Exhibit 99.1
GLOSSARY OF TERMS
The following abbreviations or acronyms used in this Form 10-Q are defined below:
Abbreviation or Acronym |
| Definition |
2017 Tax Reform Act |
| An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (previously known as The Tax Cuts and Jobs Act) enacted on December 22, 2017 |
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 |
2023 Biennial Review |
| Virginia Commission review of Virginia Power’s earned return on base rate generation and distribution services for the two successive 12-month test periods beginning January 1, 2021 and ending December 31, 2022 and prospective rate base setting for the succeeding annual periods beginning January 1, 2024 and ending December 31, 2025 |
2025 Biennial Review |
| Future Virginia Commission review of Virginia Power’s earned return on base rate generation and distribution services for the two successive 12-month test periods beginning January 1, 2023 and ending December 31, 2024 and prospective rate base setting for the succeeding annual periods beginning January 1, 2026 and ending December 31, 2027 |
ACE Rule |
| Affordable Clean Energy Rule |
AFUDC |
| Allowance for funds used during construction |
AMI |
| Advanced Metering Infrastructure |
AOCI |
| Accumulated other comprehensive income (loss) |
ARO |
| Asset retirement obligation |
Atlantic Coast Pipeline |
| Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy and Duke Energy |
Atlantic Coast Pipeline Project |
| A previously proposed approximately 600-mile natural gas pipeline running from West Virginia through Virginia to North Carolina which would have been owned by Dominion Energy and Duke Energy |
bcf |
| Billion cubic feet |
Bear Garden |
| A 622 MW combined-cycle, natural gas-fired power station in Buckingham County, Virginia |
BHE |
| The legal entity, Berkshire Hathaway Energy Company, one or more of its consolidated subsidiaries (including 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 |
| Clean Air Act |
CCR |
| Coal combustion residual |
CCRO |
| Customer credit reinvestment offset |
CEP |
| Capital Expenditure Program, as established by House Bill 95, Ohio legislation enacted in 2011, deployed by East Ohio to recover certain costs associated with capital investment |
CERCLA |
| Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as Superfund |
CFIUS |
| The Committee on Foreign Investment in the U.S. |
CO2 |
| Carbon dioxide |
Colonial Trail West |
| A 142 MW utility-scale solar power station located in Surry County, Virginia |
Companies |
| Dominion Energy and Virginia Power, collectively |
Contracted Energy |
| Contracted Energy operating segment, formerly known as the Contracted Assets operating segment |
Cove Point |
| Cove Point LNG, LP (formerly known as Dominion Energy Cove Point LNG, LP) |
CPCN |
| Certificate of Public Convenience and Necessity |
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 |
CWA |
| Clean Water Act |
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.) |
DES |
| Dominion Energy Services, Inc. |
DESC |
| The legal entity, Dominion Energy South Carolina, Inc., one or more of its consolidated entities or operating segment, or the entirety of Dominion Energy South Carolina, Inc. and its consolidated entities |
DGI |
| Dominion Generation, Inc. |
DOE |
| U.S. Department of Energy |
Dominion Energy |
| The legal entity, Dominion Energy, Inc., one or more of its consolidated subsidiaries (other than Virginia Power) or operating segments, or the entirety of Dominion Energy, Inc. and its consolidated subsidiaries |
Dominion Energy 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 |
DSM |
| Demand-side management |
Dth |
| Dekatherm |
Duke Energy |
| The legal entity, Duke Energy Corporation, one or more of its consolidated subsidiaries, or the entirety of Duke Energy Corporation and its consolidated subsidiaries |
East Ohio |
| The East Ohio Gas Company, doing business as Dominion Energy Ohio |
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 |
EnergySolutions |
| EnergySolutions, LLC |
EPA |
| U.S. Environmental Protection Agency |
EPS |
| Earnings per common share |
2
FCC |
| Federal Communications Commission |
FERC |
| Federal Energy Regulatory Commission |
GAAP |
| U.S. generally accepted accounting principles |
Gas Distribution |
| Gas Distribution operating segment |
GENCO |
| South Carolina Generating Company, Inc. |
GHG |
| Greenhouse gas |
Greensville County |
| A 1,629 MW combined-cycle, natural gas-fired power station in Greensville County, Virginia |
GTSA |
| Virginia Grid Transformation and Security Act of 2018 |
GW |
| Gigawatt |
Hope |
| Hope Gas, Inc., doing business as Dominion Energy West Virginia through August 2022 |
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 |
kV |
| Kilovolt |
LNG |
| Liquefied natural gas |
MGD |
| Million gallons per day |
MW |
| Megawatt |
MWh |
| Megawatt hour |
NAV |
| Net asset value |
NND Project |
| V.C. Summer Units 2 and 3 nuclear development project under which DESC and Santee Cooper undertook to construct two Westinghouse AP1000 Advanced Passive Safety nuclear units in Jenkinsville, South Carolina |
North Anna |
| North Anna nuclear power station |
North Carolina Commission |
| North Carolina Utilities Commission |
NOX |
| Nitrogen oxide |
NRC |
| U.S. Nuclear Regulatory Commission |
Ohio Commission |
| Public Utilities Commission of Ohio |
ozone season |
| The period May 1st through September 30th, as determined on a federal level |
Patriot |
| Patriot Utility Privatizations, LLC, a joint venture between Foundation Infrastructure Partners, LLC and John Hancock Life Insurance Company (U.S.A.) and affiliates |
PIPP |
| Percentage of Income Payment Plan deployed by East Ohio |
PIR |
| Pipeline Infrastructure Replacement program deployed by East Ohio |
PSD |
| Prevention of significant deterioration |
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)) |
3
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 |
Rider CCR |
| A rate adjustment clause associated with the recovery of costs related to the removal of CCR at certain power stations |
Rider CE |
| A rate adjustment clause associated with the recovery of costs related to certain renewable generation, energy storage and related transmission facilities in Virginia as well as certain small-scale distributed generation projects and related transmission facilities |
Rider D |
| A rate mechanism which allows PSNC to recover from customers all prudently incurred gas costs and the related portion of uncollectible expenses as well as losses on negotiated gas and transportation sales |
Rider GT |
| A rate adjustment clause associated with the recovery of costs associated with electric distribution grid transformation projects that the Virginia Commission has approved as authorized by the GTSA |
Rider GV |
| A rate adjustment clause associated with the recovery of costs related to Greensville County |
Rider OSW |
| A rate adjustment clause associated with costs incurred to construct, own and operate the CVOW Commercial Project |
Rider PPA |
| A rate adjustment clause associated with the recovery of costs associated with power purchase agreements for the energy, capacity, ancillary services and renewable energy credits owned by third parties |
Rider R |
| A rate adjustment clause associated with the recovery of costs related to Bear Garden |
Rider RGGI |
| A rate adjustment clause associated with the recovery of costs related to the purchase of allowances through the RGGI market-based trading program for CO2 |
Rider RPS |
| A rate adjustment clause associated with the recovery of costs related to the mandatory renewable portfolio standard program established by the VCEA |
Rider S |
| A rate adjustment clause associated with the recovery of costs related to the Virginia City Hybrid Energy Center |
Rider SNA |
| A rate adjustment clause associated with costs relating to the preparation of the applications for subsequent license renewal to the NRC to extend the operating licenses of Surry and North Anna and related projects |
Rider T1 |
| A rate adjustment clause to recover the difference between revenues produced from transmission rates included in base rates, and the new total revenue requirement developed annually for the rate years effective September 1 |
Rider U |
| A rate adjustment clause associated with the recovery of costs of new underground distribution facilities |
Rider US-3 |
| A rate adjustment clause associated with the recovery of costs related to Colonial Trail West and Spring Grove 1 |
Rider US-4 |
| A rate adjustment clause associated with the recovery of costs related to Sadler Solar |
Rider W |
| A rate adjustment clause associated with the recovery of costs related to Warren County |
ROE |
| Return on equity |
Sadler Solar |
| A 100 MW utility-scale solar power station located in Greensville County, Virginia |
4
Santee Cooper |
| South Carolina Public Service Authority |
SCANA |
| The legal entity, SCANA Corporation, one or more of its consolidated subsidiaries, or the entirety of SCANA Corporation and its consolidated subsidiaries |
SCANA Combination |
| Dominion Energy’s acquisition of SCANA completed on January 1, 2019 pursuant to the terms of the agreement and plan of merger entered on January 2, 2018 between Dominion Energy and SCANA |
SCANA Merger Approval Order |
| Final order issued by the South Carolina Commission on December 21, 2018 setting forth its approval of the SCANA Combination |
SCDOR |
| South Carolina Department of Revenue |
SEC |
| U.S. Securities and Exchange Commission |
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) |
Series B Preferred Stock |
| Dominion Energy’s 4.65% Series B Fixed-Rate Cumulative Redeemable Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000 per share |
Series C Preferred Stock |
| Dominion Energy’s 4.35% Series C Fixed-Rate Cumulative Redeemable Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000 per share |
South Carolina Commission |
| Public Service Commission of South Carolina |
Southwest Gas |
| The legal entity, 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 |
| A 98 MW utility-scale solar power station located in Surry County, Virginia |
Summer |
| V.C. Summer nuclear power station |
Surry |
| Surry nuclear power station |
UEX |
| Uncollectible Expense Rider deployed by East Ohio |
Utah Commission |
| Utah Public Service Commission |
VCEA |
| Virginia Clean Economy Act of March 2020 |
VEBA |
| Voluntary Employees’ Beneficiary Association |
VIE |
| Variable interest entity |
Virginia City Hybrid Energy Center |
| A 610 MW baseload carbon-capture compatible, clean coal powered electric generation facility in Wise County, Virginia |
Virginia Commission |
| Virginia State Corporation Commission |
Virginia Power |
| The legal entity, Virginia Electric and Power Company, one or more of its consolidated subsidiaries or operating segment, or the entirety of Virginia Electric and Power Company and its consolidated subsidiaries |
Warren County |
| A 1,349 MW combined-cycle, natural gas-fired power station in Warren County, Virginia |
Wexpro |
| The legal entity, Wexpro Company, one or more of its consolidated subsidiaries, or the entirety of Wexpro Company and its consolidated subsidiaries |
Wisconsin Commission |
| Public Service Commission of Wisconsin |
WP&L |
| Wisconsin Power and Light Company, a subsidiary of Alliant Energy Corporation |
WPSC |
| Wisconsin Public Service Corporation, a subsidiary of WEC Energy Group |
Wrangler |
| Wrangler Retail Gas Holdings, LLC, a partnership between Dominion Energy (through March 2022) and Interstate Gas Supply, Inc. |
5
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
(millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Operating Revenue |
| $ | 3,166 |
|
| $ | 3,059 |
|
| $ | 7,049 |
|
| $ | 6,172 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Electric fuel and other energy-related purchases |
|
| 939 |
|
|
| 730 |
|
|
| 1,961 |
|
|
| 1,408 |
|
Purchased electric capacity |
|
| 15 |
|
|
| 16 |
|
|
| 23 |
|
|
| 29 |
|
Purchased gas |
|
| 49 |
|
|
| 95 |
|
|
| 172 |
|
|
| 240 |
|
Other operations and maintenance |
|
| 775 |
|
|
| 850 |
|
|
| 1,517 |
|
|
| 1,740 |
|
Depreciation, depletion and amortization |
|
| 603 |
|
|
| 600 |
|
|
| 1,221 |
|
|
| 1,202 |
|
Other taxes |
|
| 164 |
|
|
| 177 |
|
|
| 355 |
|
|
| 359 |
|
Impairment of assets and other charges |
|
| 44 |
|
|
| 416 |
|
|
| 142 |
|
|
| 405 |
|
Losses (gains) on sales of assets |
|
| (21 | ) |
|
| 636 |
|
|
| (23 | ) |
|
| 608 |
|
Total operating expenses |
|
| 2,568 |
|
|
| 3,520 |
|
|
| 5,368 |
|
|
| 5,991 |
|
Income (loss) from operations |
|
| 598 |
|
|
| (461 | ) |
|
| 1,681 |
|
|
| 181 |
|
Other income (expense) |
|
| 314 |
|
|
| (285 | ) |
|
| 590 |
|
|
| (242 | ) |
Interest and related charges |
|
| 395 |
|
|
| 71 |
|
|
| 874 |
|
|
| 313 |
|
Income (loss) from continuing operations including noncontrolling |
|
| 517 |
|
|
| (817 | ) |
|
| 1,397 |
|
|
| (374 | ) |
Income tax expense (benefit) |
|
| 86 |
|
|
| (152 | ) |
|
| 250 |
|
|
| (9 | ) |
Net Income (Loss) From Continuing Operations |
|
| 431 |
|
|
| (665 | ) |
|
| 1,147 |
|
|
| (365 | ) |
Net Income (Loss) From Discontinued Operations(1) |
|
| 168 |
|
|
| 212 |
|
|
| 449 |
|
|
| 623 |
|
Net Income (Loss) Including Noncontrolling Interests |
|
| 599 |
|
|
| (453 | ) |
|
| 1,596 |
|
|
| 258 |
|
Noncontrolling Interests |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Net Income (Loss) Attributable to Dominion Energy |
| $ | 599 |
|
| $ | (453 | ) |
| $ | 1,596 |
|
| $ | 258 |
|
Amounts attributable to Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) from continuing operations |
| $ | 431 |
|
| $ | (665 | ) |
| $ | 1,147 |
|
| $ | (365 | ) |
Net income (loss) from discontinued operations |
|
| 168 |
|
|
| 212 |
|
|
| 449 |
|
|
| 623 |
|
Net income (loss) attributable to Dominion Energy |
| $ | 599 |
|
| $ | (453 | ) |
| $ | 1,596 |
|
| $ | 258 |
|
EPS - Basic |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) from continuing operations |
| $ | 0.49 |
|
| $ | (0.84 | ) |
| $ | 1.32 |
|
| $ | (0.51 | ) |
Net income (loss) from discontinued operations |
|
| 0.20 |
|
|
| 0.26 |
|
|
| 0.54 |
|
|
| 0.76 |
|
Net income (loss) attributable to Dominion Energy |
| $ | 0.69 |
|
| $ | (0.58 | ) |
| $ | 1.86 |
|
| $ | 0.25 |
|
EPS - Diluted |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net income (loss) from continuing operations |
| $ | 0.49 |
|
| $ | (0.84 | ) |
| $ | 1.32 |
|
| $ | (0.51 | ) |
Net income (loss) from discontinued operations |
|
| 0.20 |
|
|
| 0.26 |
|
|
| 0.54 |
|
|
| 0.76 |
|
Net income (loss) attributable to Dominion Energy |
| $ | 0.69 |
|
| $ | (0.58 | ) |
| $ | 1.86 |
|
| $ | 0.25 |
|
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 |
| $ | 599 |
|
| $ | (453 | ) |
| $ | 1,596 |
|
| $ | 258 |
|
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net deferred gains (losses) on derivatives-hedging |
|
| 6 |
|
|
| 29 |
|
|
| (3 | ) |
|
| 54 |
|
Changes in unrealized net gains (losses) on investment |
|
| (1 | ) |
|
| (27 | ) |
|
| 16 |
|
|
| (89 | ) |
Changes in net unrecognized pension and other |
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 30 |
|
Amounts reclassified to net income (loss): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net derivative (gains) losses-hedging activities(4) |
|
| 8 |
|
|
| 11 |
|
|
| 16 |
|
|
| 21 |
|
Net realized (gains) losses on investment securities(5) |
|
| (2 | ) |
|
| 9 |
|
|
| (1 | ) |
|
| 12 |
|
Net pension and other postretirement benefit costs |
|
| (12 | ) |
|
| 16 |
|
|
| (23 | ) |
|
| 33 |
|
Changes in other comprehensive income from equity |
|
| — |
|
|
| — |
|
|
| 1 |
|
|
| 1 |
|
Total other comprehensive income (loss) |
|
| (1 | ) |
|
| 40 |
|
|
| 6 |
|
|
| 62 |
|
Comprehensive income (loss) including noncontrolling interests |
|
| 598 |
|
|
| (413 | ) |
|
| 1,602 |
|
|
| 320 |
|
Comprehensive income attributable to noncontrolling |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Comprehensive income (loss) attributable to Dominion Energy |
| $ | 598 |
|
| $ | (413 | ) |
| $ | 1,602 |
|
| $ | 320 |
|
(1) Net of $(2) million and $(10) million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $1 million and $(18) million tax for the six months ended June 30, 2023 and 2022, respectively.
(2) Net of $3 million and $9 million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $(4) million and $28 million tax for the six months ended June 30, 2023 and 2022, respectively.
(3) Net of $— million and $2 million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $— million and $(8) million tax for the six months ended June 30, 2023 and 2022, respectively.
(4) Net of $(2) million and $(3) million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $(5) million and $(7) million tax for the six months ended June 30, 2023 and 2022, respectively.
(5) Net of $1 million and $(3) million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $— million and $(4) million tax for the six months ended June 30, 2023 and 2022, respectively.
(6) Net of $4 million and $(6) million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $8 million and $(12) million tax for the six months ended June 30, 2023 and 2022, respectively.
(7) Net of $— million and $— million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $— million and $— million tax for the six months ended June 30, 2023 and 2022, respectively.
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
7
DOMINION ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
| June 30, 2023 |
|
| December 31, 2022(1) |
| ||
(millions) |
|
|
|
|
|
| ||
ASSETS |
|
|
|
|
|
| ||
Current Assets |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 108 |
|
| $ | 120 |
|
Customer receivables (less allowance for doubtful accounts of $30 and $27) |
|
| 2,093 |
|
|
| 2,157 |
|
Other receivables (less allowance for doubtful accounts of $1 and $2) |
|
| 380 |
|
|
| 383 |
|
Inventories |
|
| 1,627 |
|
|
| 1,528 |
|
Derivative assets |
|
| 258 |
|
|
| 1,019 |
|
Margin deposit assets |
|
| 169 |
|
|
| 480 |
|
Regulatory assets |
|
| 1,294 |
|
|
| 1,883 |
|
Other |
|
| 570 |
|
|
| 504 |
|
Current assets held for sale |
|
| 1,478 |
|
|
| 1,776 |
|
Total current assets |
|
| 7,977 |
|
|
| 9,850 |
|
Investments |
|
|
|
|
|
| ||
Nuclear decommissioning trust funds |
|
| 6,553 |
|
|
| 5,957 |
|
Investment in equity method affiliates |
|
| 300 |
|
|
| 295 |
|
Other |
|
| 323 |
|
|
| 325 |
|
Total investments |
|
| 7,176 |
|
|
| 6,577 |
|
Property, Plant and Equipment |
|
|
|
|
|
| ||
Property, plant and equipment |
|
| 78,669 |
|
|
| 75,178 |
|
Accumulated depreciation, depletion and amortization |
|
| (24,053 | ) |
|
| (23,352 | ) |
Total property, plant and equipment, net |
|
| 54,616 |
|
|
| 51,826 |
|
Deferred Charges and Other Assets |
|
|
|
|
|
| ||
Goodwill |
|
| 4,143 |
|
|
| 4,143 |
|
Regulatory assets |
|
| 8,065 |
|
|
| 8,265 |
|
Other |
|
| 5,047 |
|
|
| 4,780 |
|
Total deferred charges and other assets |
|
| 17,255 |
|
|
| 17,188 |
|
Noncurrent Assets Held for Sale |
|
| 19,040 |
|
|
| 18,802 |
|
Total assets |
| $ | 106,064 |
|
| $ | 104,243 |
|
(1) Dominion Energy’s Consolidated Balance Sheet at December 31, 2022 has been derived from the audited Consolidated Balance Sheet at that date and recast for certain events as discussed in Note 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 |
| $ | 4,346 |
|
| $ | 3,337 |
|
Supplemental credit facility borrowings |
|
| 450 |
|
|
| — |
|
Short-term debt |
|
| 4,575 |
|
|
| 3,423 |
|
Accounts payable |
|
| 826 |
|
|
| 1,165 |
|
Accrued interest, payroll and taxes |
|
| 780 |
|
|
| 910 |
|
Derivative liabilities |
|
| 319 |
|
|
| 772 |
|
Regulatory liabilities |
|
| 437 |
|
|
| 748 |
|
Other(2) |
|
| 1,542 |
|
|
| 1,697 |
|
Current liabilities held for sale |
|
| 711 |
|
|
| 1,398 |
|
Total current liabilities |
|
| 13,986 |
|
|
| 13,450 |
|
Long-Term Debt |
|
|
|
|
|
| ||
Long-term debt |
|
| 33,278 |
|
|
| 32,515 |
|
Junior subordinated notes |
|
| 1,387 |
|
|
| 1,387 |
|
Supplemental credit facility borrowings |
|
| — |
|
|
| 450 |
|
Other |
|
| 229 |
|
|
| 232 |
|
Total long-term debt |
|
| 34,894 |
|
|
| 34,584 |
|
Deferred Credits and Other Liabilities |
|
|
|
|
|
| ||
Deferred income taxes and investment tax credits |
|
| 5,710 |
|
|
| 5,397 |
|
Regulatory liabilities |
|
| 8,576 |
|
|
| 8,417 |
|
Other |
|
| 6,924 |
|
|
| 6,963 |
|
Total deferred credits and other liabilities |
|
| 21,210 |
|
|
| 20,777 |
|
Noncurrent Liabilities Held for Sale |
|
| 7,546 |
|
|
| 7,551 |
|
Total liabilities |
|
| 77,636 |
|
|
| 76,362 |
|
Commitments and Contingencies (see Note 17) |
|
|
|
|
|
| ||
Shareholders' Equity |
|
|
|
|
|
| ||
Preferred stock (see Note 16) |
|
| 1,783 |
|
|
| 1,783 |
|
Common stock – no par(3) |
|
| 23,704 |
|
|
| 23,605 |
|
Retained earnings |
|
| 4,507 |
|
|
| 4,065 |
|
Accumulated other comprehensive loss |
|
| (1,566 | ) |
|
| (1,572 | ) |
Shareholders' equity |
|
| 28,428 |
|
|
| 27,881 |
|
Noncontrolling interests |
|
| — |
|
|
| — |
|
Total shareholders' equity |
|
| 28,428 |
|
|
| 27,881 |
|
Total liabilities and shareholders' equity |
| $ | 106,064 |
|
| $ | 104,243 |
|
(1) Dominion Energy’s Consolidated Balance Sheet at December 31, 2022 has been derived from the audited Consolidated Balance Sheet at that date and recast for certain events as discussed in Note 1.
(2) See Note 10 for amounts attributable to related parties.
(3) 1.8 billion shares authorized; 837 million and 835 million shares outstanding at June 30, 2023 and December 31, 2022, respectively.
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
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 |
| 2 |
| $ | 1,783 |
|
| 811 |
| $ | 21,657 |
| $ | 5,516 |
| $ | (1,436 | ) | $ | 27,520 |
| $ | — |
| $ | 27,520 |
|
Net loss including noncontrolling |
|
|
|
|
|
|
|
|
| (453 | ) |
|
|
| (453 | ) |
| — |
|
| (453 | ) | |||||
Issuance of stock |
|
|
|
|
| 21 |
|
| 1,758 |
|
|
|
|
|
| 1,758 |
|
|
|
| 1,758 |
| |||||
Stock awards (net of change in |
|
|
|
|
|
|
| 12 |
|
|
|
|
|
| 12 |
|
|
|
| 12 |
| ||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
| (25 | ) |
|
|
| (25 | ) |
|
|
| (25 | ) | ||||||
Common stock dividends ($0.6675 |
|
|
|
|
|
|
|
|
| (555 | ) |
|
|
| (555 | ) |
| — |
|
| (555 | ) | |||||
Other comprehensive income, net of |
|
|
|
|
|
|
|
|
|
|
| 40 |
|
| 40 |
|
|
|
| 40 |
| ||||||
June 30, 2022 |
| 2 |
| $ | 1,783 |
|
| 832 |
| $ | 23,427 |
| $ | 4,483 |
| $ | (1,396 | ) | $ | 28,297 |
| $ | — |
| $ | 28,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
March 31, 2023 |
| 2 |
| $ | 1,783 |
|
| 836 |
| $ | 23,652 |
| $ | 4,486 |
| $ | (1,565 | ) | $ | 28,356 |
| $ | — |
| $ | 28,356 |
|
Net income including noncontrolling |
|
|
|
|
|
|
|
|
| 599 |
|
|
|
| 599 |
|
| — |
|
| 599 |
| |||||
Issuance of stock |
|
|
|
|
| 1 |
|
| 42 |
|
|
|
|
|
| 42 |
|
|
|
| 42 |
| |||||
Stock awards (net of change in |
|
|
|
|
|
|
| 10 |
|
|
|
|
|
| 10 |
|
|
|
| 10 |
| ||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
| (20 | ) |
|
|
| (20 | ) |
|
|
| (20 | ) | ||||||
Common stock dividends ($0.6675 |
|
|
|
|
|
|
|
|
| (558 | ) |
|
|
| (558 | ) |
| — |
|
| (558 | ) | |||||
Other comprehensive loss, net of |
|
|
|
|
|
|
|
|
|
|
| (1 | ) |
| (1 | ) |
|
|
| (1 | ) | ||||||
June 30, 2023 |
| 2 |
| $ | 1,783 |
|
| 837 |
| $ | 23,704 |
| $ | 4,507 |
| $ | (1,566 | ) | $ | 28,428 |
| $ | — |
| $ | 28,428 |
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
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 |
| 2 |
| $ | 1,783 |
|
| 810 |
| $ | 21,610 |
| $ | 5,373 |
| $ | (1,458 | ) | $ | 27,308 |
| $ | — |
| $ | 27,308 |
|
Net income including noncontrolling |
|
|
|
|
|
|
|
|
| 258 |
|
|
|
| 258 |
|
| — |
|
| 258 |
| |||||
Issuance of stock |
|
|
|
|
| 22 |
|
| 1,803 |
|
|
|
|
|
| 1,803 |
|
|
|
| 1,803 |
| |||||
Stock awards (net of change in |
|
|
|
|
|
|
| 14 |
|
|
|
|
|
| 14 |
|
|
|
| 14 |
| ||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
| (52 | ) |
|
|
| (52 | ) |
|
|
| (52 | ) | ||||||
Common stock dividends ($1.335 |
|
|
|
|
|
|
|
|
| (1,096 | ) |
|
|
| (1,096 | ) |
| — |
|
| (1,096 | ) | |||||
Other comprehensive income, net of |
|
|
|
|
|
|
|
|
|
|
| 62 |
|
| 62 |
|
|
|
| 62 |
| ||||||
June 30, 2022 |
| 2 |
| $ | 1,783 |
|
| 832 |
| $ | 23,427 |
| $ | 4,483 |
| $ | (1,396 | ) | $ | 28,297 |
| $ | — |
| $ | 28,297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
December 31, 2022 |
| 2 |
| $ | 1,783 |
|
| 835 |
| $ | 23,605 |
| $ | 4,065 |
| $ | (1,572 | ) | $ | 27,881 |
| $ | — |
| $ | 27,881 |
|
Net income including noncontrolling |
|
|
|
|
|
|
|
|
| 1,596 |
|
|
|
| 1,596 |
|
| — |
|
| 1,596 |
| |||||
Issuance of stock |
|
|
|
|
| 2 |
|
| 85 |
|
|
|
|
|
| 85 |
|
|
|
| 85 |
| |||||
Stock awards (net of change in |
|
|
|
|
|
|
| 14 |
|
|
|
|
|
| 14 |
|
|
|
| 14 |
| ||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
| (40 | ) |
|
|
| (40 | ) |
|
|
| (40 | ) | ||||||
Common stock dividends ($1.335 |
|
|
|
|
|
|
|
|
| (1,115 | ) |
|
|
| (1,115 | ) |
| — |
|
| (1,115 | ) | |||||
Other comprehensive income, net of |
|
|
|
|
|
|
|
|
|
|
| 6 |
|
| 6 |
|
|
|
| 6 |
| ||||||
Other |
|
|
|
|
|
|
|
|
| 1 |
|
|
|
| 1 |
|
|
|
| 1 |
| ||||||
June 30, 2023 |
| 2 |
| $ | 1,783 |
|
| 837 |
| $ | 23,704 |
| $ | 4,507 |
| $ | (1,566 | ) | $ | 28,428 |
| $ | — |
| $ | 28,428 |
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
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 |
| $ | 1,596 |
|
| $ | 258 |
|
Adjustments to reconcile net income including noncontrolling interests to net cash |
|
|
|
|
|
| ||
Depreciation, depletion and amortization (including nuclear fuel) |
|
| 1,555 |
|
|
| 1,535 |
|
Deferred income taxes and investment tax credits |
|
| 305 |
|
|
| 145 |
|
Impairment of assets and other charges |
|
| 150 |
|
|
| 392 |
|
Losses (gains) on sales of assets and equity method investments |
|
| (31 | ) |
|
| 601 |
|
Net (gains) losses on nuclear decommissioning trust funds and other investments |
|
| (308 | ) |
|
| 556 |
|
Other adjustments |
|
| 62 |
|
|
| (56 | ) |
Changes in: |
|
|
|
|
|
| ||
Accounts receivable |
|
| 590 |
|
|
| (115 | ) |
Inventories |
|
| (101 | ) |
|
| (12 | ) |
Deferred fuel and purchased gas costs, net |
|
| 416 |
|
|
| (858 | ) |
Prepayments |
|
| (35 | ) |
|
| (81 | ) |
Accounts payable |
|
| (694 | ) |
|
| 69 |
|
Accrued interest, payroll and taxes |
|
| (200 | ) |
|
| (155 | ) |
Margin deposit assets and liabilities |
|
| 311 |
|
|
| (291 | ) |
Net realized and unrealized changes related to derivative activities |
|
| 176 |
|
|
| (87 | ) |
Pension and other postretirement benefits |
|
| (239 | ) |
|
| (231 | ) |
Other operating assets and liabilities |
|
| (359 | ) |
|
| (309 | ) |
Net cash provided by operating activities |
|
| 3,194 |
|
|
| 1,361 |
|
Investing Activities |
|
|
|
|
|
| ||
Plant construction and other property additions (including nuclear fuel) |
|
| (4,850 | ) |
|
| (3,219 | ) |
Acquisition of solar development projects |
|
| (12 | ) |
|
| (121 | ) |
Proceeds from sales of securities |
|
| 1,138 |
|
|
| 2,081 |
|
Purchases of securities |
|
| (1,301 | ) |
|
| (1,851 | ) |
Proceeds from sale of assets and equity method investments |
|
| 11 |
|
|
| 146 |
|
Contributions to equity method affiliates |
|
| (48 | ) |
|
| (31 | ) |
Short-term deposit |
|
| — |
|
|
| (2,000 | ) |
Other |
|
| 48 |
|
|
| (153 | ) |
Net cash used in investing activities |
|
| (5,014 | ) |
|
| (5,148 | ) |
Financing Activities |
|
|
|
|
|
| ||
Issuance of short-term debt, net |
|
| 1,152 |
|
|
| 765 |
|
364-day term loan facility borrowings |
|
| 2,500 |
|
|
| — |
|
Issuance and remarketing of long-term debt |
|
| 1,660 |
|
|
| 2,338 |
|
Repayment and repurchase of long-term debt |
|
| (2,394 | ) |
|
| (221 | ) |
Supplemental credit facility borrowings |
|
| 450 |
|
|
| 900 |
|
Repayment of supplemental credit facility borrowings |
|
| (450 | ) |
|
| (450 | ) |
Issuance of common stock |
|
| 85 |
|
|
| 1,701 |
|
Common dividend payments |
|
| (1,115 | ) |
|
| (1,096 | ) |
Other |
|
| (94 | ) |
|
| (151 | ) |
Net cash provided by financing activities |
|
| 1,794 |
|
|
| 3,786 |
|
Decrease in cash, restricted cash and equivalents |
|
| (26 | ) |
|
| (1 | ) |
Cash, restricted cash and equivalents at beginning of period |
|
| 341 |
|
|
| 408 |
|
Cash, restricted cash and equivalents at end of period |
| $ | 315 |
|
| $ | 407 |
|
See Note 2 for disclosure of supplemental cash flow information.
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
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) |
| $ | 2,251 |
|
| $ | 2,175 |
|
| $ | 4,635 |
|
| $ | 4,342 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Electric fuel and other energy-related purchases(1) |
|
| 706 |
|
|
| 533 |
|
|
| 1,505 |
|
|
| 1,049 |
|
Purchased electric capacity |
|
| 10 |
|
|
| 11 |
|
|
| 18 |
|
|
| 22 |
|
Other operations and maintenance: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Affiliated suppliers |
|
| 99 |
|
|
| 84 |
|
|
| 192 |
|
|
| 175 |
|
Other |
|
| 344 |
|
|
| 394 |
|
|
| 692 |
|
|
| 873 |
|
Depreciation and amortization |
|
| 432 |
|
|
| 425 |
|
|
| 879 |
|
|
| 854 |
|
Other taxes |
|
| 67 |
|
|
| 83 |
|
|
| 152 |
|
|
| 158 |
|
Impairment of assets and other charges |
|
| 38 |
|
|
| 409 |
|
|
| 45 |
|
|
| 413 |
|
Total operating expenses |
|
| 1,696 |
|
|
| 1,939 |
|
|
| 3,483 |
|
|
| 3,544 |
|
Income from operations |
|
| 555 |
|
|
| 236 |
|
|
| 1,152 |
|
|
| 798 |
|
Other income (expense) |
|
| 48 |
|
|
| (44 | ) |
|
| 84 |
|
|
| (40 | ) |
Interest and related charges(1) |
|
| 182 |
|
|
| 145 |
|
|
| 363 |
|
|
| 293 |
|
Income before income tax expense |
|
| 421 |
|
|
| 47 |
|
|
| 873 |
|
|
| 465 |
|
Income tax expense |
|
| 89 |
|
|
| — |
|
|
| 188 |
|
|
| 61 |
|
Net Income |
| $ | 332 |
|
| $ | 47 |
|
| $ | 685 |
|
| $ | 404 |
|
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 |
| $ | 332 |
|
| $ | 47 |
|
| $ | 685 |
|
| $ | 404 |
|
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net deferred gains (losses) on derivatives-hedging |
|
| 6 |
|
|
| 25 |
|
|
| (3 | ) |
|
| 44 |
|
Changes in unrealized net gains (losses) on investment |
|
| (1 | ) |
|
| (3 | ) |
|
| 3 |
|
|
| (10 | ) |
Amounts reclassified to net income: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net derivative (gains) losses-hedging activities(3) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 1 |
|
Net realized (gains) losses on investment securities(4) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (1 | ) |
Total other comprehensive income (loss) |
|
| 5 |
|
|
| 22 |
|
|
| — |
|
|
| 34 |
|
Comprehensive income |
| $ | 337 |
|
| $ | 69 |
|
| $ | 685 |
|
| $ | 438 |
|
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 |
| $ | 19 |
|
| $ | 22 |
|
Customer receivables (less allowance for doubtful accounts of $24 and $21) |
|
| 1,693 |
|
|
| 1,578 |
|
Other receivables (less allowance for doubtful accounts of $1 and $2) |
|
| 201 |
|
|
| 204 |
|
Affiliated receivables |
|
| 72 |
|
|
| 7 |
|
Inventories (average cost method) |
|
| 1,009 |
|
|
| 924 |
|
Margin deposit assets |
|
| 32 |
|
|
| 310 |
|
Derivative assets(2) |
|
| 61 |
|
|
| 765 |
|
Regulatory assets |
|
| 627 |
|
|
| 1,140 |
|
Other |
|
| 48 |
|
|
| 52 |
|
Total current assets |
|
| 3,762 |
|
|
| 5,002 |
|
Investments |
|
|
|
|
|
| ||
Nuclear decommissioning trust funds |
|
| 3,508 |
|
|
| 3,202 |
|
Other |
|
| 4 |
|
|
| 3 |
|
Total investments |
|
| 3,512 |
|
|
| 3,205 |
|
Property, Plant and Equipment |
|
|
|
|
|
| ||
Property, plant and equipment |
|
| 57,554 |
|
|
| 54,697 |
|
Accumulated depreciation and amortization |
|
| (16,760 | ) |
|
| (16,218 | ) |
Total property, plant and equipment, net |
|
| 40,794 |
|
|
| 38,479 |
|
Deferred Charges and Other Assets |
|
|
|
|
|
| ||
Regulatory assets |
|
| 4,151 |
|
|
| 4,247 |
|
Other(2) |
|
| 2,485 |
|
|
| 2,261 |
|
Total deferred charges and other assets |
|
| 6,636 |
|
|
| 6,508 |
|
Total assets |
| $ | 54,704 |
|
| $ | 53,194 |
|
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 |
| $ | 379 |
|
| $ | 1,164 |
|
Short-term debt |
|
| 1,265 |
|
|
| 941 |
|
Accounts payable |
|
| 540 |
|
|
| 600 |
|
Payables to affiliates |
|
| 97 |
|
|
| 255 |
|
Affiliated current borrowings |
|
| 2,330 |
|
|
| 2,024 |
|
Accrued interest, payroll and taxes |
|
| 298 |
|
|
| 270 |
|
Regulatory liabilities |
|
| 231 |
|
|
| 506 |
|
Derivative liabilities(2) |
|
| 126 |
|
|
| 298 |
|
Other |
|
| 1,103 |
|
|
| 1,176 |
|
Total current liabilities |
|
| 6,369 |
|
|
| 7,234 |
|
Long-Term Debt |
|
|
|
|
|
| ||
Long-term debt |
|
| 16,050 |
|
|
| 14,916 |
|
Other |
|
| 69 |
|
|
| 65 |
|
Total long-term debt |
|
| 16,119 |
|
|
| 14,981 |
|
Deferred Credits and Other Liabilities |
|
|
|
|
|
| ||
Deferred income taxes and investment tax credits |
|
| 3,588 |
|
|
| 3,452 |
|
Regulatory liabilities |
|
| 5,799 |
|
|
| 5,499 |
|
Other(2) |
|
| 4,899 |
|
|
| 4,783 |
|
Total deferred credits and other liabilities |
|
| 14,286 |
|
|
| 13,734 |
|
Total liabilities |
|
| 36,774 |
|
|
| 35,949 |
|
Commitments and Contingencies (see Note 17) |
|
|
|
|
|
| ||
Common Shareholder’s Equity |
|
|
|
|
|
| ||
Common stock – no par(3) |
|
| 5,738 |
|
|
| 5,738 |
|
Other paid-in capital |
|
| 1,113 |
|
|
| 1,113 |
|
Retained earnings |
|
| 11,070 |
|
|
| 10,385 |
|
Accumulated other comprehensive income |
|
| 9 |
|
|
| 9 |
|
Total common shareholder’s equity |
|
| 17,930 |
|
|
| 17,245 |
|
Total liabilities and shareholder’s equity |
| $ | 54,704 |
|
| $ | 53,194 |
|
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 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 9,526 |
|
| $ | (29 | ) |
| $ | 16,348 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
| 47 |
|
|
|
|
|
| 47 |
| ||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 22 |
|
|
| 22 |
| ||||
Other |
|
|
|
|
|
|
|
|
|
|
| 1 |
|
|
|
|
|
| 1 |
| ||||
June 30, 2022 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 9,574 |
|
| $ | (7 | ) |
| $ | 16,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
March 31, 2023 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 10,738 |
|
| $ | 4 |
|
| $ | 17,593 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
| 332 |
|
|
|
|
|
| 332 |
| ||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 5 |
|
|
| 5 |
| ||||
June 30, 2023 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 11,070 |
|
| $ | 9 |
|
| $ | 17,930 |
|
YEAR-TO-DATE
|
| Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
| Shares |
|
| Amount |
|
| Other Paid-In Capital |
|
| Retained Earnings |
|
| AOCI |
|
| Total |
| ||||||
(millions, except for shares) |
| (thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
December 31, 2021 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 9,170 |
|
| $ | (41 | ) |
| $ | 15,980 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
| 404 |
|
|
|
|
|
| 404 |
| ||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 34 |
|
|
| 34 |
| ||||
June 30, 2022 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 9,574 |
|
| $ | (7 | ) |
| $ | 16,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
December 31, 2022 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 10,385 |
|
| $ | 9 |
|
| $ | 17,245 |
|
Net income |
|
|
|
|
|
|
|
|
|
|
| 685 |
|
|
|
|
|
| 685 |
| ||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
|
| — |
| ||||
June 30, 2023 |
|
| 275 |
|
| $ | 5,738 |
|
| $ | 1,113 |
|
| $ | 11,070 |
|
| $ | 9 |
|
| $ | 17,930 |
|
The accompanying notes are an integral part of 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 |
| $ | 685 |
|
| $ | 404 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
| ||
Depreciation and amortization (including nuclear fuel) |
|
| 961 |
|
|
| 937 |
|
Deferred income taxes and investment tax credits |
|
| 107 |
|
|
| 147 |
|
Impairment of assets and other charges |
|
| 44 |
|
|
| 400 |
|
Net (gains) losses on nuclear decommissioning trust funds and other investments |
|
| (45 | ) |
|
| 75 |
|
Other adjustments |
|
| (5 | ) |
|
| (50 | ) |
Changes in: |
|
|
|
|
|
| ||
Accounts receivable |
|
| 4 |
|
|
| (302 | ) |
Affiliated receivables and payables |
|
| (224 | ) |
|
| (27 | ) |
Inventories |
|
| (88 | ) |
|
| 22 |
|
Prepayments |
|
| (1 | ) |
|
| 4 |
|
Deferred fuel expenses, net |
|
| 386 |
|
|
| (780 | ) |
Accounts payable |
|
| (27 | ) |
|
| 116 |
|
Accrued interest, payroll and taxes |
|
| 27 |
|
|
| 42 |
|
Margin deposit assets and liabilities |
|
| 278 |
|
|
| (311 | ) |
Net realized and unrealized changes related to derivative activities |
|
| 472 |
|
|
| 84 |
|
Other operating assets and liabilities |
|
| (121 | ) |
|
| (72 | ) |
Net cash provided by operating activities |
|
| 2,453 |
|
|
| 689 |
|
Investing Activities |
|
|
|
|
|
| ||
Plant construction and other property additions |
|
| (3,236 | ) |
|
| (1,996 | ) |
Purchases of nuclear fuel |
|
| (100 | ) |
|
| (118 | ) |
Acquisition of solar development projects |
|
| (12 | ) |
|
| (38 | ) |
Proceeds from sales of securities |
|
| 719 |
|
|
| 864 |
|
Purchases of securities |
|
| (824 | ) |
|
| (892 | ) |
Other |
|
| 55 |
|
|
| (21 | ) |
Net cash used in investing activities |
|
| (3,398 | ) |
|
| (2,201 | ) |
Financing Activities |
|
|
|
|
|
| ||
Issuance (repayment) of short-term debt, net |
|
| 324 |
|
|
| (20 | ) |
Issuance (repayment) of affiliated current borrowings, net |
|
| 306 |
|
|
| (587 | ) |
Issuance and remarketing of long-term debt |
|
| 1,660 |
|
|
| 2,338 |
|
Repayment and repurchase of long-term debt |
|
| (1,308 | ) |
|
| (138 | ) |
Other |
|
| (42 | ) |
|
| (49 | ) |
Net cash provided by financing activities |
|
| 940 |
|
|
| 1,544 |
|
Increase (decrease) in cash, restricted cash and equivalents |
|
| (5 | ) |
|
| 32 |
|
Cash, restricted cash and equivalents at beginning of period |
|
| 24 |
|
|
| 26 |
|
Cash, restricted cash and equivalents at end of period |
| $ | 19 |
|
| $ | 58 |
|
|
|
|
|
|
|
|
See Note 2 for disclosure of supplemental cash flow information.
The accompanying notes are an integral part of 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 50% noncontrolling partnership interest in Cove Point to BHE. See Note 10 for additional information.
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 50% noncontrolling partnership interest in Cove Point to BHE under the agreement entered in July 2023. As discussed in Notes 3 and 10, these operations are classified as discontinued operations and held for sale in Dominion Energy’s Consolidated Financial Statements. Subsequently in September 2023, Dominion Energy revised its primary operating segments as discussed in Note 21. Dominion Energy’s Consolidated Financial Statements and Notes have been recast to reflect these changes in presentation.
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) |
| $ | 137 |
|
| $ | 273 |
|
| $ | 153 |
|
| $ | 283 |
|
Restricted cash and equivalents(2) |
|
| 178 |
|
|
| 134 |
|
|
| 188 |
|
|
| 125 |
|
Cash, restricted cash and equivalents shown in the |
| $ | 315 |
|
| $ | 407 |
|
| $ | 341 |
|
| $ | 408 |
|
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
| $ | 19 |
|
| $ | 56 |
|
| $ | 22 |
|
| $ | 26 |
|
Restricted cash and equivalents(3) |
|
| — |
|
|
| 2 |
|
|
| 2 |
|
|
| — |
|
Cash, restricted cash and equivalents shown in the |
| $ | 19 |
|
| $ | 58 |
|
| $ | 24 |
|
| $ | 26 |
|
Supplemental Cash Flow Information
The following table provides supplemental disclosure of 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 |
| $ | 713 |
|
| $ | 512 |
|
Leases(2) |
|
| 279 |
|
|
| 57 |
|
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 |
| $ | 550 |
|
| $ | 240 |
|
Leases(1) |
|
| 242 |
|
|
| 47 |
|
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 $6.6 billion, consisting of a purchase price of approximately $4.3 billion in cash and approximately $2.3 billion of assumed indebtedness. The purchase price will be subject to customary post-closing adjustments, including adjustments for cash, indebtedness, net working capital, capital expenditures and net regulatory assets and liabilities. Closing of the East Ohio Transaction is not conditioned upon the closing of the PSNC or Questar Gas 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 and FCC 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, as required under the sale agreement, Dominion Energy filed a notice with the Ohio Commission. The proposed internal reorganization in connection with the East Ohio 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 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 $155 million due to Dominion Energy under certain conditions. Based on the recorded balances at September 30, 2023, Dominion Energy expects to recognize a pre-tax gain of approximately $20 million ($20 million after-tax loss) upon closing, including the write-off of $1.5 billion of goodwill which is not deductible for tax purposes but excluding the effects of final closing adjustments.
At the closing of the East Ohio Transaction, Dominion Energy and Enbridge will enter into a transition services agreement pursuant to which Dominion Energy will continue to provide certain services to support the ongoing operations of East Ohio for up to approximately two years. Enbridge has also agreed to provide certain services to Dominion Energy.
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 $3.1 billion, consisting of a purchase price of approximately $2.2 billion in cash and approximately $1.0 billion of assumed indebtedness. The purchase price will be subject to customary post-closing adjustments, including adjustments for cash, indebtedness, net working capital, capital expenditures and net regulatory assets and liabilities. Closing of the PSNC Transaction is not conditioned upon the closing of the East Ohio or Questar Gas 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 North Carolina Commission 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 approval from the North Carolina Commission. The proposed internal reorganization in connection with the PSNC Transaction is subject to approval by the North Carolina Commission. Dominion Energy filed for such approval in September 2023.
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 $78 million due to Dominion Energy under certain conditions. Based on the recorded balances at September 30, 2023, Dominion Energy expects to recognize a pre-tax gain of approximately $130 million ($290 million after-tax loss) upon closing, including the write-off of $0.7 billion of goodwill which is not deductible for tax purposes but excluding the effects of final closing adjustments.
At the closing of the PSNC Transaction, Dominion Energy and Enbridge will enter into a transition services agreement pursuant to which Dominion Energy will continue to provide certain services to support the ongoing operations of PSNC for up to approximately two years. Enbridge has also agreed to provide certain services to Dominion Energy.
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 $4.3 billion, consisting of a purchase price of approximately $3.0 billion in cash and approximately $1.3 billion of assumed indebtedness. The purchase price will be subject to customary post-closing adjustments, including adjustments for cash, indebtedness, net working capital, capital expenditures and net
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 $107 million due to Dominion Energy under certain conditions. Based on the recorded balances at September 30, 2023, Dominion Energy expects to recognize a pre-tax loss of approximately $10 million ($530 million after-tax loss) upon closing, including the write-off of $1.0 billion of goodwill which is not deductible for tax purposes but excluding the effects of final closing adjustments.
At the closing of the Questar Gas Transaction, Dominion Energy and Enbridge will enter into a transition services agreement pursuant to which Dominion Energy will continue to provide certain services to support the ongoing operations of Questar Gas and Wexpro for up to approximately two years. Enbridge has also agreed to provide certain services to Dominion Energy.
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 $21 million. Dominion Energy recorded an impairment associated with these operations in the second quarter of 2023 as discussed in Note 8.
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 |
| $ | 235 |
| $ | 120 |
| $ | 271 |
| $ | 2 |
|
| $ | 547 |
| $ | 446 |
| $ | 1,001 |
| $ | 3 |
|
Operating expense |
|
| 153 |
|
| 98 |
|
| 233 |
|
| 19 |
|
|
| 369 |
|
| 306 |
|
| 812 |
|
| 22 |
|
Other income (expense) |
|
| 7 |
|
| 3 |
|
| 2 |
|
| — |
|
|
| 15 |
|
| 5 |
|
| 3 |
|
| — |
|
Interest and related charges |
|
| 17 |
|
| 12 |
|
| 17 |
|
| 1 |
|
|
| 32 |
|
| 25 |
|
| 33 |
|
| 1 |
|
Income (loss) before income |
|
| 72 |
|
| 13 |
|
| 23 |
|
| (18 | ) |
|
| 161 |
|
| 120 |
|
| 159 |
|
| (20 | ) |
Income tax expense (benefit) |
|
| 6 |
|
| 2 |
|
| 3 |
|
| (4 | ) |
|
| 19 |
|
| 26 |
|
| 32 |
|
| (5 | ) |
Net income (loss) attributable |
| $ | 66 |
| $ | 11 |
| $ | 20 |
| $ | (14 | ) |
| $ | 142 |
| $ | 94 |
| $ | 127 |
| $ | (15 | ) |
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 |
| $ | 222 |
| $ | 111 |
| $ | 213 |
| $ | 1 |
|
| $ | 532 |
| $ | 446 |
| $ | 732 |
| $ | 3 |
|
Operating expense |
|
| 145 |
|
| 88 |
|
| 170 |
|
| 1 |
|
|
| 363 |
|
| 312 |
|
| 558 |
|
| 3 |
|
Other income (expense) |
|
| 7 |
|
| 1 |
|
| — |
|
| — |
|
|
| 14 |
|
| 3 |
|
| — |
|
| — |
|
Interest and related charges |
|
| 6 |
|
| 10 |
|
| 10 |
|
| — |
|
|
| 9 |
|
| 19 |
|
| 20 |
|
| — |
|
Income (loss) before income |
|
| 78 |
|
| 14 |
|
| 33 |
|
| — |
|
|
| 174 |
|
| 118 |
|
| 154 |
|
| — |
|
Income tax expense |
|
| 10 |
|
| 2 |
|
| 5 |
|
| — |
|
|
| 24 |
|
| 25 |
|
| 31 |
|
| — |
|
Net income (loss) attributable |
| $ | 68 |
| $ | 12 |
| $ | 28 |
| $ | — |
|
| $ | 150 |
| $ | 93 |
| $ | 123 |
| $ | — |
|
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) | $ | 403 |
| $ | 230 |
| $ | 728 |
| $ | 30 |
|
| $ | 544 |
| $ | 381 |
| $ | 803 |
| $ | 1 |
|
Property, plant and equipment, net |
| 5,174 |
|
| 2,659 |
|
| 4,094 |
|
| — |
|
|
| 5,012 |
|
| 2,591 |
|
| 3,984 |
|
| 47 |
|
Other deferred charges and other |
| 2,628 |
|
| 818 |
|
| 1,004 |
|
| — |
|
|
| 2,629 |
|
| 822 |
|
| 1,043 |
|
| — |
|
Current liabilities |
| 359 |
|
| 120 |
|
| 223 |
|
| 9 |
|
|
| 634 |
|
| 151 |
|
| 612 |
|
| 1 |
|
Long-term debt |
| 2,286 |
|
| 798 |
|
| 1,245 |
|
|
|
|
| 2,287 |
|
| 798 |
|
| 1,245 |
|
| — |
| |
Other deferred credits and liabilities |
| 1,423 |
|
| 695 |
|
| 1,097 |
|
| — |
|
|
| 1,435 |
|
| 689 |
|
| 1,087 |
|
| 9 |
|
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 |
| $ | 215 |
| $ | 99 |
| $ | 177 |
| $ | — |
|
| $ | 192 |
| $ | 68 |
| $ | 210 |
| $ | — |
|
Significant noncash items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Depreciation, depletion |
|
| 71 |
|
| 44 |
|
| 86 |
|
| 2 |
|
|
| 65 |
|
| 43 |
|
| 81 |
|
| 2 |
|
Accrued capital expenditures |
|
| 48 |
|
| 19 |
|
| 32 |
|
| — |
|
|
| 28 |
|
| 16 |
|
| 35 |
|
| — |
|
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 $27 million ($20 million after-tax) in discontinued operations in its Consolidated Statements of Income associated with finalization of working capital adjustments.
Sale of Kewaunee
In May 2021, Dominion Energy entered into an agreement to sell 100% of the equity interests in Dominion Energy Kewaunee, Inc. to EnergySolutions, including the transfer of all decommissioning obligations associated with Kewaunee, which ceased operations in 2013. The sale closed in June 2022 following approval from the Wisconsin Commission in May 2022 and NRC approval of a requested license transfer in March 2022. The sale was treated as an asset sale for tax purposes and Dominion Energy retained the assets and obligations of the pension and other postretirement employee benefit plans. EnergySolutions is subject to the Wisconsin regulatory conditions agreed to by Dominion Energy upon its acquisition of Kewaunee, including the return of any excess decommissioning funds to WPSC and WP&L customers following completion of all decommissioning activities.
In the second quarter of 2022, Dominion Energy recorded a loss of $649 million ($513 million after-tax), recorded in losses (gains) on sales of assets in its Consolidated Statements of Income, primarily related to the difference between the nuclear decommissioning trust and AROs. Prior to its receipt, there had been uncertainty as to the timing of or ability to obtain approval from the Wisconsin Commission. Prior to closing, Dominion Energy withdrew $80 million from the nuclear decommissioning trust to recover certain spent nuclear fuel and other permitted costs.
Note 4. Operating Revenue
The Companies’ operating revenue consists of the following:
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||||||||||
| Quarter-to-Date |
|
| Year-to-Date |
|
| Quarter-to-Date |
|
| Year-to-Date |
| ||||||||||||||||||||
Period Ended June 30, | 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Residential | $ | 1,124 |
|
| $ | 1,117 |
|
| $ | 2,410 |
|
| $ | 2,404 |
|
| $ | 832 |
|
| $ | 816 |
|
| $ | 1,842 |
|
| $ | 1,831 |
|
Commercial |
| 1,147 |
|
|
| 1,089 |
|
|
| 2,217 |
|
|
| 1,987 |
|
|
| 917 |
|
|
| 874 |
|
|
| 1,783 |
|
|
| 1,591 |
|
Industrial |
| 211 |
|
|
| 220 |
|
|
| 431 |
|
|
| 417 |
|
|
| 99 |
|
|
| 110 |
|
|
| 215 |
|
|
| 213 |
|
Government and other retail |
| 232 |
|
|
| 297 |
|
|
| 476 |
|
|
| 569 |
|
|
| 213 |
|
|
| 281 |
|
|
| 442 |
|
|
| 539 |
|
Wholesale |
| 36 |
|
|
| 68 |
|
|
| 80 |
|
|
| 115 |
|
|
| 22 |
|
|
| 31 |
|
|
| 51 |
|
|
| 63 |
|
Nonregulated electric sales |
| 125 |
|
|
| 236 |
|
|
| 382 |
|
|
| 603 |
|
|
| 22 |
|
|
| 31 |
|
|
| 33 |
|
|
| 45 |
|
Regulated gas sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Residential |
| 43 |
|
|
| 52 |
|
|
| 179 |
|
|
| 215 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Commercial |
| 28 |
|
|
| 40 |
|
|
| 81 |
|
|
| 105 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other |
| 16 |
|
|
| 43 |
|
|
| 39 |
|
|
| 77 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Regulated gas transportation and storage |
| 5 |
|
|
| 14 |
|
|
| 9 |
|
|
| 24 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other regulated revenues |
| 65 |
|
|
| 84 |
|
|
| 143 |
|
|
| 140 |
|
|
| 62 |
|
|
| 80 |
|
|
| 136 |
|
|
| 131 |
|
Other nonregulated revenues(1)(2) |
| 48 |
|
|
| 43 |
|
|
| 85 |
|
|
| 75 |
|
|
| 22 |
|
|
| 16 |
|
|
| 33 |
|
|
| 22 |
|
Total operating revenue from contracts with customers |
| 3,080 |
|
|
| 3,303 |
|
|
| 6,532 |
|
|
| 6,731 |
|
|
| 2,189 |
|
|
| 2,239 |
|
|
| 4,535 |
|
|
| 4,435 |
|
Other revenues(1)(3) |
| 86 |
|
|
| (244 | ) |
|
| 517 |
|
|
| (559 | ) |
|
| 62 |
|
|
| (64 | ) |
|
| 100 |
|
|
| (93 | ) |
Total operating revenue | $ | 3,166 |
|
| $ | 3,059 |
|
| $ | 7,049 |
|
| $ | 6,172 |
|
| $ | 2,251 |
|
| $ | 2,175 |
|
| $ | 4,635 |
|
| $ | 4,342 |
|
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 $81 million and $51 million, respectively, and are recorded in other current liabilities and other deferred credits and other liabilities in its Consolidated Balance Sheets. At June 30, 2023 and December 31, 2022, Virginia Power’s contract liability balances were $74 million and $39 million,
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 $47 million and $42 million, respectively, from the beginning contract liability balances. During the six months ended June 30, 2023 and 2022, Virginia Power recognized $39 million and $33 million, respectively, from the beginning contract liability balances.
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 |
|
| 21.0 | % |
|
| 21.0 | % |
|
| 21.0 | % |
|
| 21.0 | % |
Increases (reductions) resulting from: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Recognition of taxes - sale of |
|
| — |
|
|
| (24.1 | ) |
|
|
|
|
|
| ||
State taxes, net of federal benefit |
|
| 3.8 |
|
|
| (2.8 | ) |
|
| 4.6 |
|
|
| 4.4 |
|
Investment tax credits |
|
| (3.1 | ) |
|
| 4.5 |
|
|
| (0.3 | ) |
|
| (6.9 | ) |
Production tax credits |
|
| (0.5 | ) |
|
| 0.5 |
|
|
| (0.8 | ) |
|
| (1.0 | ) |
Reversal of excess deferred income |
|
| (2.0 | ) |
|
| 4.2 |
|
|
| (2.3 | ) |
|
| (3.9 | ) |
Changes in state deferred taxes associated |
|
| — |
|
|
| (1.4 | ) |
|
|
|
|
|
| ||
AFUDC - equity |
|
| (0.1 | ) |
|
| 0.2 |
|
|
| (0.1 | ) |
|
| (1.0 | ) |
Other, net |
|
| (1.2 | ) |
|
| 0.3 |
|
|
| (0.5 | ) |
|
| 0.6 |
|
Effective tax rate |
|
| 17.9 | % |
|
| 2.4 | % |
|
| 21.6 | % |
|
| 13.2 | % |
In the first quarter of 2022, Dominion Energy entered into an agreement to sell 100% of the equity interests in Hope in a stock sale for income tax purposes. As of June 30, 2022, Dominion had established $90 million of deferred tax liabilities reflecting the excess of the financial reporting basis over the tax basis in Hope’s stock. These deferred taxes reversed upon closing of the sale in August 2022 and became a component of current income tax expense on the sale. See Note 3 to the Consolidated Financial Statements in Dominion Energy's Annual Report on Form 10-K for the year ended December 31, 2022 for additional information regarding the sale of Hope.
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 $94 million and $132 million for the six months ended June 30, 2023 and 2022, respectively.
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 |
| $ | 431 |
|
| $ | (665 | ) |
| $ | 1,147 |
|
| $ | (365 | ) |
Preferred stock dividends (see Note 16) |
|
| (20 | ) |
|
| (25 | ) |
|
| (40 | ) |
|
| (52 | ) |
Net income (loss) attributable to Dominion Energy from |
|
| 411 |
|
|
| (690 | ) |
|
| 1,107 |
|
|
| (417 | ) |
Dilutive effect of 2019 Equity Units(1)(2) |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Net income (loss) attributable to Dominion Energy from |
| $ | 411 |
|
| $ | (690 | ) |
| $ | 1,107 |
|
| $ | (417 | ) |
Net income (loss) attributable to Dominion Energy from |
| $ | 168 |
|
| $ | 212 |
|
| $ | 449 |
|
| $ | 623 |
|
Average shares of common stock outstanding – Basic |
|
| 836.0 |
|
|
| 818.4 |
|
|
| 835.6 |
|
|
| 814.5 |
|
Net effect of dilutive securities(1)(3) |
|
| 0.2 |
|
|
| — |
|
|
| 0.3 |
|
|
| — |
|
Average shares of common stock outstanding – Diluted |
|
| 836.2 |
|
|
| 818.4 |
|
|
| 835.9 |
|
|
| 814.5 |
|
EPS from continuing operations – Basic |
| $ | 0.49 |
|
| $ | (0.84 | ) |
| $ | 1.32 |
|
| $ | (0.51 | ) |
EPS from discontinued operations – Basic |
|
| 0.20 |
|
|
| 0.26 |
|
|
| 0.54 |
|
|
| 0.76 |
|
EPS attributable to Dominion Energy – Basic |
| $ | 0.69 |
|
| $ | (0.58 | ) |
| $ | 1.86 |
|
| $ | 0.25 |
|
EPS from continuing operations – Diluted |
| $ | 0.49 |
|
| $ | (0.84 | ) |
| $ | 1.32 |
|
| $ | (0.51 | ) |
EPS from discontinued operations – Diluted |
|
| 0.20 |
|
|
| 0.26 |
|
|
| 0.54 |
|
|
| 0.76 |
|
EPS attributable to Dominion Energy – Diluted |
| $ | 0.69 |
|
| $ | (0.58 | ) |
| $ | 1.86 |
|
| $ | 0.25 |
|
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 |
| $ | (250 | ) |
| $ | (26 | ) |
| $ | (1,287 | ) |
| $ | (2 | ) |
| $ | (1,565 | ) |
Other comprehensive income (loss) before |
|
| 6 |
|
|
| (1 | ) |
|
| — |
|
|
| — |
|
|
| 5 |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Interest and related charges |
|
| 10 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 10 |
|
Other income (expense) |
|
| — |
|
|
| (3 | ) |
|
| (16 | ) |
|
| — |
|
|
| (19 | ) |
Total |
|
| 10 |
|
|
| (3 | ) |
|
| (16 | ) |
|
| — |
|
|
| (9 | ) |
Income tax expense (benefit) |
|
| (2 | ) |
|
| 1 |
|
|
| 4 |
|
|
| — |
|
|
| 3 |
|
Total, net of tax |
|
| 8 |
|
|
| (2 | ) |
|
| (12 | ) |
|
| — |
|
|
| (6 | ) |
Net current period other comprehensive |
|
| 14 |
|
|
| (3 | ) |
|
| (12 | ) |
|
| — |
|
|
| (1 | ) |
Ending balance |
| $ | (236 | ) |
| $ | (29 | ) |
| $ | (1,299 | ) |
| $ | (2 | ) |
| $ | (1,566 | ) |
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning balance |
| $ | (323 | ) |
| $ | (22 | ) |
| $ | (1,088 | ) |
| $ | (3 | ) |
| $ | (1,436 | ) |
Other comprehensive income (loss) before |
|
| 29 |
|
|
| (27 | ) |
|
| 2 |
|
|
| — |
|
|
| 4 |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Interest and related charges |
|
| 14 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 14 |
|
Other income (expense) |
|
| — |
|
|
| 12 |
|
|
| 22 |
|
|
| — |
|
|
| 34 |
|
Total |
|
| 14 |
|
|
| 12 |
|
|
| 22 |
|
|
| — |
|
|
| 48 |
|
Income tax expense (benefit) |
|
| (3 | ) |
|
| (3 | ) |
|
| (6 | ) |
|
| — |
|
|
| (12 | ) |
Total, net of tax |
|
| 11 |
|
|
| 9 |
|
|
| 16 |
|
|
| — |
|
|
| 36 |
|
Net current period other comprehensive |
|
| 40 |
|
|
| (18 | ) |
|
| 18 |
|
|
| — |
|
|
| 40 |
|
Ending balance |
| $ | (283 | ) |
| $ | (40 | ) |
| $ | (1,070 | ) |
| $ | (3 | ) |
| $ | (1,396 | ) |
27
|
| Total Derivative-Hedging Activities(1)(2) |
|
| Investment |
|
| Pension |
|
| Equity Method Investees(5) |
|
| Total |
| |||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning balance |
| $ | (249 | ) |
| $ | (44 | ) |
| $ | (1,276 | ) |
| $ | (3 | ) |
| $ | (1,572 | ) |
Other comprehensive income (loss) before |
|
| (3 | ) |
|
| 16 |
|
|
| — |
|
|
| 1 |
|
|
| 14 |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Interest and related charges |
|
| 21 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 21 |
|
Other income (expense) |
|
| — |
|
|
| (1 | ) |
|
| (31 | ) |
|
| — |
|
|
| (32 | ) |
Total |
|
| 21 |
|
|
| (1 | ) |
|
| (31 | ) |
|
| — |
|
|
| (11 | ) |
Income tax expense (benefit) |
|
| (5 | ) |
|
| — |
|
|
| 8 |
|
|
| — |
|
|
| 3 |
|
Total, net of tax |
|
| 16 |
|
|
| (1 | ) |
|
| (23 | ) |
|
| — |
|
|
| (8 | ) |
Net current period other comprehensive |
|
| 13 |
|
|
| 15 |
|
|
| (23 | ) |
|
| 1 |
|
|
| 6 |
|
Ending balance |
| $ | (236 | ) |
| $ | (29 | ) |
| $ | (1,299 | ) |
| $ | (2 | ) |
| $ | (1,566 | ) |
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Beginning balance |
| $ | (358 | ) |
| $ | 37 |
|
| $ | (1,133 | ) |
| $ | (4 | ) |
| $ | (1,458 | ) |
Other comprehensive income (loss) before |
|
| 54 |
|
|
| (89 | ) |
|
| 30 |
|
|
| 1 |
|
|
| (4 | ) |
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
Interest and related charges |
|
| 28 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 28 |
|
Other income (expense) |
|
| — |
|
|
| 16 |
|
|
| 45 |
|
|
| — |
|
|
| 61 |
|
Total |
|
| 28 |
|
|
| 16 |
|
|
| 45 |
|
|
| — |
|
|
| 89 |
|
Income tax expense (benefit) |
|
| (7 | ) |
|
| (4 | ) |
|
| (12 | ) |
|
| — |
|
|
| (23 | ) |
Total, net of tax |
|
| 21 |
|
|
| 12 |
|
|
| 33 |
|
|
| — |
|
|
| 66 |
|
Net current period other comprehensive |
|
| 75 |
|
|
| (77 | ) |
|
| 63 |
|
|
| 1 |
|
|
| 62 |
|
Ending balance |
| $ | (283 | ) |
| $ | (40 | ) |
| $ | (1,070 | ) |
| $ | (3 | ) |
| $ | (1,396 | ) |
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 |
| $ | 7 |
|
| $ | (3 | ) |
| $ | 4 |
|
Other comprehensive income (loss) before |
|
| 6 |
|
|
| (1 | ) |
|
| 5 |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
| |||||
Total |
|
| — |
|
|
| — |
|
|
| — |
|
Income tax expense (benefit) |
|
| — |
|
|
| — |
|
|
| — |
|
Total, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
Net current period other comprehensive income (loss) |
|
| 6 |
|
|
| (1 | ) |
|
| 5 |
|
Ending balance |
| $ | 13 |
|
| $ | (4 | ) |
| $ | 9 |
|
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
| |||
Beginning balance |
| $ | (25 | ) |
| $ | (4 | ) |
| $ | (29 | ) |
Other comprehensive income (loss) before |
|
| 25 |
|
|
| (3 | ) |
|
| 22 |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
| |||||
Total |
|
| — |
|
|
| — |
|
|
| — |
|
Income tax expense (benefit) |
|
| — |
|
|
| — |
|
|
| — |
|
Total, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
Net current period other comprehensive income (loss) |
|
| 25 |
|
|
| (3 | ) |
|
| 22 |
|
Ending balance |
| $ | — |
|
| $ | (7 | ) |
| $ | (7 | ) |
|
| Total Derivative-Hedging Activities(1)(2) |
|
| Investment |
|
| Total |
| |||
(millions) |
|
|
|
|
|
|
|
|
| |||
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
| |||
Beginning balance |
| $ | 16 |
|
| $ | (7 | ) |
| $ | 9 |
|
Other comprehensive income (loss) before |
|
| (3 | ) |
|
| 3 |
|
|
| — |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
| |||||
Total |
|
| — |
|
|
| — |
|
|
| — |
|
Income tax expense (benefit) |
|
| — |
|
|
| — |
|
|
| — |
|
Total, net of tax |
|
| — |
|
|
| — |
|
|
| — |
|
Net current period other comprehensive income (loss) |
|
| (3 | ) |
|
| 3 |
|
|
| — |
|
Ending balance |
| $ | 13 |
|
| $ | (4 | ) |
| $ | 9 |
|
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
| |||
Beginning balance |
| $ | (45 | ) |
| $ | 4 |
|
| $ | (41 | ) |
Other comprehensive income (loss) before |
|
| 44 |
|
|
| (10 | ) |
|
| 34 |
|
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
| |||||
Interest and related charges |
|
| 1 |
|
|
| — |
|
|
| 1 |
|
Other income (expense) |
|
| — |
|
|
| (1 | ) |
|
| (1 | ) |
Total |
|
| 1 |
|
|
| (1 | ) |
|
| — |
|
Income tax expense (benefit) |
|
| — |
|
|
| — |
|
|
| — |
|
Total, net of tax |
|
| 1 |
|
|
| (1 | ) |
|
| — |
|
Net current period other comprehensive income (loss) |
|
| 45 |
|
|
| (11 | ) |
|
| 34 |
|
Ending balance |
| $ | — |
|
| $ | (7 | ) |
| $ | (7 | ) |
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) | $ | 141 |
| 25-138 | 47 |
|
| — |
| — | — |
Physical options: |
|
|
|
|
|
|
|
|
|
|
| |||
Natural gas(2) | Option model | Market price | (3) |
| 15 |
| 1-8 | 4 |
|
| 15 |
| 1-8 | 4 |
| Price volatility | (4) |
|
| 19%-72% | 51% |
|
|
| 19%-72% | 51% | |||
Total assets |
|
|
| $ | 156 |
|
|
|
| $ | 15 |
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
| ||
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
| |||
Natural gas(2) | Discounted | Market price | (3) | $ | 18 |
| (2)-2 | (1) |
| $ | 18 |
| (2)-2 | (1) |
Electricity | Discounted | Market price | (3) |
| 4 |
| 32-138 | 64 |
|
| — |
| — | — |
Total |
|
|
| $ | 22 |
|
|
|
| $ | 18 |
|
|
|
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 $91 million ($68 million after-tax) in impairment of assets and other charges in its Consolidated Statements of Income to adjust a corporate office building down to its estimated fair value, using a market approach, of $35 million. The valuation is considered a Level 3 fair value measurement as it is based on unobservable inputs due to limited comparable market activity. The corporate office building is reflected in the Corporate and Other segment and presented as held for sale in Dominion Energy’s Consolidated Balance Sheets at June 30, 2023.
In the second quarter of 2023, Dominion Energy recorded a charge of $15 million ($11 million after-tax) presented within discontinued operations in its Consolidated Statements of Income to adjust certain nonregulated solar assets down to their estimated fair value, using a market approach, of $22 million. The valuation is considered a Level 2 fair value measurement given that it is based on bids received. As discussed in Note 3, these assets were sold in August 2023.
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 |
| $ | 1 |
|
| $ | 194 |
|
| $ | 156 |
|
| $ | 351 |
|
| $ | 1 |
|
| $ | 73 |
|
| $ | 15 |
|
| $ | 89 |
|
Interest rate |
|
| — |
|
|
| 904 |
|
|
| — |
|
|
| 904 |
|
|
| — |
|
|
| 135 |
|
|
| — |
|
|
| 135 |
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
U.S. |
|
| 4,354 |
|
|
| — |
|
|
| — |
|
|
| 4,354 |
|
|
| 2,317 |
|
|
| — |
|
|
| — |
|
|
| 2,317 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Corporate debt instruments |
|
| — |
|
|
| 539 |
|
|
| — |
|
|
| 539 |
|
|
| — |
|
|
| 323 |
|
|
| — |
|
|
| 323 |
|
Government securities |
|
| 170 |
|
|
| 1,144 |
|
|
| — |
|
|
| 1,314 |
|
|
| 90 |
|
|
| 619 |
|
|
| — |
|
|
| 709 |
|
Cash equivalents and other |
|
| 27 |
|
|
| — |
|
|
| — |
|
|
| 27 |
|
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| 1 |
|
Total assets |
| $ | 4,552 |
|
| $ | 2,781 |
|
| $ | 156 |
|
| $ | 7,489 |
|
| $ | 2,409 |
|
| $ | 1,150 |
|
| $ | 15 |
|
| $ | 3,574 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Commodity |
| $ | — |
|
| $ | 332 |
|
| $ | 22 |
|
| $ | 354 |
|
| $ | — |
|
| $ | 150 |
|
| $ | 18 |
|
| $ | 168 |
|
Interest rate |
|
| — |
|
|
| 381 |
|
|
| — |
|
|
| 381 |
|
|
| — |
|
|
| 11 |
|
|
| — |
|
|
| 11 |
|
Foreign currency exchange rate |
|
| — |
|
|
| 59 |
|
|
| — |
|
|
| 59 |
|
|
| — |
|
|
| 59 |
|
|
| — |
|
|
| 59 |
|
Total liabilities |
| $ | — |
|
| $ | 772 |
|
| $ | 22 |
|
| $ | 794 |
|
| $ | — |
|
| $ | 220 |
|
| $ | 18 |
|
| $ | 238 |
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Commodity |
| $ | — |
|
| $ | 332 |
|
| $ | 437 |
|
| $ | 769 |
|
| $ | — |
|
| $ | 32 |
|
| $ | 236 |
|
| $ | 268 |
|
Interest rate |
|
| — |
|
|
| 1,407 |
|
|
| — |
|
|
| 1,407 |
|
|
| — |
|
|
| 614 |
|
|
| — |
|
|
| 614 |
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
U.S. |
|
| 3,810 |
|
|
| — |
|
|
| — |
|
|
| 3,810 |
|
|
| 2,028 |
|
|
| — |
|
|
| — |
|
|
| 2,028 |
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Corporate debt instruments |
|
| — |
|
|
| 576 |
|
|
| — |
|
|
| 576 |
|
|
| — |
|
|
| 360 |
|
|
| — |
|
|
| 360 |
|
Government securities |
|
| 161 |
|
|
| 1,059 |
|
|
| — |
|
|
| 1,220 |
|
|
| 90 |
|
|
| 542 |
|
|
| — |
|
|
| 632 |
|
Total assets |
| $ | 3,971 |
|
| $ | 3,374 |
|
| $ | 437 |
|
| $ | 7,782 |
|
| $ | 2,118 |
|
| $ | 1,548 |
|
| $ | 236 |
|
| $ | 3,902 |
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Commodity |
| $ | — |
|
| $ | 911 |
|
| $ | 15 |
|
| $ | 926 |
|
| $ | — |
|
| $ | 333 |
|
| $ | 15 |
|
| $ | 348 |
|
Interest rate |
|
| — |
|
|
| 377 |
|
|
| — |
|
|
| 377 |
|
|
| — |
|
|
| 7 |
|
|
| — |
|
|
| 7 |
|
Foreign currency exchange rate |
|
| — |
|
|
| 101 |
|
|
| — |
|
|
| 101 |
|
|
| — |
|
|
| 101 |
|
|
| — |
|
|
| 101 |
|
Total liabilities |
| $ | — |
|
| $ | 1,389 |
|
| $ | 15 |
|
| $ | 1,404 |
|
| $ | — |
|
| $ | 441 |
|
| $ | 15 |
|
| $ | 456 |
|
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 |
| $ | 206 |
|
| $ | 202 |
|
| $ | 422 |
|
| $ | 222 |
|
| $ | 55 |
|
| $ | 22 |
|
| $ | 221 |
|
| $ | 102 |
|
Total realized and unrealized gains |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Included in earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Operating revenue |
|
| 2 |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Electric fuel and other energy- |
|
| (36 | ) |
|
| 117 |
|
|
| (87 | ) |
|
| 165 |
|
|
| (36 | ) |
|
| 106 |
|
|
| (88 | ) |
|
| 151 |
|
Included in regulatory assets/ |
|
| (74 | ) |
|
| 261 |
|
|
| (290 | ) |
|
| 241 |
|
|
| (58 | ) |
|
| 206 |
|
|
| (224 | ) |
|
| 126 |
|
Settlements |
|
| 36 |
|
|
| (117 | ) |
|
| 71 |
|
|
| (165 | ) |
|
| 36 |
|
|
| (106 | ) |
|
| 72 |
|
|
| (151 | ) |
Purchases |
|
| — |
|
|
| 17 |
|
|
| 16 |
|
|
| 17 |
|
|
| — |
|
|
| 17 |
|
|
| 16 |
|
|
| 17 |
|
Ending balance |
| $ | 134 |
|
| $ | 480 |
|
| $ | 134 |
|
| $ | 480 |
|
| $ | (3 | ) |
| $ | 245 |
|
| $ | (3 | ) |
| $ | 245 |
|
Dominion Energy had $2 million of unrealized gains included in earnings in the Level 3 fair value category related to assets/liabilities still held at the reporting date for the three and six months ended June 30, 2023 and no unrealized gains or losses for the three and six months ended June 30, 2022. Virginia Power had no unrealized gains or losses for the three and six months ended June 30, 2023 and June 30, 2022.
Fair Value of Financial Instruments
Substantially all of the Companies’ financial instruments are recorded at fair value, with the exception of the instruments described below, which are reported at historical cost. Estimated fair values have been determined using available market information and valuation methodologies considered appropriate by management. The carrying amount of cash, restricted cash and equivalents, customer and other receivables, affiliated receivables, short-term debt, affiliated current borrowings, payables to affiliates and accounts payable are representative of fair value because of the short-term nature of these instruments. For the Companies' financial instruments that are not recorded at fair value, the carrying amounts and estimated fair values are as follows:
|
| Dominion Energy |
|
| Virginia Power |
| ||||||||||
|
| Carrying |
|
| Estimated |
|
| Carrying |
|
| Estimated |
| ||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Long-term debt(2) |
| $ | 41,887 |
|
| $ | 38,876 |
|
| $ | 16,399 |
|
| $ | 14,909 |
|
Supplemental credit facility borrowings |
|
| 450 |
|
|
| 450 |
|
|
|
|
|
|
| ||
Junior subordinated notes(2) |
|
| 1,387 |
|
|
| 1,349 |
|
|
|
|
|
|
| ||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Long-term debt(2) |
| $ | 39,680 |
|
| $ | 36,426 |
|
| $ | 15,616 |
|
| $ | 14,067 |
|
Supplemental credit facility borrowings |
|
| 450 |
|
|
| 450 |
|
|
|
|
|
|
| ||
Junior subordinated notes(2) |
|
| 1,387 |
|
|
| 1,340 |
|
|
|
|
|
|
|
Note 9. Derivatives and Hedge Accounting Activities
The Companies’ 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 |
| $ | 162 |
|
| $ | 55 |
|
| $ | — |
|
| $ | 107 |
|
| $ | 78 |
|
| $ | 32 |
|
| $ | — |
|
| $ | 46 |
|
Exchange |
|
| 55 |
|
|
| 55 |
|
|
| — |
|
|
| — |
|
|
| 10 |
|
|
| 10 |
|
|
| — |
|
|
| — |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
|
| 904 |
|
|
| 214 |
|
|
| — |
|
|
| 690 |
|
|
| 135 |
|
|
| 2 |
|
|
| — |
|
|
| 133 |
|
Total derivatives, |
| $ | 1,121 |
|
| $ | 324 |
|
| $ | — |
|
| $ | 797 |
|
| $ | 223 |
|
| $ | 44 |
|
| $ | — |
|
| $ | 179 |
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
| $ | 408 |
|
| $ | 28 |
|
| $ | — |
|
| $ | 380 |
|
| $ | 238 |
|
| $ | 7 |
|
| $ | — |
|
| $ | 231 |
|
Exchange |
|
| 160 |
|
|
| 159 |
|
|
| — |
|
|
| 1 |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
|
| 1,407 |
|
|
| 248 |
|
|
| — |
|
|
| 1,159 |
|
|
| 614 |
|
|
| 38 |
|
|
| — |
|
|
| 576 |
|
Total derivatives, |
| $ | 1,975 |
|
| $ | 435 |
|
| $ | — |
|
| $ | 1,540 |
|
| $ | 852 |
|
| $ | 45 |
|
| $ | — |
|
| $ | 807 |
|
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 |
| $ | 209 |
|
| $ | 55 |
|
| $ | — |
|
| $ | 154 |
|
| $ | 67 |
|
| $ | 32 |
|
| $ | — |
|
| $ | 35 |
|
Exchange |
|
| 145 |
|
|
| 55 |
|
|
| 90 |
|
|
| — |
|
|
| 23 |
|
|
| 10 |
|
|
| 13 |
|
|
| — |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
|
| 381 |
|
|
| 214 |
|
|
| 1 |
|
|
| 166 |
|
|
| 11 |
|
|
| 2 |
|
|
| — |
|
|
| 9 |
|
Foreign currency exchange rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Over-the-counter |
|
| 59 |
|
|
| — |
|
|
| — |
|
|
| 59 |
|
|
| 59 |
|
|
| — |
|
|
| — |
|
|
| 59 |
|
Total derivatives, |
| $ | 794 |
|
| $ | 324 |
|
| $ | 91 |
|
| $ | 379 |
|
| $ | 160 |
|
| $ | 44 |
|
| $ | 13 |
|
| $ | 103 |
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
| $ | 443 |
|
| $ | 34 |
|
| $ | 71 |
|
| $ | 338 |
|
| $ | 146 |
|
| $ | 13 |
|
| $ | 71 |
|
| $ | 62 |
|
Exchange |
|
| 483 |
|
|
| 159 |
|
|
| 324 |
|
|
| — |
|
|
| 176 |
|
|
| — |
|
|
| 176 |
|
|
| — |
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Over-the-counter |
|
| 377 |
|
|
| 210 |
|
|
| 1 |
|
|
| 166 |
|
|
| 7 |
|
|
| — |
|
|
| — |
|
|
| 7 |
|
Foreign currency exchange rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Over-the-counter |
|
| 101 |
|
|
| 32 |
|
|
| — |
|
|
| 69 |
|
|
| 101 |
|
|
| 32 |
|
|
| — |
|
|
| 69 |
|
Total derivatives, |
| $ | 1,404 |
|
| $ | 435 |
|
| $ | 396 |
|
| $ | 573 |
|
| $ | 430 |
|
| $ | 45 |
|
| $ | 247 |
|
| $ | 138 |
|
Volumes
The following table presents the volume of 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) |
|
| 43 |
|
|
| 14 |
|
|
| 40 |
|
|
| 14 |
|
Basis(2) |
|
| 157 |
|
|
| 375 |
|
|
| 138 |
|
|
| 372 |
|
Electricity (MWh in millions): |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Fixed price |
|
| 17 |
|
|
| 44 |
|
|
| 8 |
|
|
| 13 |
|
Oil (Gal in millions) |
|
| 6 |
|
|
| — |
|
|
| 6 |
|
|
| — |
|
Interest rate(3) (in millions) |
| $ | 524 |
|
| $ | 11,758 |
|
| $ | 125 |
|
| $ | 2,750 |
|
Foreign currency exchange rate(3) (in millions) |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Danish Krone |
| 1,004 kr. |
|
| 3,468 kr. |
|
| 1,004 kr. |
|
| 3,468 kr. |
| ||||
Euro |
| €453 |
|
| €2,131 |
|
| €453 |
|
| €2,131 |
|
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 |
| $ | (236 | ) |
| $ | (33 | ) |
| 390 months |
| $ | 13 |
|
| $ | — |
|
| 390 months |
Total |
| $ | (236 | ) |
| $ | (33 | ) |
|
|
| $ | 13 |
|
| $ | — |
|
|
|
The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interest 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 |
| $ | — |
|
| $ | 129 |
|
| $ | 129 |
|
| $ | — |
|
| $ | 43 |
|
| $ | 43 |
|
Interest rate |
|
| 18 |
|
|
| 113 |
|
|
| 131 |
|
|
| 18 |
|
|
| — |
|
|
| 18 |
|
Total current derivative assets(1) |
|
| 18 |
|
|
| 242 |
|
|
| 260 |
|
|
| 18 |
|
|
| 43 |
|
|
| 61 |
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
|
| — |
|
|
| 222 |
|
|
| 222 |
|
|
| — |
|
|
| 46 |
|
|
| 46 |
|
Interest rate |
|
| 117 |
|
|
| 656 |
|
|
| 773 |
|
|
| 117 |
|
|
| — |
|
|
| 117 |
|
Total noncurrent derivative assets(2) |
|
| 117 |
|
|
| 878 |
|
|
| 995 |
|
|
| 117 |
|
|
| 46 |
|
|
| 163 |
|
Total derivative assets |
| $ | 135 |
|
| $ | 1,120 |
|
| $ | 1,255 |
|
| $ | 135 |
|
| $ | 89 |
|
| $ | 224 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
| $ | — |
|
| $ | 240 |
|
| $ | 240 |
|
| $ | — |
|
| $ | 117 |
|
| $ | 117 |
|
Interest rate |
|
| — |
|
|
| 83 |
|
|
| 83 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Foreign currency exchange rate |
|
| — |
|
|
| 9 |
|
|
| 9 |
|
|
| — |
|
|
| 9 |
|
|
| 9 |
|
Total current derivative liabilities(3) |
|
| — |
|
|
| 332 |
|
|
| 332 |
|
|
| — |
|
|
| 126 |
|
|
| 126 |
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
|
| — |
|
|
| 114 |
|
|
| 114 |
|
|
| — |
|
|
| 51 |
|
|
| 51 |
|
Interest rate |
|
| 11 |
|
|
| 287 |
|
|
| 298 |
|
|
| 11 |
|
|
| — |
|
|
| 11 |
|
Foreign currency exchange rate |
|
| — |
|
|
| 50 |
|
|
| 50 |
|
|
| — |
|
|
| 50 |
|
|
| 50 |
|
Total noncurrent derivative liabilities(4) |
|
| 11 |
|
|
| 451 |
|
|
| 462 |
|
|
| 11 |
|
|
| 101 |
|
|
| 112 |
|
Total derivative liabilities |
| $ | 11 |
|
| $ | 783 |
|
| $ | 794 |
|
| $ | 11 |
|
| $ | 227 |
|
| $ | 238 |
|
At December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
| $ | — |
|
| $ | 532 |
|
| $ | 532 |
|
| $ | — |
|
| $ | 264 |
|
| $ | 264 |
|
Interest rate |
|
| 501 |
|
|
| 104 |
|
|
| 605 |
|
|
| 501 |
|
|
| — |
|
|
| 501 |
|
Total current derivative assets(1) |
|
| 501 |
|
|
| 636 |
|
|
| 1,137 |
|
|
| 501 |
|
|
| 264 |
|
|
| 765 |
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
|
| — |
|
|
| 237 |
|
|
| 237 |
|
|
| — |
|
|
| 4 |
|
|
| 4 |
|
Interest rate |
|
| 113 |
|
|
| 689 |
|
|
| 802 |
|
|
| 113 |
|
|
| — |
|
|
| 113 |
|
Total noncurrent derivative assets(2) |
|
| 113 |
|
|
| 926 |
|
|
| 1,039 |
|
|
| 113 |
|
|
| 4 |
|
|
| 117 |
|
Total derivative assets |
| $ | 614 |
|
| $ | 1,562 |
|
| $ | 2,176 |
|
| $ | 614 |
|
| $ | 268 |
|
| $ | 882 |
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
| $ | — |
|
| $ | 700 |
|
| $ | 700 |
|
| $ | — |
|
| $ | 290 |
|
| $ | 290 |
|
Interest rate |
|
| — |
|
|
| 70 |
|
|
| 70 |
|
|
| — |
|
|
| — |
|
|
| — |
|
Foreign currency exchange rate |
|
| — |
|
|
| 8 |
|
|
| 8 |
|
|
| — |
|
|
| 8 |
|
|
| 8 |
|
Total current derivative liabilities(3) |
|
| — |
|
|
| 778 |
|
|
| 778 |
|
|
| — |
|
|
| 298 |
|
|
| 298 |
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Commodity |
|
| — |
|
|
| 226 |
|
|
| 226 |
|
|
| — |
|
|
| 58 |
|
|
| 58 |
|
Interest rate |
|
| 7 |
|
|
| 300 |
|
|
| 307 |
|
|
| 7 |
|
|
| — |
|
|
| 7 |
|
Foreign currency exchange rate |
|
| — |
|
|
| 93 |
|
|
| 93 |
|
|
| — |
|
|
| 93 |
|
|
| 93 |
|
Total noncurrent derivative liabilities(4) |
|
| 7 |
|
|
| 619 |
|
|
| 626 |
|
|
| 7 |
|
|
| 151 |
|
|
| 158 |
|
Total derivative liabilities |
| $ | 7 |
|
| $ | 1,397 |
|
| $ | 1,404 |
|
| $ | 7 |
|
| $ | 449 |
|
| $ | 456 |
|
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) |
| $ | 8 |
|
| $ | (10 | ) |
| $ | 88 |
|
| $ | 8 |
|
| $ | — |
|
| $ | 88 |
|
Total |
| $ | 8 |
|
| $ | (10 | ) |
| $ | 88 |
|
| $ | 8 |
|
| $ | — |
|
| $ | 88 |
|
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest rate(3) |
| $ | 39 |
|
|
| (14 | ) |
| $ | 354 |
|
| $ | 33 |
|
| $ | — |
|
| $ | 353 |
|
Total |
| $ | 39 |
|
| $ | (14 | ) |
| $ | 354 |
|
| $ | 33 |
|
| $ | — |
|
| $ | 353 |
|
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest rate(3) |
| $ | (4 | ) |
| $ | (21 | ) |
| $ | (32 | ) |
| $ | (4 | ) |
| $ | — |
|
| $ | (32 | ) |
Total |
| $ | (4 | ) |
| $ | (21 | ) |
| $ | (32 | ) |
| $ | (4 | ) |
| $ | — |
|
| $ | (32 | ) |
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Interest rate(3) |
| $ | 72 |
|
| $ | (28 | ) |
| $ | 633 |
|
| $ | 59 |
|
| $ | (1 | ) |
| $ | 632 |
|
Total |
| $ | 72 |
|
| $ | (28 | ) |
| $ | 633 |
|
| $ | 59 |
|
| $ | (1 | ) |
| $ | 632 |
|
|
| Amount of Gain (Loss) Recognized in Income on Derivatives(1)(2) |
| |||||||||||||||||||||||||||||
Derivatives not designated as hedging instruments |
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||||||||||
|
| Quarter-to-Date |
|
| Year-to-Date |
|
| Quarter-to-Date |
|
| Year-to-Date |
| ||||||||||||||||||||
Period Ended June 30, |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Operating revenue |
| $ | 26 |
|
| $ | (272 | ) |
| $ | 421 |
|
| $ | (602 | ) |
| $ | 10 |
|
| $ | (88 | ) |
| $ | 19 |
|
| $ | (129 | ) |
Purchased gas |
|
| — |
|
|
| 3 |
|
|
| — |
|
|
| 4 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Electric fuel and other energy-related |
|
| (73 | ) |
|
| 137 |
|
|
| (118 | ) |
|
| 196 |
|
|
| (73 | ) |
|
| 125 |
|
|
| (119 | ) |
|
| 182 |
|
Operations and maintenance |
|
| 2 |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
|
| 2 |
|
|
| — |
|
Discontinued operations |
|
| — |
|
|
| — |
|
|
| 94 |
|
|
| 1 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Interest and related charges |
|
| 29 |
|
|
| 273 |
|
|
| (47 | ) |
|
| 368 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Discontinued operations |
|
| 50 |
|
|
| 67 |
|
|
| 24 |
|
|
| 168 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total |
| $ | 34 |
|
| $ | 208 |
|
| $ | 376 |
|
| $ | 135 |
|
| $ | (61 | ) |
| $ | 37 |
|
| $ | (98 | ) |
| $ | 53 |
|
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 $1.6 billion but not more than $2.0 billion to be posted as collateral to secure its $1.6 billion redemption obligation of the Series A Preferred Stock as described in Note 16. In May 2022, Dominion Energy funded the short-term deposit in the amount of $2.0 billion, which earned interest income at an annual rate of 1.75% through its maturity in September 2022.
Rabbi Trust Securities
Equity and fixed income securities and cash equivalents in Dominion Energy’s rabbi trusts and classified as trading totaled $113 million and $111 million at June 30, 2023 and December 31, 2022, respectively.
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. The Companies' decommissioning trust funds are summarized below:
| Dominion Energy |
|
| Virginia Power |
| ||||||||||||||||||||||||||||
| Amortized |
| Total |
| Total |
|
| Allowance for Credit Losses |
| Fair |
|
| Amortized |
| Total |
| Total |
|
| Allowance for Credit Losses |
| Fair |
| ||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
U.S. | $ | 1,397 |
| $ | 2,999 |
| $ | (22 | ) |
|
|
| $ | 4,374 |
|
| $ | 872 |
| $ | 1,562 |
| $ | (21 | ) |
|
|
| $ | 2,413 |
| ||
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Corporate debt |
| 577 |
|
| 1 |
|
| (47 | ) |
| $ | — |
|
| 531 |
|
|
| 356 |
|
| 1 |
|
| (34 | ) |
| $ | — |
|
| 323 |
|
Government |
| 1,332 |
|
| 5 |
|
| (49 | ) |
|
| — |
|
| 1,288 |
|
|
| 731 |
|
| 3 |
|
| (25 | ) |
|
| — |
|
| 709 |
|
Common/ |
| 71 |
|
| — |
|
| — |
|
|
| — |
|
| 71 |
|
|
| 54 |
|
| — |
|
| — |
|
|
| — |
|
| 54 |
|
Insurance contracts |
| 236 |
|
| — |
|
| — |
|
|
|
|
| 236 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash equivalents |
| 53 |
|
| — |
|
| — |
|
|
| — |
|
| 53 |
|
|
| 9 |
|
| — |
|
| — |
|
|
| — |
|
| 9 |
|
Total | $ | 3,666 |
| $ | 3,005 |
| $ | (118 | ) | (4) | $ | — |
| $ | 6,553 |
|
| $ | 2,022 |
| $ | 1,566 |
| $ | (80 | ) | (4) | $ | — |
| $ | 3,508 |
|
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
U.S. | $ | 1,378 |
| $ | 2,501 |
| $ | (46 | ) |
|
|
| $ | 3,833 |
|
| $ | 858 |
| $ | 1,304 |
| $ | (35 | ) |
|
|
| $ | 2,127 |
| ||
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||
Corporate debt |
| 640 |
|
| 1 |
|
| (65 | ) |
| $ | — |
|
| 576 |
|
|
| 406 |
|
| 1 |
|
| (47 | ) |
| $ | — |
|
| 360 |
|
Government |
| 1,252 |
|
| 4 |
|
| (70 | ) |
|
| — |
|
| 1,186 |
|
|
| 664 |
|
| 2 |
|
| (35 | ) |
|
| — |
|
| 631 |
|
Common/ |
| 98 |
|
| — |
|
| — |
|
|
| — |
|
| 98 |
|
|
| 61 |
|
| — |
|
| — |
|
|
| — |
|
| 61 |
|
Insurance contracts |
| 221 |
|
| — |
|
| — |
|
|
|
|
| 221 |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Cash equivalents |
| 43 |
|
| — |
|
| — |
|
|
| — |
|
| 43 |
|
|
| 23 |
|
| — |
|
| — |
|
|
| — |
|
| 23 |
|
Total | $ | 3,632 |
| $ | 2,506 |
| $ | (181 | ) | (4) | $ | — |
| $ | 5,957 |
|
| $ | 2,012 |
| $ | 1,307 |
| $ | (117 | ) | (4) | $ | — |
| $ | 3,202 |
|
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 |
| $ | 294 |
|
| $ | (712 | ) |
| $ | 520 |
|
| $ | (918 | ) |
| $ | 153 |
|
| $ | (361 | ) |
| $ | 269 |
|
| $ | (463 | ) |
Less: Net (gains) losses recognized |
|
| 1 |
|
|
| 6 |
|
|
| 3 |
|
|
| 5 |
|
|
| 2 |
|
|
| — |
|
|
| 3 |
|
|
| (4 | ) |
Unrealized gains (losses) recognized |
| $ | 295 |
|
| $ | (706 | ) |
| $ | 523 |
|
| $ | (913 | ) |
| $ | 155 |
|
| $ | (361 | ) |
| $ | 272 |
|
| $ | (467 | ) |
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 |
| $ | 91 |
|
| $ | 59 |
|
Due after one year through five years |
|
| 482 |
|
|
| 260 |
|
Due after five years through ten years |
|
| 422 |
|
|
| 248 |
|
Due after ten years |
|
| 895 |
|
|
| 519 |
|
Total |
| $ | 1,890 |
|
| $ | 1,086 |
|
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 |
| $ | 594 |
|
| $ | 1,267 |
|
| $ | 1,138 |
|
| $ | 2,081 |
|
| $ | 346 |
|
| $ | 472 |
|
| $ | 719 |
|
| $ | 864 |
|
Realized gains(1) |
|
| 22 |
|
|
| 75 |
|
|
| 43 |
|
|
| 115 |
|
|
| 8 |
|
|
| 10 |
|
|
| 25 |
|
|
| 26 |
|
Realized losses(1) |
|
| 36 |
|
|
| 143 |
|
|
| 77 |
|
|
| 197 |
|
|
| 14 |
|
|
| 33 |
|
|
| 45 |
|
|
| 52 |
|
Equity Method Investments
Dominion Energy recorded equity earnings on its investments of $3 million and $16 million for the six months ended June 30, 2023 and 2022, respectively, in other income (expense) in its Consolidated Statements of Income. In addition, Dominion Energy recorded equity earnings of $184 million and $143 million for the six months ended June 30, 2023 and 2022, respectively, in discontinued operations, including amounts primarily related to its investments in Cove Point and Atlantic Coast Pipeline discussed below. Dominion Energy received distributions of $185 million and $167 million for the six months ended June 30, 2023 and 2022,
40
respectively. Dominion Energy made contributions of $48 million and $90 million for the six months ended June 30, 2023 and 2022, respectively. At June 30, 2023 and December 31, 2022, the net difference between the carrying amount of Dominion Energy’s investments and its share of underlying equity in net assets was $221 million and $223 million, respectively. At June 30, 2023, these differences are primarily comprised of $9 million of equity method goodwill that is not being amortized and a $212 million basis difference from Dominion Energy’s investment in Cove Point, which is being amortized over the useful lives of the underlying assets. At December 31, 2022, these differences are comprised of $9 million of equity method goodwill that is not being amortized, $215 million basis difference from Dominion Energy’s investment in Cove Point, which is being amortized over the useful lives of the underlying assets and a net $(1) million basis difference primarily attributable to capitalized interest.
Cove Point
Prior to the completion of the sale in September 2023 as discussed below, Dominion Energy held a 50% noncontrolling limited partnership interest in Cove Point which is accounted for as an equity method investment, as discussed in Note 9 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dominion Energy recorded distributions from Cove Point of $95 million and $85 million for the three months ended June 30, 2023 and 2022, respectively, and $178 million and $161 million for the six months ended June 30, 2023 and 2022, respectively.
In June 2023, Dominion Energy entered into an agreement with Cove Point for transportation and storage services at market rates for a 20-year period commencing in August 2023.
In July 2023, Dominion Energy entered into an agreement to sell its 50% noncontrolling limited partnership interest in Cove Point to BHE for cash consideration of $3.3 billion which closed in September 2023 after all customary closing and regulatory conditions were satisfied, including clearance under the Hart-Scott-Rodino Act and approval from the DOE. The sale is treated as an asset sale for tax purposes. In addition, Dominion Energy received proceeds of $199 million from the settlement of related interest rate derivatives. In connection with closing, Dominion Energy utilized proceeds, as required, to repay DECP Holding's term loan secured by its noncontrolling interest in Cove Point, which had an outstanding balance of $2.2 billion, and $750 million of outstanding borrowings under Dominion Energy’s two $600 million 364-day term loan facilities entered in July 2023. See Note 16 for additional information on these facilities. Dominion Energy recorded a gain on the sale of its noncontrolling interest in Cove Point of $626 million ($348 million after-tax) within discontinued operations in its Consolidated Statements of Income.
In September 2023, as a result of Dominion Energy entering agreements for the East Ohio, PSNC and Questar Gas Transactions, Dominion Energy’s 50% noncontrolling limited partnership interest in Cove Point also met the requirements to be presented as discontinued operations and held for sale as both disposition activities were executed in connection with Dominion Energy’s comprehensive business review announced in November 2022. In addition, interest expense associated with DECP Holding's term loan secured by its noncontrolling interest in Cove Point and related interest rate derivatives have been classified as discontinued operations. As a result, the previously reported amounts have been recast to reflect this presentation.
Amounts presented within discontinued operations within Dominion Energy’s Consolidated Statements of Income for the three and six months ended June 30, 2023 include $90 million and $166 million of earnings on equity method investees, $(11) million and $51 million of interest expense (benefit) and $21 million and $24 million of income tax expense, respectively. Such amounts for the three and six months ended June 30, 2022 were $74 million and $147 million of earnings on equity method investees, $(49) million and $(140) million of interest expense (benefit) and $26 million and $61 million of income tax expense. Dominion Energy’s Consolidated Balance Sheets at both June 30, 2023 and December 31, 2022 include $2.7 billion within noncurrent assets held for sale for Dominion Energy’s 50% noncontrolling limited partnership interest in Cove Point.
Atlantic Coast Pipeline
A description of Dominion Energy’s investment in Atlantic Coast Pipeline, including events that led to the cancellation of the Atlantic Coast Pipeline Project in July 2020, is included in Note 9 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
At June 30, 2023 and December 31, 2022, Dominion Energy has recorded a liability of $52 million and $114 million, respectively, in other current liabilities in its Consolidated Balance Sheets as a result of its share of equity losses exceeding its investment which reflects Dominion Energy’s obligations on behalf of Atlantic Coast Pipeline related to its AROs.
Dominion Energy recorded $41 million of contributions to Atlantic Coast Pipeline during the six months ended June 30, 2023. Dominion Energy made no contributions to Atlantic Coast Pipeline during the six months ended June 30, 2022.
Dominion Energy expects to incur additional losses from Atlantic Coast Pipeline as it completes wind-down activities. While Dominion Energy is unable to precisely estimate the amounts to be incurred by Atlantic Coast Pipeline, the portion of such amounts attributable to Dominion Energy is not expected to be material to Dominion Energy’s results of operations, financial position or statement of cash flows.
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 15% noncontrolling partnership interest in Wrangler to Interstate Gas Supply, Inc. for cash consideration of $85 million. Dominion Energy recognized a gain of $11 million ($8 million after-tax), included in other income (expense), in its Consolidated Statements of Income for the six months ended June 30, 2022.
Dominion Privatization
Dominion Energy holds a 50% noncontrolling ownership interest in Dominion Privatization which is accounted for as an equity method investment, as discussed in Note 9 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
In March 2022, Dominion Energy completed its initial contribution of privatization operations in South Carolina (excluding contracts held by DESC), Texas and Pennsylvania to Dominion Privatization for total consideration of $120 million, subject to customary closing adjustments, comprised of $60 million in cash proceeds and a 50% noncontrolling ownership interest in Dominion Privatization with an initial fair value of $60 million, estimated using the market approach. This was considered a Level 2 fair value measurement given that it was based on the agreed-upon sales price. In the first quarter of 2022, Dominion Energy recorded a gain of $23 million ($16 million after-tax), presented in losses (gains) on sales of assets in its Consolidated Statements of Income.
Note 11. Property, Plant and Equipment
Acquisitions of Nonregulated Solar Projects
Other than the item discussed below, there have been no significant updates to acquisitions of solar projects by the Companies from those discussed in Note 10 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
In March 2023, Dominion Energy entered into an agreement to acquire the Foxhound solar development project in Virginia (reflected in Contracted Energy) with closing on the agreement expected in 2024. The project is expected to cost approximately $205 million, including the initial acquisition cost, and commence commercial operations in 2024 with a generating capacity of 83 MW. Dominion Energy expects to claim production tax credits on the energy generated and sold by the project. Dominion Energy anticipates that an impairment charge may be required upon closing given its expectation that it is more likely than not that the nonregulated solar generation projects within Contracted Energy will be sold before the end of their useful lives as described in Note 10 to the Consolidated Financial Statements in Dominion Energy’s Annual Report on Form 10-K for the year ended December 31, 2022.
Sale of Utility Property
In June 2022, Dominion Energy completed the sale of certain utility property in South Carolina, as approved by the South Carolina Commission in May 2022, for total cash consideration of $16 million. In connection with the sale, Dominion Energy recognized a gain of $16 million ($12 million after-tax), recorded in losses (gains) on sales of assets, in its Consolidated Statements of Income for the three and six months ended June 30, 2022.
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) |
| $ | 401 |
| $ | 603 |
|
| $ | 50 |
| $ | 133 |
|
Deferred rider costs for Virginia electric utility(2) |
|
| 57 |
|
| 152 |
|
|
| 57 |
|
| 152 |
|
Ash pond and landfill closure costs(3) |
|
| 181 |
|
| 221 |
|
|
| 181 |
|
| 221 |
|
Deferred nuclear refueling outage costs(4) |
|
| 84 |
|
| 83 |
|
|
| 82 |
|
| 83 |
|
NND Project costs(5) |
|
| 138 |
|
| 138 |
|
|
|
|
|
| ||
Deferred early plant retirement charges(6) |
|
| 113 |
|
| 226 |
|
|
| 113 |
|
| 226 |
|
Derivatives(7) |
|
| 84 |
|
| 256 |
|
|
| 81 |
|
| 251 |
|
Other |
|
| 236 |
|
| 204 |
|
|
| 63 |
|
| 74 |
|
Regulatory assets-current |
|
| 1,294 |
|
| 1,883 |
|
|
| 627 |
|
| 1,140 |
|
Unrecognized pension and other postretirement benefit costs(8) |
|
| 873 |
|
| 891 |
|
|
| — |
|
| 4 |
|
Deferred rider costs for Virginia electric utility(2) |
|
| 610 |
|
| 363 |
|
|
| 610 |
|
| 363 |
|
Interest rate hedges(9) |
|
| 169 |
|
| 169 |
|
|
| — |
|
| — |
|
AROs and related funding(10) |
|
| 384 |
|
| 380 |
|
|
|
|
|
| ||
NND Project costs(5) |
|
| 2,018 |
|
| 2,088 |
|
|
|
|
|
| ||
Ash pond and landfill closure costs(3) |
|
| 2,024 |
|
| 2,051 |
|
|
| 2,021 |
|
| 2,049 |
|
Deferred cost of fuel used in electric generation(1) |
|
| 1,310 |
|
| 1,551 |
|
|
| 1,310 |
|
| 1,551 |
|
Derivatives(7) |
|
| 183 |
|
| 254 |
|
|
| 79 |
|
| 148 |
|
Other |
|
| 494 |
|
| 518 |
|
|
| 131 |
|
| 132 |
|
Regulatory assets-noncurrent |
|
| 8,065 |
|
| 8,265 |
|
|
| 4,151 |
|
| 4,247 |
|
Total regulatory assets |
| $ | 9,359 |
| $ | 10,148 |
|
| $ | 4,778 |
| $ | 5,387 |
|
Regulatory liabilities: |
|
|
|
|
|
|
|
|
|
| ||||
Provision for future cost of removal and AROs(11) |
|
| 111 |
|
| 111 |
|
|
| 111 |
|
| 111 |
|
Reserve for refunds and rate credits to electric utility customers(12) |
|
| 102 |
|
| 125 |
|
|
| 10 |
|
| 25 |
|
Income taxes refundable through future rates(13) |
|
| 99 |
|
| 100 |
|
|
| 65 |
|
| 65 |
|
Monetization of guarantee settlement(14) |
|
| 67 |
|
| 67 |
|
|
|
|
|
| ||
Derivatives(7) |
|
| 12 |
|
| 211 |
|
|
| — |
|
| 176 |
|
Other |
|
| 46 |
|
| 134 |
|
|
| 45 |
|
| 129 |
|
Regulatory liabilities-current |
|
| 437 |
|
| 748 |
|
|
| 231 |
|
| 506 |
|
Income taxes refundable through future rates(13) |
|
| 3,126 |
|
| 3,169 |
|
|
| 2,243 |
|
| 2,272 |
|
Provision for future cost of removal and AROs(11) |
|
| 1,771 |
|
| 1,731 |
|
|
| 1,164 |
|
| 1,135 |
|
Nuclear decommissioning trust(15) |
|
| 1,936 |
|
| 1,685 |
|
|
| 1,936 |
|
| 1,685 |
|
Monetization of guarantee settlement(14) |
|
| 669 |
|
| 702 |
|
|
|
|
|
| ||
Interest rate hedges(9) |
|
| 196 |
|
| 240 |
|
|
| 196 |
|
| 240 |
|
Reserve for refunds and rate credits to electric utility customers(12) |
|
| 274 |
|
| 325 |
|
|
| — |
|
| — |
|
Overrecovered other postretirement benefit costs(16) |
|
| 152 |
|
| 140 |
|
|
|
|
|
| ||
Derivatives(7) |
|
| 189 |
|
| 234 |
|
|
| — |
|
| — |
|
Other |
|
| 263 |
|
| 191 |
|
|
| 260 |
|
| 167 |
|
Regulatory liabilities-noncurrent |
|
| 8,576 |
|
| 8,417 |
|
|
| 5,799 |
|
| 5,499 |
|
Total regulatory liabilities |
| $ | 9,013 |
| $ | 9,165 |
|
| $ | 6,030 |
| $ | 6,005 |
|
43
At June 30, 2023, Dominion Energy and Virginia Power regulatory assets include $4.4 billion and $2.7 billion, respectively, on which they do not expect to earn a return during the applicable recovery period. With the exception of certain items discussed above, the majority of these expenditures are expected to be recovered within the next two years.
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 9.70% for Virginia Power in the 2023 Biennial Review, reflecting the average authorized ROE of vertically integrated electric utilities by the applicable regulatory commissions in the peer group jurisdictions of Florida, Georgia, Texas, Tennessee, West Virginia, Kentucky and North Carolina. Subsequent to the 2023 Biennial Review, all provisions related to this peer group benchmarking expire and the Virginia Commission is authorized to utilize any methodology it deems to be consistent with the public interest to make future ROE determinations. In all future biennial reviews, if the Virginia Commission determines that Virginia Power’s existing base rates will, on a going-forward basis, produce revenues that are either in excess of or below its authorized rate of return, the Virginia Commission is authorized to reduce or increase such base rates, as applicable and necessary, to ensure that Virginia Power’s base rates are just and reasonable while still allowing Virginia Power to recover its costs and earn a fair rate of return. In addition, beginning with the biennial review to be filed in 2025, the Virginia Commission may, at its discretion, increase or decrease Virginia Power’s authorized ROE by up to 50 basis points based on factors that may include reliability, generating plant performance, customer service and operating efficiency, with the provisions applying to such adjustments to be determined in a future proceeding.
The legislation directs that if the Virginia Commission determines as part of the 2023 Biennial Review that Virginia Power has earned more than 70 basis points above its authorized ROE of 9.35% established in the 2021 Triennial Review that 85% of the amount of such earnings above this level be credited to customers’ bills. In future biennial reviews, beginning with the biennial review to be filed in 2025, 85% of any earnings determined by the Virginia Commission to be up to 150 basis points above Virginia Power’s authorized ROE shall be credited to customers’ bills as well as 100% of any earnings that are more than 150 basis points above Virginia Power’s authorized ROE. For the purposes of measuring any bill credits due to customers, associated income taxes are factored into the determination of such amounts. In addition, the legislation eliminates Virginia Power’s ability to utilize Virginia Commission-approved investment amounts in qualifying solar or wind generation facilities or electric distribution grid transformation projects as a CCRO to reduce or offset any earnings otherwise eligible for customer credits as previously permitted under the GTSA.
In addition to the biennial review mechanisms discussed above, the legislation also includes provisions related to other aspects of Virginia Power’s ratemaking framework.
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 9.04% on its generation and distribution services for the test period, within 70 basis points of its authorized ROE of 9.35% established in the 2021 Triennial Review. Virginia Power did not request an increase in base rates for generation and distribution services and proposed that base rates remain at their existing level utilizing an ROE of 9.70% for the prospective test periods and a common equity capitalization to total capitalization ratio of 52.10%. Virginia Power noted that while its prospective test periods would result in a revenue deficiency, it did not request an increase to base rates given that the combination of certain riders with an aggregate annual revenue requirement of at least $350 million into base rates effective July 2023 cannot serve as the basis for an increase in base rates as part of the 2023 Biennial Review. The Virginia Commission will determine whether Virginia Power’s earnings for the test period, considered as a whole, were within 70 basis points above or below the authorized ROE of 9.35%. The Virginia Commission will also authorize an ROE of 9.70%, as directed by legislation enacted in Virginia in April 2023, for Virginia Power that will be applied to Virginia Power’s riders prospectively and that will also be utilized to measure base rate earnings for the 2025 Biennial Review. This matter is pending.
Virginia Fuel Expenses
In May 2023, Virginia Power filed its annual fuel factor filing with the Virginia Commission to recover an estimated $2.3 billion in Virginia jurisdictional projected fuel expense for the rate year beginning July 1, 2023 and a projected $1.3 billion under-recovered balance as of June 30, 2023. The projected under-recovered balance includes $578 million representing the remaining two years of under-recovered balance as of June 30, 2022 being collected over a three-year period in accordance with the Virginia Commission’s approval of Virginia Power’s 2022 annual fuel factor as described in Note 13 to the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. Virginia Power proposed two alternatives to recover these under-collected fuel costs. The first option reflects recovery of the total $3.3 billion fuel cost requirement over the July 2023 through June 2024 fuel period and results in an increase in Virginia Power’s fuel revenues of $631 million when applied to projected kilowatt-hour sales for the period. The second option proposed by Virginia Power incorporates its anticipated July 2023 application to the Virginia Commission for approval of a financing order to securitize up to the projected $1.3 billion under-recovered balance as of June 30, 2023 as permitted under legislation enacted in Virginia in April 2023. Under this option, Virginia Power proposed implementation of the current period fuel factor rate only effective July 2023 on an interim basis, while suspending implementation of the prior-period fuel factor rate pending the Virginia Commission’s consideration of the securitization petition. If approved by the Virginia Commission, the securitization option results in a net decrease in Virginia Power’s fuel revenues for the rate year of approximately $541 million. In addition, Virginia Power has proposed to alter the order in which revenue from certain customers who elect to pay market-based rates would be allocated between base rates and fuel, which if approved would result in a reduction to fuel revenue of $13 million. In May 2023, the Virginia Commission ordered that, in accordance with Virginia Power’s second proposed option, only the current period fuel factor rate be implemented effective July 2023 on an interim basis. In accordance with legislation enacted in Virginia in April 2023 discussed above, in July 2023, Virginia Power filed an application with the Virginia Commission for approval of a financing order to securitize the projected $1.3 billion under-recovered fuel balance as of June 30, 2023 through the issuance of one or more tranches of bonds with tenors up to approximately ten years. These matters are pending.
Virginia Power Equity Application
In July 2023, Virginia Power requested approval from the Virginia Commission to issue and sell to Dominion Energy up to $3.25 billion of authorized but unissued shares of its common stock, no par value, through the end of 2023 in order to maintain a common equity capitalization to total capitalization ratio of 52.10% through December 2024 in accordance with legislation enacted in Virginia in April 2023 as discussed above. This matter is pending.
GTSA Filing
In March 2023, Virginia Power filed a petition with the Virginia Commission for approval of Phase III, covering 2024 through 2026, of its plan for electric distribution grid transformation projects as authorized by the GTSA. The plan includes 14 projects covering six components (i) AMI; (ii) customer information platform; (iii) grid improvement projects; (iv) physical and cyber security; (v) telecommunications infrastructure and (vi) customer education. For Phase III, the total proposed capital investment is $1.1 billion and the proposed operations and maintenance investment is $71 million. This matter is pending.
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 474 MW of solar generation and 16 MW of energy storage as part of its efforts to meet the renewable generation development requirements under the VCEA. The projects, as of October 2022, are expected to cost approximately $1.2 billion in the aggregate, excluding financing costs, and be placed into service between 2024 through 2025. In April 2023, the Virginia Commission approved the petition.
Riders
Developments for significant riders associated with various Virginia Power projects are as follows:
Rider Name |
| Application Date |
| Approval Date |
| Rate Year |
| Total Revenue |
|
| Increase (Decrease) |
| ||
Rider CCR |
| February 2023 |
| Pending |
| December 2023 |
| $ | 194 |
|
| $ | (37 | ) |
Rider CE(1) |
| October 2022 |
| April 2023 |
| May 2023 |
|
| 89 |
|
|
| 18 |
|
Rider GT |
| August 2022 |
| April 2023 |
| June 2023 |
|
| 14 |
|
|
| (42 | ) |
Rider GT |
| August 2023 |
| Pending |
| June 2024 |
|
| 145 |
|
|
| 131 |
|
Rider GV(2) |
| June 2023 |
| Pending |
| April 2024 |
|
| 132 |
|
|
| 5 |
|
Rider GV(2) |
| June 2023 |
| Pending |
| April 2025 |
|
| 135 |
|
|
| 3 |
|
Rider OSW |
| November 2022 |
| July 2023 |
| September 2023 |
|
| 271 |
|
|
| 192 |
|
Rider PPA |
| December 2022 |
| July 2023 |
| September 2023 |
|
| (22 | ) |
|
| (17 | ) |
Rider R |
| June 2021 |
| March 2022 |
| April 2023 |
|
| 55 |
| (8) |
| (4 | ) |
Rider RGGI(3) |
| December 2022 |
| July 2023 |
| September 2023 |
|
| 356 |
|
| N/A |
| |
Rider RPS |
| December 2022 |
| July 2023 |
| September 2023 |
|
| 96 |
|
|
| (44 | ) |
Rider S |
| June 2021 |
| February 2022 |
| April 2023 |
|
| 191 |
| (8) |
| (1 | ) |
Rider SNA(4) |
| October 2022 |
| June 2023 |
| September 2023 |
|
| 50 |
|
|
| (57 | ) |
Rider T1(5) |
| May 2023 |
| July 2023 |
| September 2023 |
|
| 879 |
|
|
| 173 |
|
Rider U(6) |
| June 2022 |
| February 2023 |
| April 2023 |
|
| 74 |
|
|
| (21 | ) |
Rider US-3 |
| August 2022 |
| April 2023 |
| June 2023 |
|
| 40 |
|
|
| (10 | ) |
Rider US-3 |
| August 2023 |
| Pending |
| June 2024 |
|
| 37 |
|
|
| (3 | ) |
Rider US-4 |
| August 2022 |
| April 2023 |
| June 2023 |
|
| 16 |
|
|
| 1 |
|
Rider US-4 |
| August 2023 |
| Pending |
| June 2024 |
|
| 14 |
|
|
| (2 | ) |
Rider W(7) |
| June 2022 |
| February 2023 |
| April 2023 |
|
| 105 |
| (8) |
| (16 | ) |
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 |
| August 2022 |
| April 2023 |
| 230 kV |
| 15 |
| $ | 40 |
|
Construct new switching station, substations, |
| October 2022 |
| June 2023 |
| 230 kV |
| 18 |
|
| 230 |
|
Construct new switching station, substation, |
| October 2022 |
| May 2023 |
| 230 kV |
| 26 |
|
| 215 |
|
Construct new Mars and Wishing Star substations, |
| October 2022 |
| April 2023 |
| 500/230 kV |
| 4 |
|
| 720 |
|
Construct new Altair switching station, transmission |
| November 2022 |
| June 2023 |
| 230 kV |
| 2 |
|
| 50 |
|
Rebuild of Lines #2019 and #2007 in the City of |
| February 2023 |
| Pending |
| 230 kV |
| 5 |
|
| 95 |
|
Install transformer at Possum Point substation, |
| March 2023 |
| Pending |
| 230 kV |
| 2 |
|
| 35 |
|
Partial rebuild of Line #2011 in the Cities of |
| March 2023 |
| Pending |
| 230 kV |
| 7 |
|
| 35 |
|
Construct new transmission lines and convert Jeffress |
| May 2023 |
| Pending |
| 230 kV |
| 18 |
|
| 135 |
|
Construct new transmission lines and expand White |
| June 2023 |
| Pending |
| 230 kV |
| 5 |
|
| 45 |
|
Virginia Regulation – Select Prior Year Events
The following items were disclosed in Note 13 to the Consolidated Financial Statements in the Companies’ 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 $2.3 billion in Virginia jurisdictional projected fuel expense for the rate year beginning July 1, 2022 and a projected $1.0 billion under-recovered balance as of June 30, 2022. In July 2022, Virginia Power, the Virginia Commission staff and another party filed a comprehensive settlement agreement, approved by the Virginia Commission in September 2022, which provided for the collection of the requested under-recovered projected fuel expense over a three-year period beginning July 1, 2022 and required that Virginia Power exclude from recovery through base rates one half of the related financing costs over the three year period. In addition, the settlement agreement affirmed Virginia Power’s proposal regarding fuel cost recovery for market-based customers. As a result, Virginia Power recorded a $191 million ($142 million after-tax) charge in the second quarter of 2022 within impairment of assets and other charges in its Consolidated Statements of Income. See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 for additional information.
Rider RGGI
In May 2022, Virginia Power filed a petition with the Virginia Commission requesting suspension of Rider RGGI approved in August 2021. Virginia Power also requested that RGGI compliance costs incurred and unrecovered through July 2022 be recovered through existing base rates in effect during the period incurred. The Virginia Commission approved the request in June 2022. In the second quarter of 2022, Virginia Power recorded a charge of $180 million ($134 million after-tax) in impairment of assets and other charges for the amount deemed recovered through base rates through June 30, 2022, including the impact of certain non-jurisdictional customers which follow Virginia Power’s jurisdictional rate methodology. See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 for additional information.
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 $56 million gas cost decrease with rates effective March 2023. The North Carolina Commission approved the filing in March 2023.
PSNC Customer Usage Tracker
PSNC utilizes a customer usage tracker, a decoupling mechanism, which allows it to adjust its base rates semi-annually for residential and commercial customers based on average per customer consumption. In March 2023, PSNC submitted a filing with the North Carolina Commission for a $23 million decrease relating to the customer usage tracker. The North Carolina Commission approved the filing in March 2023 with rates effective April 2023.
South Carolina Regulation
DSM Programs
DESC has approval for 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 $46 million of costs and net lost revenues associated with these programs, along with an incentive to invest in such programs. DESC requested that rates be effective with the first billing cycle of May 2023. In April 2023, the South Carolina Commission approved the request, effective with the first billing cycle of May 2023.
Cost of Fuel
DESC's retail electric rates include a cost of fuel component approved by the South Carolina Commission which may be adjusted periodically to reflect changes in the price of fuel purchased by DESC. In February 2023, DESC filed with the South Carolina Commission a proposal to increase the total fuel cost component of retail electric rates. DESC's proposed adjustment is designed to recover DESC's current base fuel costs, including its existing under-collected balance, over the 12-month period beginning with the first billing cycle of May 2023, along with a requested decrease to DESC's variable environmental and avoided capacity cost component. The net effect of the proposal is an annual increase of $176 million. In March 2023, DESC, the South Carolina Office of Regulatory Staff and another party of record filed a stipulation with the South Carolina Commission for approval to reduce the base fuel cost component reflecting a subsequent decrease in current fuel prices, resulting in a net annual increase of $121 million. In April 2023, the South Carolina Commission voted to approve the stipulation, with rates effective May 2023.
Electric Transmission Project
In March 2023, DESC filed an application with the South Carolina Commission requesting approval to construct and operate 19 miles of 230 kV transmission lines, a substation and associated facilities in Jasper County, South Carolina estimated to cost approximately $55 million. In July 2023, the South Carolina Commission voted to approve the request.
Electric - Other
DESC utilizes a pension costs rider approved by the South Carolina Commission which is designed to allow recovery of projected pension costs, including under-collected balances or net of over-collected balances, as applicable. The rider is typically reviewed for adjustment every 12 months with any resulting increase or decrease going into effect beginning with the first billing cycle in May. In February 2023, DESC requested that the South Carolina Commission approve an adjustment to this rider to increase annual revenue by $24 million. In April 2023, the South Carolina Commission approved the request.
Natural Gas Base Rate Case
In March 2023, DESC filed its natural gas base rate case and schedules with the South Carolina Commission. DESC proposed a non-fuel, base rate increase of $19 million effective October 2023. The base rate increase was proposed to recover significant investment in distribution infrastructure for the benefit of customers. The proposed rates would provide for an ROE of 10.38% compared to the currently authorized ROE of 10.25%. In addition, DESC elected to continue applicability of the Natural Gas Rate Stabilization Act, which allows for the adjustment of natural gas base rates annually, to its future rates and charges. This matter is pending.
49
Ohio Regulation
PIR Program
In 2008, East Ohio began PIR, aimed at replacing approximately 25% of its pipeline system. The Ohio Commission has approved East Ohio’s PIR program for capital investments through 2026 with 3% increases of annual capital expenditures per year.
In February 2023, East Ohio filed an application with the Ohio Commission requesting approval to adjust the PIR recovery. The filing reflects gross plant investment for 2022 of $225 million, cumulative gross plant investment of $2.4 billion and a revenue requirement of $305 million. In April 2023, the Ohio Commission approved the request.
CEP Program
In 2011, East Ohio began CEP which enables East Ohio to defer depreciation expense, property tax expense and carrying costs at the debt rate of 6.5% on capital investments not covered by its PIR program to expand, upgrade or replace its infrastructure and information technology systems as well as investments necessary to comply with the Ohio Commission or other government regulations. In April 2022, certain parties filed an appeal with the Supreme Court of Ohio appealing the Ohio Commission’s December 2020 order establishing the CEP rider, including the rate of return utilized in determining the revenue requirement. This matter is pending.
In March 2023, East Ohio filed an application with the Ohio Commission requesting approval to adjust CEP cost recovery rates for 2022 costs. The filing reflects gross plant investment for 2022 of $195 million, cumulative gross plant investment of $1.3 billion and a revenue requirement of $151 million. This matter is pending.
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 $23 million to provide for recovery of an under-recovered accumulated bad debt expense of $9 million as of March 31, 2023, and recovery of net bad debt expense projected to total $14 million for the twelve-month period ending March 2024.
Utah Regulation
Purchased Gas
In February 2023, Questar Gas filed an application with the Utah Commission seeking approval for a $92 million gas cost increase with rates effective March 2023. Subsequently in February 2023, the Utah Commission approved a $164 million gas cost increase reflecting additional undercollected gas costs incurred in January 2023.
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 $6 million and $11 million for the three and six months ended June 30, 2023, respectively, and $7 million and $11 million for the three and six months ended June 30, 2022, respectively, of rental revenue included in operating revenue. Dominion Energy’s Consolidated Statements of Income include $2 million and $3 million for the three and six months ended June 30, 2023, respectively, and $8 million and $17 million for the three and six months ended June 30, 2022, respectively, of depreciation expense included in depreciation, depletion and amortization related to facilities subject to power purchase agreements under which Dominion Energy is the lessor.
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. Dominion Energy has been appointed to act as the construction agent for the lessor, during which time Dominion Energy will request cash draws from the lessor and debt investors to fund all project costs, which totaled $367 million as of June 30, 2023. If the project is terminated under certain events of default, Dominion Energy could be required to pay up to 100% of the then funded amount.
The initial lease term will commence once construction is substantially complete and the vessel is delivered and will mature in November 2027. At the end of the initial lease term, Dominion Energy can (i) extend the term of the lease for an additional term,
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 $113 million and $96 million for the three months ended June 30, 2023 and 2022, respectively and $226 million and $194 million for the six months ended June 30, 2023 and 2022, respectively. Virginia Power’s Consolidated Balance Sheets include amounts due to DES of $27 million and $28 million at June 30, 2023 and December 31, 2022, respectively, recorded in payables to affiliates.
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 $6.0 billion joint revolving credit facility that provides for a discount in the pricing of certain annual fees and amounts borrowed by Dominion Energy under the facility if Dominion Energy achieves certain annual renewable electric generation and diversity and inclusion objectives.
At 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) |
| $ | 6,000 |
|
| $ | 4,172 |
|
| $ | 16 |
|
| $ | 1,812 |
|
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 $500 million and $250 million, respectively.
In March 2023, FERC granted DESC authority through March 2025 to issue short-term indebtedness (pursuant to Section 204 of the Federal Power Act) in amounts not to exceed $2.2 billion outstanding with maturity dates of one year or less. In addition, in March 2023, FERC granted GENCO authority through March 2025 to issue short-term indebtedness not to exceed $200 million outstanding with maturity dates of one year or less.
In addition to the credit 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 $30 million in letters of credit and will mature in June 2024. At both June 30, 2023 and December 31, 2022, Dominion Energy had $25 million in letters of credit outstanding under this facility.
In March 2023, Dominion Energy entered into an agreement with a financial institution which it expects to allow it to issue up to $100 million in letters of credit. At June 30, 2023, $58 million in letters of credit were issued and outstanding under this agreement.
Dominion Energy has an effective shelf registration statement with the SEC for the sale of up to $3.0 billion of variable denomination floating rate demand notes, called Dominion Energy Reliability InvestmentSM as disclosed in Note 17 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. At June 30, 2023 and December 31, 2022, Dominion Energy’s Consolidated Balance Sheets include $403 million and $347 million, respectively, with respect to such notes presented within short-term debt. The proceeds are used for general corporate purposes and to repay debt.
In January 2023, Dominion Energy entered into a $2.5 billion 364-Day term loan 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. At June 30, 2023, Dominion Energy's Consolidated Balance Sheet includes $2.5 billion with respect to such facility presented within securities due within one year. The maximum allowed total debt to total capital ratio under the facility is consistent with such allowed ratio under Dominion Energy’s joint revolving credit facility.
In July 2023, Dominion Energy entered into two $600 million 364-day term loan facilities which 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. The maximum allowed total debt to total capital ratio under the facilities is consistent with such allowed ratio under Dominion Energy’s joint revolving credit facility.
Virginia Power
Virginia Power’s short-term financing is supported through its access as co-borrower to Dominion Energy’s $6.0 billion joint revolving credit facility. The credit facility can be used for working capital, as support for the combined commercial paper programs of the borrowers under the credit facility and for other general corporate purposes.
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) |
| $ | 6,000 |
|
| $ | 1,265 |
|
| $ | 10 |
|
52
In January 2023, Virginia Power entered into a letter of credit facility which allows Virginia Power to issue up to $125 million in letters of credit and matures in January 2026. At June 30, 2023, less than $1 million in letters of credit were issued and outstanding under this facility with no amounts drawn under the letters of credit.
In March 2023, Virginia Power entered into an agreement with a financial institution, which it expects to allow it to issue up to $200 million in letters of credit. At June 30, 2023, $60 million in letters of credit were issued and outstanding under this agreement.
Long-term Debt
Unless otherwise noted, the proceeds of long-term debt issuances were used for general corporate purposes and/or to repay short-term debt.
In March 2023, Dominion Energy borrowed $450 million under its Sustainability Revolving Credit Agreement, which, as described in Note 18 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, matures in 2024 and bears interest at a variable rate with the proceeds used for general corporate purposes. In April 2023 Dominion Energy repaid $450 million borrowed for general corporate purposes. At both June 30, 2023 and December 31, 2022, Dominion Energy’s Consolidated Balance Sheets include $450 million with respect to this facility.
In March 2023, Virginia Power issued $750 million of 5.00% senior notes and $750 million of 5.45% senior notes that mature in 2033 and 2053, respectively.
In June 2023, Virginia Power remarketed three series of tax-exempt bonds, with an aggregate outstanding principal of $160 million to 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.
Derivative Restructuring
In August 2020, Virginia Power amended a portfolio of interest rate swaps with a notional value of $900 million, extending the mandatory termination dates, as discussed in Note 18 to the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. In March 2023, Virginia Power settled the remaining outstanding interest rate swaps which would have otherwise matured in December 2023, resulting in a $448 million reduction in securities due within one year.
Preferred Stock
Dominion Energy is authorized to issue up to 20 million shares of preferred stock, which may be designated into separate classes. At June 30, 2023 and December 31, 2022, Dominion Energy had issued and outstanding 1.8 million shares of preferred stock, 0.8 million and 1.0 million of which were designated as the Series B Preferred Stock and the Series C Preferred Stock, respectively.
Dominion Energy recorded dividends of $5 million ($2.917 per share) for the three months ended June 30, 2022 and $12 million ($7.292 per share) for the six months ended June 30, 2022, on the Series A Preferred Stock. In addition, Dominion Energy recorded interest expense of $2 million on the Series A Preferred Stock for the three and six months ended June 30, 2022, following the reclassification of these shares to a mandatorily redeemable liability effective June 2022. Dominion Energy recorded dividends of $9 million ($11.625 per share) for both the three months ended June 30, 2023 and 2022 and $18 million ($23.250 per share) for both the six months ended June 30, 2023 and 2022 on the Series B Preferred Stock. Dominion Energy recorded dividends of $11 million ($10.875 per share) for both the three months ended June 30, 2023 and 2022 and $22 million ($21.750 per share) for both the six months ended June 30, 2023 and 2022 on the Series C Preferred Stock.
There have been no significant changes to Dominion Energy’s Series B Preferred Stock and Series C Preferred Stock as described in Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
2019 Corporate Units
The 2019 Equity Units, initially issued in the form of 2019 Series A Corporate Units, are described in Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
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 1.75% for the June 2022 through August 2022 dividend period and 6.75% effective September 2022. The conversion rate on the Series A Preferred Stock did not increase as a result of the remarketing. In May 2022, Dominion Energy received a commitment from a financial institution to purchase up to 1.6 million shares of the Series A Preferred Stock in the final remarketing. Accordingly, following the settlement of the successful remarketing and approval from its Board of Directors in June 2022, Dominion Energy became obligated to redeem all outstanding shares of Series A Preferred Stock in September 2022. As such, effective June 2022, the Series A Preferred Stock was considered to be mandatorily redeemable and was classified as a current liability. In addition, Dominion Energy made a short-term deposit at the financial institution as described further in Note 10. Proceeds from the final remarketing were used on behalf of holders of 2019 Series A Corporate Units at the time of the remarketing to pay the purchase price to Dominion Energy for the issuance of its common stock under the stock purchase contracts included in such corporate units in June 2022.
Issuance of Common Stock
Dominion Energy recorded, net of fees and commissions, $85 million from the issuance of 2 million shares of common stock for the six months ended June 30, 2023 and $91 million from the issuance of 1 million shares of common stock for the six months ended June 30, 2022, through various programs including Dominion Energy Direct® and employee savings plans as described in Note 20 to the Consolidated Financial Statements to the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
In May 2022, Dominion Energy issued 0.9 million shares of its common stock, valued at $72 million, to partially satisfy DESC’s remaining obligation under a settlement agreement with the SCDOR discussed in Note 17.
In June 2022, Dominion Energy issued 0.4 million shares of its common stock, valued at $30 million, to partially satisfy its obligation under a settlement agreement for the State Court Merger Case discussed in Note 17.
In June 2022, Dominion Energy issued 19.4 million shares to settle the stock purchase contract component of the 2019 Equity Units and received proceeds of $1.6 billion.
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 June 2023.
Repurchase of Common Stock
In November 2020, the Board of Directors authorized the repurchase of up to $1.0 billion of Dominion Energy’s common stock in addition to the $3.0 billion repurchase program authorized in July 2020 and completed in December 2020 as discussed in Note 20 to the Consolidated Financial Statements in the Companies’ Annual Report Form 10-K for the year ended December 31, 2022.
Dominion Energy did not repurchase any shares of common stock during the six months ended June 30, 2023, except for shares tendered by employees to satisfy tax withholding obligations on vested restricted stock, which do not count against its stock repurchase authorization.
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 75,000 tons per year of CO2 equivalent emissions. Until the EPA ultimately takes final action on this rulemaking, the Companies cannot predict the impact to their results of operations, financial condition and/or cash flows.
In December 2018, the EPA proposed revised Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources. The proposed rule would amend the previous determination that the best system of emission reduction for newly constructed coal-fired steam generating units is no longer partial carbon capture and storage. Instead, the proposed revised best system of emission reduction for this source category is the most efficient demonstrated steam cycle (e.g., supercritical steam conditions for large units and subcritical steam conditions for small units) in combination with best operating practices. 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 five mandatory facility-specific factors, including a social cost-benefit test, and six optional facility-specific factors. The rule governs all electric generating stations with water withdrawals above two MGD, with a heightened entrainment analysis for those facilities over 125 MGD. Dominion Energy and Virginia Power currently have 15 and nine facilities, respectively, that are subject to the final regulations. Dominion Energy is also working with the EPA and state regulatory agencies to assess the applicability of Section 316(b) to eight hydroelectric facilities, including three Virginia Power facilities. The Companies anticipate that they may have to install impingement control technologies at certain of these stations that have once-through cooling systems. The Companies are currently evaluating the need or potential for entrainment controls under the final rule as these decisions will be made on a case-by-case basis after a thorough review of detailed biological, technological, and cost benefit studies. DESC is conducting studies and implementing plans as required by the rule to determine appropriate intake structure modifications at certain facilities to ensure compliance with this rule. While the impacts of this rule could be material to the Companies’ results of operations, financial condition and/or cash flows, the existing regulatory frameworks in South Carolina and Virginia provide rate recovery mechanisms that could substantially mitigate any such impacts for the regulated electric utilities.
Effluent Limitations Guidelines
In September 2015, the EPA released a final rule to revise the Effluent Limitations Guidelines for the Steam Electric Power Generating Category. The final rule established updated standards for wastewater discharges that apply primarily at coal and oil steam generating stations. Affected facilities are required to convert from wet to dry or closed cycle coal ash management, improve existing wastewater treatment systems and/or install new wastewater treatment technologies in order to meet the new discharge limits. In April 2017, the EPA granted two separate petitions for reconsideration of the Effluent Limitations Guidelines final rule and stayed future compliance dates in the rule. Also in April 2017, the U.S. Court of Appeals for the Fifth Circuit granted the EPA’s request for a stay of the pending consolidated litigation challenging the rule while the EPA addresses the petitions for reconsideration. In September 2017, the EPA signed a rule to postpone the earliest compliance dates for certain waste streams regulations in the Effluent Limitations Guidelines final rule from November 2018 to November 2020; however, the latest date for compliance for these regulations was December 2023. In October 2020, the EPA released the final rule that extends the latest dates for compliance. Individual facilities’ compliance dates will vary based on circumstances and the determination by state regulators and may range from 2021 to 2028. While the impacts of this rule could be material to the Companies’ results of operations, financial condition and/or cash flows, the existing regulatory frameworks in South Carolina and Virginia provide rate recovery mechanisms that could substantially mitigate any such impacts for the regulated electric utilities.
Waste Management and Remediation
The operations of the Companies are subject to a variety of state and federal laws and regulations governing the management and disposal of solid and hazardous waste, and release of hazardous substances associated with current and/or historical operations. The CERCLA, as amended, and similar state laws, may impose joint, several and strict liability for cleanup on potentially responsible parties who owned, operated or arranged for disposal at facilities affected by a release of hazardous substances. In addition, many states have created programs to incentivize voluntary remediation of sites where historical releases of hazardous substances are identified and property owners or responsible parties decide to initiate cleanups.
From time to time, the Companies may be identified as a potentially responsible party in connection with the alleged release of hazardous substances or wastes at a site. Under applicable federal and state laws, the Companies could be responsible for costs associated with the investigation or remediation of impacted sites, or subject to contribution claims by other responsible parties for their costs incurred at such sites. The Companies also may identify, evaluate and remediate other potentially impacted sites under voluntary state programs. Remediation costs may be subject to reimbursement under the Companies’ insurance policies, rate recovery
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 13 sites associated with Dominion Energy, remediation work has been substantially completed under federal or state oversight. Where required, the sites are following state-approved groundwater monitoring programs. Dominion Energy commenced remediation activities at one site in the second quarter of 2022. In addition, Dominion Energy has proposed remediation plans for one site at Virginia Power and expects to commence remediation activities in 2023 depending on receipt of final permits and approvals. At June 30, 2023 and December 31, 2022, Dominion Energy had $46 million and $47 million, respectively, of which $1 million at both periods is reflected in liabilities held for sale and Virginia Power had $25 million at both periods, of reserves recorded. Dominion Energy is associated with 12 additional sites, including two associated with Virginia Power, which are not under investigation by any state or federal environmental agency nor the subject of any current or proposed plans to perform remediation activities. Due to the uncertainty surrounding such sites, the Companies are unable to make an estimate of the potential financial statement impacts.
Other Legal Matters
The Companies are defendants in a number of lawsuits and claims involving unrelated incidents of property damage and personal injury. Due to the uncertainty surrounding these matters, the Companies are unable to make an estimate of the potential financial statement impacts; however, they could have a material impact on results of operations, financial condition and/or cash flows.
SCANA Legal Proceedings
The following describes certain legal proceedings involving Dominion Energy, SCANA or DESC relating 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 $66 million and $94 million, respectively, included in other current liabilities, and insurance receivables of $72 million and $68 million, respectively, included within other receivables. These balances at June 30, 2023 and December 31, 2022 include $62 million and $68 million, respectively, of offsetting reserves and insurance receivables related to personal injury or wrongful death cases which are currently pending. During both the three and six months ended June 30, 2023 and 2022, charges included in Dominion Energy's Consolidated Statements of Income were inconsequential.
Governmental Proceedings and Investigations
In June 2018, DESC received a notice of proposed assessment of approximately $410 million, excluding interest, from the SCDOR following its audit of DESC’s sales and use tax returns for the periods September 1, 2008 through December 31, 2017. The proposed assessment, which includes 100% of the NND Project, is based on the SCDOR’s position that DESC’s sales and use tax exemption for the NND Project does not apply because the facility will not become operational. In December 2020, the parties reached an agreement in principle in the amount of $165 million to resolve this matter. In June 2021, the parties executed a settlement agreement which allows DESC to fund the settlement amount through a combination of cash, shares of Dominion Energy common stock or real estate with an initial payment of at least $43 million in shares of Dominion Energy common stock. In August 2021, Dominion Energy issued 0.6 million shares of its common stock to satisfy DESC’s obligation for the initial payment under the settlement agreement. In May 2022, Dominion Energy issued an additional 0.9 million shares of its common stock to partially satisfy DESC’s remaining obligation under the settlement agreement. In June 2022, DESC requested approval from the South Carolina Commission to transfer certain real estate with a total settlement value of $51 million to satisfy its remaining obligation under the settlement agreement. In July 2022, the South Carolina Commission voted to approve the request and issued its final order in August 2022. In September 2022, DESC transferred certain non-utility property with a fair value of $28 million to the SCDOR under the settlement agreement. In December 2022, DESC transferred additional utility property with a fair value of $3 million to the SCDOR. In October 2022, DESC filed for approval to transfer the remaining real estate with FERC which was received in November 2022. In March 2023, DESC transferred utility property with a fair value of $10 million to the SCDOR resulting in a gain of $9 million ($7 million after-tax), recorded in losses (gains) on sales of assets in Dominion Energy’s Consolidated Statements of Income for the six months ended June 30, 2023. In June 2023, DESC transferred the remaining utility property with a fair value of $11 million to the SCDOR resulting in a gain of $11 million ($8 million after-tax), recorded in losses (gains) on sales of assets in Dominion Energy's Consolidated Statements of Income for the three and six months ended June 30, 2023. In July 2023, DESC made a less than $1 million cash payment to the SCDOR to fully satisfy its remaining obligation, including applicable interest, under the settlement agreement.
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 four guarantees related to Cove Point, an equity method investment, in support of terminal services, transportation and construction. Two of the Cove Point guarantees have a cumulative maximum exposure of $1.9 billion while the other two guarantees have no maximum limit. No amounts related to these guarantees have been recorded.
In addition, at June 30, 2023, Dominion Energy had issued an additional $20 million of guarantees, primarily to support third parties. No amounts related to these guarantees have been recorded.
Dominion Energy also enters into guarantee arrangements on behalf of its consolidated subsidiaries, primarily to facilitate their commercial transactions with third parties. If any of these subsidiaries fail to perform or pay under the contracts and the counterparties seek performance or payment, Dominion Energy would be obligated to satisfy such obligation. To the extent that a liability subject to a guarantee has been incurred by one of Dominion Energy’s consolidated subsidiaries, that liability is included in the Consolidated Financial Statements. Dominion Energy is not required to recognize liabilities for guarantees issued on behalf of its subsidiaries unless it becomes probable that it will have to perform under the guarantees. Terms of the guarantees typically end once obligations have been paid. Dominion Energy currently believes it is unlikely that it would be required to perform or otherwise incur any losses associated with guarantees of its subsidiaries’ obligations.
At June 30, 2023, Dominion Energy had issued the following subsidiary guarantees:
|
| Maximum |
| |
(millions) |
|
|
| |
Commodity transactions(1) |
| $ | 2,861 |
|
Nuclear obligations(2) |
|
| 245 |
|
Solar(3) |
|
| 214 |
|
Other(4) |
|
| 1,269 |
|
Total(5)(6) |
| $ | 4,589 |
|
58
Additionally, at June 30, 2023, Dominion Energy had purchased $282 million of surety bonds, including $198 million at Virginia Power and $39 million related to entities held for sale, and authorized the issuance of letters of credit by financial institutions of $16 million to facilitate commercial transactions by its subsidiaries with third parties. Under the terms of surety bonds, the Companies are obligated to indemnify the respective surety bond company for any amounts paid.
Note 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 $208 million, primarily related to price risk management activities. Of this amount, investment grade counterparties, including those internally rated, represented 86%. No single counterparty, whether investment grade or non-investment grade, exceeded $47 million of exposure. At June 30, 2023, Virginia Power’s exposure related to wholesale customers totaled $63 million. Of this amount, investment grade counterparties, including those internally rated, represented 75%. No single counterparty, whether investment grade or non-investment grade, exceeded $12 million of exposure.
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 $89 million and $35 million, respectively, as of June 30, 2023, and $140 million and $28 million, respectively, as of December 31, 2022. The collateral that would be required to be posted includes the impacts of any offsetting asset positions and any amounts already posted for derivatives, non-derivative contracts and derivatives elected under the normal purchases and normal sales exception, per contractual terms. Dominion Energy had posted collateral of $1 million at June 30, 2023, and both Dominion Energy and Virginia Power had posted $72 million at December 31, 2022, related to derivatives with credit-related contingent provisions that are in a liability position and not fully collateralized with cash. Virginia Power had no such collateral posted at June 30, 2023. In addition, Dominion Energy and Virginia Power had both posted letters of credit as collateral with counterparties covering $4 million and $20 million of fair value of derivative instruments in a liability position at June 30, 2023 and December 31, 2022, respectively. The aggregate fair value of all derivative instruments with credit related contingent provisions that are in a liability position and not fully collateralized with cash for Dominion Energy and Virginia Power was $90 million and $35 million, respectively, as of June 30, 2023 and $212 million and $99 million, respectively, as of December 31, 2022, which does not include the impact of any offsetting asset positions.
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 $1 million and $89 million, respectively. At December 31, 2022, Virginia Power’s derivative assets and liabilities with affiliates were $33 million and $31 million, respectively. See Note 9 for additional information.
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 $439 million and $422 million, respectively. At June 30, 2023 and December 31, 2022, Virginia Power's amounts due from Dominion Energy associated with the Dominion Energy Retiree Health and Welfare Plan and included in other deferred charges and other assets in the Consolidated Balance Sheets were $550 million and $518 million, respectively.
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 |
| $ | 103 |
|
| $ | 291 |
|
| $ | 317 |
|
| $ | 584 |
|
Services provided by affiliates(1) |
|
| 145 |
|
|
| 123 |
|
|
| 292 |
|
|
| 253 |
|
Services provided to affiliates |
|
| 4 |
|
|
| 5 |
|
|
| 8 |
|
|
| 9 |
|
Virginia Power has borrowed funds from Dominion Energy under short-term borrowing arrangements. There were $2.3 billion and $2.0 billion in short-term demand note borrowings from Dominion Energy as of June 30, 2023 and December 31, 2022, respectively. Virginia Power had no outstanding borrowings, net of repayments, under the Dominion Energy money pool for its nonregulated subsidiaries as of June 30, 2023 and December 31, 2022. Interest charges related to Virginia Power’s borrowings from Dominion Energy were $21 million and $45 million for the three and six months ended June 30, 2023, respectively, and inconsequential for the three and six months ended June 30, 2022.
There were no issuances of Virginia Power’s common stock to Dominion Energy for the three and six months ended June 30, 2023 and 2022.
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 20-month lease term in August 2025 at a total cost of approximately $240 million plus ancillary services.
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 $4 million and $8 million for the three and six months ended June 30, 2023, respectively, and $6 million and $12 million for the three and six months ended June 30, 2022, respectively, presented in discontinued operations. The non-service cost components of net periodic benefit (credit) cost are reflected in other income (expense) in Dominion Energy’s Consolidated Statements of Income, except for $(12) million and $(23) million for the three and six months ended June 30, 2023, respectively, and $(10) million and $(21) million for the three and six months ended June 30, 2022, respectively, presented in discontinued operations. The components of Dominion Energy’s provision for net periodic benefit cost (credit) are as follows:
|
| Pension Benefits |
|
| Other Postretirement Benefits |
| ||||||||||||||||||||||||||
|
| Quarter-to-Date |
|
| Year-to-Date |
|
| Quarter-to-Date |
|
| Year-to-Date |
| ||||||||||||||||||||
Period Ended June 30, |
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Service cost |
| $ | 24 |
|
| $ | 35 |
|
| $ | 48 |
|
| $ | 71 |
|
| $ | 4 |
|
| $ | 5 |
|
| $ | 7 |
|
| $ | 11 |
|
Interest cost |
|
| 110 |
|
|
| 84 |
|
|
| 221 |
|
|
| 167 |
|
|
| 16 |
|
|
| 12 |
|
|
| 31 |
|
|
| 23 |
|
Expected return on plan assets |
|
| (216 | ) |
|
| (223 | ) |
|
| (432 | ) |
|
| (446 | ) |
|
| (38 | ) |
|
| (48 | ) |
|
| (76 | ) |
|
| (96 | ) |
Amortization of prior service |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| (9 | ) |
|
| (9 | ) |
|
| (18 | ) |
|
| (19 | ) |
Amortization of net actuarial |
|
| — |
|
|
| 40 |
|
|
| — |
|
|
| 80 |
|
|
| (2 | ) |
|
| (1 | ) |
|
| (3 | ) |
|
| (1 | ) |
Net periodic benefit |
| $ | (82 | ) |
| $ | (64 | ) |
| $ | (163 | ) |
| $ | (128 | ) |
| $ | (29 | ) |
| $ | (41 | ) |
| $ | (59 | ) |
| $ | (82 | ) |
60
Employer Contributions
During the three and six months ended June 30, 2023, Dominion Energy made no contributions to its qualified defined benefit pension plans or other postretirement benefit plans. Dominion Energy is not required to make any contributions to its qualified defined benefit pension plans or to VEBAs associated with its other postretirement plans in 2023. Dominion Energy considers voluntary contributions from time to time, either in the form of cash or equity securities.
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 $592 million in the Corporate and Other segment, including $735 million of after-tax net income for specific items with $370 million of after-tax net income attributable to its operating segments. In the six months ended June 30, 2022, Dominion Energy reported after-tax net expenses of $963 million in the Corporate and Other segment, including $944 million of after-tax net expenses for specific items with $1.7 billion of after-tax net expenses attributable to its operating segments.
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 |
| $ | 2,252 |
|
| $ | 771 |
|
| $ | 126 |
|
| $ | 17 |
|
| $ | — |
|
| $ | 3,166 |
|
Intersegment revenue |
|
| (1 | ) |
|
| 2 |
|
|
| 5 |
|
|
| 229 |
|
|
| (235 | ) |
|
| — |
|
Total operating revenue |
|
| 2,251 |
|
|
| 773 |
|
|
| 131 |
|
|
| 246 |
|
|
| (235 | ) |
|
| 3,166 |
|
Net income from discontinued |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 168 |
|
|
| — |
|
|
| 168 |
|
Net income (loss) attributable to |
|
| 392 |
|
|
| 68 |
|
|
| (44 | ) |
|
| 183 |
|
|
| — |
|
|
| 599 |
|
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total revenue from external |
| $ | 2,173 |
|
| $ | 812 |
|
| $ | 161 |
|
| $ | (87 | ) |
| $ | — |
|
| $ | 3,059 |
|
Intersegment revenue |
|
| (3 | ) |
|
| 3 |
|
|
| 6 |
|
|
| 204 |
|
|
| (210 | ) |
|
| — |
|
Total operating revenue |
|
| 2,170 |
|
|
| 815 |
|
|
| 167 |
|
|
| 117 |
|
|
| (210 | ) |
|
| 3,059 |
|
Net income from discontinued |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 212 |
|
|
| — |
|
|
| 212 |
|
Net income (loss) attributable to |
|
| 442 |
|
|
| 124 |
|
|
| (27 | ) |
|
| (992 | ) |
|
| — |
|
|
| (453 | ) |
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total revenue from external |
| $ | 4,636 |
|
| $ | 1,615 |
|
| $ | 434 |
|
| $ | 364 |
|
| $ | — |
|
| $ | 7,049 |
|
Intersegment revenue |
|
| (1 | ) |
|
| 3 |
|
|
| 8 |
|
|
| 460 |
|
|
| (470 | ) |
|
| — |
|
Total operating revenue |
|
| 4,635 |
|
|
| 1,618 |
|
|
| 442 |
|
|
| 824 |
|
|
| (470 | ) |
|
| 7,049 |
|
Net income from discontinued |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 449 |
|
|
| — |
|
|
| 449 |
|
Net income attributable to |
|
| 776 |
|
|
| 159 |
|
|
| 69 |
|
|
| 592 |
|
|
| — |
|
|
| 1,596 |
|
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total revenue from external |
| $ | 4,342 |
|
| $ | 1,610 |
|
| $ | 405 |
|
| $ | (185 | ) |
| $ | — |
|
| $ | 6,172 |
|
Intersegment revenue |
|
| (7 | ) |
|
| 4 |
|
|
| 10 |
|
|
| 419 |
|
|
| (426 | ) |
|
| — |
|
Total operating revenue |
|
| 4,335 |
|
|
| 1,614 |
|
|
| 415 |
|
|
| 234 |
|
|
| (426 | ) |
|
| 6,172 |
|
Net income from discontinued |
|
| — |
|
|
| — |
|
|
| — |
|
|
| 623 |
|
|
| — |
|
|
| 623 |
|
Net income (loss) attributable to |
|
| 958 |
|
|
| 233 |
|
|
| 30 |
|
|
| (963 | ) |
|
| — |
|
|
| 258 |
|
Intersegment sales and transfers for Dominion Energy are based on contractual arrangements and may result in intersegment profit or loss that is eliminated in consolidation, 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 $91 million in the Corporate and Other segment, including $87 million of after-tax net expenses for specific items all of which was attributable to its operating segment. In the six months ended June 30, 2022, Virginia Power reported after-tax net expenses of $554 million in the Corporate and Other segment, including $547 million of after-tax net expenses for specific items with $527 million of after-tax net expenses attributable to its operating segment.
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 |
| $ | 2,251 |
|
| $ | — |
|
| $ | 2,251 |
|
Net income (loss) |
|
| 392 |
|
|
| (60 | ) |
|
| 332 |
|
Three Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
| |||
Operating revenue |
| $ | 2,170 |
|
| $ | 5 |
|
| $ | 2,175 |
|
Net income (loss) |
|
| 442 |
|
|
| (395 | ) |
|
| 47 |
|
Six Months Ended June 30, 2023 |
|
|
|
|
|
|
|
|
| |||
Operating revenue |
| $ | 4,635 |
|
| $ | — |
|
| $ | 4,635 |
|
Net income (loss) |
|
| 776 |
|
|
| (91 | ) |
|
| 685 |
|
Six Months Ended June 30, 2022 |
|
|
|
|
|
|
|
|
| |||
Operating revenue |
| $ | 4,335 |
|
| $ | 7 |
|
| $ | 4,342 |
|
Net income (loss) |
|
| 958 |
|
|
| (554 | ) |
|
| 404 |
|
64