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 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 and Part II. Item 1A. Risk Factors in this report.

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 September 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)
Third Quarter
Net income attributable to Dominion Energy		$	163			$	778			$	(615	)
Diluted EPS			0.17				0.91				(0.74	)
Year-To-Date
Net income attributable to Dominion Energy		$	1,759			$	1,036			$	723
Diluted EPS			2.03				1.17				0.86

Overview

Third Quarter 2023 vs. 2022

Net income attributable to Dominion Energy decreased 79%, primarily due to a charge to reflect the recognition of deferred taxes on the outside basis of stock associated with East Ohio, PSNC, Questar Gas and Wexpro meeting the classification as held for sale and a decrease from the impact of 2023 Virginia legislation, partially offset by a gain on the sale of Dominion Energy's remaining noncontrolling interest in Cove Point and increased unrealized gains on economic hedging activities.

Year-To-Date 2023 vs. 2022

Net income attributable to Dominion Energy increased 70%, 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, a gain on the sale of Dominion Energy's remaining noncontrolling interest in Cove Point, 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 to reflect the recognition of deferred taxes on the outside basis of stock associated with East Ohio, PSNC, Questar Gas and Wexpro meeting the classification as held for sale, a charge associated with the impairment of a

corporate office building, a decrease in sales to electric utility customers attributable to weather and a decrease from the impact of 2023 Virginia legislation.

Analysis of Consolidated Operations

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

		Third Quarter												Year-To-Date
		2023				2022				$ Change				2023				2022				$ Change
(millions)
Operating revenue		$	3,810			$	3,963			$	(153	)		$	10,859			$	10,135			$	724
Electric fuel and other energy-related purchases			1,049				1,217				(168	)			3,010				2,625				385
Purchased electric capacity			19				16				3				42				45				(3	)
Purchased gas			40				91				(51	)			212				331				(119	)
Other operations and maintenance			848				849				(1	)			2,365				2,589				(224	)
Depreciation, depletion and amortization			663				630				33				1,884				1,832				52
Other taxes			162				172				(10	)			517				531				(14	)
Impairment of assets and other charges (benefits)			(6	)			20				(26	)			136				425				(289	)
Losses (gains) on sales of assets			—				(27	)			27				(23	)			581				(604	)
Other income (expense)			56				61				(5	)			646				(181	)			827
Interest and related charges			192				360				(168	)			1,066				673				393
Income tax expense			182				70				112				432				61				371
Net income (loss) from discontinued operations including noncontrolling interests			(554	)			152				(706	)			(105	)			775				(880	)

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

Third Quarter 2023 vs. 2022

Operating revenue decreased 4%, primarily reflecting:

A $213 million decrease in fuel-related revenue as a result of a decrease in commodity costs associated with sales to electric utility retail customers ($168 million) and a decrease in commodity costs associated with sales to gas utility customers ($45 million);

A $110 million decrease from the combination of certain riders into base rates at Virginia Power as a result of 2023 Virginia legislation; and

A $14 million decrease from the sale of Hope.

These decreases were partially offset by:

A $107 million net increase associated with market prices affecting Millstone, including economic hedging impacts of net realized and unrealized gains on freestanding derivatives ($199 million);

A $103 million increase to recover the costs and an authorized return, as applicable, associated with Virginia Power non-fuel riders;

A $25 million increase in sales to electric utility retail customers, primarily due to an increase in cooling degree days; and

A $18 million increase in sales to electric utility retail customers associated with growth.

Electric fuel and other energy-related purchases decreased 14%, primarily due to lower commodity costs for electric utilities, which are offset in operating revenue and do not impact net income.

Purchased gas decreased 56%, primarily due to a decrease in commodity costs for gas utility operations, which are offset in operating revenue and do not impact net income.

Other operations and maintenance remained substantially consistent, 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 ($60 million), partially offset by an increase in storm damage and restoration costs in Virginia Power’s service territory ($27 million) and an increase from the combination of certain riders into base rates at Virginia Power as a result of 2023 Virginia legislation ($15 million).

Impairment of assets and other charges decreased $26 million, primarily due to a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities at Virginia Power.

Gains on sales of assets decreased $27 million, primarily due to the absence of a gain on the transfer of certain non-utility property in South Carolina.

Interest and related charges decreased 47%, primarily due to unrealized gains in 2023 compared to unrealized losses in 2022 associated with freestanding derivatives ($308 million), partially offset by increased commercial paper and long-term debt borrowings ($53 million), higher interest rates on commercial paper and long-term debt ($47 million), higher interest rates on variable rate debt and cash flow interest rate swaps ($33 million) and the absence of benefits associated with the early redemption of certain securities in the third quarter of 2022 ($17 million).

Income tax expense increased $112 million, primarily due to higher pre-tax income ($35 million), an increase in consolidated state deferred income taxes associated with the East Ohio, PSNC and Questar Gas Transactions and the sale of Dominion Energy’s 50% noncontrolling interest in Cove Point ($29 million), lower interim period allocation of investment tax credits ($29 million) and increased consolidated state deferred income taxes on pre-tax gains from nuclear decommissioning trusts and economic hedges ($15 million).

Net income from discontinued operations including noncontrolling interests decreased $706 million, primarily due to charges reflecting the recognition of deferred taxes on the outside basis of stock associated with East Ohio, PSNC, Questar Gas and Wexpro meeting the classification as held for sale that will reverse when the sale is completed ($939 million), unrealized losses in 2023 compared to unrealized gains in 2022 on interest rate derivatives for economic hedging of debt secured by Dominion Energy's interest in Cove Point ($72 million) and a decrease in equity method earnings from the sale of Dominion Energy's noncontrolling interest in Cove Point ($29 million), partially offset by the gain on the sale of Dominion Energy's remaining noncontrolling interest in Cove Point ($348 million).

Year-To-Date 2023 vs. 2022

Operating revenue increased 7%, primarily reflecting:

An $862 million net increase associated with market prices affecting Millstone, including economic hedging impacts of net realized and unrealized gains on freestanding derivatives ($1.1 billion);

A $277 million net increase in fuel-related revenue as a result of an increase in commodity costs associated with sales to electric utility retail customers ($354 million) and a decrease in commodity costs associated with sales to gas utility customers ($77 million);

A $158 million increase to recover the costs and an authorized return, as applicable, associated with Virginia Power non-fuel riders;

A $90 million increase in sales to electric utility retail customers associated with economic and other usage factors; and

A $42 million increase in sales to electric utility retail customers associated with growth.

These increases were partially offset by:

A $181 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 ($64 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 $110 million decrease from the combination of certain riders into base rates at Virginia Power as a result of 2023 Virginia legislation;

A $109 million decrease from the sale of Hope; and

A $74 million decrease from unplanned outages ($61 million) and planned outages ($13 million) at Millstone.

Electric fuel and other energy-related purchases increased 15%, primarily due to higher commodity costs for electric utilities ($354 million) and an increase in the use of purchased renewable energy credits at Virginia Power ($63 million), which are offset in operating revenue and do not impact net income.

Purchased gas decreased 36%, primarily due to a decrease in commodity costs for gas utility operations ($77 million), which are offset in operating revenue and do not impact net income and a decrease from the sale of Hope ($43 million).

Other operations and maintenance decreased 9%, primarily due to a decrease in certain Virginia Power expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($163 million), a decrease in storm damage and restoration costs in Virginia Power’s service territory ($84 million) and a decrease from the sale of Hope ($25 million), partially offset by an increase in outside services ($38 million), an increase in salaries, wages and benefits ($16 million) and an increase from the combination of certain riders into base rates at Virginia Power as a result of 2023 Virginia legislation ($15 million).

Depreciation, depletion and amortization increased 3%, primarily due to various projects being placed into service ($80 million), partially offset by a decrease due to the impairment of certain nonregulated solar generation facilities in 2022 ($26 million).

Impairment of assets and other charges decreased 68%, 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 ($70 million), partially offset by the impairment of a corporate office building ($96 million) and a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million).

Gains on sales of assets increased $604 million, primarily due to the absence of a loss associated with the sale of Kewaunee ($649 million), partially offset by the absence of a gain on the contribution of certain privatization operations to Dominion Privatization ($23 million).

Other income increased $827 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 58%, primarily due to higher interest rates on commercial paper and long-term debt ($148 million), increased commercial paper and long-term debt borrowings ($133 million), higher interest rates on variable rate debt and cash flow interest rate swaps ($110 million), lower premiums received on interest rate derivatives ($39 million), lower unrealized gains in 2023 compared to 2022 associated with freestanding derivatives ($28 million) and the absence of benefits associated with the early redemption of certain securities in the third quarter of 2022 ($17 million), partially offset by decreased interest expense associated with rider deferrals ($30 million).

Income tax expense increased $371 million, primarily due to higher pre-tax income ($480 million) and an increase in consolidated state deferred income taxes associated with the East Ohio, PSNC and Questar Gas Transactions and the sale of Dominion Energy’s 50% noncontrolling interest in Cove Point ($29 million), partially offset by the absence of a charge on the sale of Hope’s stock ($90 million) and decreased consolidated state deferred income taxes on pre-tax gains from nuclear decommissioning trusts and economic hedges ($16 million).

Net income from discontinued operations including noncontrolling interests decreased $880 million, primarily due to charges reflecting the recognition of deferred taxes on the outside basis of stock associated with East Ohio, PSNC, Questar Gas and Wexpro meeting the classification as held for sale that will reverse when the sale is completed ($939 million), lower unrealized gains in 2023 compared to 2022 on interest rate derivatives for economic hedging of debt secured by Dominion Energy's interest in Cove Point ($179 million), higher interest rates on variable rate debt secured by Dominion Energy's interest in Cove Point ($39 million), an increase in interest expense primarily associated with debt issuances in 2022 ($27 million), the absence of a gain associated with the Q-Pipe Group for the finalization of the working capital adjustment in the first quarter of 2022 ($20 million) and an impairment charge of certain nonregulated solar assets ($11 million), partially offset by the gain on the sale of Dominion Energy's remaining noncontrolling interest in Cove Point ($348 million) and an increase following the approved base rate case for Questar Gas ($29 million).

Results of Operations—Virginia Power

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

		Third Quarter												Year-To-Date
		2023				2022				$ Change				2023				2022				$ Change
(millions)
Net income		$	473			$	571			$	(98	)		$	1,158			$	975			$	183

Overview

Third Quarter 2023 vs. 2022

Net income decreased 17%, primarily due to the impact of 2023 Virginia legislation.

Year-To-Date 2023 vs. 2022

Net income increased 19%, 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 and the impact of 2023 Virginia legislation.

Analysis of Consolidated Operations

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

		Third Quarter												Year-To-Date
		2023				2022				$ Change				2023				2022				$ Change
(millions)
Operating revenue		$	2,645			$	2,875			$	(230	)		$	7,280			$	7,217			$	63
Electric fuel and other energy-related purchases			736				981				(245	)			2,241				2,030				211
Purchased electric capacity			15				11				4				33				33				—
Other operations and maintenance			532				531				1				1,416				1,579				(163	)
Depreciation and amortization			488				451				37				1,367				1,305				62
Other taxes			71				80				(9	)			223				238				(15	)
Impairment of assets and other charges (benefits)			(15	)			19				(34	)			30				432				(402	)
Other income (expense)			(1	)			3				(4	)			83				(37	)			120
Interest and related charges			215				168				47				578				461				117
Income tax expense			129				66				63				317				127				190

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

Third Quarter 2023 vs. 2022

Operating revenue decreased 8%, primarily reflecting:

A $243 million decrease in fuel-related revenue as a result of a decrease in commodity costs associated with sales to electric utility retail customers;

A $110 million decrease from the combination of certain riders into base rates as a result of 2023 Virginia legislation; partially offset by

A $103 million increase to recover the costs and an authorized return, as applicable, associated with non-fuel riders;

A $16 million net increase from electric utility customers who elect to pay market based or other negotiated rates, including settlements of economic hedges; and

A $14 million increase in sales to electric utility retail customers associated with economic and other usage factors.

Electric fuel and other energy-related purchases decreased 25%, primarily due to lower commodity costs for electric utilities, which are offset in operating revenue and do not impact net income.

Other operations and maintenance remained substantially consistent, primarily due to a decrease in certain expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($60 million), partially offset by an increase in storm damage and restoration costs ($27 million), an increase in salaries, wages and benefits and administrative costs ($26 million), an increase from the combination of certain riders into base rates as a result of 2023 Virginia legislation ($15 million) and an increase in bad debt expense ($10 million).

Impairment of assets and other charges decreased $34 million, primarily due to a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities.

Interest and related charges increased 28%, primarily due to increased commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($42 million) and higher interest rates on commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($11 million), partially offset by decreased interest expense associated with rider deferrals ($11 million).

Income tax expense increased 95%, primarily due to lower interim period allocation of investment tax credits.

Year-To-Date 2023 vs. 2022

Operating revenue increased 1%, primarily reflecting:

A $175 million increase in fuel-related revenue as a result of an increase in commodity costs associated with sales to electric utility retail customers;

A $158 million increase to recover the costs and an authorized return, as applicable, associated with non-fuel riders;

A $103 million increase in sales to electric utility retail customers associated with economic and other usage factors; and

A $19 million increase in sales to electric utility retail customers associated with growth.

These increases were partially offset by:

A $140 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 ($49 million);

A $110 million decrease from the combination of certain riders into base rates as a result of 2023 Virginia legislation;

An $89 million net decrease from electric utility customers who elect to pay market based or other negotiated rates, including settlements of economic hedges; and

A $13 million decrease in PJM off-system sales.

Electric fuel and other energy-related purchases increased 10%, primarily due to higher commodity costs for electric utilities ($175 million) and an increase in the use of purchased renewable energy credits ($63 million), partially offset by a $13 million decrease in PJM off-system sales, which are offset in operating revenue and do not impact net income.

Other operations and maintenance decreased 10%, primarily due to a decrease in certain expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($163 million) and a decrease in storm damage and restoration costs ($84 million), partially offset by an increase in salaries, wages and benefits and administrative costs ($43 million), an increase in outside services ($34 million) and an increase from the combination of certain riders into base rates as a result of 2023 Virginia legislation ($15 million).

Impairment of assets and other charges decreased 93%, 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 ($70 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 $120 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 25%, primarily due to increased commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($114 million) and higher interest rates on commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($33 million), partially offset by decreased interest expense associated with rider deferrals ($30 million).

Income tax expense increased $190 million, primarily due to higher pre-tax income ($100 million) and lower interim period allocation of investment tax credits ($97 million).

Segment Results of Operations

Segment results include the impact of intersegment revenues and expenses, which may result in intersegment profit and loss. In September 2023, Dominion Energy revised its operating segments subsequent to entering agreements for the East Ohio, PSNC and Questar Gas Transactions as well as completing the sale of its noncontrolling interest in Cove Point. See Notes 1 and 21 to the Consolidated Financial Statements for more information. The historical information presented herein has been recast to reflect the current segment presentation. Presented below is a summary of contributions by Dominion Energy’s operating segments to net income (loss) attributable to Dominion Energy:

		Net Income (Loss) Attributable to Dominion Energy												EPS**(1)**
		2023				2022				$ Change				2023				2022				$ Change
(millions, except EPS)
Third Quarter
Dominion Energy Virginia		$	532			$	618			$	(86	)		$	0.64			$	0.74			$	(0.10	)
Dominion Energy South Carolina			143				175				(32	)			0.17				0.21				(0.04	)
Contracted Energy			54				65				(11	)			0.06				0.08				(0.02	)
Corporate and Other			(566	)			(80	)			(486	)			(0.70	)			(0.12	)			(0.58	)
Consolidated		$	163			$	778			$	(615	)		$	0.17			$	0.91			$	(0.74	)
Year-To-Date
Dominion Energy Virginia		$	1,308			$	1,576			$	(268	)		$	1.56			$	1.92			$	(0.36	)
Dominion Energy South Carolina			302				408				(106	)			0.36				0.50				(0.14	)
Contracted Energy			123				95				28				0.15				0.12				0.03
Corporate and Other			26				(1,043	)			1,069				(0.04	)			(1.37	)			1.33
Consolidated		$	1,759			$	1,036			$	723			$	2.03			$	1.17			$	0.86

(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:

		Third Quarter												Year-To-Date
		2023				2022				% Change				2023				2022				% Change
Electricity delivered (million MWh)			24.7				24.9				(1	)%			68.2				67.9				—		%
Electricity supplied (million MWh):
Utility			25.8				25.0				3				68.3				68.1				—
Non-Jurisdictional			0.5				0.5				—				1.4				1.3				8
Degree days (electric distribution and utility service area):
Cooling			1,224				1,222				—				1,585				1,735				(9	)
Heating			2				17				(88	)			1,677				2,209				(24	)
Average electric distribution customer accounts (thousands)			2,756				2,727				1				2,748				2,721				1

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

		Third Quarter 2023 vs. 2022 Increase (Decrease)								Year-To-Date 2023 vs. 2022 Increase (Decrease)
		Amount				EPS				Amount				EPS
(millions, except EPS)
Weather		$	3			$	—			$	(106	)		$	(0.13	)
Customer usage and other factors			17				0.02				92				0.11
Customer-elected rate impacts			12				0.01				(66	)			(0.08	)
Impact of 2023 Virginia legislation			(76	)			(0.09	)			(86	)			(0.10	)
Rider equity return			34				0.04				83				0.10
Storm damage and restoration costs			(11	)			(0.01	)			2				—
Depreciation and amortization			(8	)			(0.01	)			(20	)			(0.02	)
Renewable energy investment tax credits			(24	)			(0.03	)			(77	)			(0.09	)
Interest expense, net			(17	)			(0.02	)			(40	)			(0.05	)
Other			(16	)			(0.01	)			(50	)			(0.07	)
Share dilution			—				—				—				(0.03	)
Change in net income contribution		$	(86	)		$	(0.10	)		$	(268	)		$	(0.36	)

Dominion Energy South Carolina

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

		Third Quarter												Year-To-Date
		2023				2022				% Change				2023				2022				% Change
Electricity delivered (million MWh)			6.6				6.6				—		%		16.8				17.7				(5	%)
Electricity supplied (million MWh)			6.9				6.9				—				17.6				18.6				(5	)
Degree days (electric distribution service areas):
Cooling			609				514				18				723				767				(6	)
Heating			—				—				—				484				783				(38	)
Gas distribution throughput (bcf):
Sales			15				15				—				48				50				(4	)
Average distribution customer accounts (thousands):
Electric			796				779				2				789				776				2
Gas			446				428				4				441				425				4

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

		Third Quarter 2023 vs. 2022 Increase (Decrease)								Year-To-Date 2023 vs. 2022 Increase (Decrease)
		Amount				EPS				Amount				EPS
(millions, except EPS)
Weather		$	14			$	0.02			$	(31	)		$	(0.04	)
Customer usage and other factors			(2	)			—				8				0.01
Customer-elected rate impacts			(11	)			(0.01	)			(29	)			(0.04	)
Base rate case & Natural Gas Rate Stabilization Act impacts			1				—				7				0.01
Capital cost rider			(2	)			—				(6	)			(0.01	)
Gains on sales of property			(15	)			(0.02	)			(27	)			(0.03	)
Depreciation and amortization			(6	)			(0.01	)			(13	)			(0.02	)
Interest expense, net			(6	)			(0.01	)			(20	)			(0.02	)
Other			(5	)			(0.01	)			5				0.01
Share dilution			—				—				—				(0.01	)
Change in net income contribution		$	(32	)		$	(0.04	)		$	(106	)		$	(0.14	)

Contracted Energy

Presented below are selected operating statistics related to Contracted Energy's operations:

		Third Quarter												Year-To-Date
		2023				2022				% Change				2023				2022				% Change
Electricity supplied (million MWh)			4.6				5.0				(8	%)			11.6				13.0				(11	)	%

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

		Third Quarter 2023 vs. 2022 Increase (Decrease)								Year-To-Date 2023 vs. 2022 Increase (Decrease)
		Amount				EPS				Amount				EPS
(millions, except EPS)
Margin		$	(9	)		$	(0.01	)		$	13			$	0.02
Planned outage costs(1)			(3	)			—				3				—
Unplanned outage costs(1)			—				—				(2	)			—
Depreciation and amortization			6				0.01				17				0.02
Other			(5	)			(0.02	)			(3	)			(0.01	)
Share dilution			—				—				—				—
Change in net income contribution		$	(11	)		$	(0.02	)		$	28			$	0.03

(1)

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:

		Third Quarter												Year-To-Date
		2023				2022				$ Change				2023				2022				$ Change
(millions, except EPS)
Specific items attributable to operating segments		$	(125	)		$	(251	)		$	126			$	245			$	(1,909	)		$	2,154
Specific items attributable to Corporate and Other segment			(379	)			182				(561	)			(14	)			896				(910	)
Total specific items			(504	)			(69	)			(435	)			231				(1,013	)			1,244
Other corporate and other operations:
Interest expense, net			(140	)			(77	)			(63	)			(390	)			(239	)			(151	)
Other			78				66				12				185				209				(24	)
Total other corporate and other operations			(62	)			(11	)			(51	)			(205	)			(30	)			(175	)
Total net income (expense)		$	(566	)		$	(80	)		$	(486	)		$	26			$	(1,043	)		$	1,069
EPS impact		$	(0.70	)		$	(0.12	)		$	(0.58	)		$	(0.04	)		$	(1.37	)		$	1.33

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 September 30, 2023, other than the effects of required interim period provision for income taxes, this primarily included a $939 million charge to reflect the recognition of deferred taxes on the outside basis of stock associated with East Ohio, PSNC, Questar Gas and Wexpro meeting the classification as held for sale that will reverse when the sale is completed, $385 million net income from discontinued operations, primarily associated with operations included in the East Ohio, PSNC and Questar Gas Transactions and Dominion Energy's noncontrolling interest in Cove Point, including the gain on sale, and a $218 million after-tax benefit for derivative mark-to-market changes. For the nine months ended September 30, 2023, other than the effects of required interim period provision for income taxes, this primarily included a $939 million charge to reflect the recognition of deferred taxes on the outside basis of stock associated with East Ohio, PSNC, Questar Gas and Wexpro meeting the classification as held for sale that will reverse when the sale is completed, $834 million net income from discontinued operations, primarily associated with operations included in the East Ohio, PSNC and Questar Gas Transactions and Dominion Energy's noncontrolling interest in Cove Point, including the gain on sale, a $209 million after-tax benefit for derivative mark-to-market changes and a $71 million after-tax charge associated with the impairment of a corporate office building.

For the three months ended September 30, 2022, other than the effects of required interim period provision for income taxes, this primarily included $152 million net income from discontinued operations, primarily associated with operations included in the East Ohio, PSNC and Questar Gas Transactions and Dominion Energy's noncontrolling interest in Cove Point. For the nine months ended September 30, 2022, other than the effects of required interim period provision for income taxes, this primarily included $775 million net income from discontinued operations, primarily associated with operations included in the East Ohio, PSNC and Questar Gas Transactions and Dominion Energy's noncontrolling interest in Cove Point, a $228 million after-tax benefit for derivative mark-to-market changes and an $82 million loss associated with the sale of Hope.

Outlook

As of September 30, 2023, other than the following matters 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. In addition, Dominion Energy's 2023 net income increased for the gain on sale of its noncontrolling interest in Cove Point completed in September 2023 which will be partially offset by the absence of future earnings from Cove Point.

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			5,186				2,671
Investing activities			(4,091	)			(4,519	)
Financing activities			(1,189	)			1,780
Net increase (decrease) in cash, restricted cash and equivalents			(94	)			(68	)
Cash, restricted cash and equivalents at September 30		$	247			$	340

Operating Cash Flows

Net cash provided by Dominion Energy's operating activities increased $2.5 billion, inclusive of a $377 million decrease from discontinued operations. Net cash provided by continuing operations increased $2.9 billion primarily due to higher deferred fuel and purchased gas cost recoveries ($2.3 billion), lower margin deposits ($470 million), a decrease in refund payments to Virginia electric customers associated with the settlement of the 2021 Triennial Review ($296 million) and a $247 million increase primarily due to lower income tax payments, partially offset by an increase in interest payments driven by higher interest rates and borrowings ($377 million).

Investing Cash Flows

Net cash used in Dominion Energy’s investing activities decreased $428 million, primarily due to net proceeds from the sale of the remaining noncontrolling interest in Cove Point ($3.3 billion) and lower acquisitions of solar development projects ($125 million), substantially offset by an increase in plant construction and other property additions ($1.9 billion), the absence of net proceeds from the sale of Hope ($722 million), a decrease in proceeds from the sale of assets and equity method investments ($114 million), the absence of withdrawals from Kewaunee's nuclear decommissioning trust ($80 million) and increased contributions to equity method affiliates ($45 million).

Financing Cash Flows

Net cash used in Dominion Energy’s financing activities was $1.2 billion for the nine months ended September 30, 2023, compared to net cash provided by financing activities of $1.8 billion for the nine months ended September 30, 2022. This change is primarily due to a $5.4 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 lower net issuances of short-term debt ($267 million), partially offset by the net borrowings on the 364-day term loan facility ($2.7 billion) and the absence of the redemption of Series A Preferred Stock in 2022 ($1.6 billion).

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 nine months ended September 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 September 30, 2023, Dominion Energy had $2.6 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 September 30, 2023, Dominion Energy’s Consolidated Balance Sheets include $423 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 bore interest at a variable rate and were scheduled to 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 was permitted to make up to three additional borrowings under each agreement through November 2023, at which point any unused capacity would cease to be available to Dominion Energy. The agreements contained 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. In September 2023, Dominion Energy repaid the $750 million borrowing with after-tax proceeds from the sale of Dominion Energy’s noncontrolling interest in Cove Point, as discussed in Note 10. Subsequently in September 2023, Dominion Energy borrowed $225 million in the aggregate under these facilities with the proceeds used to repay short-term debt and for general corporate purposes. In October 2023, Dominion Energy repaid the $225 million borrowing and terminated the facilities along with any remaining unused commitments.

In October 2023, Dominion Energy entered into a $2.25 billion 364-Day term loan facility which bears interest at a variable rate and will mature in October 2024 with the proceeds to be used for general corporate purposes. Concurrently, Dominion Energy borrowed an initial $1.0 billion with the proceeds used for general corporate purposes, including to repay short-term and long-term debt. Dominion Energy is permitted to make up to three additional borrowings under the agreement through February 2024, at which point any unused capacity will cease to be available to Dominion Energy. Dominion Energy also has the ability through August 2024 to request an increase in the amount of this facility by up to an additional $500 million. The agreement contains certain mandatory early repayment provisions, including that any after-tax proceeds in connection with the East Ohio, PSNC and Questar Gas Transactions, following the repayment of the 364-day term loan facility entered into in January 2023, be applied to any outstanding borrowings under this facility. The maximum allowed total debt to total capital ratio under this facility is consistent with such allowed ratio under Dominion Energy’s joint revolving credit facility.

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. In September 2023, Dominion Energy borrowed $450 million under this facility with the proceeds used for general corporate purposes. At September 30, 2023, Dominion Energy had $900 million borrowed, $450 million to support environmental sustainability and social investment initiatives and $450 million for general corporate purposes. In October 2023, Dominion Energy repaid $450 million borrowed for general corporate purposes.

Issuances and Borrowings of Long-Term Debt

During the nine months ended September 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
August		Senior notes		Public		Virginia Power			400				5.300		%		2033
August		Senior notes		Public		Virginia Power			600				5.700		%		2053
Total issuances and borrowings								$	2,500

In October 2023, DESC issued $500 million of 6.25% first mortgage bonds that mature in 2053.

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 nine months ended September 30, 2023:

Month		Type		Entity		Principal (1)				Rate		Stated Maturity
						(millions)
Debt scheduled to mature in 2023				Multiple		$	2,818			various
Early redemptions
September		Term loan		DECP Holdings		$	2,247			variable		2024
Total repayments, repurchases and redemptions						$	5,065

(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 was repaid in connection with Dominion Energy's sale of its 50% noncontrolling limited partnership interest in Cove Point to BHE in September 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 series of 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 September 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 nine months ended September 30, 2023, Dominion Energy issued $91 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 September 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 September 30, 2023 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 September 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 September 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 September 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 September 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)		$	145			$	—			$	145
Non-investment grade(2)			10				—				10
No external ratings:
Internally rated—investment grade(3)			37				6				31
Internally rated—non-investment grade(4)			19				—				19
Total(5)		$	211			$	6			$	205

(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 45% of the total net credit exposure.

(2)

The five largest counterparty exposures, combined, for this category represented approximately 5% of the total net credit exposure.

(3)

The five largest counterparty exposures, combined, for this category represented approximately 15% of the total net credit exposure.

(4)

The five largest counterparty exposures, combined, for this category represented approximately 6% 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 September 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 shifts $350 million of annual revenue requirement for costs recovered through riders into base rates effective July 2023, eliminates the ability of Virginia Power to utilize CCROs and adjusts 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 September 2023, Dominion Energy entered agreements to sell East Ohio, PSNC, Questar Gas and Wexpro to Enbridge and completed the sale of its 50% noncontrolling limited partner interest in Cove Point to BHE under the agreement signed in July 2023 as discussed in Notes 3 and 10 to the Consolidated Financial Statements in this report. Dominion Energy is evaluating a potential divestiture of a noncontrolling equity interest in the CVOW Commercial Project as the final strategic component of the on-going business review. While the ultimate impacts cannot be estimated until the review is completed, which is expected to occur by the end of 2023 or early 2024, 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.

Dominion Energy Virginia – CVOW Commercial Project

In October 2023, Virginia Power received a record of decision from the Bureau of Ocean Management for construction of the CVOW Commercial Project. As a result, Virginia Power commenced major onshore construction activities in November 2023 and anticipates commencing major offshore construction activities in the first half of 2024. The project is expected to be placed in service by the end of 2026 at a total cost of approximately $10 billion, excluding financing costs. Virginia Power’s estimate for the 2.6 GW project’s projected levelized cost of energy is approximately $75-85/MWh.

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 while it cannot currently estimate the potential financial statement impacts, it does not expect a material impact to its results of operations, financial condition and/or cash flows based on its expectation that the East Ohio, PSNC and Questar Gas Transactions will close in 2024.

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. Until FERC takes further action, Dominion Energy is unable to estimate the potential financial statement impacts.

Dominion Energy South Carolina - Nuclear Operating License

In August 2023, DESC filed an application with the NRC to renew the operating license for Unit 1 at Summer for an additional 20 years. Under its current license, the nuclear unit is allowed to generate electricity through 2042. A relicensing would extend its life through 2062. The existing regulatory framework in South Carolina provides a rate recovery mechanism for costs incurred on the relicensing process.

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 $77 million and $52 million in the fair value of Dominion Energy’s commodity-based derivative instruments as of September 30, 2023 and December 31, 2022, respectively.

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

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 $44 million and $37 million decrease in earnings at September 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 $15 million and $14 million decrease in earnings at September 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 September 30, 2023, Dominion Energy and Virginia Power had $10.4 billion and $2.8 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 $242 million and $118 million, respectively, in the fair value of Dominion Energy and Virginia Power’s interest rate derivatives at September 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 September 30, 2023 and December 31, 2022, Dominion Energy had €2.4 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 $239 million and $284 million in the fair value of Dominion Energy’s foreign currency swaps at September 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 $409 million for the nine months ended September 30, 2023, and net investment losses (including investment income) on nuclear decommissioning and rabbi trust investments of $1.2 billion and $888 million for the nine months ended September 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 decrease in unrealized gains on debt investments of $14 million, $253 million and $196 million for the nine months ended September 30, 2023, nine months ended September 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 $206 million for the nine months ended September 30, 2023, and net investment losses (including investment income) on nuclear decommissioning trust investments of $593 million and $426 million for the nine months ended September 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 decrease in unrealized gains on debt investments of $8 million, $137 million and $106 million for the nine months ended September 30, 2023, nine months ended September 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.