filings.toolsDominion Energy 10-Q 2023-09-30
Filed 2023-11-08. 6 sections, 433K characters. Original on sec.gov · Markdown · JSON
Cover and table of contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2023
or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
| Commission File Number | Exact name of registrants as specified in their charters, address of principal executive offices and registrants’ telephone number | I.R.S. Employer Identification Number | ||
| 001-08489 | DOMINION ENERGY, INC. | 54-1229715 | ||
| 000-55337 | VIRGINIA ELECTRIC AND POWER COMPANY | 54-0418825 | ||
| 120 Tredegar Street Richmond**,** Virginia 23219 (804) 819-2284 |
State or other jurisdiction of incorporation or organization of the registrants: Virginia
Securities registered pursuant to Section 12(b) of the Act:
| Registrant | Trading Symbol | Title of Each Class | Name of Each Exchange on Which Registered |
| DOMINION ENERGY, INC. | D | Common Stock, no par value | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Dominion Energy, Inc. Yes ☒ No ☐ Virginia Electric and Power Company Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Dominion Energy, Inc. Yes ☒ No ☐ Virginia Electric and Power Company Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Dominion Energy, Inc.
| Large accelerated filer | ☒ | Accelerated filer | ☐ | Emerging growth company | ☐ | |
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Virginia Electric and Power Company
| Large accelerated filer | ☐ | Accelerated filer | ☐ | Emerging growth company | ☐ | |
| Non-accelerated filer | ☒ | Smaller reporting company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Dominion Energy, Inc. Yes ☐ No ☒ Virginia Electric and Power Company Yes ☐ No ☒
At November 2, 2023, the latest practicable date for determination, Dominion Energy, Inc. had 836,796,771 shares of common stock outstanding and Virginia Electric and Power Company had 314,178 shares of common stock outstanding. Dominion Energy, Inc. is the sole holder of Virginia Electric and Power Company’s common stock.
This combined Form 10-Q represents separate filings by Dominion Energy, Inc. and Virginia Electric and Power Company. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Virginia Electric and Power Company makes no representation as to the information relating to Dominion Energy, Inc.’s other operations.
VIRGINIA ELECTRIC AND POWER COMPANY MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND IS FILING THIS FORM 10-Q UNDER THE REDUCED DISCLOSURE FORMAT.
COMBINED INDEX
| Page Number | ||
| Glossary of Terms | 3 | |
| PART I. Financial Information | ||
| Item 1. | Financial Statements | 9 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 71 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 89 |
| Item 4. | Controls and Procedures | 90 |
| PART II. Other Information | ||
| Item 1. | Legal Proceedings | 91 |
| Item 1A. | Risk Factors | 91 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 91 |
| Item 5. | Other Information | 92 |
| Item 6. | Exhibits | 93 |
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 | |
| CEO | Chief Executive Officer | |
| CEP | Capital Expenditure Program, as established by House Bill 95, Ohio legislation enacted in 2011, deployed by East Ohio to recover certain costs associated with capital investment | |
| CERCLA | Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as Superfund | |
| CFIUS | The Committee on Foreign Investment in the U.S. | |
| CFO | Chief Financial Officer | |
| CO2 | Carbon dioxide |
| Colonial Trail West | A 142 MW utility-scale solar power station located in Surry County, Virginia | |
| Companies | Dominion Energy and Virginia Power, collectively | |
| Contracted Energy | Contracted Energy operating segment, formerly known as the Contracted Assets operating segment | |
| Cooling degree days | Units measuring the extent to which the average daily temperature is greater than 65 degrees Fahrenheit, or 75 degrees Fahrenheit in DESC’s service territory, calculated as the difference between 65 or 75 degrees, as applicable, and the average temperature for that day | |
| Cove Point | Cove Point LNG, LP (formerly known as Dominion Energy Cove Point LNG, LP) | |
| 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 | |
| FCC | Federal Communications Commission | |
| FERC | Federal Energy Regulatory Commission | |
| FTRs | Financial transmission rights | |
| GAAP | U.S. generally accepted accounting principles | |
| Gas Distribution | Gas Distribution operating segment | |
| GENCO | South Carolina Generating Company, Inc. | |
| GHG | Greenhouse gas | |
| 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 | |
| Heating degree days | Units measuring the extent to which the average daily temperature is less than 65 degrees Fahrenheit, or 60 degrees Fahrenheit in DESC’s service territory, calculated as the difference between 65 or 60 degrees, as applicable, and the average temperature for that day | |
| Hope | Hope Gas, Inc., doing business as Dominion Energy West Virginia through August 2022 | |
| ISO | Independent system operator | |
| Jones Act | The Coastwise Merchandise Statute (commonly known as the Jones Act) 46 U.S.C. §55102 regulating U.S. maritime commerce | |
| Kewaunee | Kewaunee nuclear power station | |
| kV | Kilovolt | |
| LNG | Liquefied natural gas | |
| MD&A | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
| MGD | Million gallons per day | |
| Millstone | Millstone nuclear power station | |
| 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 |
| Order 1000 | Order issued by FERC adopting requirements for electric transmission planning, cost allocation and development | |
| 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 | |
| PFAS | Per- and polyfluorinated substances, a group of widely used chemicals that break down very slowly over time in the environment | |
| PIPP | Percentage of Income Payment Plan deployed by East Ohio | |
| PIR | Pipeline Infrastructure Replacement program deployed by East Ohio | |
| PJM | PJM Interconnection, LLC | |
| PSD | Prevention of significant deterioration | |
| PSNC | Public Service Company of North Carolina, Incorporated, doing business as Dominion Energy North Carolina | |
| 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)) | |
| 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 E | A rate adjustment clause associated with the recovery of costs related to certain capital projects at Virginia Power's electric generating stations to comply with federal and state environmental laws and regulations | |
| Rider 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 RBB | A rate adjustment clause associated with the recovery of costs related to installation of broadband capacity in certain unserved rural areas | |
| 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 | |
| RTO | Regional transmission organization | |
| Sadler Solar | A 100 MW utility-scale solar power station located in Greensville County, Virginia | |
| 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 | |
| SEEM | Southeast Energy Exchange Market | |
| Series A Preferred Stock | Dominion Energy’s Series A Cumulative Perpetual Convertible Preferred Stock, without par value, with a liquidation preference of $1,000 per share (previously designated the 1.75% Series A Cumulative Perpetual Convertible Preferred Stock) | |
| 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 | |
| Spruce Power | The legal entity, Spruce Power Holding Corporation, one or more of its consolidated subsidiaries, or the entirety of Spruce Power Holding Corporation and its consolidated subsidiaries | |
| Standard & Poor’s | Standard & Poor’s Ratings Services, a division of S&P Global Inc. | |
| Summer | V.C. Summer nuclear power station | |
| Surry | Surry nuclear power station | |
| 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. |
PART I. FINANCI****AL INFORMATION
Item 1. FINANCIAL STATEMENTS
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (millions, except per share amounts) | ||||||||||||||||
| Operating Revenue | $ | 3,810 | $ | 3,963 | $ | 10,859 | $ | 10,135 | ||||||||
| Operating Expenses | ||||||||||||||||
| Electric fuel and other energy-related purchases | 1,049 | 1,217 | 3,010 | 2,625 | ||||||||||||
| Purchased electric capacity | 19 | 16 | 42 | 45 | ||||||||||||
| Purchased gas | 40 | 91 | 212 | 331 | ||||||||||||
| Other operations and maintenance | 848 | 849 | 2,365 | 2,589 | ||||||||||||
| Depreciation, depletion and amortization | 663 | 630 | 1,884 | 1,832 | ||||||||||||
| Other taxes | 162 | 172 | 517 | 531 | ||||||||||||
| Impairment of assets and other charges (benefits) | **(**6 | ) | 20 | 136 | 425 | |||||||||||
| Losses (gains) on sales of assets | — | (27 | ) | **(**23 | ) | 581 | ||||||||||
| Total operating expenses | 2,775 | 2,968 | 8,143 | 8,959 | ||||||||||||
| Income from operations | 1,035 | 995 | 2,716 | 1,176 | ||||||||||||
| Other income (expense) | 56 | 61 | 646 | (181 | ) | |||||||||||
| Interest and related charges | 192 | 360 | 1,066 | 673 | ||||||||||||
| Income from continuing operations including noncontrolling interests before income tax expense | 899 | 696 | 2,296 | 322 | ||||||||||||
| Income tax expense | 182 | 70 | 432 | 61 | ||||||||||||
| Net Income From Continuing Operations | 717 | 626 | 1,864 | 261 | ||||||||||||
| Net Income (Loss) From Discontinued Operations**(1)** | **(**554 | ) | 152 | **(**105 | ) | 775 | ||||||||||
| Net Income Including Noncontrolling Interests | 163 | 778 | 1,759 | 1,036 | ||||||||||||
| Noncontrolling Interests | — | — | — | — | ||||||||||||
| Net Income Attributable to Dominion Energy | $ | 163 | $ | 778 | $ | 1,759 | $ | 1,036 | ||||||||
| Amounts attributable to Dominion Energy | ||||||||||||||||
| Net income from continuing operations | $ | 717 | $ | 626 | $ | 1,864 | $ | 261 | ||||||||
| Net income (loss) from discontinued operations | **(**554 | ) | 152 | **(**105 | ) | 775 | ||||||||||
| Net income attributable to Dominion Energy | $ | 163 | $ | 778 | $ | 1,759 | $ | 1,036 | ||||||||
| EPS - Basic | ||||||||||||||||
| Net income from continuing operations | $ | 0.83 | $ | 0.73 | $ | 2.16 | $ | 0.23 | ||||||||
| Net income (loss) from discontinued operations | **(**0.66 | ) | 0.18 | **(**0.13 | ) | 0.95 | ||||||||||
| Net income attributable to Dominion Energy | $ | 0.17 | $ | 0.91 | $ | 2.03 | $ | 1.18 | ||||||||
| EPS - Diluted | ||||||||||||||||
| Net income from continuing operations | $ | 0.83 | $ | 0.73 | $ | 2.16 | $ | 0.23 | ||||||||
| Net income (loss) from discontinued operations | **(**0.66 | ) | 0.18 | **(**0.13 | ) | 0.94 | ||||||||||
| Net income attributable to Dominion Energy | $ | 0.17 | $ | 0.91 | $ | 2.03 | $ | 1.17 |
(1)
*Includes income tax expense of $*1.2 *billion and $53 million for the three months ended September 30, 2023 and 2022, respectively, and $*1.3 billion and $185 million for the nine months ended September 30, 2023 and 2022, respectively.
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (millions) | ||||||||||||||||
| Net income including noncontrolling interests | $ | 163 | $ | 778 | $ | 1,759 | $ | 1,036 | ||||||||
| Other comprehensive income (loss), net of taxes: | ||||||||||||||||
| Net deferred gains (losses) on derivatives-hedging activities(1) | 19 | 10 | 16 | 64 | ||||||||||||
| Changes in unrealized net gains (losses) on investment securities(2) | **(**22 | ) | (27 | ) | **(**6 | ) | (116 | ) | ||||||||
| Changes in net unrecognized pension and other postretirement benefit costs(3) | — | — | — | 30 | ||||||||||||
| Amounts reclassified to net income (loss): | ||||||||||||||||
| Net derivative (gains) losses-hedging activities(4) | 8 | 12 | 24 | 33 | ||||||||||||
| Net realized (gains) losses on investment securities(5) | 2 | 1 | 1 | 13 | ||||||||||||
| Net pension and other postretirement benefit costs (credits)(6) | **(**8 | ) | 26 | **(**31 | ) | 59 | ||||||||||
| Net earnings from equity method investees(7) | 3 | — | 3 | — | ||||||||||||
| Changes in other comprehensive income from equity method investees(8) | **(**1 | ) | — | — | 1 | |||||||||||
| Total other comprehensive income | 1 | 22 | 7 | 84 | ||||||||||||
| Comprehensive income including noncontrolling interests | 164 | 800 | 1,766 | 1,120 | ||||||||||||
| Comprehensive income attributable to noncontrolling interests | — | — | — | — | ||||||||||||
| Comprehensive income attributable to Dominion Energy | $ | 164 | $ | 800 | $ | 1,766 | $ | 1,120 |
(1) Net of $**(6) million and $**(4) million tax for the three months ended September 30, 2023 and 2022, respectively, and net of $**(5) million and $**(22) million tax for the nine months ended September 30, 2023 and 2022*, respectively.*
(2) *Net of $*6 *million and $*9 *million tax for the three months ended September 30, 2023 and 2022, respectively, and net of $*2 million and $37 million tax for the nine months ended September 30, 2023 and 2022, respectively.
(3) Net of $— million and $— million tax for the three months ended September 30, 2023 and 2022, respectively, and net of $— million and $(8) million tax for the nine months ended September 30, 2023 and 2022*, respectively.*
(4) Net of $**(3) million and $**(4) million tax for the three months ended September 30, 2023 and 2022, respectively, and net of $**(8)
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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;
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 any or all of the East Ohio, PSNC and Questar Gas Transactions, 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;
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
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Item 4. CONTROLS AND PROCEDURES
Senior management of both Dominion Energy and Virginia Power, including Dominion Energy and Virginia Power’s CEO and CFO, evaluated the effectiveness of each company’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation process, each of Dominion Energy and Virginia Power’s CEO and CFO have concluded that each company’s disclosure controls and procedures are effective.
There were no changes that occurred during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, Dominion Energy or Virginia Power’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Companies are parties to various legal, environmental or other regulatory proceedings, including in the ordinary course of business. SEC regulations require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Companies reasonably believe will exceed a specified threshold. Pursuant to the SEC regulations, the Companies use a threshold of $1 million for such proceedings.
See the following for discussions on various legal, environmental and other regulatory proceedings to which the Companies are a party, which information is incorporated herein by reference:
Notes 13 and 23 to the Consolidated Financial Statements and Future Issues and Other Matters in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Notes 13 and 17 to the Consolidated Financial Statements and Future Issues and Other Matters in MD&A in this report.
Item 1A. RISK FACTORS
The Companies’ businesses are influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond the Companies’ control. A number of these risk factors have been identified in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, which should be taken into consideration when reviewing the information contained in this report. Other than the risk factor discussed below, there have been no material changes with regard to the risk factors previously disclosed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. For other factors that may cause actual results to differ materially from those indicated in any forward-looking statement or projection contained in this report, see Forward-Looking Statements in MD&A in this report.
Dominion Energy may be unable to complete one or all the proposed sales of certain regulated gas distribution operations to Enbridge under the current terms and/or expected timing. The ability of Dominion Energy to complete the East Ohio, PSNC and Questar Gas Transactions, each of which are not conditioned upon the completion of the others, is dependent upon receiving clearance or approval under or by the Hart-Scott-Rodino Act, CFIUS, FCC and applicable state utility commissions, including the North Carolina, Utah and Wyoming Commissions, as well as other customary closing and regulatory conditions. The ability to obtain the requisite regulatory approvals for each sale as well as the timing of such approvals is outside of Dominion Energy’s control. In addition, the terms and conditions associated with such approvals may result in additional requirements or obligations which may be burdensome or potentially result in the inability to complete one or all of the proposed sales under the current terms and/or expected timing. Such events could negatively impact Dominion Energy’s ability to implement certain of the recommendations in connection with the comprehensive business review announced in November 2022 as well as have a material adverse effect on Dominion Energy’s reputation, its financial condition, results of operations or cash flows.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Dominion Energy
Purchases of Equity Securities
| Period | Total Number of Shares (or Units) Purchased**(1)** | Average Price Paid per Share (or Unit)****(2) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares (or Units that May Yet Be Purchased under the Plans or Programs**(3)** | ||||||||
| 7/1/23 - 7/31/23 | 1,059 | $ | 51.79 | — | $ 0.92 billion | |||||||
| 8/1/23 - 8/31/23 | 6,594 | 52.30 | — | 0.92 billion | ||||||||
| 9/1/23 - 9/30/23 | 95 | 47.88 | — | 0.92 billion | ||||||||
| Total | 7,748 | $ | 52.18 | — | $ 0.92 billion |
(1)
Represents shares of common stock that were tendered by employees to satisfy tax withholding obligations on vested restricted stock.
(2)
Represents the weighted-average price paid per share.
(3)
In November 2020, the Dominion Energy Board of Directors authorized the repurchase of up to $1.0 billion of shares of common stock. This repurchase program has no expiration date or price or volume targets and may be modified, suspended or terminated at any time. Shares may be purchased through open market or privately negotiated transactions or otherwise at the discretion of management subject to prevailing market conditions, applicable securities laws and other factors.
ITEM 5. OTHER INFORMATION
During the last fiscal quarter, none of the Companies’ directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
On November 2, 2023, Virginia Power issued 8,256 shares of its common stock to Dominion Energy, the sole holder of Virginia Power’s common stock, for an aggregate purchase price of approximately $539 million in a transaction exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. Virginia Power used the proceeds from the sale of the shares to reduce the aggregate amount outstanding under its intercompany credit facility with Dominion Energy. Virginia Power issued the shares pursuant to a Virginia Commission order authorizing Virginia Power to issue up to $3.25 billion of common stock to Dominion Energy through the end of 2023 in order to maintain a common equity capitalization to total capitalization ratio of 52.10% in accordance with legislation enacted in Virginia in April 2023.
Item 6. EXHIBITS
| Exhibit Number | Description | Dominion Energy | Virginia Power | |||
| 31.b | Certification by Chief Financial Officer of Dominion Energy, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | X | ||||
| 31.c | Certification by Chief Executive Officer of Virginia Electric and Power Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | X | ||||
| 31.d | Certification by Chief Financial Officer of Virginia Electric and Power Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | X | ||||
| 32.a | Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Dominion Energy, Inc. as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | X | ||||
| 32.b | Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Virginia Electric and Power Company as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | X | ||||
| 99 | Condensed consolidated earnings statements (filed herewith). | X | X | |||
| 101 | The following financial statements from Dominion Energy, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed on November 8, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. The following financial statements from Virginia Electric and Power Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed on November 8, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Common Shareholder’s Equity (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. | X | X | |||
| 104 | Cover Page Interactive Data File formatted in iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101. | X | X |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| DOMINION ENERGY, INC. Registrant | |
| November 8, 2023 | /s/ Michele L. Cardiff |
| Michele L. Cardiff Senior Vice President, Controller and Chief Accounting Officer | |
| VIRGINIA ELECTRIC AND POWER COMPANY Registrant | |
| November 8, 2023 | /s/ Michele L. Cardiff |
| Michele L. Cardiff Senior Vice President, Controller and Chief Accounting Officer | |