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D Dominion Energy

Filed: 4 May 21, 11:37am
0000715957 d:ProvisionForFutureCostOfRemovalMember d:VirginiaElectricAndPowerCompanyMember 2021-03-31

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark one)

 

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

 

For the quarterly period ended March 31, 2021

or

 

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

 

For the transition period from              to

 

 

Commission File

Number

 

Exact name of registrants as specified in their charters, address of

principal executive offices and registrants’ telephone number

 

I.R.S. Employer

Identification Number

 

 

 

 

 

001-08489

 

DOMINION ENERGY, INC.

 

54-1229715

 

 

 

 

 

000-55337

 

VIRGINIA ELECTRIC AND POWER COMPANY

 

54-0418825

 

 

 

 

 

 

 

120 Tredegar Street

Richmond, Virginia 23219

(804) 819-2000

 

 

 

State or other jurisdiction of incorporation or organization of the registrants: Virginia

 

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

 

Registrant

Trading Symbol

Title of Each Class

Name of Each Exchange

on Which Registered

DOMINION ENERGY, INC.

D

Common Stock, no par value

New York Stock Exchange

 

DRUA

2016 Series A 5.25% Enhanced Junior Subordinated Notes

New York Stock Exchange

 

DCUE

2019 Series A Corporate Units

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

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

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Dominion Energy, Inc.

 

Large accelerated filer

 

Accelerated filer

Emerging growth company

Non-accelerated filer

 

Smaller reporting company

 

 

 

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

 

Virginia Electric and Power Company

 

Large accelerated filer

 

Accelerated filer

Emerging growth company

Non-accelerated filer

 

Smaller reporting company

 

 

 

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

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

At April 23, 2021, the latest practicable date for determination, Dominion Energy, Inc. had 806,524,337 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

2019 Equity Units

 

Dominion Energy’s 2019 Series A Equity Units issued in June 2019, initially in the form of 2019 Series A Corporate Units, consisting of a stock purchase contract and a 1/10 interest in a share of the Series A Preferred Stock

2017 Tax Reform Act

 

An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (previously known as The Tax Cuts and Jobs Act) enacted on December 22, 2017

2021 Triennial Review

 

Virginia Commission review of Virginia Power’s earned return on base rate generation and distribution services for the four successive 12-month test periods beginning January 1, 2017 and ending December 31, 2020

ACE Rule

 

Affordable Clean Energy Rule

AFUDC

 

Allowance for funds used during construction

Align RNG

 

Align RNG, LLC, a joint venture between Dominion Energy and Smithfield Foods, Inc.

AOCI

 

Accumulated other comprehensive income (loss)

ARO

 

Asset retirement obligation

Atlantic Coast Pipeline

 

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

Atlantic Coast Pipeline Project

 

A previously proposed approximately 600-mile natural gas pipeline running from West Virginia through Virginia to North Carolina which would have been owned by Dominion Energy and Duke Energy

bcf

 

Billion cubic feet

Bear Garden

 

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

BHE

 

The legal entity, Berkshire Hathaway Energy Company, one or more of its consolidated subsidiaries (including Dominion Energy Gas, Dominion Energy Midstream and Cove Point effective November 1, 2020), or the entirety of Berkshire Hathaway Energy Company and its consolidated subsidiaries

Brookfield

 

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

CAA

 

Clean Air Act

CCR

 

Coal combustion residual

CCRO

 

Customer credit reinvestment offset

CEO

 

Chief Executive Officer

CEP

 

Capital Expenditure Program, as established by House Bill 95, Ohio legislation enacted in 2011, deployed by East Ohio to recover certain costs associated with capital investment

CERCLA

 

Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as Superfund

CFO

 

Chief Financial Officer

CO2

 

Carbon dioxide

Colonial Trail West

 

A 142 MW utility-scale solar power station located in Surry County, Virginia

Companies

 

Dominion Energy and Virginia Power, collectively

Contracted Assets

 

Contracted Assets operating segment

Cooling degree days

 

Units measuring the extent to which the average daily temperature is greater than 65 degrees Fahrenheit, or 75 degrees Fahrenheit in DESC’s service territory, calculated as the difference between 65 or 75 degrees, as applicable, and the average temperature for that day

Cove Point

 

Cove Point LNG, LP (formerly known as Dominion Energy Cove Point LNG, LP)

3


CPCN

 

Certificate of Public Convenience and Necessity

CWA

 

Clean Water Act

DCP

 

The legal entity, CPMLP Holding Company, LLC (formerly known as Dominion Cove Point, LLC), one or more of its consolidated subsidiaries (including Dominion Energy Midstream), or the entirety of CPMLP Holding Company, LLC and its consolidated subsidiaries

DECGS

 

Carolina Gas Services, Inc. (formerly known as Dominion Energy Carolina Gas Services, Inc.)

DEQPS

 

Dominion Energy Questar Pipeline Services, Inc.

DES

 

Dominion Energy Services, Inc.

DESC

 

The legal entity, Dominion Energy South Carolina, Inc., one or more of its consolidated entities or operating segment, or the entirety of Dominion Energy South Carolina, Inc. and its consolidated entities

DETI

 

Eastern Gas Transmission and Storage, Inc. (formerly known as Dominion Energy Transmission, Inc.)

DGI

 

Dominion Generation, Inc.

DGP

 

Eastern Gathering and Processing, Inc. (formerly known as Dominion Gathering and Processing, Inc.)

DMLPHCII

 

Eastern MLP Holding Company II, LLC (formerly known as Dominion MLP Holding Company II, LLC)

DOE

 

U.S. Department of Energy

Dominion Energy

 

The legal entity, Dominion Energy, Inc., one or more of its consolidated subsidiaries (other than Virginia Power) or operating segments, or the entirety of Dominion Energy, Inc. and its consolidated subsidiaries

Dominion Energy Gas

 

The legal entity, Eastern Energy Gas Holdings, LLC (formerly known as Dominion Energy Gas Holdings, LLC), one or more of its consolidated subsidiaries (consisting of DETI, DCP, DMLPHCII and Dominion Iroquois), or the entirety of Eastern Energy Gas Holdings, LLC and its consolidated subsidiaries

Dominion Energy  Midstream

 

The legal entity, Northeast Midstream Partners, LP (formerly known as Dominion Energy Midstream Partners, LP), one or more of its consolidated subsidiaries, or the entirety of Northeast Midstream Partners, LP and its consolidated subsidiaries

Dominion Energy Questar Pipeline

 

The legal entity, Dominion Energy Questar Pipeline, LLC, one or more of its consolidated subsidiaries (including its 50% noncontrolling interest in White River Hub), or the entirety of Dominion Energy Questar Pipeline, LLC and its consolidated subsidiaries

Dominion Energy South Carolina

 

Dominion Energy South Carolina operating segment

Dominion Energy Virginia

 

Dominion Energy Virginia operating segment

Dominion Iroquois

 

The legal entity Iroquois Inc. (formerly known as Dominion Iroquois, Inc.), one or more of its consolidated subsidiaries, or the entirety of Iroquois, Inc. and its consolidated subsidiaries, which held a 50% noncontrolling interest in Iroquois

DSM

 

Demand-side management

Dth

 

Dekatherm

Duke Energy

 

The legal entity, Duke Energy Corporation, one or more of its consolidated subsidiaries, or the entirety of Duke Energy Corporation and its consolidated subsidiaries

East Ohio

 

The East Ohio Gas Company, doing business as Dominion Energy Ohio

EPA

 

U.S. Environmental Protection Agency

EPS

 

Earnings per common share

FERC

 

Federal Energy Regulatory Commission

FILOT

 

Fee in lieu of taxes

4


Four Brothers

 

Four Brothers Solar, LLC, a limited liability company owned by Dominion Energy and Four Brothers Holdings, LLC, a subsidiary of GIP

Fowler Ridge

 

Fowler I Holdings LLC, a wind-turbine facility in Benton County, Indiana

FTRs

 

Financial transmission rights

GAAP

 

U.S. generally accepted accounting principles

Gas Distribution

 

Gas Distribution operating segment

GENCO

 

South Carolina Generating Company, Inc.

GHG

 

Greenhouse gas

GIP

 

The legal entity, Global Infrastructure Partners, one or more of its consolidated subsidiaries, or the entirety of Global Infrastructure Partners and its consolidated subsidiaries

Granite Mountain

 

Granite Mountain Holdings, LLC, a limited liability company owned by Dominion Energy and Granite Mountain Renewables, LLC, a subsidiary of GIP

Grassfield Solar

 

A proposed 20 MW utility-scale solar power station located in Chesapeake, Virginia

Greensville County

 

A 1,588 MW combined-cycle, natural gas-fired power station in Greensville County, Virginia

GT&S Transaction

 

The sale by Dominion Energy to BHE of Dominion Energy Gas, DGP, DECGS, Eastern Energy Field Services, Inc. (formerly known as Dominion Energy Field Services, Inc.) and Modular LNG Holdings, Inc. (formerly known as Dominion Modular LNG Holdings, Inc.) (which holds a 50% noncontrolling interest in JAX LNG) pursuant to a purchase and sale agreement entered into on July 3, 2020, which was completed on November 1, 2020

GTSA

 

Virginia Grid Transformation and Security Act of 2018

Heating degree days

 

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

Iron Springs

 

Iron Springs Holdings, LLC, a limited liability company owned by Dominion Energy and Iron Springs Renewables, LLC, a subsidiary of GIP

Iroquois

 

Iroquois Gas Transmission System, L.P.

ISO

 

Independent system operator

JAX LNG

 

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

Kewaunee

 

Kewaunee nuclear power station

kV

 

Kilovolt

LNG

 

Liquefied natural gas

MD&A

 

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

MGD

 

Million gallons a day

Millstone

 

Millstone nuclear power station

Millstone 2019 power purchase agreements

 

Power purchase agreements with Eversource Energy and The United Illuminating Company for Millstone to provide nine million MWh per year of electricity for ten years

MW

 

Megawatt

MWh

 

Megawatt hour

NAV

 

Net asset value

NND Project

 

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

Norge Solar

 

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

5


North Carolina    Commission

 

North Carolina Utilities Commission

NOX

 

Nitrogen oxide

NRC

 

U.S. Nuclear Regulatory Commission

Order 1000

 

Order issued by FERC adopting requirements for electric transmission planning, cost allocation and development

PIR

 

Pipeline Infrastructure Replacement program deployed by East Ohio

PJM

 

PJM Interconnection, LLC

PSD

 

Prevention of significant deterioration

PSNC

 

Public Service Company of North Carolina, Incorporated, doing business as Dominion Energy North Carolina

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

Regulation Act

 

Legislation effective July 1, 2007, that amended the Virginia Electric Utility Restructuring Act and fuel factor statute, which legislation is also known as the Virginia Electric Utility Regulation Act, as amended in 2015 and 2018

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 CCR

 

A rate adjustment clause associated with the recovery of costs related to the removal of CCR at certain power stations

Rider CE

 

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

Rider GV

 

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

Rider R

 

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

Rider S

 

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

Rider U

 

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

Rider US-3

 

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

Rider US-4

 

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

Rider W

 

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

ROE

 

Return on equity

RTO

 

Regional transmission organization

Sadler Solar

 

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

6


SCANA Merger Approval Order

 

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

SCDHEC

 

South Carolina Department of Health and Environmental Control

SCDOR

 

South Carolina Department of Revenue

SEC

 

U.S. Securities and Exchange Commission

Series A Preferred Stock

 

Dominion Energy’s 1.75% Series A Cumulative Perpetual Convertible Preferred Stock, without par value, with a liquidation preference of $1,000 per share

Series B Preferred Stock

 

Dominion Energy’s 4.65% Series B Fixed-Rate Cumulative Redeemable Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000 per share

South Carolina    Commission

 

Public Service Commission of South Carolina

Spring Grove 1

 

A 98 MW utility-scale solar power station located in Surry County, Virginia

Standard & Poor’s

 

Standard & Poor’s Ratings Services, a division of S&P Global Inc.

Summer

 

V.C. Summer nuclear power station

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 of March 2020

VEBA

 

Voluntary Employees’ Beneficiary Association

VIE

 

Variable interest entity

Virginia City Hybrid Energy Center

 

A 610 MW baseload carbon-capture compatible, clean coal powered electric generation facility in Wise County, Virginia

Virginia Commission

 

Virginia State Corporation Commission

Virginia Power

 

The legal entity, Virginia Electric and Power Company, one or more of its consolidated subsidiaries or operating segment, or the entirety of Virginia Electric and Power Company and its consolidated subsidiaries

Warren County

 

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

WECTEC

 

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

Westinghouse

 

Westinghouse Electric Company LLC

Wexpro

 

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

White River Hub

 

White River Hub, LLC

Wrangler

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7


 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

(millions, except per share amounts)

 

 

 

 

 

 

 

 

Operating Revenue

 

$

3,870

 

 

$

3,938

 

Operating Expenses

 

 

 

 

 

 

 

 

Electric fuel and other energy-related purchases

 

 

550

 

 

 

657

 

Purchased electric capacity

 

 

11

 

 

 

2

 

Purchased gas

 

 

484

 

 

 

434

 

Other operations and maintenance

 

 

987

 

 

 

891

 

Depreciation, depletion and amortization

 

 

608

 

 

 

578

 

Other taxes

 

 

257

 

 

 

240

 

Impairment of assets and other charges

 

 

95

 

 

 

768

 

Total operating expenses

 

 

2,992

 

 

 

3,570

 

Income from operations

 

 

878

 

 

 

368

 

Other income (expense)

 

 

367

 

 

 

(454

)

Interest and related charges

 

 

53

 

 

 

432

 

Income (loss) from continuing operations including noncontrolling interests

      before income tax expense (benefit)

 

 

1,192

 

 

 

(518

)

Income tax expense (benefit)

 

 

212

 

 

 

(50

)

Net Income (Loss) From Continuing Operations Including

      Noncontrolling Interests

 

 

980

 

 

 

(468

)

Net Income From Discontinued Operations Including

     Noncontrolling Interests(1)(2)

 

 

28

 

 

 

229

 

Net Income (Loss) Including Noncontrolling Interests

 

 

1,008

 

 

 

(239

)

Noncontrolling Interests

 

 

 

 

 

31

 

Net Income (Loss) Attributable to Dominion Energy

 

$

1,008

 

 

$

(270

)

Amounts attributable to Dominion Energy

 

 

 

 

 

 

 

 

Net Income (Loss) from continuing operations

 

$

980

 

 

$

(466

)

Net Income from discontinued operations

 

 

28

 

 

 

196

 

Net Income (Loss) attributable to Dominion Energy

 

$

1,008

 

 

$

(270

)

EPS - Basic

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

1.19

 

 

$

(0.57

)

Net income from discontinued operations

 

 

0.04

 

 

 

0.23

 

Net income (loss) attributable to Dominion Energy

 

$

1.23

 

 

$

(0.34

)

EPS - Diluted

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

1.19

 

 

$

(0.57

)

Net income from discontinued operations

 

 

0.04

 

 

 

0.23

 

Net income (loss) attributable to Dominion Energy

 

$

1.23

 

 

$

(0.34

)

 

(1)

See Note 10 for amounts attributable to related parties.

(2)

Includes income tax expense of $7 million and $31 million for the three months ended March 31, 2021 and 2020, respectively.

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

8


DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

 

2021

 

 

2020

 

 

(millions)

 

 

 

 

 

 

 

 

 

Net income (loss) including noncontrolling interests

 

$

1,008

 

 

$

(239

)

 

Other comprehensive income (loss), net of taxes:

 

 

 

 

 

 

 

 

 

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

 

 

39

 

 

 

(266

)

 

Changes in unrealized net gains (losses) on investment securities(2)

 

 

(31

)

 

 

9

 

 

Changes in net unrecognized pension and other postretirement benefit costs(3)

 

 

6

 

 

 

 

 

Amounts reclassified to net income (loss):

 

 

 

 

 

 

 

 

 

Net derivative losses-hedging activities(4)

 

 

13

 

 

 

22

 

 

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

 

 

1

 

 

 

(9

)

 

Net pension and other postretirement benefit costs(6)

 

 

18

 

 

 

19

 

 

Total other comprehensive income (loss)

 

 

46

 

 

 

(225

)

 

Comprehensive income (loss) including noncontrolling interests

 

 

1,054

 

 

 

(464

)

 

Comprehensive income attributable to noncontrolling interests

 

 

 

 

 

31

 

 

Comprehensive income (loss) attributable to Dominion Energy

 

$

1,054

 

 

$

(495

)

 

 

(1)

Net of $(13) million and $93 million tax for the three months ended March 31, 2021 and 2020, respectively.

(2)

Net of $10 million and $(4) million tax for the three months ended March 31, 2021 and 2020, respectively.

(3)

Net of $(4) million and $0 million tax for the three months ended March 31, 2021 and 2020, respectively.

(4)

Net of $(4) million and $(7) million tax for the three months ended March 31, 2021 and 2020, respectively.

(5)

Net of $0 million and $4 million tax for the three months ended March 31, 2021 and 2020, respectively.

(6)

Net of $(7) million and $(5) million tax for the three months ended March 31, 2021 and 2020, respectively.

   

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

9


DOMINION ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

March 31, 2021

 

 

December 31, 2020(1)

 

(millions)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

477

 

 

$

172

 

Customer receivables (less allowance for doubtful accounts of $39 and $42)

 

 

1,841

 

 

 

2,295

 

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

 

 

239

 

 

 

212

 

Inventories

 

 

1,476

 

 

 

1,550

 

Regulatory assets

 

 

650

 

 

 

699

 

Other

 

 

479

 

 

 

476

 

Current assets held for sale

 

 

1,500

 

 

 

1,482

 

Total current assets

 

 

6,662

 

 

 

6,886

 

Investments

 

 

 

 

 

 

 

 

Nuclear decommissioning trust funds

 

 

7,139

 

 

 

6,900

 

Investment in equity method affiliates

 

 

2,949

 

 

 

2,934

 

Other

 

 

405

 

 

 

404

 

Total investments

 

 

10,493

 

 

 

10,238

 

Property, Plant and Equipment

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

84,035

 

 

 

82,959

 

Accumulated depreciation, depletion and amortization

 

 

(25,614

)

 

 

(25,111

)

Total property, plant and equipment, net

 

 

58,421

 

 

 

57,848

 

Deferred Charges and Other Assets

 

 

 

 

 

 

 

 

Goodwill

 

 

7,381

 

 

 

7,381

 

Regulatory assets

 

 

8,793

 

 

 

9,133

 

Other

 

 

4,953

 

 

 

4,419

 

Total deferred charges and other assets

 

 

21,127

 

 

 

20,933

 

Total assets

 

$

96,703

 

 

$

95,905

 

 

(1)

Dominion Energy’s Consolidated Balance Sheet at December 31, 2020 has been derived from the audited Consolidated Balance Sheet at that date.

 

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

10


DOMINION ENERGY, INC.

CONSOLIDATED BALANCE SHEETS—(Continued)

(Unaudited)

 

 

 

March 31, 2021

 

 

December 31, 2020(1)

 

(millions)

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Securities due within one year

 

$

2,639

 

 

$

1,937

 

Supplemental 364-Day credit facility borrowings

 

 

 

 

 

225

 

Short-term debt

 

 

2,815

 

 

 

895

 

Accounts payable

 

 

848

 

 

 

944

 

Accrued interest, payroll and taxes

 

 

957

 

 

 

1,133

 

Regulatory liabilities

 

 

641

 

 

 

809

 

Liability to Atlantic Coast Pipeline

 

 

97

 

 

 

1,052

 

Q-Pipe Transaction deposit

 

 

1,290

 

 

 

1,290

 

Other(2)

 

 

1,924

 

 

 

1,933

 

Current liabilities held for sale

 

 

625

 

 

 

625

 

Total current liabilities

 

 

11,836

 

 

 

10,843

 

Long-Term Debt

 

 

 

 

 

 

 

 

Long-term debt

 

 

30,209

 

 

 

30,915

 

Junior subordinated notes

 

 

2,162

 

 

 

2,161

 

Other

 

 

877

 

 

 

881

 

Total long-term debt

 

 

33,248

 

 

 

33,957

 

Deferred Credits and Other Liabilities

 

 

 

 

 

 

 

 

Deferred income taxes and investment tax credits

 

 

6,202

 

 

 

5,953

 

Regulatory liabilities

 

 

10,202

 

 

 

10,187

 

Other

 

 

8,177

 

 

 

8,504

 

Total deferred credits and other liabilities

 

 

24,581

 

 

 

24,644

 

Total liabilities

 

 

69,665

 

 

 

69,444

 

Commitments and Contingencies (see Note 17)

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Preferred stock (See Note 16)

 

 

2,387

 

 

 

2,387

 

Common stock – no par(3)

 

 

21,310

 

 

 

21,258

 

Retained earnings

 

 

4,673

 

 

 

4,189

 

Accumulated other comprehensive loss

 

 

(1,671

)

 

 

(1,717

)

Total shareholders' equity

 

 

26,699

 

 

 

26,117

 

Noncontrolling interests

 

 

339

 

 

 

344

 

Total equity

 

 

27,038

 

 

 

26,461

 

Total liabilities and equity

 

$

96,703

 

 

$

95,905

 

 

(1)

Dominion Energy’s Consolidated Balance Sheet at December 31, 2020 has been derived from the audited Consolidated Balance Sheet at that date.

(2)

See Note 10 for amounts attributable to related parties.

(3)

1.8 billion shares authorized; 806 million shares outstanding at both March 31, 2021 and December 31, 2020.

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

11


DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(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, 2019

 

 

2

 

 

$

2,387

 

 

 

838

 

 

$

23,824

 

 

$

7,576

 

 

$

(1,793

)

 

$

31,994

 

 

$

2,039

 

 

$

34,033

 

Cumulative-effect of changes in

     accounting principles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(48

)

 

 

 

 

 

 

(48

)

 

 

 

 

 

 

(48

)

Net income (loss) including noncontrolling

     interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(270

)

 

 

 

 

 

 

(270

)

 

 

31

 

 

 

(239

)

Issuance of stock

 

 

 

 

 

 

 

 

 

 

1

 

 

 

78

 

 

 

 

 

 

 

 

 

 

 

78

 

 

 

 

 

 

 

78

 

Preferred stock dividends (See Note 16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16

)

 

 

 

 

 

 

(16

)

 

 

 

 

 

 

(16

)

Common stock dividends ($0.940 per

     share) and distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(788

)

 

 

 

 

 

 

(788

)

 

 

(44

)

 

 

(832

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(225

)

 

 

(225

)

 

 

 

 

 

 

(225

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

1

 

March 31, 2020

 

 

2

 

 

$

2,387

 

 

 

839

 

 

$

23,902

 

 

$

6,455

 

 

$

(2,018

)

 

$

30,726

 

 

$

2,026

 

 

$

32,752

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

2

 

 

$

2,387

 

 

 

806

 

 

$

21,258

 

 

$

4,189

 

 

$

(1,717

)

 

$

26,117

 

 

$

344

 

 

$

26,461

 

Net income including

     noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,008

 

 

 

 

 

 

 

1,008

 

 

 

 

 

 

1,008

 

Issuance of stock

 

 

 

 

 

 

 

 

 

 

 

 

 

48

 

 

 

 

 

 

 

 

 

 

 

48

 

 

 

 

 

 

 

48

 

Stock awards (net of change in

     unearned compensation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

4

 

Preferred stock dividends (See Note 16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16

)

 

 

 

 

 

 

(16

)

 

 

 

 

 

 

(16

)

Common stock dividends ($0.630 per

     share) and distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(508

)

 

 

 

 

 

 

(508

)

 

 

(6

)

 

 

(514

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

46

 

 

 

46

 

 

 

 

 

 

 

46

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

1

 

March 31, 2021

 

 

2

 

 

$

2,387

 

 

 

806

 

 

$

21,310

 

 

$

4,673

 

 

$

(1,671

)

 

$

26,699

 

 

$

339

 

 

$

27,038

 

 

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

12


DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Three Months Ended March 31,

 

2021

 

 

2020

 

(millions)

 

 

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

 

 

 

Net income (loss) including noncontrolling interests

 

$

1,008

 

 

$

(239

)

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

   provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization (including nuclear fuel)

 

 

685

 

 

 

759

 

Deferred income taxes and investment tax credits

 

 

216

 

 

 

(65

)

Impairment of assets and other charges

 

 

95

 

 

 

768

 

Net losses (gains) on nuclear decommissioning trust funds and other investments

 

 

(152

)

 

 

526

 

Other adjustments

 

 

4

 

 

 

4

 

Changes in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

334

 

 

 

245

 

Inventories

 

 

73

 

 

 

71

 

Deferred fuel and purchased gas costs, net

 

 

(149

)

 

 

162

 

Prepayments

 

 

24

 

 

 

38

 

Accounts payable

 

 

21

 

 

 

(164

)

Accrued interest, payroll and taxes

 

 

(177

)

 

 

(234

)

Customer deposits

 

 

(9

)

 

 

(13

)

Margin deposit assets and liabilities

 

 

(60

)

 

 

46

 

Net realized and unrealized changes related to derivative activities

 

 

(218

)

 

 

36

 

Other operating assets and liabilities

 

 

(243

)

 

 

(307

)

Net cash provided by operating activities

 

 

1,452

 

 

 

1,633

 

Investing Activities

 

 

 

 

 

 

 

 

Plant construction and other property additions (including nuclear fuel)

 

 

(1,328

)

 

 

(1,462

)

Acquisition of solar development projects

 

 

(23

)

 

 

(8

)

Proceeds from sales of securities

 

 

1,765

 

 

 

602

 

Purchases of securities

 

 

(1,765

)

 

 

(631

)

Contributions to equity method affiliates

 

 

(977

)

 

 

(11

)

Acquisition of equity method investments

 

 

0

 

 

 

(178

)

Other

 

 

20

 

 

 

47

 

Net cash used in investing activities

 

 

(2,308

)

 

 

(1,641

)

Financing Activities

 

 

 

 

 

 

 

 

Issuance of short-term debt, net

 

 

1,921

 

 

 

1,279

 

Issuance of short-term notes

 

 

0

 

 

 

500

 

Repayment of supplemental 364-day credit facility borrowings

 

 

(225

)

 

 

0

 

Issuance of long-term debt

 

 

150

 

 

 

950

 

Repayment of long-term debt, including redemption premiums

 

 

(161

)

 

 

(932

)

Issuance of common stock

 

 

48

 

 

 

78

 

Common dividend payments

 

 

(508

)

 

 

(788

)

Other

 

 

(54

)

 

 

(81

)

Net cash provided by financing activities

 

 

1,171

 

 

 

1,006

 

Increase in cash, restricted cash and equivalents

 

 

315

 

 

 

998

 

Cash, restricted cash and equivalents at beginning of period

 

 

247

 

 

 

269

 

Cash, restricted cash and equivalents at end of period

 

$

562

 

 

$

1,267

 

 

See Note 2 for disclosure of supplemental cash flow information.

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

13


VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

(millions)

 

 

 

 

 

 

 

 

Operating Revenue(1)

 

$

1,830

 

 

$

1,930

 

Operating Expenses

 

 

 

 

 

 

 

 

Electric fuel and other energy-related purchases(1)

 

 

406

 

 

 

492

 

Excess electric capacity

 

 

(3

)

 

 

(9

)

Other operations and maintenance:

 

 

 

 

 

 

 

 

Affiliated suppliers

 

 

87

 

 

 

87

 

Other

 

 

426

 

 

 

331

 

Depreciation and amortization

 

 

324

 

 

 

311

 

Other taxes

 

 

93

 

 

 

87

 

Impairment of assets and other charges (benefit)

 

 

(51

)

 

 

764

 

Total operating expenses

 

 

1,282

 

 

 

2,063

 

Income (loss) from operations

 

 

548

 

 

 

(133

)

Other income (expense)

 

 

32

 

 

 

(52

)

Interest and related charges(1)

 

 

136

 

 

 

126

 

Income (loss) before income tax expense

 

 

444

 

 

 

(311

)

Income tax expense (benefit)

 

 

70

 

 

 

(31

)

Net Income (Loss)

 

$

374

 

 

$

(280

)

 

(1)

See Note 19 for amounts attributable to affiliates.

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

 


14


 

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

(millions)

 

 

 

 

 

 

 

 

Net income (loss)

 

$

374

 

 

$

(280

)

Other comprehensive income (loss), net of taxes:

 

 

 

 

 

 

 

 

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

 

 

32

 

 

 

(45

)

Changes in unrealized net losses on nuclear decommissioning trust funds(2)

 

 

(5

)

 

 

(2

)

Amounts reclassified to net income (loss):

 

 

 

 

 

 

 

 

Net derivative losses-hedging activities(3)

 

 

1

 

 

 

0

 

Net realized losses on nuclear decommissioning  trust funds(4)

 

 

1

 

 

 

1

 

Total other comprehensive income (loss)

 

 

29

 

 

 

(46

)

Comprehensive income (loss)

 

$

403

 

 

$

(326

)

 

(1)

Net of $(11) million and $16 million tax for the three months ended March 31, 2021 and 2020, respectively.   

(2)

Net of $0 million and $0 million tax for the three months ended March 31, 2021 and 2020, respectively.   

(3)

Net of $0 million and $0 million tax for the three months ended March 31, 2021 and 2020, respectively.

(4)

Net of $0 million and $(1) million tax for the three months ended March 31, 2021 and 2020, respectively. 

 

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

 

15


 

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

March 31, 2021

 

 

December 31, 2020(1)

 

(millions)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

56

 

 

$

35

 

Customer receivables (less allowance for doubtful accounts of $18 and $23)

 

 

926

 

 

 

1,315

 

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

 

 

86

 

 

 

91

 

Affiliated receivables

 

 

10

 

 

 

5

 

Inventories (average cost method)

 

 

840

 

 

 

862

 

Regulatory assets

 

 

292

 

 

 

295

 

Other(2)

 

 

52

 

 

 

59

 

Total current assets

 

 

2,262

 

 

 

2,662

 

Investments

 

 

 

 

 

 

 

 

Nuclear decommissioning trust funds

 

 

3,322

 

 

 

3,197

 

Other

 

 

3

 

 

 

3

 

Total investments

 

 

3,325

 

 

 

3,200

 

Property, Plant and Equipment

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

47,431

 

 

 

46,736

 

Accumulated depreciation and amortization

 

 

(14,446

)

 

 

(14,167

)

Total property, plant and equipment, net

 

 

32,985

 

 

 

32,569

 

Deferred Charges and Other Assets

 

 

 

 

 

 

 

 

Regulatory assets

 

 

3,235

 

 

 

3,509

 

Other(2)

 

 

1,977

 

 

 

1,714

 

Total deferred charges and other assets

 

 

5,212

 

 

 

5,223

 

Total assets

 

$

43,784

 

 

$

43,654

 

 

 

 

(1)

Virginia Power’s Consolidated Balance Sheet at December 31, 2020 has been derived from the audited Consolidated Balance Sheet at that date.

(2)

See Note 19 for amounts attributable to affiliates.

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

16


VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED BALANCE SHEETS—(Continued)

(Unaudited)

 

 

 

 

March 31, 2021

 

 

December 31, 2020(1)

 

(millions)

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDER’S EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Securities due within one year

 

$

458

 

 

$

8

 

Short-term debt

 

 

420

 

 

 

45

 

Accounts payable

 

 

311

 

 

 

332

 

Payables to affiliates

 

 

125

 

 

 

266

 

Affiliated current borrowings

 

 

177

 

 

 

380

 

Accrued interest, payroll and taxes

 

 

307

 

 

 

253

 

Asset retirement obligations

 

 

159

 

 

 

166

 

Regulatory liabilities

 

 

272

 

 

 

425

 

Derivative liabilities(2)

 

 

171

 

 

 

390

 

Other

 

 

591

 

 

 

562

 

Total current liabilities

 

 

2,991

 

 

 

2,827

 

Long-Term Debt

 

 

 

 

 

 

 

 

Long-term debt

 

 

12,759

 

 

 

13,207

 

Other

 

 

481

 

 

 

480

 

Total long-term debt

 

 

13,240

 

 

 

13,687

 

Deferred Credits and Other Liabilities

 

 

 

 

 

 

 

 

Deferred income taxes and investment tax credits

 

 

2,873

 

 

 

2,779

 

Asset retirement obligations

 

 

3,681

 

 

 

3,654

 

Regulatory liabilities

 

 

5,402

 

 

 

5,338

 

Other(2)

 

 

786

 

 

 

812

 

Total deferred credits and other liabilities

 

 

12,742

 

 

 

12,583

 

Total liabilities

 

 

28,973

 

 

 

29,097

 

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

 

 

7,983

 

 

 

7,758

 

Accumulated other comprehensive loss

 

 

(23

)

 

 

(52

)

Total common shareholder’s equity

 

 

14,811

 

 

 

14,557

 

Total liabilities and shareholder’s equity

 

$

43,784

 

 

$

43,654

 

 

(1)

Virginia Power’s Consolidated Balance Sheet at December 31, 2020 has been derived from the audited Consolidated Balance Sheet at that date.

(2)

See Note 19 for amounts attributable to affiliates.

(3)

500,000 shares authorized; 274,723 shares outstanding at March 31, 2021 and December 31, 2020.

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

17


VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER’S EQUITY

(Unaudited)

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Other Paid-In Capital

 

 

Retained Earnings

 

 

AOCI

 

 

Total

 

(millions, except for shares)

 

(thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2019

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

7,167

 

 

$

(29

)

 

$

13,989

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(280

)

 

 

 

 

 

 

(280

)

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(108

)

 

 

 

 

 

 

(108

)

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(46

)

 

 

(46

)

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

1

 

March 31, 2020

 

 

275

 

 

 

5,738

 

 

 

1,113

 

 

 

6,780

 

 

 

(75

)

 

 

13,556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

7,758

 

 

$

(52

)

 

$

14,557

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

374

 

 

 

 

 

 

 

374

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(150

)

 

 

 

 

 

 

(150

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29

 

 

 

29

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

1

 

March 31, 2021

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

7,983

 

 

$

(23

)

 

$

14,811

 

 

 

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

18


VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Three Months Ended March 31,

 

2021

 

 

2020

 

(millions)

 

 

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

 

 

 

Net income (loss)

 

$

374

 

 

$

(280

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization (including nuclear fuel)

 

 

365

 

 

 

357

 

Deferred income taxes and investment tax credits

 

 

87

 

 

 

(135

)

Impairment of assets and other charges (benefit)

 

 

(51

)

 

 

764

 

Other adjustments

 

 

(29

)

 

 

53

 

Changes in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

317

 

 

 

123

 

Affiliated receivables and payables

 

 

(144

)

 

 

24

 

Inventories

 

 

21

 

 

 

5

 

Prepayments

 

 

(4

)

 

 

(5

)

Deferred fuel expenses, net

 

 

(159

)

 

 

70

 

Accounts payable

 

 

0

 

 

 

99

 

Accrued interest, payroll and taxes

 

 

54

 

 

 

13

 

Net realized and unrealized changes related to derivative activities

 

 

18

 

 

 

(12

)

Other operating assets and liabilities

 

 

(65

)

 

 

73

 

Net cash provided by operating activities

 

 

784

 

 

 

1,149

 

Investing Activities

 

 

 

 

 

 

 

 

Plant construction and other property additions

 

 

(766

)

 

 

(764

)

Purchases of nuclear fuel

 

 

(46

)

 

 

(25

)

Acquisition of solar development projects

 

 

(10

)

 

 

(6

)

Proceeds from sales of securities

 

 

789

 

 

 

294

 

Purchases of securities

 

 

(791

)

 

 

(310

)

Other

 

 

41

 

 

 

37

 

Net cash used in investing activities

 

 

(783

)

 

 

(774

)

Financing Activities

 

 

 

 

 

 

 

 

Issuance (repayment) of short-term debt, net

 

 

375

 

 

 

(108

)

Repayment of affiliated current borrowings, net

 

 

(203

)

 

 

(106

)

Common dividend payments to parent

 

 

(150

)

 

 

(108

)

Other

 

 

(2

)

 

 

(1

)

Net cash provided by (used in) financing activities

 

 

20

 

 

 

(323

)

Increase in cash, restricted cash and equivalents

 

 

21

 

 

 

52

 

Cash, restricted cash and equivalents at beginning of period

 

 

35

 

 

 

24

 

Cash, restricted cash and equivalents at end of period

 

$

56

 

 

$

76

 

 

 

 

 

 

 

 

 

 

 

See Note 2 for disclosure of supplemental cash flow information. 

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

 

19


 

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Note 1. Nature of Operations

Dominion Energy, headquartered in Richmond, Virginia, is one of the nation’s largest producers and distributors of energy. Dominion Energy’s operations are conducted through various subsidiaries, including Virginia Power. Dominion Energy’s operations also include DESC, regulated gas distribution operations primarily in the eastern and Rocky Mountain regions of the U.S., nonregulated electric generation and, following completion of the GT&S Transaction in November 2020, a noncontrolling interest in Cove Point. See Note 3 for a description of the sale of substantially all of Dominion Energy’s gas transmission and storage operations to BHE through the GT&S Transaction completed in November 2020 and the proposed Q-Pipe Transaction of Dominion Energy’s remaining regulated gas transmission and storage services in the Rocky Mountain region of the U.S.

 

Note 2. Significant Accounting Policies

As permitted by the rules and regulations of the SEC, the Companies’ accompanying unaudited Consolidated Financial Statements contain certain condensed financial information and exclude certain footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with GAAP. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020.

In the Companies’ opinion, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly their financial position at March 31, 2021 and their results of operations, changes in equity and cash flows for the three months ended March 31, 2021 and 2020. Such adjustments are normal and recurring in nature unless otherwise noted.

The Companies make certain estimates and assumptions in preparing their Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from those estimates.

The Companies’ accompanying unaudited Consolidated Financial Statements include, after eliminating intercompany transactions and balances, their accounts, those of their respective majority-owned subsidiaries and non-wholly-owned entities in which they have a controlling financial interest. For certain partnership structures, income is allocated based on the liquidation value of the underlying contractual arrangements. At March 31, 2021, Dominion Energy owns 50% of the voting interests in Four Brothers and Three Cedars and has a controlling financial interest over the entities through its right to control operations. GIP’s ownership interest in Four Brothers and Three Cedars, Terra Nova Renewable Partners’ 33% interest in certain Dominion Energy nonregulated solar projects and Brookfield’s 25% interest in Cove Point (effective December 2019 until November 2020) are reflected as noncontrolling interest in Dominion Energy’s Consolidated Financial Statements. Terra Nova Renewable Partners has a future option to buy all or a portion of Dominion Energy’s remaining 67% ownership in certain nonregulated solar 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.

Certain amounts in the Companies’ 2020 Consolidated Financial Statements and Notes have been reclassified to conform to the 2021 presentation for comparative purposes; however, such reclassifications did not affect the Companies’ net income, total assets, liabilities, equity or cash flows.

Amounts disclosed for Dominion Energy are inclusive of Virginia Power, where applicable. There have been no significant changes from Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, with the exception of the items described below.

20


Cash, Restricted Cash and Equivalents

Restricted Cash and Equivalents

The following table provides a reconciliation of the total cash, restricted cash and equivalents reported within the Companies’ Consolidated Balance Sheets to the corresponding amounts reported within the Companies’ Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020:

 

 

 

Cash, Restricted Cash and Equivalents

at End of Period

 

 

Cash, Restricted Cash and Equivalents

at Beginning of Period

 

 

 

March 31, 2021

 

 

March 31, 2020

 

 

December 31, 2020

 

 

December 31, 2019

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominion Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents(1)

 

$

491

 

 

$

1,192

 

 

$

179

 

 

$

166

 

Restricted cash and equivalents(2)(3)

 

 

71

 

 

 

75

 

 

 

68

 

 

 

103

 

Cash, restricted cash and equivalents shown in the

   Consolidated Statements of Cash Flows

 

$

562

 

 

$

1,267

 

 

$

247

 

 

$

269

 

Virginia Power

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

56

 

 

$

71

 

 

$

35

 

 

$

17

 

Restricted cash and equivalents(3)

 

 

0

 

 

 

5

 

 

 

0

 

 

 

7

 

Cash, restricted cash and equivalents shown in the

   Consolidated Statements of Cash Flows

 

$

56

 

 

$

76

 

 

$

35

 

 

$

24

 

 

(1)

At March 31, 2021, March 31, 2020, December 31, 2020 and December 31, 2019, Dominion Energy had $14 million, $59 million, $7 million and $31 million of cash and cash equivalents included in current assets held for sale, respectively.

(2)

At March 31, 2021, March 31, 2020, December 31, 2020 and December 31, 2019, Dominion Energy had $3 million, $12 million, $3 million and $12 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.

 

Supplemental Cash Flow Information

 

The following table provides supplemental disclosure of cash flow information related to Dominion Energy:

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

(millions)

 

 

 

 

 

 

 

 

Significant noncash investing and financing activities:

 

 

 

 

 

 

 

 

Accrued capital expenditures

 

$

341

 

 

$

343

 

Leases(1)

 

 

9

 

 

 

17

 

(1)

Includes $2 million and $17 million of financing leases at March 31, 2021 and 2020, respectively, and $7 million of operating leases at March 31, 2021.

 

The following table provides supplemental disclosure of cash flow information related to Virginia Power:

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

(millions)

 

 

 

 

 

 

 

 

Significant noncash investing and financing activities:

 

 

 

 

 

 

 

 

Accrued capital expenditures

 

$

262

 

 

$

210

 

Financing leases

 

 

1

 

 

 

10

 

Property, Plant and Equipment

 

In March 2020, Virginia Power committed to retire certain coal- and oil-fired generating units before the end of their useful lives based on economic and other factors, including but not limited to market power prices and the VCEA. These units will be retired after they meet their capacity obligations to PJM in 2023. As a result, Virginia Power recorded a charge of $754 million ($561 million after-tax) in the first quarter of 2020, primarily included in impairment of assets and other charges in its Consolidated Statements of Income. This charge is considered a component of Virginia Power’s base rates deemed recovered under the GTSA, subject to review as discussed in Note 13 to the Consolidated Financial Statements in Virginia Power’s Annual Report on Form 10-K for the year ended December 31, 2020.

21


 

Note 3. Acquisitions and Dispositions

Disposition of Gas Transmission & Storage Operations to BHE

 

In July 2020, Dominion Energy entered into an agreement with BHE with a total value of approximately $10 billion, comprised of approximately $4.0 billion of cash consideration (subject to customary closing adjustments) plus the assumption of long-term debt, to sell substantially all of its gas transmission and storage operations, including processing assets, as well as noncontrolling partnership interests in Iroquois, JAX LNG and White River Hub and a controlling interest in Cove Point (consisting of 100% of the general partner interest and 25% of the total limited partner interests). The agreement provides that Dominion Energy retains the assets and obligations of the pension and other postretirement employee benefit plans associated with the operations included in the transaction and relating to services provided through closing. In October 2020, pursuant to a provision in the agreement with BHE, Dominion Energy elected to exclude Dominion Energy Questar Pipeline and certain other affiliated 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 as discussed in Note 3 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

 

In connection with closing of the GT&S Transaction, Dominion Energy and BHE entered into a transition services agreement under which Dominion Energy will continue to provide specified administrative services to support the operations of the disposed business for up to 24 months after closing. In addition, BHE will provide certain administrative services to Dominion Energy. Dominion Energy recorded revenue of $5 million associated with the transition service agreement in operating revenue in its Consolidated Statements of Income for the three months ended March 31, 2021.

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, effective April 1, 2021, solicit or accept offers from alternative buyers for all or a material portion of the Q-Pipe Transaction and either party may terminate the Q-Pipe Transaction if closing has not occurred on or before June 30, 2021.  If the Hart-Scott-Rodino Act approval has not been obtained by June 30, 2021, upon BHE’s request, 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 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 March 31, 2021, Dominion Energy expects to recognize a pre-tax gain of approximately $450 million ($320 million after-tax) upon closing, including the write-off of $191 million of goodwill, but excluding the effects of any closing adjustments.

The operations included in both the GT&S Transaction and the Q-Pipe Transaction are presented in held-for-sale and discontinued operations effective July 2020. As a result, the previously reported amounts have been recast to reflect this presentation and depreciation and amortization ceased on the applicable assets. As Cove Point had previously been consolidated within Dominion Energy’s financial statements, balances associated with Cove Point prior to the closing of the GT&S Transaction are presented within held-for-sale and discontinued operations. See Note 10 for further information regarding Dominion Energy’s equity method investment in Cove Point.

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

 

 

 

Three Months Ended

March 31, 2021

 

 

Three Months Ended

March 31, 2020

 

 

 

Q-Pipe Transaction

 

 

GT&S Transaction

 

 

Q-Pipe Transaction

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

$

67

 

 

$

563

 

 

$

65

 

Operating expense

 

 

19

 

 

 

333

 

 

 

33

 

Other income

 

 

0

 

 

 

20

 

 

 

1

 

Interest and related charges

 

 

5

 

 

 

53

 

 

 

4

 

Income before income taxes

 

 

43

 

 

 

197

 

 

 

29

 

Income tax expense

 

 

8

 

 

 

27

 

 

 

4

 

Net income including noncontrolling interests

 

 

35

 

 

 

170

 

 

 

25

 

Noncontrolling interests

 

 

 

 

 

33

 

 

 

 

Net income attributable to Dominion Energy

 

$

35

 

 

$

137

 

 

$

25

 

22


 

 

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

 

 

 

At March 31, 2021

 

 

At December 31, 2020

 

 

 

Q-Pipe Transaction

 

 

Q-Pipe Transaction

 

(millions)

 

 

 

 

 

 

 

 

Current assets(1)

 

$

49

 

 

$

47

 

Equity method investments(2)

 

 

35

 

 

 

35

 

Property, plant and equipment, net

 

 

1,120

 

 

 

1,113

 

Other deferred charges and other assets, including goodwill and intangible assets(3)

 

 

224

 

 

 

224

 

Current liabilities

 

 

30

 

 

 

30

 

Long-term debt

 

 

426

 

 

 

426

 

Other deferred credits and liabilities

 

 

154

 

 

 

154

 

 

 

(1)

Includes cash and cash equivalents of $13 million and $7 million as of March 31, 2021 and December 31, 2020.

 

(2)

Comprised of an equity method investment in White River Hub.

 

(3)

Includes goodwill of $191 million at both March 31, 2021 and December 31, 2020.

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

 

 

 

Three Months Ended

March 31, 2021

 

 

Three Months Ended March 31, 2020

 

 

 

Q-Pipe

Transaction

 

 

GT&S

Transaction

 

 

Q-Pipe

Transaction

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

3

 

 

$

73

 

 

$

6

 

Significant noncash items

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization

 

 

0

 

 

 

82

 

 

 

13

 

Accrued capital expenditures

 

 

2

 

 

 

16

 

 

 

0

 

 

 

 

23


 

Note 4. Operating Revenue

The Companies’ operating revenue consists of the following:

 

 

 

Three Months Ended March 31,

 

 

 

 

2021

 

 

2020

 

 

(millions)

 

 

 

 

 

 

 

 

 

Dominion Energy

 

 

 

 

 

 

 

 

 

Regulated electric sales:

 

 

 

 

 

 

 

 

 

Residential

 

$

1,155

 

 

$

1,158

 

 

Commercial

 

 

719

 

 

 

798

 

 

Industrial

 

 

178

 

 

 

182

 

 

Government and other retail

 

 

189

 

 

 

219

 

 

Wholesale

 

 

43

 

 

 

33

 

 

Nonregulated electric sales

 

 

249

 

 

 

232

 

 

Regulated gas sales:

 

 

 

 

 

 

 

 

 

Residential

 

 

630

 

 

 

548

 

 

Commercial

 

 

206

 

 

 

191

 

 

Other

 

 

34

 

 

 

28

 

 

Nonregulated gas sales

 

 

52

 

 

 

83

 

 

Regulated gas transportation and storage

 

 

271

 

 

 

232

 

 

Other regulated revenues

 

 

66

 

 

 

92

 

 

Other nonregulated revenues(1)(2)

 

 

48

 

 

 

31

 

 

Total operating revenue from contracts

   with customers

 

 

3,840

 

 

 

3,827

 

 

Other revenues(3)(4)

 

 

30

 

 

 

111

 

 

Total operating revenue

 

$

3,870

 

 

$

3,938

 

 

Virginia Power

 

 

 

 

 

 

 

 

 

Regulated electric sales:

 

 

 

 

 

 

 

 

 

Residential

 

$

889

 

 

$

896

 

 

Commercial

 

 

547

 

 

 

614

 

 

Industrial

 

 

91

 

 

 

97

 

 

Government and other retail

 

 

176

 

 

 

203

 

 

Wholesale

 

 

26

 

 

 

24

 

 

Other regulated revenues

 

 

57

 

 

 

62

 

 

Other nonregulated revenues(1)(2)

 

 

21

 

 

 

13

 

 

Total operating revenue from contracts

   with customers

 

 

1,807

 

 

 

1,909

 

 

Other revenues(2)(3)

 

 

23

 

 

 

21

 

 

Total operating revenue

 

$

1,830

 

 

$

1,930

 

 

 

(1)

Amounts above include sales which are considered to be goods transferred at a point in time. Such amounts include $7 million for both the three months ended March 31, 2021 and 2020, 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 $6 million and $4 million for the three months ended March 31, 2021 and $4 million and $3 million for the three months ended March 31, 2020, 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 $22 million and $36 million at Dominion Energy and $20 million and $17 million at Virginia Power for the three months ended March 31, 2021 and 2020, respectively.

(4)

Amounts above include revenue associated with services provided to discontinued operations of $1 million and $2 million for the three months ended March 31, 2021 and 2020, 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.

 

Revenue expected to be recognized on multi-year

   contracts in place at March 31, 2021

 

2021

 

 

2022

 

 

2023

 

 

2024

 

 

2025

 

 

Thereafter

 

 

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominion Energy

 

$

51

 

 

$

68

 

 

$

66

 

 

$

59

 

 

$

51

 

 

$

493

 

 

$

788

 

24


 

 

At March 31, 2021 and December 31, 2020, Dominion Energy’s contract liability balances were $74 million and $130 million, respectively, and are recorded in other current liabilities and other deferred credits and other liabilities in the Consolidated Balance Sheets.  At March 31, 2021 and December 31, 2020, Virginia Power’s contract liability balances were $32 million and $36 million, respectively, and are recorded in other current liabilities and other deferred credits and other liabilities in its Consolidated Balance Sheets.

 

The Companies recognize revenue as they fulfill their obligations to provide service to their customers. During the three months ended March 31, 2021 and 2020, Dominion Energy recognized revenue of $122 million and $93 million, respectively, from the beginning contract liability balances. During the three months ended March 31, 2021 and 2020, Virginia Power recognized $36 million and $24 million, respectively, from the beginning contract liability balance.  

 

 

Note 5. Income Taxes

For continuing operations, including noncontrolling interests, the statutory U.S. federal income tax rate reconciles to the Companies’ effective income tax rate as follows:

 

 

 

Dominion Energy

 

 

Virginia Power

 

Three Months Ended March 31,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

U.S. statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

Increases (reductions) resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

State taxes, net of federal benefit

 

 

3.5

 

 

 

3.3

 

 

 

4.5

 

 

 

4.8

 

Investment tax credits

 

 

(3.8

)

 

 

(7.0

)

 

 

(6.6

)

 

 

(6.4

)

Production tax credits

 

 

(0.3

)

 

 

(0.8

)

 

 

(0.6

)

 

 

(0.8

)

Reversal of excess deferred income

   taxes

 

 

(2.2

)

 

 

(7.8

)

 

 

(2.2

)

 

 

(8.1

)

AFUDC - equity

 

 

(0.4

)

 

 

(0.7

)

 

 

(0.7

)

 

 

(0.7

)

Other, net

 

 

 

 

 

1.7

 

 

 

0.3

 

 

 

0.3

 

Effective tax rate

 

 

17.8

%

 

 

9.7

%

 

 

15.7

%

 

 

10.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 2021. The reversal of these excess deferred income taxes will impact the effective tax rate and rates charged to customers. See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 for more information.

 

As of March 31, 2021, there have been no material changes in the Companies’ unrecognized tax benefits or possible changes that could reasonably be expected to occur during the next twelve months. See Note 5 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, for a discussion of these unrecognized tax benefits.

 

In April 2021, a state legislative change was enacted for tax years beginning January 1, 2022. Dominion Energy expects to record an approximate $20 million deferred tax benefit, inclusive of an approximate $15 million benefit at Virginia Power, in the second quarter of 2021.

 

Discontinued operations

Income tax expense reflected in discontinued operations is $7 million and $31 million for the three months ended March 31, 2021 and 2020, respectively.

 

25


 

Note 6. Earnings Per Share

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

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

(millions, except EPS)

 

 

 

 

 

 

 

 

Net income (loss) attributable to Dominion Energy from

    continuing operations

 

$

980

 

 

$

(466

)

Preferred stock dividends (see Note 16)

 

 

(16

)

 

 

(16

)

Net income (loss) attributable to Dominion Energy from

    continuing operations – Basic

 

 

964

 

 

 

(482

)

Dilutive effect of Series A Preferred Stock

 

 

 

 

 

 

Net income (loss) attributable to Dominion Energy from

    continuing operations - Diluted

 

$

964

 

 

$

(482

)

 

 

 

 

 

 

 

 

 

Net income attributable to Dominion Energy from

    discontinued operations - Basic & Diluted

 

$

28

 

 

$

196

 

 

 

 

 

 

 

 

 

 

Average shares of common stock outstanding – Basic &

    Diluted

 

 

805.9

 

 

 

838.2

 

Net effect of dilutive securities

 

 

 

 

 

 

Average shares of common stock outstanding – Diluted

 

 

805.9

 

 

 

838.2

 

 

 

 

 

 

 

 

 

 

EPS from continuing operations – Basic

 

$

1.19

 

 

$

(0.57

)

EPS from discontinued operations – Basic

 

 

0.04

 

 

 

0.23

 

EPS attributable to Dominion Energy – Basic

 

$

1.23

 

 

$

(0.34

)

 

 

 

 

 

 

 

 

 

EPS from continuing operations – Diluted

 

 

1.19

 

 

$

(0.57

)

EPS from discontinued operations – Diluted

 

 

0.04

 

 

 

0.23

 

EPS attributable to Dominion Energy – Diluted

 

$

1.23

 

 

$

(0.34

)

 

The 2019 Equity Units and the Q-Pipe Transaction deposit are potentially dilutive securities. See Note 3 in this report and Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 for more information. The forward stock purchase contracts included within the 2019 Equity Units were excluded from the calculation of diluted EPS from continuing operations for the three months ended March 31, 2021, as the dilutive stock price threshold was not met. The Series A Preferred Stock included within the 2019 Equity Units is excluded from the calculation of diluted EPS from continuing operations based upon the expectation that the conversion will be settled in cash rather than through the issuance of Dominion Energy common stock. For the three months ended March 31, 2021, a fair value adjustment related to the Series A Preferred Stock included within the 2019 Equity Units is excluded from the calculation of diluted EPS from continuing operations, as such fair value adjustment was not dilutive during the period. As a result of a net loss attributable to Dominion Energy from continuing operations for the three months ended March 31, 2020, any adjustments to earnings or shares would be considered antidilutive and are therefore excluded from the calculation of diluted EPS from continuing operations. The impact of settling the deposit associated with the Q-Pipe Transaction in shares is excluded from the calculation of diluted EPS from continuing operations for the three months ended March 31, 2021 based upon the expectation Dominion Energy would settle in cash rather than through the issuance of Dominion Energy common stock.

 

26


 

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 March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(419

)

 

$

62

 

 

$

(1,359

)

 

$

(1

)

 

$

(1,717

)

Other comprehensive income before reclassifications:

   gains (losses)

 

 

39

 

 

 

(31

)

 

 

6

 

 

 

0

 

 

 

14

 

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

 

 

13

 

 

 

1

 

 

 

18

 

 

 

0

 

 

 

32

 

Net current period other comprehensive income (loss)

 

 

52

 

 

 

(30

)

 

 

24

 

 

 

0

 

 

 

46

 

Ending balance

 

$

(367

)

 

$

32

 

 

$

(1,335

)

 

$

(1

)

 

$

(1,671

)

Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(407

)

 

$

37

 

 

$

(1,421

)

 

$

(2

)

 

$

(1,793

)

Other comprehensive income before reclassifications:

   gains (losses)

 

 

(266

)

 

 

9

 

 

 

 

 

 

0

 

 

 

(257

)

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

 

 

22

 

 

 

(9

)

 

 

19

 

 

 

0

 

 

 

32

 

Net current period other comprehensive income (loss)

 

 

(244

)

 

 

 

 

 

19

 

 

 

0

 

 

 

(225

)

Ending balance

 

$

(651

)

 

$

37

 

 

$

(1,402

)

 

$

(2

)

 

$

(2,018

)

 

(1)

See table below for details about these reclassifications.

27


 

The following table presents Dominion Energy’s reclassifications out of AOCI by component:

 

Details about AOCI components

 

Amounts

reclassified

from AOCI

 

 

Affected line item in the

Consolidated Statements of

Income

(millions)

 

 

 

 

 

 

Three Months Ended March 31, 2021

 

 

 

 

 

 

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

 

 

 

 

 

 

Commodity contracts

 

$

1

 

 

Purchased gas

Interest rate contracts

 

 

16

 

 

Interest and related charges

Total

 

 

17

 

 

 

      Tax

 

 

(4

)

 

Income tax expense (benefit)

Total, net of tax

 

$

13

 

 

 

Unrealized (gains) and losses on investment securities:

 

 

 

 

 

 

Realized (gains) losses on sale of securities

 

$

1

 

 

Other income (expense)

Total

 

 

1

 

 

 

Tax

 

 

 

 

Income tax expense (benefit)

Total, net of tax

 

$

1

 

 

 

Unrecognized pension and other postretirement benefit costs:

 

 

 

 

 

 

      Amortization of prior-service costs (credits)

 

$

(5

)

 

Other income (expense)

Amortization of actuarial losses

 

 

30

 

 

Other income (expense)

Total

 

 

25

 

 

 

Tax

 

 

(7

)

 

Income tax expense (benefit)

Total, net of tax

 

$

18

 

 

 

Three Months Ended March 31, 2020

 

 

 

 

 

 

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

 

 

 

 

 

 

Commodity contracts

 

$

(6

)

 

Operating revenue

 

 

 

3

 

 

Purchased gas

 

 

 

(1

)

 

Discontinued operations

Interest rate contracts

 

 

25

 

 

Interest and related charges

 

 

 

2

 

 

Discontinued operations

Foreign currency contracts

 

 

6

 

 

Discontinued operations

Total

 

 

29

 

 

 

Tax

 

 

(7

)

 

Income tax expense (benefit)

Total, net of tax

 

$

22

 

 

 

Unrealized (gains) and losses on investment securities:

 

 

 

 

 

 

Realized (gains) losses on sale of securities

 

$

(13

)

 

Other income (expense)

Total

 

 

(13

)

 

 

Tax

 

 

4

 

 

Income tax expense (benefit)

Total, net of tax

 

$

(9

)

 

 

Unrecognized pension and other postretirement benefit costs:

 

 

 

 

 

 

Amortization of prior-service costs (credits)

 

$

(6

)

 

Other income (expense)

Amortization of actuarial losses

 

 

30

 

 

Other income (expense)

Total

 

 

24

 

 

 

Tax

 

 

(5

)

 

Income tax expense (benefit)

Total, net of tax

 

$

19

 

 

 

 

28


 

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 March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(60

)

 

$

8

 

 

$

(52

)

Other comprehensive income before reclassifications:

   gains (losses)

 

 

32

 

 

 

(5

)

 

 

27

 

Amounts reclassified from AOCI: losses(1)

 

 

1

 

 

 

1

 

 

 

2

 

Net current period other comprehensive income (loss)

 

 

33

 

 

 

(4

)

 

 

29

 

Ending balance

 

$

(27

)

 

$

4

 

 

$

(23

)

Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(34

)

 

$

5

 

 

$

(29

)

Other comprehensive income before reclassifications:

   losses

 

 

(45

)

 

 

(2

)

 

 

(47

)

Amounts reclassified from AOCI: losses(1)

 

 

 

 

 

1

 

 

 

1

 

Net current period other comprehensive income (loss)

 

 

(45

)

 

 

(1

)

 

 

(46

)

Ending balance

 

$

(79

)

 

$

4

 

 

$

(75

)

 

(1)

See table below for details about these reclassifications.

 

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

 

Details about AOCI components

 

Amounts

reclassified

from AOCI

 

 

Affected line item in the

Consolidated Statements  of

Income

(millions)

 

 

 

 

 

 

Three Months Ended March 31, 2021

 

 

 

 

 

 

(Gains) losses on cash flow hedges:

 

 

 

 

 

 

Interest rate contracts

 

$

1

 

 

Interest and related charges

Total

 

 

1

 

 

 

Tax

 

 

 

 

Income tax expense (benefit)

Total, net of tax

 

$

1

 

 

 

Unrealized (gains) and losses on investment securities:

 

 

 

 

 

 

Realized (gains) losses on sale of securities

 

$

1

 

 

Other income (expense)

Total

 

 

1

 

 

 

Tax

 

 

 

 

Income tax expense (benefit)

Total, net of tax

 

$

1

 

 

 

Three Months Ended March 31, 2020

 

 

 

 

 

 

Unrealized (gains) and losses on investment securities:

 

 

 

 

 

 

Realized (gains) losses on sale of securities

 

$

2

 

 

Other income (expense)

Total

 

 

2

 

 

 

Tax

 

 

(1

)

 

Income tax expense (benefit)

Total, net of tax

 

$

1

 

 

 

 

 

Note 8. Fair Value Measurements

The Companies’ fair value measurements are made in accordance with the policies discussed in Note 6 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020. See Note 9 in this report for further information about the Companies’ derivatives and hedge accounting activities.

29


The Companies enter into certain physical and financial forwards, futures, options and swaps, which are considered Level 3 as they have one or more inputs that are not observable and are significant to the valuation. The discounted cash flow method is used to value Level 3 physical and financial forwards, futures and swaps contracts. 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. For Level 3 fair value measurements, certain forward market prices are considered unobservable.

The following table presents Dominion Energy’s quantitative information about Level 3 fair value measurements at March 31, 2021.  The range and weighted average are presented in dollars for market price inputs.

 

 

 

Fair Value

(millions)

 

 

Valuation Techniques

 

Unobservable Input

 

 

Range

 

Weighted

Average(1)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Physical and financial forwards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas(2)

 

$

56

 

 

Discounted cash flow

 

Market price (per Dth)

(3)

 

(2) - 3

 

 

(1

)

FTRs

 

 

2

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

(2) - 3

 

 

0

 

Total assets

 

$

58

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial forwards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FTRs

 

$

2

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

(2) - 2

 

 

0

 

Total liabilities

 

$

2

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Averages weighted by volume.

(2)

Includes basis.

(3)

Represents market prices beyond defined terms for Levels 1 and 2.    

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)

30


 

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 March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

51

 

 

$

58

 

 

$

109

 

Interest rate

 

 

0

 

 

 

740

 

 

 

0

 

 

 

740

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

4,569

 

 

 

0

 

 

 

0

 

 

 

4,569

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

0

 

 

 

722

 

 

 

0

 

 

 

722

 

Government securities

 

 

728

 

 

 

727

 

 

 

0

 

 

 

1,455

 

Cash equivalents and other

 

 

18

 

 

 

0

 

 

 

0

 

 

 

18

 

Total assets

 

$

5,315

 

 

$

2,240

 

 

$

58

 

 

$

7,613

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

76

 

 

$

2

 

 

$

78

 

Interest rate

 

 

0

 

 

 

186

 

 

 

0

 

 

 

186

 

Total liabilities

 

$

0

 

 

$

262

 

 

$

2

 

 

$

264

 

At December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

57

 

 

$

110

 

 

$

167

 

Interest rate

 

 

0

 

 

 

230

 

 

 

0

 

 

 

230

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

4,648

 

 

 

0

 

 

 

0

 

 

 

4,648

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

0

 

 

 

629

 

 

 

0

 

 

 

629

 

Government securities

 

 

508

 

 

 

730

 

 

 

0

 

 

 

1,238

 

Cash equivalents and other

 

 

32

 

 

 

15

 

 

 

0

 

 

 

47

 

Total assets

 

$

5,188

 

 

$

1,661

 

 

$

110

 

 

$

6,959

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

48

 

 

$

7

 

 

$

55

 

Interest rate

 

 

0

 

 

 

431

 

 

 

0

 

 

 

431

 

Total liabilities

 

$

0

 

 

$

479

 

 

$

7

 

 

$

486

 

(1)

31


Includes investments held in the nuclear decommissioning and rabbi trusts. Excludes $399 million and $340 million of assets at March 31, 2021 and December 31, 2020, 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

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

(millions)

 

 

 

 

 

 

 

 

Beginning balance

 

$

103

 

 

$

(37

)

Total realized and unrealized gains (losses):

 

 

 

 

 

 

 

 

Included in earnings:

 

 

 

 

 

 

 

 

Electric fuel and other energy-related purchases

 

 

(21

)

 

 

(22

)

Included in regulatory assets/liabilities

 

 

(47

)

 

 

80

 

Settlements

 

 

21

 

 

 

22

 

Ending balance

 

$

56

 

 

$

43

 

There are less than $1 million of unrealized gains and losses included in earnings in the Level 3 fair value category related to assets/liabilities still held at the reporting date for the three months ended March 31, 2021. There were 0 unrealized gains and losses included in earnings in the Level 3 fair value category related to assets/liabilities still held at the reporting date for the three months ended March 31, 2020.

 

Virginia Power

The following table presents Virginia Power’s quantitative information about Level 3 fair value measurements at March 31, 2021.  The range and weighted average are presented in dollars for market price inputs.

 

 

 

Fair Value

(millions)

 

 

Valuation Techniques

 

Unobservable Input

 

 

Range

 

Weighted

Average(1)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Physical and financial forwards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas(2)

 

$

56

 

 

Discounted cash flow

 

Market price (per Dth)

(3)

 

(2) - 3

 

 

(1

)

FTRs

 

 

2

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

(2) - 3

 

 

0

 

Total assets

 

$

58

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial forwards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FTRs

 

$

2

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

(2) - 2

 

 

0

 

Total liabilities

 

$

2

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Averages weighted by volume.

(2)

Includes basis.

(3)

Represents market prices beyond defined terms for Levels 1 and 2.

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)

 

32


 

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 March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

18

 

 

$

58

 

 

$

76

 

Interest rate

 

 

0

 

 

 

283

 

 

 

0

 

 

 

283

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

2,132

 

 

 

0

 

 

 

0

 

 

 

2,132

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

0

 

 

 

400

 

 

 

0

 

 

 

400

 

Government securities

 

 

340

 

 

 

277

 

 

 

0

 

 

 

617

 

Total assets

 

$

2,472

 

 

$

978

 

 

$

58

 

 

$

3,508

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

26

 

 

$

2

 

 

$

28

 

Interest rate

 

 

0

 

 

 

150

 

 

 

0

 

 

 

150

 

Total liabilities

 

$

0

 

 

$

176

 

 

$

2

 

 

$

178

 

At December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

5

 

 

$

110

 

 

$

115

 

Interest rate

 

 

0

 

 

 

66

 

 

 

0

 

 

 

66

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

2,171

 

 

 

0

 

 

 

0

 

 

 

2,171

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

0

 

 

 

348

 

 

 

0

 

 

 

348

 

Government securities

 

 

201

 

 

 

309

 

 

 

0

 

 

 

510

 

Cash equivalents and other

 

 

13

 

 

 

0

 

 

 

0

 

 

 

13

 

Total assets

 

$

2,385

 

 

$

728

 

 

$

110

 

 

$

3,223

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

22

 

 

$

7

 

 

$

29

 

Interest rate

 

 

0

 

 

 

376

 

 

 

0

 

 

 

376

 

Total liabilities

 

$

0

 

 

$

398

 

 

$

7

 

 

$

405

 

 

(1)

33


Includes investments held in the nuclear decommissioning trusts. Excludes $199 million and $167 million of assets at March 31, 2021 and December 31, 2020, respectively, measured at fair value using NAV (or its equivalent) as a practical expedient which are not required to be categorized in the fair value hierarchy.

The following table presents the net change in Virginia Power’s assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2021

 

 

2020

 

(millions)

 

 

 

 

 

 

 

 

Beginning balance

 

$

103

 

 

$

(37

)

Total realized and unrealized gains (losses):

 

 

 

 

 

 

 

 

Included in earnings:

 

 

 

 

 

 

 

 

Electric fuel and other energy-related purchases

 

 

(21

)

 

 

(22

)

Included in regulatory assets/liabilities

 

 

(47

)

 

 

80

 

Settlements

 

 

21

 

 

 

22

 

Ending balance

 

$

56

 

 

$

43

 

 

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 months ended March 31, 2021 and 2020.

 

Fair Value of Financial Instruments

Substantially all of the Companies’ financial instruments are recorded at fair value, with the exception of the instruments described below, which are reported at historical cost. Estimated fair values have been determined using available market information and valuation methodologies considered appropriate by management. The carrying amount of cash, restricted cash and equivalents, customer and other receivables, affiliated receivables, short-term debt, affiliated current borrowings, payables to affiliates and accounts payable are representative of fair value because of the short-term nature of these instruments. For the Companies' financial instruments that are not recorded at fair value, the carrying amounts and estimated fair values are as follows:

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Carrying

Amount

 

 

Estimated

Fair

Value(1)

 

 

Carrying

Amount

 

 

Estimated

Fair

Value(1)

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominion Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt(2)(3)

 

$

31,991

 

 

$

36,334

 

 

$

31,996

 

 

$

38,773

 

Supplemental 364-Day credit facility borrowings

 

 

0

 

 

 

0

 

 

 

225

 

 

 

225

 

Junior subordinated notes(4)

 

 

3,412

 

 

 

3,579

 

 

 

3,411

 

 

 

3,633

 

Virginia Power

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt(4)

 

$

13,209

 

 

$

15,174

 

 

$

13,207

 

 

$

16,455

 

 

(1)

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

(2)

Carrying amount includes current portions included in securities due within one year and amounts which represent the unamortized debt issuance costs and discount or premium. At both March 31, 2021 and December 31, 2020, the carrying amount includes the valuation of certain fair value hedges associated with fixed rate debt of $3 million.

(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, 2020. See Note 8 in this report for further information about fair value measurements and associated valuation methods for derivatives.

 

Derivative assets and liabilities are presented gross on the Companies’ Consolidated Balance Sheets. The Companies’ derivative contracts include both over-the-counter transactions and those that are executed on an exchange or other trading platform (exchange contracts) and centrally cleared. Over-the-counter contracts are bilateral contracts that are transacted directly with a third party. Exchange contracts utilize a financial intermediary, exchange, or clearinghouse to enter, execute or clear the transactions. Certain over-the-counter and exchange contracts contain contractual rights of setoff through master netting arrangements, derivative clearing

34


agreements and contract default provisions. In addition, the contracts are subject to conditional rights of setoff through counterparty nonperformance, insolvency or other conditions.

 

In general, most over-the-counter transactions and all exchange contracts are subject to collateral requirements. Types of collateral for over-the-counter and exchange contracts include cash, letters of credit, and in some cases other forms of securities, none of which are subject to restrictions. Cash collateral, as presented in the table below, is used to offset derivative assets and liabilities.  Certain accounts receivable and accounts payable recognized on the Companies’ Consolidated Balance Sheets, letters of credit and other forms of securities, as well as certain long-term debt, all of which are not included in the tables below, are subject to offset under master netting or similar arrangements and would reduce the net exposure. See Note 18 for further information regarding credit-related contingent features for the Companies’ derivative instruments.

 

Dominion Energy

Balance Sheet Presentation

The tables below present Dominion Energy’s derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in its Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

 

Gross Assets

Presented in the

Consolidated

Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Received

 

 

Net

Amounts

 

 

Gross Assets

Presented in the

Consolidated

Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Received

 

 

Net

Amounts

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

$

76

 

 

$

18

 

 

$

0

 

 

$

58

 

 

$

117

 

 

$

9

 

 

$

0

 

 

$

108

 

Exchange

 

 

33

 

 

 

33

 

 

 

0

 

 

 

0

 

 

 

49

 

 

 

24

 

 

 

0

 

 

 

25

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

 

740

 

 

 

19

 

 

 

0

 

 

 

721

 

 

 

230

 

 

 

13

 

 

 

0

 

 

 

217

 

Total derivatives, subject to a

   master netting or similar

   arrangement

 

$

849

 

 

$

70

 

 

$

0

 

 

$

779

 

 

$

396

 

 

$

46

 

 

$

0

 

 

$

350

 

 

(1)

Excludes less than $1 million and $1 million of derivative assets at March 31, 2021 and December 31, 2020, respectively, which are not subject to master netting or similar arrangements.

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

 

Gross

Liabilities

Presented in the

Consolidated

Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Paid

 

 

Net

Amounts

 

 

Gross

Liabilities

Presented in the

Consolidated

Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Paid

 

 

Net

Amounts

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

$

28

 

 

$

18

 

 

$

0

 

 

$

10

 

 

$

30

 

 

$

9

 

 

$

0

 

 

$

21

 

Exchange

 

 

50

 

 

 

33

 

 

 

17

 

 

 

0

 

 

 

24

 

 

 

24

 

 

 

0

 

 

 

0

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

 

186

 

 

 

19

 

 

 

11

 

 

 

156

 

 

 

431

 

 

 

13

 

 

 

17

 

 

 

401

 

Total derivatives, subject to a

   master netting or similar

   arrangement

 

$

264

 

 

$

70

 

 

$

28

 

 

$

166

 

 

$

485

 

 

$

46

 

 

$

17

 

 

$

422

 

 

(1)

35


Excludes less than $1 million and $1 million of derivative liabilities at March 31, 2021 and December 31, 2020, respectively, which are not subject to master netting or similar arrangements.

Volumes

The following table presents the volume of Dominion Energy’s derivative activity at March 31, 2021. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.

 

 

 

Current

 

 

Noncurrent

 

Natural Gas (bcf):

 

 

 

 

 

 

 

 

Fixed price(1)

 

 

60

 

 

 

19

 

Basis

 

 

202

 

 

 

496

 

Electricity (MWh):

 

 

 

 

 

 

 

 

Fixed price

 

 

10,745,307

 

 

 

9,789,934

 

FTRs

 

 

18,264,727

 

 

 

0

 

Interest rate(2) (millions)

 

$

1,250

 

 

$

5,407

 

 

(1)

Includes options.

(2)

Maturity is determined based on final settlement period.

AOCI

The following table presents selected information related to losses on cash flow hedges included in AOCI in Dominion Energy’s Consolidated Balance Sheet at March 31, 2021:

 

 

 

AOCI

After-Tax

 

 

Amounts Expected to be

Reclassified to Earnings

During the Next 12 Months

After-Tax

 

 

Maximum Term

(millions)

 

 

 

 

 

 

 

 

 

 

Interest rate

 

$

(367

)

 

$

(40

)

 

393 months

Total

 

$

(367

)

 

$

(40

)

 

 

 

The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interest rate payments) in earnings, thereby achieving the realization of prices contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in interest rates.

 

Fair Value Hedges

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings and presented in the same line item. There were 0 derivative instruments designated as fair value hedges during the three months ended March 31, 2021 and March 31, 2020.

 

The following table presents the amounts recorded on the balance sheet related to cumulative basis adjustments for fair value hedges:

 

 

 

Carrying Amount of the Hedged Asset

(Liability)(1)

 

 

Cumulative Amount of Fair Value Hedging

Adjustments Included in the Carrying Amount

of the Hedged Assets (Liabilities)(2)

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

March 31, 2021

 

 

December 31, 2020

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

$

(1,153

)

 

$

(1,153

)

 

$

(3

)

 

$

(3

)

 

(1)

Includes $(1.2) billion related to discontinued hedging relationships at both March 31, 2021 and December 31, 2020.

(2)

Includes $(3) million of hedging adjustments on discontinued hedging relationships at both March 31, 2021 and December 31, 2020.

36


 

Fair Value and Gains and Losses on Derivative Instruments

The following table presents the fair values of Dominion Energy’s derivatives and where they are presented in its Consolidated Balance Sheets: 

 

 

 

Fair Value –

Derivatives under

Hedge

Accounting

 

 

Fair Value –

Derivatives not under

Hedge

Accounting

 

 

Total Fair Value

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

24

 

 

$

24

 

Interest rate

 

 

0

 

 

 

12

 

 

 

12

 

Total current derivative assets(1)

 

 

0

 

 

 

36

 

 

 

36

 

Noncurrent Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

0

 

 

 

85

 

 

 

85

 

Interest rate

 

 

287

 

 

 

441

 

 

 

728

 

Total noncurrent derivative assets(2)

 

 

287

 

 

 

526

 

 

 

813

 

Total derivative assets

 

$

287

 

 

$

562

 

 

$

849

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

61

 

 

$

61

 

Interest rate

 

 

150

 

 

 

10

 

 

 

160

 

Total current derivative liabilities(3)

 

 

150

 

 

 

71

 

 

 

221

 

Noncurrent Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

0

 

 

 

17

 

 

 

17

 

Interest rate

 

 

0

 

 

 

26

 

 

 

26

 

Total noncurrent derivative liabilities(4)

 

 

0

 

 

 

43

 

 

 

43

 

Total derivative liabilities

 

$

150

 

 

$

114

 

 

$

264

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

58

 

 

$

58

 

Interest rate

 

 

0

 

 

 

9

 

 

 

9

 

Total current derivative assets(1)

 

 

0

 

 

 

67

 

 

 

67

 

Noncurrent Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

0

 

 

 

109

 

 

 

109

 

Interest rate

 

 

66

 

 

 

155

 

 

 

221

 

Total noncurrent derivative assets(2)

 

 

66

 

 

 

264

 

 

 

330

 

Total derivative assets

 

$

66

 

 

$

331

 

 

$

397

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

42

 

 

$

42

 

Interest rate

 

 

363

 

 

 

10

 

 

 

373

 

Total current derivative liabilities(3)

 

 

363

 

 

 

52

 

 

 

415

 

Noncurrent Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

0

 

 

 

13

 

 

 

13

 

Interest rate

 

 

19

 

 

 

39

 

 

 

58

 

Total noncurrent derivative liabilities(4)

 

 

19

 

 

 

52

 

 

 

71

 

Total derivative liabilities

 

$

382

 

 

$

104

 

 

$

486

 

 

(1)

Current derivative assets include $31 million and $63 million in other current assets in Dominion Energy’s Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020, respectively.  The remainder is recorded in current assets held for sale in Dominion Energy’s Consolidated Balance Sheets.

(2)

Noncurrent derivative assets are presented in other deferred charges and other assets in Dominion Energy’s Consolidated Balance Sheets.   

37


 

(3)

Current derivative liabilities include $217 million and $412 million at March 31, 2021 and December 31, 2020, respectively, presented in other current liabilities in Dominion Energy’s Consolidated Balance Sheets. The remainder is in current liabilities held for sale in Dominion Energy’s Consolidated Balance Sheets.

(4)

Noncurrent derivative liabilities are presented in other deferred credits and other liabilities in Dominion Energy’s Consolidated Balance Sheets.

 

 

The following tables present the gains and losses on Dominion Energy’s derivatives, as well as where the associated activity is presented in its Consolidated Balance Sheets and Statements of Income.

 

Derivatives in cash flow hedging relationships

 

Amount of Gain

(Loss) Recognized

in AOCI on

Derivatives(1)

 

 

Amount of Gain

(Loss) Reclassified

From AOCI to

Income

 

 

Increase

(Decrease) in

Derivatives

Subject to

Regulatory

Treatment(2)

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Commodity:

 

 

 

 

 

 

 

 

 

 

 

 

Purchased gas

 

$

 

 

$

(1

)

 

$

 

Interest rate:

 

 

 

 

 

 

 

 

 

 

 

 

Interest and related charges

 

 

52

 

 

 

(16

)

 

 

408

 

Total

 

$

52

 

 

$

(17

)

 

$

408

 

Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Commodity:

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

 

 

 

 

$

6

 

 

 

 

 

Purchased gas

 

 

 

 

 

 

(3

)

 

 

 

 

Discontinued operations

 

 

 

 

 

 

1

 

 

 

 

 

Total Commodity

 

$

 

 

$

4

 

 

$

 

Interest rate:

 

 

 

 

 

 

 

 

 

 

 

 

Interest and related charges

 

 

 

 

 

 

(25

)

 

 

 

 

Discontinued operations

 

 

 

 

 

 

(2

)

 

 

 

 

Total interest rate

 

 

(336

)

 

 

(27

)

 

 

(563

)

Foreign currency(3)

 

 

(23

)

 

 

(6

)

 

 

 

Total

 

$

(359

)

 

$

(29

)

 

$

(563

)

 

(1)

Amounts deferred into AOCI have no associated effect in Dominion Energy’s Consolidated Statements of Income.

(2)

Represents net derivative activity deferred into and amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Dominion Energy’s Consolidated Statements of Income.

(3)  Amounts recorded in Dominion Energy’s Consolidated Statement of Income are classified in discontinued operations.

 

Derivatives not designated as hedging instruments

 

Amount of Gain (Loss) Recognized

in Income on Derivatives(1)

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2021

 

 

2020

 

 

(millions)

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

Commodity:

 

 

 

 

 

 

 

 

 

Operating revenue

 

$

(41

)

 

$

51

 

 

Purchased gas

 

 

0

 

 

 

(11

)

 

Electric fuel and other energy-related purchases

 

 

(44

)

 

 

(65

)

 

Discontinued operations

 

 

0

 

 

 

11

 

 

Interest rate:

 

 

 

 

 

 

 

 

 

Interest and related charges

 

 

319

 

 

 

(53

)

 

Discontinued operations

 

 

0

 

 

 

(8

)

 

Total

 

$

234

 

 

$

(75

)

 

38


 

 

(1)

Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Dominion Energy’s Consolidated Statements of Income.

 

Virginia Power

Balance Sheet Presentation

The tables below present Virginia Power’s derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in its Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

 

Gross Assets Presented

in the

Consolidated

Balance Sheet(1)

 

 

Financial Instruments

 

 

Cash

Collateral

Received

 

 

Net

Amounts

 

 

Gross

Assets Presented

in the

Consolidated

Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Received

 

 

Net

Amounts

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

$

71

 

 

$

15

 

 

$

0

 

 

$

56

 

 

$

111

 

 

$

6

 

 

$

0

 

 

$

105

 

Exchange

 

 

3

 

 

 

3

 

 

 

0

 

 

 

0

 

 

1

 

 

1

 

 

 

0

 

 

 

0

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

 

283

 

 

 

19

 

 

 

0

 

 

 

264

 

 

66

 

 

7

 

 

 

0

 

 

 

59

 

Total derivatives, subject to a

   master netting or similar

   arrangement

 

$

357

 

 

$

37

 

 

$

0

 

 

$

320

 

 

$

178

 

 

$

14

 

 

$

0

 

 

$

164

 

 

(1)

Excludes $2 million and $3 million of derivative assets at March 31, 2021 and December 31, 2020, respectively, which are not subject to master netting or similar arrangements.

 

 

 

 

March 31, 2021

 

 

December 31, 2020

 

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

 

Gross

Liabilities

Presented in the

Consolidated

Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Paid

 

 

Net

Amounts

 

 

Gross

Liabilities

Presented in the Consolidated Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Paid

 

 

Net

Amounts

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

$

19

 

 

$

15

 

 

$

0

 

 

$

4

 

 

$

6

 

 

$

6

 

 

$

0

 

 

$

0

 

Exchange

 

 

4

 

 

 

3

 

 

 

1

 

 

 

0

 

 

1

 

 

1

 

 

 

0

 

 

 

0

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

 

150

 

 

 

19

 

 

 

0

 

 

 

131

 

 

376

 

 

7

 

 

 

0

 

 

 

369

 

Total derivatives, subject to a

   master netting or similar

   arrangement

 

$

173

 

 

$

37

 

 

$

1

 

 

$

135

 

 

$

383

 

 

$

14

 

 

$

0

 

 

$

369

 

 

(1)

39


Excludes $5 million and $22 million of derivative liabilities at March 31, 2021 and December 31, 2020, respectively, which are not subject to master netting or similar arrangements.

Volumes

The following table presents the volume of Virginia Power’s derivative activity at March 31, 2021. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.

 

 

 

Current

 

 

Noncurrent

 

Natural Gas (bcf):

 

 

 

 

 

 

 

 

Fixed price(1)

 

 

35

 

 

 

18

 

Basis

 

 

151

 

 

 

495

 

Electricity (MWh):

 

 

 

 

 

 

 

 

Fixed price

 

 

3,770,002

 

 

 

3,029,859

 

FTRs

 

 

18,264,727

 

 

 

0

 

Interest rate(2) (millions)

 

$

850

 

 

$

1,200

 

 

(1)

Includes options.

(2)

Maturity is determined based on final settlement period.

 

AOCI

The following table presents selected information related to losses on cash flow hedges included in AOCI in Virginia Power’s Consolidated Balance Sheet at March 31, 2021:

 

 

 

AOCI

After-Tax

 

 

Amounts Expected to be

Reclassified to Earnings

During the Next 12

Months After-Tax

 

 

Maximum Term

(millions)

 

 

 

 

 

 

 

 

 

 

Interest rate

 

$

(27

)

 

$

(2

)

 

393 months

Total

 

$

(27

)

 

$

(2

)

 

 

 

The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interest payments) in earnings, thereby achieving the realization of interest rates contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in interest rates.

40


Fair Value and Gains and Losses on Derivative Instruments

The following table presents the fair values of Virginia Power’s derivatives and where they are presented in its Consolidated Balance Sheets:

 

 

 

Fair Value –

Derivatives under

Hedge

Accounting

 

 

Fair Value –

Derivatives not under

Hedge

Accounting

 

 

Total Fair Value

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

11

 

 

$

11

 

Total current derivative assets(1)

 

 

0

 

 

 

11

 

 

 

11

 

Noncurrent Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

0

 

 

 

65

 

 

 

65

 

Interest rate

 

 

283

 

 

 

0

 

 

 

283

 

Total noncurrent derivative assets(2)

 

 

283

 

 

 

65

 

 

 

348

 

Total derivative assets

 

$

283

 

 

$

76

 

 

$

359

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

21

 

 

$

21

 

Interest rate

 

 

150

 

 

 

0

 

 

 

150

 

Total current derivative liabilities

 

 

150

 

 

 

21

 

 

 

171

 

Noncurrent Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

0

 

 

 

7

 

 

 

7

 

Total noncurrent derivative liabilities(3)

 

 

0

 

 

 

7

 

 

 

7

 

Total derivative liabilities

 

$

150

 

 

$

28

 

 

$

178

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

22

 

 

$

22

 

Total current derivative assets(1)

 

 

0

 

 

 

22

 

 

 

22

 

Noncurrent Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

0

 

 

 

93

 

 

 

93

 

Interest rate

 

 

66

 

 

 

0

 

 

 

66

 

Total noncurrent derivative assets(2)

 

 

66

 

 

 

93

 

 

 

159

 

Total derivative assets

 

$

66

 

 

$

115

 

 

$

181

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

0

 

 

$

28

 

 

$

28

 

Interest rate

 

 

362

 

 

 

0

 

 

 

362

 

Total current derivative liabilities

 

 

362

 

 

 

28

 

 

 

390

 

Noncurrent Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

0

 

 

 

1

 

 

 

1

 

Interest rate

 

 

14

 

 

 

0

 

 

 

14

 

Total noncurrent derivative liabilities(3)

 

 

14

 

 

 

1

 

 

 

15

 

Total derivative liabilities

 

$

376

 

 

$

29

 

 

$

405

 

 

(1)

Current derivative assets are presented in other current assets in Virginia Power’s Consolidated Balance Sheets.

(2)

Noncurrent derivative assets are presented in other deferred charges and other assets in Virginia Power’s Consolidated Balance Sheets. 

(3)

Noncurrent derivative liabilities are presented in other deferred credits and other liabilities in Virginia Power’s Consolidated Balance Sheets.

41


 

The following tables present the gains and losses on Virginia Power’s derivatives, as well as where the associated activity is presented in its Consolidated Balance Sheets and Statements of Income:

 

Derivatives in cash flow hedging relationships

 

Amount of Gain

(Loss) Recognized

in AOCI on Derivatives(1)

 

 

Amount of Gain

(Loss) Reclassified

From AOCI to

Income

 

 

Increase (Decrease)

in Derivatives

Subject to

Regulatory

Treatment(2)

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate(3)

 

$

43

 

 

$

(1

)

 

$

407

 

Total

 

$

43

 

 

$

(1

)

 

$

407

 

Three Months Ended March 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate(3)

 

$

(61

)

 

$

0

 

 

$

(565

)

Total

 

$

(61

)

 

$

0

 

 

$

(565

)

 

(1)

Amounts deferred into AOCI have no associated effect in Virginia Power’s Consolidated Statements of Income.

(2)

Represents net derivative activity deferred into and amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Virginia Power’s Consolidated Statements of Income.

(3)

Amounts recorded in Virginia Power’s Consolidated Statements of Income are classified in interest and related charges.

 

 

Derivatives not designated as hedging instruments

 

Amount of Gain (Loss) Recognized

in Income on Derivatives(1)

 

 

Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2021

 

 

2020

 

 

(millions)

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

      Commodity:

 

 

 

 

 

 

 

 

 

            Electric fuel and other energy-related purchases

 

$

(44

)

 

$

(65

)

 

      Operating revenue

 

 

(2

)

 

 

0

 

 

Total

 

$

(46

)

 

$

(65

)

 

 

(1)

Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Virginia Power’s Consolidated Statements of Income.

 

 

Note 10. Investments

Dominion Energy

Equity and Debt Securities

Rabbi Trust Securities

Equity and fixed income securities and cash equivalents in Dominion Energy’s rabbi trusts and classified as trading totaled $139 million and $134 million at March 31, 2021 and December 31, 2020, respectively.

42


Decommissioning Trust Securities

Dominion Energy holds equity and fixed income securities, insurance contracts and cash equivalents in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Dominion Energy’s decommissioning trust funds are summarized below:

 

 

 

Amortized

Cost

 

 

Total

Unrealized

Gains

 

 

Total

Unrealized

Losses

 

 

Allowance for Credit Losses

 

 

Fair

Value

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

1,573

 

 

$

3,036

 

 

$

(10

)

 

 

 

 

 

$

4,599

 

Fixed income securities:(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

698

 

 

 

32

 

 

 

(8

)

 

$

0

 

 

 

722

 

Government securities

 

 

1,369

 

 

 

47

 

 

 

(14

)

 

 

0

 

 

 

1,402

 

Common/collective trust funds

 

 

221

 

 

 

6

 

 

 

0

 

 

 

0

 

 

 

227

 

Insurance contracts

 

 

237

 

 

 

 

 

 

 

 

 

 

 

 

 

237

 

Cash equivalents and other(3)

 

 

(51

)

 

 

3

 

 

 

 

 

 

0

 

 

 

(48

)

Total

 

$

4,047

 

 

$

3,124

 

 

$

(32

)

(4)

$

0

 

 

$

7,139

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

1,756

 

 

$

2,948

 

 

$

(24

)

 

 

 

 

 

$

4,680

 

Fixed income securities:(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

572

 

 

 

58

 

 

 

(1

)

 

$

0

 

 

 

629

 

Government securities

 

 

1,119

 

 

 

66

 

 

 

(1

)

 

 

0

 

 

 

1,184

 

Common/collective trust funds

 

 

170

 

 

 

5

 

 

 

0

 

 

 

0

 

 

 

175

 

Insurance contracts

 

 

237

 

 

 

0

 

 

 

0

 

 

 

 

 

 

 

237

 

Cash equivalents and other(3)

 

 

(8

)

 

 

4

 

 

 

(1

)

 

 

0

 

 

 

(5

)

Total

 

$

3,846

 

 

$

3,081

 

 

$

(27

)

(4)

$

0

 

 

$

6,900

 

 

(1)

Unrealized gains and losses on equity securities are included in other income and the nuclear decommissioning trust regulatory liability.

(2)

Unrealized gains and losses on fixed income securities are included in AOCI and the nuclear decommissioning trust regulatory liability. Changes in allowance for credit losses are included in other income.

(3)

Includes pending purchases of securities of $63 million and $49 million at March 31, 2021 and December 31, 2020, respectively.

(4)

The fair value of securities in an unrealized loss position was $937 million and $293 million at March 31, 2021 and December 31, 2020, respectively.

The portion of unrealized gains and losses that relates to equity securities held within Dominion Energy’s nuclear decommissioning trusts is summarized below:

 

 

 

Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

(millions)

 

 

 

 

 

 

 

 

Net gains (losses) recognized during the period

 

$

279

 

 

$

(898

)

Less: Net (gains) losses recognized during the period

   on securities sold during the period

 

 

(178

)

 

 

14

 

Unrealized gains (losses) recognized during the period

   on securities still held at period end(1)

 

$

101

 

 

$

(884

)

 

(1)

Included in other income and the nuclear decommissioning trust regulatory liability.

43


 

The fair value of Dominion Energy’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at March 31, 2021 by contractual maturity is as follows:

 

 

 

Amount

 

(millions)

 

 

 

 

Due in one year or less

 

$

292

 

Due after one year through five years

 

 

640

 

Due after five years through ten years

 

 

614

 

Due after ten years

 

 

805

 

Total

 

$

2,351

 

 

Presented below is selected information regarding Dominion Energy’s equity and fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds.

 

 

 

Three Months Ended

March 31,

 

 

 

2021

 

 

2020

 

(millions)

 

 

 

 

 

 

 

 

Proceeds from sales

 

$

1,765

 

 

$

602

 

Realized gains(1)

 

 

232

 

 

 

66

 

Realized losses(1)

 

 

59

 

 

 

69

 

 

(1)

Includes realized gains and losses recorded to the nuclear decommissioning trust regulatory liability.

Virginia Power

Virginia Power holds equity and fixed income securities and cash equivalents in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Virginia Power’s decommissioning trust funds are summarized below:

 

 

 

Amortized

Cost

 

 

Total

Unrealized

Gains

 

 

Total

Unrealized

Losses

 

 

Allowance for Credit Losses

 

 

Fair

Value

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

839

 

 

$

1,414

 

 

$

(9

)

 

 

 

 

 

$

2,244

 

Fixed income securities:(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

385

 

 

 

18

 

 

 

(3

)

 

$

0

 

 

 

400

 

Government securities

 

 

601

 

 

 

18

 

 

 

(3

)

 

 

0

 

 

 

616

 

Common/collective trust funds

 

 

86

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

86

 

Cash equivalents and other(3)

 

 

(24

)

 

 

 

 

 

 

 

 

0

 

 

 

(24

)

Total

 

$

1,887

 

 

$

1,450

 

 

$

(15

)

(4)

$

0

 

 

$

3,322

 

December 31, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

929

 

 

$

1,371

 

 

$

(21

)

 

 

 

 

 

$

2,279

 

Fixed income securities:(2)