Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MD&A discusses Dominion Energy’s results of operations and general financial condition and Virginia Power’s results of operations. MD&A should be read in conjunction with the Companies’ Consolidated Financial Statements. Virginia Power meets the conditions to file under the reduced disclosure format, and therefore has omitted certain sections of MD&A.

Contents of MD&A

MD&A consists of the following information:

Forward-Looking Statements—Dominion Energy and Virginia Power

Accounting Matters—Dominion Energy

Results of Operations—Dominion Energy and Virginia Power

Segment Results of Operations—Dominion Energy

Outlook—Dominion Energy

Liquidity and Capital Resources—Dominion Energy

Future Issues and Other Matters—Dominion Energy

Forward-Looking Statements

This report contains statements concerning the Companies’ expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, the reader can identify these forward-looking statements by such words as “anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,” “could,” “plan,” “may,” “continue,” “target” or other similar words.

The Companies make forward-looking statements with full knowledge that risks and uncertainties exist that may cause actual results to differ materially from predicted results. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Additionally, other factors may cause actual results to differ materially from those indicated in any forward-looking statement. These factors include but are not limited to:

Unusual weather conditions and their effect on energy sales to customers and energy commodity prices;

Extreme weather events and other natural disasters, including, but not limited to, hurricanes, high winds, severe storms, earthquakes, flooding, climate changes and changes in water temperatures and availability that can cause outages and property damage to facilities;

The impact of extraordinary external events, such as the current pandemic health event resulting from COVID-19, and their collateral consequences, including extended disruption of economic activity in our markets and global supply chains;

Federal, state and local legislative and regulatory developments, including changes in or interpretations of federal and state tax laws and regulations;

The direct and indirect impacts of implementing recommendations resulting from the business review announced in November 2022;

Risks of operating businesses in regulated industries that are subject to changing regulatory structures;

Changes to regulated electric rates collected by the Companies and regulated gas distribution, transportation and storage rates collected by Dominion Energy;

Changes in rules for RTOs and ISOs in which the Companies join and/or participate, including changes in rate designs, changes in FERC’s interpretation of market rules and new and evolving capacity models;

Risks associated with Virginia Power’s membership and participation in PJM, including risks related to obligations created by the default of other participants;

Risks associated with entities in which Dominion Energy shares ownership with third parties, including risks that result from lack of sole decision making authority, disputes that may arise between Dominion Energy and third party participants and difficulties in exiting these arrangements;

Changes in future levels of domestic and international natural gas production, supply or consumption;

Impacts to Dominion Energy’s noncontrolling interest in Cove Point from fluctuations in future volumes of LNG imports or exports from the U.S. and other countries worldwide or demand for, purchases of, and prices related to natural gas or LNG;

Timing and receipt of regulatory approvals necessary for planned construction or growth projects and compliance with conditions associated with such regulatory approvals;

The inability to complete planned construction, conversion or growth projects at all, or with the outcomes or within the terms and time frames initially anticipated, including as a result of increased public involvement, intervention or litigation in such projects;

Risks and uncertainties that may impact the Companies’ ability to develop and construct the CVOW Commercial Project within the currently proposed timeline, or at all, and consistent with current cost estimates along with the ability to recover such costs from customers;

Changes to federal, state and local environmental laws and regulations, including those related to climate change, the tightening of emission or discharge limits for GHGs and other substances, more extensive permitting requirements and the regulation of additional substances;

Cost of environmental strategy and compliance, including those costs related to climate change;

Changes in implementation and enforcement practices of regulators relating to environmental standards and litigation exposure for remedial activities;

Difficulty in anticipating mitigation requirements associated with environmental and other regulatory approvals or related appeals;

Unplanned outages at facilities in which the Companies have an ownership interest;

The impact of operational hazards, including adverse developments with respect to pipeline and plant safety or integrity, equipment loss, malfunction or failure, operator error and other catastrophic events;

Risks associated with the operation of nuclear facilities, including costs associated with the disposal of spent nuclear fuel, decommissioning, plant maintenance and changes in existing regulations governing such facilities;

Changes in operating, maintenance and construction costs;

Domestic terrorism and other threats to the Companies’ physical and intangible assets, as well as threats to cybersecurity;

Additional competition in industries in which the Companies operate, including in electric markets in which Dominion Energy’s nonregulated generation facilities operate and potential competition from the development and deployment of alternative energy sources, such as self-generation and distributed generation technologies, and availability of market alternatives to large commercial and industrial customers;

Competition in the development, construction and ownership of certain electric transmission facilities in the Companies’ service territory in connection with Order 1000;

Changes in technology, particularly with respect to new, developing or alternative sources of generation and smart grid technologies;

Changes in demand for the Companies’ services, including industrial, commercial and residential growth or decline in the Companies’ service areas, changes in supplies of natural gas delivered to Dominion Energy’s pipeline system, failure to maintain or replace customer contracts on favorable terms, changes in customer growth or usage patterns, including as a result of energy conservation programs, the availability of energy efficient devices and the use of distributed generation methods;

Receipt of approvals for, and timing of, closing dates for acquisitions and divestitures;

Impacts of acquisitions, divestitures, transfers of assets to joint ventures and retirements of assets based on asset portfolio reviews;

The expected timing and likelihood of the completion of the proposed sale of Dominion Energy’s noncontrolling interest in Cove Point, including the ability to obtain the requisite regulatory approvals and the terms and conditions of such approvals;

Adverse outcomes in litigation matters or regulatory proceedings, including matters acquired in the SCANA Combination;

Counterparty credit and performance risk;

Fluctuations in the value of investments held in nuclear decommissioning trusts by the Companies and in benefit plan trusts by Dominion Energy;

Fluctuations in energy-related commodity prices and the effect these could have on Dominion Energy’s earnings and the Companies’ liquidity position and the underlying value of their assets;

Fluctuations in interest rates;

The effectiveness to which existing economic hedging instruments mitigate fluctuations in currency exchange rates of the Euro and Danish Krone associated with certain fixed price contracts for the major offshore construction and equipment components of the CVOW Commercial Project;

Changes in rating agency requirements or credit ratings and their effect on availability and cost of capital;

Global capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms;

Political and economic conditions, including inflation and deflation;

Employee workforce factors including collective bargaining agreements and labor negotiations with union employees; and

Changes in financial or regulatory accounting principles or policies imposed by governing bodies.

Additionally, other risks that could cause actual results to differ from predicted results are set forth in Part I. Item 1A. Risk Factors in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.

The Companies’ forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. The Companies caution the reader not to place undue reliance on their forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. The Companies undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

Accounting Matters

As of June 30, 2023, there have been no significant changes with regard to the critical accounting policies and estimates disclosed in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. The policies disclosed included the accounting for regulated operations, AROs, income taxes, accounting for derivative contracts and financial instruments at fair value, use of estimates in goodwill impairment testing, use of estimates in long-lived asset and equity method investment impairment testing, held for sale classification and employee benefit plans.

Results of Operations—Dominion Energy

Presented below is a summary of Dominion Energy’s consolidated results:

		2023				2022				$ Change
(millions, except EPS)
Second Quarter
Net income (loss) attributable to Dominion Energy		$	599			$	(453	)		$	1,052
Diluted EPS			0.69				(0.58	)			1.27
Year-To-Date
Net income attributable to Dominion Energy		$	1,596			$	258			$	1,338
Diluted EPS			1.86				0.25				1.61

Overview

Second Quarter 2023 vs. 2022

Net income attributable to Dominion Energy increased $1.1 billion, primarily due to the absences of a loss associated with the sale of Kewaunee, a charge for RGGI compliance costs deemed recovered through base rates and a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses. In addition, there was an increase in net investment earnings on nuclear decommissioning trust funds and increased unrealized gains on economic hedging activities. These increases were partially offset by a decrease in sales to electric utility customers attributable to weather.

Year-To-Date 2023 vs. 2022

Net income attributable to Dominion Energy increased $1.3 billion, primarily due to the absences of a loss associated with the sale of Kewaunee, a charge for RGGI compliance costs deemed recovered through base rates, a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses and a charge to reflect the recognition of deferred taxes on the outside basis of Hope’s stock upon meeting the classification as held for sale. In addition, there was an increase in net investment earnings on nuclear decommissioning trust funds, increased unrealized gains on economic hedging activities and a decrease in storm damage and service restoration costs. These increases were partially offset by a charge associated with the impairment of a corporate office building and a decrease in sales to electric utility customers attributable to weather.

Analysis of Consolidated Operations

Presented below are selected amounts related to Dominion Energy’s results of operations:

		Second Quarter												Year-To-Date
		2023				2022				$ Change				2023				2022				$ Change
(millions)
Operating revenue		$	3,794			$	3,596			$	198			$	9,046			$	7,875			$	1,171
Electric fuel and other energy-related purchases			939				730				209				1,961				1,408				553
Purchased electric capacity			15				16				(1	)			23				29				(6	)
Purchased gas			227				202				25				991				847				144
Other operations and maintenance			932				985				(53	)			1,853				2,039				(186	)
Depreciation, depletion and amortization			706				695				11				1,426				1,393				33
Other taxes			222				235				(13	)			497				488				9
Impairment of assets and other charges			53				415				(362	)			151				405				(254	)
Losses (gains) on sales of assets			(22	)			636				(658	)			(23	)			608				(631	)
Earnings from equity method investees			90				83				7				170				163				7
Other income (expense)			325				(287	)			612				609				(241	)			850
Interest and related charges			430				47				383				1,016				221				795
Income tax expense (benefit)			121				(117	)			238				342				119				223
Net income (loss) from discontinued operations including noncontrolling interests			13				(1	)			14				8				18				(10	)

An analysis of Dominion Energy’s results of operations follows:

Second Quarter 2023 vs. 2022

Operating revenue increased 6%, primarily reflecting:

A $234 million increase in fuel-related revenue as a result of an increase in commodity costs associated with sales to electric utility retail customers ($206 million) and gas utility customers ($28 million);

A $182 million net increase associated with market prices affecting Millstone, including economic hedging impacts of net realized and unrealized gains on freestanding derivatives ($201 million); and

A $52 million increase in sales to electric utility retail customers associated with economic and other usage factors.

These increases were partially offset by:

A $91 million net decrease from electric utility customers who elect to pay market based or other negotiated rates, including settlements of economic hedges at Virginia Power;

An $89 million decrease in sales to electric utility retail customers, primarily due to a decrease in cooling degree days;

A $69 million decrease from unplanned outages ($60 million) and planned outages ($9 million) at Millstone; and

A $29 million decrease from the sale of Hope.

Electric fuel and other energy-related purchases increased 29%, primarily due to higher commodity costs for electric utilities ($206 million) and an increase in the use of purchased renewable energy credits at Virginia Power ($26 million), which are offset in operating revenue and do not impact net income.

Purchased gas increased 12%, primarily due to a net increase in commodity costs for gas utilities, which are offset in operating revenue and do not impact net income.

Other operations and maintenance decreased 5%, primarily due to a decrease in certain Virginia Power expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($32 million), partially offset by an increase in outside services ($17 million).

Impairment of assets and other charges decreased 87%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities at Virginia Power ($38 million), partially offset by a charge for the write-off of certain previously

deferred amounts related to the cessation of certain riders effective July 2023 ($36 million) and an impairment charge of certain nonregulated solar assets ($15 million).

Gains on sales of assets increased $658 million, primarily due to the absence of a loss associated with the sale of Kewaunee.

Other income increased $612 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.

Interest and related charges increased $383 million, primarily due to lower unrealized gains in 2023 compared to 2022 associated with freestanding derivatives ($239 million), higher interest rates on commercial paper and long-term debt ($60 million), increased commercial paper and long-term debt borrowings ($53 million) and higher interest rates on variable rate debt and cash flow interest rate swaps ($42 million).

Income tax expense increased $238 million, primarily due to higher pre-tax income ($309 million), partially offset by lower interim period allocation of investment tax credits ($20 million), excess deferred income tax amortization ($19 million) and decreased consolidated state deferred tax expense on pre-tax gains from nuclear decommissioning trusts and economic hedges ($18 million).

Year-To-Date 2023 vs. 2022

Operating revenue increased 15%, primarily reflecting:

A $755 million net increase associated with market prices affecting Millstone, including economic hedging impacts of net realized and unrealized gains on freestanding derivatives ($876 million);

A $714 million increase in fuel-related revenue as a result of an increase in commodity costs associated with sales to electric utility retail customers ($522 million) and gas utility customers ($192 million);

An $89 million increase in sales to electric utility retail customers associated with economic and other usage factors;

A $55 million increase to recover the costs and an authorized return, as applicable, associated with Virginia Power non-fuel riders;

A $32 million increase following the approved base rate case for Questar Gas;

A $31 million increase from gas utility capital cost riders; and

A $24 million increase in sales to electric utility retail customers associated with growth.

These increases were partially offset by:

A $206 million decrease in sales to electric utility retail customers, primarily due to a decrease in heating degree days during the heating season ($117 million) and a decrease in cooling degree days during the cooling season ($89 million);

A $128 million net decrease from electric utility customers who elect to pay market based or other negotiated rates, including settlements of economic hedges at Virginia Power;

A $95 million decrease from the sale of Hope; and

A $69 million decrease from unplanned outages ($60 million) and planned outages ($9 million) at Millstone.

Electric fuel and other energy-related purchases increased 39%, primarily due to higher commodity costs for electric utilities ($522 million) and an increase in the use of purchased renewable energy credits at Virginia Power ($54 million), which are offset in operating revenue and do not impact net income.

Purchased gas increased 17%, primarily due to a net increase in commodity costs for gas utilities ($192 million), which are offset in operating revenue and do not impact net income, partially offset by a decrease from the sale of Hope ($37 million).

Other operations and maintenance decreased 9%, primarily due to a decrease in storm damage and restoration costs in Virginia Power’s service territory ($111 million) and a decrease in certain Virginia Power expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($103 million), partially offset by an increase in outside services ($36 million).

Impairment of assets and other charges decreased 63%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain

retired electric generation facilities at Virginia Power ($39 million), partially offset by the impairment of a corporate office building ($91 million), a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million) and an impairment charge of certain nonregulated solar assets ($15 million).

Gains on sales of assets increased $631 million, primarily due to the absence of a loss associated with the sale of Kewaunee ($649 million) and a gain on the transfer of certain utility property in South Carolina ($20 million), partially offset by the absence of a gain on the contribution of certain privatization operations to Dominion Privatization ($23 million).

Other income increased $850 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.

Interest and related charges increased $795 million, primarily due to unrealized losses in 2023 compared to unrealized gains in 2022 associated with freestanding derivatives ($517 million), higher interest rates on commercial paper and long-term debt ($107 million),

increased commercial paper and long-term debt borrowings ($98 million), higher interest rates on variable rate debt and cash flow interest rate swaps ($88 million) and lower premiums received on interest rate derivatives ($24 million).

Income tax expense increased $223 million, primarily due to higher pre-tax income ($388 million), partially offset by the absence of a charge to reflect the recognition of deferred taxes on the outside basis of Hope’s stock upon meeting the classification as held for sale ($90 million) and decreased consolidated state deferred tax expense on pre-tax gains from nuclear decommissioning trusts and economic hedges ($25 million).

Results of Operations—Virginia Power

Presented below is a summary of Virginia Power’s consolidated results:

		Second Quarter												Year-To-Date
		2023				2022				$ Change				2023				2022				$ Change
(millions)
Net income		$	332			$	47			$	285			$	685			$	404			$	281

Overview

Second Quarter 2023 vs. 2022

Net income increased $285 million, primarily due to the absences of a charge for RGGI compliance costs deemed recovered through base rates and a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses as well as an increase in net investment earnings on nuclear decommissioning trust funds, partially offset by a decrease in sales to electric utility customers attributable to weather.

Year-To-Date 2023 vs. 2022

Net income increased 70%, primarily due to the absences of a charge for RGGI compliance costs deemed recovered through base rates and a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses as well as an increase in net investment earnings on nuclear decommissioning trust funds and a decrease in storm damage and service restoration costs, partially offset by a decrease in sales to electric utility customers attributable to weather.

Analysis of Consolidated Operations

Presented below are selected amounts related to Virginia Power’s results of operations:

		Second Quarter												Year-To-Date
		2023				2022				$ Change				2023				2022				$ Change
(millions)
Operating revenue		$	2,251			$	2,175			$	76			$	4,635			$	4,342			$	293
Electric fuel and other energy-related purchases			706				533				173				1,505				1,049				456
Purchased electric capacity			10				11				(1	)			18				22				(4	)
Other operations and maintenance			443				478				(35	)			884				1,048				(164	)
Depreciation and amortization			432				425				7				879				854				25
Other taxes			67				83				(16	)			152				158				(6	)
Impairment of assets and other charges			38				409				(371	)			45				413				(368	)
Other income (expense)			48				(44	)			92				84				(40	)			124
Interest and related charges			182				145				37				363				293				70
Income tax expense			89				—				89				188				61				127

An analysis of Virginia Power’s results of operations follows:

Second Quarter 2023 vs. 2022

Operating revenue increased 3%, primarily reflecting:

A $169 million increase in fuel-related revenue as a result of a net increase in commodity costs associated with sales to electric utility retail customers; and

A $54 million increase in sales to electric utility retail customers associated with economic and other usage factors.

These increases were partially offset by:

A $77 million net decrease from electric utility customers who elect to pay market based or other negotiated rates, including settlements of economic hedges; and

A $55 million decrease in sales to electric utility retail customers, primarily due to a decrease in cooling degree days.

Electric fuel and other energy-related purchases increased 32%, primarily due to higher commodity costs for electric utilities ($169 million) and an increase in the use of purchased renewable energy credits ($26 million), which are offset in operating revenue and do not impact net income.

Other operations and maintenance decreased 7%, primarily due to a decrease in certain expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($32 million) and a decrease in bad debt expense ($10 million), partially offset by an increase in outside services ($13 million).

Other taxes decreased 19%, primarily due to lower property taxes.

Impairment of assets and other charges decreased 91%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities ($38 million), partially offset by a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million).

Other income increased $92 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.

Interest and related charges increased 26%, primarily due to increased commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($39 million) and higher interest rates on commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($11 million).

Income tax expense increased $89 million, primarily due to higher pre-tax income.

Year-To-Date 2023 vs. 2022

Operating revenue increased 7%, primarily reflecting:

A $418 million increase in fuel-related revenue as a result of a net increase in commodity costs associated with sales to electric utility retail customers;

A $89 million increase in sales to electric utility retail customers associated with economic and other usage factors;

A $55 million increase to recover the costs and an authorized return, as applicable, associated with non-fuel riders; and

A $12 million increase in sales to electric utility retail customers associated with growth.

These increases were partially offset by:

A $146 million decrease in sales to electric utility retail customers from a decrease in heating degree days during the heating season ($91 million) and a decrease in cooling degree days during the cooling season ($55 million); and

A $105 million net decrease from electric utility customers who elect to pay market based or other negotiated rates, including settlements of economic hedges.

Electric fuel and other energy-related purchases increased 43%, primarily due to higher commodity costs for electric utilities ($418 million) and an increase in the use of purchased renewable energy credits ($54 million), which are offset in operating revenue and do not impact net income.

Other operations and maintenance decreased 16%, primarily due to a decrease in storm damage and restoration costs ($111 million) and a decrease in certain expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($103 million), partially offset by an increase in outside services ($29 million) and an increase in salaries, wages and benefits and administrative costs ($18 million).

Impairment of assets and other charges decreased 89%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities ($39 million), partially offset by a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million).

Other income increased $124 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.

Interest and related charges increased 24%, primarily due to increased commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($72 million) and higher interest rates on commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($22 million), partially offset by decreased interest expense associated with rider deferrals ($19 million).

Income tax expense increased $127 million, primarily due to higher pre-tax income ($101 million) and lower investment tax credits ($31 million).

Segment Results of Operations

Segment results include the impact of intersegment revenues and expenses, which may result in intersegment profit and loss. Presented below is a summary of contributions by Dominion Energy’s operating segments to net income (loss) attributable to Dominion Energy:

		Net Income (Loss) Attributable to Dominion Energy												EPS**(1)**
		2023				2022				$ Change				2023				2022				$ Change
(millions, except EPS)
Second Quarter
Dominion Energy Virginia		$	391			$	440			$	(49	)		$	0.47			$	0.54			$	(0.07	)
Gas Distribution			103				125				(22	)			0.12				0.15				(0.03	)
Dominion Energy South Carolina			68				124				(56	)			0.08				0.15				(0.07	)
Contracted Assets			11				20				(9	)			0.01				0.02				(0.01	)
Corporate and Other			26				(1,162	)			1,188				0.01				(1.44	)			1.45
Consolidated		$	599			$	(453	)		$	1,052			$	0.69			$	(0.58	)		$	1.27
Year-To-Date
Dominion Energy Virginia		$	777			$	958			$	(181	)		$	0.93			$	1.18			$	(0.25	)
Gas Distribution			381				419				(38	)			0.46				0.51				(0.05	)
Dominion Energy South Carolina			159				233				(74	)			0.19				0.29				(0.10	)
Contracted Assets			167				121				46				0.20				0.15				0.05
Corporate and Other			112				(1,473	)			1,585				0.08				(1.88	)			1.96
Consolidated		$	1,596			$	258			$	1,338			$	1.86			$	0.25			$	1.61

(1) Consolidated results are presented on a diluted EPS basis. The dilutive impacts, primarily consisting of potential shares which had not yet been issued, are included within the results of the Corporate and Other segment. EPS contributions for Dominion Energy’s operating segments are presented utilizing basic average shares outstanding for the period.

Dominion Energy Virginia

Presented below are selected operating statistics related to Dominion Energy Virginia’s operations:

		Second Quarter												Year-To-Date
		2023				2022				% Change				2023				2022				% Change
Electricity delivered (million MWh)			21.8				20.7				5	%			43.5				43.0				1	%
Electricity supplied (million MWh):
Utility			20.7				20.8				—				42.5				43.1				(1	)
Non-Jurisdictional			0.6				0.5				20				0.9				0.8				13
Degree days (electric distribution and utility service area):
Cooling			358				502				(29	)			361				513				(30	)
Heating			204				297				(31	)			1,675				2,192				(24	)
Average electric distribution customer accounts (thousands)			2,746				2,720				1				2,743				2,718				1

Presented below, on an after-tax basis, are the key factors impacting Dominion Energy Virginia’s net income contribution:

		Second Quarter 2023 vs. 2022 Increase (Decrease)								Year-To-Date 2023 vs. 2022 Increase (Decrease)
		Amount				EPS				Amount				EPS
(millions, except EPS)
Weather		$	(42	)		$	(0.05	)		$	(109	)		$	(0.13	)
Customer usage and other factors			42				0.05				75				0.09
Customer-elected rate impacts			(57	)			(0.07	)			(78	)			(0.10	)
Rider equity return			17				0.02				49				0.06
Storm damage and restoration costs			5				0.01				13				0.02
Depreciation and amortization			(6	)			(0.01	)			(12	)			(0.01	)
Renewable energy investment tax credits			4				—				(53	)			(0.07	)
Interest expense, net			(10	)			(0.01	)			(23	)			(0.03	)
Other			(2	)			—				(43	)			(0.06	)
Share dilution			—				(0.01	)			—				(0.02	)
Change in net income contribution		$	(49	)		$	(0.07	)		$	(181	)		$	(0.25	)

Gas Distribution

Presented below are selected operating statistics related to Gas Distribution’s operations:

		Second Quarter												Year-To-Date
		2023				2022(1)				% Change				2023				2022(1)				% Change
Gas distribution throughput (bcf):
Sales			27				26				4	%			111				115				(3	%)
Transportation			193				217				(11	)			465				518				(10	)
Heating degree days (gas distribution service area):
North Carolina			189				189				—				1,377				1,772				(22	)
Ohio and West Virginia(1)			658				622				6				3,055				3,534				(14	)
Utah, Wyoming and Idaho			499				662				(25	)			3,154				3,140				—
Average gas distribution customer accounts (thousands):
Sales			1,899				1,971				(4	)			1,898				1,967				(4	)
Transportation			1,138				1,136				—				1,137				1,137				—

(1)

Includes Hope in 2022.

Presented below, on an after-tax basis, are the key factors impacting Gas Distribution’s net income contribution:

		Second Quarter 2023 vs. 2022 Increase (Decrease)								Year-To-Date 2023 vs. 2022 Increase (Decrease)
		Amount				EPS				Amount				EPS
(millions, except EPS)
Weather		$	—			$	—			$	(4	)		$	—
Customer usage and other factors			2				—				9				0.01
Base rate case impacts			9				0.01				25				0.03
Rider equity return			6				0.01				9				0.01
Wexpro cost saving sharing incentives			(7	)			(0.01	)			(4	)			—
Sale of Hope			(3	)			—				(22	)			(0.03	)
Depreciation and amortization			(6	)			(0.01	)			(11	)			(0.01	)
Interest expense, net			(13	)			(0.02	)			(25	)			(0.03	)
Other			(10	)			(0.01	)			(15	)			(0.02	)
Share dilution			—				—				—				(0.01	)
Change in net income contribution		$	(22	)		$	(0.03	)		$	(38	)		$	(0.05	)

Dominion Energy South Carolina

Presented below are selected operating statistics related to Dominion Energy South Carolina’s operations:

		Second Quarter												Year-To-Date
		2023				2022				% Change				2023				2022				% Change
Electricity delivered (million MWh)			5.2				5.9				(12	%)			10.2				11.1				(8	%)
Electricity supplied (million MWh)			5.5				6.2				(11	)			10.7				11.7				(9	)
Degree days (electric distribution service areas):
Cooling			113				253				(55	)			114				253				(55	)
Heating			25				33				(24	)			484				783				(38	)
Gas distribution throughput (bcf):
Sales			16				15				7				33				35				(6	)
Average distribution customer accounts (thousands):
Electric			789				776				2				786				774				2
Gas			441				425				4				439				424				4

Presented below, on an after-tax basis, are the key factors impacting Dominion Energy South Carolina’s net income contribution:

		Second Quarter 2023 vs. 2022 Increase (Decrease)								Year-To-Date 2023 vs. 2022 Increase (Decrease)
		Amount				EPS				Amount				EPS
(millions, except EPS)
Weather		$	(26	)		$	(0.03	)		$	(45	)		$	(0.06	)
Customer usage and other factors			3				—				10				0.01
Customer-elected rate impacts			(11	)			(0.01	)			(18	)			(0.02	)
Base rate case & Natural Gas Rate Stabilization Act impacts			1				—				6				0.01
Capital cost rider			(2	)			—				(4	)			—
Gains on sales of property			(12	)			(0.01	)			(12	)			(0.01	)
Depreciation and amortization			(4	)			—				(7	)			(0.01	)
Interest expense, net			(8	)			(0.01	)			(14	)			(0.02	)
Other			3				(0.01	)			10				0.01
Share dilution			—				—				—				(0.01	)
Change in net income contribution		$	(56	)		$	(0.07	)		$	(74	)		$	(0.10	)

Contracted Assets

Presented below are selected operating statistics related to Contracted Asset’s operations:

		Second Quarter												Year-To-Date
		2023				2022				% Change				2023				2022				% Change
Electricity supplied (million MWh)			2.4				3.4				(29	%)			7.0				8.0				(13	)	%

Presented below, on an after-tax basis, are the key factors impacting Contracted Asset’s net income contribution:

		Second Quarter 2023 vs. 2022 Increase (Decrease)								Year-To-Date 2023 vs. 2022 Increase (Decrease)
		Amount				EPS				Amount				EPS
(millions, except EPS)
Margin(1)		$	(11	)		$	(0.01	)		$	38			$	0.05
Planned outage costs(2)			3				—				6				0.01
Unplanned outage costs(2)			(3	)			—				(2	)			—
Depreciation and amortization			6				0.01				11				0.01
Interest expense, net			(2	)			—				(7	)			(0.01	)
Other			(2	)			(0.01	)			—				—
Share dilution			—				—				—				(0.01	)
Change in net income contribution		$	(9	)		$	(0.01	)		$	46			$	0.05

(1)

Includes earnings associated with a 50% noncontrolling interest in Cove Point.

(2)

Excludes earnings impact from lower energy margins associated with a Millstone outage.

Corporate and Other

Presented below are the Corporate and Other segment’s after-tax results:

		Second Quarter												Year-To-Date
		2023				2022				$ Change				2023				2022				$ Change
(millions, except EPS)
Specific items attributable to operating segments		$	92			$	(1,254	)		$	1,346			$	364			$	(1,523	)		$	1,887
Specific items attributable to Corporate and Other segment			39				143				(104	)			(85	)			123				(208	)
Total specific items			131				(1,111	)			1,242				279				(1,400	)			1,679
Other corporate operations:
Interest expense, net			(133	)			(82	)			(51	)			(253	)			(161	)			(92	)
Other			28				31				(3	)			86				88				(2	)
Total other corporate operations			(105	)			(51	)			(54	)			(167	)			(73	)			(94	)
Total net income (expense)		$	26			$	(1,162	)		$	1,188			$	112			$	(1,473	)		$	1,585
EPS impact		$	0.01			$	(1.44	)		$	1.45			$	0.08			$	(1.88	)		$	1.96

Corporate and Other includes specific items attributable to Dominion Energy’s primary operating segments that are not included in profit measures evaluated by executive management in assessing the segments' performance or in allocating resources. See Note 21 to the Consolidated Financial Statements in this report for discussion of these items in more detail. Corporate and Other also includes items attributable to the Corporate and Other segment. For the three months ended June 30, 2023, this primarily included a $36 million after-tax gain for derivative mark-to-market changes. For the six months ended June 30, 2023, this primarily included a $68 million after-tax charge associated with the impairment of a corporate office building.

For the three months ended June 30, 2022, other than the effects of required interim period provision for income taxes, this primarily included a $188 million after-tax benefit for derivative mark-to-market changes. For the six months ended June 30, 2022, other than the effects of required interim period provision for income taxes, this primarily included a $240 million after-tax benefit for derivative mark-to-market changes, a $90 million charge to reflect the recognition of deferred taxes on the outside basis of Hope’s stock upon meeting the classification as held for sale and $18 million net income from discontinued operations, primarily associated with the Q-Pipe Group.

Outlook

As of June 30, 2023, there have been no material changes to Dominion Energy’s 2023 outlook as described in Item 7. MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. As discussed in Future Issues and Other Matters, legislation enacted in Virginia in April 2023 is expected to decrease Dominion Energy’s 2023 net income for riders combined into base rates effective July 2023.

Liquidity and Capital Resources

Dominion Energy depends on both cash generated from operations and external sources of liquidity to provide working capital and as a bridge to long-term financings. Dominion Energy’s material cash requirements include capital and investment expenditures, repaying short-term and long-term debt obligations and paying dividends on its common and preferred stock. This section should be read in conjunction with Item 7. MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.

Analysis of Cash Flows

Presented below are selected amounts related to Dominion Energy’s cash flows:

		2023				2022
(millions)
Cash, restricted cash and equivalents at January 1		$	341			$	408
Cash flows provided by (used in):
Operating activities			3,194				1,361
Investing activities			(5,014	)			(5,148	)
Financing activities			1,794				3,786
Net increase (decrease) in cash, restricted cash and equivalents			(26	)			(1	)
Cash, restricted cash and equivalents at June 30		$	315			$	407

Operating Cash Flows

Net cash provided by Dominion Energy's operating activities increased $1.8 billion, primarily due to higher deferred fuel and purchased gas cost recoveries ($1.3 billion), lower margin deposits ($602 million), a decrease in refund payments to Virginia electric customers associated with the settlement of the 2021 Triennial Review ($282 million), partially offset by an increase in interest payments driven by higher interest rates and borrowings ($300 million) and changes in working capital ($147 million).

Investing Cash Flows

Net cash used in Dominion Energy’s investing activities decreased $134 million, primarily due to the absence of an issuance of a short-term deposit ($2.0 billion) and lower acquisitions of solar development projects ($109 million), substantially offset by an increase in plant construction and other property additions ($1.6 billion), a decrease in proceeds from the sale of assets and equity method investments ($135 million) and the absence of withdrawals from Kewaunee's nuclear decommissioning trust ($80 million).

Financing Cash Flows

Net cash provided by Dominion Energy's financing activities decreased $2.0 billion primarily due to a $2.9 billion decrease due to net repayments of long-term debt in 2023 versus net issuances in 2022, the absence of the settlement of the stock purchase contract component of the 2019 Equity Units in 2022 ($1.6 billion) and a decrease in supplemental credit facility borrowings ($450 million), partially offset by the issuance of 364-day term loan facility borrowings ($2.5 billion) and higher net issuances of short-term debt ($387 million).

Credit Facilities and Short-Term Debt

As discussed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, Dominion Energy generally uses proceeds from short-term borrowings, including commercial paper, to satisfy short-term cash requirements not met through cash from operations. The levels of borrowing may vary significantly during the course of the year, depending on the timing and amount of cash requirements not satisfied by cash from operations. There have been no significant changes to Dominion Energy’s use of credit facilities and/or short-term debt during the six months ended June 30, 2023.

Joint Revolving Credit Facility

Dominion Energy maintains a $6.0 billion joint revolving credit facility which provides for a discount in the pricing of certain annual fees and amounts borrowed by Dominion Energy under the facility if Dominion Energy achieves certain annual renewable electric generation and diversity and inclusion objectives. At June 30, 2023, Dominion Energy had $1.8 billion of unused capacity under its joint revolving credit facility. See Note 16 to the Consolidated Financial Statements in this report for the balances of commercial paper and letters of credit outstanding.

Dominion Energy Reliability Investment**SM Program

Dominion Energy has an effective shelf registration statement with the SEC for the sale of up to $3.0 billion of variable denomination floating rate demand notes, called Dominion Energy Reliability InvestmentSM. The registration limits the principal amount that may be outstanding at any one time to $1.0 billion. The notes are offered on a continuous basis and bear interest at a floating rate per annum determined by the Dominion Energy Reliability Investment Committee, or its designee, on a weekly basis. The notes have no stated maturity date, are non-transferable and may be redeemed in whole or in part by Dominion Energy or at the investor’s option at any time. At June 30, 2023, Dominion Energy’s Consolidated Balance Sheets include $403 million with respect to such notes presented within short-term debt. The proceeds are used for general corporate purposes and to repay debt.

Other Facilities

In addition to the primary sources of short-term liquidity discussed above, from time to time Dominion Energy enters into separate supplementary credit facilities or term loans as discussed in Note 16 to the Consolidated Financial Statements in this report.

In January 2023, Dominion Energy entered into a $2.5 billion 364-day term loan facility which bears interest at a variable rate and will mature in January 2024 with the proceeds to be used to repay existing long-term debt and short-term debt upon maturity and for other general corporate purposes. Concurrently, Dominion Energy borrowed an initial $1.0 billion with the proceeds used to repay long-term debt. In February and March 2023, Dominion Energy borrowed $500 million and $1.0 billion, respectively, with the proceeds used for general corporate purposes and to repay long-term debt.

In July 2023, Dominion Energy entered into two $600 million 364-day term loan facilities which bear interest at a variable rate and will mature in July 2024 with the proceeds to be used to repay existing long-term debt and/or short-term debt upon maturity and for other general corporate purposes. Subsequently in July 2023, Dominion Energy borrowed an initial $750 million in the aggregate under these facilities with the proceeds used to repay short-term debt and for general corporate purposes. Dominion Energy is permitted to make up to three additional borrowings under each agreement through November 2023, at which point any unused capacity will cease to be available to Dominion Energy. The agreements contain certain mandatory early repayment provisions, including that any after-tax proceeds in connection with a sale of Dominion Energy’s noncontrolling interest in Cove Point, following the repayment of DECP Holding’s term loan secured by its noncontrolling interest in Cove Point, be applied to any outstanding borrowings under the facilities.

Long-Term Debt

Sustainability Revolving Credit Agreement

Dominion Energy maintains a $900 million Sustainability Revolving Credit Agreement which matures in 2024 and bears interest at a variable rate. The facility offers a reduced interest rate margin with respect to borrowed amounts allocated to certain environmental sustainability or social investment initiatives. In March 2023, Dominion Energy borrowed $450 million with the proceeds used for general corporate purposes. In April 2023, Dominion Energy repaid $450 million borrowed for general corporate purposes. At June 30, 2023, Dominion Energy had $450 million borrowed to support environmental sustainability and social investment initiatives.

Issuances and Borrowings of Long-Term Debt

During the six months ended June 30, 2023, Dominion Energy issued or borrowed the following long-term debt. Unless otherwise noted, the proceeds were used for the repayment of existing indebtedness and for general corporate purposes.

Month		Type		Public / Private		Entity		Principal				Rate					Stated Maturity
								(millions)
March		Senior notes		Public		Virginia Power		$	750				5.000		%		2033
March		Senior notes		Public		Virginia Power			750				5.450		%		2053
Total issuances and borrowings								$	1,500

Dominion Energy currently meets the definition of a well-known seasoned issuer under SEC rules governing the registration, communication and offering processes under the Securities Act of 1933, as amended. The rules provide for a streamlined shelf registration process to provide registrants with timely access to capital. This allows Dominion Energy to use automatic shelf registration statements to register any offering of securities, other than those for exchange offers or business combination transactions.

As the comprehensive business review announced in November 2022 is still in progress, Dominion Energy is uncertain as to the amount of long-term debt it anticipates issuing in 2023. Dominion Energy expects to issue long-term debt to satisfy cash needs for capital expenditures and maturing long-term debt to the extent such amounts are not satisfied from cash available from operations

following the payment of dividends and any borrowings made from unused capacity of Dominion Energy’s credit facilities discussed above. The raising of external capital is subject to certain regulatory requirements, including registration with the SEC for certain issuances.

Repayments, Repurchases and Redemptions of Long-Term Debt

Dominion Energy may from time to time reduce its outstanding debt and level of interest expense through redemption of debt securities prior to maturity or repurchases of debt securities in the open market, in privately negotiated transactions, through tender offers or otherwise.

The following long-term debt was repaid, repurchased or redeemed during the six months ended June 30, 2023:

Month		Type		Entity		Principal (1)				Rate		Stated Maturity
						(millions)
Debt scheduled to mature in 2023				Multiple		$	1,787			various
Early redemptions
None
Total repayments, repurchases and redemptions						$	1,787

(1)

Total amount redeemed prior to maturity includes remaining principal plus accrued interest.

See Note 18 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 for additional information regarding scheduled maturities of Dominion Energy’s long-term debt, including related average interest rates.

As discussed in Note 10 to the Consolidated Financial Statements in this report, DECP Holding's term loan secured by its noncontrolling interest in Cove Point is required to be repaid in connection with closing of Dominion Energy's July 2023 agreement with BHE for the sale of its 50% noncontrolling limited partnership interest in Cove Point, which is expected to occur by the end of 2023.

Remarketing of Long-Term Debt

In June 2023, Virginia Power remarketed three series of tax-exempt bonds, with an aggregate outstanding principal of $160 million to new investors. All three bonds will bear interest at a coupon of 3.65% until October 2027, after which they will bear interest at a market rate to be determined at that time. Dominion Energy does not expect to remarket any other long-term debt in 2023.

Credit Ratings

As discussed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, Dominion Energy’s credit ratings affect its liquidity, cost of borrowing under credit facilities and collateral posting requirements under commodity contracts, as well as the rates at which it is able to offer debt securities. The credit ratings for Dominion Energy are affected by its financial profile, mix of regulated and nonregulated businesses and respective cash flows, changes in methodologies used by the ratings agencies and event risk, if applicable, such as major acquisitions or dispositions. A credit rating is not a recommendation to buy, sell or hold securities and should be evaluated independently of any other rating. In April 2023, Standard & Poor’s affirmed its credit ratings but revised its outlook for Dominion Energy from stable to negative. Dominion Energy cannot predict the potential impact the negative outlook at Standard & Poor’s could have on its liquidity, cost of borrowing under credit facilities and collateral posting requirements under commodity contracts, as well as the rates at which it is able to offer debt securities. There have been no other changes in Dominion Energy’s credit ratings from those described in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.

Financial Covenants

As discussed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, Dominion Energy is subject to various covenants present in the enabling agreements underlying Dominion Energy’s debt. As of June 30, 2023, there have been no material changes to covenants, nor any events of default under Dominion Energy’s covenants.

Common Stock, Preferred Stock and Other Equity Securities

In the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, there is a discussion of Dominion Energy’s existing equity financing programs, including an at-the-market program and Dominion Energy Direct®. During the six months ended June 30, 2023, Dominion Energy issued $85 million of stock through these programs. Dominion Energy's at-the-market program expired in June 2023. See Note 16 to the Consolidated Financial Statements in this report for additional information.

As the comprehensive business review announced in November 2022 is still in progress, Dominion Energy is uncertain as to the amount of common stock that it anticipates issuing in 2023. However, Dominion Energy anticipates raising similar amounts of capital through Dominion Energy Direct® in 2023 compared to 2022 and 2021. The raising of external capital is subject to certain regulatory requirements, including registration with the SEC for certain issuances.

As of June 30, 2023, there have been no material changes to the Board of Directors authorization to repurchase Dominion Energy stock, or the remaining available capacity under this authorization, disclosed in the Repurchases of Equity Securities section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. Dominion Energy has not repurchased through June 30 and does not plan to repurchase in the remainder of 2023 any shares of its common stock, except for shares tendered by employees to satisfy tax withholding obligations on vested restricted stock.

Capital Expenditures

As of June 30, 2023, there have been no material changes to Dominion Energy’s expectation for planned capital expenditures as disclosed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.

Dividends

Dominion Energy believes that its operations provide a stable source of cash flow to contribute to planned levels of capital expenditures and maintain or grow the dividend on common shares. See Note 16 to the Consolidated Financial Statements in this report for additional information regarding Dominion Energy’s outstanding preferred stock and associated dividend rates.

Subsidiary Dividend Restrictions

As of June 30, 2023, there have been no material changes to the subsidiary dividend restrictions disclosed in the Dividends section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.

Collateral and Credit Risk

As of June 30, 2023, there have been no material changes to the collateral requirements disclosed in the Collateral and Credit Risk section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.

Dominion Energy’s exposure to potential concentrations of credit risk results primarily from its energy marketing and price risk management activities. Presented below is a summary of Dominion Energy’s credit exposure at June 30, 2023 for these activities. Gross credit exposure for each counterparty is calculated as outstanding receivables plus any unrealized on- or off-balance sheet exposure, taking into account contractual netting rights.

		Gross Credit Exposure				Credit Collateral				Net Credit Exposure
(millions)
Investment grade(1)		$	166			$	—			$	166
Non-investment grade(2)			2				—				2
No external ratings:
Internally rated—investment grade(3)			15				2				13
Internally rated—non-investment grade(4)			28				1				27
Total(5)		$	211			$	3			$	208

(1)

Designations as investment grade are based upon minimum credit ratings assigned by Moody’s Investors Service and Standard & Poor’s. The five largest counterparty exposures, combined, for this category represented approximately 55% of the total net credit exposure.

(2)

The five largest counterparty exposures, combined, for this category represented approximately 1% of the total net credit exposure.

(3)

The five largest counterparty exposures, combined, for this category represented approximately 6% of the total net credit exposure.

(4)

The five largest counterparty exposures, combined, for this category represented approximately 9% of the total net credit exposure.

(5)

Excludes long-term purchase power agreements entered to satisfy legislative or state regulatory commission requirements.

Fuel and Other Purchase Commitments

There have been no material changes outside of the ordinary course of business to Dominion Energy’s fuel and other purchase commitments included in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.

Other Material Cash Requirements

As of June 30, 2023, there have been no material changes outside of the ordinary course of business to Dominion Energy’s other material cash requirements included in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. Such obligations include:

Operating and finance lease obligations – See Note 14 to the Consolidated Financial Statements in this report;

Regulatory liabilities – See Note 12 to the Consolidated Financial Statements in this report;

AROs – See Note 14 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022;

Employee benefit plan obligations – See Note 22 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022;

Charitable commitments – See Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022;

Off-balance sheet leasing arrangements – See Note 15 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022; and

Guarantees – See Note 17 to the Consolidated Financial Statements in this report.

Future Issues and Other Matters

See Item 1. Business, Future Issues and Other Matters in MD&A and Notes 13 and 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 and Notes 13 and 17 to the Consolidated Financial Statements in this report for additional information on various environmental, regulatory, legal and other matters that may impact future results of operations, financial condition and/or cash flows.

Business Review

In November 2022, Dominion Energy announced the commencement of a business review of value-maximizing strategic business actions, alternatives to its current business mix and capital allocation and regulatory options which may assist customers to manage costs and provide greater predictability to its long-term, state-regulated utility value proposition. In April 2023, the legislative process in Virginia was substantially completed resulting in new legislation which will shift $350 million of annual revenue requirement for costs currently recovered through riders into base rates effective July 2023, eliminate the ability of Virginia Power to utilize CCROs and adjust the parameters for determining an authorized ROE and revenue sharing. In addition, new legislation allows Virginia Power to apply for the securitization of certain deferred fuel costs as well as seek approval for a noncontrolling equity financing partner for the CVOW Commercial Project. In July 2023, Dominion Energy entered an agreement to sell its 50% noncontrolling limited partner interest in Cove Point to BHE as discussed in Note 10 to the Consolidated Financial Statements in this report. As part of the on-going business review, Dominion Energy may consider additional divestiture of all or a portion of certain operations. While the ultimate impacts cannot be estimated until the review is completed, which is expected to occur in the third quarter of 2023, implementation of recommendations resulting from the business review could have a material impact on Dominion Energy's future results of operations, financial condition and/or cash flows.

Virginia Legislation

The 2023 General Assembly session in Virginia included several proposals, including those ultimately enacted into law, related to Virginia Power’s retail base rates and other cost recovery mechanisms. In April 2023, legislation was enacted that amended several key provisions of the Regulation Act, as previously amended by the GTSA. The new legislation will shift $350 million of annual revenue requirement for costs currently recovered under riders into base rates effective July 2023, eliminate the ability of Virginia Power to utilize CCROs and adjust the parameters for determining an authorized ROE and revenue sharing. In addition, this legislation reestablishes biennial base rate reviews, sets a target capitalization ratio and permits Virginia Power to apply for the securitization of certain deferred fuel costs. See Note 13 to the Consolidated Financial Statements for additional information. In March 2023, legislation was enacted that permits Virginia Power to seek approval for a noncontrolling equity financing partner for the CVOW Commercial Project. In addition, in May 2023 legislation was enacted that amended certain portions of the VCEA, which qualifies generation produced by Virginia Power’s biomass electric generating stations as renewable energy and eliminates the

mandated retirement by the end of 2028 of such facilities. While Dominion Energy is unable to estimate the ultimate financial statement impacts related to the newly enacted legislation, it expects there could be a material impact to its results of operations, financial condition and/or cash flows.

Future Environmental Regulations

In March 2023, the EPA released a proposed rule to further revise the Effluent Limitations Guidelines for the Steam Electric Power Generating Category, which apply primarily to wastewater discharges at coal and oil steam generating stations. Also in March 2023, the EPA released its first proposed rule to establish national drinking water standards for PFAS. Dominion Energy anticipates that the EPA will release additional rulemakings as part of an overall strategy to identify and mitigate PFAS exposure. In April 2023, the EPA released a proposal to tighten aspects of the Mercury and Air Toxics Standards, including the reduction of emissions limits for filterable particulate matter, and requiring the use of continuous emissions monitoring systems to demonstrate compliance. In May 2023, the EPA proposed a package of rules designed to reduce CO2 emissions from certain fossil fuel-fired electric generating units. The proposal sets standards of performance and emission guidelines for CO2 emissions from new gas-fired combustion turbines and modified coal-fired steam generating units. The proposed rulemaking package also proposes emission guidelines, including presumptive emission limits, for existing coal, oil and gas-fired steam generating units and certain gas-fired combustion turbines. Also in May 2023, the EPA released a proposed rule to regulate inactive surface impoundments located at retired generating stations that contained CCR and liquids after October 2015, and certain other inactive or previously closed surface impoundments, landfills or other areas that contain accumulations of CCR. Until the EPA ultimately takes final action on these rulemakings, Dominion Energy is unable to predict whether or to what extent the new rules will ultimately require additional controls. The expenditures required to implement additional controls could have a material impact on Dominion Energy’s financial condition and cash flows.

Federal Income Tax Laws

In April 2023, the IRS issued safe harbor guidance to taxpayers on the treatment of amounts paid to repair, maintain, replace, or improve natural gas distribution property, including whether expenditures should be deducted as repairs or capitalized and depreciated on tax returns. The guidance includes safe harbor tax accounting methods which a taxpayer may choose to elect and provides special transition rules and incentives that vary depending on which tax year is the year of change. Dominion Energy is evaluating this new guidance and cannot currently estimate the potential financial statement impacts, but there could be a material impact to its results of operations, financial condition and/or cash flows.

Offshore Wind Vessel Leasing Arrangement

In December 2020, Dominion Energy signed an agreement (subsequently amended in December 2022 and May 2023) with a lessor to complete construction of and lease a Jones Act compliant offshore wind installation vessel. This vessel is designed to handle current turbine technologies as well as next generation turbines. The lessor is providing equity and has obtained financing commitments from debt investors, totaling $625 million, to fund the estimated project costs. The project is expected to be completed in late 2024 or early 2025. The initial lease term will commence once construction is substantially complete and the vessel is delivered and will mature in November 2027. See Note 14 to the Consolidated Financial Statements in this report for additional information.

Southeast Energy Exchange Market

In July 2023, the U.S. Court of Appeals for the District of Columbia Circuit vacated certain of FERC’s previous orders authorizing the SEEM market, including the tariff amendments to provide transmission service for transactions in SEEM. Dominion Energy is evaluating this ruling and currently cannot estimate the potential financial statement impacts.

ITEM 3.

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

The matters discussed in this Item may contain “forward-looking statements” as described in the introductory paragraphs under Part I., Item 2. MD&A in this report. The reader’s attention is directed to those paragraphs for discussion of various risks and uncertainties that may impact the Companies.

Market Risk Sensitive Instruments and Risk Management

The Companies’ financial instruments, commodity contracts and related financial derivative instruments are exposed to potential losses due to adverse changes in commodity prices, interest rates, foreign currency exchange rates and equity securities prices as described below. Commodity price risk is present in the Companies’ electric operations and Dominion Energy’s natural gas procurement and marketing operations due to the exposure to market shifts in prices received and paid for electricity, natural gas and other commodities. The Companies use commodity derivative contracts to manage price risk exposures for these operations. Interest rate risk is generally related to their outstanding debt and future issuances of debt. In addition, the Companies are exposed to investment price risk through various portfolios of equity and debt securities. The Companies’ exposure to foreign currency exchange rate risk is related to certain fixed price contracts associated with the CVOW Commercial Project which it manages through foreign currency exchange rate derivatives. The contracts include services denominated in currencies other than the U.S. dollar for approximately €2.6 billion and 5.1 billion kr. In addition, certain of the fixed price contracts, approximately €0.7 billion, contain commodity indexing provisions linked to steel.

The following sensitivity analysis estimates the potential loss of future earnings or fair value from market risk sensitive instruments over a selected time period due to a 10% change in commodity prices, interest rates or foreign currency exchange rates.

Commodity Price Risk

To manage price risk, the Companies hold commodity-based derivative instruments held for non-trading purposes associated with purchases and sales of electricity, natural gas and other energy-related products.

The derivatives used to manage commodity price risk are executed within established policies and procedures and may include instruments such as futures, forwards, swaps, options and FTRs that are sensitive to changes in the related commodity prices. For sensitivity analysis purposes, the hypothetical change in market prices of commodity-based derivative instruments is determined based on models that consider the market prices of commodities in future periods, the volatility of the market prices in each period, as well as the time value factors of the derivative instruments. Prices and volatility are principally determined based on observable market prices.

A hypothetical 10% increase in commodity prices would have resulted in a decrease of $98 million and $52 million in the fair value of Dominion Energy’s commodity-based derivative instruments as of June 30, 2023 and December 31, 2022, respectively.

A hypothetical 10% increase in commodity prices would have resulted in a decrease of $45 million and $25 million in the fair value of Virginia Power’s commodity-based derivative instruments as of June 30, 2023 and December 31, 2022, respectively.

The impact of a change in energy commodity prices on the Companies' commodity-based derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net losses from commodity-based financial derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction, such as revenue from physical sales of the commodity.

Interest Rate Risk

The Companies manage their interest rate risk exposure predominantly by maintaining a balance of fixed and variable rate debt. For variable rate debt outstanding for Dominion Energy, a hypothetical 10% increase in market interest rates would result in a $64 million and $37 million decrease in earnings at June 30, 2023 and December 31, 2022, respectively. For variable rate debt outstanding for Virginia Power, a hypothetical 10% increase in market interest rates would result in a $20 million and $14 million decrease in earnings at June 30, 2023 or December 31, 2022, respectively.

The Companies also use interest rate derivatives, including forward-starting swaps, interest rate swaps and interest rate lock agreements to manage interest rate risk. As of June 30, 2023, Dominion Energy and Virginia Power had $12.3 billion and $2.9 billion, respectively, in aggregate notional amounts of these interest rate derivatives outstanding. A hypothetical 10% decrease in market interest rates would have resulted in a decrease of $253 million and $121 million, respectively, in the fair value of Dominion Energy and Virginia Power’s interest rate derivatives at June 30, 2023. As of December 31, 2022, Dominion Energy and Virginia Power had $12.7 billion and $3.6 billion, respectively, in aggregate notional amounts of these interest rate derivatives outstanding. A hypothetical

10% decrease in market interest rates would have resulted in a decrease of $274 million and $156 million, respectively, in the fair value of Dominion Energy and Virginia Power’s interest rate derivatives at December 31, 2022.

The impact of a change in interest rates on the Companies’ interest rate-based financial derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net gains and/or losses from interest rate derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction.

Foreign Currency Exchange Rate Risk

The Companies utilize foreign currency swaps to economically hedge the foreign currency exchange risk associated with fixed price contracts related to the CVOW Commercial Project denominated in foreign currencies. As of June 30, 2023 and December 31, 2022, Dominion Energy had €2.6 billion and €2.9 billion, respectively, in aggregate notional amounts of these foreign currency forward purchase agreements outstanding. A hypothetical 10% increase in exchange rates would have resulted in a decrease of $251 million and $284 million in the fair value of Dominion Energy’s foreign currency swaps at June 30, 2023 and December 31, 2022, respectively.

The impact of a change in exchange rates on the Companies’ foreign currency-based financial derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net gains and/or losses from foreign exchange derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction.

Investment Price Risk

The Companies are subject to investment price risk due to securities held as investments in nuclear decommissioning and rabbi trust funds that are managed by third-party investment managers. These trust funds primarily hold marketable securities that are reported in the Companies’ Consolidated Balance Sheets at fair value.

Dominion Energy recognized net investment gains (including investment income) on nuclear decommissioning and rabbi trust investments of $562 million for the six months ended June 30, 2023, and net investment losses (including investment income) on nuclear decommissioning and rabbi trust investments of $981 million and $888 million for the six months ended June 30, 2022 and the year ended December 31, 2022, respectively. Net realized gains and losses include gains and losses from the sale of investments as well as any other-than-temporary declines in fair value. Dominion Energy recorded in AOCI and regulatory liabilities, a net increase in unrealized gains on debt investments of $39 million for the six months ended June 30, 2023, and a net decrease in unrealized gains on debt investments of $191 million and $196 million for six months ended June 30, 2022 and the year ended December 31, 2022, respectively.

Virginia Power recognized net investment gains (including investment income) on nuclear decommissioning trust investments of $283 million for the six months ended June 30, 2023, and net investment losses (including investment income) on nuclear decommissioning trust investments of $468 million and $426 million for the six months ended June 30, 2022 and the year ended December 31, 2022, respectively. Net realized gains and losses include gains and losses from the sale of investments as well as any other-than-temporary declines in fair value. Virginia Power recorded in AOCI and regulatory liabilities, a net increase in unrealized gains on debt investments of $24 million for the six months ended June 30, 2023, and a net decrease in unrealized gains on debt investments of $106 million for both the six months ended June 30, 2022 and the year ended December 31, 2022, respectively.

Dominion Energy sponsors pension and other postretirement employee benefit plans that hold investments in trusts to fund employee benefit payments. Virginia Power employees participate in these plans. Differences between actual and expected returns on plan assets are accumulated and amortized during future periods. As such, any investment-related declines in these trusts will result in future increases in the net periodic cost recognized for employee benefit plans and will be included in the determination of the amount of cash to be contributed to the employee benefit plans.