UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
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Commission File Number |
Exact name of registrants as specified in their charters |
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Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 8.01 |
Other Events. |
Dominion Energy, Inc. (Dominion Energy) and Virginia Electric and Power Company (collectively the Companies) are filing this Current Report on Form 8-K to recast the consolidated financial statements and other financial information previously included in their combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the Securities and Exchange Commission (the SEC) on August 4, 2023. As disclosed in the Companies' combined Quarterly Report on Form 10-Q for the three months ended September 30, 2023, in connection with the comprehensive business reviewed announced in November 2022, Dominion Energy entered into agreements in September 2023 to sell all of its regulated gas distribution operations, except for those of Dominion Energy South Carolina, Inc., to wholly-owned subsidiaries of Enbridge Inc. (Enbridge). In addition, Dominion Energy completed the sale in September 2023 of its remaining 50% noncontrolling partnership interest in Cove Point LNG, LP to a wholly-owned subsidiary of Berkshire Hathaway Energy Company under the agreement entered in July 2023. These operations are, effective September 2023, classified as discontinued operations and held for sale. Subsequently in September 2023, Dominion Energy revised its primary operating segments. Dominion Energy’s Consolidated Statements of Income for the three and six months ended June 30, 2023 and 2022, Consolidated Balance Sheets at June 30, 2023 and December 31, 2022 and accompanying notes have been recast to reflect these changes in presentation.
The following items of the combined Quarterly Report on Form 10-Q of the Companies for the quarter ended June 30, 2023 have been recast to reflect the previously described classification of certain regulated gas distribution operations and investments as discontinued operations and held for sale as well as the revision of operating segments and are filed as exhibits to this Current Report on Form 8-K and incorporated herein by reference:
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Exhibit 99.1 |
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Item 1. Financial Statements and Supplementary Data |
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Exhibit 99.2 |
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Exhibit 101 |
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The following financial statements for the quarter ended June 30, 2023 from Dominion Energy, Inc.’s Current Report on Form 8-K, filed on November 8, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. The following financial statements for the quarter ended June 30, 2023 from Virginia Electric and Power Company’s Current Report on Form 8-K, filed on November 8, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Common Shareholder’s Equity (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. |
The recast items of the Form 10-Q described above have been updated only for the aforementioned classification of certain regulated gas distribution operations and investments as discontinued operations and held for sale as well as the revision of operating segments. The Companies have not otherwise updated for activities or events occurring after the date these items were originally presented. The information in this report should be read in conjunction with the other information included (but not replaced as described above) in the Companies’ combined Quarterly Report on Form 10-Q for the quarter ended June 30, 2023 and the Companies’ other filings with the SEC.
Item 9.01 |
Financial Statements and Exhibits. |
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Exhibit No. |
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Description |
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99.1 |
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99.2 |
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101 |
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The following financial statements for the quarter ended June 30, 2023 from Dominion Energy, Inc.’s Current Report on Form 8-K, filed on November 8, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. The following financial statements for the quarter ended June 30, 2023 from Virginia Electric and Power Company’s Current Report on Form 8-K, filed on November 8, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Common Shareholder’s Equity (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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DOMINION ENERGY, INC. |
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Registrant |
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/s/ Michele L. Cardiff |
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Name: |
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Michele L. Cardiff |
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Title: |
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Senior Vice President, Controller and Chief Accounting Officer |
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Date: November 8, 2023 |
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VIRGINIA ELECTRIC AND POWER COMPANY |
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Registrant |
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/s/ Michele L. Cardiff |
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Name: |
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Michele L. Cardiff |
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Senior Vice President, Controller and Chief Accounting Officer |
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Date: November 8, 2023 |
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Exhibit 99.1
GLOSSARY OF TERMS
The following abbreviations or acronyms used in this Form 10-Q are defined below:
Abbreviation or Acronym |
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Definition |
2017 Tax Reform Act |
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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 |
2019 Equity Units |
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Dominion Energy’s 2019 Series A Equity Units issued in June 2019, initially in the form of 2019 Series A Corporate Units, which consisted of a stock purchase contract and a 1/10 interest in a share of the Series A Preferred Stock |
2021 Triennial Review |
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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 |
2023 Biennial Review |
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Virginia Commission review of Virginia Power’s earned return on base rate generation and distribution services for the two successive 12-month test periods beginning January 1, 2021 and ending December 31, 2022 and prospective rate base setting for the succeeding annual periods beginning January 1, 2024 and ending December 31, 2025 |
2025 Biennial Review |
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Future Virginia Commission review of Virginia Power’s earned return on base rate generation and distribution services for the two successive 12-month test periods beginning January 1, 2023 and ending December 31, 2024 and prospective rate base setting for the succeeding annual periods beginning January 1, 2026 and ending December 31, 2027 |
ACE Rule |
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Affordable Clean Energy Rule |
AFUDC |
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Allowance for funds used during construction |
AMI |
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Advanced Metering Infrastructure |
AOCI |
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Accumulated other comprehensive income (loss) |
ARO |
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Asset retirement obligation |
Atlantic Coast Pipeline |
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Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy and Duke Energy |
Atlantic Coast Pipeline Project |
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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 |
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Billion cubic feet |
Bear Garden |
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A 622 MW combined-cycle, natural gas-fired power station in Buckingham County, Virginia |
BHE |
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The legal entity, Berkshire Hathaway Energy Company, one or more of its consolidated subsidiaries (including Eastern Energy Gas Holdings, LLC, Northeast Midstream Partners, LP and Cove Point effective November 2020), or the entirety of Berkshire Hathaway Energy Company and its consolidated subsidiaries |
CAA |
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Clean Air Act |
CCR |
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Coal combustion residual |
CCRO |
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Customer credit reinvestment offset |
CEP |
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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 |
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Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as Superfund |
CFIUS |
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The Committee on Foreign Investment in the U.S. |
CO2 |
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Carbon dioxide |
Colonial Trail West |
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A 142 MW utility-scale solar power station located in Surry County, Virginia |
Companies |
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Dominion Energy and Virginia Power, collectively |
Contracted Energy |
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Contracted Energy operating segment, formerly known as the Contracted Assets operating segment |
Cove Point |
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Cove Point LNG, LP (formerly known as Dominion Energy Cove Point LNG, LP) |
CPCN |
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Certificate of Public Convenience and Necessity |
CVOW Commercial Project |
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A proposed 2.6 GW wind generation facility 27 miles off the coast of Virginia Beach, Virginia in federal waters adjacent to the CVOW Pilot Project and associated interconnection facilities in and around Virginia Beach, Virginia |
CVOW Pilot Project |
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A 12 MW wind generation facility 27 miles off the coast of Virginia Beach, Virginia in federal waters |
CWA |
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Clean Water Act |
DECP Holdings |
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The legal entity DECP Holdings, Inc., which holds Dominion Energy's noncontrolling interest in Cove Point |
DEQPS |
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MountainWest Pipeline Services, Inc. (formerly known as Dominion Energy Questar Pipeline Services, Inc.) |
DES |
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Dominion Energy Services, Inc. |
DESC |
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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 |
DGI |
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Dominion Generation, Inc. |
DOE |
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U.S. Department of Energy |
Dominion Energy |
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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 Direct® |
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A dividend reinvestment and open enrollment direct stock purchase plan |
Dominion Energy Questar Pipeline |
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The legal entity, MountainWest Pipeline, LLC (formerly known as Dominion Energy Questar Pipeline, LLC), one or more of its consolidated subsidiaries (including its 50% noncontrolling interest in White River Hub, LLC), or the entirety of Dominion Energy Questar Pipeline, LLC and its consolidated subsidiaries |
Dominion Energy South Carolina |
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Dominion Energy South Carolina operating segment |
Dominion Energy Virginia |
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Dominion Energy Virginia operating segment |
Dominion Privatization |
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Dominion Utility Privatization, LLC, a joint venture between Dominion Energy and Patriot |
DSM |
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Demand-side management |
Dth |
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Dekatherm |
Duke Energy |
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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 |
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The East Ohio Gas Company, doing business as Dominion Energy Ohio |
East Ohio Transaction |
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The proposed sale by Dominion Energy to Enbridge of all issued and outstanding capital stock in Dominion Energy Questar Corporation and its consolidated subsidiaries, which following a proposed reorganization will include East Ohio and Dominion Energy Gas Distribution, LLC, pursuant to a purchase and sale agreement entered into on September 5, 2023 |
Enbridge |
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The legal entity, Enbridge Inc., one or more of its consolidated subsidiaries (including Enbridge Elephant Holdings, LLC, Enbridge Parrot Holdings, LLC, and Enbridge Quail Holdings, LLC), or the entirety of Enbridge Inc. and its consolidated subsidiaries |
EnergySolutions |
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EnergySolutions, LLC |
EPA |
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U.S. Environmental Protection Agency |
EPS |
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Earnings per common share |
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FCC |
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Federal Communications Commission |
FERC |
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Federal Energy Regulatory Commission |
GAAP |
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U.S. generally accepted accounting principles |
Gas Distribution |
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Gas Distribution operating segment |
GENCO |
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South Carolina Generating Company, Inc. |
GHG |
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Greenhouse gas |
Greensville County |
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A 1,629 MW combined-cycle, natural gas-fired power station in Greensville County, Virginia |
GTSA |
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Virginia Grid Transformation and Security Act of 2018 |
GW |
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Gigawatt |
Hope |
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Hope Gas, Inc., doing business as Dominion Energy West Virginia through August 2022 |
Jones Act |
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The Coastwise Merchandise Statute (commonly known as the Jones Act) 46 U.S.C. §55102 regulating U.S. maritime commerce |
Kewaunee |
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Kewaunee nuclear power station |
kV |
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Kilovolt |
LNG |
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Liquefied natural gas |
MGD |
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Million gallons per day |
MW |
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Megawatt |
MWh |
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Megawatt hour |
NAV |
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Net asset value |
NND Project |
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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 |
North Anna |
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North Anna nuclear power station |
North Carolina Commission |
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North Carolina Utilities Commission |
NOX |
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Nitrogen oxide |
NRC |
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U.S. Nuclear Regulatory Commission |
Ohio Commission |
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Public Utilities Commission of Ohio |
ozone season |
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The period May 1st through September 30th, as determined on a federal level |
Patriot |
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Patriot Utility Privatizations, LLC, a joint venture between Foundation Infrastructure Partners, LLC and John Hancock Life Insurance Company (U.S.A.) and affiliates |
PIPP |
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Percentage of Income Payment Plan deployed by East Ohio |
PIR |
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Pipeline Infrastructure Replacement program deployed by East Ohio |
PSD |
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Prevention of significant deterioration |
PSNC |
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Public Service Company of North Carolina, Incorporated, doing business as Dominion Energy North Carolina |
PSNC Transaction |
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The proposed sale by Dominion Energy to Enbridge of all of its membership interests in Fall North Carolina Holdco LLC and its consolidated subsidiaries, which following a proposed reorganization will include PSNC, pursuant to a purchase and sale agreement entered into on September 5, 2023 |
Q-Pipe Group |
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Collectively, Dominion Energy Questar Pipeline, DEQPS and MountainWest Energy Holding Company, LLC (formerly known as QPC Holding Company, LLC and its subsidiary MountainWest Southern Trails Pipeline Company (formerly known as Questar Southern Trails Pipeline Company)) |
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Questar Gas |
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Questar Gas Company, doing business as Dominion Energy Utah, Dominion Energy Wyoming and Dominion Energy Idaho |
Questar Gas Transaction |
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The proposed sale by Dominion Energy to Enbridge of all of its membership interests in Fall West Holdco LLC and its consolidated subsidiaries, which following a proposed reorganization will include Questar Gas, Wexpro, Wexpro II Company, Wexpro Development Company, Dominion Energy Wexpro Services Company, Questar InfoComm Inc. and Dominion Gas Projects Company, LLC, pursuant to a purchase and sale agreement entered into on September 5, 2023 |
Regulation Act |
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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, 2018 and 2023 |
RGGI |
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Regional Greenhouse Gas Initiative |
Rider CCR |
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A rate adjustment clause associated with the recovery of costs related to the removal of CCR at certain power stations |
Rider CE |
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A rate adjustment clause associated with the recovery of costs related to certain renewable generation, energy storage and related transmission facilities in Virginia as well as certain small-scale distributed generation projects and related transmission facilities |
Rider D |
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A rate mechanism which allows PSNC to recover from customers all prudently incurred gas costs and the related portion of uncollectible expenses as well as losses on negotiated gas and transportation sales |
Rider GT |
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A rate adjustment clause associated with the recovery of costs associated with electric distribution grid transformation projects that the Virginia Commission has approved as authorized by the GTSA |
Rider GV |
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A rate adjustment clause associated with the recovery of costs related to Greensville County |
Rider OSW |
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A rate adjustment clause associated with costs incurred to construct, own and operate the CVOW Commercial Project |
Rider PPA |
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A rate adjustment clause associated with the recovery of costs associated with power purchase agreements for the energy, capacity, ancillary services and renewable energy credits owned by third parties |
Rider R |
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A rate adjustment clause associated with the recovery of costs related to Bear Garden |
Rider RGGI |
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A rate adjustment clause associated with the recovery of costs related to the purchase of allowances through the RGGI market-based trading program for CO2 |
Rider RPS |
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A rate adjustment clause associated with the recovery of costs related to the mandatory renewable portfolio standard program established by the VCEA |
Rider S |
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A rate adjustment clause associated with the recovery of costs related to the Virginia City Hybrid Energy Center |
Rider SNA |
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A rate adjustment clause associated with costs relating to the preparation of the applications for subsequent license renewal to the NRC to extend the operating licenses of Surry and North Anna and related projects |
Rider T1 |
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A rate adjustment clause to recover the difference between revenues produced from transmission rates included in base rates, and the new total revenue requirement developed annually for the rate years effective September 1 |
Rider U |
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A rate adjustment clause associated with the recovery of costs of new underground distribution facilities |
Rider US-3 |
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A rate adjustment clause associated with the recovery of costs related to Colonial Trail West and Spring Grove 1 |
Rider US-4 |
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A rate adjustment clause associated with the recovery of costs related to Sadler Solar |
Rider W |
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A rate adjustment clause associated with the recovery of costs related to Warren County |
ROE |
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Return on equity |
Sadler Solar |
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A 100 MW utility-scale solar power station located in Greensville County, Virginia |
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Santee Cooper |
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South Carolina Public Service Authority |
SCANA |
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The legal entity, SCANA Corporation, one or more of its consolidated subsidiaries, or the entirety of SCANA Corporation and its consolidated subsidiaries |
SCANA Combination |
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Dominion Energy’s acquisition of SCANA completed on January 1, 2019 pursuant to the terms of the agreement and plan of merger entered on January 2, 2018 between Dominion Energy and SCANA |
SCANA Merger Approval Order |
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Final order issued by the South Carolina Commission on December 21, 2018 setting forth its approval of the SCANA Combination |
SCDOR |
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South Carolina Department of Revenue |
SEC |
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U.S. Securities and Exchange Commission |
Series A Preferred Stock |
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Dominion Energy’s Series A Cumulative Perpetual Convertible Preferred Stock, without par value, with a liquidation preference of $1,000 per share (previously designated the 1.75% Series A Cumulative Perpetual Convertible Preferred Stock) |
Series B Preferred Stock |
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Dominion Energy’s 4.65% Series B Fixed-Rate Cumulative Redeemable Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000 per share |
Series C Preferred Stock |
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Dominion Energy’s 4.35% Series C Fixed-Rate Cumulative Redeemable Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000 per share |
South Carolina Commission |
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Public Service Commission of South Carolina |
Southwest Gas |
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The legal entity, Southwest Gas Holdings, Inc., one or more of its consolidated subsidiaries, or the entirety of Southwest Gas Holdings, Inc. and its consolidated subsidiaries |
Spring Grove 1 |
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A 98 MW utility-scale solar power station located in Surry County, Virginia |
Summer |
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V.C. Summer nuclear power station |
Surry |
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Surry nuclear power station |
UEX |
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Uncollectible Expense Rider deployed by East Ohio |
Utah Commission |
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Utah Public Service Commission |
VCEA |
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Virginia Clean Economy Act of March 2020 |
VEBA |
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Voluntary Employees’ Beneficiary Association |
VIE |
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Variable interest entity |
Virginia City Hybrid Energy Center |
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A 610 MW baseload carbon-capture compatible, clean coal powered electric generation facility in Wise County, Virginia |
Virginia Commission |
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Virginia State Corporation Commission |
Virginia Power |
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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 |
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A 1,349 MW combined-cycle, natural gas-fired power station in Warren County, Virginia |
Wexpro |
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The legal entity, Wexpro Company, one or more of its consolidated subsidiaries, or the entirety of Wexpro Company and its consolidated subsidiaries |
Wisconsin Commission |
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Public Service Commission of Wisconsin |
WP&L |
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Wisconsin Power and Light Company, a subsidiary of Alliant Energy Corporation |
WPSC |
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Wisconsin Public Service Corporation, a subsidiary of WEC Energy Group |
Wrangler |
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Wrangler Retail Gas Holdings, LLC, a partnership between Dominion Energy (through March 2022) and Interstate Gas Supply, Inc. |
5
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2023 |
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2022 |
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2022 |
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(millions, except per share amounts) |
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Operating Revenue |
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Operating Expenses |
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Electric fuel and other energy-related purchases |
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Purchased electric capacity |
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Purchased gas |
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Other operations and maintenance |
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Depreciation, depletion and amortization |
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Other taxes |
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Impairment of assets and other charges |
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Losses (gains) on sales of assets |
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Total operating expenses |
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Income (loss) from operations |
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Other income (expense) |
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Interest and related charges |
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Income (loss) from continuing operations including noncontrolling |
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Income tax expense (benefit) |
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Net Income (Loss) From Continuing Operations |
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Net Income (Loss) From Discontinued Operations(1) |
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Net Income (Loss) Including Noncontrolling Interests |
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Noncontrolling Interests |
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Net Income (Loss) Attributable to Dominion Energy |
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Amounts attributable to Dominion Energy |
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Net income (loss) from continuing operations |
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Net income (loss) from discontinued operations |
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Net income (loss) attributable to Dominion Energy |
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EPS - Basic |
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Net income (loss) from continuing operations |
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$ |
|
|
$ |
( |
) |
||
Net income (loss) from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to Dominion Energy |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
EPS - Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) from continuing operations |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Net income (loss) from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to Dominion Energy |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
6
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) including noncontrolling interests |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net deferred gains (losses) on derivatives-hedging |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Changes in unrealized net gains (losses) on investment |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Changes in net unrecognized pension and other |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Amounts reclassified to net income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net derivative (gains) losses-hedging activities(4) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net realized (gains) losses on investment securities(5) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Net pension and other postretirement benefit costs |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Changes in other comprehensive income from equity |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total other comprehensive income (loss) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Comprehensive income (loss) including noncontrolling interests |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Comprehensive income attributable to noncontrolling |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Comprehensive income (loss) attributable to Dominion Energy |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
(1)
(2)
(3)
(4)
(5)
(6)
(7)
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
7
DOMINION ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
June 30, 2023 |
|
|
December 31, 2022(1) |
|
||
(millions) |
|
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Current Assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Customer receivables (less allowance for doubtful accounts of $ |
|
|
|
|
|
|
||
Other receivables (less allowance for doubtful accounts of $ |
|
|
|
|
|
|
||
Inventories |
|
|
|
|
|
|
||
Derivative assets |
|
|
|
|
|
|
||
Margin deposit assets |
|
|
|
|
|
|
||
Regulatory assets |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Current assets held for sale |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Investments |
|
|
|
|
|
|
||
Nuclear decommissioning trust funds |
|
|
|
|
|
|
||
Investment in equity method affiliates |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total investments |
|
|
|
|
|
|
||
Property, Plant and Equipment |
|
|
|
|
|
|
||
Property, plant and equipment |
|
|
|
|
|
|
||
Accumulated depreciation, depletion and amortization |
|
|
( |
) |
|
|
( |
) |
Total property, plant and equipment, net |
|
|
|
|
|
|
||
Deferred Charges and Other Assets |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Regulatory assets |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total deferred charges and other assets |
|
|
|
|
|
|
||
Noncurrent Assets Held for Sale |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
(1)
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
8
DOMINION ENERGY, INC.
CONSOLIDATED BALANCE SHEETS—(Continued)
(Unaudited)
|
|
June 30, 2023 |
|
|
December 31, 2022(1) |
|
||
(millions) |
|
|
|
|
|
|
||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
||
Current Liabilities |
|
|
|
|
|
|
||
Securities due within one year |
|
$ |
|
|
$ |
|
||
Supplemental credit facility borrowings |
|
|
|
|
|
— |
|
|
Short-term debt |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Accrued interest, payroll and taxes |
|
|
|
|
|
|
||
Derivative liabilities |
|
|
|
|
|
|
||
Regulatory liabilities |
|
|
|
|
|
|
||
Other(2) |
|
|
|
|
|
|
||
Current liabilities held for sale |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-Term Debt |
|
|
|
|
|
|
||
Long-term debt |
|
|
|
|
|
|
||
Junior subordinated notes |
|
|
|
|
|
|
||
Supplemental credit facility borrowings |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total long-term debt |
|
|
|
|
|
|
||
Deferred Credits and Other Liabilities |
|
|
|
|
|
|
||
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
||
Regulatory liabilities |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total deferred credits and other liabilities |
|
|
|
|
|
|
||
Noncurrent Liabilities Held for Sale |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Shareholders' Equity |
|
|
|
|
|
|
||
Preferred stock (see Note 16) |
|
|
|
|
|
|
||
Common stock – no par(3) |
|
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
|
||
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Shareholders' equity |
|
|
|
|
|
|
||
Noncontrolling interests |
|
|
|
|
|
|
||
Total shareholders' equity |
|
|
|
|
|
|
||
Total liabilities and shareholders' equity |
|
$ |
|
|
$ |
|
||
(1)
(2)
(3)
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
9
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
QUARTER-TO-DATE
|
Preferred Stock |
|
Common Stock |
|
Dominion Energy Shareholders |
|
|
|
|
|
|
|
|||||||||||||||
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Retained Earnings |
|
AOCI |
|
Total |
|
Noncontrolling |
|
Total |
|
|||||||||
(millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
March 31, 2022 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
— |
|
$ |
|
|||||||
Net loss including noncontrolling |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
— |
|
|
( |
) |
|||||
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Stock awards (net of change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
||||||
Common stock dividends ($ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
— |
|
|
( |
) |
|||||
Other comprehensive income, net of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
June 30, 2022 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
— |
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
March 31, 2023 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
— |
|
$ |
|
|||||||
Net income including noncontrolling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
||||||||
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Stock awards (net of change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
||||||
Common stock dividends ($ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
— |
|
|
( |
) |
|||||
Other comprehensive loss, net of |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
( |
) |
|
|
|
( |
) |
||||||
June 30, 2023 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
— |
|
$ |
|
|||||||
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
10
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
YEAR-TO-DATE
|
Preferred Stock |
|
Common Stock |
|
Dominion Energy Shareholders |
|
|
|
|
|
|
|
|||||||||||||||
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Retained Earnings |
|
AOCI |
|
Total Shareholders' |
|
Noncontrolling |
|
Total |
|
|||||||||
(millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
December 31, 2021 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
— |
|
$ |
|
|||||||
Net income including noncontrolling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
||||||||
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Stock awards (net of change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
||||||
Common stock dividends ($ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
— |
|
|
( |
) |
|||||
Other comprehensive income, net of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
June 30, 2022 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
— |
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
December 31, 2022 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
— |
|
$ |
|
|||||||
Net income including noncontrolling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
||||||||
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Stock awards (net of change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
||||||
Common stock dividends ($ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
— |
|
|
( |
) |
|||||
Other comprehensive income, net of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
June 30, 2023 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
— |
|
$ |
|
|||||||
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
11
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30, |
|
2023 |
|
|
2022 |
|
||
(millions) |
|
|
|
|
|
|
||
Operating Activities |
|
|
|
|
|
|
||
Net income including noncontrolling interests |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income including noncontrolling interests to net cash |
|
|
|
|
|
|
||
Depreciation, depletion and amortization (including nuclear fuel) |
|
|
|
|
|
|
||
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
||
Impairment of assets and other charges |
|
|
|
|
|
|
||
Losses (gains) on sales of assets and equity method investments |
|
|
( |
) |
|
|
|
|
Net (gains) losses on nuclear decommissioning trust funds and other investments |
|
|
( |
) |
|
|
|
|
Other adjustments |
|
|
|
|
|
( |
) |
|
Changes in: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
( |
) |
|
Inventories |
|
|
( |
) |
|
|
( |
) |
Deferred fuel and purchased gas costs, net |
|
|
|
|
|
( |
) |
|
Prepayments |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
( |
) |
|
|
|
|
Accrued interest, payroll and taxes |
|
|
( |
) |
|
|
( |
) |
Margin deposit assets and liabilities |
|
|
|
|
|
( |
) |
|
Net realized and unrealized changes related to derivative activities |
|
|
|
|
|
( |
) |
|
Pension and other postretirement benefits |
|
|
( |
) |
|
|
( |
) |
Other operating assets and liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
||
Investing Activities |
|
|
|
|
|
|
||
Plant construction and other property additions (including nuclear fuel) |
|
|
( |
) |
|
|
( |
) |
Acquisition of solar development projects |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of securities |
|
|
|
|
|
|
||
Purchases of securities |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of assets and equity method investments |
|
|
|
|
|
|
||
Contributions to equity method affiliates |
|
|
( |
) |
|
|
( |
) |
Short-term deposit |
|
|
— |
|
|
|
( |
) |
Other |
|
|
|
|
|
( |
) |
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Financing Activities |
|
|
|
|
|
|
||
Issuance of short-term debt, net |
|
|
|
|
|
|
||
364-day term loan facility borrowings |
|
|
|
|
|
— |
|
|
Issuance and remarketing of long-term debt |
|
|
|
|
|
|
||
Repayment and repurchase of long-term debt |
|
|
( |
) |
|
|
( |
) |
Supplemental credit facility borrowings |
|
|
|
|
|
|
||
Repayment of supplemental credit facility borrowings |
|
|
( |
) |
|
|
( |
) |
Issuance of common stock |
|
|
|
|
|
|
||
Common dividend payments |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
Decrease in cash, restricted cash and equivalents |
|
|
( |
) |
|
|
( |
) |
Cash, restricted cash and equivalents at beginning of period |
|
|
|
|
|
|
||
Cash, restricted cash and equivalents at end of period |
|
$ |
|
|
$ |
|
||
See Note 2 for disclosure of supplemental cash flow information.
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
12
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating Revenue(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Electric fuel and other energy-related purchases(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Purchased electric capacity |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other operations and maintenance: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Affiliated suppliers |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Impairment of assets and other charges |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income from operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Interest and related charges(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income before income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net Income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
13
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net deferred gains (losses) on derivatives-hedging |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Changes in unrealized net gains (losses) on investment |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Amounts reclassified to net income: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net derivative (gains) losses-hedging activities(3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net realized (gains) losses on investment securities(4) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Total other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Comprehensive income |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
14
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
June 30, 2023 |
|
|
December 31, 2022(1) |
|
||
(millions) |
|
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Current Assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Customer receivables (less allowance for doubtful accounts of $ |
|
|
|
|
|
|
||
Other receivables (less allowance for doubtful accounts of $ |
|
|
|
|
|
|
||
Affiliated receivables |
|
|
|
|
|
|
||
Inventories (average cost method) |
|
|
|
|
|
|
||
Margin deposit assets |
|
|
|
|
|
|
||
Derivative assets(2) |
|
|
|
|
|
|
||
Regulatory assets |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Investments |
|
|
|
|
|
|
||
Nuclear decommissioning trust funds |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total investments |
|
|
|
|
|
|
||
Property, Plant and Equipment |
|
|
|
|
|
|
||
Property, plant and equipment |
|
|
|
|
|
|
||
Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Total property, plant and equipment, net |
|
|
|
|
|
|
||
Deferred Charges and Other Assets |
|
|
|
|
|
|
||
Regulatory assets |
|
|
|
|
|
|
||
Other(2) |
|
|
|
|
|
|
||
Total deferred charges and other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
15
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETS—(Continued)
(Unaudited)
|
|
June 30, 2023 |
|
|
December 31, 2022(1) |
|
||
(millions) |
|
|
|
|
|
|
||
LIABILITIES AND SHAREHOLDER’S EQUITY |
|
|
|
|
|
|
||
Current Liabilities |
|
|
|
|
|
|
||
Securities due within one year |
|
$ |
|
|
$ |
|
||
Short-term debt |
|
|
|
|
|
|
||
Accounts payable |
|
|
|
|
|
|
||
Payables to affiliates |
|
|
|
|
|
|
||
Affiliated current borrowings |
|
|
|
|
|
|
||
Accrued interest, payroll and taxes |
|
|
|
|
|
|
||
Regulatory liabilities |
|
|
|
|
|
|
||
Derivative liabilities(2) |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-Term Debt |
|
|
|
|
|
|
||
Long-term debt |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total long-term debt |
|
|
|
|
|
|
||
Deferred Credits and Other Liabilities |
|
|
|
|
|
|
||
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
||
Regulatory liabilities |
|
|
|
|
|
|
||
Other(2) |
|
|
|
|
|
|
||
Total deferred credits and other liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Common Shareholder’s Equity |
|
|
|
|
|
|
||
Common stock – no par(3) |
|
|
|
|
|
|
||
Other paid-in capital |
|
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
|
||
Accumulated other comprehensive income |
|
|
|
|
|
|
||
Total common shareholder’s equity |
|
|
|
|
|
|
||
Total liabilities and shareholder’s equity |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
16
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER’S EQUITY
(Unaudited)
QUARTER-TO-DATE
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Shares |
|
|
Amount |
|
|
Other Paid-In Capital |
|
|
Retained Earnings |
|
|
AOCI |
|
|
Total |
|
||||||
(millions, except for shares) |
|
(thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
March 31, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
June 30, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
March 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
June 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
YEAR-TO-DATE
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Shares |
|
|
Amount |
|
|
Other Paid-In Capital |
|
|
Retained Earnings |
|
|
AOCI |
|
|
Total |
|
||||||
(millions, except for shares) |
|
(thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2021 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
June 30, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
June 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
17
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30, |
|
2023 |
|
|
2022 |
|
||
(millions) |
|
|
|
|
|
|
||
Operating Activities |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization (including nuclear fuel) |
|
|
|
|
|
|
||
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
||
Impairment of assets and other charges |
|
|
|
|
|
|
||
Net (gains) losses on nuclear decommissioning trust funds and other investments |
|
|
( |
) |
|
|
|
|
Other adjustments |
|
|
( |
) |
|
|
( |
) |
Changes in: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
( |
) |
|
Affiliated receivables and payables |
|
|
( |
) |
|
|
( |
) |
Inventories |
|
|
( |
) |
|
|
|
|
Prepayments |
|
|
( |
) |
|
|
|
|
Deferred fuel expenses, net |
|
|
|
|
|
( |
) |
|
Accounts payable |
|
|
( |
) |
|
|
|
|
Accrued interest, payroll and taxes |
|
|
|
|
|
|
||
Margin deposit assets and liabilities |
|
|
|
|
|
( |
) |
|
Net realized and unrealized changes related to derivative activities |
|
|
|
|
|
|
||
Other operating assets and liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
||
Investing Activities |
|
|
|
|
|
|
||
Plant construction and other property additions |
|
|
( |
) |
|
|
( |
) |
Purchases of nuclear fuel |
|
|
( |
) |
|
|
( |
) |
Acquisition of solar development projects |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of securities |
|
|
|
|
|
|
||
Purchases of securities |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
( |
) |
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Financing Activities |
|
|
|
|
|
|
||
Issuance (repayment) of short-term debt, net |
|
|
|
|
|
( |
) |
|
Issuance (repayment) of affiliated current borrowings, net |
|
|
|
|
|
( |
) |
|
Issuance and remarketing of long-term debt |
|
|
|
|
|
|
||
Repayment and repurchase of long-term debt |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
Increase (decrease) in cash, restricted cash and equivalents |
|
|
( |
) |
|
|
|
|
Cash, restricted cash and equivalents at beginning of period |
|
|
|
|
|
|
||
Cash, restricted cash and equivalents at end of period |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
See Note 2 for disclosure of supplemental cash flow information.
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
18
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 a noncontrolling interest in Cove Point. In July 2023, Dominion Energy entered into an agreement to sell its remaining
In connection with the comprehensive business review announced in November 2022, Dominion Energy entered into agreements in September 2023 to sell all of its regulated gas distribution operations, except for DESC’s, to Enbridge. In addition, Dominion Energy completed the sale in September 2023 of its remaining
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, 2022.
In the Companies’ opinion, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly their financial position at June 30, 2023, their results of operations and changes in equity for the three and six months ended June 30, 2023 and 2022 and their cash flows for the six months ended June 30, 2023 and 2022. Such adjustments are normal and recurring in nature unless otherwise noted.
The Companies make certain estimates and assumptions in preparing their Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from those estimates.
The Companies’ 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.
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’ 2022 Consolidated Financial Statements and Notes have been reclassified to conform to the 2023 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, 2022, with the exception of the items described below.
19
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 six months ended June 30, 2023 and 2022:
|
|
Cash, Restricted Cash and Equivalents |
|
|
Cash, Restricted Cash and Equivalents |
|
||||||||||
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
|
December 31, 2022 |
|
|
December 31, 2021 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Restricted cash and equivalents(2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash, restricted cash and equivalents shown in the |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Restricted cash and equivalents(3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash, restricted cash and equivalents shown in the |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Supplemental Cash Flow Information
The following table provides supplemental disclosure of cash flow information related to Dominion Energy:
Six Months Ended June 30, |
|
2023 |
|
|
2022 |
|
||
(millions) |
|
|
|
|
|
|
||
Significant noncash investing and financing activities:(1) |
|
|
|
|
|
|
||
Accrued capital expenditures |
|
$ |
|
|
$ |
|
||
Leases(2) |
|
|
|
|
|
|
||
The following table provides supplemental disclosure of cash flow information related to Virginia Power:
Six Months Ended June 30, |
|
2023 |
|
|
2022 |
|
||
(millions) |
|
|
|
|
|
|
||
Significant noncash investing and financing activities: |
|
|
|
|
|
|
||
Accrued capital expenditures |
|
$ |
|
|
$ |
|
||
Leases(1) |
|
|
|
|
|
|
||
20
Note 3. Acquisitions and Dispositions
Business Review Dispositions
Sale of East Ohio
In September 2023, Dominion Energy entered into an agreement with Enbridge for the East Ohio Transaction, which includes the sale of East Ohio and is valued at approximately $
Upon closing, Dominion Energy will retain the pension and other postretirement benefit plan assets and obligations, including related income tax and other deferred balances, associated with retiree participants in both East Ohio's union pension and other postretirement benefit plans and retiree participants of the sale entities in the Dominion Energy Pension Plan and the Dominion Energy Retiree Health and Welfare Plan. The East Ohio Transaction is subject to termination by either party if not completed by September 2024, subject to a potential three-month extension for receipt of regulatory approvals, with a termination fee of $
Sale of PSNC
In September 2023, Dominion Energy entered into an agreement with Enbridge for the PSNC Transaction, which includes the sale of PSNC and is valued at approximately $
Upon closing, Dominion Energy will retain the entirety of the assets and obligations, including related income tax and other deferred balances, of the pension and other postretirement employee benefit plans associated with the operations included in the transaction and relating to services provided through closing. The PSNC Transaction is subject to termination by either party if not completed by September 2024, subject to a potential three-month extension for receipt of regulatory approvals, with a termination fee of $
Sale of Questar Gas and Wexpro
In September 2023, Dominion Energy entered into an agreement with Enbridge for the Questar Gas Transaction, which includes the sale of Questar Gas, Wexpro and related affiliates and is valued at approximately $
21
regulatory assets and liabilities. Closing of the Questar Gas Transaction is not conditioned upon the closing of the East Ohio or PSNC Transactions. The sale will be treated as a stock sale for tax purposes and is expected to close in 2024, subject to clearance or approval under or by the Hart-Scott-Rodino Act, CFIUS, FCC and Utah and Wyoming Commissions as well as other customary closing and regulatory conditions. In November 2023, the waiting period under the Hart-Scott-Rodino Act expired. Also in November 2023, Dominion Energy submitted its initial filing request for approval by CFIUS. In October 2023, Dominion Energy filed for approvals from the Utah and Wyoming Commissions. In October 2023, Dominion Energy filed the notice with the Idaho Commission required for closing of the Questar Gas Transaction. The proposed internal reorganization in connection with the Questar Gas Transaction is subject to approval by the Utah and Wyoming Commissions. Dominion Energy filed for such approvals in September 2023 and received approval from the Utah Commission in November 2023.
Upon closing, Dominion Energy will retain the pension and other postretirement benefit plan assets and obligations, including related income tax and other deferred balances, associated with retiree participants of the sale entities in the Dominion Energy Pension Plan and the Dominion Energy Retiree Health and Welfare Plan. The Questar Gas Transaction is subject to termination by either party if not completed by September 2024, subject to a potential three-month extension for receipt of regulatory approvals, with a termination fee of $
Other Sales
In August 2023, Dominion Energy entered into an agreement and completed the sale of Tredegar Solar Fund I, LLC to Spruce Power for cash consideration of $
Financial Statement Information
The operations included in each of the East Ohio, PSNC and Questar Gas Transactions are presented as held for sale and discontinued operations within the Corporate and Other segment effective September 2023. In addition, operations associated with the other sales related to the comprehensive business review are also presented as discontinued operations within the Corporate and Other segment effective September 2023. As a result, the previously reported amounts have been recast to reflect this presentation and depreciation and amortization ceased on the applicable assets.
The following table represents selected information for each disposal group regarding the results of operations reported within discontinued operations in Dominion Energy's Consolidated Statements of Income:
|
Three Months Ended June 30, 2023 |
|
|
Six Months Ended June 30, 2023 |
|
|||||||||||||||||||||
|
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating revenue |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
Operating expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense) |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||||||
Interest and related charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) before income |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||||||
Income tax expense (benefit) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||||||
Net income (loss) attributable |
|
$ |
|
$ |
|
$ |
|
$ |
( |
) |
|
$ |
|
$ |
|
$ |
|
$ |
( |
) |
||||||
22
|
Three Months Ended June 30, 2022 |
|
|
Six Months Ended June 30, 2022 |
|
|||||||||||||||||||||
|
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating revenue |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
Operating expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense) |
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
— |
|
||||
Interest and related charges |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||||||
Income (loss) before income |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||||||
Income tax expense |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||||||
Net income (loss) attributable |
|
$ |
|
$ |
|
$ |
|
$ |
— |
|
|
$ |
|
$ |
|
$ |
|
$ |
— |
|
||||||
The carrying amount 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 June 30, 2023 |
|
|
At December 31, 2022 |
|
||||||||||||||||||||
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current assets(1) |
$ |
|
$ |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
Property, plant and equipment, net |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||||
Other deferred charges and other |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||||||
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||||||
Other deferred credits and liabilities |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||||
Capital expenditures and significant noncash items relating to the disposal groups included the following:
|
Six Months Ended June 30, 2023 |
|
|
Six Months Ended June 30, 2022 |
|
|||||||||||||||||||||
|
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Capital expenditures |
|
$ |
|
$ |
|
$ |
|
$ |
— |
|
|
$ |
|
$ |
|
$ |
|
$ |
— |
|
||||||
Significant noncash items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation, depletion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accrued capital expenditures |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||||||
23
Disposition of Gas Transmission & Storage Operations
In December 2021, Dominion Energy completed the sale of the Q-Pipe Group to Southwest Gas, as discussed in Note 3 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. In the first quarter of 2022, Dominion Energy recognized a gain of $
Sale of Kewaunee
In May 2021, Dominion Energy entered into an agreement to sell
In the second quarter of 2022, Dominion Energy recorded a loss of $
Note 4. Operating Revenue
The Companies’ operating revenue consists of the following:
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||||||||||
|
Quarter-to-Date |
|
|
Year-to-Date |
|
|
Quarter-to-Date |
|
|
Year-to-Date |
|
||||||||||||||||||||
Period Ended June 30, |
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Government and other retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Nonregulated electric sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Regulated gas sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Regulated gas transportation and storage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other regulated revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other nonregulated revenues(1)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total operating revenue from contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other revenues(1)(3) |
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Total operating revenue |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Neither Dominion Energy nor Virginia Power have any amounts for revenue to be recognized in the future on multi-year contracts in place at June 30, 2023.
At June 30, 2023 and December 31, 2022, Dominion Energy’s contract liability balances were $
24
respectively, and are recorded in other current liabilities and other deferred credits and other liabilities in its Consolidated Balance Sheets.
The Companies recognize revenue as they fulfill their obligations to provide service to their customers. During the six months ended June 30, 2023 and 2022, Dominion Energy recognized revenue of $
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 |
|
||||||||||
Six Months Ended June 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
U.S. statutory rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Increases (reductions) resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Recognition of taxes - sale of |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
||
State taxes, net of federal benefit |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Investment tax credits |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Production tax credits |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Reversal of excess deferred income |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Changes in state deferred taxes associated |
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
||
AFUDC - equity |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Other, net |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Effective tax rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
In the first quarter of 2022, Dominion Energy entered into an agreement to sell
As of June 30, 2023, 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, 2022, for a discussion of these unrecognized tax benefits.
Discontinued operations
Income tax expense reflected in discontinued operations is $
25
The following table presents the calculation of Dominion Energy’s basic and diluted EPS:
|
|
Quarter-to-Date |
|
|
Year-to-Date |
|
||||||||||
Period Ended June 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to Dominion Energy from |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Preferred stock dividends (see Note 16) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income (loss) attributable to Dominion Energy from |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Dilutive effect of 2019 Equity Units(1)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to Dominion Energy from |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Net income (loss) attributable to Dominion Energy from |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Average shares of common stock outstanding – Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net effect of dilutive securities(1)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Average shares of common stock outstanding – Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EPS from continuing operations – Basic |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
EPS from discontinued operations – Basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EPS attributable to Dominion Energy – Basic |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
EPS from continuing operations – Diluted |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
EPS from discontinued operations – Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
EPS attributable to Dominion Energy – Diluted |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||
The 2019 Equity Units, prior to settlement in June 2022, were a potentially dilutive instrument. See Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 and Note 16 in this report for additional information.
26
Note 7. Accumulated Other Comprehensive Income (Loss)
Dominion Energy
The following table presents Dominion Energy’s changes in AOCI (net of tax) and reclassifications out of AOCI by component:
|
|
Total Derivative-Hedging Activities(1)(2) |
|
|
Investment |
|
|
Pension |
|
|
Equity Method Investees(5) |
|
|
Total |
|
|||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Three Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Beginning balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income (loss) before |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Interest and related charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other income (expense) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Income tax expense (benefit) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total, net of tax |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net current period other comprehensive |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Ending balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Beginning balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income (loss) before |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Interest and related charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income tax expense (benefit) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Total, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net current period other comprehensive |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Ending balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
27
|
|
Total Derivative-Hedging Activities(1)(2) |
|
|
Investment |
|
|
Pension |
|
|
Equity Method Investees(5) |
|
|
Total |
|
|||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Beginning balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income (loss) before |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Interest and related charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other income (expense) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Income tax expense (benefit) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total, net of tax |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net current period other comprehensive |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Ending balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income (loss) before |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Interest and related charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income tax expense (benefit) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Total, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net current period other comprehensive |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Ending balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
28
Virginia Power
The following table presents Virginia Power’s changes in AOCI (net of tax) and reclassifications out of AOCI by component:
|
|
Total Derivative-Hedging Activities(1)(2) |
|
|
Investment |
|
|
Total |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Three Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|||
Beginning balance |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Other comprehensive income (loss) before |
|
|
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|||||
Total |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Income tax expense (benefit) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net current period other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
|
||
Ending balance |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|||
Beginning balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income (loss) before |
|
|
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|||||
Total |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Income tax expense (benefit) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net current period other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
|
||
Ending balance |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
Total Derivative-Hedging Activities(1)(2) |
|
|
Investment |
|
|
Total |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|||
Beginning balance |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Other comprehensive income (loss) before |
|
|
( |
) |
|
|
|
|
|
|
||
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|||||
Total |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Income tax expense (benefit) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total, net of tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net current period other comprehensive income (loss) |
|
|
( |
) |
|
|
|
|
|
|
||
Ending balance |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|||
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Other comprehensive income (loss) before |
|
|
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|||||
Interest and related charges |
|
|
|
|
|
|
|
|
|
|||
Other income (expense) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Total |
|
|
|
|
|
( |
) |
|
|
|
||
Income tax expense (benefit) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total, net of tax |
|
|
|
|
|
( |
) |
|
|
|
||
Net current period other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
|
||
Ending balance |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
29
Note 8. Fair Value Measurements
The Companies’ fair value measurements are made in accordance with the policies discussed in Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. See Note 9 in this report for additional information about the Companies’ derivatives and hedge accounting activities.
The Companies enter into certain physical and financial forwards, futures and options, which are considered Level 3 as they have one or more inputs that are not observable and are significant to the valuation. The discounted cash flow method is used to value Level 3 physical and financial forwards and futures contracts. An option model is used to value Level 3 physical options. The discounted cash flow model for forwards and futures calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return and credit spreads. The option model calculates mark-to-market valuations using variations of the Black-Scholes option model. The inputs into the models are the forward market prices, implied price volatilities, risk-free rate of return, the option expiration dates, the option strike prices, the original sales prices and volumes. For Level 3 fair value measurements, certain forward market prices and implied price volatilities are considered unobservable.
The following table presents the Companies' quantitative information about Level 3 fair value measurements at June 30, 2023. The range and weighted average are presented in dollars for market price inputs and percentages for price volatility.
|
|
|
|
Dominion Energy |
|
Virginia Power |
||||||||
|
Valuation |
Unobservable |
|
Fair Value (millions) |
|
Range |
Weighted |
|
Fair Value (millions) |
|
Range |
Weighted |
||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
||
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|||
Electricity |
Discounted |
Market price |
(3) |
$ |
|
|
|
— |
|
— |
— |
|||
Physical options: |
|
|
|
|
|
|
|
|
|
|
|
|||
Natural gas(2) |
Option model |
Market price |
(3) |
|
|
|
|
|
||||||
|
|
Price volatility |
(4) |
|
|
|
|
|
||||||
Total assets |
|
|
|
$ |
|
|
|
|
$ |
|
|
|
||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|||
Natural gas(2) |
Discounted |
Market price |
(3) |
$ |
|
( |
( |
|
$ |
|
( |
( |
||
Electricity |
Discounted |
Market price |
(3) |
|
|
|
|
— |
|
— |
— |
|||
Total |
|
|
|
$ |
|
|
|
|
$ |
|
|
|
||
Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:
Significant Unobservable Inputs |
|
Position |
|
Change to Input |
|
Impact on Fair Value Measurement |
Market price |
|
Buy |
|
Increase (decrease) |
|
Gain (loss) |
Market price |
|
Sell |
|
Increase (decrease) |
|
Loss (gain) |
Price volatility |
|
Buy |
|
Increase (decrease) |
|
Gain (loss) |
Price volatility |
|
Sell |
|
Increase (decrease) |
|
Loss (gain) |
30
Nonrecurring Fair Value Measurements
See Note 10 for information regarding nonrecurring fair value measurements associated with Dominion Energy’s noncontrolling ownership interest in Dominion Privatization.
In the first quarter of 2023, Dominion Energy recorded a charge of $
In the second quarter of 2023, Dominion Energy recorded a charge of $
31
Recurring Fair Value Measurements
The following table presents the Companies' assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Interest rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt instruments |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Government securities |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Cash equivalents and other |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Foreign currency exchange rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total liabilities |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt instruments |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Government securities |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Foreign currency exchange rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total liabilities |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
32
The following table presents the net change in the Companies' assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||||||||||
|
|
Quarter-to-Date |
|
|
Year-to-Date |
|
|
Quarter-to-Date |
|
|
Year-to-Date |
|
||||||||||||||||||||
Period Ended June 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Total realized and unrealized gains |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Included in earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating revenue |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
and purchases |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||||
Included in regulatory assets/ |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||||
Settlements |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Purchases |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
Dominion Energy had $
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.
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
|
|
Carrying |
|
|
Estimated |
|
|
Carrying |
|
|
Estimated |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt(2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Supplemental credit facility borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Junior subordinated notes(2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt(2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Supplemental credit facility borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Junior subordinated notes(2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
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, 2022. See Note 8 in this report for additional information about fair value measurements and associated valuation methods for derivatives.
33
Cash collateral is used in the table below to offset derivative assets and liabilities. In February 2022, Dominion Energy entered into contracts representing offsetting positions to certain existing exchange contracts with collateral requirements as well as new over-the-counter transactions that are not subject to collateral requirements. These contracts resulted in positions which limit the risk of increased cash collateral requirements. Certain accounts receivable and accounts payable recognized on the Companies’ Consolidated Balance Sheets, letters of credit and other forms of securities, as well as certain other long-term debt, all of which are not included in the tables below, are subject to offset under master netting or similar arrangements and would reduce the net exposure. See Note 18 for additional information regarding credit-related contingent features for the Companies’ derivative instruments.
Balance Sheet Presentation
The tables below present the Companies' derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in their Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:
|
|
Dominion Energy Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
Virginia Power Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
||||||||||||||||||||||||||
|
|
Gross Assets |
|
|
Financial |
|
|
Cash |
|
|
Net |
|
|
Gross Assets |
|
|
Financial |
|
|
Cash |
|
|
Net |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total derivatives, |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total derivatives, |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
34
|
|
Dominion Energy Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
Virginia Power Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
||||||||||||||||||||||||||
|
|
Gross Liabilities |
|
|
Financial |
|
|
Cash |
|
|
Net |
|
|
Gross Liabilities |
|
|
Financial |
|
|
Cash |
|
|
Net |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total derivatives, |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total derivatives, |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Volumes
The following table presents the volume of the Companies' derivative activity at June 30, 2023. 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.
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
|
|
Current |
|
|
Noncurrent |
|
|
Current |
|
|
Noncurrent |
|
||||
Natural Gas (bcf): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed price(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basis(2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Electricity (MWh in millions): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed price |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil (Gal in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate(3) (in millions) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Foreign currency exchange rate(3) (in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Danish Krone |
|
|
|
|
|
|
|
|
||||||||
Euro |
|
€ |
|
|
€ |
|
|
€ |
|
|
€ |
|
||||
35
AOCI
The following table presents selected information related to gains and losses on cash flow hedges included in AOCI in the Companies' Consolidated Balance Sheets at June 30, 2023:
|
|
Dominion Energy |
|
Virginia Power |
||||||||||||||||
|
|
AOCI After-Tax |
|
|
Amounts Expected to be |
|
|
Maximum Term |
|
AOCI After-Tax |
|
|
Amounts Expected to be |
|
|
Maximum Term |
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
|
|
$ |
|
|
||||
Total |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
$ |
|
|
$ |
|
|
|
||
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.
36
Fair Value and Gains and Losses on Derivative Instruments
The following table presents the fair values of the Companies' derivatives and where they are presented in their Consolidated Balance Sheets:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||
|
|
Fair Value – |
|
|
Fair Value – |
|
|
Total Fair |
|
|
Fair Value – |
|
|
Fair Value – |
|
|
Total Fair |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
At June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total current derivative assets(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total noncurrent derivative assets(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivative assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency exchange rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total current derivative liabilities(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency exchange rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total noncurrent derivative liabilities(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivative liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
At December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total current derivative assets(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total noncurrent derivative assets(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivative assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency exchange rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total current derivative liabilities(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency exchange rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total noncurrent derivative liabilities(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivative liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
37
The following tables present the gains and losses on the Companies' derivatives, as well as where the associated activity is presented in their Consolidated Balance Sheets and Statements of Income.
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||
Derivatives in |
|
Amount of Gain |
|
|
Amount of Gain |
|
|
Increase (Decrease) |
|
|
Amount of Gain |
|
|
Amount of Gain |
|
|
Increase (Decrease) |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Three Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest rate(3) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest rate(3) |
|
$ |
|
|
|
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest rate(3) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Total |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest rate(3) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
|
|
Amount of Gain (Loss) Recognized in Income on Derivatives(1)(2) |
|
|||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments |
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||||||||||
|
|
Quarter-to-Date |
|
|
Year-to-Date |
|
|
Quarter-to-Date |
|
|
Year-to-Date |
|
||||||||||||||||||||
Period Ended June 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Operating revenue |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||||
Purchased gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Electric fuel and other energy-related |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||||
Operations and maintenance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest and related charges |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||||
38
Note 10. Investments
Dominion Energy
Equity and Debt Securities
Short-Term Deposit
In May 2022, Dominion Energy entered into an agreement with a financial institution and committed to make a short-term deposit of at least $
Rabbi Trust Securities
Equity and fixed income securities and cash equivalents in Dominion Energy’s rabbi trusts and classified as trading totaled $
Decommissioning Trust Securities
The Companies hold equity and fixed income securities and cash equivalents, and Dominion Energy also holds insurance contracts, in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants.
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||||||||||||
|
Amortized |
|
Total |
|
Total |
|
|
Allowance for Credit Losses |
|
Fair |
|
|
Amortized |
|
Total |
|
Total |
|
|
Allowance for Credit Losses |
|
Fair |
|
||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. |
$ |
|
$ |
|
$ |
( |
) |
|
|
|
$ |
|
|
$ |
|
$ |
|
$ |
( |
) |
|
|
|
$ |
|
||||||||
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Corporate debt |
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|
|
||||||||
Government |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
||||||||
Common/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total |
$ |
|
$ |
|
$ |
( |
) |
(4) |
$ |
|
$ |
|
|
$ |
|
$ |
|
$ |
( |
) |
(4) |
$ |
|
$ |
|
||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. |
$ |
|
$ |
|
$ |
( |
) |
|
|
|
$ |
|
|
$ |
|
$ |
|
$ |
( |
) |
|
|
|
$ |
|
||||||||
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Corporate debt |
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|
|
||||||||
Government |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
||||||||
Common/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
||||||||||
Cash equivalents |
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total |
$ |
|
$ |
|
$ |
( |
) |
(4) |
$ |
|
$ |
|
|
$ |
|
$ |
|
$ |
( |
) |
(4) |
$ |
|
$ |
|
||||||||
39
The portion of unrealized gains and losses that relates to equity securities held within Dominion Energy and Virginia Power’s nuclear decommissioning trusts is summarized below:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||||||||||
|
|
Quarter-to-Date |
|
|
Year-to-Date |
|
|
Quarter-to-Date |
|
|
Year-to-Date |
|
||||||||||||||||||||
Period Ended June 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net gains (losses) recognized during |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||||
Less: Net (gains) losses recognized |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||||||
Unrealized gains (losses) recognized |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||||
The fair value of Dominion Energy and Virginia Power’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at June 30, 2023 by contractual maturity is as follows:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||
(millions) |
|
|
|
|
|
|
||
Due in one year or less |
|
$ |
|
|
$ |
|
||
Due after one year through five years |
|
|
|
|
|
|
||
Due after five years through ten years |
|
|
|
|
|
|
||
Due after ten years |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
Presented below is selected information regarding Dominion Energy and Virginia Power’s equity and fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds.
|
|
|
|
|
|
|
||||||||||||||||||||||||||
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||||||||||
|
|
Quarter-to-Date |
|
|
Year-to-Date |
|
|
Quarter-to-Date |
|
|
Year-to-Date |
|
||||||||||||||||||||
Period Ended June 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Proceeds from sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Realized gains(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Realized losses(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity Method Investments
Dominion Energy recorded equity earnings on its investments of $
40
respectively. Dominion Energy made contributions of $
Cove Point
Prior to the completion of the sale in September 2023 as discussed below, Dominion Energy held a
Dominion Energy recorded distributions from Cove Point of $
In June 2023, Dominion Energy entered into an agreement with Cove Point for transportation and storage services at market rates for a
In July 2023, Dominion Energy entered into an agreement to sell its
In September 2023, as a result of Dominion Energy entering agreements for the East Ohio, PSNC and Questar Gas Transactions, Dominion Energy’s
Amounts presented within discontinued operations within Dominion Energy’s Consolidated Statements of Income for the three and six months ended June 30, 2023 include $
Atlantic Coast Pipeline
A description of Dominion Energy’s investment in Atlantic Coast Pipeline, including events that led to the cancellation of the Atlantic Coast Pipeline Project in July 2020, is included in Note 9 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
At June 30, 2023 and December 31, 2022, Dominion Energy has recorded a liability of $
Dominion Energy recorded $
Dominion Energy expects to incur additional losses from Atlantic Coast Pipeline as it completes wind-down activities. While Dominion Energy is unable to precisely estimate the amounts to be incurred by Atlantic Coast Pipeline, the portion of such amounts attributable to Dominion Energy is not expected to be material to Dominion Energy’s results of operations, financial position or statement of cash flows.
41
Wrangler
A description of Dominion Energy’s investment in Wrangler (through March 2022) is included in Note 9 to the Consolidated Financial Statements in Dominion Energy’s Annual Report on Form 10-K for the year ended December 31, 2022.
In March 2022, Dominion Energy sold its remaining
Dominion Privatization
Dominion Energy holds a
In March 2022, Dominion Energy completed its initial contribution of privatization operations in South Carolina (excluding contracts held by DESC), Texas and Pennsylvania to Dominion Privatization for total consideration of $
Note 11. Property, Plant and Equipment
Acquisitions of Nonregulated Solar Projects
Other than the item discussed below, there have been no significant updates to acquisitions of solar projects by the Companies from those discussed in Note 10 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
In
Sale of Utility Property
In June 2022, Dominion Energy completed the sale of certain utility property in South Carolina, as approved by the South Carolina Commission in May 2022, for total cash consideration of $
42
Note 12. Regulatory Assets and Liabilities
Regulatory assets and liabilities include the following:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||
|
|
June 30, |
|
December 31, |
|
|
June 30, |
|
December 31, |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
||||
Regulatory assets: |
|
|
|
|
|
|
|
|
|
|
||||
Deferred cost of fuel used in electric generation(1) |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
Deferred rider costs for Virginia electric utility(2) |
|
|
|
|
|
|
|
|
|
|
||||
Ash pond and landfill closure costs(3) |
|
|
|
|
|
|
|
|
|
|
||||
Deferred nuclear refueling outage costs(4) |
|
|
|
|
|
|
|
|
|
|
||||
NND Project costs(5) |
|
|
|
|
|
|
|
|
|
|
||||
Deferred early plant retirement charges(6) |
|
|
|
|
|
|
|
|
|
|
||||
Derivatives(7) |
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
||||
Regulatory assets-current |
|
|
|
|
|
|
|
|
|
|
||||
Unrecognized pension and other postretirement benefit costs(8) |
|
|
|
|
|
|
|
|
|
|
||||
Deferred rider costs for Virginia electric utility(2) |
|
|
|
|
|
|
|
|
|
|
||||
Interest rate hedges(9) |
|
|
|
|
|
|
|
|
|
|
||||
AROs and related funding(10) |
|
|
|
|
|
|
|
|
|
|
||||
NND Project costs(5) |
|
|
|
|
|
|
|
|
|
|
||||
Ash pond and landfill closure costs(3) |
|
|
|
|
|
|
|
|
|
|
||||
Deferred cost of fuel used in electric generation(1) |
|
|
|
|
|
|
|
|
|
|
||||
Derivatives(7) |
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
||||
Regulatory assets-noncurrent |
|
|
|
|
|
|
|
|
|
|
||||
Total regulatory assets |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
Regulatory liabilities: |
|
|
|
|
|
|
|
|
|
|
||||
Provision for future cost of removal and AROs(11) |
|
|
|
|
|
|
|
|
|
|
||||
Reserve for refunds and rate credits to electric utility customers(12) |
|
|
|
|
|
|
|
|
|
|
||||
Income taxes refundable through future rates(13) |
|
|
|
|
|
|
|
|
|
|
||||
Monetization of guarantee settlement(14) |
|
|
|
|
|
|
|
|
|
|
||||
Derivatives(7) |
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
||||
Regulatory liabilities-current |
|
|
|
|
|
|
|
|
|
|
||||
Income taxes refundable through future rates(13) |
|
|
|
|
|
|
|
|
|
|
||||
Provision for future cost of removal and AROs(11) |
|
|
|
|
|
|
|
|
|
|
||||
Nuclear decommissioning trust(15) |
|
|
|
|
|
|
|
|
|
|
||||
Monetization of guarantee settlement(14) |
|
|
|
|
|
|
|
|
|
|
||||
Interest rate hedges(9) |
|
|
|
|
|
|
|
|
|
|
||||
Reserve for refunds and rate credits to electric utility customers(12) |
|
|
|
|
|
|
|
|
|
|
||||
Overrecovered other postretirement benefit costs(16) |
|
|
|
|
|
|
|
|
|
|
||||
Derivatives(7) |
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
||||
Regulatory liabilities-noncurrent |
|
|
|
|
|
|
|
|
|
|
||||
Total regulatory liabilities |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
43
At June 30, 2023, Dominion Energy and Virginia Power regulatory assets include $
Note 13. Regulatory Matters
Regulatory Matters Involving Potential Loss Contingencies
As a result of issues generated in the ordinary course of business, the Companies are involved in various regulatory matters. Certain regulatory matters may ultimately result in a loss; however, as such matters are in an initial procedural phase, involve uncertainty as to the outcome of pending reviews or orders, and/or involve significant factual issues that need to be resolved, it is not possible for the Companies to estimate a range of possible loss. For regulatory matters that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the regulatory process such that the Companies are able to estimate a range of possible loss. For regulatory matters that the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any estimated range is based on currently available information, involves elements of judgment and significant uncertainties and may not represent the Companies’ maximum possible loss exposure. The circumstances of such regulatory matters will change from time to time and actual results may vary significantly from the current estimate. For current matters not specifically reported below, management does not anticipate that the outcome from such matters would have a material effect on the Companies’ financial position, liquidity or results of operations.
Other Regulatory Matters
Other than the following matters, there have been no significant developments regarding the pending regulatory matters disclosed in Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
44
Virginia Regulation - Key Legislation Affecting Operations
Virginia 2023 Legislation
In April 2023, legislation was enacted that amended several key provisions of the Regulation Act, as previously amended by the GTSA, and revised portions of the existing regulatory framework affecting Virginia Power’s operations. See Note 13 to the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, for additional information on the Regulation Act and GTSA.
The legislation resets the frequency of base rate reviews from a triennial period, as established under the GTSA, to a biennial period commencing with the 2023 Biennial Review. Such biennial reviews shall include the establishment of an authorized ROE to be utilized for base rates and riders, prospective base rates for the upcoming two-year period based on projected cost of service and a determination by the Virginia Commission as to Virginia Power’s base rate earned return for the most recently completed two-year period against the previously authorized ROE, including any potential credits to customers’ bills.
The legislation provides that the Virginia Commission will establish an authorized ROE of
The legislation directs that if the Virginia Commission determines as part of the 2023 Biennial Review that Virginia Power has earned more than
In addition to the biennial review mechanisms discussed above, the legislation also includes provisions related to other aspects of Virginia Power’s ratemaking framework.
45
In addition, in May 2023 legislation was enacted that amended certain portions of the VCEA to qualify generation produced by Virginia Power’s biomass electric generating stations as renewable energy and eliminate the mandated retirement of such facilities by the end of 2028.
Virginia Regulation - Recent Developments
2023 Biennial Review
In July 2023, Virginia Power filed its base rate case and accompanying schedules in support of the 2023 Biennial Review in accordance with legislation enacted in Virginia in April 2023 as discussed above. Virginia Power’s earnings test analysis, as filed, demonstrated it earned a combined ROE of
Virginia Fuel Expenses
In May 2023, Virginia Power filed its annual fuel factor filing with the Virginia Commission to recover an estimated $
Virginia Power Equity Application
In July 2023, Virginia Power requested approval from the Virginia Commission to issue and sell to Dominion Energy up to $
GTSA Filing
In March 2023, Virginia Power filed a petition with the Virginia Commission for approval of Phase III, covering 2024 through 2026, of its plan for electric distribution grid transformation projects as authorized by the GTSA. The plan includes
46
Renewable Generation Projects
In October 2022, Virginia Power filed a petition with the Virginia Commission for CPCNs to construct and operate eight utility-scale projects totaling approximately
Riders
Developments for significant riders associated with various Virginia Power projects are as follows:
Rider Name |
|
Application Date |
|
Approval Date |
|
Rate Year |
|
Total Revenue |
|
|
Increase (Decrease) |
|
||
Rider CCR |
|
|
|
|
$ |
|
|
$ |
( |
) |
||||
Rider CE(1) |
|
|
|
|
|
|
|
|
|
|||||
Rider GT |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider GT |
|
|
|
|
|
|
|
|
|
|||||
Rider GV(2) |
|
|
|
|
|
|
|
|
|
|||||
Rider GV(2) |
|
|
|
|
|
|
|
|
|
|||||
Rider OSW |
|
|
|
|
|
|
|
|
|
|||||
Rider PPA |
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Rider R |
|
|
|
|
|
|
(8) |
|
( |
) |
||||
Rider RGGI(3) |
|
|
|
|
|
|
|
N/A |
|
|||||
Rider RPS |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider S |
|
|
|
|
|
|
(8) |
|
( |
) |
||||
Rider SNA(4) |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider T1(5) |
|
|
|
|
|
|
|
|
|
|||||
Rider U(6) |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider US-3 |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider US-3 |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider US-4 |
|
|
|
|
|
|
|
|
|
|||||
Rider US-4 |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider W(7) |
|
|
|
|
|
|
(8) |
|
( |
) |
||||
47
Electric Transmission Projects
Developments for significant Virginia Power electric transmission projects approved or applied for are as follows:
Description and Location |
|
Application Date |
|
Approval Date |
|
Type of |
|
Miles of |
|
Cost Estimate |
|
|
Partial rebuild of Bristers-Ox 115 kV line in |
|
|
|
|
|
$ |
|
|||||
Construct new switching station, substations, |
|
|
|
|
|
|
|
|||||
Construct new switching station, substation, |
|
|
|
|
|
|
|
|||||
Construct new Mars and Wishing Star substations, |
|
|
|
|
|
|
|
|||||
Construct new Altair switching station, transmission |
|
|
|
|
|
|
|
|||||
Rebuild of Lines #2019 and #2007 in the City of |
|
|
Pending |
|
|
|
|
|
||||
Install transformer at Possum Point substation, |
|
|
Pending |
|
|
|
|
|
||||
Partial rebuild of Line #2011 in the Cities of |
|
|
Pending |
|
|
|
|
|
||||
Construct new transmission lines and convert Jeffress |
|
|
Pending |
|
|
|
|
|
||||
Construct new transmission lines and expand White |
|
|
Pending |
|
|
|
|
|
||||
Virginia Regulation – Select Prior Year Events
The following items were disclosed in Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 and are included in this report as they had an impact to the Companies’ Consolidated Statements of Income for the three and/or six months ended June 30, 2022.
Virginia Fuel Expenses
In May 2022, Virginia Power filed its annual fuel factor filing with the Virginia Commission to recover an estimated $
Rider RGGI
In May 2022, Virginia Power filed a petition with the Virginia Commission requesting suspension of Rider RGGI approved in August 2021. Virginia Power also requested that RGGI compliance costs incurred and unrecovered through July 2022 be recovered through existing base rates in effect during the period incurred. The Virginia Commission approved the request in June 2022. In the second quarter of 2022, Virginia Power recorded a charge of $
48
North Carolina Regulation
PSNC Rider D
Rider D allows PSNC to recover from customers all prudently incurred gas costs and the related portion of uncollectible expenses as well as losses on negotiated gas and transportation sales. In February 2023, PSNC submitted a filing with the North Carolina Commission for a $
PSNC Customer Usage Tracker
PSNC utilizes a customer usage tracker, a decoupling mechanism, which allows it to adjust its base rates semi-annually for residential and commercial customers based on average per customer consumption. In
South Carolina Regulation
DSM Programs
DESC has approval for a DSM rider through which it recovers expenditures related to its DSM programs. In January 2023, DESC filed an application with the South Carolina Commission seeking approval to recover $
Cost of Fuel
DESC's retail electric rates include a cost of fuel component approved by the South Carolina Commission which may be adjusted periodically to reflect changes in the price of fuel purchased by DESC. In February 2023, DESC filed with the South Carolina Commission a proposal to increase the total fuel cost component of retail electric rates. DESC's proposed adjustment is designed to recover DESC's current base fuel costs, including its existing under-collected balance, over the 12-month period beginning with the first billing cycle of May 2023, along with a requested decrease to DESC's variable environmental and avoided capacity cost component. The net effect of the proposal is an annual increase of $
Electric Transmission Project
In
Electric - Other
DESC utilizes a pension costs rider approved by the South Carolina Commission which is designed to allow recovery of projected pension costs, including under-collected balances or net of over-collected balances, as applicable. The rider is typically reviewed for adjustment every 12 months with any resulting increase or decrease going into effect beginning with the first billing cycle in May. In February 2023, DESC requested that the South Carolina Commission approve an adjustment to this rider to increase annual revenue by $
Natural Gas Base Rate Case
In March 2023, DESC filed its natural gas base rate case and schedules with the South Carolina Commission. DESC proposed a non-fuel, base rate increase of $
49
Ohio Regulation
PIR Program
In 2008, East Ohio began PIR, aimed at replacing approximately
In
CEP Program
In 2011, East Ohio began CEP which enables East Ohio to defer depreciation expense, property tax expense and carrying costs at the debt rate of
In
UEX Rider
East Ohio has approval for a UEX rider through which it recovers the bad debt expense of most customers not participating in the PIPP Plus Program. The UEX rider is adjusted annually to achieve dollar for dollar recovery of East Ohio's actual write-offs of uncollectible amounts. In July 2023, the Ohio Commission approved East Ohio's application to adjust its UEX rider to reflect an annual revenue requirement of $
Utah Regulation
Purchased Gas
In
Note 14. Leases
Other than the items discussed below, there have been no significant changes regarding the Companies’ leases as described in Note 15 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dominion Energy’s Consolidated Statements of Income include $
Offshore Wind Vessel Leasing Arrangement
In December 2020, Dominion Energy signed an agreement (subsequently amended in December 2022 and May 2023) with a lessor to complete construction of and lease a Jones Act compliant offshore wind installation vessel. This vessel is designed to handle current turbine technologies as well as next generation turbines. The lessor is providing equity and has obtained financing commitments from debt investors, totaling $
The initial lease term will commence once construction is substantially complete and the vessel is delivered and will mature in
50
subject to the approval of the participants, at current market terms, (ii) purchase the property for an amount equal to the outstanding project costs or, (iii) subject to certain terms and conditions, sell the property on behalf of the lessor to a third party using commercially reasonable efforts to obtain the highest cash purchase price for the property. If the project is sold and the proceeds from the sale are insufficient to repay the investors for the outstanding project costs, Dominion Energy may be required to make a payment to the lessor for the difference between the outstanding project costs and sale proceeds. Dominion Energy is not considered the owner during construction for financial accounting purposes and, therefore, will not reflect the construction activity in its consolidated financial statements. Dominion Energy expects to recognize a right-of-use asset and a corresponding finance lease liability at the commencement of the lease term. Dominion Energy will be considered the owner of the leased property for tax purposes, and as a result, will be entitled to tax deductions for depreciation and interest expense.
Note 15. Variable Interest Entities
There have been no significant changes regarding the entities the Companies consider VIEs as described in Note 16 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Virginia Power
Virginia Power purchased shared services from DES, an affiliated VIE, of $
Note 16. Significant Financing Transactions
Credit Facilities and Short-term Debt
The Companies use short-term debt to fund working capital requirements and as a bridge to long-term debt financings. The levels of borrowing may vary significantly during the course of the year, depending upon the timing and amount of cash requirements not satisfied by cash from operations. In addition, Dominion Energy utilizes cash and letters of credit to fund collateral requirements. Collateral requirements are impacted by commodity prices, hedging levels, Dominion Energy’s credit ratings and the credit quality of its counterparties. Other than the items discussed below, there have been no significant changes regarding the Companies’ credit facilities and short-term debt as described in Note 17 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dominion Energy
Dominion Energy’s short-term financing is supported by its $
At June 30, 2023, Dominion Energy’s commercial paper and letters of credit outstanding, as well as its capacity available under the credit facility, were as follows:
|
|
Facility |
|
|
Outstanding |
|
|
Outstanding |
|
|
Facility |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Joint revolving credit facility(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
51
DESC and Questar Gas’ short-term financings are supported through access as co-borrowers to the joint revolving credit facility discussed above with the Companies. At June 30, 2023, the sub-limits for DESC and Questar Gas were $
In March 2023, FERC granted DESC authority through March 2025 to issue short-term indebtedness (pursuant to Section 204 of the Federal Power Act) in amounts not to exceed $
In addition to the credit facility mentioned above and Virginia Power's letter of credit facilities mentioned below, Dominion Energy also has a credit facility which allows Dominion Energy to issue up to approximately $
In March 2023, Dominion Energy entered into an agreement with a financial institution which it expects to allow it to issue up to $
Dominion Energy has an effective shelf registration statement with the SEC for the sale of up to $
In January 2023, Dominion Energy entered into a $
In July 2023, Dominion Energy entered into two $
Virginia Power
Virginia Power’s short-term financing is supported through its access as co-borrower to Dominion Energy’s $
At June 30, 2023, Virginia Power’s share of commercial paper and letters of credit outstanding under the joint revolving credit facility with Dominion Energy, Questar Gas and DESC was as follows:
|
|
Facility |
|
|
Outstanding |
|
|
Outstanding |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Joint revolving credit facility(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
52
In January 2023, Virginia Power entered into a letter of credit facility which allows Virginia Power to issue up to $
In March 2023, Virginia Power entered into an agreement with a financial institution, which it expects to allow it to issue up to $
Long-term Debt
Unless otherwise noted, the proceeds of long-term debt issuances were used for general corporate purposes and/or to repay short-term debt.
In March 2023, Dominion Energy borrowed $
In March 2023, Virginia Power issued $
In June 2023, Virginia Power remarketed three series of tax-exempt bonds, with an aggregate outstanding principal of $
Derivative Restructuring
In August 2020, Virginia Power amended a portfolio of interest rate swaps with a notional value of $
Preferred Stock
Dominion Energy is authorized to issue up to
Dominion Energy recorded dividends of $
There have been no significant changes to Dominion Energy’s Series B Preferred Stock and Series C Preferred Stock as described in Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
2019 Corporate Units
The 2019 Equity Units, initially issued in the form of 2019 Series A Corporate Units, are described in Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
53
Pursuant to the terms of the 2019 Equity Units, Dominion Energy conducted a final remarketing of substantially all shares of Series A Preferred Stock in May 2022 which resulted in the dividend rate for all shares of Series A Preferred Stock being reset to
Issuance of Common Stock
Dominion Energy recorded, net of fees and commissions, $
In May 2022, Dominion Energy issued
In June 2022, Dominion Energy issued
In June 2022, Dominion Energy issued
At-the-Market Program
In August 2020, Dominion Energy entered into sales agency agreements to effect sales under an at-the-market program as discussed in Note 20 to the Consolidated Financial Statements in the Companies’ Annual Report Form 10-K for the year ended December 31, 2022. Dominion Energy did not issue any shares or enter into any forward sale agreements under this program during the three and six months ended June 30, 2023, prior to its expiration in
Repurchase of Common Stock
In November 2020, the Board of Directors authorized the repurchase of up to $
Dominion Energy did
Note 17. Commitments and Contingencies
As a result of issues generated in the ordinary course of business, the Companies are involved in legal proceedings before various courts and are periodically subject to governmental examinations (including by regulatory authorities), inquiries and investigations. Certain legal proceedings and governmental examinations involve demands for unspecified amounts of damages, are in an initial procedural phase, involve uncertainty as to the outcome of pending appeals or motions, or involve significant factual issues that need to be resolved, such that it is not possible for the Companies to estimate a range of possible loss. For such matters that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the litigation or investigative processes such that the Companies are able to estimate a range of possible loss. For legal proceedings and governmental examinations that the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. The Companies maintain various insurance programs, including general liability insurance coverage which provides coverage for personal injury or wrongful death cases. Any accrued liability is recorded on a gross basis with a receivable also recorded for any probable insurance recoveries. Estimated ranges of loss are inclusive of legal fees and net of any anticipated insurance recoveries. Any estimated range is based on
54
currently available information and involves elements of judgment and significant uncertainties. Any estimated range of possible loss may not represent the Companies’ maximum possible loss exposure. The circumstances of such legal proceedings and governmental examinations will change from time to time and actual results may vary significantly from the current estimate. For current proceedings not specifically reported below, management does not anticipate that the liabilities, if any, arising from such proceedings would have a material effect on the Companies’ financial position, liquidity or results of operations.
Environmental Matters
The Companies are subject to costs resulting from a number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of compliance, remediation, containment and monitoring obligations.
Air
The CAA, as amended, is a comprehensive program utilizing a broad range of regulatory tools to protect and preserve the nation’s air quality. At a minimum, states are required to establish regulatory programs to meet applicable requirements of the CAA. However, states may choose to develop regulatory programs that are more restrictive. Many of the Companies’ facilities are subject to the CAA’s permitting and other requirements.
Ozone Standards
The EPA published final non-attainment designations for the October 2015 ozone standards in June 2018 with states required to develop plans to address the new standard. Certain states in which the Companies operate have developed plans, and had such plans approved or partially approved by the EPA, which are not expected to have a material impact on the Companies’ results of operations or cash flows. In March 2023, the EPA issued a final rule specifying an interstate federal implementation plan to comply with certain aspects of planning for the 2015 ozone standards which is applicable in August 2023 for certain states, including Virginia. The interstate federal implementation plan imposes tighter NOX emissions limits during the ozone season and includes provisions for the use of allowances to cover such emissions. Until implementation plans for the 2015 ozone standards are fully developed and approved for all states in which the Companies operate, the Companies are unable to predict whether or to what extent the new rules will ultimately require additional controls. The expenditures required to implement additional controls could have a material impact on the Companies’ results of operations, financial condition and/or cash flows.
ACE Rule
In July 2019, the EPA published the final rule informally referred to as the ACE Rule, as a replacement for the Clean Power Plan. The ACE Rule regulated GHG emissions from existing coal-fired power plants pursuant to Section 111(d) of the CAA and required states to develop plans by July 2022 establishing unit-specific performance standards for existing coal-fired power plants. In January 2021, the U.S. Court of Appeals for the D.C. Circuit vacated the ACE Rule and remanded it to the EPA. This decision would take effect upon issuance of the court’s mandate. In March 2021, the court issued a partial mandate vacating and remanding all parts of the ACE Rule except for the portion of the ACE Rule that repealed the Clean Power Plan. In October 2021, the U.S. Supreme Court agreed to hear a challenge of the U.S. Court of Appeals for the D.C. Circuit’s decision on the ACE Rule. In June 2022, the U.S. Supreme Court reversed the D.C. Circuit’s decision on the ACE Rule and remanded the case back to the D.C. Circuit. In May 2023, the EPA proposed to repeal the ACE Rule as part of a package of proposed rules addressing CO2 emissions from new and existing fossil fuel-fired electric generating units. Until the EPA takes final action on this proposed rulemaking, the Companies cannot predict an impact to its operations, financial condition and/or cash flows.
Carbon Regulations
In August 2016, the EPA issued a draft rule proposing to reaffirm that a source’s obligation to obtain a PSD or Title V permit for GHGs is triggered only if such permitting requirements are first triggered by non-GHG, or conventional, pollutants that are regulated by the New Source Review program, and exceed a significant emissions rate of
In December 2018, the EPA proposed revised Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources. The proposed rule would amend the previous determination that the best system of emission reduction for newly constructed coal-fired steam generating units is no longer partial carbon capture and storage. Instead, the proposed revised best system of emission reduction for this source category is the most efficient demonstrated steam cycle (e.g., supercritical steam conditions for large units and subcritical steam conditions for small units) in combination with best operating practices. The proposed revision to the performance standards for coal-fired steam generating units remains pending. Until the EPA ultimately takes
55
final action on this rulemaking, the Companies cannot predict the impact to their results of operations, financial condition and/or cash flows.
Water
The CWA, as amended, is a comprehensive program requiring a broad range of regulatory tools including a permit program to authorize and regulate discharges to surface waters with strong enforcement mechanisms. The Companies must comply with applicable aspects of the CWA programs at their operating facilities.
Regulation 316(b)
In October 2014, the final regulations under Section 316(b) of the CWA that govern existing facilities and new units at existing facilities that employ a cooling water intake structure and that have flow levels exceeding a minimum threshold became effective. The rule establishes a national standard for impingement based on seven compliance options, but forgoes the creation of a single technology standard for entrainment. Instead, the EPA has delegated entrainment technology decisions to state regulators. State regulators are to make case-by-case entrainment technology determinations after an examination of
Effluent Limitations Guidelines
In September 2015, the EPA released a final rule to revise the Effluent Limitations Guidelines for the Steam Electric Power Generating Category. The final rule established updated standards for wastewater discharges that apply primarily at coal and oil steam generating stations. Affected facilities are required to convert from wet to dry or closed cycle coal ash management, improve existing wastewater treatment systems and/or install new wastewater treatment technologies in order to meet the new discharge limits. In April 2017, the EPA granted
Waste Management and Remediation
The operations of the Companies are subject to a variety of state and federal laws and regulations governing the management and disposal of solid and hazardous waste, and release of hazardous substances associated with current and/or historical operations. The CERCLA, as amended, and similar state laws, may impose joint, several and strict liability for cleanup on potentially responsible parties who owned, operated or arranged for disposal at facilities affected by a release of hazardous substances. In addition, many states have created programs to incentivize voluntary remediation of sites where historical releases of hazardous substances are identified and property owners or responsible parties decide to initiate cleanups.
From time to time, the Companies may be identified as a potentially responsible party in connection with the alleged release of hazardous substances or wastes at a site. Under applicable federal and state laws, the Companies could be responsible for costs associated with the investigation or remediation of impacted sites, or subject to contribution claims by other responsible parties for their costs incurred at such sites. The Companies also may identify, evaluate and remediate other potentially impacted sites under voluntary state programs. Remediation costs may be subject to reimbursement under the Companies’ insurance policies, rate recovery
56
mechanisms, or both. Except as described below, the Companies do not believe these matters will have a material effect on results of operations, financial condition and/or cash flows.
Dominion Energy has determined that it is associated with former manufactured gas plant sites, including certain sites associated with Virginia Power. At
Other Legal Matters
The Companies are defendants in a number of lawsuits and claims involving unrelated incidents of property damage and personal injury. Due to the uncertainty surrounding these matters, the Companies are unable to make an estimate of the potential financial statement impacts; however, they could have a material impact on results of operations, financial condition and/or cash flows.
SCANA Legal Proceedings
The following describes certain legal proceedings involving Dominion Energy, SCANA or DESC relating primarily to events occurring before closing of the SCANA Combination. In addition, certain legal matters which have been resolved are discussed in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. No reference to, or disclosure of, any proceeding, item or matter described below shall be construed as an admission or indication that such proceeding, item or matter is material. For certain of these matters, and unless otherwise noted therein, Dominion Energy is unable to estimate a reasonable range of possible loss and the related financial statement impacts, but for any such matter there could be a material impact to its results of operations, financial condition and/or cash flows. For the matters for which Dominion Energy is able to reasonably estimate a probable loss, Dominion Energy’s Consolidated Balance Sheets at June 30, 2023 and December 31, 2022 include reserves of $
Governmental Proceedings and Investigations
In June 2018, DESC received a notice of proposed assessment of approximately $
57
Nuclear Operations
Nuclear Insurance
There have been no significant changes regarding the Companies’ nuclear insurance as described in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Spent Nuclear Fuel
As discussed in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, the Companies entered into contracts with the DOE for the disposal of spent nuclear fuel under provisions of the Nuclear Waste Policy Act of 1982.
Guarantees, Surety Bonds and Letters of Credit
At June 30, 2023, Dominion Energy had issued
In addition, at June 30, 2023, Dominion Energy had issued an additional $
Dominion Energy also enters into guarantee arrangements on behalf of its consolidated subsidiaries, primarily to facilitate their commercial transactions with third parties. If any of these subsidiaries fail to perform or pay under the contracts and the counterparties seek performance or payment, Dominion Energy would be obligated to satisfy such obligation. To the extent that a liability subject to a guarantee has been incurred by one of Dominion Energy’s consolidated subsidiaries, that liability is included in the Consolidated Financial Statements. Dominion Energy is not required to recognize liabilities for guarantees issued on behalf of its subsidiaries unless it becomes probable that it will have to perform under the guarantees. Terms of the guarantees typically end once obligations have been paid. Dominion Energy currently believes it is unlikely that it would be required to perform or otherwise incur any losses associated with guarantees of its subsidiaries’ obligations.
At June 30, 2023, Dominion Energy had issued the following subsidiary guarantees:
|
|
Maximum |
|
|
(millions) |
|
|
|
|
Commodity transactions(1) |
|
$ |
|
|
Nuclear obligations(2) |
|
|
|
|
Solar(3) |
|
|
|
|
Other(4) |
|
|
|
|
Total(5)(6) |
|
$ |
|
|
58
Additionally, at June 30, 2023, Dominion Energy had purchased $
Note 18. Credit Risk
The Companies’ accounting policies for credit risk are discussed in Note 24 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
At June 30, 2023, Dominion Energy’s credit exposure totaled $
Credit-Related Contingent Provisions
Certain of Dominion Energy and Virginia Power's derivative instruments contain credit-related contingent provisions. These provisions require Dominion Energy and Virginia Power to provide collateral upon the occurrence of specific events, primarily a credit rating downgrade. If the credit-related contingent features underlying these instruments that are in a liability position and not fully collateralized with cash were fully triggered, Dominion Energy and Virginia Power would have been required to post additional collateral to its counterparties of $
See Note 9 for additional information about derivative instruments.
Note 19. Related-Party Transactions
Dominion Energy’s transactions with equity method investments are described in Note 10. Virginia Power engages in related-party transactions primarily with other Dominion Energy subsidiaries (affiliates). Virginia Power’s receivable and payable balances with affiliates are settled based on contractual terms or on a monthly basis, depending on the nature of the underlying transactions. Virginia Power is included in Dominion Energy's consolidated federal income tax return and, where applicable, combined income tax returns for Dominion Energy are filed in various states. A discussion of Virginia Power's significant related-party transactions follows.
Virginia Power transacts with affiliates for certain quantities of natural gas and other commodities in the ordinary course of business. Virginia Power also enters into certain commodity derivative contracts with affiliates. Virginia Power uses these contracts, which are principally comprised of forward commodity purchases, to manage commodity price risks associated with purchases of natural gas. At June 30, 2023, Virginia Power’s derivative assets and liabilities with affiliates were $
Virginia Power participates in certain Dominion Energy benefit plans described in Note 22 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. At June 30, 2023 and December 31, 2022, amounts due to Dominion Energy associated with the Dominion Energy Pension Plan and included in other deferred credits and other liabilities in the Consolidated Balance Sheets were $
59
DES and other affiliates provide accounting, legal, finance and certain administrative and technical services and licenses to Virginia Power. In addition, Virginia Power provides certain services to affiliates, including charges for facilities and equipment usage.
The financial statements for all years presented include costs for certain general, administrative and corporate expenses assigned by DES to Virginia Power on the basis of direct and allocated methods in accordance with Virginia Power’s services agreements with DES. Where costs incurred cannot be determined by specific identification, the costs are allocated based on the proportional level of effort devoted by DES resources that is attributable to the entity, determined by reference to number of employees, salaries and wages and other similar measures for the relevant DES service. Management believes the assumptions and methodologies underlying the allocation of general corporate overhead expenses are reasonable.
Presented below are Virginia Power’s significant transactions with DES and other affiliates:
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Quarter-to-Date |
|
|
Year-to-Date |
|
||||||||||
Period Ended June 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity purchases from affiliates |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Services provided by affiliates(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Services provided to affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Virginia Power has borrowed funds from Dominion Energy under short-term borrowing arrangements. There were $
There were
In January 2023, Virginia Power entered into a lease contract with an affiliated entity for the use of a Jones Act compliant offshore wind installation vessel currently under development with commencement of the
Note 20. Employee Benefit Plans
Net Periodic Benefit (Credit) Cost
The service cost component of net periodic benefit (credit) cost is reflected in other operations and maintenance expense in Dominion Energy’s Consolidated Statements of Income, except for $
|
|
Pension Benefits |
|
|
Other Postretirement Benefits |
|
||||||||||||||||||||||||||
|
|
Quarter-to-Date |
|
|
Year-to-Date |
|
|
Quarter-to-Date |
|
|
Year-to-Date |
|
||||||||||||||||||||
Period Ended June 30, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of prior service |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of net actuarial |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
||
Net periodic benefit |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
60
Employer Contributions
During the three and six months ended June 30, 2023, Dominion Energy made
Note 21. Operating Segments
The Companies are organized primarily on the basis of products and services sold in the U.S. A description of the operations included in the Companies’ primary operating segments effective September 2023 is as follows:
Primary Operating Segment |
|
Description of Operations |
|
Dominion |
|
Virginia |
Dominion Energy Virginia |
|
Regulated electric distribution |
|
X |
|
X |
|
|
Regulated electric transmission |
|
X |
|
X |
|
|
Regulated electric generation fleet(1) |
|
X |
|
X |
Dominion Energy South Carolina |
|
Regulated electric distribution |
|
X |
|
|
|
|
Regulated electric transmission |
|
X |
|
|
|
|
Regulated electric generation fleet |
|
X |
|
|
|
|
Regulated gas distribution and storage |
|
X |
|
|
Contracted Energy(2) |
|
Nonregulated electric generation fleet(3) |
|
X |
|
|
In addition to the operating segments above, the Companies also report a Corporate and Other segment.
Dominion Energy
The Corporate and Other Segment of Dominion Energy includes, effective September 2023, its corporate, service company and other functions (including unallocated debt) as well as its noncontrolling interest in Dominion Privatization and its noncontrolling interest in Wrangler (through March 2022) and Hope (through August 2022). In addition, Corporate and Other includes specific items attributable to Dominion Energy’s operating segments that are not included in profit measures evaluated by executive management in assessing the segments’ performance or in allocating resources, as well as the net impact of the operations included in the East Ohio, PSNC and Questar Gas Transactions, its noncontrolling interest in Cove Point and gas transmission and storage operations, including its noncontrolling interest in Atlantic Coast Pipeline, reported as discontinued operations which are discussed in Notes 3 and 10 as well as Notes 3 and 9 to the Consolidated Financial Statements in Dominion Energy’s Annual Report on Form 10-K for the year ended December 31, 2022.
In the six months ended June 30, 2023, Dominion Energy reported after-tax net income of $
The net income for specific items attributable to Dominion Energy’s operating segments in 2023 primarily related to the impact of the following items:
61
The net expenses for specific items attributable to Dominion Energy’s operating segments in 2022 primarily related to the impact of the following items:
62
The following table presents segment information pertaining to Dominion Energy’s operations:
|
|
Dominion |
|
|
Dominion |
|
|
Contracted |
|
|
Corporate |
|
|
Adjustments |
|
|
Consolidated |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Three Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenue from external |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Net income from discontinued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenue from external |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Net income from discontinued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenue from external |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Net income from discontinued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenue from external |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Net income from discontinued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Intersegment sales and transfers for Dominion Energy are based on contractual arrangements and may result in intersegment profit or loss that is eliminated in consolidation, including amounts related to entities presented within discontinued operations.
Virginia Power
The Corporate and Other Segment of Virginia Power primarily includes specific items attributable to its operating segment that are not included in profit measures evaluated by executive management in assessing the segment’s performance or in allocating resources.
63
In the six months ended June 30, 2023, Virginia Power reported after-tax net expenses of $
The net expenses for specific items attributable to Virginia Power’s operating segment in 2023 primarily related to the impact of the following item:
The net expenses for specific items attributable to Virginia Power’s operating segment in 2022 primarily related to the impact of the following items:
The following table presents segment information pertaining to Virginia Power’s operations:
|
|
Dominion |
|
|
Corporate |
|
|
Consolidated |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Three Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net income (loss) |
|
|
|
|
|
( |
) |
|
|
|
||
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net income (loss) |
|
|
|
|
|
( |
) |
|
|
|
||
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net income (loss) |
|
|
|
|
|
( |
) |
|
|
|
||
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net income (loss) |
|
|
|
|
|
( |
) |
|
|
|
||
64
Exhibit 99.2
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, which consisted of a stock purchase contract and a 1/10 interest in a share of the Series A Preferred Stock |
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 |
ARO |
|
Asset retirement obligation |
bcf |
|
Billion cubic feet |
BHE |
|
The legal entity, Berkshire Hathaway Energy Company, one or more of its consolidated subsidiaries (including Eastern Energy Gas Holdings, LLC, Northeast Midstream Partners, LP and Cove Point effective November 2020), or the entirety of Berkshire Hathaway Energy Company and its consolidated subsidiaries |
CCR |
|
Coal combustion residual |
CCRO |
|
Customer credit reinvestment offset |
CO2 |
|
Carbon dioxide |
Companies |
|
Dominion Energy and Virginia Power, collectively |
Contracted Energy |
|
Contracted Energy operating segment, formerly known as the 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) |
CVOW Commercial Project |
|
A proposed 2.6 GW wind generation facility 27 miles off the coast of Virginia Beach, Virginia in federal waters adjacent to the CVOW Pilot Project and associated interconnection facilities in and around Virginia Beach, Virginia |
CVOW Pilot Project |
|
A 12 MW wind generation facility 27 miles off the coast of Virginia Beach, Virginia in federal waters |
DECP Holdings |
|
The legal entity DECP Holdings, Inc., which holds Dominion Energy's noncontrolling interest in Cove Point |
DEQPS |
|
MountainWest Pipeline Services, Inc. (formerly known as Dominion Energy Questar Pipeline 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 |
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 Direct® |
|
A dividend reinvestment and open enrollment direct stock purchase plan |
Dominion Energy Questar Pipeline |
|
The legal entity, MountainWest Pipeline, LLC (formerly known as Dominion Energy Questar Pipeline, LLC), one or more of its consolidated subsidiaries (including its 50% noncontrolling interest in White River Hub, LLC), 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 Privatization |
|
Dominion Utility Privatization, LLC, a joint venture between Dominion Energy and Patriot |
East Ohio |
|
The East Ohio Gas Company, doing business as Dominion Energy Ohio |
East Ohio Transaction |
|
The proposed sale by Dominion Energy to Enbridge of all issued and outstanding capital stock in Dominion Energy Questar Corporation and its consolidated subsidiaries, which following a proposed reorganization will include East Ohio and Dominion Energy Gas Distribution, LLC, pursuant to a purchase and sale agreement entered into on September 5, 2023 |
Enbridge |
|
The legal entity, Enbridge Inc., one or more of its consolidated subsidiaries (including Enbridge Elephant Holdings, LLC, Enbridge Parrot Holdings, LLC, and Enbridge Quail Holdings, LLC), or the entirety of Enbridge Inc. and its consolidated subsidiaries |
EPA |
|
U.S. Environmental Protection Agency |
EPS |
|
Earnings per common share |
FERC |
|
Federal Energy Regulatory Commission |
Gas Distribution |
|
Gas Distribution operating segment |
GHG |
|
Greenhouse gas |
GTSA |
|
Virginia Grid Transformation and Security Act of 2018 |
GW |
|
Gigawatt |
Heating degree days |
|
Units measuring the extent to which the average daily temperature is less than 65 degrees Fahrenheit, or 60 degrees Fahrenheit in DESC’s service territory, calculated as the difference between 65 or 60 degrees, as applicable, and the average temperature for that day |
Hope |
|
Hope Gas, Inc., doing business as Dominion Energy West Virginia through August 2022 |
ISO |
|
Independent system operator |
Jones Act |
|
The Coastwise Merchandise Statute (commonly known as the Jones Act) 46 U.S.C. §55102 regulating U.S. maritime commerce |
Kewaunee |
|
Kewaunee nuclear power station |
LNG |
|
Liquefied natural gas |
MD&A |
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Millstone |
|
Millstone nuclear power station |
MW |
|
Megawatt |
MWh |
|
Megawatt hour |
Order 1000 |
|
Order issued by FERC adopting requirements for electric transmission planning, cost allocation and development |
Patriot |
|
Patriot Utility Privatizations, LLC, a joint venture between Foundation Infrastructure Partners, LLC and John Hancock Life Insurance Company (U.S.A.) and affiliates |
PFAS |
|
Per- and polyfluorinated substances, a group of widely used chemicals that break down very slowly over time in the environment |
PJM |
|
PJM Interconnection, LLC |
PSNC |
|
Public Service Company of North Carolina, Incorporated, doing business as Dominion Energy North Carolina |
PSNC Transaction |
|
The proposed sale by Dominion Energy to Enbridge of all of its membership interests in Fall North Carolina Holdco LLC and its consolidated subsidiaries, which following a proposed reorganization will include PSNC, pursuant to a purchase and sale agreement entered into on September 5, 2023 |
Q-Pipe Group |
|
Collectively, Dominion Energy Questar Pipeline, DEQPS and MountainWest Energy Holding Company, LLC (formerly known as QPC Holding Company, LLC and its subsidiary MountainWest Southern Trails Pipeline Company (formerly known as Questar Southern Trails Pipeline Company)) |
2
Questar Gas |
|
Questar Gas Company, doing business as Dominion Energy Utah, Dominion Energy Wyoming and Dominion Energy Idaho |
Questar Gas Transaction |
|
The proposed sale by Dominion Energy to Enbridge of all of its membership interests in Fall West Holdco LLC and its consolidated subsidiaries, which following a proposed reorganization will include Questar Gas, Wexpro, Wexpro II Company, Wexpro Development Company, Dominion Energy Wexpro Services Company, Questar InfoComm Inc. and Dominion Gas Projects Company, LLC, pursuant to a purchase and sale agreement entered into on September 5, 2023 |
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, 2018 and 2023 |
RGGI |
|
Regional Greenhouse Gas Initiative |
ROE |
|
Return on equity |
RTO |
|
Regional transmission organization |
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 |
SEC |
|
U.S. Securities and Exchange Commission |
SEEM |
|
Southeast Energy Exchange Market |
Series A Preferred Stock |
|
Dominion Energy’s Series A Cumulative Perpetual Convertible Preferred Stock, without par value, with a liquidation preference of $1,000 per share (previously designated the 1.75% Series A Cumulative Perpetual Convertible Preferred Stock) |
Standard & Poor’s |
|
Standard & Poor’s Ratings Services, a division of S&P Global Inc. |
VCEA |
|
Virginia Clean Economy Act of March 2020 |
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 |
Wexpro |
|
The legal entity, Wexpro Company, one or more of its consolidated subsidiaries, or the entirety of Wexpro Company and its consolidated subsidiaries |
3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MD&A discusses Dominion Energy’s results of operations and general financial condition and Virginia Power’s results of operations. MD&A should be read in conjunction with the Companies’ Consolidated Financial Statements. Virginia Power meets the conditions to file under the reduced disclosure format, and therefore has omitted certain sections of MD&A.
Contents of MD&A
MD&A consists of the following information:
Forward-Looking Statements
This report contains statements concerning the Companies’ expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, the reader can identify these forward-looking statements by such words as “anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,” “could,” “plan,” “may,” “continue,” “target” or other similar words.
The Companies make forward-looking statements with full knowledge that risks and uncertainties exist that may cause actual results to differ materially from predicted results. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Additionally, other factors may cause actual results to differ materially from those indicated in any forward-looking statement. These factors include but are not limited to:
4
5
Additionally, other risks that could cause actual results to differ from predicted results are set forth in Part I. Item 1A. Risk Factors in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
The Companies’ forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. The Companies caution the reader not to place undue reliance on their forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. The Companies undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.
Accounting Matters
As of June 30, 2023, there have been no significant changes with regard to the critical accounting policies and estimates disclosed in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. The policies disclosed included the accounting for regulated operations, AROs, income taxes, accounting for derivative contracts and financial instruments at fair value, use of estimates in goodwill impairment testing, use of estimates in long-lived asset and equity method investment impairment testing, held for sale classification and employee benefit plans.
Results of Operations—Dominion Energy
Presented below is a summary of Dominion Energy’s consolidated results:
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|||
Second Quarter |
|
|
|
|
|
|
|
|
|
|||
Net income (loss) attributable to Dominion Energy |
|
$ |
599 |
|
|
$ |
(453 |
) |
|
$ |
1,052 |
|
Diluted EPS |
|
|
0.69 |
|
|
|
(0.58 |
) |
|
|
1.27 |
|
Year-To-Date |
|
|
|
|
|
|
|
|
|
|||
Net income attributable to Dominion Energy |
|
$ |
1,596 |
|
|
$ |
258 |
|
|
$ |
1,338 |
|
Diluted EPS |
|
|
1.86 |
|
|
|
0.25 |
|
|
|
1.61 |
|
Overview
Second Quarter 2023 vs. 2022
Net income attributable to Dominion Energy increased $1.1 billion, primarily due to the absences of a loss associated with the sale of Kewaunee, a charge for RGGI compliance costs deemed recovered through base rates and a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses. In addition, there was an increase in net investment earnings on nuclear decommissioning trust funds and increased unrealized gains on economic hedging activities. These increases were partially offset by a decrease in sales to electric utility customers attributable to weather.
Year-To-Date 2023 vs. 2022
Net income attributable to Dominion Energy increased $1.3 billion, primarily due to the absences of a loss associated with the sale of Kewaunee, a charge for RGGI compliance costs deemed recovered through base rates, a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses and a charge to reflect the recognition of deferred taxes on the outside basis of Hope’s stock upon meeting the classification as held for sale. In addition, there was an increase in net investment earnings on nuclear decommissioning trust funds, increased unrealized gains on economic hedging activities and a decrease in storm damage and service
6
restoration costs. These increases were partially offset by a charge associated with the impairment of a corporate office building and a decrease in sales to electric utility customers attributable to weather.
Analysis of Consolidated Operations
Presented below are selected amounts related to Dominion Energy’s results of operations:
|
|
Second Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating revenue |
|
$ |
3,166 |
|
|
$ |
3,059 |
|
|
$ |
107 |
|
|
$ |
7,049 |
|
|
$ |
6,172 |
|
|
$ |
877 |
|
Electric fuel and other energy-related purchases |
|
|
939 |
|
|
|
730 |
|
|
|
209 |
|
|
|
1,961 |
|
|
|
1,408 |
|
|
|
553 |
|
Purchased electric capacity |
|
|
15 |
|
|
|
16 |
|
|
|
(1 |
) |
|
|
23 |
|
|
|
29 |
|
|
|
(6 |
) |
Purchased gas |
|
|
49 |
|
|
|
95 |
|
|
|
(46 |
) |
|
|
172 |
|
|
|
240 |
|
|
|
(68 |
) |
Other operations and maintenance |
|
|
775 |
|
|
|
850 |
|
|
|
(75 |
) |
|
|
1,517 |
|
|
|
1,740 |
|
|
|
(223 |
) |
Depreciation, depletion and amortization |
|
|
603 |
|
|
|
600 |
|
|
|
3 |
|
|
|
1,221 |
|
|
|
1,202 |
|
|
|
19 |
|
Other taxes |
|
|
164 |
|
|
|
177 |
|
|
|
(13 |
) |
|
|
355 |
|
|
|
359 |
|
|
|
(4 |
) |
Impairment of assets and other charges |
|
|
44 |
|
|
|
416 |
|
|
|
(372 |
) |
|
|
142 |
|
|
|
405 |
|
|
|
(263 |
) |
Losses (gains) on sales of assets |
|
|
(21 |
) |
|
|
636 |
|
|
|
(657 |
) |
|
|
(23 |
) |
|
|
608 |
|
|
|
(631 |
) |
Other income (expense) |
|
|
314 |
|
|
|
(285 |
) |
|
|
599 |
|
|
|
590 |
|
|
|
(242 |
) |
|
|
832 |
|
Interest and related charges |
|
|
395 |
|
|
|
71 |
|
|
|
324 |
|
|
|
874 |
|
|
|
313 |
|
|
|
561 |
|
Income tax expense (benefit) |
|
|
86 |
|
|
|
(152 |
) |
|
|
238 |
|
|
|
250 |
|
|
|
(9 |
) |
|
|
259 |
|
Net income from discontinued operations |
|
|
168 |
|
|
|
212 |
|
|
|
(44 |
) |
|
|
449 |
|
|
|
623 |
|
|
|
(174 |
) |
An analysis of Dominion Energy’s results of operations follows:
Second Quarter 2023 vs. 2022
Operating revenue increased 3%, primarily reflecting:
These increases were partially offset by:
Electric fuel and other energy-related purchases increased 29%, primarily due to higher commodity costs for electric utilities ($206 million) and an increase in the use of purchased renewable energy credits at Virginia Power ($26 million), which are offset in operating revenue and do not impact net income.
Purchased gas decreased 48%, primarily due to a decrease in commodity costs for gas utilities, which are offset in operating revenue and do not impact net income.
Other operations and maintenance decreased 9%, primarily due to a decrease in certain Virginia Power expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($32 million), partially offset by an increase in outside services ($13 million).
7
Impairment of assets and other charges decreased 89%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities at Virginia Power ($38 million), partially offset by a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million).
Gains on sales of assets increased $657 million, primarily due to the absence of a loss associated with the sale of Kewaunee.
Other income increased $599 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.
Interest and related charges increased $324 million, primarily due to lower unrealized gains in 2023 compared to 2022 associated with freestanding derivatives ($205 million), higher interest rates on commercial paper and long-term debt ($56 million), increased commercial paper and long-term debt borrowings ($44 million) and higher interest rates on variable rate debt and cash flow interest rate swaps ($37 million).
Income tax expense increased $238 million, primarily due to higher pre-tax income ($328 million), partially offset by lower interim period allocation of investment tax credits ($34 million), excess deferred income tax amortization ($20 million) and decreased consolidated state deferred tax expense on pre-tax gains from nuclear decommissioning trusts and economic hedges ($24 million).
Net income from discontinued operations including noncontrolling interests decreased 21%, primarily due to higher interest rates on variable rate debt secured by Dominion Energy's 50% noncontrolling interest in Cove Point ($17 million) and an impairment charge of certain nonregulated solar assets ($11 million).
Year-To-Date 2023 vs. 2022
Operating revenue increased 14%, primarily reflecting:
These increases were partially offset by:
Electric fuel and other energy-related purchases increased 39%, primarily due to higher commodity costs for electric utilities ($522 million) and an increase in the use of purchased renewable energy credits at Virginia Power ($54 million), which are offset in operating revenue and do not impact net income.
Purchased gas decreased 28%, primarily due to a a decrease from the sale of Hope ($37 million) and a decrease in commodity costs for gas utilities ($32 million), which are offset in operating revenue and do not impact net income.
Other operations and maintenance decreased 13%, primarily due to a decrease in storm damage and restoration costs in Virginia Power’s service territory ($111 million) and a decrease in certain Virginia Power expenditures which are primarily recovered through
8
state- and FERC-regulated rates and do not impact net income ($103 million), partially offset by an increase in outside services ($26 million).
Impairment of assets and other charges decreased 65%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities at Virginia Power ($39 million), partially offset by the impairment of a corporate office building ($91 million) and a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million).
Gains on sales of assets increased $631 million, primarily due to the absence of a loss associated with the sale of Kewaunee ($649 million) and a gain on the transfer of certain utility property in South Carolina ($20 million), partially offset by the absence of a gain on the contribution of certain privatization operations to Dominion Privatization ($23 million).
Other income increased $832 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.
Interest and related charges increased $561 million, primarily due to unrealized losses in 2023 compared to unrealized gains in 2022 associated with freestanding derivatives ($336 million), higher interest rates on commercial paper and long-term debt ($101 million), increased commercial paper and long-term debt borrowings ($80 million), higher interest rates on variable rate debt and cash flow interest rate swaps ($77 million) and lower premiums received on interest rate derivatives ($24 million).
Income tax expense increased $259 million, primarily due to higher pre-tax income ($440 million), partially offset by the absence of a charge to reflect the recognition of deferred taxes on the outside basis of Hope’s stock upon meeting the classification as held for sale ($90 million) and decreased consolidated state deferred tax expense on pre-tax gains from nuclear decommissioning trusts and economic hedges ($30 million).
Net income from discontinued operations including noncontrolling interests decreased 28%, primarily due to lower unrealized gains on interest rate derivatives for economic hedging of debt secured by Dominion Energy's 50% noncontrolling interest in Cove Point ($107 million), higher interest rates on variable rate debt secured by Dominion Energy's 50% noncontrolling interest in Cove Point ($36 million), an increase in interest expense primarily associated with debt issuances in 2022 ($25 million) and an impairment charge of certain nonregulated solar assets ($11 million), partially offset by an increase following the approved base rate case for Questar Gas ($25 million).
Results of Operations—Virginia Power
Presented below is a summary of Virginia Power’s consolidated results:
|
|
Second Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income |
|
$ |
332 |
|
|
$ |
47 |
|
|
$ |
285 |
|
|
$ |
685 |
|
|
$ |
404 |
|
|
$ |
281 |
|
Overview
Second Quarter 2023 vs. 2022
Net income increased $285 million, primarily due to the absences of a charge for RGGI compliance costs deemed recovered through base rates and a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses as well as an increase in net investment earnings on nuclear decommissioning trust funds, partially offset by a decrease in sales to electric utility customers attributable to weather.
Year-To-Date 2023 vs. 2022
Net income increased 70%, primarily due to the absences of a charge for RGGI compliance costs deemed recovered through base rates and a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses as well as an increase in net investment earnings on nuclear decommissioning trust funds and a decrease in storm damage and service restoration costs, partially offset by a decrease in sales to electric utility customers attributable to weather.
9
Analysis of Consolidated Operations
Presented below are selected amounts related to Virginia Power’s results of operations:
|
|
Second Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating revenue |
|
$ |
2,251 |
|
|
$ |
2,175 |
|
|
$ |
76 |
|
|
$ |
4,635 |
|
|
$ |
4,342 |
|
|
$ |
293 |
|
Electric fuel and other energy-related purchases |
|
|
706 |
|
|
|
533 |
|
|
|
173 |
|
|
|
1,505 |
|
|
|
1,049 |
|
|
|
456 |
|
Purchased electric capacity |
|
|
10 |
|
|
|
11 |
|
|
|
(1 |
) |
|
|
18 |
|
|
|
22 |
|
|
|
(4 |
) |
Other operations and maintenance |
|
|
443 |
|
|
|
478 |
|
|
|
(35 |
) |
|
|
884 |
|
|
|
1,048 |
|
|
|
(164 |
) |
Depreciation and amortization |
|
|
432 |
|
|
|
425 |
|
|
|
7 |
|
|
|
879 |
|
|
|
854 |
|
|
|
25 |
|
Other taxes |
|
|
67 |
|
|
|
83 |
|
|
|
(16 |
) |
|
|
152 |
|
|
|
158 |
|
|
|
(6 |
) |
Impairment of assets and other charges |
|
|
38 |
|
|
|
409 |
|
|
|
(371 |
) |
|
|
45 |
|
|
|
413 |
|
|
|
(368 |
) |
Other income (expense) |
|
|
48 |
|
|
|
(44 |
) |
|
|
92 |
|
|
|
84 |
|
|
|
(40 |
) |
|
|
124 |
|
Interest and related charges |
|
|
182 |
|
|
|
145 |
|
|
|
37 |
|
|
|
363 |
|
|
|
293 |
|
|
|
70 |
|
Income tax expense |
|
|
89 |
|
|
|
— |
|
|
|
89 |
|
|
|
188 |
|
|
|
61 |
|
|
|
127 |
|
An analysis of Virginia Power’s results of operations follows:
Second Quarter 2023 vs. 2022
Operating revenue increased 3%, primarily reflecting:
These increases were partially offset by:
Electric fuel and other energy-related purchases increased 32%, primarily due to higher commodity costs for electric utilities ($169 million) and an increase in the use of purchased renewable energy credits ($26 million), which are offset in operating revenue and do not impact net income.
Other operations and maintenance decreased 7%, primarily due to a decrease in certain expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($32 million) and a decrease in bad debt expense ($10 million), partially offset by an increase in outside services ($13 million).
Other taxes decreased 19%, primarily due to lower property taxes.
Impairment of assets and other charges decreased 91%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities ($38 million), partially offset by a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million).
Other income increased $92 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.
Interest and related charges increased 26%, primarily due to increased commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($39 million) and higher interest rates on commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($11 million).
Income tax expense increased $89 million, primarily due to higher pre-tax income.
10
Year-To-Date 2023 vs. 2022
Operating revenue increased 7%, primarily reflecting:
These increases were partially offset by:
Electric fuel and other energy-related purchases increased 43%, primarily due to higher commodity costs for electric utilities ($418 million) and an increase in the use of purchased renewable energy credits ($54 million), which are offset in operating revenue and do not impact net income.
Other operations and maintenance decreased 16%, primarily due to a decrease in storm damage and restoration costs ($111 million) and a decrease in certain expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($103 million), partially offset by an increase in outside services ($29 million) and an increase in salaries, wages and benefits and administrative costs ($18 million).
Impairment of assets and other charges decreased 89%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities ($39 million), partially offset by a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million).
Other income increased $124 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.
Interest and related charges increased 24%, primarily due to increased commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($72 million) and higher interest rates on commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($22 million), partially offset by decreased interest expense associated with rider deferrals ($19 million).
Income tax expense increased $127 million, primarily due to higher pre-tax income ($101 million) and lower investment tax credits ($31 million).
11
Segment Results of Operations
Segment results include the impact of intersegment revenues and expenses, which may result in intersegment profit and loss. In September 2023, Dominion Energy revised its operating segments subsequent to entering agreements for the East Ohio, PSNC and Questar Gas Transactions as well as completing the sale of its noncontrolling interest in Cove Point. See Notes 1 and 21 to the Consolidated Financial Statements for more information. The historical information presented herein has been recast to reflect the current segment presentation. Presented below is a summary of contributions by Dominion Energy’s operating segments to net income (loss) attributable to Dominion Energy:
|
|
Net Income (Loss) Attributable to |
|
|
EPS(1) |
|
||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
||||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Second Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Dominion Energy Virginia |
|
$ |
392 |
|
|
$ |
442 |
|
|
$ |
(50 |
) |
|
$ |
0.47 |
|
|
$ |
0.54 |
|
|
$ |
(0.07 |
) |
Dominion Energy South Carolina |
|
|
68 |
|
|
|
124 |
|
|
|
(56 |
) |
|
|
0.08 |
|
|
|
0.15 |
|
|
|
(0.07 |
) |
Contracted Energy |
|
|
(44 |
) |
|
|
(27 |
) |
|
|
(17 |
) |
|
|
(0.05 |
) |
|
|
(0.03 |
) |
|
|
(0.02 |
) |
Corporate and Other |
|
|
183 |
|
|
|
(992 |
) |
|
|
1,175 |
|
|
|
0.19 |
|
|
|
(1.24 |
) |
|
|
1.43 |
|
Consolidated |
|
$ |
599 |
|
|
$ |
(453 |
) |
|
$ |
1,052 |
|
|
$ |
0.69 |
|
|
$ |
(0.58 |
) |
|
$ |
1.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Year-To-Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Dominion Energy Virginia |
|
$ |
776 |
|
|
$ |
958 |
|
|
$ |
(182 |
) |
|
$ |
0.93 |
|
|
$ |
1.18 |
|
|
$ |
(0.25 |
) |
Dominion Energy South Carolina |
|
|
159 |
|
|
|
233 |
|
|
|
(74 |
) |
|
|
0.19 |
|
|
|
0.29 |
|
|
|
(0.10 |
) |
Contracted Energy |
|
|
69 |
|
|
|
30 |
|
|
|
39 |
|
|
|
0.08 |
|
|
|
0.04 |
|
|
|
0.04 |
|
Corporate and Other |
|
|
592 |
|
|
|
(963 |
) |
|
|
1,555 |
|
|
|
0.66 |
|
|
|
(1.26 |
) |
|
|
1.92 |
|
Consolidated |
|
$ |
1,596 |
|
|
$ |
258 |
|
|
$ |
1,338 |
|
|
$ |
1.86 |
|
|
$ |
0.25 |
|
|
$ |
1.61 |
|
(1) Consolidated results are presented on a diluted EPS basis. The dilutive impacts, primarily consisting of potential shares which had not yet been issued, are included within the results of the Corporate and Other segment. EPS contributions for Dominion Energy’s operating segments are presented utilizing basic average shares outstanding for the period.
Dominion Energy Virginia
Presented below are selected operating statistics related to Dominion Energy Virginia’s operations:
|
|
Second Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
2022 |
|
|
% Change |
|
||||||
Electricity delivered (million MWh) |
|
|
21.8 |
|
|
|
20.7 |
|
|
|
5 |
% |
|
|
43.5 |
|
|
|
43.0 |
|
|
|
1 |
% |
Electricity supplied (million MWh): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Utility |
|
|
20.7 |
|
|
|
20.8 |
|
|
|
— |
|
|
|
42.5 |
|
|
|
43.1 |
|
|
|
(1 |
) |
Non-Jurisdictional |
|
|
0.6 |
|
|
|
0.5 |
|
|
|
20 |
|
|
|
0.9 |
|
|
|
0.8 |
|
|
|
13 |
|
Degree days (electric distribution and utility service area): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cooling |
|
|
358 |
|
|
|
502 |
|
|
|
(29 |
) |
|
|
361 |
|
|
|
513 |
|
|
|
(30 |
) |
Heating |
|
|
204 |
|
|
|
297 |
|
|
|
(31 |
) |
|
|
1,675 |
|
|
|
2,192 |
|
|
|
(24 |
) |
Average electric distribution customer accounts |
|
|
2,746 |
|
|
|
2,720 |
|
|
|
1 |
|
|
|
2,743 |
|
|
|
2,718 |
|
|
|
1 |
|
12
Presented below, on an after-tax basis, are the key factors impacting Dominion Energy Virginia’s net income contribution:
|
|
Second Quarter |
|
|
Year-To-Date |
|
||||||||||
|
|
Amount |
|
|
EPS |
|
|
Amount |
|
|
EPS |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weather |
|
$ |
(42 |
) |
|
$ |
(0.05 |
) |
|
$ |
(109 |
) |
|
$ |
(0.13 |
) |
Customer usage and other factors |
|
|
42 |
|
|
|
0.05 |
|
|
|
75 |
|
|
|
0.09 |
|
Customer-elected rate impacts |
|
|
(57 |
) |
|
|
(0.07 |
) |
|
|
(78 |
) |
|
|
(0.10 |
) |
Rider equity return |
|
|
17 |
|
|
|
0.02 |
|
|
|
49 |
|
|
|
0.06 |
|
Storm damage and restoration costs |
|
|
5 |
|
|
|
0.01 |
|
|
|
13 |
|
|
|
0.02 |
|
Depreciation and amortization |
|
|
(6 |
) |
|
|
(0.01 |
) |
|
|
(12 |
) |
|
|
(0.01 |
) |
Renewable energy investment tax credits |
|
|
4 |
|
|
|
— |
|
|
|
(53 |
) |
|
|
(0.07 |
) |
Interest expense, net |
|
|
(10 |
) |
|
|
(0.01 |
) |
|
|
(23 |
) |
|
|
(0.03 |
) |
Other |
|
|
(3 |
) |
|
|
— |
|
|
|
(44 |
) |
|
|
(0.06 |
) |
Share dilution |
|
|
— |
|
|
|
(0.01 |
) |
|
|
— |
|
|
|
(0.02 |
) |
Change in net income contribution |
|
$ |
(50 |
) |
|
$ |
(0.07 |
) |
|
$ |
(182 |
) |
|
$ |
(0.25 |
) |
Dominion Energy South Carolina
Presented below are selected operating statistics related to Dominion Energy South Carolina’s operations:
|
|
Second Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
2022 |
|
|
% Change |
|
||||||
Electricity delivered (million MWh) |
|
|
5.2 |
|
|
|
5.9 |
|
|
|
(12 |
%) |
|
|
10.2 |
|
|
|
11.1 |
|
|
|
(8 |
%) |
Electricity supplied (million MWh) |
|
|
5.5 |
|
|
|
6.2 |
|
|
|
(11 |
) |
|
|
10.7 |
|
|
|
11.7 |
|
|
|
(9 |
) |
Degree days (electric distribution service areas): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cooling |
|
|
113 |
|
|
|
253 |
|
|
|
(55 |
) |
|
|
114 |
|
|
|
253 |
|
|
|
(55 |
) |
Heating |
|
|
25 |
|
|
|
33 |
|
|
|
(24 |
) |
|
|
484 |
|
|
|
783 |
|
|
|
(38 |
) |
Gas distribution throughput (bcf): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Sales |
|
|
16 |
|
|
|
15 |
|
|
|
7 |
|
|
|
33 |
|
|
|
35 |
|
|
|
(6 |
) |
Average distribution customer accounts (thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Electric |
|
|
789 |
|
|
|
776 |
|
|
|
2 |
|
|
|
786 |
|
|
|
774 |
|
|
|
2 |
|
Gas |
|
|
441 |
|
|
|
425 |
|
|
|
4 |
|
|
|
439 |
|
|
|
424 |
|
|
|
4 |
|
Presented below, on an after-tax basis, are the key factors impacting Dominion Energy South Carolina’s net income contribution:
|
|
Second Quarter |
|
|
Year-To-Date |
|
||||||||||
|
|
Amount |
|
|
EPS |
|
|
Amount |
|
|
EPS |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weather |
|
$ |
(26 |
) |
|
$ |
(0.03 |
) |
|
$ |
(45 |
) |
|
$ |
(0.06 |
) |
Customer usage and other factors |
|
|
3 |
|
|
|
— |
|
|
|
10 |
|
|
|
0.01 |
|
Customer-elected rate impacts |
|
|
(11 |
) |
|
|
(0.01 |
) |
|
|
(18 |
) |
|
|
(0.02 |
) |
Base rate case & Natural Gas Rate Stabilization Act impacts |
|
|
1 |
|
|
|
— |
|
|
|
6 |
|
|
|
0.01 |
|
Capital cost rider |
|
|
(2 |
) |
|
|
— |
|
|
|
(4 |
) |
|
|
— |
|
Gains on sales of property |
|
|
(12 |
) |
|
|
(0.01 |
) |
|
|
(12 |
) |
|
|
(0.01 |
) |
Depreciation and amortization |
|
|
(4 |
) |
|
|
— |
|
|
|
(7 |
) |
|
|
(0.01 |
) |
Interest expense, net |
|
|
(8 |
) |
|
|
(0.01 |
) |
|
|
(14 |
) |
|
|
(0.02 |
) |
Other |
|
|
3 |
|
|
|
(0.01 |
) |
|
|
10 |
|
|
|
0.01 |
|
Share dilution |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.01 |
) |
Change in net income contribution |
|
$ |
(56 |
) |
|
$ |
(0.07 |
) |
|
$ |
(74 |
) |
|
$ |
(0.10 |
) |
13
Contracted Energy
Presented below are selected operating statistics related to Contracted Energy's operations:
|
|
Second Quarter |
|
|
Year-To-Date |
|
|
||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
2022 |
|
|
% Change |
|
|
||||||
Electricity supplied (million MWh) |
|
|
2.4 |
|
|
|
3.4 |
|
|
|
(29 |
%) |
|
|
7.0 |
|
|
|
8.0 |
|
|
|
(13 |
) |
% |
Presented below, on an after-tax basis, are the key factors impacting Contracted Energy's net income contribution:
|
|
Second Quarter |
|
|
Year-To-Date |
|
||||||||||
|
|
Amount |
|
|
EPS |
|
|
Amount |
|
|
EPS |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Margin |
|
$ |
(24 |
) |
|
$ |
(0.03 |
) |
|
$ |
22 |
|
|
$ |
0.03 |
|
Planned outage costs(1) |
|
|
3 |
|
|
|
— |
|
|
|
6 |
|
|
|
0.01 |
|
Unplanned outage costs(1) |
|
|
(3 |
) |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
Depreciation and amortization |
|
|
6 |
|
|
|
0.01 |
|
|
|
11 |
|
|
|
0.01 |
|
Other |
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
|
|
(0.01 |
) |
Share dilution |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Change in net income contribution |
|
$ |
(17 |
) |
|
$ |
(0.02 |
) |
|
$ |
39 |
|
|
$ |
0.04 |
|
Corporate and Other
Presented below are the Corporate and Other segment’s after-tax results:
|
|
Second Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
|
2023 |
|
|
2022 |
|
|
$ Change |
|
||||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Specific items attributable to operating |
|
$ |
66 |
|
|
$ |
(1,306 |
) |
|
$ |
1,372 |
|
|
$ |
370 |
|
|
$ |
(1,658 |
) |
|
$ |
2,028 |
|
Specific items attributable to Corporate and |
|
|
205 |
|
|
|
342 |
|
|
|
(137 |
) |
|
|
365 |
|
|
|
714 |
|
|
|
(349 |
) |
Total specific items |
|
|
271 |
|
|
|
(964 |
) |
|
|
1,235 |
|
|
|
735 |
|
|
|
(944 |
) |
|
|
1,679 |
|
Other corporate and other operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense, net |
|
|
(131 |
) |
|
|
(82 |
) |
|
|
(49 |
) |
|
|
(250 |
) |
|
|
(162 |
) |
|
|
(88 |
) |
Other |
|
|
43 |
|
|
|
54 |
|
|
|
(11 |
) |
|
|
107 |
|
|
|
143 |
|
|
|
(36 |
) |
Total other corporate and other operations |
|
|
(88 |
) |
|
|
(28 |
) |
|
|
(60 |
) |
|
|
(143 |
) |
|
|
(19 |
) |
|
|
(124 |
) |
Total net income (expense) |
|
$ |
183 |
|
|
$ |
(992 |
) |
|
$ |
1,175 |
|
|
$ |
592 |
|
|
$ |
(963 |
) |
|
$ |
1,555 |
|
EPS impact |
|
$ |
0.19 |
|
|
$ |
(1.24 |
) |
|
$ |
1.43 |
|
|
$ |
0.66 |
|
|
$ |
(1.26 |
) |
|
$ |
1.92 |
|
Corporate and Other includes specific items attributable to Dominion Energy’s primary operating segments that are not included in profit measures evaluated by executive management in assessing the segments' performance or in allocating resources. See Note 21 to the Consolidated Financial Statements in this report for discussion of these items in more detail. Corporate and Other also includes items attributable to the Corporate and Other segment. For the three months ended June 30, 2023, this primarily included $168 million net income from discontinued operations, primarily associated with operations included in the East Ohio, PSNC and Questar Gas Transactions and Dominion Energy's noncontrolling interest in Cove Point, and a $36 million after-tax gain for derivative mark-to-market changes. For the six months ended June 30, 2023, this primarily included $449 million net income from discontinued operations, primarily associated with operations included in the East Ohio, PSNC and Questar Gas Transactions and Dominion Energy's noncontrolling interest in Cove Point and a $68 million after-tax charge associated with the impairment of a corporate office building.
For the three months ended June 30, 2022, other than the effects of required interim period provision for income taxes, this primarily included $212 million net income from discontinued operations, primarily associated with operations included in the East Ohio, PSNC and Questar Gas Transactions and Dominion Energy's noncontrolling interest in Cove Point and a $187 million after-tax benefit for derivative mark-to-market changes. For the six months ended June 30, 2022, other than the effects of required interim period provision for income taxes, this primarily included $623 million net income from discontinued operations, primarily associated with operations
14
included in the East Ohio, PSNC and Questar Gas Transactions and Dominion Energy's noncontrolling interest in Cove Point, a $239 million after-tax benefit for derivative mark-to-market changes and a $90 million charge to reflect the recognition of deferred taxes on the outside basis of Hope’s stock upon meeting the classification as held for sale.
Outlook
As of June 30, 2023, there have been no material changes to Dominion Energy’s 2023 outlook as described in Item 7. MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. As discussed in Future Issues and Other Matters, legislation enacted in Virginia in April 2023 is expected to decrease Dominion Energy’s 2023 net income for riders combined into base rates effective July 2023.
Liquidity and Capital Resources
Dominion Energy depends on both cash generated from operations and external sources of liquidity to provide working capital and as a bridge to long-term financings. Dominion Energy’s material cash requirements include capital and investment expenditures, repaying short-term and long-term debt obligations and paying dividends on its common and preferred stock. This section should be read in conjunction with Item 7. MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Analysis of Cash Flows
Presented below are selected amounts related to Dominion Energy’s cash flows:
|
|
2023 |
|
|
2022 |
|
||
(millions) |
|
|
|
|
|
|
||
Cash, restricted cash and equivalents at January 1 |
|
$ |
341 |
|
|
$ |
408 |
|
Cash flows provided by (used in): |
|
|
|
|
|
|
||
Operating activities |
|
|
3,194 |
|
|
|
1,361 |
|
Investing activities |
|
|
(5,014 |
) |
|
|
(5,148 |
) |
Financing activities |
|
|
1,794 |
|
|
|
3,786 |
|
Net increase (decrease) in cash, restricted cash and equivalents |
|
|
(26 |
) |
|
|
(1 |
) |
Cash, restricted cash and equivalents at June 30 |
|
$ |
315 |
|
|
$ |
407 |
|
Operating Cash Flows
Net cash provided by Dominion Energy's operating activities increased $1.8 billion, inclusive of a $280 million decrease from discontinued operations. Net cash provided by continuing operations increased $2.1 billion primarily due to higher deferred fuel and purchased gas cost recoveries ($1.5 billion), lower margin deposits ($602 million), a decrease in refund payments to Virginia electric customers associated with the settlement of the 2021 Triennial Review ($282 million), partially offset by an increase in interest payments driven by higher interest rates and borrowings ($252 million).
Investing Cash Flows
Net cash used in Dominion Energy’s investing activities decreased $134 million, primarily due to the absence of an issuance of a short-term deposit ($2.0 billion) and lower acquisitions of solar development projects ($109 million), substantially offset by an increase in plant construction and other property additions ($1.6 billion), a decrease in proceeds from the sale of assets and equity method investments ($135 million) and the absence of withdrawals from Kewaunee's nuclear decommissioning trust ($80 million).
Financing Cash Flows
Net cash provided by Dominion Energy's financing activities decreased $2.0 billion primarily due to a $2.9 billion decrease due to net repayments of long-term debt in 2023 versus net issuances in 2022, the absence of the settlement of the stock purchase contract component of the 2019 Equity Units in 2022 ($1.6 billion) and a decrease in supplemental credit facility borrowings ($450 million), partially offset by the issuance of 364-day term loan facility borrowings ($2.5 billion) and higher net issuances of short-term debt ($387 million).
Credit Facilities and Short-Term Debt
As discussed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, Dominion Energy generally uses proceeds from short-term borrowings, including commercial paper, to satisfy short-term cash requirements not met through cash from operations. The levels of borrowing may vary significantly during the course of the year, depending on the timing and amount of cash requirements not satisfied by cash from operations. There have been no significant changes to Dominion Energy’s use of credit facilities and/or short-term debt during the six months ended June 30, 2023.
15
Joint Revolving Credit Facility
Dominion Energy maintains a $6.0 billion joint revolving credit facility which provides for a discount in the pricing of certain annual fees and amounts borrowed by Dominion Energy under the facility if Dominion Energy achieves certain annual renewable electric generation and diversity and inclusion objectives. At June 30, 2023, Dominion Energy had $1.8 billion of unused capacity under its joint revolving credit facility. See Note 16 to the Consolidated Financial Statements in this report for the balances of commercial paper and letters of credit outstanding.
Dominion Energy Reliability InvestmentSM Program
Dominion Energy has an effective shelf registration statement with the SEC for the sale of up to $3.0 billion of variable denomination floating rate demand notes, called Dominion Energy Reliability InvestmentSM. The registration limits the principal amount that may be outstanding at any one time to $1.0 billion. The notes are offered on a continuous basis and bear interest at a floating rate per annum determined by the Dominion Energy Reliability Investment Committee, or its designee, on a weekly basis. The notes have no stated maturity date, are non-transferable and may be redeemed in whole or in part by Dominion Energy or at the investor’s option at any time. At June 30, 2023, Dominion Energy’s Consolidated Balance Sheets include $403 million with respect to such notes presented within short-term debt. The proceeds are used for general corporate purposes and to repay debt.
Other Facilities
In addition to the primary sources of short-term liquidity discussed above, from time to time Dominion Energy enters into separate supplementary credit facilities or term loans as discussed in Note 16 to the Consolidated Financial Statements in this report.
In January 2023, Dominion Energy entered into a $2.5 billion 364-day term loan facility which bears interest at a variable rate and will mature in January 2024 with the proceeds to be used to repay existing long-term debt and short-term debt upon maturity and for other general corporate purposes. Concurrently, Dominion Energy borrowed an initial $1.0 billion with the proceeds used to repay long-term debt. In February and March 2023, Dominion Energy borrowed $500 million and $1.0 billion, respectively, with the proceeds used for general corporate purposes and to repay long-term debt.
In July 2023, Dominion Energy entered into two $600 million 364-day term loan facilities which bear interest at a variable rate and will mature in July 2024 with the proceeds to be used to repay existing long-term debt and/or short-term debt upon maturity and for other general corporate purposes. Subsequently in July 2023, Dominion Energy borrowed an initial $750 million in the aggregate under these facilities with the proceeds used to repay short-term debt and for general corporate purposes. Dominion Energy is permitted to make up to three additional borrowings under each agreement through November 2023, at which point any unused capacity will cease to be available to Dominion Energy. The agreements contain certain mandatory early repayment provisions, including that any after-tax proceeds in connection with a sale of Dominion Energy’s noncontrolling interest in Cove Point, following the repayment of DECP Holding’s term loan secured by its noncontrolling interest in Cove Point, be applied to any outstanding borrowings under the facilities.
Long-Term Debt
Sustainability Revolving Credit Agreement
Dominion Energy maintains a $900 million Sustainability Revolving Credit Agreement which matures in 2024 and bears interest at a variable rate. The facility offers a reduced interest rate margin with respect to borrowed amounts allocated to certain environmental sustainability or social investment initiatives. In March 2023, Dominion Energy borrowed $450 million with the proceeds used for general corporate purposes. In April 2023, Dominion Energy repaid $450 million borrowed for general corporate purposes. At June 30, 2023, Dominion Energy had $450 million borrowed to support environmental sustainability and social investment initiatives.
Issuances and Borrowings of Long-Term Debt
During the six months ended June 30, 2023, Dominion Energy issued or borrowed the following long-term debt. Unless otherwise noted, the proceeds were used for the repayment of existing indebtedness and for general corporate purposes.
Month |
|
Type |
|
Public / Private |
|
Entity |
|
Principal |
|
|
Rate |
|
|
|
Stated Maturity |
||
|
|
|
|
|
|
|
|
(millions) |
|
|
|
|
|
|
|
||
March |
|
Senior notes |
|
Public |
|
Virginia Power |
|
$ |
750 |
|
|
|
5.000 |
|
% |
|
2033 |
March |
|
Senior notes |
|
Public |
|
Virginia Power |
|
|
750 |
|
|
|
5.450 |
|
% |
|
2053 |
Total issuances and borrowings |
|
|
|
|
|
$ |
1,500 |
|
|
|
|
|
|
|
|||
16
Dominion Energy currently meets the definition of a well-known seasoned issuer under SEC rules governing the registration, communication and offering processes under the Securities Act of 1933, as amended. The rules provide for a streamlined shelf registration process to provide registrants with timely access to capital. This allows Dominion Energy to use automatic shelf registration statements to register any offering of securities, other than those for exchange offers or business combination transactions.
As the comprehensive business review announced in November 2022 is still in progress, Dominion Energy is uncertain as to the amount of long-term debt it anticipates issuing in 2023. Dominion Energy expects to issue long-term debt to satisfy cash needs for capital expenditures and maturing long-term debt to the extent such amounts are not satisfied from cash available from operations following the payment of dividends and any borrowings made from unused capacity of Dominion Energy’s credit facilities discussed above. The raising of external capital is subject to certain regulatory requirements, including registration with the SEC for certain issuances.
Repayments, Repurchases and Redemptions of Long-Term Debt
Dominion Energy may from time to time reduce its outstanding debt and level of interest expense through redemption of debt securities prior to maturity or repurchases of debt securities in the open market, in privately negotiated transactions, through tender offers or otherwise.
The following long-term debt was repaid, repurchased or redeemed during the six months ended June 30, 2023:
Month |
|
Type |
|
Entity |
|
Principal (1) |
|
|
Rate |
|
Stated Maturity |
|
|
|
|
|
|
|
(millions) |
|
|
|
|
|
|
Debt scheduled to mature in 2023 |
|
Multiple |
|
$ |
1,787 |
|
|
various |
|
|
||
Early redemptions |
|
|
|
|
|
|
|
|
|
|||
None |
|
|
|
|
|
|
|
|
|
|
|
|
Total repayments, repurchases and redemptions |
|
|
$ |
1,787 |
|
|
|
|
|
|||
See Note 18 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 for additional information regarding scheduled maturities of Dominion Energy’s long-term debt, including related average interest rates.
As discussed in Note 10 to the Consolidated Financial Statements in this report, DECP Holding's term loan secured by its noncontrolling interest in Cove Point is required to be repaid in connection with closing of Dominion Energy's July 2023 agreement with BHE for the sale of its 50% noncontrolling limited partnership interest in Cove Point, which is expected to occur by the end of 2023.
17
Remarketing of Long-Term Debt
In June 2023, Virginia Power remarketed three series of tax-exempt bonds, with an aggregate outstanding principal of $160 million to new investors. All three bonds will bear interest at a coupon of 3.65% until October 2027, after which they will bear interest at a market rate to be determined at that time. Dominion Energy does not expect to remarket any other long-term debt in 2023.
Credit Ratings
As discussed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, Dominion Energy’s credit ratings affect its liquidity, cost of borrowing under credit facilities and collateral posting requirements under commodity contracts, as well as the rates at which it is able to offer debt securities. The credit ratings for Dominion Energy are affected by its financial profile, mix of regulated and nonregulated businesses and respective cash flows, changes in methodologies used by the ratings agencies and event risk, if applicable, such as major acquisitions or dispositions. A credit rating is not a recommendation to buy, sell or hold securities and should be evaluated independently of any other rating. In April 2023, Standard & Poor’s affirmed its credit ratings but revised its outlook for Dominion Energy from stable to negative. Dominion Energy cannot predict the potential impact the negative outlook at Standard & Poor’s could have on its liquidity, cost of borrowing under credit facilities and collateral posting requirements under commodity contracts, as well as the rates at which it is able to offer debt securities. There have been no other changes in Dominion Energy’s credit ratings from those described in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Financial Covenants
As discussed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, Dominion Energy is subject to various covenants present in the enabling agreements underlying Dominion Energy’s debt. As of June 30, 2023, there have been no material changes to covenants, nor any events of default under Dominion Energy’s covenants.
Common Stock, Preferred Stock and Other Equity Securities
In the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, there is a discussion of Dominion Energy’s existing equity financing programs, including an at-the-market program and Dominion Energy Direct®. During the six months ended June 30, 2023, Dominion Energy issued $85 million of stock through these programs. Dominion Energy's at-the-market program expired in June 2023. See Note 16 to the Consolidated Financial Statements in this report for additional information.
As the comprehensive business review announced in November 2022 is still in progress, Dominion Energy is uncertain as to the amount of common stock that it anticipates issuing in 2023. However, Dominion Energy anticipates raising similar amounts of capital through Dominion Energy Direct® in 2023 compared to 2022 and 2021. The raising of external capital is subject to certain regulatory requirements, including registration with the SEC for certain issuances.
As of June 30, 2023, there have been no material changes to the Board of Directors authorization to repurchase Dominion Energy stock, or the remaining available capacity under this authorization, disclosed in the Repurchases of Equity Securities section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. Dominion Energy has not repurchased through June 30 and does not plan to repurchase in the remainder of 2023 any shares of its common stock, except for shares tendered by employees to satisfy tax withholding obligations on vested restricted stock.
Capital Expenditures
As of June 30, 2023, there have been no material changes to Dominion Energy’s expectation for planned capital expenditures as disclosed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dividends
Dominion Energy believes that its operations provide a stable source of cash flow to contribute to planned levels of capital expenditures and maintain or grow the dividend on common shares. See Note 16 to the Consolidated Financial Statements in this report for additional information regarding Dominion Energy’s outstanding preferred stock and associated dividend rates.
18
Subsidiary Dividend Restrictions
As of June 30, 2023, there have been no material changes to the subsidiary dividend restrictions disclosed in the Dividends section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Collateral and Credit Risk
As of June 30, 2023, there have been no material changes to the collateral requirements disclosed in the Collateral and Credit Risk section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dominion Energy’s exposure to potential concentrations of credit risk results primarily from its energy marketing and price risk management activities. Presented below is a summary of Dominion Energy’s credit exposure at June 30, 2023 for these activities. Gross credit exposure for each counterparty is calculated as outstanding receivables plus any unrealized on- or off-balance sheet exposure, taking into account contractual netting rights.
|
|
Gross Credit |
|
|
Credit |
|
|
Net Credit |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Investment grade(1) |
|
$ |
166 |
|
|
$ |
— |
|
|
$ |
166 |
|
Non-investment grade(2) |
|
|
2 |
|
|
|
— |
|
|
|
2 |
|
No external ratings: |
|
|
|
|
|
|
|
|
|
|||
Internally rated—investment grade(3) |
|
|
15 |
|
|
|
2 |
|
|
|
13 |
|
Internally rated—non-investment grade(4) |
|
|
28 |
|
|
|
1 |
|
|
|
27 |
|
Total(5) |
|
$ |
211 |
|
|
$ |
3 |
|
|
$ |
208 |
|
Fuel and Other Purchase Commitments
There have been no material changes outside of the ordinary course of business to Dominion Energy’s fuel and other purchase commitments included in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Other Material Cash Requirements
As of June 30, 2023, there have been no material changes outside of the ordinary course of business to Dominion Energy’s other material cash requirements included in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. Such obligations include:
19
Future Issues and Other Matters
See Item 1. Business, Future Issues and Other Matters in MD&A and Notes 13 and 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 and Notes 13 and 17 to the Consolidated Financial Statements in this report for additional information on various environmental, regulatory, legal and other matters that may impact future results of operations, financial condition and/or cash flows.
Business Review
In November 2022, Dominion Energy announced the commencement of a business review of value-maximizing strategic business actions, alternatives to its current business mix and capital allocation and regulatory options which may assist customers to manage costs and provide greater predictability to its long-term, state-regulated utility value proposition. In April 2023, the legislative process in Virginia was substantially completed resulting in new legislation which will shift $350 million of annual revenue requirement for costs currently recovered through riders into base rates effective July 2023, eliminate the ability of Virginia Power to utilize CCROs and adjust the parameters for determining an authorized ROE and revenue sharing. In addition, new legislation allows Virginia Power to apply for the securitization of certain deferred fuel costs as well as seek approval for a noncontrolling equity financing partner for the CVOW Commercial Project. In July 2023, Dominion Energy entered an agreement to sell its 50% noncontrolling limited partner interest in Cove Point to BHE as discussed in Note 10 to the Consolidated Financial Statements in this report. As part of the on-going business review, Dominion Energy may consider additional divestiture of all or a portion of certain operations. While the ultimate impacts cannot be estimated until the review is completed, which is expected to occur in the third quarter of 2023, implementation of recommendations resulting from the business review could have a material impact on Dominion Energy's future results of operations, financial condition and/or cash flows.
Virginia Legislation
The 2023 General Assembly session in Virginia included several proposals, including those ultimately enacted into law, related to Virginia Power’s retail base rates and other cost recovery mechanisms. In April 2023, legislation was enacted that amended several key provisions of the Regulation Act, as previously amended by the GTSA. The new legislation will shift $350 million of annual revenue requirement for costs currently recovered under riders into base rates effective July 2023, eliminate the ability of Virginia Power to utilize CCROs and adjust the parameters for determining an authorized ROE and revenue sharing. In addition, this legislation reestablishes biennial base rate reviews, sets a target capitalization ratio and permits Virginia Power to apply for the securitization of certain deferred fuel costs. See Note 13 to the Consolidated Financial Statements for additional information. In March 2023, legislation was enacted that permits Virginia Power to seek approval for a noncontrolling equity financing partner for the CVOW Commercial Project. In addition, in May 2023 legislation was enacted that amended certain portions of the VCEA, which qualifies generation produced by Virginia Power’s biomass electric generating stations as renewable energy and eliminates the mandated retirement by the end of 2028 of such facilities. While Dominion Energy is unable to estimate the ultimate financial statement impacts related to the newly enacted legislation, it expects there could be a material impact to its results of operations, financial condition and/or cash flows.
Future Environmental Regulations
In March 2023, the EPA released a proposed rule to further revise the Effluent Limitations Guidelines for the Steam Electric Power Generating Category, which apply primarily to wastewater discharges at coal and oil steam generating stations. Also in March 2023, the EPA released its first proposed rule to establish national drinking water standards for PFAS. Dominion Energy anticipates that the EPA will release additional rulemakings as part of an overall strategy to identify and mitigate PFAS exposure. In April 2023, the EPA released a proposal to tighten aspects of the Mercury and Air Toxics Standards, including the reduction of emissions limits for filterable particulate matter, and requiring the use of continuous emissions monitoring systems to demonstrate compliance. In May 2023, the EPA proposed a package of rules designed to reduce CO2 emissions from certain fossil fuel-fired electric generating units. The proposal sets standards of performance and emission guidelines for CO2 emissions from new gas-fired combustion turbines and modified coal-fired steam generating units. The proposed rulemaking package also proposes emission guidelines, including presumptive emission limits, for existing coal, oil and gas-fired steam generating units and certain gas-fired combustion turbines. Also in May 2023, the EPA released a proposed rule to regulate inactive surface impoundments located at retired generating stations that contained CCR and liquids after October 2015, and certain other inactive or previously closed surface impoundments, landfills or other areas that contain accumulations of CCR. Until the EPA ultimately takes final action on these rulemakings, Dominion Energy is unable to predict whether or to what extent the new rules will ultimately require additional controls. The expenditures required to implement additional controls could have a material impact on Dominion Energy’s financial condition and cash flows.
Federal Income Tax Laws
In April 2023, the IRS issued safe harbor guidance to taxpayers on the treatment of amounts paid to repair, maintain, replace, or improve natural gas distribution property, including whether expenditures should be deducted as repairs or capitalized and depreciated
20
on tax returns. The guidance includes safe harbor tax accounting methods which a taxpayer may choose to elect and provides special transition rules and incentives that vary depending on which tax year is the year of change. Dominion Energy is evaluating this new guidance and cannot currently estimate the potential financial statement impacts, but there could be a material impact to its results of operations, financial condition and/or cash flows.
Offshore Wind Vessel Leasing Arrangement
In December 2020, Dominion Energy signed an agreement (subsequently amended in December 2022 and May 2023) with a lessor to complete construction of and lease a Jones Act compliant offshore wind installation vessel. This vessel is designed to handle current turbine technologies as well as next generation turbines. The lessor is providing equity and has obtained financing commitments from debt investors, totaling $625 million, to fund the estimated project costs. The project is expected to be completed in late 2024 or early 2025. The initial lease term will commence once construction is substantially complete and the vessel is delivered and will mature in November 2027. See Note 14 to the Consolidated Financial Statements in this report for additional information.
Southeast Energy Exchange Market
In July 2023, the U.S. Court of Appeals for the District of Columbia Circuit vacated certain of FERC’s previous orders authorizing the SEEM market, including the tariff amendments to provide transmission service for transactions in SEEM. Dominion Energy is evaluating this ruling and currently cannot estimate the potential financial statement impacts.
21