 

891

 

 

 

(1,463

)

 

 

289

 

Comprehensive income (loss) attributable to noncontrolling interests

 

 

(225

)

 

 

10

 

 

 

(157

)

 

 

17

 

Comprehensive income (loss) attributable to Dominion Energy

 

$

320

 

 

$

881

 

 

$

(1,306

)

 

$

272

 

 

(1)

Net of $(4) million and $37 million tax for the three months ended September 30, 2020 and 2019, respectively, and net of $85 million and $69 million tax for the nine months ended September 30, 2020 and 2019, respectively.

(2)

Net of $(2) million and $(2) million tax for the three months ended September 30, 2020 and 2019, respectively, and net of $(12) million and $(13) million tax for the nine months ended September 30, 2020 and 2019, respectively.

(3)  Net of $91 million and $4 million tax for the three months ended September 30, 2020 and 2019, respectively, and net of $94 million and $(45) million tax for the nine months ended September 30, 2020 and 2019, respectively.

(4)  Net of $(63) million and $1 million tax for the three months ended September 30, 2020 and 2019, respectively, and net of $(72) million and $19 million tax for the nine months ended September 30, 2020 and 2019, respectively.

(5)  Net of $2 million and $1 million tax for the three months ended September 30, 2020 and 2019, respectively, and net of $6 million and $1 million tax for the nine months ended September 30, 2020 and 2019, respectively.

(6)  Net of $(8) million and $(6) million tax for the three months ended September 30, 2020 and 2019, respectively, and net of $(21) million and $(17) million tax for the nine months ended September 30, 2020 and 2019, respectively.

(7) Net of $(1) million and $0 million tax for the three months ended September 30, 2020 and 2019, respectively, and net of $(1) million and $0 million tax for the nine months ended September 30, 2020 and 2019, respectively.

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

11


DOMINION ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

September 30, 2020

 

 

December 31, 2019(1)

 

(millions)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

413

 

 

$

135

 

Customer receivables (less allowance for doubtful accounts of $51 and $18)

 

 

2,002

 

 

 

2,085

 

Other receivables (less allowance for doubtful accounts of $3 at both dates)

 

 

174

 

 

 

340

 

Inventories

 

 

1,565

 

 

 

1,616

 

Prepayments

 

 

632

 

 

 

296

 

Regulatory assets

 

 

663

 

 

 

871

 

Other

 

 

232

 

 

 

218

 

Current assets held for sale(2)

 

 

14,148

 

 

 

535

 

Total current assets

 

 

19,829

 

 

 

6,096

 

Investments

 

 

 

 

 

 

 

 

Nuclear decommissioning trust funds

 

 

6,357

 

 

 

6,192

 

Investment in equity method affiliates

 

 

137

 

 

 

1,334

 

Other

 

 

396

 

 

 

379

 

Total investments

 

 

6,890

 

 

 

7,905

 

Property, Plant and Equipment

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

81,729

 

 

 

82,043

 

Accumulated depreciation, depletion and amortization

 

 

(24,941

)

 

 

(24,843

)

Total property, plant and equipment, net

 

 

56,788

 

 

 

57,200

 

Deferred Charges and Other Assets

 

 

 

 

 

 

 

 

Goodwill

 

 

7,395

 

 

 

7,395

 

Regulatory assets

 

 

9,449

 

 

 

7,652

 

Other

 

 

4,184

 

 

 

3,618

 

Total deferred charges and other assets

 

 

21,028

 

 

 

18,665

 

Noncurrent assets held for sale

 

 

 

 

 

13,957

 

Total assets

 

$

104,535

 

 

$

103,823

 

 

(1)

Dominion Energy’s Consolidated Balance Sheet at December 31, 2019 has been derived from the audited Consolidated Balance Sheet at that date.

(2)

See Note 10 for amounts attributable to related parties.

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

12


DOMINION ENERGY, INC.

CONSOLIDATED BALANCE SHEETS—(Continued)

(Unaudited)

 

 

 

September 30, 2020

 

 

December 31, 2019(1)

 

(millions)

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Securities due within one year

 

$

2,700

 

 

$

2,462

 

Supplemental 364-Day credit facility borrowings

 

 

225

 

 

 

 

Short-term debt

 

 

2,328

 

 

 

849

 

Accounts payable

 

 

738

 

 

 

1,023

 

Accrued interest, payroll and taxes

 

 

1,146

 

 

 

1,284

 

Regulatory liabilities

 

 

716

 

 

 

455

 

Reserves for SCANA legal proceedings

 

 

228

 

 

 

696

 

Derivative liabilities

 

 

223

 

 

 

394

 

Other(2)

 

 

2,376

 

 

 

1,738

 

Current liabilities held for sale

 

 

6,880

 

 

 

1,039

 

Total current liabilities

 

 

17,560

 

 

 

9,940

 

Long-Term Debt

 

 

 

 

 

 

 

 

Long-term debt

 

 

30,103

 

 

 

25,492

 

Junior subordinated notes

 

 

2,160

 

 

 

3,406

 

Other

 

 

882

 

 

 

100

 

Total long-term debt

 

 

33,145

 

 

 

28,998

 

Deferred Credits and Other Liabilities

 

 

 

 

 

 

 

 

Deferred income taxes and investment tax credits

 

 

5,812

 

 

 

6,277

 

Regulatory liabilities

 

 

10,170

 

 

 

10,204

 

Derivative liabilities

 

 

537

 

 

 

329

 

Other(2)

 

 

9,245

 

 

 

8,288

 

Total deferred credits and other liabilities

 

 

25,764

 

 

 

25,098

 

Noncurrent liabilities held for sale

 

 

 

 

 

5,754

 

Total liabilities

 

 

76,469

 

 

 

69,790

 

Commitments and Contingencies (see Note 17)

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Preferred stock (See Note 16)

 

 

2,387

 

 

 

2,387

 

Common stock – no par(3)

 

 

21,930

 

 

 

23,824

 

Retained earnings

 

 

4,035

 

 

 

7,576

 

Accumulated other comprehensive loss

 

 

(2,016

)

 

 

(1,793

)

Total shareholders' equity

 

 

26,336

 

 

 

31,994

 

Noncontrolling interests

 

 

1,730

 

 

 

2,039

 

Total equity

 

 

28,066

 

 

 

34,033

 

Total liabilities and equity

 

$

104,535

 

 

$

103,823

 

 

(1) Dominion Energy’s Consolidated Balance Sheet at December 31, 2019 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; 816 million shares and 838 million shares outstanding at September 30, 2020 and December 31, 2019, respectively.

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

13


DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF EQUITY - QUARTER-TO-DATE

(Unaudited)

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2019

 

 

2

 

 

$

1,596

 

 

 

803

 

 

$

20,660

 

 

$

7,124

 

 

$

(1,683

)

 

$

27,697

 

 

$

684

 

 

$

28,381

 

Net income including noncontrolling

     interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

975

 

 

 

 

 

 

 

975

 

 

 

10

 

 

 

985

 

Issuance of stock

 

 

 

 

 

 

 

 

 

 

20

 

 

 

1,477

 

 

 

 

 

 

 

 

 

 

 

1,477

 

 

 

 

 

 

 

1,477

 

Stock awards (net of change in

     unearned compensation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

 

 

 

 

7

 

Preferred stock dividends(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7

)

 

 

 

 

 

 

(7

)

 

 

 

 

 

 

(7

)

Common stock dividends ($0.9175 per

     share) and distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(755

)

 

 

 

 

 

 

(755

)

 

 

(23

)

 

 

(778

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(94

)

 

 

(94

)

 

 

 

 

 

 

(94

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

(1

)

 

 

 

 

 

 

(14

)

 

 

 

 

 

 

(14

)

September 30, 2019

 

 

2

 

 

$

1,596

 

 

 

823

 

 

$

22,131

 

 

$

7,336

 

 

$

(1,777

)

 

$

29,286

 

 

$

671

 

 

$

29,957

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2020

 

 

2

 

 

$

2,387

 

 

 

840

 

 

$

23,984

 

 

$

4,480

 

 

$

(1,980

)

 

$

28,871

 

 

$

2,013

 

 

$

30,884

 

Net income (loss) including

     noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

356

 

 

 

 

 

 

 

356

 

 

 

(225

)

 

 

131

 

Issuance of stock

 

 

 

 

 

 

 

 

 

 

4

 

 

 

333

 

 

 

 

 

 

 

 

 

 

 

333

 

 

 

 

 

 

 

333

 

Stock repurchases

 

 

 

 

 

 

 

 

 

 

(28

)

 

 

(2,385

)

 

 

 

 

 

 

 

 

 

 

(2,385

)

 

 

 

 

 

 

(2,385

)

Stock awards (net of change in

     unearned compensation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

9

 

Preferred stock dividends(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16

)

 

 

 

 

 

 

(16

)

 

 

 

 

 

 

(16

)

Common stock dividends ($0.940 per

     share) and distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(785

)

 

 

 

 

 

 

(785

)

 

 

(59

)

 

 

(844

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36

)

 

 

(36

)

 

 

 

 

 

 

(36

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11

)

 

 

 

 

 

 

 

 

 

 

(11

)

 

 

1

 

 

 

(10

)

September 30, 2020

 

 

2

 

 

$

2,387

 

 

 

816

 

 

$

21,930

 

 

$

4,035

 

 

$

(2,016

)

 

$

26,336

 

 

$

1,730

 

 

$

28,066

 

 

(1) See Note 16 for further information.

 

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14


 

 

 

DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF EQUITY - YEAR-TO-DATE

(Unaudited)

 

 

 

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, 2018

 

 

0

 

 

$

0

 

 

 

681

 

 

$

12,588

 

 

$

9,219

 

 

$

(1,700

)

 

$

20,107

 

 

$

1,941

 

 

$

22,048

 

Net income including

     noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

349

 

 

 

 

 

 

 

349

 

 

 

17

 

 

 

366

 

Issuance of stock

 

 

2

 

 

 

1,596

 

 

 

24

 

 

 

1,802

 

 

 

 

 

 

 

 

 

 

 

3,398

 

 

 

 

 

 

 

3,398

 

Stock purchase contract component of

     2019 Equity Units(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(264

)

 

 

 

 

 

 

 

 

 

 

(264

)

 

 

 

 

 

 

(264

)

Acquisition of SCANA

 

 

 

 

 

 

 

 

 

 

96

 

 

 

6,818

 

 

 

 

 

 

 

 

 

 

 

6,818

 

 

 

 

 

 

 

6,818

 

Acquisition of public interest in

     Dominion Energy Midstream

 

 

 

 

 

 

 

 

 

 

22

 

 

 

1,181

 

 

 

 

 

 

 

 

 

 

 

1,181

 

 

 

(1,221

)

 

 

(40

)

Stock awards (net of change in

     unearned compensation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

 

19

 

Preferred stock dividends(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8

)

 

 

 

 

 

 

(8

)

 

 

 

 

 

 

(8

)

Common stock dividends ($2.753 per

     common share) and distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,224

)

 

 

 

 

 

 

(2,224

)

 

 

(66

)

 

 

(2,290

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(77

)

 

 

(77

)

 

 

 

 

 

 

(77

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

 

 

 

 

(13

)

September 30, 2019

 

 

2

 

 

$

1,596

 

 

 

823

 

 

$

22,131

 

 

$

7,336

 

 

$

(1,777

)

 

$

29,286

 

 

$

671

 

 

$

29,957

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

2

 

 

$

2,387

 

 

 

838

 

 

$

23,824

 

 

$

7,576

 

 

$

(1,793

)

 

$

31,994

 

 

$

2,039

 

 

$

34,033

 

Cumulative-effect of changes in

     accounting principles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(48

)

 

 

 

 

 

 

(48

)

 

 

 

 

 

 

(48

)

Net loss including noncontrolling

     interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,083

)

 

 

 

 

 

 

(1,083

)

 

 

(157

)

 

 

(1,240

)

Issuance of stock

 

 

 

 

 

 

 

 

 

 

6

 

 

 

481

 

 

 

 

 

 

 

 

 

 

 

481

 

 

 

 

 

 

 

481

 

Stock repurchases

 

 

 

 

 

 

 

 

 

 

(28

)

 

 

(2,385

)

 

 

 

 

 

 

 

 

 

 

(2,385

)

 

 

 

 

 

 

(2,385

)

Stock awards (net of change in

     unearned compensation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

 

 

 

 

22

 

Preferred stock dividends(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(48

)

 

 

 

 

 

 

(48

)

 

 

 

 

 

 

(48

)

Common stock dividends ($2.820 per

     share) and distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,362

)

 

 

 

 

 

 

(2,362

)

 

 

(153

)

 

 

(2,515

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(223

)

 

 

(223

)

 

 

 

 

 

 

(223

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12

)

 

 

 

 

 

 

 

 

 

 

(12

)

 

 

1

 

 

 

(11

)

September 30, 2020

 

 

2

 

 

$

2,387

 

 

 

816

 

 

$

21,930

 

 

$

4,035

 

 

$

(2,016

)

 

$

26,336

 

 

$

1,730

 

 

$

28,066

 

 

(1) See Note 16 for further information.

 

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

 

 

15


DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Nine Months Ended September 30,

 

2020

 

 

2019

 

(millions)

 

 

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

 

 

 

Net income (loss) including noncontrolling interests

 

$

(1,240

)

 

$

366

 

Adjustments to reconcile net income (loss) including noncontrolling interests to net cash

   provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization (including nuclear fuel)

 

 

2,178

 

 

 

2,235

 

Deferred income taxes and investment tax credits

 

 

(380

)

 

 

112

 

Provision for refunds and rate credits to electric utility customers

 

 

0

 

 

 

936

 

Impairment of assets and other charges

 

 

2,207

 

 

 

982

 

Loss for equity method investee

 

 

2,376

 

 

 

0

 

Charges related to a voluntary retirement program

 

 

0

 

 

 

384

 

Net gains on nuclear decommissioning trust funds and other investments

 

 

(101

)

 

 

(418

)

Revision to future ash pond and landfill closure costs

 

 

0

 

 

 

(113

)

Other adjustments

 

 

84

 

 

 

(29

)

Changes in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

291

 

 

 

354

 

Inventories

 

 

29

 

 

 

(106

)

Deferred fuel and purchased gas costs, net

 

 

206

 

 

 

158

 

Prepayments

 

 

(292

)

 

 

31

 

Accounts payable

 

 

(186

)

 

 

(446

)

Accrued interest, payroll and taxes

 

 

(113

)

 

 

(123

)

Customer deposits

 

 

(9

)

 

 

(94

)

Margin deposit assets and liabilities

 

 

3

 

 

 

54

 

Net realized and unrealized changes related to derivative activities

 

 

285

 

 

 

1

 

Pension and other postretirement benefits

 

 

(170

)

 

 

(107

)

Other operating assets and liabilities

 

 

(358

)

 

 

(468

)

Net cash provided by operating activities

 

 

4,810

 

 

 

3,709

 

Investing Activities

 

 

 

 

 

 

 

 

Plant construction and other property additions (including nuclear fuel)

 

 

(4,409

)

 

 

(3,407

)

Cash and restricted cash acquired in the SCANA Combination

 

 

0

 

 

 

389

 

Acquisition of solar development projects

 

 

(245

)

 

 

(183

)

Proceeds from sales of securities

 

 

2,868

 

 

 

1,311

 

Purchases of securities

 

 

(2,948

)

 

 

(1,330

)

Proceeds from sales of assets and equity method investments

 

 

71

 

 

 

211

 

Contributions to equity method affiliates

 

 

(92

)

 

 

(187

)

Acquisition of equity method investments

 

 

(178

)

 

 

0

 

Other

 

 

73

 

 

 

36

 

Net cash used in investing activities

 

 

(4,860

)

 

 

(3,160

)

Financing Activities

 

 

 

 

 

 

 

 

Issuance of short-term debt, net

 

 

1,417

 

 

 

1,913

 

Issuance of short-term notes

 

 

1,125

 

 

 

3,000

 

Repayment of short-term notes

 

 

(625

)

 

 

0

 

Supplemental 364-Day credit facility borrowings

 

 

225

 

 

 

0

 

Repayment of credit facility borrowings

 

 

0

 

 

 

(113

)

Issuance of long-term debt

 

 

5,677

 

 

 

2,298

 

Repayment of long-term debt, including redemption premiums

 

 

(2,546

)

 

 

(8,595

)

Issuance of 2019 Equity Units

 

 

0

 

 

 

1,582

 

Issuance of common stock

 

 

159

 

 

 

1,802

 

Repurchase of common stock

 

 

(2,385

)

 

 

0

 

Common dividend payments

 

 

(2,362

)

 

 

(2,224

)

Other

 

 

(346

)

 

 

(163

)

Net cash provided by (used in) financing activities

 

 

339

 

 

 

(500

)

Increase in cash, restricted cash and equivalents

 

 

289

 

 

 

49

 

Cash, restricted cash and equivalents at beginning of period

 

 

269

 

 

 

391

 

Cash, restricted cash and equivalents at end of period

 

$

558

 

 

$

440

 

Supplemental Cash Flow Information

 

 

 

 

 

 

 

 

Significant noncash investing and financing activities:(1)(2)

 

 

 

 

 

 

 

 

Accrued capital expenditures

 

$

461

 

 

$

378

 

Leases(3)

 

 

45

 

 

 

102

 

(1)

See Note 3 for noncash investing and financing activities related to the SCANA Combination.

(2)

See Note 16 for noncash financing activities related to derivative restructuring, the acquisition of the public interest in Dominion Energy Midstream, the issuance of stock purchase contracts associated with the 2019 Equity Units and the issuance of common stock associated with the settlement of litigation.  See Note 17 for noncash investing activities related to property, plant and equipment conveyed to satisfy litigation.

16


See Note 18 to the Consolidated Financial Statements in Dominion Energy’s Annual Report on Form 10-K for the year ended December 31, 2019 for noncash financing activities related to the remarketing of RSNs.

(3)   Includes $42 million and $98 million of financing leases at September 30, 2020 and 2019, respectively, and $3 million and $4 million of operating leases at September 30, 2020 and 2019, respectively.

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

17


VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue(1)

 

$

2,248

 

 

$

2,264

 

 

$

5,983

 

 

$

6,167

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electric fuel and other energy-related purchases(1)

 

 

424

 

 

 

559

 

 

 

1,282

 

 

 

1,691

 

Purchased (excess) electric capacity

 

 

3

 

 

 

(1

)

 

 

(14

)

 

 

45

 

Other operations and maintenance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliated suppliers

 

 

69

 

 

 

74

 

 

 

236

 

 

 

287

 

Other

 

 

456

 

 

 

379

 

 

 

1,083

 

 

 

1,010

 

Depreciation and amortization

 

 

324

 

 

 

313

 

 

 

942

 

 

 

916

 

Other taxes

 

 

85

 

 

 

82

 

 

 

257

 

 

 

257

 

Impairment of assets and other charges

 

 

200

 

 

 

38

 

 

 

1,008

 

 

 

781

 

Total operating expenses

 

 

1,561

 

 

 

1,444

 

 

 

4,794

 

 

 

4,987

 

Income from operations

 

 

687

 

 

 

820

 

 

 

1,189

 

 

 

1,180

 

Other income

 

 

34

 

 

 

15

 

 

 

34

 

 

 

68

 

Interest and related charges(1)

 

 

135

 

 

 

138

 

 

 

398

 

 

 

408

 

Income before income tax expense

 

 

586

 

 

 

697

 

 

 

825

 

 

 

840

 

Income tax expense

 

 

111

 

 

 

95

 

 

 

140

 

 

 

118

 

Net Income

 

$

475

 

 

$

602

 

 

$

685

 

 

$

722

 

 

(1)

See Note 19 for amounts attributable to affiliates.

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

 


18


VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

475

 

 

$

602

 

 

$

685

 

 

$

722

 

Other comprehensive income (loss), net of taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net deferred gains (losses) on derivatives-hedging activities(1)

 

 

5

 

 

 

(16

)

 

 

(39

)

 

 

(34

)

Changes in unrealized net gains (losses) on nuclear

   decommissioning trust funds(2)

 

 

0

 

 

 

1

 

 

 

4

 

 

 

5

 

Amounts reclassified to net income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net derivative (gains) losses-hedging activities(3)

 

 

1

 

 

 

0

 

 

 

1

 

 

 

1

 

Net realized (gains) losses on nuclear decommissioning

   trust funds(4)

 

 

(1

)

 

 

0

 

 

 

(2

)

 

 

(1

)

Total other comprehensive income (loss)

 

 

5

 

 

 

(15

)

 

 

(36

)

 

 

(29

)

Comprehensive income

 

$

480

 

 

$

587

 

 

$

649

 

 

$

693

 

 

(1)

Net of $(1) million and $5 million tax for the three months ended September 30, 2020 and 2019, respectively, and net of $14 million and $11 million tax for the nine months ended September 30, 2020 and 2019, respectively.

(2)

Net of $(1) million and $(1) million tax for the three months ended September 30, 2020 and 2019, respectively, and net of $(2) million and $(2) million tax for the nine months ended September 30, 2020 and 2019, respectively.  

(3)

Net of $0 million and $0 million tax for the three months ended September 30, 2020 and 2019, respectively, and net of $(1) million and $— tax for the nine months ended September 30, 2020 and 2019, respectively.

(4)

Net of $0 million and $1 million tax for the three months ended September 30, 2020 and 2019, respectively, and net of $1 million and $1 million tax for the nine months ended September 30, 2020 and 2019, respectively.

 

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

 

19


VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

 

September 30, 2020

 

 

December 31, 2019(1)

 

(millions)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

62

 

 

$

17

 

Customer receivables (less allowance for doubtful accounts of $30 and $9)

 

 

1,337

 

 

 

1,163

 

Other receivables (less allowance for doubtful accounts of $2 at both dates)

 

 

73

 

 

 

106

 

Affiliated receivables

 

 

1

 

 

 

27

 

Inventories (average cost method)

 

 

828

 

 

 

873

 

Regulatory assets

 

 

218

 

 

 

433

 

Other(2)

 

 

78

 

 

 

57

 

Total current assets

 

 

2,597

 

 

 

2,676

 

Investments

 

 

 

 

 

 

 

 

Nuclear decommissioning trust funds

 

 

2,933

 

 

 

2,881

 

Other

 

 

3

 

 

 

3

 

Total investments

 

 

2,936

 

 

 

2,884

 

Property, Plant and Equipment

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

46,083

 

 

 

47,038

 

Accumulated depreciation and amortization

 

 

(14,055

)

 

 

(14,156

)

Total property, plant and equipment, net

 

 

32,028

 

 

 

32,882

 

Deferred Charges and Other Assets

 

 

 

 

 

 

 

 

Regulatory assets

 

 

3,610

 

 

 

1,863

 

Other(2)

 

 

1,566

 

 

 

1,123

 

Total deferred charges and other assets

 

 

5,176

 

 

 

2,986

 

Total assets

 

$

42,737

 

 

$

41,428

 

 

(1)

Virginia Power’s Consolidated Balance Sheet at December 31, 2019 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.

20


VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED BALANCE SHEETS—(Continued)

(Unaudited)

 

 

 

 

September 30, 2020

 

 

December 31, 2019(1)

 

(millions)

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDER’S EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Securities due within one year

 

$

8

 

 

$

4

 

Short-term debt

 

 

422

 

 

 

243

 

Accounts payable

 

 

320

 

 

 

334

 

Payables to affiliates

 

 

328

 

 

 

210

 

Affiliated current borrowings

 

 

230

 

 

 

107

 

Accrued interest, payroll and taxes

 

 

339

 

 

 

253

 

Asset retirement obligations

 

 

91

 

 

 

340

 

Regulatory liabilities

 

 

312

 

 

 

167

 

Derivative liabilities(2)

 

 

15

 

 

 

243

 

Other

 

 

563

 

 

 

571

 

Total current liabilities

 

 

2,628

 

 

 

2,472

 

Long-Term Debt

 

 

 

 

 

 

 

 

Long-term debt

 

 

12,328

 

 

 

12,325

 

Other

 

 

477

 

 

 

16

 

Total long-term debt

 

 

12,805

 

 

 

12,341

 

Deferred Credits and Other Liabilities

 

 

 

 

 

 

 

 

Deferred income taxes and investment tax credits

 

 

2,720

 

 

 

2,962

 

Asset retirement obligations

 

 

3,568

 

 

 

3,241

 

Regulatory liabilities

 

 

5,324

 

 

 

5,074

 

Other(2)

 

 

1,377

 

 

 

1,349

 

Total deferred credits and other liabilities

 

 

12,989

 

 

 

12,626

 

Total liabilities

 

 

28,422

 

 

 

27,439

 

Commitments and Contingencies (see Note 17)

 

 

 

 

 

 

 

 

Common Shareholder’s Equity

 

 

 

 

 

 

 

 

Common stock – no par(3)

 

 

5,738

 

 

 

5,738

 

Other paid-in capital

 

 

1,113

 

 

 

1,113

 

Retained earnings

 

 

7,529

 

 

 

7,167

 

Accumulated other comprehensive loss

 

 

(65

)

 

 

(29

)

Total common shareholder’s equity

 

 

14,315

 

 

 

13,989

 

Total liabilities and shareholder’s equity

 

$

42,737

 

 

$

41,428

 

 

(1)

Virginia Power’s Consolidated Balance Sheet at December 31, 2019 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 September 30, 2020 and December 31, 2019.

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

21


VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER’S EQUITY

(Unaudited)

 

QUARTER-TO-DATE

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Other Paid-In Capital

 

 

Retained Earnings

 

 

AOCI

 

 

Total

 

(millions, except for shares)

 

(thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2019

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

6,139

 

 

$

(26

)

 

$

12,964

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

602

 

 

 

 

 

 

 

602

 

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15

)

 

 

(15

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

(1

)

September 30, 2019

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

6,740

 

 

$

(41

)

 

$

13,550

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2020

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

7,163

 

 

$

(70

)

 

$

13,944

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

475

 

 

 

 

 

 

 

475

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(108

)

 

 

 

 

 

 

(108

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

5

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

(1

)

September 30, 2020

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

7,529

 

 

$

(65

)

 

$

14,315

 

 

 

 

 

YEAR-TO-DATE

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Other Paid-In Capital

 

 

Retained Earnings

 

 

AOCI

 

 

Total

 

(millions, except for shares)

 

(thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2018

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

6,208

 

 

$

(12

)

 

$

13,047

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

722

 

 

 

 

 

 

 

722

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(189

)

 

 

 

 

 

 

(189

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29

)

 

 

(29

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

(1

)

September 30, 2019

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

6,740

 

 

$

(41

)

 

$

13,550

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

7,167

 

 

$

(29

)

 

$

13,989

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

685

 

 

 

 

 

 

 

685

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(323

)

 

 

 

 

 

 

(323

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36

)

 

 

(36

)

September 30, 2020

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

7,529

 

 

$

(65

)

 

$

14,315

 

 

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

22


VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Nine Months Ended September 30,

 

2020

 

 

 

 

2019

 

(millions)

 

 

 

 

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

 

 

 

 

 

Net income

 

$

685

 

 

 

 

$

722

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization (including nuclear fuel)

 

 

1,068

 

 

 

 

 

1,045

 

Deferred income taxes and investment tax credits

 

 

(259

)

 

 

 

 

(141

)

Revision to future ash pond and landfill closure costs

 

 

0

 

 

 

 

 

(113

)

Impairment of assets and other charges

 

 

1,004

 

 

 

 

 

646

 

Charge related to a voluntary retirement program

 

 

0

 

 

 

 

 

138

 

Other adjustments

 

 

(23

)

 

 

 

 

(60

)

Changes in:

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(152

)

 

 

 

 

(154

)

Affiliated receivables and payables

 

 

144

 

 

 

 

 

21

 

Inventories

 

 

46

 

 

 

 

 

(34

)

Prepayments

 

 

1

 

 

 

 

 

(4

)

Deferred fuel expenses, net

 

 

144

 

 

 

 

 

232

 

Accounts payable

 

 

(1

)

 

 

 

 

(38

)

Accrued interest, payroll and taxes

 

 

81

 

 

 

 

 

73

 

Net realized and unrealized changes related to derivative activities

 

 

(18

)

 

 

 

 

18

 

Asset retirement obligations

 

 

51

 

 

 

 

 

33

 

Pension and other postretirement benefits

 

 

(273

)

 

 

 

 

54

 

Other operating assets and liabilities

 

 

67

 

 

 

 

 

(370

)

Net cash provided by operating activities

 

 

2,565

 

 

 

 

 

2,068

 

Investing Activities

 

 

 

 

 

 

 

 

 

 

Plant construction and other property additions

 

 

(2,301

)

 

 

 

 

(1,816

)

Purchases of nuclear fuel

 

 

(170

)

 

 

 

 

(96

)

Acquisition of solar development projects

 

 

(26

)

 

 

 

 

(169

)

Proceeds from sales of securities

 

 

694

 

 

 

 

 

677

 

Purchases of securities

 

 

(729

)

 

 

 

 

(717

)

Other

 

 

33

 

 

 

 

 

(18

)

Net cash used in investing activities

 

 

(2,499

)

 

 

 

 

(2,139

)

Financing Activities

 

 

 

 

 

 

 

 

 

 

Issuance of short-term debt, net

 

 

179

 

 

 

 

 

371

 

Issuance (repayment) of affiliated current borrowings, net

 

 

123

 

 

 

 

 

(215

)

Issuance of long-term debt

 

 

427

 

 

 

 

 

698

 

Repayment of long-term debt

 

 

(427

)

 

 

 

 

(590

)

Common dividend payments to parent

 

 

(323

)

 

 

 

 

(189

)

Other

 

 

(6

)

 

 

 

 

(5

)

Net cash provided by (used in) financing activities

 

 

(27

)

 

 

 

 

70

 

Increase (decrease) in cash, restricted cash and equivalents

 

 

39

 

 

 

 

 

(1

)

Cash, restricted cash and equivalents at beginning of period

 

 

24

 

 

 

 

 

38

 

Cash, restricted cash and equivalents at end of period

 

$

63

 

 

 

 

$

37

 

Supplemental Cash Flow Information

 

 

 

 

 

 

 

 

 

 

Significant noncash investing and financing activities:(1)

 

 

 

 

 

 

 

 

 

 

Accrued capital expenditures

 

$

234

 

 

 

 

$

231

 

Financing leases

 

 

26

 

 

 

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

See Note 16 for noncash financing activities related to derivative restructuring.

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

 

23


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 transporters 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., regulated gas transportation and storage services in the Rocky Mountain region of the U.S., merchant electric generation and, following the completion of the GT&S Transaction in November 2020, a noncontrolling interest in Cove Point. Virginia Power is a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and northeastern North Carolina.  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 Transaction.

 

Beginning in September 2020, Dominion Energy manages its daily operations through 4 primary operating segments:  Dominion Energy Virginia, Gas Distribution, Dominion Energy South Carolina and Contracted Assets.  Dominion Energy also reports a Corporate and Other segment, which 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. Corporate and Other includes specific items attributable to Dominion Energy’s operating segments that are not included in profit measures evaluated by executive management in assessing the operating segments’ performance or in allocating resources.  In addition, Corporate and Other includes the net impact of discontinued operations consisting of Dominion Energy’s gas transmission and storage operations as discussed in Note 3 and its equity investment in Atlantic Coast Pipeline as discussed in Note 10.

 

See Note 21 for further discussion of the Companies’ operating segments.

 

 

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, 2019.

In the Companies’ opinion, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly their financial position at September 30, 2020, their results of operations and changes in equity for the three and nine months ended September 30, 2020 and 2019 and their cash flows for the nine months ended September 30, 2020 and 2019. 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 September 30, 2020, Dominion Energy owns 50% of the voting interests in Four Brothers and Three Cedars and has a controlling financial interest over the entities through its right to control operations. GIP’s ownership interest in Four Brothers and Three Cedars, Terra Nova Renewable Partners’ 33% interest in certain Dominion Energy merchant solar projects, Brookfield’s 25% interest in Cove Point (effective December 2019) and the non-Dominion Energy held interest in Dominion Energy Midstream (through January 2019) are reflected as noncontrolling interest in Dominion Energy’s Consolidated Financial Statements. Terra Nova Renewable Partners has a future option to buy all or a portion of Dominion Energy’s remaining 67% ownership in certain merchant projects upon the occurrence of certain events, including any proposed sale by Dominion Energy of its interest.

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.

24


Certain amounts in the Companies’ 2019 Consolidated Financial Statements and Notes have been reclassified to conform to the 2020 presentation for comparative purposes; however, such reclassifications did not affect the Companies’ net income, total assets, liabilities, equity or cash flows.

Amounts disclosed for Dominion Energy are inclusive of Virginia Power, 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, 2019, with the exception of the items described below.

Cash, 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 nine months ended September 30, 2020 and 2019:

 

 

 

Cash, Restricted Cash and Equivalents

at End of Period

 

 

Cash, Restricted Cash and Equivalents

at Beginning of Period

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

December 31, 2019

 

 

December 31, 2018

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominion Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents(1)

 

$

462

 

 

$

378

 

 

$

166

 

 

$

268

 

Restricted cash and equivalents(2)(3)

 

 

96

 

 

 

62

 

 

 

103

 

 

 

123

 

Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows

 

$

558

 

 

$

440

 

 

$

269

 

 

$

391

 

Virginia Power

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

62

 

 

$

29

 

 

$

17

 

 

$

29

 

Restricted cash and equivalents(3)

 

 

1

 

 

 

8

 

 

 

7

 

 

 

9

 

Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows

 

$

63

 

 

$

37

 

 

$

24

 

 

$

38

 

 

(1)

At September 30, 2020, September 30, 2019, December 31, 2019 and December 31, 2018, Dominion Energy had $49 million, $80 million, $31 million and $110  million of cash and cash equivalents included in current assets held for sale, respectively.

(2)

At September 30, 2020, September 30, 2019, December 31, 2019 and December 31, 2018, Dominion Energy had $16 million, $5 million, $12 million and $89  million of restricted cash and equivalents included in current assets held for sale, respectively

(3)   Restricted cash and equivalent balances are presented within other current assets in the Companies’ Consolidated Balance Sheets.

 

Property, Plant and Equipment

In January 2019, Virginia Power committed to a plan to retire certain automated metering reading infrastructure associated with its electric operations before the end of its estimated useful life and replace such equipment with more current AMI technology. As a result, Virginia Power recorded a charge of $160 million ($119 million after-tax) in the first quarter of 2019, 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 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, 2019.

 

In March 2019, Virginia Power committed to retire certain electric generating units before the end of their useful lives and completed the retirement of certain units at 6 facilities representing 1,292 MW of electric generating capacity, which had previously been placed in cold reserve. An additional unit at Possum Point power station will be retired in December 2020. As a result, Virginia Power recorded a charge of $369 million ($275 million after-tax) in the first quarter of 2019, 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 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, 2019.

 

In May 2019, Virginia Power abandoned a coal rail project at its Mt. Storm generating facility. As a result, Virginia Power recorded a charge of $62 million ($46 million after-tax) in the second quarter of 2019, included in impairment of assets and other charges in its Consolidated Statements of Income.

In September 2019, the Companies abandoned certain property, plant and equipment before the end of its useful life. As a result, Dominion Energy recorded a charge of $26 million ($19 million after-tax) and Virginia Power recorded a charge of $17 million ($12

25


million after-tax), included in impairment of assets and other charges in their Consolidated Statements of Income for the three and nine months ended September 30, 2019.

 

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 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, 2019.

 

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.

 

In the first quarter of 2020, Virginia Power updated depreciation rates for its nuclear plants to reflect lower depreciation rates as a result of the expected approval of license extensions from the NRC. This adjustment resulted in a decrease in depreciation expense of $8 million ($6 million after-tax) and $24 million ($18 million after-tax) for the three and nine months ended September 30, 2020, respectively, in Virginia Power’s Consolidated Statements of Income and a $0.01 and $0.02 increase in Dominion Energy’s EPS, for the three and nine months ended September 30, 2020, respectively. This revision is expected to decrease annual depreciation expense by approximately $31 million ($23 million after-tax) and increase Dominion Energy’s EPS by $0.03 for the year ended December 31, 2020.

 

In the second quarter of 2020, DESC completed a nuclear decommissioning cost study related to Summer. As a result of the study, Dominion Energy recorded an $89 million increase to its nuclear decommissioning ARO, with a corresponding increase to property, plant and equipment.

 

Credit Risk

Credit risk is the risk of financial loss if counterparties fail to perform their contractual obligations. In order to minimize overall credit risk, credit policies are maintained, including the evaluation of counterparty financial condition, collateral requirements and the use of standardized agreements that facilitate the netting of cash flows associated with a single counterparty. In addition, counterparties may make available collateral, including letters of credit or cash held as margin deposits, as a result of exceeding agreed-upon credit limits, or may be required to prepay the transaction.

 

Effective January 2020, expected credit losses are estimated and recorded based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets held at amortized cost as well as expected credit losses on commitments with respect to financial guarantees.

 

Investments

Debt and Equity Securities with Readily Determinable Fair Value

Dominion Energy accounts for and classifies investments in debt securities as trading or available-for-sale securities. Virginia Power classifies investments in debt securities as available-for-sale securities.

 

Debt securities classified as trading securities include securities held by Dominion Energy in rabbi trusts associated with certain deferred compensation plans. These securities are reported in other investments in its Consolidated Balance Sheets at fair value with net realized and unrealized gains and losses included in other income in its Consolidated Statements of Income.

 

Debt securities classified as available-for-sale securities include all other debt securities, primarily comprised of securities held in the nuclear decommissioning trusts. These investments are reported at fair value in nuclear decommissioning trust funds in the Consolidated Balance Sheets. Net realized and unrealized gains and losses (including any credit-related impairments) on investments held in Virginia Power’s nuclear decommissioning trusts are deferred to a regulatory asset or liability as applicable for certain jurisdictions subject to cost-based regulation. For all other available-for-sale debt securities, including those held in Dominion Energy’s merchant generation nuclear decommissioning trusts, net realized gains and losses (including any credit-related impairments) are included in other income and unrealized gains and losses are reported as a component of AOCI, after-tax.

26


 

In determining realized gains and losses for debt securities, the cost basis of the security is based on the specific identification method.

 

Equity securities with readily determinable fair values include securities held by Dominion Energy in rabbi trusts associated with certain deferred compensation plans and securities held by the Companies in the nuclear decommissioning trusts. The Companies record all equity securities with a readily determinable fair value, or for which they are permitted to estimate fair value using NAV (or its equivalent), at fair value in nuclear decommissioning trust funds and other investments in the Consolidated Balance Sheets. However, the Companies may elect a measurement alternative for equity securities without a readily determinable fair value. Under the measurement alternative, equity securities are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Companies qualitatively assess equity securities reported using the measurement alternative to determine whether an investment is impaired on an ongoing basis. Net realized and unrealized gains and losses on equity securities held in Virginia Power’s nuclear decommissioning trusts are deferred to a regulatory asset or liability, as applicable, for certain jurisdictions subject to cost-based regulation. For all other equity securities, including those held in Dominion Energy’s merchant generation nuclear decommissioning trusts and rabbi trusts, net realized and unrealized gains and losses are included in other income in its Consolidated Statements of Income.

 

Equity Securities without Readily Determinable Fair Values

The Companies account for illiquid and privately held securities without readily determinable fair values under either the equity method or cost method. Equity securities without readily determinable fair values include:

 

Equity method investments when the Companies have the ability to exercise significant influence, but not control, over the investee. Dominion Energy’s investments are included in investment in equity method affiliates in its Consolidated Balance Sheets, except for such investments which are classified as held for sale. Dominion Energy records equity method adjustments in other income in its Consolidated Statements of Income, except for such adjustments which are classified as discontinued operations, including its proportionate share of investee income or loss, gains or losses resulting from investee capital transactions, amortization of certain differences between the carrying value and the equity in the net assets of the investee at the date of investment and other adjustments required by the equity method.

 

Cost method investments when the Companies do not have the ability to exercise significant influence over the investee. The Companies’ investments are included in other investments and nuclear decommissioning trust funds. Cost method investments are reported at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

 

Other-Than-Temporary Impairment

The Companies periodically review their equity method investments to determine whether a decline in fair value should be considered other-than-temporary. If a decline in the fair value of any equity method investment is determined to be other-than-temporary, the investment is written down to its fair value at the end of the reporting period.

 

Credit Impairment

Effective January 2020, the Companies periodically review their available-for-sale debt securities to determine whether a decline in fair value should be considered credit related. If a decline in the fair value of any available-for-sale debt security is determined to be credit related, the credit-related impairment is recorded to an allowance included in nuclear decommissioning trust funds in the Companies’ Consolidated Balance Sheets at the end of the reporting period, with such allowance for credit losses subject to reversal in subsequent evaluations.

 

Using information obtained from their nuclear decommissioning trust fixed-income investment managers, the Companies record in earnings, or defer as applicable for certain jurisdictions subject to cost-based regulation, any unrealized loss for a debt security when the manager intends to sell the debt security or it is more-likely-than-not that the manager will have to sell the debt security before recovery of its fair value up to its cost basis. If that is not the case, but the debt security is deemed to have experienced a credit loss, the Companies record the credit loss in earnings with the remaining non-credit portion of the unrealized loss recorded in AOCI. Credit losses are evaluated primarily by considering the credit ratings of the issuer, prior instances of non-performance by the issuer and other factors.

 

New Accounting Standards

27


In August 2020, the FASB issued revised accounting guidance for debt with conversion options and contracts in an entity’s own equity. The revised guidance eliminates the ability to assert cash settlement and exclude potential shares from the diluted EPS calculation for a contract that may be settled in stock or cash.  The effective date is for interim and annual reporting periods beginning January 1, 2022 and may be adopted through a modified retrospective or fully retrospective method of transition. Upon adoption, Dominion Energy will no longer exclude the Series A Preferred Stock from the effect of dilutive securities and will also exclude the fair value adjustment reflected within net income attributable to Dominion Energy for the calculation of diluted EPS.

 

 

 

Note 3. Acquisitions and Dispositions

Acquisition of SCANA

In January 2019, Dominion Energy issued 95.6 million shares of Dominion Energy common stock, valued at $6.8 billion, representing 0.6690 of a share of Dominion Energy common stock for each share of SCANA common stock, in connection with the completion of the SCANA Combination. SCANA, through its regulated subsidiaries, is primarily engaged in the generation, transmission and distribution of electricity in the central, southern and southwestern portions of South Carolina and in the distribution of natural gas in North Carolina and South Carolina. In addition, at the closing of the SCANA Combination, SCANA marketed natural gas to retail customers in the southeast U.S. Following completion of the SCANA Combination, SCANA operates as a wholly-owned subsidiary of Dominion Energy. In addition, SCANA’s debt totaled $6.9 billion at closing. The SCANA Combination expanded Dominion Energy’s portfolio of regulated electric generation, transmission and distribution and regulated natural gas distribution infrastructure operations.

See Note 3 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019 for more information on the SCANA Combination, including merger approval and conditions, information on assets acquired and liabilities assumed and purchase price allocation. In addition, see Note 17 for a discussion of certain legal proceedings involving Dominion Energy, SCANA or DESC relating to events occurring before closing of the SCANA Combination.

In accordance with the SCANA Merger Approval Order, Dominion Energy incurred certain charges to its Consolidated Statements of Income for the following:

 

In the first quarter of 2019, DESC recorded a reduction in operating revenue and a corresponding regulatory liability of $1.0 billion representing a refund of amounts previously collected from retail electric customers of DESC for the NND Project to be credited over an estimated 11-year period, effective January 2019. As a result, Dominion Energy’s Consolidated Statement of Income for the nine months ended September 30, 2019 includes a $756 million after-tax charge.

 

Dominion Energy committed to forgo recovery of $105 million of certain property, plant and equipment associated with the NND Project. As a result, Dominion Energy’s Consolidated Statement of Income for the nine months ended September 30, 2019 includes a charge of $105 million ($79 million after-tax), included in impairment of assets and other charges.

 

Dominion Energy committed to forgo recovery of $264 million of certain income tax-related regulatory assets associated with the NND Project. As a result, Dominion Energy’s Consolidated Statement of Income for the nine months ended September 30, 2019 includes a charge of $198 million included in income tax expense.

Results of Operations and Unaudited Pro Forma Information

The impact of the SCANA Combination on Dominion Energy’s operating revenue was an increase of $809 million and $979 million for the three months ended September 30, 2020 and 2019, respectively, and an increase of $2.4 billion and $2.1 billion for the nine months ended September 30, 2020 and 2019, respectively, in the Consolidated Statements of Income. The impact of the SCANA Combination on net income attributable to Dominion Energy was an increase of $85 million and $97 million for the three months ended September 30, 2020 and 2019, respectively, and an increase of $197 million and a decrease of $1.1 billion for the nine months ended September 30, 2020 and 2019, respectively, in the Consolidated Statements of Income.

Dominion Energy incurred merger and integration-related costs of $22 million and $64 million for the three and nine months ended September 30, 2020, respectively, of which $22 million and $61 million are recorded in other operations and maintenance expense in the Consolidated Statements of Income. Dominion Energy incurred merger and integration-related costs of $29 million and $596 million in the Consolidated Statements of Income for the three and nine months ended September 30, 2019, respectively. These amounts for the three and nine months ended September 30, 2019 include $4 million and $427 million, respectively, for a charge related to a voluntary retirement program. See Note 20 for additional information. Of the remaining merger and integration-related costs, $25 million and $169 million was recorded in other operations and maintenance expense in the Consolidated Statements of Income for the three and nine months ended September 30, 2019, respectively, and less than $1 million and $9 million was recorded in interest and related charges in the Consolidated Statement of Income for the three and nine months ended September 30, 2019,

28


respectively. These costs consist of professional fees, charitable contribution commitments, employee-related expenses, certain financing costs and other miscellaneous costs.

The following unaudited pro forma financial information reflects the consolidated results of operations of Dominion Energy assuming the SCANA Combination had taken place on January 1, 2018. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of the combined company.

 

 

 

Three Months Ended

September 30, 2019(1)

 

 

Nine Months Ended

September 30, 2019(1)

 

(millions, except EPS)

 

 

 

 

 

 

 

 

Operating Revenue

 

$

3,782

 

 

$

11,513

 

Net income attributable to Dominion Energy

 

 

1,029

 

 

 

1,991

 

Earnings Per Common Share Basic

 

$

1.28

 

 

$

2.47

 

Earnings Per Common Share Diluted

 

$

1.26

 

 

$

2.44

 

 

(1)

Amounts include adjustments for non-recurring costs directly related to the SCANA Combination.

Disposition of Gas Transmission & Storage Operations to BHE

In July 2020, Dominion Energy entered into an agreement with BHE with a total value of approximately $10 billion, comprised of approximately $4.0 billion of cash consideration (subject to customary closing adjustments) plus the assumption of long-term debt, to sell substantially all of its  gas transmission and storage operations, including processing assets, as well as noncontrolling partnership interests in Iroquois, JAX LNG and White River Hub and a controlling interest in Cove Point (consisting of 100% of the general partner interest and 25% of the total limited partner interests).  The agreement provides that Dominion Energy retains the assets and obligations of the pension and other postretirement employee benefit plans associated with the operations included in the transaction and relating to services provided through closing. In October 2020, pursuant to a provision in the agreement with BHE, Dominion Energy elected to exclude Dominion Energy Questar Pipeline and certain other affiliated entities from the transaction as approval under the Hart-Scott-Rodino Act had not been obtained by mid-September 2020.  Concurrently in October 2020, Dominion Energy and BHE entered into a separate agreement under which Dominion Energy will sell Dominion Energy Questar Pipeline and certain other affiliated entities for cash consideration of $1.3 billion and the assumption of related long-term debt.  

In November 2020, Dominion Energy completed the GT&S Transaction and received cash proceeds of $2.7 billion.  This transaction is structured as an asset sale for tax purposes.  Based on the recorded balances at September 30, 2020, Dominion Energy expects to recognize a pre-tax gain of approximately $200 million in the fourth quarter of 2020, including the write-off of $1.4 billion of goodwill and reflecting closing adjustments of approximately $200 million to be paid to BHE.  Closing adjustments, including any required payment of cash, are expected to be finalized by early 2021.

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.  In addition, BHE will provide certain administrative services to Dominion Energy.

Also in November 2020, BHE provided a $1.3 billion deposit to Dominion Energy on the Q-Pipe Transaction.  Dominion Energy will be required to repay all or substantially all of this deposit, or issue to BHE an equivalent value in shares of Dominion Energy common stock at Dominion Energy’s option, if the Q-Pipe Transaction does not close by December 30, 2021.  Dominion Energy may not solicit or accept offers from alternative buyers for all or a material portion of the Q-Pipe Transaction until after March 31, 2021 and either party may terminate the Q-Pipe Transaction if closing has not occurred on or before June 30, 2021.  If the Hart-Scott-Rodino Act approval has not been obtained by June 30, 2021, upon BHE’s request, Dominion Energy will seek an alternative buyer for all or a material portion of the Q-Pipe Transaction. The Q-Pipe Transaction is structured as an asset sale for tax purposes and is expected to close in early 2021, contingent on clearance or approval under the Hart-Scott-Rodino Act, and other customary closing and regulatory conditions. Based on the recorded balances at September 30, 2020, Dominion Energy expects to recognize a pre-tax gain of approximately $500 million upon closing, including the write-off of $191 million of goodwill, but excluding the effects of any closing adjustments.

29


The operations included in both the GT&S Transaction and the Q-Pipe Transaction are presented in held-for-sale and discontinued operations effective July 2020.  As a result, the previously reported amounts have been recast to reflect this presentation and depreciation and amortization ceased on the applicable assets.  Dominion Energy retained a 50% noncontrolling interest in Cove Point that is accounted for as an equity method investment upon closing of the GT&S Transaction as Dominion Energy has the ability to exercise significant influence, but not control, over Cove Point.  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.

The following table represents selected information regarding the results of operations of reported within discontinued operations in Dominion Energy’s Consolidated Statements of Income:

 

 

 

Three Months Ended September 30, 2020

 

 

Three Months Ended September 30, 2019

 

 

Nine Months Ended September 30, 2020

 

 

Nine Months Ended September 30, 2019

 

 

 

GT&S Transaction

 

 

Q-Pipe Transaction

 

 

GT&S Transaction

 

 

Q-Pipe Transaction

 

 

GT&S Transaction

 

 

Q-Pipe Transaction

 

 

GT&S Transaction

 

 

Q-Pipe Transaction

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

$

511

 

 

$

59

 

 

$

497

 

 

$

60

 

 

$

1,554

 

 

$

182

 

 

$

1,627

 

 

$

185

 

Operating Expense(1)

 

 

208

 

 

 

16

 

 

 

317

 

 

 

31

 

 

 

1,311

 

 

 

78

 

 

 

1,029

 

 

 

100

 

Other income (loss)

 

 

(5

)

 

 

1

 

 

 

13

 

 

 

1

 

 

 

27

 

 

 

3

 

 

 

42

 

 

 

3

 

Interest and related charges(2)

 

 

267

 

 

 

5

 

 

 

76

 

 

 

5

 

 

 

366

 

 

 

15

 

 

 

224

 

 

 

15

 

Income (loss) before income taxes

 

 

31

 

 

 

39

 

 

 

117

 

 

 

25

 

 

 

(96

)

 

 

92

 

 

 

416

 

 

 

73

 

Income tax expense (benefit)

 

 

(14

)

 

 

5

 

 

 

117

 

 

 

19

 

 

 

(65

)

 

 

19

 

 

 

42

 

 

 

6

 

Net income (loss) including noncontrolling

   interests

 

 

45

 

 

 

34

 

 

 

0

 

 

 

6

 

 

 

(31

)

 

 

73

 

 

 

374

 

 

 

67

 

Noncontrolling interests

 

 

32

 

 

 

 

 

 

0

 

 

 

 

 

 

97

 

 

 

 

 

 

6

 

 

 

 

Net income (loss) attributable to Dominion

   Energy

 

$

13

 

 

$

34

 

 

$

0

 

 

$

6

 

 

$

(128

)

 

$

73

 

 

$

368

 

 

$

67

 

 

(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.

 

(2)

GT&S Transaction includes a loss of $237 million recorded in the third quarter of 2020 associated with cash flow hedges of debt-related items that were determined to be probable of not occurring.

 

The carrying amounts of major classes of assets and liabilities relating to the disposal groups, which are reported as held for sale in Dominion Energy’s Consolidated Balance Sheets were as follows:

 

 

 

At September 30, 2020(1)

 

 

At December 31, 2019

 

 

 

GT&S Transaction

 

 

Q-Pipe Transaction

 

 

GT&S Transaction

 

 

Q-Pipe Transaction

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets(2)

 

$

398

 

 

$

57

 

 

$

445

 

 

$

49

 

Equity method investments(3)

 

 

316

 

 

 

35

 

 

 

276

 

 

 

36

 

Property, plant and equipment, net(4)

 

 

10,449

 

 

 

1,109

 

 

 

10,764

 

 

 

1,103

 

Other deferred charges and other assets, including goodwill(5)

   and intangible assets

 

 

1,544

 

 

 

224

 

 

 

1,553

 

 

 

225

 

Current liabilities(6)

 

 

1,536

 

 

 

38

 

 

 

1,002

 

 

 

37

 

Long-term debt

 

 

3,916

 

 

 

425

 

 

 

4,401

 

 

 

425

 

Other deferred credits and liabilities

 

 

810

 

 

 

155

 

 

 

773

 

 

 

155

 

 

(1)

All amounts at September 30, 2020 are classified as current in Dominion Energy’s Consolidated Balance Sheet.

 

(2)

Includes cash and cash equivalents of $24 million and $20 million as of September 30, 2020 and December 31, 2019, respectively, within the GT&S Transaction and $25 million and $11 million as of September 30, 2020 and December 31, 2019, respectively within the Q-Pipe Transaction.

 

(3)

Comprised of equity method investments in Iroquois and JAX LNG within the GT&S Transaction and White River Hub within the Q-Pipe Transaction.

 

(4)

GT&S Transaction includes $40 million recorded at September 30, 2020 for a potential modified Supply Header Project.

 

(5)

Includes goodwill of $1.4 billion and $191 million at both September 30, 2020 and December 31, 2019 within the GT&S Transaction and the Q-Pipe Transaction, respectively.

 

(6)

Includes $47 million ARO recorded at September 30, 2020 related to the Supply Header Project and current portions of long-term debt of $1.2 billion and $699 million as of September 30, 2020 and December 31, 2020, respectively, within the GT&S Transaction.

30


Capital expenditures and significant noncash items relating to the disposal groups included the following:

 

 

Nine Months Ended September 30, 2020

 

 

Nine Months Ended September 30, 2019

 

 

 

GT&S Transaction

 

 

Q-Pipe Transaction

 

 

GT&S Transaction

 

 

Q-Pipe Transaction

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

240

 

 

$

27

 

 

$

265

 

 

$

32

 

Significant noncash items

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment of assets and other charges

 

 

463

 

 

 

0

 

 

 

13

 

 

 

0

 

Charge related to a voluntary retirement program

 

 

0

 

 

 

0

 

 

 

22

 

 

 

4

 

Depreciation, depletion and amortization

 

 

173

 

 

 

25

 

 

 

240

 

 

 

38

 

Accrued capital expenditures

 

 

43

 

 

 

2

 

 

 

42

 

 

 

3

 

 

In October 2020, Dominion Energy settled various derivatives related to, but not included in, the GT&S Transaction for a payment of $165 million.

 

 

31


Note 4. Operating Revenue

The Companies’ operating revenue consists of the following:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominion Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated electric sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

1,497

 

 

$

1,440

 

 

$

3,746

 

 

$

3,180

 

Commercial

 

 

865

 

 

 

962

 

 

 

2,391

 

 

 

2,347

 

Industrial

 

 

190

 

 

 

227

 

 

 

548

 

 

 

474

 

Government and other retail

 

 

239

 

 

 

244

 

 

 

651

 

 

 

658

 

Wholesale

 

 

37

 

 

 

45

 

 

 

99

 

 

 

134

 

Nonregulated electric sales

 

 

218

 

 

 

197

 

 

 

627

 

 

 

688

 

Regulated gas sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

123

 

 

 

121

 

 

 

853

 

 

 

905

 

Commercial

 

 

50

 

 

 

52

 

 

 

304

 

 

 

311

 

Other

 

 

18

 

 

 

23

 

 

 

61

 

 

 

84

 

Nonregulated gas sales

 

 

12

 

 

 

51

 

 

 

124

 

 

 

369

 

Regulated gas transportation and storage - State

 

 

165

 

 

 

168

 

 

 

578

 

 

 

547

 

Other regulated revenues

 

 

61

 

 

 

54

 

 

 

236

 

 

 

184

 

Other nonregulated revenues(1)(2)

 

 

61

 

 

 

39

 

 

 

132

 

 

 

112

 

Total operating revenue from contracts

   with customers

 

 

3,536

 

 

 

3,623

 

 

 

10,350

 

 

 

9,993

 

Other revenues(3)(4)

 

 

71

 

 

 

159

 

 

 

301

 

 

 

513

 

Total operating revenue

 

$

3,607

 

 

$

3,782

 

 

$

10,651

 

 

$

10,506

 

Virginia Power

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated electric sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

1,146

 

 

$

1,085

 

 

$

2,860

 

 

$

2,816

 

Commercial

 

 

645

 

 

 

732

 

 

 

1,805

 

 

 

2,049

 

Industrial

 

 

98

 

 

 

121

 

 

 

284

 

 

 

351

 

Government and other retail

 

 

223

 

 

 

224

 

 

 

603

 

 

 

625

 

Wholesale

 

 

25

 

 

 

31

 

 

 

70

 

 

 

97

 

Other regulated revenues

 

 

61

 

 

 

36

 

 

 

217

 

 

 

124

 

Other nonregulated revenues(1)(2)

 

 

33

 

 

 

21

 

 

 

66

 

 

 

54

 

Total operating revenue from contracts

   with customers

 

 

2,231

 

 

 

2,250

 

 

 

5,905

 

 

 

6,116

 

Other revenues(2)(3)

 

 

17

 

 

 

14

 

 

 

78

 

 

 

51

 

Total operating revenue

 

$

2,248

 

 

$

2,264

 

 

$

5,983

 

 

$

6,167

 

 

(1)

Amounts above include sales which are considered to be goods transferred at a point in time. Such amounts included $5 million for the three months ended September 30, 2020, $12 million for the three months ended September 30, 2019, $16 million for the nine months ended September 30, 2020 and $29 million for the nine months ended September 30, 2019, primarily consisting of sales of commodities related to nonregulated extraction activities and other miscellaneous products. Additionally, amounts above include sales of renewable energy credits. Such amounts included $21 million and $16 million for the three months ended September 30, 2020, $12 million and $11 million for the three months ended September 30, 2019, $32 million and $24 million for the nine months ended September 30, 2020 and $19 million and $14 million for the nine months ended September 30, 2019, at Dominion Energy and Virginia Power, respectively.

(2)

See Notes 10 and 19 for amounts attributable to related parties and affiliates.

(3)

Amounts above include alternative revenue of $51 million and $9 million at Dominion Energy and $12 million and $9 million at Virginia Power for the three months ended September 30, 2020 and 2019, respectively, and $90 million and $44million at Dominion Energy and $63 million and $35 million at Virginia Power for the nine months ended September 30, 2020 and 2019, respectively.

(4)

Amounts above include revenue associated with services provided to discontinued operations of $1 million and $4 million for both the three and nine months ended September 30, 2020 and 2019, respectively.

 

 

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.

 

32


Revenue expected to be recognized on multi-year

   contracts in place at September 30, 2020

 

2020

 

 

2021

 

 

2022

 

 

2023

 

 

2024

 

 

Thereafter

 

 

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominion Energy

 

$

18

 

 

$

66

 

 

$

66

 

 

$

64

 

 

$

57

 

 

$

516

 

 

$

787

 

Virginia Power

 

 

1

 

 

 

1

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

2

 

 

At September 30, 2020 and December 31, 2019, Dominion Energy’s contract liability balances were $120 million and $102 million, respectively, and are recorded in other current liabilities and other deferred credits and other liabilities in the Consolidated Balance Sheets.  At September 30, 2020 and December 31, 2019, Virginia Power’s contract liability balances were $27 million and $24 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 nine months ended September 30, 2020 and 2019 Dominion Energy recognized revenue of $95 million and $83 million, respectively, from the beginning contract liability balances. During the nine months ended September 30, 2020 and 2019, Virginia Power recognized $24 million and $22 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

 

Nine Months Ended September 30,

 

2020

 

 

2019

 

 

2020

 

 

2019

 

U.S. statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

Increases (reductions) resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State taxes, net of federal benefit

 

 

1.5

 

 

 

(898.5

)

 

 

4.7

 

 

 

4.5

 

Investment tax credits

 

 

(30.5

)

 

 

(325.2

)

 

 

(5.6

)

 

 

(5.3

)

Production tax credits

 

 

(2.4

)

 

 

(66.3

)

 

 

(0.9

)

 

 

(0.8

)

Reversal of excess deferred income

   taxes

 

 

(14.5

)

 

 

(375.6

)

 

 

(1.9

)

 

 

(4.1

)

Write-off of regulatory assets

 

 

0

 

 

 

16,565.9

 

 

 

0

 

 

 

0

 

Change in tax status

 

 

(6.1

)

 

 

0

 

 

 

0

 

 

 

0

 

AFUDC - equity

 

 

(1.1

)

 

 

(55.8

)

 

 

(0.3

)

 

 

0

 

Changes in state deferred taxes

    associated with assets held for sale

 

 

(11.6

)

 

 

0

 

 

 

0

 

 

 

0

 

Absence of tax on noncontrolling interest

 

 

14.1

 

 

 

0

 

 

 

0

 

 

 

0

 

Other, net

 

 

(1.8

)

 

 

(987.3

)

 

 

0

 

 

 

(1.2

)

Effective tax rate

 

 

(31.4

)%

 

13,878.2%

 

 

 

17.0

%

 

 

14.1

%

 

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 2020. 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, 2019 for more information.

 

For the nine months ended September 30, 2020, Dominion Energy’s effective tax rate reflects an income tax benefit of $45 million associated with the remeasurement of consolidated state deferred taxes with the classification of gas transmission and storage operations as held for sale.  In addition, Dominion Energy’s effective tax rate reflects an income tax expense of $55 million attributable to the noncontrolling interest primarily associated with the impairment of solar assets held in partnership form discussed in Note 11.

 

In March 2020, the CARES Act was enacted which includes several significant business tax provisions that modify or temporarily suspend certain provisions of the 2017 Tax Reform Act.  The CARES Act provisions are intended to improve cash flow and liquidity by, among other things, providing a temporary five-year carryback for certain net operating losses, accelerating the refund of previously generated corporate alternative minimum tax credits and temporarily loosening the business interest limitation to 50% of adjusted taxable income for certain businesses.  Dominion Energy utilized the income tax provisions of the CARES Act to accelerate the recognition of certain tax attributes, but they did not provide a material benefit.

33


In July 2020, the U.S. Department of Treasury issued final regulations providing guidance about the limitation on the deduction for business interest expenses and issued proposed regulations on the application of these rules to certain pass-through entities and partners in those entities under the 2017 Tax Reform Act as modified by the CARES Act.  Dominion Energy is assessing the impact of these regulations, but expects interest expense to be deductible in 2020.

Dominion Energy’s 2019 effective tax rate is a function of the nominal year-to-date pre-tax income primarily driven by charges associated with the SCANA Combination, charges at Virginia Power for the early retirement of assets and charges associated with the voluntary retirement program.  In connection with the SCANA Combination, Dominion Energy committed to forgo, or limit, the recovery of certain income tax-related regulatory assets associated with the NND Project. Dominion Energy’s 2019 effective tax rate reflects deferred income tax expense of $198 million in satisfaction of this commitment.  Dominion Energy’s 2019 effective tax rate also reflects the changes in consolidated state income taxes resulting from the SCANA Combination.

As of September 30, 2020, 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, 2019, for a discussion of these unrecognized tax benefits.

 

Discontinued operations

Income tax expense (benefit) reflected in discontinued operations is $(572) million and $47 million for the nine months ended September 30, 2020 and 2019, respectively.  The 2020 income tax expense reflects a charge of $81 million for the write-off of tax-related regulatory assets associated with the Atlantic Coast Pipeline project.

 

Note 6. Earnings Per Share

The following table presents the calculation of Dominion Energy’s basic and diluted EPS:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

(millions, except EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Dominion Energy from

    continuing operations

 

$

369

 

 

$

937

 

 

$

767

 

 

$

(171

)

Preferred stock dividends (see Note 16)

 

 

(16

)

 

 

(7

)

 

 

(48

)

 

 

(8

)

Net income (loss) attributable to Dominion Energy from

    continuing operations – Basic

 

 

353

 

 

 

930

 

 

 

719

 

 

 

(179

)

Dilutive effect of Series A Preferred Stock

 

 

 

 

 

(13

)

 

 

(28

)

 

 

 

Net income (loss) attributable to Dominion Energy from

    continuing operations - Diluted

 

$

353

 

 

$

917

 

 

$

691

 

 

$

(179

)

 

 

 

 

 

 

��

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Dominion Energy from

    discontinued operations - Basic & Diluted

 

$

(13

)

 

$

38

 

 

$

(1,850

)

 

$

520

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares of common stock outstanding – Basic &

    Diluted

 

 

833.8

 

 

 

813.0

 

 

 

837.1

 

 

 

802.9

 

Net effect of dilutive securities

 

 

 

 

 

 

 

 

 

 

 

 

Average shares of common stock outstanding – Diluted

 

 

833.8

 

 

 

813.0

 

 

 

837.1

 

 

 

802.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS from continuing operations – Basic

 

$

0.42

 

 

$

1.14

 

 

$

0.86

 

 

$

(0.22

)

EPS from discontinued operations – Basic

 

 

(0.01

)

 

 

0.05

 

 

 

(2.21

)

 

 

0.64

 

EPS attributable to Dominion Energy – Basic

 

$

0.41

 

 

$

1.19

 

 

$

(1.35

)

 

$

0.42

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS from continuing operations – Diluted

 

$

0.42

 

 

$

1.12

 

 

$

0.83

 

 

$

(0.22

)

EPS from discontinued operations – Diluted

 

 

(0.01

)

 

 

0.05

 

 

 

(2.21

)

 

 

0.64

 

EPS attributable to Dominion Energy – Diluted

 

$

0.41

 

 

$

1.17

 

 

$

(1.38

)

 

$

0.42

 

 

As a result of a net loss from continuing operations for the nine months ended September 30, 2019, any adjustments to earnings or shares would be considered antidilutive and are therefore excluded from the calculation of diluted EPS. The 2019 Equity Units and the two September 2020 accelerated share purchase agreements are potentially dilutive securities. See Note 16 for more information. The forward stock purchase contracts included within the 2019 Equity Units were excluded from the calculation of diluted EPS for the

34


three and nine months ended September 30, 2020 and the three months ended September 30, 2019, as the dilutive stock price threshold was not met. The forward stock purchase contracts included within the accelerated share repurchase agreements are excluded from the calculation of diluted EPS for the three and nine months ended September 30, 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 effect of dilutive securities within diluted EPS, but a fair value adjustment is reflected within net income from continuing operations attributable to Dominion Energy for the calculation of diluted EPS from continuing operations for the nine months ended September 30, 2020 and the three months ended September 30, 2019, based upon the expectation that the conversion will be settled in cash rather than through the issuance of Dominion Energy common stock. Such fair value adjustment is not included within net income from continuing operations attributable to Dominion Energy for the calculation of diluted EPS from continuing operations for the three months ended September 30, 2020 as the dilutive stock price threshold was not met. The 2016 Equity Units are potentially dilutive securities, but were excluded from the calculation of diluted EPS for the three months ended September 30, 2019 as the dilutive stock price threshold was not met.

 

Note 7. Accumulated Other Comprehensive Income

Dominion Energy

The following table presents Dominion Energy’s changes in AOCI by component, net of tax:

 

 

 

Deferred

gains and

losses on

derivatives-

hedging

activities

 

 

Unrealized

gains and

losses on

investment

securities

 

 

Unrecognized

pension and

other

postretirement

benefit costs

 

 

Other

comprehensive

loss from

equity method

investees

 

 

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(644

)

 

$

51

 

 

$

(1,385

)

 

$

(2

)

 

$

(1,980

)

Other comprehensive income before reclassifications:

   gains (losses)

 

 

10

 

 

 

4

 

 

 

(261

)

 

 

1

 

 

 

(246

)

Amounts reclassified from AOCI: (gains) losses(1)

 

 

188

 

 

 

(1

)

 

 

23

 

 

 

0

 

 

 

210

 

Net current period other comprehensive income (loss)

 

 

198

 

 

 

3

 

 

 

(238

)

 

 

1

 

 

 

(36

)

Ending balance

 

$

(446

)

 

$

54

 

 

$

(1,623

)

 

$

(1

)

 

$

(2,016

)

Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(389

)

 

$

30

 

 

$

(1,322

)

 

$

(2

)

 

$

(1,683

)

Other comprehensive income before reclassifications:

   gains (losses)

 

 

(107

)

 

 

8

 

 

 

(4

)

 

 

(1

)

 

 

(104

)

Amounts reclassified from AOCI: (gains) losses(1)

 

 

(6

)

 

 

(4

)

 

 

20

 

 

 

0

 

 

 

10

 

Net current period other comprehensive income (loss)

 

 

(113

)

 

 

4

 

 

 

16

 

 

 

(1

)

 

 

(94

)

Ending balance

 

$

(502

)

 

$

34

 

 

$

(1,306

)

 

$

(3

)

 

$

(1,777

)

Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(407

)

 

$

37

 

 

$

(1,421

)

 

$

(2

)

 

$

(1,793

)

Other comprehensive income before reclassifications:

   gains (losses)

 

 

(254

)

 

 

32

 

 

 

(262

)

 

 

1

 

 

 

(483

)

Amounts reclassified from AOCI: (gains) losses(1)

 

 

215

 

 

 

(15

)

 

 

60

 

 

 

0

 

 

 

260

 

Net current period other comprehensive income (loss)

 

 

(39

)

 

 

17

 

 

 

(202

)

 

 

1

 

 

 

(223

)

Ending balance

 

$

(446

)

 

$

54

 

 

$

(1,623

)

 

$

(1

)

 

$

(2,016

)

Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(235

)

 

$

2

 

 

$

(1,465

)

 

$

(2

)

 

$

(1,700

)

Other comprehensive income before reclassifications:

   gains (losses)

 

 

(209

)

 

 

37

 

 

 

109

 

 

 

(1

)

 

 

(64

)

Amounts reclassified from AOCI: (gains) losses(1)

 

 

(58

)

 

 

(5

)

 

 

50

 

 

 

0

 

 

 

(13

)

Net current period other comprehensive income (loss)

 

 

(267

)

 

 

32

 

 

 

159

 

 

 

(1

)

 

 

(77

)

Ending balance

 

$

(502

)

 

$

34

 

 

$

(1,306

)

 

$

(3

)

 

$

(1,777

)

 

(1)

See table below for details about these reclassifications.

35


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 September 30, 2020

 

 

 

 

 

 

Deferred (gains) and losses on derivatives-hedging activities:

 

 

 

 

 

 

Commodity contracts

 

$

(8

)

 

Operating revenue

Interest rate contracts

 

 

23

 

 

Interest and related charges

 

 

 

230

 

 

Discontinued operations

      Foreign currency contracts

 

 

6

 

 

Discontinued operations

Total

 

 

251

 

 

 

      Tax

 

 

(63

)

 

Income tax expense (benefit)

Total, net of tax

 

$

188

 

 

 

Unrealized (gains) and losses on investment securities:

 

 

 

 

 

 

Realized (gains) losses on sale of securities

 

$

(3

)

 

Other income

Total

 

 

(3

)

 

 

Tax

 

 

2

 

 

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

Amortization of actuarial losses

 

 

36

 

 

Other income

Total

 

 

31

 

 

 

Tax

 

 

(8

)

 

Income tax expense (benefit)

Total, net of tax

 

$

23

 

 

 

Three Months Ended September 30, 2019

 

 

 

 

 

 

Deferred (gains) and losses on derivatives-hedging activities:

 

 

 

 

 

 

Commodity contracts

 

$

(34

)

 

Operating revenue

 

 

 

2

 

 

Purchased gas

 

 

 

(1

)

 

Discontinued operations

Interest rate contracts

 

 

12

 

 

Interest and related charges

 

 

 

2

 

 

Discontinued operations

Foreign currency contracts

 

 

12

 

 

Discontinued operations

Total

 

 

(7

)

 

 

Tax

 

 

1

 

 

Income tax expense (benefit)

Total, net of tax

 

$

(6

)

 

 

Unrealized (gains) and losses on investment securities:

 

 

 

 

 

 

Realized (gains) losses on sale of securities

 

$

(5

)

 

Other income

Total

 

 

(5

)

 

 

Tax

 

 

1

 

 

Income tax expense (benefit)

Total, net of tax

 

$

(4

)

 

 

Unrecognized pension and other postretirement benefit costs:

 

 

 

 

 

 

Amortization of prior-service costs (credits)

 

$

(5

)

 

Other income

Amortization of actuarial losses

 

 

31

 

 

Other income

Total

 

 

26

 

 

 

Tax

 

 

(6

)

 

Income tax expense (benefit)

Total, net of tax

 

$

20

 

 

 

 

36


Details about AOCI components

 

Amounts

reclassified

from AOCI

 

 

Affected line item in the

Consolidated Statements of

Income

(millions)

 

 

 

 

 

 

Nine Months Ended September 30, 2020

 

 

 

 

 

 

Deferred (gains) and losses on derivatives-hedging activities:

 

 

 

 

 

 

Commodity contracts

 

$

(22

)

 

Operating revenue

 

 

 

3

 

 

Purchased gas

 

 

 

(2

)

 

Discontinued operations

Interest rate contracts

 

 

66

 

 

Interest and related charges

 

 

 

236

 

 

Discontinued operations

Foreign currency contracts

 

 

6

 

 

Discontinued operations

Total

 

 

287

 

 

 

Tax

 

 

(72

)

 

Income tax expense (benefit)

Total, net of tax

 

$

215

 

 

 

Unrealized (gains) and losses on investment securities:

 

 

 

 

 

 

Realized (gains) losses on sale of securities

 

$

(21

)

 

Other income

Total

 

 

(21

)

 

 

Tax

 

 

6

 

 

Income tax expense (benefit)

Total, net of tax

 

$

(15

)

 

 

Unrecognized pension and other postretirement benefit costs:

 

 

 

 

 

 

Amortization of prior-service costs (credits)

 

$

(16

)

 

Other income

Amortization of actuarial losses

 

 

97

 

 

Other income

Total

 

 

81

 

 

 

Tax

 

 

(21

)

 

Income tax expense (benefit)

Total, net of tax

 

$

60

 

 

 

Nine Months Ended September 30, 2019

 

 

 

 

 

 

Deferred (gains) and losses on derivatives-hedging activities:

 

 

 

 

 

 

Commodity contracts

 

$

(123

)

 

Operating revenue

 

 

 

(1

)

 

Purchased gas

 

 

 

(4

)

 

Discontinued operations

Interest rate contracts

 

 

35

 

 

Interest and related charges

 

 

 

2

 

 

Discontinued operations

Foreign currency contracts

 

 

14

 

 

Discontinued operations

Total

 

 

(77

)

 

 

Tax

 

 

19

 

 

Income tax expense (benefit)

Total, net of tax

 

$

(58

)

 

 

Unrealized (gains) and losses on investment securities:

 

 

 

 

 

 

Realized (gains) losses on sale of securities

 

$

(6

)

 

Other income

Total

 

 

(6

)

 

 

Tax

 

 

1

 

 

Income tax expense (benefit)

Total, net of tax

 

$

(5

)

 

 

Unrecognized pension and other postretirement benefit costs:

 

 

 

 

 

 

Amortization of prior-service costs (credits)

 

$

(18

)

 

Other income

Amortization of actuarial losses

 

 

85

 

 

Other income

Total

 

 

67

 

 

 

Tax

 

 

(17

)

 

Income tax expense (benefit)

Total, net of tax

 

$

50

 

 

 

 

 

 

 

 

 

 

37


Virginia Power

The following table presents Virginia Power’s changes in AOCI by component, net of tax:

 

 

 

Deferred gains

and losses on

derivatives-

hedging

activities

 

 

Unrealized gains

and losses on

investment

securities

 

 

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(78

)

 

$

8

 

 

$

(70

)

Other comprehensive income before reclassifications:

   gains (losses)

 

 

5

 

 

 

0

 

 

 

5

 

Amounts reclassified from AOCI: (gains) losses(1)

 

 

1

 

 

 

(1

)

 

 

0

 

Net current period other comprehensive income (loss)

 

 

6

 

 

 

(1

)

 

 

5

 

Ending balance

 

$

(72

)

 

$

7

 

 

$

(65

)

Three Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(30

)

 

$

4

 

 

$

(26

)

Other comprehensive income before reclassifications:

   gains (losses)

 

 

(16

)

 

 

1

 

 

 

(15

)

Amounts reclassified from AOCI: (gains) losses(1)

 

 

0

 

 

 

0

 

 

 

0

 

Net current period other comprehensive income (loss)

 

 

(16

)

 

 

1

 

 

 

(15

)

Ending balance

 

$

(46

)

 

$

5

 

 

$

(41

)

Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(34

)

 

$

5

 

 

$

(29

)

Other comprehensive income before reclassifications:

   gains (losses)

 

 

(39

)

 

 

4

 

 

 

(35

)

Amounts reclassified from AOCI: (gains) losses(1)

 

 

1

 

 

 

(2

)

 

 

(1

)

Net current period other comprehensive income (loss)

 

 

(38

)

 

 

2

 

 

 

(36

)

Ending balance

 

$

(72

)

 

$

7

 

 

$

(65

)

Nine Months Ended September 30, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(13

)

 

$

1

 

 

$

(12

)

Other comprehensive income before reclassifications:

   gains (losses)

 

 

(34

)

 

 

5

 

 

 

(29

)

Amounts reclassified from AOCI: (gains) losses(1)

 

 

1

 

 

 

(1

)

 

 

0

 

Net current period other comprehensive income (loss)

 

 

(33

)

 

 

4

 

 

 

(29

)

Ending balance

 

$

(46

)

 

$

5

 

 

$

(41

)

 

(1)

See table below for details about these reclassifications. Virginia Power’s reclassifications out of AOCI were immaterial for both the three and nine months ended September 30, 2019.

 

38


The following table presents Virginia Power’s reclassifications out of AOCI by component:

 

Details about AOCI components

 

Amounts

reclassified

from AOCI

 

 

Affected line item in the

Consolidated Statements  of

Income

(millions)

 

 

 

 

 

 

Three Months Ended September 30, 2020

 

 

 

 

 

 

(Gains) losses on cash flow hedges:

 

 

 

 

 

 

Interest rate contracts

 

$

1

 

 

Interest and related charges

Total

 

 

1

 

 

 

Tax

 

 

0

 

 

Income tax expense

Total, net of tax

 

$

1

 

 

 

Unrealized (gains) and losses on investment securities:

 

 

 

 

 

 

Realized (gains) losses on sale of securities

 

$

(1

)

 

Other income

Total

 

 

(1

)

 

 

Tax

 

 

0

 

 

Income tax expense

Total, net of tax

 

$

(1

)

 

 

Nine Months Ended September 30, 2020

 

 

 

 

 

 

(Gains) losses on cash flow hedges:

 

 

 

 

 

 

Interest rate contracts

 

$

2

 

 

Interest and related charges

Total

 

 

2

 

 

 

Tax

 

 

(1

)

 

Income tax expense

Total, net of tax

 

$

1

 

 

 

Unrealized (gains) and losses on investment securities:

 

 

 

 

 

 

Realized (gains) losses on sale of securities

 

$

(3

)

 

Other income

Total

 

 

(3

)

 

 

Tax

 

 

1

 

 

Income tax expense

Total, net of tax

 

$

(2

)

 

 

 

 

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, 2019. See Note 9 in this report for further information about the Companies’ derivatives and hedge accounting activities.

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.

39


The following table presents Dominion Energy’s quantitative information about Level 3 fair value measurements at September 30, 2020.  The range and weighted average are presented in dollars for market price inputs and percentages for price volatility.

 

 

 

Fair Value

(millions)

 

 

Valuation Techniques

 

Unobservable Input

 

 

Range

 

Weighted

Average(1)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Physical and financial forwards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas(2)

 

$

102

 

 

Discounted cash flow

 

Market price (per Dth)

(3)

 

(2) - 3

 

 

(1

)

FTRs

 

 

32

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

(1) - 5

 

 

1

 

Physical options:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas

 

 

3

 

 

Option model

 

Market price (per Dth)

(3)

 

1 - 6

 

 

4

 

 

 

 

 

 

 

 

 

Price volatility

(4)

 

19% - 61%

 

 

35

%

Total assets

 

$

137

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial forwards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FTRs

 

$

10

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

(5) - 4

 

 

0

 

Total liabilities

 

$

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)

40


Nonrecurring Fair Value Measurements

Dominion Energy

See Notes 10 and 11 for information on nonrecurring fair value measurements associated with charges recorded related to Fowler Ridge and non-wholly-owned merchant solar facilities, respectively.

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

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

49

 

 

$

137

 

 

$

186

 

Interest rate

 

 

0

 

 

 

60

 

 

 

0

 

 

 

60

 

Foreign currency

 

 

0

 

 

 

6

 

 

 

0

 

 

 

6

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

4,146

 

 

 

0

 

 

 

0

 

 

 

4,146

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

0

 

 

 

617

 

 

 

0

 

 

 

617

 

Government securities

 

 

499

 

 

 

746

 

 

 

0

 

 

 

1,245

 

Cash equivalents and other

 

 

31

 

 

 

12

 

 

 

0

 

 

 

43

 

Total assets

 

$

4,676

 

 

$

1,490

 

 

$

137

 

 

$

6,303

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

41

 

 

$

10

 

 

$

51

 

Interest rate

 

 

0

 

 

 

721

 

 

 

0

 

 

 

721

 

Foreign currency

 

 

0

 

 

 

4

 

 

 

0

 

 

 

4

 

Total liabilities

 

$

0

 

 

$

766

 

 

$

10

 

 

$

776

 

At December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

55

 

 

$

19

 

 

$

74

 

Interest rate

 

 

0

 

 

 

11

 

 

 

0

 

 

 

11

 

Foreign currency

 

 

0

 

 

 

8

 

 

 

0

 

 

 

8

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

4,195

 

 

 

0

 

 

 

0

 

 

 

4,195

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

0

 

 

 

463

 

 

 

0

 

 

 

463

 

Government securities

 

 

473

 

 

 

719

 

 

 

0

 

 

 

1,192

 

Cash equivalents and other

 

 

19

 

 

 

1

 

 

 

0

 

 

 

20

 

Total assets

 

$

4,687

 

 

$

1,257

 

 

$

19

 

 

$

5,963

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

75

 

 

$

56

 

 

$

131

 

Interest rate

 

 

0

 

 

 

606

 

 

 

0

 

 

 

606

 

Foreign currency

 

 

0

 

 

 

3

 

 

 

0

 

 

 

3

 

Total liabilities

 

$

0

 

 

$

684

 

 

$

56

 

 

$

740

 

41


(1)

Includes investments held in the nuclear decommissioning and rabbi trusts. Excludes $297 million and $274 million of assets at September 30, 2020 and December 31, 2019, respectively, measured at fair value using NAV (or its equivalent) as a practical expedient which are not required to be categorized in the fair value hierarchy.

The following table presents the net change in 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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

123

 

 

$

75

 

 

$

(37

)

 

$

64

 

Total realized and unrealized gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

 

0

 

 

 

0

 

 

 

0

 

 

 

2

 

Purchased gas

 

 

0

 

 

 

0

 

 

 

0

 

 

 

1

 

Electric fuel and other energy-related purchases

 

 

0

 

 

 

(5

)

 

 

(26

)

 

 

(12

)

Included in regulatory assets/liabilities

 

 

4

 

 

 

(76

)

 

 

164

 

 

 

(51

)

Settlements

 

 

0

 

 

 

5

 

 

 

26

 

 

 

7

 

Purchases

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(10

)

Transfers out of Level 3

 

 

0

 

 

 

0

 

 

 

0

 

 

 

(2

)

Ending balance

 

$

127

 

 

$

(1

)

 

$

127

 

 

$

(1

)

The amount of total gains (losses) for the period included in

   earnings attributable to the change in unrealized gains

   (losses) relating to assets/liabilities still held at the

   reporting date:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

$

0

 

 

$

0

 

 

$

0

 

 

$

2

 

Purchased gas

 

 

0

 

 

 

0

 

 

 

0

 

 

 

1

 

Total

 

$

0

 

 

$

0

 

 

$

0

 

 

$

3

 

 

Virginia Power

The following table presents Virginia Power’s quantitative information about Level 3 fair value measurements at September 30, 2020.  The range and weighted average are presented in dollars for market price inputs and percentages for price volatility.

 

 

 

Fair Value

(millions)

 

 

Valuation Techniques

 

Unobservable Input

 

 

Range

 

Weighted

Average(1)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Physical and financial forwards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas(2)

 

$

102

 

 

Discounted cash flow

 

Market price (per Dth)

(3)

 

(2) - 3

 

 

(1

)

FTRs

 

 

32

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

(1) - 5

 

 

1

 

Physical options:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas

 

 

3

 

 

Option model

 

Market price (per Dth)

(3)

 

1 - 6

 

 

4

 

 

 

 

 

 

 

 

 

Price volatility

(4)

 

19% - 61%

 

 

35

%

Total assets

 

$

137

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial forwards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FTRs

 

$

10

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

(5) - 4

 

 

0

 

Total liabilities

 

$

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.

42


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)

 

The following table presents Virginia Power’s assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

8

 

 

$

137

 

 

$

145

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

1,928

 

 

 

0

 

 

 

0

 

 

 

1,928

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

0

 

 

 

352

 

 

 

0

 

 

 

352

 

Government securities

 

 

176

 

 

 

310

 

 

 

0

 

 

 

486

 

Cash equivalents and other

 

 

14

 

 

 

0

 

 

 

0

 

 

 

14

 

Total assets

 

$

2,118

 

 

$

670

 

 

$

137

 

 

$

2,925

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

6

 

 

$

10

 

 

$

16

 

Interest rate

 

 

0

 

 

 

475

 

 

 

0

 

 

 

475

 

Total liabilities

 

$

0

 

 

$

481

 

 

$

10

 

 

$

491

 

At December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

3

 

 

$

19

 

 

$

22

 

Interest rate

 

 

0

 

 

 

2

 

 

 

0

 

 

 

2

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

1,920

 

 

 

0

 

 

 

0

 

 

 

1,920

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

0

 

 

 

256

 

 

 

0

 

 

 

256

 

Government securities

 

 

186

 

 

 

361

 

 

 

0

 

 

 

547

 

Cash equivalents and other

 

 

0

 

 

 

1

 

 

 

0

 

 

 

1

 

Total assets

 

$

2,106

 

 

$

623

 

 

$

19

 

 

$

2,748

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

47

 

 

$

56

 

 

$

103

 

Interest rate

 

 

0

 

 

 

363

 

 

 

0

 

 

 

363

 

Total liabilities

 

$

0

 

 

$

410

 

 

$

56

 

 

$

466

 

 

(1)

Includes investments held in the nuclear decommissioning trusts. Excludes $150 million and $159 million of assets at September 30, 2020 and December 31, 2019, respectively, measured at fair value using NAV (or its equivalent) as a practical expedient which are not required to be categorized in the fair value hierarchy.

43


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

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

123

 

 

$

77

 

 

$

(37

)

 

$

60

 

Total realized and unrealized gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electric fuel and other energy-related purchases

 

 

0

 

 

 

(5

)

 

 

(26

)

 

 

(12

)

Included in regulatory assets/liabilities

 

 

4

 

 

 

(76

)

 

 

164

 

 

 

(50

)

Settlements

 

 

0

 

 

 

5

 

 

 

26

 

 

 

3

 

Ending balance

 

$

127

 

 

$

1

 

 

$

127

 

 

$

1

 

 

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 nine months ended September 30, 2020 and 2019.

 

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:

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

Carrying

Amount

 

 

Estimated

Fair

Value(1)

 

 

Carrying

Amount

 

 

Estimated

Fair

Value(1)

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominion Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt(2)(3)

 

$

37,045

 

 

$

43,872

 

 

$

32,055

 

 

$

36,155

 

Supplemental 364-Day credit facility borrowings

 

 

225

 

 

 

225

 

 

 

0

 

 

 

0

 

Junior subordinated notes(4)

 

 

3,410

 

 

 

3,589

 

 

 

4,797

 

 

 

4,953

 

Virginia Power

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt(4)

 

$

12,328

 

 

$

15,410

 

 

$

12,326

 

 

$

14,281

 

 

(1)

Fair value is estimated using market prices, where available, and interest rates currently available for issuance of debt with similar terms and remaining maturities. All fair value measurements are classified as Level 2. The carrying amount of debt issuances with short-term maturities and variable rates refinanced at current market rates is a reasonable estimate of their fair value.

(2)

Carrying amount includes current portions included in securities due within one year and amounts which represent the unamortized debt issuance costs, discount or premium and foreign currency remeasurement adjustments. At September 30, 2020 and December 31, 2019, includes the valuation of certain fair value hedges associated with fixed rate debt of $3 million and $4 million, respectively.

(3)

Includes amounts classified as held for sale, see Note 3.

(4)

Carrying amount includes current portions included in securities due within one year and amounts which represent the unamortized debt issuance costs, discount or premium.

 

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, 2019. 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. Dominion Energy’s derivative contracts include both over-the-counter transactions and those that are executed on an exchange or other trading platform (exchange contracts) and centrally cleared. Virginia Power’s derivative contracts include over-the-counter transactions. Over-the-counter contracts are bilateral contracts that are transacted directly with a third party. Exchange contracts utilize a financial intermediary, e