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 June 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
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).
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
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 July 28, 2023, the latest practicable date for determination, Dominion Energy, Inc. had 836,772,913 shares of common stock outstanding and Virginia Electric and Power Company had 274,723 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.
1
COMBINED INDEX
Page
Glossary of Terms
3
PART I. Financial Information
Item 1.
Financial Statements
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
63
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
80
Item 4.
Controls and Procedures
81
PART II. Other Information
Legal Proceedings
83
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Item 5.
Other Information
Item 6.
Exhibits
84
2
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
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 Assets
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
EnergySolutions
EnergySolutions, LLC
EPA
U.S. Environmental Protection Agency
EPS
Earnings per common share
FERC
Federal Energy Regulatory Commission
FTRs
Financial transmission rights
4
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
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
5
PSNC
Public Service Company of North Carolina, Incorporated, doing business as Dominion Energy North Carolina
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
Regulation Act
Legislation effective July 1, 2007, that amended the Virginia Electric Utility Restructuring Act and fuel factor statute, which legislation is also known as the Virginia Electric Utility Regulation Act, as amended in 2015, 2018 and 2023
RGGI
Regional Greenhouse Gas Initiative
Rider CCR
A rate adjustment clause associated with the recovery of costs related to the removal of CCR at certain power stations
Rider CE
A rate adjustment clause associated with the recovery of costs related to certain renewable generation, energy storage and related transmission facilities in Virginia as well as certain small-scale distributed generation projects and related transmission facilities
Rider D
A rate mechanism which allows PSNC to recover from customers all prudently incurred gas costs and the related portion of uncollectible expenses as well as losses on negotiated gas and transportation sales
Rider GT
A rate adjustment clause associated with the recovery of costs associated with electric distribution grid transformation projects that the Virginia Commission has approved as authorized by the GTSA
Rider GV
A rate adjustment clause associated with the recovery of costs related to Greensville County
Rider OSW
A rate adjustment clause associated with costs incurred to construct, own and operate the CVOW Commercial Project
Rider PPA
A rate adjustment clause associated with the recovery of costs associated with power purchase agreements for the energy, capacity, ancillary services and renewable energy credits owned by third parties
Rider R
A rate adjustment clause associated with the recovery of costs related to Bear Garden
Rider RGGI
A rate adjustment clause associated with the recovery of costs related to the purchase of allowances through the RGGI market-based trading program for CO2
Rider RPS
A rate adjustment clause associated with the recovery of costs related to the mandatory renewable portfolio standard program established by the VCEA
Rider S
A rate adjustment clause associated with the recovery of costs related to the Virginia City Hybrid Energy Center
Rider SNA
A rate adjustment clause associated with costs relating to the preparation of the applications for subsequent license renewal to the NRC to extend the operating licenses of Surry and North Anna and related projects
Rider T1
A rate adjustment clause to recover the difference between revenues produced from transmission rates included in base rates, and the new total revenue requirement developed annually for the rate years effective September 1
Rider U
A rate adjustment clause associated with the recovery of costs of new underground distribution facilities
Rider US-3
A rate adjustment clause associated with the recovery of costs related to Colonial Trail West and Spring Grove 1
Rider US-4
A rate adjustment clause associated with the recovery of costs related to Sadler Solar
Rider W
A rate adjustment clause associated with the recovery of costs related to Warren County
ROE
Return on equity
RTO
Regional transmission organization
6
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
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.
7
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2023
2022
(millions, except per share amounts)
Operating Revenue
$
3,794
3,596
9,046
7,875
Operating Expenses
Electric fuel and other energy-related purchases
939
730
1,961
1,408
Purchased electric capacity
15
16
23
29
Purchased gas
227
202
991
847
Other operations and maintenance
932
985
1,853
2,039
Depreciation, depletion and amortization
706
695
1,426
1,393
Other taxes
222
235
497
488
Impairment of assets and other charges
53
415
151
405
Losses (gains) on sales of assets
(22
)
636
(23
608
Total operating expenses
3,072
3,914
6,879
7,217
Income (loss) from operations
722
(318
2,167
658
Earnings from equity method investees
90
170
163
Other income (expense)
325
(287
609
(241
Interest and related charges
430
47
1,016
221
Income (loss) from continuing operations including noncontrolling interests before income tax expense (benefit)
707
(569
1,930
359
Income tax expense (benefit)
121
(117
342
119
Net Income (Loss) From Continuing Operations
586
(452
1,588
240
Net Income (Loss) From Discontinued Operations(1)
13
(1
18
Net Income (Loss) Including Noncontrolling Interests
599
(453
1,596
258
Noncontrolling Interests
—
Net Income (Loss) Attributable to Dominion Energy
Amounts attributable to Dominion Energy
Net income (loss) from continuing operations
Net income (loss) from discontinued operations
Net income (loss) attributable to Dominion Energy
EPS - Basic
0.67
(0.58
1.85
0.23
0.02
0.01
0.69
1.86
0.25
EPS - Diluted
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(millions)
Net income (loss) including noncontrolling interests
Other comprehensive income (loss), net of taxes:
Net deferred gains (losses) on derivatives-hedging activities(1)
(3
54
Changes in unrealized net gains (losses) on investment securities(2)
(27
(89
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)
11
21
Net realized (gains) losses on investment securities(5)
(2
9
12
Net pension and other postretirement benefit costs (credits) (6)
(12
33
Changes in other comprehensive income from equity method investees(7)
Total other comprehensive income (loss)
40
62
Comprehensive income (loss) including noncontrolling interests
598
(413
1,602
320
Comprehensive income attributable to noncontrolling interests
Comprehensive income (loss) attributable to Dominion Energy
(1) Net of $(2) million and $(10) million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $1 million and $(18) million tax for the six months ended June 30, 2023 and 2022, respectively.
(2) Net of $3 million and $9 million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $(4) million and $28 million tax for the six months ended June 30, 2023 and 2022, respectively.
(3) Net of $— million and $2 million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $— million and $(8) million tax for the six months ended June 30, 2023 and 2022, respectively.
(4) Net of $(2) million and $(3) million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $(5) million and $(7) million tax for the six months ended June 30, 2023 and 2022, respectively.
(5) Net of $1 million and $(3) million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $— million and $(4) million tax for the six months ended June 30, 2023 and 2022, respectively.
(6) Net of $4 million and $(6) million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $8 million and $(12) million tax for the six months ended June 30, 2023 and 2022, respectively.
(7) Net of $— million and $— million tax for the three months ended June 30, 2023 and 2022, respectively, and net of $— million and $— million tax for the six months ended June 30, 2023 and 2022, respectively.
CONSOLIDATED BALANCE SHEETS
June 30, 2023
December 31, 2022(1)
ASSETS
Current Assets
Cash and cash equivalents
137
153
Customer receivables (less allowance for doubtful accounts of $34 and $31)
2,496
2,952
Other receivables (less allowance for doubtful accounts of $3 at both dates)
399
Inventories
1,826
1,729
Derivative assets
260
1,137
Margin deposit assets
169
480
Regulatory assets
1,945
2,340
Other
628
607
Current assets held for sale
117
Total current assets
7,977
9,850
Investments
Nuclear decommissioning trust funds
6,553
5,957
Investment in equity method affiliates
3,006
3,012
393
390
Total investments
9,952
9,359
Property, Plant and Equipment
Property, plant and equipment
95,088
91,202
Accumulated depreciation, depletion and amortization
(28,545
(27,742
Total property, plant and equipment, net
66,543
63,460
Deferred Charges and Other Assets
Goodwill
7,295
8,863
9,087
5,434
5,192
Total deferred charges and other assets
21,592
21,574
Total assets
106,064
104,243
(1) Dominion Energy’s Consolidated Balance Sheet at December 31, 2022 has been derived from the audited Consolidated Balance Sheet at that date.
10
CONSOLIDATED BALANCE SHEETS—(Continued)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Securities due within one year
4,349
3,341
Supplemental credit facility borrowings
450
Short-term debt
4,575
3,423
Accounts payable
997
1,825
Accrued interest, payroll and taxes
998
1,199
Derivative liabilities
332
778
Regulatory liabilities
583
946
Other(2)
1,702
1,938
Total current liabilities
13,986
13,450
Long-Term Debt
Long-term debt
37,596
36,832
Junior subordinated notes
1,387
245
Total long-term debt
39,223
38,914
Deferred Credits and Other Liabilities
Deferred income taxes and investment tax credits
7,067
6,698
10,255
10,107
7,105
7,193
Total deferred credits and other liabilities
24,427
23,998
Total liabilities
77,636
76,362
Commitments and Contingencies (see Note 17)
Shareholders' Equity
Preferred stock (see Note 16)
1,783
Common stock – no par(3)
23,704
23,605
Retained earnings
4,507
4,065
Accumulated other comprehensive loss
(1,566
(1,572
Shareholders' equity
28,428
27,881
Noncontrolling interests
Total shareholders' equity
Total liabilities and shareholders' equity
(2) See Note 10 for amounts attributable to related parties.
(3) 1.8 billion shares authorized; 837 million and 835 million shares outstanding at June 30, 2023 and December 31, 2022, respectively.
CONSOLIDATED STATEMENTS OF EQUITY
QUARTER-TO-DATE
Preferred Stock
Common Stock
Dominion Energy Shareholders
Shares
Amount
Retained Earnings
TotalShareholders'Equity
NoncontrollingInterests
Total Equity
March 31, 2022
811
21,657
5,516
(1,436
27,520
Net loss including noncontrolling interests
Issuance of stock
1,758
Stock awards (net of change in unearned compensation)
Preferred stock dividends (see Note 16)
(25
Common stock dividends ($0.6675 per share) and distributions
(555
Other comprehensive income, net of tax
June 30, 2022
832
23,427
4,483
(1,396
28,297
March 31, 2023
836
23,652
4,486
(1,565
28,356
Net income including noncontrolling interests
42
(20
(558
Other comprehensive loss, net of tax
837
YEAR-TO-DATE
Total Shareholders'Equity
December 31, 2021
810
21,610
5,373
(1,458
27,308
22
1,803
14
(52
Common stock dividends ($1.335 per common share) and distributions
(1,096
December 31, 2022
835
85
(40
(1,115
CONSOLIDATED STATEMENTS OF CASH FLOWS
Operating Activities
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:
Depreciation, depletion and amortization (including nuclear fuel)
1,555
1,535
305
145
150
392
Losses (gains) on sales of assets and equity method investments
(31
601
Net (gains) losses on nuclear decommissioning trust funds and other investments
(308
556
Other adjustments
(56
Changes in:
Accounts receivable
590
(115
(101
Deferred fuel and purchased gas costs, net
416
(858
Prepayments
(35
(81
(694
69
(200
(155
Margin deposit assets and liabilities
311
(291
Net realized and unrealized changes related to derivative activities
176
(87
Pension and other postretirement benefits
(239
(231
Other operating assets and liabilities
(359
(309
Net cash provided by operating activities
3,194
1,361
Investing Activities
Plant construction and other property additions (including nuclear fuel)
(4,850
(3,219
Acquisition of solar development projects
(121
Proceeds from sales of securities
1,138
2,081
Purchases of securities
(1,301
(1,851
Proceeds from sale of assets and equity method investments
146
Contributions to equity method affiliates
(48
Short-term deposit
(2,000
48
(153
Net cash used in investing activities
(5,014
(5,148
Financing Activities
Issuance of short-term debt, net
1,152
765
364-day term loan facility borrowings
2,500
Issuance and remarketing of long-term debt
1,660
2,338
Repayment and repurchase of long-term debt
(2,394
(221
900
Repayment of supplemental credit facility borrowings
(450
Issuance of common stock
1,701
Common dividend payments
(94
(151
Net cash provided by financing activities
1,794
3,786
Decrease in cash, restricted cash and equivalents
(26
Cash, restricted cash and equivalents at beginning of period
341
408
Cash, restricted cash and equivalents at end of period
315
407
See Note 2 for disclosure of supplemental cash flow information.
Operating Revenue(1)
2,251
2,175
4,635
4,342
Electric fuel and other energy-related purchases(1)
533
1,505
1,049
Other operations and maintenance:
Affiliated suppliers
99
192
175
344
394
692
873
Depreciation and amortization
432
425
879
854
67
152
158
38
409
45
413
1,696
1,939
3,483
3,544
Income from operations
555
236
798
(44
Interest and related charges(1)
182
363
293
Income before income tax expense
421
465
Income tax expense
89
188
61
Net Income
685
404
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
Net income
25
44
(10
Amounts reclassified to net income:
Net derivative (gains) losses-hedging activities(3)
Net realized (gains) losses on investment securities(4)
34
Comprehensive income
337
438
19
Customer receivables (less allowance for doubtful accounts of $24 and $21)
1,693
1,578
Other receivables (less allowance for doubtful accounts of $1 and $2)
201
204
Affiliated receivables
72
Inventories (average cost method)
1,009
924
32
310
Derivative assets(2)
627
1,140
52
3,762
5,002
3,508
3,202
3,512
3,205
57,554
54,697
Accumulated depreciation and amortization
(16,760
(16,218
40,794
38,479
4,151
4,247
2,485
2,261
6,636
6,508
54,704
53,194
17
LIABILITIES AND SHAREHOLDER’S EQUITY
379
1,164
1,265
941
540
600
Payables to affiliates
97
255
Affiliated current borrowings
2,330
2,024
298
270
231
506
Derivative liabilities(2)
126
1,103
1,176
6,369
7,234
16,050
14,916
65
16,119
14,981
3,588
3,452
5,799
5,499
4,899
4,783
14,286
13,734
36,774
35,949
Common Shareholder’s Equity
5,738
Other paid-in capital
1,113
11,070
10,385
Accumulated other comprehensive income
Total common shareholder’s equity
17,930
17,245
Total liabilities and shareholder’s equity
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER’S EQUITY
Other Paid-In Capital
Total
(millions, except for shares)
(thousands)
275
9,526
(29
16,348
9,574
(7
16,418
10,738
17,593
9,170
(41
15,980
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including nuclear fuel)
961
937
107
147
400
(45
75
(5
(50
(302
Affiliated receivables and payables
(224
(88
Deferred fuel expenses, net
386
(780
116
27
278
(311
472
(72
2,453
689
Plant construction and other property additions
(3,236
(1,996
Purchases of nuclear fuel
(100
(118
(38
719
864
(824
(892
55
(21
(3,398
(2,201
Issuance (repayment) of short-term debt, net
324
Issuance (repayment) of affiliated current borrowings, net
306
(587
(1,308
(138
(42
(49
940
1,544
Increase (decrease) in cash, restricted cash and equivalents
24
26
58
20
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Nature of Operations
Dominion Energy, headquartered in Richmond, Virginia, is one of the nation’s largest producers and distributors of energy. Dominion Energy’s operations are conducted through various subsidiaries, including Virginia Power. Dominion Energy’s operations also include DESC, regulated gas distribution operations primarily in the eastern and Rocky Mountain regions of the U.S., nonregulated electric generation and a noncontrolling interest in Cove Point. In July 2023, Dominion Energy entered into an agreement to sell its remaining 50% noncontrolling partnership interest in Cove Point to BHE. See Note 10 for additional information.
Note 2. Significant Accounting Policies
As permitted by the rules and regulations of the SEC, the Companies’ accompanying unaudited Consolidated Financial Statements contain certain condensed financial information and exclude certain footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with GAAP. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
In the Companies’ opinion, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly their financial position at June 30, 2023, their results of operations and changes in equity for the three and six months ended June 30, 2023 and 2022 and their cash flows for the six months ended June 30, 2023 and 2022. Such adjustments are normal and recurring in nature unless otherwise noted.
The Companies make certain estimates and assumptions in preparing their Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from those estimates.
The Companies’ accompanying unaudited Consolidated Financial Statements include, after eliminating intercompany transactions and balances, their accounts, those of their respective majority-owned subsidiaries and non-wholly-owned entities in which they have a controlling financial interest. For certain partnership structures, income is allocated based on the liquidation value of the underlying contractual arrangements.
The results of operations for interim periods are not necessarily indicative of the results expected for the full year. Information for quarterly periods is affected by seasonal variations in sales, rate changes, electric fuel and other energy-related purchases, purchased gas expenses and other factors.
Certain amounts in the Companies’ 2022 Consolidated Financial Statements and Notes have been reclassified to conform to the 2023 presentation for comparative purposes; however, such reclassifications did not affect the Companies’ net income, total assets, liabilities, equity or cash flows.
Amounts disclosed for Dominion Energy are inclusive of Virginia Power, where applicable. There have been no significant changes from Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, with the exception of the items described below.
Cash, Restricted Cash and Equivalents
Restricted Cash and Equivalents
The following table provides a reconciliation of the total cash, restricted cash and equivalents reported within the Companies’ Consolidated Balance Sheets to the corresponding amounts reported within the Companies’ Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022:
Cash, Restricted Cash and Equivalentsat End of Period
Cash, Restricted Cash and Equivalentsat Beginning of Period
Cash and cash equivalents(1)
273
283
Restricted cash and equivalents(2)
178
134
125
Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows
56
Supplemental Cash Flow Information
The following table provides supplemental disclosure of cash flow information related to Dominion Energy:
Significant noncash investing and financing activities:(1)
Accrued capital expenditures
713
512
Leases(2)
279
57
The following table provides supplemental disclosure of cash flow information related to Virginia Power:
Significant noncash investing and financing activities:
550
Leases(1)
242
Note 3. Acquisitions and Dispositions
Disposition of Gas Transmission & Storage Operations
In December 2021, Dominion Energy completed the sale of the Q-Pipe Group to Southwest Gas, as discussed in Note 3 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. In the first
quarter of 2022, Dominion Energy recognized a gain of $27 million ($20 million after-tax) in discontinued operations in its Consolidated Statements of Income associated with finalization of working capital adjustments.
Sale of Kewaunee
In May 2021, Dominion Energy entered into an agreement to sell 100% of the equity interests in Dominion Energy Kewaunee, Inc. to EnergySolutions, including the transfer of all decommissioning obligations associated with Kewaunee, which ceased operations in 2013. The sale closed in June 2022 following approval from the Wisconsin Commission in May 2022 and NRC approval of a requested license transfer in March 2022. The sale was treated as an asset sale for tax purposes and Dominion Energy retained the assets and obligations of the pension and other postretirement employee benefit plans. EnergySolutions is subject to the Wisconsin regulatory conditions agreed to by Dominion Energy upon its acquisition of Kewaunee, including the return of any excess decommissioning funds to WPSC and WP&L customers following completion of all decommissioning activities.
In the second quarter of 2022, Dominion Energy recorded a loss of $649 million ($513 million after-tax), recorded in losses (gains) on sales of assets in its Consolidated Statements of Income, primarily related to the difference between the nuclear decommissioning trust and AROs. Prior to its receipt, there had been uncertainty as to the timing of or ability to obtain approval from the Wisconsin Commission. Prior to closing, Dominion Energy withdrew $80 million from the nuclear decommissioning trust to recover certain spent nuclear fuel and other permitted costs.
Note 4. Operating Revenue
The Companies’ operating revenue consists of the following:
Quarter-to-Date
Year-to-Date
Period Ended June 30,
Regulated electric sales:
Residential
1,124
1,117
2,410
2,404
816
1,842
1,831
Commercial
1,147
1,089
2,217
1,987
917
874
1,591
Industrial
211
220
431
417
110
215
213
Government and other retail
232
297
476
569
281
442
539
Wholesale
36
68
115
31
51
Nonregulated electric sales
382
603
Regulated gas sales:
285
1,000
106
96
Nonregulated gas sales
Regulated gas transportation and storage
252
241
563
538
Other regulated revenues
73
130
136
131
Other nonregulated revenues(1)(2)
59
109
Total operating revenue from contracts with customers
3,685
8,441
8,341
2,189
2,239
4,535
4,435
Other revenues(1)(3)
(198
605
(466
(64
100
(93
Total operating revenue
The table below discloses the aggregate amount of the transaction price allocated to fixed-price performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period and when Dominion Energy expects to recognize this revenue. These revenues relate to contracts containing fixed prices where Dominion Energy will earn the associated revenue over time as it stands ready to perform services provided. This disclosure does not include revenue related to performance obligations that are part of
a contract with original durations of one year or less. In addition, this disclosure does not include expected consideration related to performance obligations for which Dominion Energy elects to recognize revenue in the amount it has a right to invoice.
Revenue expected to be recognized on multi-year contracts in place at June 30, 2023
2024
2025
2026
2027
Thereafter
Dominion Energy(1)
46
402
644
At June 30, 2023 and December 31, 2022, Dominion Energy’s contract liability balances were $133 million and $150 million, respectively, and are recorded in other current liabilities and other deferred credits and other liabilities in its Consolidated Balance Sheets. At June 30, 2023 and December 31, 2022, Virginia Power’s contract liability balances were $74 million and $39 million, respectively, and are recorded in other current liabilities and other deferred credits and other liabilities in its Consolidated Balance Sheets.
The Companies recognize revenue as they fulfill their obligations to provide service to their customers. During the six months ended June 30, 2023 and 2022, Dominion Energy recognized revenue of $146 million and $119 million, respectively, from the beginning contract liability balances. During the six months ended June 30, 2023 and 2022, Virginia Power recognized $39 million and $33 million, respectively, from the beginning contract liability balances.
Note 5. Income Taxes
For continuing operations, including noncontrolling interests, the statutory U.S. federal income tax rate reconciles to the Companies’ effective income tax rate as follows:
U.S. statutory rate
21.0
%
Increases (reductions) resulting from:
Recognition of taxes - sale of subsidiary stock
25.0
State taxes, net of federal benefit
3.3
7.9
4.6
4.4
Investment tax credits
(2.6
(9.8
(0.3
(6.9
Production tax credits
(0.4
(1.1
(0.8
(1.0
Reversal of excess deferred income taxes
(10.2
(2.3
(3.9
Changes in state deferred taxes associated with assets held for sale
1.4
AFUDC - equity
(0.1
(1.3
Other, net
(0.9
0.2
(0.5
0.6
Effective tax rate
17.7
33.1
21.6
13.2
In the first quarter of 2022, Dominion Energy entered into an agreement to sell 100% of the equity interests in Hope in a stock sale for income tax purposes. As of June 30, 2022, Dominion had established $90 million of deferred tax liabilities reflecting the excess of the financial reporting basis over the tax basis in Hope’s stock. These deferred taxes reversed upon closing of the sale in August 2022 and became a component of current income tax expense on the sale. See Note 3 to the Consolidated Financial Statements in Dominion Energy's Annual Report on Form 10-K for the year ended December 31, 2022 for additional information regarding the sale of Hope.
As of June 30, 2023, there have been no material changes in the Companies’ unrecognized tax benefits or possible changes that could reasonably be expected to occur during the next twelve months. See Note 5 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, for a discussion of these unrecognized tax benefits.
Discontinued operations
Income tax expense reflected in discontinued operations is $3 million and $4 million for the six months ended June 30, 2023 and 2022, respectively.
Note 6. Earnings Per Share
The following table presents the calculation of Dominion Energy’s basic and diluted EPS:
(millions, except EPS)
Net income (loss) attributable to Dominion Energy from continuing operations
Net income (loss) attributable to Dominion Energy from continuing operations – Basic
566
(477
1,548
Dilutive effect of 2019 Equity Units(1)(2)
Net income (loss) attributable to Dominion Energy from continuing operations - Diluted
Net income (loss) attributable to Dominion Energy from discontinued operations - Basic & Diluted
Average shares of common stock outstanding – Basic
836.0
818.4
835.6
814.5
Net effect of dilutive securities(1)(3)
0.3
Average shares of common stock outstanding – Diluted
836.2
835.9
815.9
EPS from continuing operations – Basic
EPS from discontinued operations – Basic
EPS attributable to Dominion Energy – Basic
EPS from continuing operations – Diluted
EPS from discontinued operations – Diluted
EPS attributable to Dominion Energy – Diluted
The 2019 Equity Units, prior to settlement in June 2022, were a potentially dilutive instrument. See Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 and Note 16 in this report for additional information.
For the six months ended June 30, 2022, the 2019 Equity Units, applying the if converted method for the period prior to settlement in June 2022, were excluded from the calculation of diluted EPS from continuing operations as the effects were anti-dilutive.
Note 7. Accumulated Other Comprehensive Income (Loss)
The following table presents Dominion Energy’s changes in AOCI (net of tax) and reclassifications out of AOCI by component:
Total Derivative-Hedging Activities(1)(2)
Investment Securities(3)
Pension and other postretirement benefit costs(4)
Equity Method Investees(5)
Three Months Ended June 30, 2023
Beginning balance
(250
(1,287
Other comprehensive income (loss) before reclassifications: gains (losses)
Amounts reclassified from AOCI: (gains) losses
(16
(19
(9
Total, net of tax
(6
Net current period other comprehensive income (loss)
Ending balance
(236
(1,299
Three Months Ended June 30, 2022
(323
(1,088
(18
(283
(1,070
Six Months Ended June 30, 2023
(249
(1,276
(32
(11
(8
Six Months Ended June 30, 2022
(358
37
(1,133
(4
28
66
(77
The following table presents Virginia Power’s changes in AOCI (net of tax) and reclassifications out of AOCI by component:
Note 8. Fair Value Measurements
The Companies’ fair value measurements are made in accordance with the policies discussed in Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. See Note 9 in this report for additional information about the Companies’ derivatives and hedge accounting activities.
The Companies enter into certain physical and financial forwards, futures and options, which are considered Level 3 as they have one or more inputs that are not observable and are significant to the valuation. The discounted cash flow method is used to value Level 3 physical and financial forwards and futures contracts. An option model is used to value Level 3 physical options. The discounted cash flow model for forwards and futures calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return and credit spreads. The option model calculates mark-to-market valuations using variations of the Black-Scholes option model. The inputs into the models are the forward market prices, implied price volatilities, risk-free rate of return, the option expiration dates, the option strike prices, the original sales prices and volumes. For Level 3 fair value measurements, certain forward market prices and implied price volatilities are considered unobservable.
The following table presents the Companies' quantitative information about Level 3 fair value measurements at June 30, 2023. The range and weighted average are presented in dollars for market price inputs and percentages for price volatility.
Valuation Techniques
Unobservable Input
Fair Value (millions)
Range
Weighted Average(1)
Assets
Physical and financial forwards:
Electricity
Discounted cash flow
Market price (per MWh)
(3)
141
25-138
Physical options:
Natural gas(2)
Option model
Market price (per Dth)
1-8
Price volatility
(4)
19%-72%
51%
156
Liabilities
(2)-2
(1)
32-138
64
Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:
Significant Unobservable Inputs
Position
Change to Input
Impact on Fair Value Measurement
Market price
Buy
Increase (decrease)
Gain (loss)
Sell
Loss (gain)
Nonrecurring Fair Value Measurements
See Note 10 for information regarding nonrecurring fair value measurements associated with Dominion Energy’s noncontrolling ownership interest in Dominion Privatization.
In the first quarter of 2023, Dominion Energy recorded a charge of $91 million ($68 million after-tax) in impairment of assets and other charges in its Consolidated Statements of Income to adjust a corporate office building down to its estimated fair value, using a market approach, of $35 million. The valuation is considered a Level 3 fair value measurement as it is based on unobservable inputs due to limited comparable market activity. The corporate office building is reflected in the Corporate and Other segment and presented as held for sale in Dominion Energy’s Consolidated Balance Sheets at June 30, 2023.
In the second quarter of 2023, Dominion Energy recorded a charge of $15 million ($11 million after-tax) in impairment of assets and other charges in its Consolidated Statements of Income to adjust certain nonregulated solar assets down to their estimated fair value, using a market approach, of $22 million. The valuation is considered a Level 2 fair value measurement given that it is based on bids received. These assets are reflected in the Corporate and Other segment and presented as held for sale in Dominion Energy’s Consolidated Balance Sheets at June 30, 2023.
Recurring Fair Value Measurements
The following table presents the Companies' assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:
Level 1
Level 2
Level 3
Derivatives:
Commodity
194
351
Interest rate
904
135
Investments(1):
Equity securities:
U.S.
4,354
2,317
Fixed income:
Corporate debt instruments
323
Government securities
1,144
1,314
619
709
Cash equivalents and other
4,552
2,781
7,489
2,409
1,150
3,574
354
168
381
Foreign currency exchange rate
772
794
238
437
769
268
1,407
614
3,810
2,028
576
360
161
1,059
1,220
542
632
3,971
3,374
7,782
2,118
3,902
911
926
333
348
377
101
1,389
1,404
441
456
The following table presents the net change in the Companies' assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:
206
422
102
Total realized and unrealized gains (losses):
Included in earnings:
Operating revenue
Electric fuel and other energy- related purchases
(36
165
Included in regulatory assets/ liabilities
(74
261
(290
(58
Settlements
71
(165
(106
Purchases
Dominion Energy had $2 million of unrealized gains included in earnings in the Level 3 fair value category related to assets/liabilities still held at the reporting date for the three and six months ended June 30, 2023 and no unrealized gains or losses for the three and six months ended June 30, 2022. Virginia Power had no unrealized gains or losses for the three and six months ended June 30, 2023 and June 30, 2022.
Fair Value of Financial Instruments
Substantially all of the Companies’ financial instruments are recorded at fair value, with the exception of the instruments described below, which are reported at historical cost. Estimated fair values have been determined using available market information and valuation methodologies considered appropriate by management. The carrying amount of cash, restricted cash and equivalents, customer and other receivables, affiliated receivables, short-term debt, affiliated current borrowings, payables to affiliates and accounts payable are representative of fair value because of the short-term nature of these instruments. For the Companies' financial instruments that are not recorded at fair value, the carrying amounts and estimated fair values are as follows:
CarryingAmount
EstimatedFair Value(1)
Long-term debt(2)
41,887
38,876
16,399
14,909
Junior subordinated notes(2)
1,349
39,680
36,426
15,616
14,067
1,340
Note 9. Derivatives and Hedge Accounting Activities
The Companies’ accounting policies, objectives and strategies for using derivative instruments are discussed in Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. See Note 8 in this report for additional information about fair value measurements and associated valuation methods for derivatives.
Cash collateral is used in the table below to offset derivative assets and liabilities. In February 2022, Dominion Energy entered into contracts representing offsetting positions to certain existing exchange contracts with collateral requirements as well as new over-the-counter transactions that are not subject to collateral requirements. These contracts resulted in positions which limit the risk of increased cash collateral requirements. Certain accounts receivable and accounts payable recognized on the Companies’ Consolidated Balance Sheets, letters of credit and other forms of securities, as well as certain other long-term debt, all of which are not included in the tables below, are subject to offset under master netting or similar arrangements and would reduce the net exposure. See Note 18 for additional information regarding credit-related contingent features for the Companies’ derivative instruments.
Balance Sheet Presentation
The tables below present the Companies' derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in their Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:
Dominion Energy Gross Amounts Not Offset in the Consolidated Balance Sheet
Virginia Power Gross Amounts Not Offset in the Consolidated Balance Sheet
Gross AssetsPresented in theConsolidatedBalance Sheet(1)
FinancialInstruments
CashCollateralReceived
NetAmounts
Commodity contracts:
Over-the-counter
162
78
Exchange
Interest rate contracts:
214
690
133
Total derivatives, subject to a master netting or similar arrangement
1,121
797
223
179
380
160
159
248
1,159
1,975
435
1,540
852
807
Gross Liabilities Presented in the Consolidated Balance Sheet(1)
Financial Instruments
Cash Collateral Paid
Net Amounts
209
154
35
166
Foreign currency exchange rate contracts:
91
103
443
338
483
210
396
573
247
138
Volumes
The following table presents the volume of the Companies' derivative activity at June 30, 2023. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.
Current
Noncurrent
Natural Gas (bcf):
Fixed price(1)
43
Basis(2)
157
375
372
Electricity (MWh in millions):
Fixed price
Oil (Gal in millions)
Interest rate(3) (in millions)
524
11,758
2,750
Foreign currency exchange rate(3) (in millions)
Danish Krone
1,004 kr.
3,468 kr.
Euro
€453
€2,131
The following table presents selected information related to gains and losses on cash flow hedges included in AOCI in the Companies' Consolidated Balance Sheets at June 30, 2023:
AOCI After-Tax
Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax
Maximum Term
(33
390 months
The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interest rate payments) in earnings, thereby achieving the realization of prices contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in interest rates.
Fair Value and Gains and Losses on Derivative Instruments
The following table presents the fair values of the Companies' derivatives and where they are presented in their Consolidated Balance Sheets:
Fair Value – Derivatives under Hedge Accounting
Fair Value – Derivatives not under Hedge Accounting
Total Fair Value
At June 30, 2023
129
113
Total current derivative assets
Noncurrent Assets
656
773
Total noncurrent derivative assets(1)
878
995
Total derivative assets
1,120
1,255
224
LIABILITIES
Total current derivative liabilities
Noncurrent Liabilities
114
287
50
Total noncurrent derivative liabilities(2)
451
462
112
Total derivative liabilities
783
At December 31, 2022
532
264
501
104
237
802
1,039
1,562
2,176
882
700
290
70
226
300
307
93
626
1,397
449
The following tables present the gains and losses on the Companies' derivatives, as well as where the associated activity is presented in their Consolidated Balance Sheets and Statements of Income.
Derivatives in cash flow hedging relationships
Amount of Gain (Loss) Recognized in AOCI on Derivatives(1)
Amount of Gain (Loss) Reclassified from AOCI to Income
Increase (Decrease) in Derivatives Subject to Regulatory Treatment(2)
Derivative type and location of gains (losses):
Interest rate(3)
88
39
(14
353
(28
633
Amount of Gain (Loss) Recognized in Income on Derivatives(1)(2)
Derivatives not designated as hedging instruments
Commodity:
(272
(602
(129
94
(73
196
(119
Operations and maintenance
Interest rate:
79
340
536
208
376
(61
(98
Note 10. Investments
Equity and Debt Securities
Short-Term Deposit
In May 2022, Dominion Energy entered into an agreement with a financial institution and committed to make a short-term deposit of at least $1.6 billion but not more than $2.0 billion to be posted as collateral to secure its $1.6 billion redemption obligation of the Series A Preferred Stock as described in Note 16. In May 2022, Dominion Energy funded the short-term deposit in the amount of $2.0 billion, which earned interest income at an annual rate of 1.75% through its maturity in September 2022.
Rabbi Trust Securities
Equity and fixed income securities and cash equivalents in Dominion Energy’s rabbi trusts and classified as trading totaled $113 million and $111 million at June 30, 2023 and December 31, 2022, respectively.
Decommissioning Trust Securities
The Companies hold equity and fixed income securities and cash equivalents, and Dominion Energy also holds insurance contracts, in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. The Companies' decommissioning trust funds are summarized below:
AmortizedCost
Total Unrealized Gains
Total UnrealizedLosses
Allowance for Credit Losses
FairValue
Equity securities:(1)
2,999
4,374
872
2,413
Fixed income securities:(2)
577
(47
531
356
(34
1,332
1,288
731
Common/ collective trust funds
Insurance contracts
Cash equivalents and other(3)
3,666
3,005
2,022
1,566
(80
1,378
2,501
(46
3,833
858
1,304
2,127
640
(65
406
1,252
(70
1,186
664
631
98
3,632
2,506
(181
2,012
1,307
The portion of unrealized gains and losses that relates to equity securities held within Dominion Energy and Virginia Power’s nuclear decommissioning trusts is summarized below:
Net gains (losses) recognized during the period
294
(712
520
(918
(361
269
(463
Less: Net (gains) losses recognized during the period on securities sold during the period
Unrealized gains (losses) recognized during the period on securities still held at period end(1)
295
(706
523
(913
155
272
(467
The fair value of Dominion Energy and Virginia Power’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at June 30, 2023 by contractual maturity is as follows:
Due in one year or less
Due after one year through five years
482
Due after five years through ten years
Due after ten years
895
519
1,890
1,086
Presented below is selected information regarding Dominion Energy and Virginia Power’s equity and fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds.
Proceeds from sales
594
1,267
346
Realized gains(1)
Realized losses(1)
143
77
197
Equity Method Investments
Dominion Energy recorded equity earnings on its investments of $170 million and $163 million for the six months ended June 30, 2023 and 2022, respectively, in earnings from equity method investees in its Consolidated Statements of Income. In addition, Dominion Energy recorded equity earnings of $17 million and equity losses of $4 million for the six months ended June 30, 2023 and 2022, respectively, in discontinued operations related to its investment in Atlantic Coast Pipeline. Dominion Energy received distributions of $185 million and $167 million for the six months ended June 30, 2023 and 2022, respectively. Dominion Energy made contributions of $48 million and $90 million for the six months ended June 30, 2023 and 2022, respectively. At June 30, 2023 and December 31, 2022, the net difference between the carrying amount of Dominion Energy’s investments and its share of underlying equity in net assets was $221 million and $223 million, respectively. At June 30, 2023, these differences are primarily comprised of $9 million of equity method goodwill that is not being amortized and a $212 million basis difference from Dominion Energy’s
investment in Cove Point, which is being amortized over the useful lives of the underlying assets. At December 31, 2022, these differences are comprised of $9 million of equity method goodwill that is not being amortized, $215 million basis difference from Dominion Energy’s investment in Cove Point, which is being amortized over the useful lives of the underlying assets and a net $(1) million basis difference primarily attributable to capitalized interest.
Dominion Energy holds a 50% noncontrolling limited partnership interest in Cove Point which is accounted for as an equity method investment, as discussed in Note 9 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dominion Energy recorded distributions from Cove Point of $95 million and $85 million for the three months ended June 30, 2023 and 2022, respectively, and $178 million and $161 million for the six months ended June 30, 2023 and 2022, respectively.
In June 2023, Dominion Energy entered into an agreement with Cove Point for transportation and storage services [at market rates] for a 20-year period commencing in August 2023.
In July 2023, Dominion Energy entered into an agreement to sell its 50% noncontrolling limited partnership interest in Cove Point to BHE for cash consideration of $3.3 billion. In addition, Dominion Energy expects to receive proceeds from the settlement of related interest rate derivatives, which had a fair value of $218 million at June 30, 2023. DECP Holding's term loan secured by its noncontrolling interest in Cove Point, which had an outstanding balance of $2.3 billion at June 30, 2023, is required to be repaid in connection with closing. In addition, remaining after-tax proceeds associated with the transaction are required to be utilized to repay any outstanding borrowings under Dominion Energy’s two $600 million 364-day term loan facilities entered in July 2023. See Note 16 for additional information on these facilities. The sale will be treated as an asset sale for tax purposes and is expected to close by the end of 2023, contingent on clearance or approval under the Hart-Scott-Rodino Act and from the DOE, and other customary closing and regulatory conditions. The agreement is subject to termination by either party if not completed by the end of 2023, subject to a potential three-month extension for receipt of regulatory approvals, with a $150 million termination fee due to Dominion Energy under certain conditions. Dominion Energy expects to record a gain on the sale of its noncontrolling interest in Cove Point of approximately $650 million ($415 million after-tax) upon closing.
A description of Dominion Energy’s investment in Atlantic Coast Pipeline, including events that led to the cancellation of the Atlantic Coast Pipeline Project in July 2020, is included in Note 9 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
At June 30, 2023 and December 31, 2022, Dominion Energy has recorded a liability of $52 million and $114 million, respectively, in other current liabilities in its Consolidated Balance Sheets as a result of its share of equity losses exceeding its investment which reflects Dominion Energy’s obligations on behalf of Atlantic Coast Pipeline related to its AROs.
Dominion Energy recorded $41 million of contributions to Atlantic Coast Pipeline during the six months ended June 30, 2023. Dominion Energy made no contributions to Atlantic Coast Pipeline during the six months ended June 30, 2022.
Dominion Energy expects to incur additional losses from Atlantic Coast Pipeline as it completes wind-down activities. While Dominion Energy is unable to precisely estimate the amounts to be incurred by Atlantic Coast Pipeline, the portion of such amounts attributable to Dominion Energy is not expected to be material to Dominion Energy’s results of operations, financial position or statement of cash flows.
A description of Dominion Energy’s investment in Wrangler (through March 2022) is included in Note 9 to the Consolidated Financial Statements in Dominion Energy’s Annual Report on Form 10-K for the year ended December 31, 2022.
In March 2022, Dominion Energy sold its remaining 15% noncontrolling partnership interest in Wrangler to Interstate Gas Supply, Inc. for cash consideration of $85 million. Dominion Energy recognized a gain of $11 million ($8 million after-tax), included in other income (expense), in its Consolidated Statements of Income for the six months ended June 30, 2022.
Dominion Energy holds a 50% noncontrolling ownership interest in Dominion Privatization which is accounted for as an equity method investment, as discussed in Note 9 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
In March 2022, Dominion Energy completed its initial contribution of privatization operations in South Carolina (excluding contracts held by DESC), Texas and Pennsylvania to Dominion Privatization for total consideration of $120 million, subject to customary closing adjustments, comprised of $60 million in cash proceeds and a 50% noncontrolling ownership interest in Dominion
Privatization with an initial fair value of $60 million, estimated using the market approach. This was considered a Level 2 fair value measurement given that it was based on the agreed-upon sales price. In the first quarter of 2022, Dominion Energy recorded a gain of $23 million ($16 million after-tax), presented in losses (gains) on sales of assets in its Consolidated Statements of Income.
Note 11. Property, Plant and Equipment
Acquisitions of Nonregulated Solar Projects
Other than the item discussed below, there have been no significant updates to acquisitions of solar projects by the Companies from those discussed in Note 10 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
In March 2023, Dominion Energy entered into an agreement to acquire the Foxhound solar development project in Virginia (reflected in Contracted Assets) with closing on the agreement expected in 2024. The project is expected to cost approximately $205 million, including the initial acquisition cost, and commence commercial operations in 2024 with a generating capacity of 83 MW. Dominion Energy expects to claim production tax credits on the energy generated and sold by the project. Dominion Energy anticipates that an impairment charge may be required upon closing given its expectation that it is more likely than not that the nonregulated solar generation projects within Contracted Assets will be sold before the end of their useful lives as described in Note 10 to the Consolidated Financial Statements in Dominion Energy’s Annual Report on Form 10-K for the year ended December 31, 2022.
Sale of Utility Property
In June 2022, Dominion Energy completed the sale of certain utility property in South Carolina, as approved by the South Carolina Commission in May 2022, for total cash consideration of $16 million. In connection with the sale, Dominion Energy recognized a gain of $16 million ($12 million after-tax), recorded in losses (gains) on sales of assets, in its Consolidated Statements of Income for the three and six months ended June 30, 2022.
Note 12. Regulatory Assets and Liabilities
Regulatory assets and liabilities include the following:
Regulatory assets:
Deferred cost of fuel used in electric generation(1)
401
Deferred project costs and DSM programs for gas utilities(2)
Unrecovered gas costs(3)
491
374
Deferred rider costs for Virginia electric utility(4)
Ash pond and landfill closure costs(5)
181
Deferred nuclear refueling outage costs(6)
82
NND Project costs(7)
Deferred early plant retirement charges(8)
Derivatives(9)
262
251
74
Regulatory assets-current
Unrecognized pension and other postretirement benefit costs(10)
958
989
610
Deferred project costs for gas utilities(2)
694
703
Interest rate hedges(11)
AROs and related funding(12)
398
2,018
2,088
2,051
2,021
2,049
1,310
1,551
184
148
496
132
Regulatory assets-noncurrent
Total regulatory assets
10,808
11,427
4,778
5,387
Regulatory liabilities:
Provision for future cost of removal and AROs(13)
127
111
Reserve for refunds and rate credits to electric utility customers(14)
Income taxes refundable through future rates(15)
Monetization of guarantee settlement(16)
327
123
Regulatory liabilities-current
3,984
4,054
2,243
2,272
2,565
2,510
1,135
Nuclear decommissioning trust(17)
1,936
1,685
669
702
274
Overrecovered other postretirement benefit costs(18)
140
189
277
167
Regulatory liabilities-noncurrent
Total regulatory liabilities
10,838
11,053
6,030
6,005
41
At June 30, 2023, Dominion Energy and Virginia Power regulatory assets include $5.6 billion and $2.7 billion, respectively, on which they do not expect to earn a return during the applicable recovery period. With the exception of certain items discussed above, the majority of these expenditures are expected to be recovered within the next two years.
Note 13. Regulatory Matters
Regulatory Matters Involving Potential Loss Contingencies
As a result of issues generated in the ordinary course of business, the Companies are involved in various regulatory matters. Certain regulatory matters may ultimately result in a loss; however, as such matters are in an initial procedural phase, involve uncertainty as to the outcome of pending reviews or orders, and/or involve significant factual issues that need to be resolved, it is not possible for the Companies to estimate a range of possible loss. For regulatory matters that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the regulatory process such that the Companies are able to estimate a range of possible loss. For regulatory matters that the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any estimated range is based on currently available information, involves elements of judgment and significant uncertainties and may not represent the Companies’ maximum possible loss exposure. The circumstances of such regulatory matters will change from time to time and actual results may vary significantly from the current estimate. For current matters not specifically reported below, management does not anticipate that the outcome from such matters would have a material effect on the Companies’ financial position, liquidity or results of operations.
Other Regulatory Matters
Other than the following matters, there have been no significant developments regarding the pending regulatory matters disclosed in Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Virginia Regulation - Key Legislation Affecting Operations
Virginia 2023 Legislation
In April 2023, legislation was enacted that amended several key provisions of the Regulation Act, as previously amended by the GTSA, and revised portions of the existing regulatory framework affecting Virginia Power’s operations. See Note 13 to the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, for additional information on the Regulation Act and GTSA.
The legislation resets the frequency of base rate reviews from a triennial period, as established under the GTSA, to a biennial period commencing with the 2023 Biennial Review. Such biennial reviews shall include the establishment of an authorized ROE to be utilized for base rates and riders, prospective base rates for the upcoming two-year period based on projected cost of service and a determination by the Virginia Commission as to Virginia Power’s base rate earned return for the most recently completed two-year period against the previously authorized ROE, including any potential credits to customers’ bills.
The legislation provides that the Virginia Commission will establish an authorized ROE of 9.70% for Virginia Power in the 2023 Biennial Review, reflecting the average authorized ROE of vertically integrated electric utilities by the applicable regulatory commissions in the peer group jurisdictions of Florida, Georgia, Texas, Tennessee, West Virginia, Kentucky and North Carolina. Subsequent to the 2023 Biennial Review, all provisions related to this peer group benchmarking expire and the Virginia Commission is authorized to utilize any methodology it deems to be consistent with the public interest to make future ROE determinations. In all future biennial reviews, if the Virginia Commission determines that Virginia Power’s existing base rates will, on a going-forward basis, produce revenues that are either in excess of or below its authorized rate of return, the Virginia Commission is authorized to reduce or increase such base rates, as applicable and necessary, to ensure that Virginia Power’s base rates are just and reasonable while still allowing Virginia Power to recover its costs and earn a fair rate of return. In addition, beginning with the biennial review to be filed in 2025, the Virginia Commission may, at its discretion, increase or decrease Virginia Power’s authorized ROE by up to 50 basis points based on factors that may include reliability, generating plant performance, customer service and operating efficiency, with the provisions applying to such adjustments to be determined in a future proceeding.
The legislation directs that if the Virginia Commission determines as part of the 2023 Biennial Review that Virginia Power has earned more than 70 basis points above its authorized ROE of 9.35% established in the 2021 Triennial Review that 85% of the amount of such earnings above this level be credited to customers’ bills. In future biennial reviews, beginning with the biennial review to be filed in 2025, 85% of any earnings determined by the Virginia Commission to be up to 150 basis points above Virginia Power’s authorized ROE shall be credited to customers’ bills as well as 100% of any earnings that are more than 150 basis points above Virginia Power’s authorized ROE. For the purposes of measuring any bill credits due to customers, associated income taxes are factored into the determination of such amounts. In addition, the legislation eliminates Virginia Power’s ability to utilize Virginia Commission-approved investment amounts in qualifying solar or wind generation facilities or electric distribution grid transformation projects as a CCRO to reduce or offset any earnings otherwise eligible for customer credits as previously permitted under the GTSA.
In addition to the biennial review mechanisms discussed above, the legislation also includes provisions related to other aspects of Virginia Power’s ratemaking framework.
In addition, in May 2023 legislation was enacted that amended certain portions of the VCEA to qualify generation produced by Virginia Power’s biomass electric generating stations as renewable energy and eliminate the mandated retirement of such facilities by the end of 2028.
Virginia Regulation - Recent Developments
In July 2023, Virginia Power filed its base rate case and accompanying schedules in support of the 2023 Biennial Review in accordance with legislation enacted in Virginia in April 2023 as discussed above. Virginia Power’s earnings test analysis, as filed, demonstrated it earned a combined ROE of 9.04% on its generation and distribution services for the test period, within 70 basis points of its authorized ROE of 9.35% established in the 2021 Triennial Review. Virginia Power did not request an increase in base rates for generation and distribution services and proposed that base rates remain at their existing level utilizing an ROE of 9.70% for the prospective test periods and a common equity capitalization to total capitalization ratio of 52.10%. Virginia Power noted that while its prospective test periods would result in a revenue deficiency, it did not request an increase to base rates given that the combination of certain riders with an aggregate annual revenue requirement of at least $350 million into base rates effective July 2023 cannot serve as the basis for an increase in base rates as part of the 2023 Biennial Review. The Virginia Commission will determine whether Virginia Power’s earnings for the test period, considered as a whole, were within 70 basis points above or below the authorized ROE of 9.35%. The Virginia Commission will also authorize an ROE of 9.70%, as directed by legislation enacted in Virginia in April 2023, for Virginia Power that will be applied to Virginia Power’s riders prospectively and that will also be utilized to measure base rate earnings for the 2025 Biennial Review. This matter is pending.
Virginia Fuel Expenses
In May 2023, Virginia Power filed its annual fuel factor filing with the Virginia Commission to recover an estimated $2.3 billion in Virginia jurisdictional projected fuel expense for the rate year beginning July 1, 2023 and a projected $1.3 billion under-recovered balance as of June 30, 2023. The projected under-recovered balance includes $578 million representing the remaining two years of under-recovered balance as of June 30, 2022 being collected over a three-year period in accordance with the Virginia Commission’s approval of Virginia Power’s 2022 annual fuel factor as described in Note 13 to the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. Virginia Power proposed two alternatives to recover these under-collected fuel costs. The first option reflects recovery of the total $3.3 billion fuel cost requirement over the July 2023 through June 2024 fuel period and results in an increase in Virginia Power’s fuel revenues of $631 million when applied to projected kilowatt-hour sales for the period. The second option proposed by Virginia Power incorporates its anticipated July 2023 application to the Virginia Commission for approval of a financing order to securitize up to the projected $1.3 billion under-recovered balance as of June 30, 2023 as permitted under legislation enacted in Virginia in April 2023. Under this option, Virginia Power proposed implementation of the current period fuel factor rate only effective July 2023 on an interim basis, while suspending implementation of the prior-period fuel factor rate pending the Virginia Commission’s consideration of the securitization petition. If approved by the Virginia Commission, the securitization option results in a net decrease in Virginia Power’s fuel revenues for the rate year of approximately $541 million. In addition, Virginia Power has proposed to alter the order in which revenue from certain customers who elect to pay market-based rates would be allocated between base rates and fuel, which if approved would result in a reduction to fuel revenue of $13 million. In May 2023, the Virginia Commission ordered that, in accordance with Virginia Power’s second proposed option, only the current period fuel factor rate be implemented effective July 2023 on an interim basis. In accordance with legislation enacted in Virginia in April 2023 discussed above, in July 2023, Virginia Power filed an application with the Virginia Commission for approval of a financing order to securitize the projected $1.3 billion under-recovered fuel balance as of June 30, 2023 through the issuance of one or more tranches of bonds with tenors up to approximately ten years. These matters are pending.
Virginia Power Equity Application
In July 2023, Virginia Power requested approval from the Virginia Commission to issue and sell to Dominion Energy up to $3.25 billion of authorized but unissued shares of its common stock, no par value, through the end of 2023 in order to maintain a common equity capitalization to total capitalization ratio of 52.10% through December 2024 in accordance with legislation enacted in Virginia in April 2023 as discussed above. This matter is pending.
GTSA Filing
In March 2023, Virginia Power filed a petition with the Virginia Commission for approval of Phase III, covering 2024 through 2026, of its plan for electric distribution grid transformation projects as authorized by the GTSA. The plan includes 14 projects covering six components (i) AMI; (ii) customer information platform; (iii) grid improvement projects; (iv) physical and cyber security; (v) telecommunications infrastructure and (vi) customer education. For Phase III, the total proposed capital investment is $1.1 billion and the proposed operations and maintenance investment is $71 million. This matter is pending.
Renewable Generation Projects
In October 2022, Virginia Power filed a petition with the Virginia Commission for CPCNs to construct and operate eight utility-scale projects totaling approximately 474 MW of solar generation and 16 MW of energy storage as part of its efforts to meet the renewable generation development requirements under the VCEA. The projects, as of October 2022, are expected to cost approximately $1.2 billion in the aggregate, excluding financing costs, and be placed into service between 2024 through 2025. In April 2023, the Virginia Commission approved the petition.
Riders
Developments for significant riders associated with various Virginia Power projects are as follows:
Rider Name
Application Date
Approval Date
Rate Year Beginning
Total RevenueRequirement(millions)
Increase (Decrease)Over Previous Year(millions)
February 2023
Pending
December 2023
(37
Rider CE(1)
October 2022
April 2023
May 2023
August 2022
June 2023
August 2023
June 2024
Rider GV(2)
April 2024
April 2025
November 2022
July 2023
September 2023
271
December 2022
(17
June 2021
March 2022
(8)
Rider RGGI(3)
N/A
February 2022
191
Rider SNA(4)
(57
Rider T1(5)
173
Rider U(6)
June 2022
Rider W(7)
105
Electric Transmission Projects
Developments for significant Virginia Power electric transmission projects approved or applied for are as follows:
Description and Location of Project
Type of Line
Miles of Lines
Cost Estimate (millions)
Partial rebuild of Bristers-Ox 115 kV line in Fauquier and Prince William Counties, Virginia
230 kV
Construct new switching station, substations, transmission lines and related projects in Lunenberg and Mecklenburg Counties, Virginia
230
Construct new switching station, substation, transmission lines and related projects in Charlotte, Halifax and Mecklenburg Counties, Virginia
Construct new Mars and Wishing Star substations, transmission lines and related projects in Loudoun County, Virginia
500/230 kV
720
Construct new Altair switching station, transmission lines and related projects in Loudoun County, Virginia
Rebuild of Lines #2019 and #2007 in the City of Virginia Beach, Virginia
95
Install transformer at Possum Point substation, rebuild and construct transmission lines and related projects in Prince William County, Virginia
March 2023
Partial rebuild of Line #2011 in the Cities of Manassas and Manassas Park, Virginia and Prince William and Fairfax Counties, Virginia
Construct new transmission lines and convert Jeffress switching station in Mecklenburg County, Virginia
Construct new transmission lines and expand White Oak substation in Henrico County, Virginia
Virginia Regulation – Select Prior Year Events
The following items were disclosed in Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 and are included in this report as they had an impact to the Companies’ Consolidated Statements of Income for the three and/or six months ended June 30, 2022.
In May 2022, Virginia Power filed its annual fuel factor filing with the Virginia Commission to recover an estimated $2.3 billion in Virginia jurisdictional projected fuel expense for the rate year beginning July 1, 2022 and a projected $1.0 billion under-recovered balance as of June 30, 2022. In July 2022, Virginia Power, the Virginia Commission staff and another party filed a comprehensive settlement agreement, approved by the Virginia Commission in September 2022, which provided for the collection of the requested under-recovered projected fuel expense over a three-year period beginning July 1, 2022 and required that Virginia Power exclude from recovery through base rates one half of the related financing costs over the three year period. In addition, the settlement agreement affirmed Virginia Power’s proposal regarding fuel cost recovery for market-based customers. As a result, Virginia Power recorded a $191 million ($142 million after-tax) charge in the second quarter of 2022 within impairment of assets and other charges in its Consolidated Statements of Income. See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 for additional information.
In May 2022, Virginia Power filed a petition with the Virginia Commission requesting suspension of Rider RGGI approved in August 2021. Virginia Power also requested that RGGI compliance costs incurred and unrecovered through July 2022 be recovered through existing base rates in effect during the period incurred. The Virginia Commission approved the request in June 2022. In the second quarter of 2022, Virginia Power recorded a charge of $180 million ($134 million after-tax) in impairment of assets and other charges for the amount deemed recovered through base rates through June 30, 2022, including the impact of certain non-jurisdictional customers which follow Virginia Power’s jurisdictional rate methodology. See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 for additional information.
North Carolina Regulation
PSNC Rider D
Rider D allows PSNC to recover from customers all prudently incurred gas costs and the related portion of uncollectible expenses as well as losses on negotiated gas and transportation sales. In February 2023, PSNC submitted a filing with the North Carolina Commission for a $56 million gas cost decrease with rates effective March 2023. The North Carolina Commission approved the filing in March 2023.
PSNC Customer Usage Tracker
PSNC utilizes a customer usage tracker, a decoupling mechanism, which allows it to adjust its base rates semi-annually for residential and commercial customers based on average per customer consumption. In March 2023, PSNC submitted a filing with the North Carolina Commission for a $23 million decrease relating to the customer usage tracker. The North Carolina Commission approved the filing in March 2023 with rates effective April 2023.
South Carolina Regulation
DSM Programs
DESC has approval for a DSM rider through which it recovers expenditures related to its DSM programs. In January 2023, DESC filed an application with the South Carolina Commission seeking approval to recover $46 million of costs and net lost revenues associated with these programs, along with an incentive to invest in such programs. DESC requested that rates be effective with the first billing cycle of May 2023. In April 2023, the South Carolina Commission approved the request, effective with the first billing cycle of May 2023.
Cost of Fuel
DESC's retail electric rates include a cost of fuel component approved by the South Carolina Commission which may be adjusted periodically to reflect changes in the price of fuel purchased by DESC. In February 2023, DESC filed with the South Carolina Commission a proposal to increase the total fuel cost component of retail electric rates. DESC's proposed adjustment is designed to recover DESC's current base fuel costs, including its existing under-collected balance, over the 12-month period beginning with the first billing cycle of May 2023, along with a requested decrease to DESC's variable environmental and avoided capacity cost component. The net effect of the proposal is an annual increase of $176 million. In March 2023, DESC, the South Carolina Office of Regulatory Staff and another party of record filed a stipulation with the South Carolina Commission for approval to reduce the base fuel cost component reflecting a subsequent decrease in current fuel prices, resulting in a net annual increase of $121 million. In April 2023, the South Carolina Commission voted to approve the stipulation, with rates effective May 2023.
Electric Transmission Project
In March 2023, DESC filed an application with the South Carolina Commission requesting approval to construct and operate 19 miles of 230 kV transmission lines, a substation and associated facilities in Jasper County, South Carolina estimated to cost approximately $55 million. In July 2023, the South Carolina Commission voted to approve the request.
Electric - Other
DESC utilizes a pension costs rider approved by the South Carolina Commission which is designed to allow recovery of projected pension costs, including under-collected balances or net of over-collected balances, as applicable. The rider is typically reviewed for adjustment every 12 months with any resulting increase or decrease going into effect beginning with the first billing cycle in May. In February 2023, DESC requested that the South Carolina Commission approve an adjustment to this rider to increase annual revenue by $24 million. In April 2023, the South Carolina Commission approved the request.
Natural Gas Base Rate Case
In March 2023, DESC filed its natural gas base rate case and schedules with the South Carolina Commission. DESC proposed a non-fuel, base rate increase of $19 million effective October 2023. The base rate increase was proposed to recover significant investment in distribution infrastructure for the benefit of customers. The proposed rates would provide for an ROE of 10.38% compared to the currently authorized ROE of 10.25%. In addition, DESC elected to continue applicability of the Natural Gas Rate Stabilization Act, which allows for the adjustment of natural gas base rates annually, to its future rates and charges. This matter is pending.
Ohio Regulation
PIR Program
In 2008, East Ohio began PIR, aimed at replacing approximately 25% of its pipeline system. The Ohio Commission has approved East Ohio’s PIR program for capital investments through 2026 with 3% increases of annual capital expenditures per year.
In February 2023, East Ohio filed an application with the Ohio Commission requesting approval to adjust the PIR recovery. The filing reflects gross plant investment for 2022 of $225 million, cumulative gross plant investment of $2.4 billion and a revenue requirement of $305 million. In April 2023, the Ohio Commission approved the request.
CEP Program
In 2011, East Ohio began CEP which enables East Ohio to defer depreciation expense, property tax expense and carrying costs at the debt rate of 6.5% on capital investments not covered by its PIR program to expand, upgrade or replace its infrastructure and information technology systems as well as investments necessary to comply with the Ohio Commission or other government regulations. In April 2022, certain parties filed an appeal with the Supreme Court of Ohio appealing the Ohio Commission’s December 2020 order establishing the CEP rider, including the rate of return utilized in determining the revenue requirement. This matter is pending.
In March 2023, East Ohio filed an application with the Ohio Commission requesting approval to adjust CEP cost recovery rates for 2022 costs. The filing reflects gross plant investment for 2022 of $195 million, cumulative gross plant investment of $1.3 billion and a revenue requirement of $151 million. This matter is pending.
UEX Rider
East Ohio has approval for a UEX rider through which it recovers the bad debt expense of most customers not participating in the PIPP Plus Program. The UEX rider is adjusted annually to achieve dollar for dollar recovery of East Ohio's actual write-offs of uncollectible amounts. In July 2023, the Ohio Commission approved East Ohio's application to adjust its UEX rider to reflect an annual revenue requirement of $23 million to provide for recovery of an under-recovered accumulated bad debt expense of $9 million as of March 31, 2023, and recovery of net bad debt expense projected to total $14 million for the twelve-month period ending March 2024.
Utah Regulation
Purchased Gas
In February 2023, Questar Gas filed an application with the Utah Commission seeking approval for a $92 million gas cost increase with rates effective March 2023. Subsequently in February 2023, the Utah Commission approved a $164 million gas cost increase reflecting additional undercollected gas costs incurred in January 2023.
Note 14. Leases
Other than the items discussed below, there have been no significant changes regarding the Companies’ leases as described in Note 15 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dominion Energy’s Consolidated Statements of Income include $6 million and $11 million for the three and six months ended June 30, 2023, respectively, and $7 million and $11 million for the three and six months ended June 30, 2022, respectively, of rental revenue included in operating revenue. Dominion Energy’s Consolidated Statements of Income include $2 million and $3 million for the three and six months ended June 30, 2023, respectively, and $8 million and $17 million for the three and six months ended June 30, 2022, respectively, of depreciation expense included in depreciation, depletion and amortization related to facilities subject to power purchase agreements under which Dominion Energy is the lessor.
Offshore Wind Vessel Leasing Arrangement
In December 2020, Dominion Energy signed an agreement (subsequently amended in December 2022 and May 2023) with a lessor to complete construction of and lease a Jones Act compliant offshore wind installation vessel. This vessel is designed to handle current turbine technologies as well as next generation turbines. The lessor is providing equity and has obtained financing commitments from debt investors, totaling $625 million, to fund the estimated project costs. The project is expected to be completed in late 2024 or early 2025. Dominion Energy has been appointed to act as the construction agent for the lessor, during which time Dominion Energy will request cash draws from the lessor and debt investors to fund all project costs, which totaled $367 million as of June 30, 2023. If the project is terminated under certain events of default, Dominion Energy could be required to pay up to 100% of the then funded amount.
The initial lease term will commence once construction is substantially complete and the vessel is delivered and will mature in November 2027. At the end of the initial lease term, Dominion Energy can (i) extend the term of the lease for an additional term, subject to the approval of the participants, at current market terms, (ii) purchase the property for an amount equal to the outstanding
project costs or, (iii) subject to certain terms and conditions, sell the property on behalf of the lessor to a third party using commercially reasonable efforts to obtain the highest cash purchase price for the property. If the project is sold and the proceeds from the sale are insufficient to repay the investors for the outstanding project costs, Dominion Energy may be required to make a payment to the lessor for the difference between the outstanding project costs and sale proceeds. Dominion Energy is not considered the owner during construction for financial accounting purposes and, therefore, will not reflect the construction activity in its consolidated financial statements. Dominion Energy expects to recognize a right-of-use asset and a corresponding finance lease liability at the commencement of the lease term. Dominion Energy will be considered the owner of the leased property for tax purposes, and as a result, will be entitled to tax deductions for depreciation and interest expense.
Note 15. Variable Interest Entities
There have been no significant changes regarding the entities the Companies consider VIEs as described in Note 16 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Virginia Power purchased shared services from DES, an affiliated VIE, of $113 million and $96 million for the three months ended June 30, 2023 and 2022, respectively and $226 million and $194 million for the six months ended June 30, 2023 and 2022, respectively. Virginia Power’s Consolidated Balance Sheets include amounts due to DES of $27 million and $28 million at June 30, 2023 and December 31, 2022, respectively, recorded in payables to affiliates.
Note 16. Significant Financing Transactions
Credit Facilities and Short-term Debt
The Companies use short-term debt to fund working capital requirements and as a bridge to long-term debt financings. The levels of borrowing may vary significantly during the course of the year, depending upon the timing and amount of cash requirements not satisfied by cash from operations. In addition, Dominion Energy utilizes cash and letters of credit to fund collateral requirements. Collateral requirements are impacted by commodity prices, hedging levels, Dominion Energy’s credit ratings and the credit quality of its counterparties. Other than the items discussed below, there have been no significant changes regarding the Companies’ credit facilities and short-term debt as described in Note 17 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dominion Energy’s short-term financing is supported by its $6.0 billion joint revolving credit facility that provides for a discount in the pricing of certain annual fees and amounts borrowed by Dominion Energy under the facility if Dominion Energy achieves certain annual renewable electric generation and diversity and inclusion objectives.
At June 30, 2023, Dominion Energy’s commercial paper and letters of credit outstanding, as well as its capacity available under the credit facility, were as follows:
FacilityLimit
OutstandingCommercial Paper
OutstandingLetters of Credit
FacilityCapacity Available
Joint revolving credit facility(1)
6,000
4,172
1,812
49
DESC and Questar Gas’ short-term financings are supported through access as co-borrowers to the joint revolving credit facility discussed above with the Companies. At June 30, 2023, the sub-limits for DESC and Questar Gas were $500 million and $250 million, respectively.
In March 2023, FERC granted DESC authority through March 2025 to issue short-term indebtedness (pursuant to Section 204 of the Federal Power Act) in amounts not to exceed $2.2 billion outstanding with maturity dates of one year or less. In addition, in March 2023, FERC granted GENCO authority through March 2025 to issue short-term indebtedness not to exceed $200 million outstanding with maturity dates of one year or less.
In addition to the credit facility mentioned above and Virginia Power's letter of credit facilities mentioned below, Dominion Energy also has a credit facility which allows Dominion Energy to issue up to approximately $30 million in letters of credit and will mature in June 2024. At both June 30, 2023 and December 31, 2022, Dominion Energy had $25 million in letters of credit outstanding under this facility.
In March 2023, Dominion Energy entered into an agreement with a financial institution which it expects to allow it to issue up to $100 million in letters of credit. At June 30, 2023, $58 million in letters of credit were issued and outstanding under this agreement.
Dominion Energy has an effective shelf registration statement with the SEC for the sale of up to $3.0 billion of variable denomination floating rate demand notes, called Dominion Energy Reliability InvestmentSM as disclosed in Note 17 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. At June 30, 2023 and December 31, 2022, Dominion Energy’s Consolidated Balance Sheets include $403 million and $347 million, respectively, with respect to such notes presented within short-term debt. The proceeds are used for general corporate purposes and to repay debt.
In January 2023, Dominion Energy entered into a $2.5 billion 364-Day term loan facility which bears interest at a variable rate and will mature in January 2024 with the proceeds to be used to repay existing long-term debt and short-term debt upon maturity and for other general corporate purposes. Concurrently, Dominion Energy borrowed an initial $1.0 billion with the proceeds used to repay long-term debt. In February and March 2023, Dominion Energy borrowed $500 million and $1.0 billion, respectively, with the proceeds used for general corporate purposes and to repay long-term debt. At June 30, 2023, Dominion Energy's Consolidated Balance Sheet includes $2.5 billion with respect to such facility presented within securities due within one year. The maximum allowed total debt to total capital ratio under the facility is consistent with such allowed ratio under Dominion Energy’s joint revolving credit facility.
In July 2023, Dominion Energy entered into two $600 million 364-day term loan facilities which bear interest at a variable rate and will mature in July 2024 with the proceeds to be used to repay existing long-term debt and/or short-term debt upon maturity and for other general corporate purposes. Subsequently in July 2023, Dominion Energy borrowed an initial $750 million in the aggregate under these facilities with the proceeds used to repay short-term debt and for general corporate purposes. Dominion Energy is permitted to make up to three additional borrowings under each agreement through November 2023, at which point any unused capacity will cease to be available to Dominion Energy. The agreements contain certain mandatory early repayment provisions, including that any after-tax proceeds in connection with a sale of Dominion Energy’s noncontrolling interest in Cove Point, following the repayment of DECP Holding’s term loan secured by its noncontrolling interest in Cove Point, be applied to any outstanding borrowings under the facilities. The maximum allowed total debt to total capital ratio under the facilities is consistent with such allowed ratio under Dominion Energy’s joint revolving credit facility.
Virginia Power’s short-term financing is supported through its access as co-borrower to Dominion Energy’s $6.0 billion joint revolving credit facility. The credit facility can be used for working capital, as support for the combined commercial paper programs of the borrowers under the credit facility and for other general corporate purposes.
At June 30, 2023, Virginia Power’s share of commercial paper and letters of credit outstanding under the joint revolving credit facility with Dominion Energy, Questar Gas and DESC was as follows:
FacilityLimit(1)
In January 2023, Virginia Power entered into a letter of credit facility which allows Virginia Power to issue up to $125 million in letters of credit and matures in January 2026. At June 30, 2023, less than $1 million in letters of credit were issued and outstanding under this facility with no amounts drawn under the letters of credit.
In March 2023, Virginia Power entered into an agreement with a financial institution, which it expects to allow it to issue up to $200 million in letters of credit. At June 30, 2023, $60 million in letters of credit were issued and outstanding under this agreement.
Long-term Debt
Unless otherwise noted, the proceeds of long-term debt issuances were used for general corporate purposes and/or to repay short-term debt.
In March 2023, Dominion Energy borrowed $450 million under its Sustainability Revolving Credit Agreement, which, as described in Note 18 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, matures in 2024 and bears interest at a variable rate with the proceeds used for general corporate purposes. In April 2023 Dominion Energy repaid $450 million borrowed for general corporate purposes. At both June 30, 2023 and December 31, 2022, Dominion Energy’s Consolidated Balance Sheets include $450 million with respect to this facility.
In March 2023, Virginia Power issued $750 million of 5.00% senior notes and $750 million of 5.45% senior notes that mature in 2033 and 2053, respectively.
In June 2023, Virginia Power remarketed three series of tax-exempt bonds, with an aggregate outstanding principal of $160 million to new investors. All three bonds will bear interest at a coupon of 3.65% until October 2027, after which they will bear interest at a market rate to be determined at that time.
Derivative Restructuring
In August 2020, Virginia Power amended a portfolio of interest rate swaps with a notional value of $900 million, extending the mandatory termination dates, as discussed in Note 18 to the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. In March 2023, Virginia Power settled the remaining outstanding interest rate swaps which would have otherwise matured in December 2023, resulting in a $448 million reduction in securities due within one year.
Dominion Energy is authorized to issue up to 20 million shares of preferred stock, which may be designated into separate classes. At June 30, 2023 and December 31, 2022, Dominion Energy had issued and outstanding 1.8 million shares of preferred stock, 0.8 million and 1.0 million of which were designated as the Series B Preferred Stock and the Series C Preferred Stock, respectively.
Dominion Energy recorded dividends of $5 million ($2.917 per share) for the three months ended June 30, 2022 and $12 million ($7.292 per share) for the six months ended June 30, 2022, on the Series A Preferred Stock. In addition, Dominion Energy recorded interest expense of $2 million on the Series A Preferred Stock for the three and six months ended June 30, 2022, following the reclassification of these shares to a mandatorily redeemable liability effective June 2022. Dominion Energy recorded dividends of $9 million ($11.625 per share) for both the three months ended June 30, 2023 and 2022 and $18 million ($23.250 per share) for both the six months ended June 30, 2023 and 2022 on the Series B Preferred Stock. Dominion Energy recorded dividends of $11 million ($10.875 per share) for both the three months ended June 30, 2023 and 2022 and $22 million ($21.750 per share) for both the six months ended June 30, 2023 and 2022 on the Series C Preferred Stock.
There have been no significant changes to Dominion Energy’s Series B Preferred Stock and Series C Preferred Stock as described in Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
2019 Corporate Units
The 2019 Equity Units, initially issued in the form of 2019 Series A Corporate Units, are described in Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Pursuant to the terms of the 2019 Equity Units, Dominion Energy conducted a final remarketing of substantially all shares of Series A Preferred Stock in May 2022 which resulted in the dividend rate for all shares of Series A Preferred Stock being reset to 1.75% for the
June 2022 through August 2022 dividend period and 6.75% effective September 2022. The conversion rate on the Series A Preferred Stock did not increase as a result of the remarketing. In May 2022, Dominion Energy received a commitment from a financial institution to purchase up to 1.6 million shares of the Series A Preferred Stock in the final remarketing. Accordingly, following the settlement of the successful remarketing and approval from its Board of Directors in June 2022, Dominion Energy became obligated to redeem all outstanding shares of Series A Preferred Stock in September 2022. As such, effective June 2022, the Series A Preferred Stock was considered to be mandatorily redeemable and was classified as a current liability. In addition, Dominion Energy made a short-term deposit at the financial institution as described further in Note 10. Proceeds from the final remarketing were used on behalf of holders of 2019 Series A Corporate Units at the time of the remarketing to pay the purchase price to Dominion Energy for the issuance of its common stock under the stock purchase contracts included in such corporate units in June 2022.
Issuance of Common Stock
Dominion Energy recorded, net of fees and commissions, $85 million from the issuance of 2 million shares of common stock for the six months ended June 30, 2023 and $91 million from the issuance of 1 million shares of common stock for the six months ended June 30, 2022, through various programs including Dominion Energy Direct® and employee savings plans as described in Note 20 to the Consolidated Financial Statements to the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
In May 2022, Dominion Energy issued 0.9 million shares of its common stock, valued at $72 million, to partially satisfy DESC’s remaining obligation under a settlement agreement with the SCDOR discussed in Note 17.
In June 2022, Dominion Energy issued 0.4 million shares of its common stock, valued at $30 million, to partially satisfy its obligation under a settlement agreement for the State Court Merger Case discussed in Note 17.
In June 2022, Dominion Energy issued 19.4 million shares to settle the stock purchase contract component of the 2019 Equity Units and received proceeds of $1.6 billion.
At-the-Market Program
In August 2020, Dominion Energy entered into sales agency agreements to effect sales under an at-the-market program as discussed in Note 20 to the Consolidated Financial Statements in the Companies’ Annual Report Form 10-K for the year ended December 31, 2022. Dominion Energy did not issue any shares or enter into any forward sale agreements under this program during the three and six months ended June 30, 2023, prior to its expiration in June 2023.
Repurchase of Common Stock
In November 2020, the Board of Directors authorized the repurchase of up to $1.0 billion of Dominion Energy’s common stock in addition to the $3.0 billion repurchase program authorized in July 2020 and completed in December 2020 as discussed in Note 20 to the Consolidated Financial Statements in the Companies’ Annual Report Form 10-K for the year ended December 31, 2022.
Dominion Energy did not repurchase any shares of common stock during the six months ended June 30, 2023, except for shares tendered by employees to satisfy tax withholding obligations on vested restricted stock, which do not count against its stock repurchase authorization.
Note 17. Commitments and Contingencies
As a result of issues generated in the ordinary course of business, the Companies are involved in legal proceedings before various courts and are periodically subject to governmental examinations (including by regulatory authorities), inquiries and investigations. Certain legal proceedings and governmental examinations involve demands for unspecified amounts of damages, are in an initial procedural phase, involve uncertainty as to the outcome of pending appeals or motions, or involve significant factual issues that need to be resolved, such that it is not possible for the Companies to estimate a range of possible loss. For such matters that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the litigation or investigative processes such that the Companies are able to estimate a range of possible loss. For legal proceedings and governmental examinations that the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. The Companies maintain various insurance programs, including general liability insurance coverage which provides coverage for personal injury or wrongful death cases. Any accrued liability is recorded on a gross basis with a receivable also recorded for any probable insurance recoveries. Estimated ranges of loss are inclusive of legal fees and net of any anticipated insurance recoveries. Any estimated range is based on currently available information and involves elements of judgment and significant uncertainties. Any estimated range of possible loss may not represent the Companies’ maximum possible loss exposure. The circumstances of such legal proceedings and governmental examinations will change from time to time and actual results may vary significantly from the current estimate. For current
proceedings not specifically reported below, management does not anticipate that the liabilities, if any, arising from such proceedings would have a material effect on the Companies’ financial position, liquidity or results of operations.
Environmental Matters
The Companies are subject to costs resulting from a number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of compliance, remediation, containment and monitoring obligations.
Air
The CAA, as amended, is a comprehensive program utilizing a broad range of regulatory tools to protect and preserve the nation’s air quality. At a minimum, states are required to establish regulatory programs to meet applicable requirements of the CAA. However, states may choose to develop regulatory programs that are more restrictive. Many of the Companies’ facilities are subject to the CAA’s permitting and other requirements.
Ozone Standards
The EPA published final non-attainment designations for the October 2015 ozone standards in June 2018 with states required to develop plans to address the new standard. Certain states in which the Companies operate have developed plans, and had such plans approved or partially approved by the EPA, which are not expected to have a material impact on the Companies’ results of operations or cash flows. In March 2023, the EPA issued a final rule specifying an interstate federal implementation plan to comply with certain aspects of planning for the 2015 ozone standards which is applicable in August 2023 for certain states, including Virginia. The interstate federal implementation plan imposes tighter NOX emissions limits during the ozone season and includes provisions for the use of allowances to cover such emissions. Until implementation plans for the 2015 ozone standards are fully developed and approved for all states in which the Companies operate, the Companies are unable to predict whether or to what extent the new rules will ultimately require additional controls. The expenditures required to implement additional controls could have a material impact on the Companies’ results of operations, financial condition and/or cash flows.
In July 2019, the EPA published the final rule informally referred to as the ACE Rule, as a replacement for the Clean Power Plan. The ACE Rule regulated GHG emissions from existing coal-fired power plants pursuant to Section 111(d) of the CAA and required states to develop plans by July 2022 establishing unit-specific performance standards for existing coal-fired power plants. In January 2021, the U.S. Court of Appeals for the D.C. Circuit vacated the ACE Rule and remanded it to the EPA. This decision would take effect upon issuance of the court’s mandate. In March 2021, the court issued a partial mandate vacating and remanding all parts of the ACE Rule except for the portion of the ACE Rule that repealed the Clean Power Plan. In October 2021, the U.S. Supreme Court agreed to hear a challenge of the U.S. Court of Appeals for the D.C. Circuit’s decision on the ACE Rule. In June 2022, the U.S. Supreme Court reversed the D.C. Circuit’s decision on the ACE Rule and remanded the case back to the D.C. Circuit. In May 2023, the EPA proposed to repeal the ACE Rule as part of a package of proposed rules addressing CO2 emissions from new and existing fossil fuel-fired electric generating units. Until the EPA takes final action on this proposed rulemaking, the Companies cannot predict an impact to its operations, financial condition and/or cash flows.
Carbon Regulations
In August 2016, the EPA issued a draft rule proposing to reaffirm that a source’s obligation to obtain a PSD or Title V permit for GHGs is triggered only if such permitting requirements are first triggered by non-GHG, or conventional, pollutants that are regulated by the New Source Review program, and exceed a significant emissions rate of 75,000 tons per year of CO2 equivalent emissions. Until the EPA ultimately takes final action on this rulemaking, the Companies cannot predict the impact to their results of operations, financial condition and/or cash flows.
In December 2018, the EPA proposed revised Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources. The proposed rule would amend the previous determination that the best system of emission reduction for newly constructed coal-fired steam generating units is no longer partial carbon capture and storage. Instead, the proposed revised best system of emission reduction for this source category is the most efficient demonstrated steam cycle (e.g., supercritical steam conditions for large units and subcritical steam conditions for small units) in combination with best operating practices. The proposed revision to the performance standards for coal-fired steam generating units remains pending. Until the EPA ultimately takes final action on this rulemaking, the Companies cannot predict the impact to their results of operations, financial condition and/or cash flows.
Water
The CWA, as amended, is a comprehensive program requiring a broad range of regulatory tools including a permit program to authorize and regulate discharges to surface waters with strong enforcement mechanisms. The Companies must comply with applicable aspects of the CWA programs at their operating facilities.
Regulation 316(b)
In October 2014, the final regulations under Section 316(b) of the CWA that govern existing facilities and new units at existing facilities that employ a cooling water intake structure and that have flow levels exceeding a minimum threshold became effective. The rule establishes a national standard for impingement based on seven compliance options, but forgoes the creation of a single technology standard for entrainment. Instead, the EPA has delegated entrainment technology decisions to state regulators. State regulators are to make case-by-case entrainment technology determinations after an examination of five mandatory facility-specific factors, including a social cost-benefit test, and six optional facility-specific factors. The rule governs all electric generating stations with water withdrawals above two MGD, with a heightened entrainment analysis for those facilities over 125 MGD. Dominion Energy and Virginia Power currently have 15 and nine facilities, respectively, that are subject to the final regulations. Dominion Energy is also working with the EPA and state regulatory agencies to assess the applicability of Section 316(b) to eight hydroelectric facilities, including three Virginia Power facilities. The Companies anticipate that they may have to install impingement control technologies at certain of these stations that have once-through cooling systems. The Companies are currently evaluating the need or potential for entrainment controls under the final rule as these decisions will be made on a case-by-case basis after a thorough review of detailed biological, technological, and cost benefit studies. DESC is conducting studies and implementing plans as required by the rule to determine appropriate intake structure modifications at certain facilities to ensure compliance with this rule. While the impacts of this rule could be material to the Companies’ results of operations, financial condition and/or cash flows, the existing regulatory frameworks in South Carolina and Virginia provide rate recovery mechanisms that could substantially mitigate any such impacts for the regulated electric utilities.
Effluent Limitations Guidelines
In September 2015, the EPA released a final rule to revise the Effluent Limitations Guidelines for the Steam Electric Power Generating Category. The final rule established updated standards for wastewater discharges that apply primarily at coal and oil steam generating stations. Affected facilities are required to convert from wet to dry or closed cycle coal ash management, improve existing wastewater treatment systems and/or install new wastewater treatment technologies in order to meet the new discharge limits. In April 2017, the EPA granted two separate petitions for reconsideration of the Effluent Limitations Guidelines final rule and stayed future compliance dates in the rule. Also in April 2017, the U.S. Court of Appeals for the Fifth Circuit granted the EPA’s request for a stay of the pending consolidated litigation challenging the rule while the EPA addresses the petitions for reconsideration. In September 2017, the EPA signed a rule to postpone the earliest compliance dates for certain waste streams regulations in the Effluent Limitations Guidelines final rule from November 2018 to November 2020; however, the latest date for compliance for these regulations was December 2023. In October 2020, the EPA released the final rule that extends the latest dates for compliance. Individual facilities’ compliance dates will vary based on circumstances and the determination by state regulators and may range from 2021 to 2028. While the impacts of this rule could be material to the Companies’ results of operations, financial condition and/or cash flows, the existing regulatory frameworks in South Carolina and Virginia provide rate recovery mechanisms that could substantially mitigate any such impacts for the regulated electric utilities.
Waste Management and Remediation
The operations of the Companies are subject to a variety of state and federal laws and regulations governing the management and disposal of solid and hazardous waste, and release of hazardous substances associated with current and/or historical operations. The CERCLA, as amended, and similar state laws, may impose joint, several and strict liability for cleanup on potentially responsible parties who owned, operated or arranged for disposal at facilities affected by a release of hazardous substances. In addition, many states have created programs to incentivize voluntary remediation of sites where historical releases of hazardous substances are identified and property owners or responsible parties decide to initiate cleanups.
From time to time, the Companies may be identified as a potentially responsible party in connection with the alleged release of hazardous substances or wastes at a site. Under applicable federal and state laws, the Companies could be responsible for costs associated with the investigation or remediation of impacted sites, or subject to contribution claims by other responsible parties for their costs incurred at such sites. The Companies also may identify, evaluate and remediate other potentially impacted sites under voluntary state programs. Remediation costs may be subject to reimbursement under the Companies’ insurance policies, rate recovery mechanisms, or both. Except as described below, the Companies do not believe these matters will have a material effect on results of operations, financial condition and/or cash flows.
Dominion Energy has determined that it is associated with former manufactured gas plant sites, including certain sites associated with Virginia Power. At 13 sites associated with Dominion Energy, remediation work has been substantially completed under federal or state oversight. Where required, the sites are following state-approved groundwater monitoring programs. Dominion Energy commenced remediation activities at one site in the second quarter of 2022. In addition, Dominion Energy has proposed remediation plans for one site at Virginia Power and expects to commence remediation activities in 2023 depending on receipt of final permits and approvals. At June 30, 2023 and December 31, 2022, Dominion Energy had $46 million and $47 million, respectively, and Virginia Power had $25 million at both periods, of reserves recorded. Dominion Energy is associated with 12 additional sites, including two associated with Virginia Power, which are not under investigation by any state or federal environmental agency nor the subject of any current or proposed plans to perform remediation activities. Due to the uncertainty surrounding such sites, the Companies are unable to make an estimate of the potential financial statement impacts.
Other Legal Matters
The Companies are defendants in a number of lawsuits and claims involving unrelated incidents of property damage and personal injury. Due to the uncertainty surrounding these matters, the Companies are unable to make an estimate of the potential financial statement impacts; however, they could have a material impact on results of operations, financial condition and/or cash flows.
SCANA Legal Proceedings
The following describes certain legal proceedings involving Dominion Energy, SCANA or DESC relating primarily to events occurring before closing of the SCANA Combination. In addition, certain legal matters which have been resolved are discussed in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. No reference to, or disclosure of, any proceeding, item or matter described below shall be construed as an admission or indication that such proceeding, item or matter is material. For certain of these matters, and unless otherwise noted therein, Dominion Energy is unable to estimate a reasonable range of possible loss and the related financial statement impacts, but for any such matter there could be a material impact to its results of operations, financial condition and/or cash flows. For the matters for which Dominion Energy is able to reasonably estimate a probable loss, Dominion Energy’s Consolidated Balance Sheets at June 30, 2023 and December 31, 2022 include reserves of $66 million and $94 million, respectively, included in other current liabilities, and insurance receivables of $72 million and $68 million, respectively, included within other receivables. These balances at June 30, 2023 and December 31, 2022 include $62 million and $68 million, respectively, of offsetting reserves and insurance receivables related to personal injury or wrongful death cases which are currently pending. During both the three and six months ended June 30, 2023 and 2022, charges included in Dominion Energy's Consolidated Statements of Income were inconsequential.
Governmental Proceedings and Investigations
In June 2018, DESC received a notice of proposed assessment of approximately $410 million, excluding interest, from the SCDOR following its audit of DESC’s sales and use tax returns for the periods September 1, 2008 through December 31, 2017. The proposed assessment, which includes 100% of the NND Project, is based on the SCDOR’s position that DESC’s sales and use tax exemption for the NND Project does not apply because the facility will not become operational. In December 2020, the parties reached an agreement in principle in the amount of $165 million to resolve this matter. In June 2021, the parties executed a settlement agreement which allows DESC to fund the settlement amount through a combination of cash, shares of Dominion Energy common stock or real estate with an initial payment of at least $43 million in shares of Dominion Energy common stock. In August 2021, Dominion Energy issued 0.6 million shares of its common stock to satisfy DESC’s obligation for the initial payment under the settlement agreement. In May 2022, Dominion Energy issued an additional 0.9 million shares of its common stock to partially satisfy DESC’s remaining obligation under the settlement agreement. In June 2022, DESC requested approval from the South Carolina Commission to transfer certain real estate with a total settlement value of $51 million to satisfy its remaining obligation under the settlement agreement. In July 2022, the South Carolina Commission voted to approve the request and issued its final order in August 2022. In September 2022, DESC transferred certain non-utility property with a fair value of $28 million to the SCDOR under the settlement agreement. In December 2022, DESC transferred additional utility property with a fair value of $3 million to the SCDOR. In October 2022, DESC filed for approval to transfer the remaining real estate with FERC which was received in November 2022. In March 2023, DESC transferred utility property with a fair value of $10 million to the SCDOR resulting in a gain of $9 million ($7 million after-tax), recorded in losses (gains) on sales of assets in Dominion Energy’s Consolidated Statements of Income for the six months ended June 30, 2023. In June 2023, DESC transferred the remaining utility property with a fair value of $11 million to the SCDOR resulting in a gain of $11 million ($8 million after-tax), recorded in losses (gains) on sales of assets in Dominion Energy's Consolidated Statements of Income for the three and six months ended June 30, 2023. In July 2023, DESC made a less than $1 million cash payment to the SCDOR to fully satisfy its remaining obligation, including applicable interest, under the settlement agreement.
Nuclear Operations
Nuclear Insurance
There have been no significant changes regarding the Companies’ nuclear insurance as described in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Spent Nuclear Fuel
As discussed in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, the Companies entered into contracts with the DOE for the disposal of spent nuclear fuel under provisions of the Nuclear Waste Policy Act of 1982.
Guarantees, Surety Bonds and Letters of Credit
At June 30, 2023, Dominion Energy had issued four guarantees related to Cove Point, an equity method investment, in support of terminal services, transportation and construction. Two of the Cove Point guarantees have a cumulative maximum exposure of $1.9 billion while the other two guarantees have no maximum limit. No amounts related to these guarantees have been recorded.
In addition, at June 30, 2023, Dominion Energy had issued an additional $20 million of guarantees, primarily to support third parties. No amounts related to these guarantees have been recorded.
Dominion Energy also enters into guarantee arrangements on behalf of its consolidated subsidiaries, primarily to facilitate their commercial transactions with third parties. If any of these subsidiaries fail to perform or pay under the contracts and the counterparties seek performance or payment, Dominion Energy would be obligated to satisfy such obligation. To the extent that a liability subject to a guarantee has been incurred by one of Dominion Energy’s consolidated subsidiaries, that liability is included in the Consolidated Financial Statements. Dominion Energy is not required to recognize liabilities for guarantees issued on behalf of its subsidiaries unless it becomes probable that it will have to perform under the guarantees. Terms of the guarantees typically end once obligations have been paid. Dominion Energy currently believes it is unlikely that it would be required to perform or otherwise incur any losses associated with guarantees of its subsidiaries’ obligations.
At June 30, 2023, Dominion Energy had issued the following subsidiary guarantees:
MaximumExposure
Commodity transactions(1)
2,861
Nuclear obligations(2)
Solar(3)
Other(4)
1,269
Total(5)(6)
4,589
Additionally, at June 30, 2023, Dominion Energy had purchased $282 million of surety bonds, including $198 million at Virginia Power, and authorized the issuance of letters of credit by financial institutions of $16 million to facilitate commercial transactions by
its subsidiaries with third parties. Under the terms of surety bonds, the Companies are obligated to indemnify the respective surety bond company for any amounts paid.
Note 18. Credit Risk
The Companies’ accounting policies for credit risk are discussed in Note 24 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
At June 30, 2023, Dominion Energy’s credit exposure totaled $208 million, primarily related to price risk management activities. Of this amount, investment grade counterparties, including those internally rated, represented 86%. No single counterparty, whether investment grade or non-investment grade, exceeded $47 million of exposure. At June 30, 2023, Virginia Power’s exposure related to wholesale customers totaled $63 million. Of this amount, investment grade counterparties, including those internally rated, represented 75%. No single counterparty, whether investment grade or non-investment grade, exceeded $12 million of exposure.
Credit-Related Contingent Provisions
Certain of Dominion Energy and Virginia Power's derivative instruments contain credit-related contingent provisions. These provisions require Dominion Energy and Virginia Power to provide collateral upon the occurrence of specific events, primarily a credit rating downgrade. If the credit-related contingent features underlying these instruments that are in a liability position and not fully collateralized with cash were fully triggered, Dominion Energy and Virginia Power would have been required to post additional collateral to its counterparties of $89 million and $35 million, respectively, as of June 30, 2023, and $140 million and $28 million, respectively, as of December 31, 2022. The collateral that would be required to be posted includes the impacts of any offsetting asset positions and any amounts already posted for derivatives, non-derivative contracts and derivatives elected under the normal purchases and normal sales exception, per contractual terms. Dominion Energy had posted collateral of $1 million at June 30, 2023, and both Dominion Energy and Virginia Power had posted $72 million at December 31, 2022, related to derivatives with credit-related contingent provisions that are in a liability position and not fully collateralized with cash. Virginia Power had no such collateral posted at June 30, 2023. In addition, Dominion Energy and Virginia Power had both posted letters of credit as collateral with counterparties covering $4 million and $20 million of fair value of derivative instruments in a liability position at June 30, 2023 and December 31, 2022, respectively. The aggregate fair value of all derivative instruments with credit related contingent provisions that are in a liability position and not fully collateralized with cash for Dominion Energy and Virginia Power was $90 million and $35 million, respectively, as of June 30, 2023 and $212 million and $99 million, respectively, as of December 31, 2022, which does not include the impact of any offsetting asset positions.
See Note 9 for additional information about derivative instruments.
Note 19. Related-Party Transactions
Dominion Energy’s transactions with equity method investments are described in Note 10. Virginia Power engages in related-party transactions primarily with other Dominion Energy subsidiaries (affiliates). Virginia Power’s receivable and payable balances with affiliates are settled based on contractual terms or on a monthly basis, depending on the nature of the underlying transactions. Virginia Power is included in Dominion Energy's consolidated federal income tax return and, where applicable, combined income tax returns for Dominion Energy are filed in various states. A discussion of Virginia Power's significant related-party transactions follows.
Virginia Power transacts with affiliates for certain quantities of natural gas and other commodities in the ordinary course of business. Virginia Power also enters into certain commodity derivative contracts with affiliates. Virginia Power uses these contracts, which are principally comprised of forward commodity purchases, to manage commodity price risks associated with purchases of natural gas. At June 30, 2023, Virginia Power’s derivative assets and liabilities with affiliates were $1 million and $89 million, respectively. At December 31, 2022, Virginia Power’s derivative assets and liabilities with affiliates were $33 million and $31 million, respectively. See Note 9 for additional information.
Virginia Power participates in certain Dominion Energy benefit plans described in Note 22 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. At June 30, 2023 and December 31, 2022, amounts due to Dominion Energy associated with the Dominion Energy Pension Plan and included in other deferred credits and other liabilities in the Consolidated Balance Sheets were $439 million and $422 million, respectively. At June 30, 2023 and December 31, 2022, Virginia Power's amounts due from Dominion Energy associated with the Dominion Energy Retiree Health and Welfare Plan and included in other deferred charges and other assets in the Consolidated Balance Sheets were $550 million and $518 million, respectively.
DES and other affiliates provide accounting, legal, finance and certain administrative and technical services and licenses to Virginia Power. In addition, Virginia Power provides certain services to affiliates, including charges for facilities and equipment usage.
The financial statements for all years presented include costs for certain general, administrative and corporate expenses assigned by DES to Virginia Power on the basis of direct and allocated methods in accordance with Virginia Power’s services agreements with DES. Where costs incurred cannot be determined by specific identification, the costs are allocated based on the proportional level of effort devoted by DES resources that is attributable to the entity, determined by reference to number of employees, salaries and wages and other similar measures for the relevant DES service. Management believes the assumptions and methodologies underlying the allocation of general corporate overhead expenses are reasonable.
Presented below are Virginia Power’s significant transactions with DES and other affiliates:
Commodity purchases from affiliates
291
317
584
Services provided by affiliates(1)
292
253
Services provided to affiliates
Virginia Power has borrowed funds from Dominion Energy under short-term borrowing arrangements. There were $2.3 billion and $2.0 billion in short-term demand note borrowings from Dominion Energy as of June 30, 2023 and December 31, 2022, respectively. Virginia Power had no outstanding borrowings, net of repayments, under the Dominion Energy money pool for its nonregulated subsidiaries as of June 30, 2023 and December 31, 2022. Interest charges related to Virginia Power’s borrowings from Dominion Energy were $21 million and $45 million for the three and six months ended June 30, 2023, respectively, and inconsequential for the three and six months ended June 30, 2022.
There were no issuances of Virginia Power’s common stock to Dominion Energy for the three and six months ended June 30, 2023 and 2022.
In January 2023, Virginia Power entered into a lease contract with an affiliated entity for the use of a Jones Act compliant offshore wind installation vessel currently under development with commencement of the 20-month lease term in August 2025 at a total cost of approximately $240 million plus ancillary services.
Note 20. Employee Benefit Plans
Net Periodic Benefit (Credit) Cost
The service cost component of net periodic benefit (credit) cost is reflected in other operations and maintenance expense in Dominion Energy’s Consolidated Statements of Income. The non-service cost components of net periodic benefit (credit) cost are reflected in other income (expense) in Dominion Energy’s Consolidated Statements of Income. The components of Dominion Energy’s provision for net periodic benefit cost (credit) are as follows:
Pension Benefits
Other Postretirement Benefits
Service cost
Interest cost
Expected return on plan assets
(216
(223
(432
(446
(76
(96
Amortization of prior service cost (credit)
Amortization of net actuarial (gain) loss
Net periodic benefit (credit) cost
(82
(163
(128
(59
Employer Contributions
During the three and six months ended June 30, 2023, Dominion Energy made no contributions to its qualified defined benefit pension plans or other postretirement benefit plans. Dominion Energy is not required to make any contributions to its qualified defined benefit
pension plans or to VEBAs associated with its other postretirement plans in 2023. Dominion Energy considers voluntary contributions from time to time, either in the form of cash or equity securities.
Note 21. Operating Segments
The Companies are organized primarily on the basis of products and services sold in the U.S. A description of the operations included in the Companies’ primary operating segments is as follows:
Primary Operating Segment
Description of Operations
DominionEnergy
VirginiaPower
Regulated electric distribution
X
Regulated electric transmission
Regulated electric generation fleet(1)
Regulated gas distribution and storage(2)
Regulated electric generation fleet
Regulated gas distribution and storage
Nonregulated electric generation fleet(3)
Noncontrolling interest in Cove Point
In addition to the operating segments above, the Companies also report a Corporate and Other segment.
The Corporate and Other Segment of Dominion Energy includes its corporate, service company and other functions (including unallocated debt) as well as its noncontrolling interest in Dominion Privatization and its noncontrolling interest in Wrangler (through March 2022). In addition, Corporate and Other includes specific items attributable to Dominion Energy’s operating segments that are not included in profit measures evaluated by executive management in assessing the segments’ performance or in allocating resources, as well as the net impact of the gas transmission and storage operations, including its noncontrolling interest in Atlantic Coast Pipeline, reported as discontinued operations which are discussed in Notes 3 and 9 to the Consolidated Financial Statements in Dominion Energy’s Annual Report on Form 10-K for the year ended December 31, 2022.
In the six months ended June 30, 2023, Dominion Energy reported after-tax net income of $112 million in the Corporate and Other segment, including $279 million of after-tax net income for specific items with $364 million of after-tax net income attributable to its operating segments. In the six months ended June 30, 2022, Dominion Energy reported after-tax net expenses of $1.5 billion in the Corporate and Other segment, including $1.4 billion of after-tax net expenses for specific items with $1.5 billion of after-tax net expenses attributable to its operating segments.
The net income for specific items attributable to Dominion Energy’s operating segments in 2023 primarily related to the impact of the following items:
The net expenses for specific items attributable to Dominion Energy’s operating segments in 2022 primarily related to the impact of the following items:
60
The following table presents segment information pertaining to Dominion Energy’s operations:
DominionEnergyVirginia
GasDistribution
DominionEnergySouthCarolina
ContractedAssets
Corporateand Other
Adjustments& Eliminations
ConsolidatedTotal
Total revenue from external customers
2,254
771
Intersegment revenue
(251
2,253
Net income from discontinued operations
Net income attributable to Dominion Energy
391
565
812
225
2,172
815
108
Net loss from discontinued operations
440
124
(1,162
4,643
1,993
1,615
495
(505
4,641
1,994
1,618
855
777
4,347
1,610
(282
(471
4,341
1,795
1,614
180
419
233
(1,473
Intersegment sales and transfers for Dominion Energy are based on contractual arrangements and may result in intersegment profit or loss that is eliminated in consolidation, including amounts related to entities presented within discontinued operations.
The Corporate and Other Segment of Virginia Power primarily includes specific items attributable to its operating segment that are not included in profit measures evaluated by executive management in assessing the segment’s performance or in allocating resources.
In the six months ended June 30, 2023, Virginia Power reported after-tax net expenses of $91 million in the Corporate and Other segment, including $87 million of after-tax net expenses for specific items all of which was attributable to its operating segment. In the six months ended June 30, 2022, Virginia Power reported after-tax net expenses of $554 million in the Corporate and Other segment, including $547 million of after-tax net expenses for specific items with $527 million of after-tax net expenses attributable to its operating segment.
The net expenses for specific items attributable to Virginia Power’s operating segment in 2023 primarily related to the impact of the following item:
The net expenses for specific items attributable to Virginia Power’s operating segment in 2022 primarily related to the impact of the following items:
The following table presents segment information pertaining to Virginia Power’s operations:
Net income (loss)
(60
2,170
(395
776
(91
4,335
(554
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MD&A discusses Dominion Energy’s results of operations and general financial condition and Virginia Power’s results of operations. MD&A should be read in conjunction with the Companies’ Consolidated Financial Statements. Virginia Power meets the conditions to file under the reduced disclosure format, and therefore has omitted certain sections of MD&A.
Contents of MD&A
MD&A consists of the following information:
Forward-Looking Statements
This report contains statements concerning the Companies’ expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, the reader can identify these forward-looking statements by such words as “anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,” “could,” “plan,” “may,” “continue,” “target” or other similar words.
The Companies make forward-looking statements with full knowledge that risks and uncertainties exist that may cause actual results to differ materially from predicted results. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Additionally, other factors may cause actual results to differ materially from those indicated in any forward-looking statement. These factors include but are not limited to:
Additionally, other risks that could cause actual results to differ from predicted results are set forth in Part I. Item 1A. Risk Factors in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
The Companies’ forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. The Companies caution the reader not to place undue reliance on their forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. The Companies undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.
Accounting Matters
As of June 30, 2023, there have been no significant changes with regard to the critical accounting policies and estimates disclosed in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. The policies disclosed included the accounting for regulated operations, AROs, income taxes, accounting for derivative contracts and financial instruments at fair value, use of estimates in goodwill impairment testing, use of estimates in long-lived asset and equity method investment impairment testing, held for sale classification and employee benefit plans.
Results of Operations—Dominion Energy
Presented below is a summary of Dominion Energy’s consolidated results:
$ Change
Second Quarter
1,052
Diluted EPS
1.27
Year-To-Date
1,338
1.61
Overview
Second Quarter 2023 vs. 2022
Net income attributable to Dominion Energy increased $1.1 billion, primarily due to the absences of a loss associated with the sale of Kewaunee, a charge for RGGI compliance costs deemed recovered through base rates and a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses. In addition, there was an increase in net investment earnings on nuclear decommissioning trust funds and increased unrealized gains on economic hedging activities. These increases were partially offset by a decrease in sales to electric utility customers attributable to weather.
Year-To-Date 2023 vs. 2022
Net income attributable to Dominion Energy increased $1.3 billion, primarily due to the absences of a loss associated with the sale of Kewaunee, a charge for RGGI compliance costs deemed recovered through base rates, a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses and a charge to reflect the recognition of deferred taxes on the outside basis of Hope’s stock upon meeting the classification as held for sale. In addition, there was an increase in net investment earnings on nuclear decommissioning trust funds, increased unrealized gains on economic hedging activities and a decrease in storm damage and service restoration costs. These increases were partially offset by a charge associated with the impairment of a corporate office building and a decrease in sales to electric utility customers attributable to weather.
Analysis of Consolidated Operations
Presented below are selected amounts related to Dominion Energy’s results of operations:
198
1,171
553
144
(53
(186
(13
(362
(254
(658
(631
612
850
383
795
Net income (loss) from discontinued operations including noncontrolling interests
An analysis of Dominion Energy’s results of operations follows:
Operating revenue increased 6%, primarily reflecting:
These increases were partially offset by:
Electric fuel and other energy-related purchases increased 29%, primarily due to higher commodity costs for electric utilities ($206 million) and an increase in the use of purchased renewable energy credits at Virginia Power ($26 million), which are offset in operating revenue and do not impact net income.
Purchased gas increased 12%, primarily due to a net increase in commodity costs for gas utilities, which are offset in operating revenue and do not impact net income.
Other operations and maintenance decreased 5%, primarily due to a decrease in certain Virginia Power expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($32 million), partially offset by an increase in outside services ($17 million).
Impairment of assets and other charges decreased 87%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities at Virginia Power ($38 million), partially offset by a charge for the write-off of certain previously
deferred amounts related to the cessation of certain riders effective July 2023 ($36 million) and an impairment charge of certain nonregulated solar assets ($15 million).
Gains on sales of assets increased $658 million, primarily due to the absence of a loss associated with the sale of Kewaunee.
Other income increased $612 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.
Interest and related charges increased $383 million, primarily due to lower unrealized gains in 2023 compared to 2022 associated with freestanding derivatives ($239 million), higher interest rates on commercial paper and long-term debt ($60 million), increased commercial paper and long-term debt borrowings ($53 million) and higher interest rates on variable rate debt and cash flow interest rate swaps ($42 million).
Income tax expense increased $238 million, primarily due to higher pre-tax income ($309 million), partially offset by lower interim period allocation of investment tax credits ($20 million), excess deferred income tax amortization ($19 million) and decreased consolidated state deferred tax expense on pre-tax gains from nuclear decommissioning trusts and economic hedges ($18 million).
Operating revenue increased 15%, primarily reflecting:
Electric fuel and other energy-related purchases increased 39%, primarily due to higher commodity costs for electric utilities ($522 million) and an increase in the use of purchased renewable energy credits at Virginia Power ($54 million), which are offset in operating revenue and do not impact net income.
Purchased gas increased 17%, primarily due to a net increase in commodity costs for gas utilities ($192 million), which are offset in operating revenue and do not impact net income, partially offset by a decrease from the sale of Hope ($37 million).
Other operations and maintenance decreased 9%, primarily due to a decrease in storm damage and restoration costs in Virginia Power’s service territory ($111 million) and a decrease in certain Virginia Power expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($103 million), partially offset by an increase in outside services ($36 million).
Impairment of assets and other charges decreased 63%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain
retired electric generation facilities at Virginia Power ($39 million), partially offset by the impairment of a corporate office building ($91 million), a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million) and an impairment charge of certain nonregulated solar assets ($15 million).
Gains on sales of assets increased $631 million, primarily due to the absence of a loss associated with the sale of Kewaunee ($649 million) and a gain on the transfer of certain utility property in South Carolina ($20 million), partially offset by the absence of a gain on the contribution of certain privatization operations to Dominion Privatization ($23 million).
Other income increased $850 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.
Interest and related charges increased $795 million, primarily due to unrealized losses in 2023 compared to unrealized gains in 2022 associated with freestanding derivatives ($517 million), higher interest rates on commercial paper and long-term debt ($107 million),
increased commercial paper and long-term debt borrowings ($98 million), higher interest rates on variable rate debt and cash flow interest rate swaps ($88 million) and lower premiums received on interest rate derivatives ($24 million).
Income tax expense increased $223 million, primarily due to higher pre-tax income ($388 million), partially offset by the absence of a charge to reflect the recognition of deferred taxes on the outside basis of Hope’s stock upon meeting the classification as held for sale ($90 million) and decreased consolidated state deferred tax expense on pre-tax gains from nuclear decommissioning trusts and economic hedges ($25 million).
Results of Operations—Virginia Power
Presented below is a summary of Virginia Power’s consolidated results:
Net income increased $285 million, primarily due to the absences of a charge for RGGI compliance costs deemed recovered through base rates and a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses as well as an increase in net investment earnings on nuclear decommissioning trust funds, partially offset by a decrease in sales to electric utility customers attributable to weather.
Net income increased 70%, primarily due to the absences of a charge for RGGI compliance costs deemed recovered through base rates and a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses as well as an increase in net investment earnings on nuclear decommissioning trust funds and a decrease in storm damage and service restoration costs, partially offset by a decrease in sales to electric utility customers attributable to weather.
Presented below are selected amounts related to Virginia Power’s results of operations:
76
478
884
1,048
(164
(371
(368
92
An analysis of Virginia Power’s results of operations follows:
Operating revenue increased 3%, primarily reflecting:
Electric fuel and other energy-related purchases increased 32%, primarily due to higher commodity costs for electric utilities ($169 million) and an increase in the use of purchased renewable energy credits ($26 million), which are offset in operating revenue and do not impact net income.
Other operations and maintenance decreased 7%, primarily due to a decrease in certain expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($32 million) and a decrease in bad debt expense ($10 million), partially offset by an increase in outside services ($13 million).
Other taxes decreased 19%, primarily due to lower property taxes.
Impairment of assets and other charges decreased 91%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities ($38 million), partially offset by a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million).
Other income increased $92 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.
Interest and related charges increased 26%, primarily due to increased commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($39 million) and higher interest rates on commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($11 million).
Income tax expense increased $89 million, primarily due to higher pre-tax income.
Operating revenue increased 7%, primarily reflecting:
Electric fuel and other energy-related purchases increased 43%, primarily due to higher commodity costs for electric utilities ($418 million) and an increase in the use of purchased renewable energy credits ($54 million), which are offset in operating revenue and do not impact net income.
Other operations and maintenance decreased 16%, primarily due to a decrease in storm damage and restoration costs ($111 million) and a decrease in certain expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($103 million), partially offset by an increase in outside services ($29 million) and an increase in salaries, wages and benefits and administrative costs ($18 million).
Impairment of assets and other charges decreased 89%, primarily due to the absence of a charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million), the absence of a charge for RGGI compliance costs deemed recovered through base rates ($180 million) and a net decrease in dismantling costs and other activities associated with certain retired electric generation facilities ($39 million), partially offset by a charge for the write-off of certain previously deferred amounts related to the cessation of certain riders effective July 2023 ($36 million).
Other income increased $124 million, primarily due to net investment gains in 2023 compared to net investment losses in 2022 on nuclear decommissioning trust funds.
Interest and related charges increased 24%, primarily due to increased commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($72 million) and higher interest rates on commercial paper, long-term debt and intercompany borrowings with Dominion Energy ($22 million), partially offset by decreased interest expense associated with rider deferrals ($19 million).
Income tax expense increased $127 million, primarily due to higher pre-tax income ($101 million) and lower investment tax credits ($31 million).
Segment Results of Operations
Segment results include the impact of intersegment revenues and expenses, which may result in intersegment profit and loss. Presented below is a summary of contributions by Dominion Energy’s operating segments to net income (loss) attributable to Dominion Energy:
EPS(1)
0.47
0.54
(0.07
0.12
0.15
(0.03
0.08
(0.01
Corporate and Other
1,188
(1.44
1.45
Consolidated
0.93
1.18
(0.25
0.46
0.51
(0.05
0.19
0.29
(0.10
0.20
0.05
1,585
(1.88
1.96
(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.
Presented below are selected operating statistics related to Dominion Energy Virginia’s operations:
% Change
Electricity delivered (million MWh)
21.8
20.7
43.5
43.0
Electricity supplied (million MWh):
Utility
20.8
42.5
43.1
Non-Jurisdictional
0.5
0.9
0.8
Degree days (electric distribution and utility service area):
Cooling
358
502
361
513
(30
Heating
1,675
2,192
(24
Average electric distribution customer accounts (thousands)
2,746
2,720
2,743
2,718
Presented below, on an after-tax basis, are the key factors impacting Dominion Energy Virginia’s net income contribution:
Second Quarter2023 vs. 2022Increase (Decrease)
Year-To-Date2023 vs. 2022Increase (Decrease)
Weather
(109
(0.13
Customer usage and other factors
0.09
Customer-elected rate impacts
(78
Rider equity return
0.06
Storm damage and restoration costs
Renewable energy investment tax credits
Interest expense, net
(43
(0.06
Share dilution
(0.02
Change in net income contribution
Presented below are selected operating statistics related to Gas Distribution’s operations:
2022(1)
Gas distribution throughput (bcf):
Sales
%)
Transportation
193
217
518
Heating degree days (gas distribution service area):
North Carolina
1,377
1,772
Ohio and West Virginia(1)
622
3,055
3,534
Utah, Wyoming and Idaho
499
662
3,154
3,140
Average gas distribution customer accounts (thousands):
1,899
1,971
1,898
1,967
1,136
Presented below, on an after-tax basis, are the key factors impacting Gas Distribution’s net income contribution:
Base rate case impacts
0.03
Wexpro cost saving sharing incentives
Sale of Hope
(15
Presented below are selected operating statistics related to Dominion Energy South Carolina’s operations:
5.2
5.9
10.2
11.1
Electricity supplied (million MWh)
5.5
6.2
10.7
11.7
Degree days (electric distribution service areas):
(55
484
Average distribution customer accounts (thousands):
Electric
789
786
774
Gas
439
424
Presented below, on an after-tax basis, are the key factors impacting Dominion Energy South Carolina’s net income contribution:
Base rate case & Natural Gas Rate Stabilization Act impacts
Capital cost rider
Gains on sales of property
Presented below are selected operating statistics related to Contracted Asset’s operations:
2.4
3.4
7.0
8.0
Presented below, on an after-tax basis, are the key factors impacting Contracted Asset’s net income contribution:
Margin(1)
Planned outage costs(2)
Unplanned outage costs(2)
Presented below are the Corporate and Other segment’s after-tax results:
Specific items attributable to operating segments
(1,254
1,346
364
(1,523
1,887
Specific items attributable to Corporate and Other segment
(104
(85
(208
Total specific items
(1,111
1,242
(1,400
1,679
Other corporate operations:
(133
(51
(253
(161
(92
86
Total other corporate operations
(105
(54
(167
Total net income (expense)
EPS impact
Corporate and Other includes specific items attributable to Dominion Energy’s primary operating segments that are not included in profit measures evaluated by executive management in assessing the segments' performance or in allocating resources. See Note 21 to the Consolidated Financial Statements in this report for discussion of these items in more detail. Corporate and Other also includes items attributable to the Corporate and Other segment. For the three months ended June 30, 2023, this primarily included a $36 million after-tax gain for derivative mark-to-market changes. For the six months ended June 30, 2023, this primarily included a $68 million after-tax charge associated with the impairment of a corporate office building.
For the three months ended June 30, 2022, other than the effects of required interim period provision for income taxes, this primarily included a $188 million after-tax benefit for derivative mark-to-market changes. For the six months ended June 30, 2022, other than the effects of required interim period provision for income taxes, this primarily included a $240 million after-tax benefit for derivative mark-to-market changes, a $90 million charge to reflect the recognition of deferred taxes on the outside basis of Hope’s stock upon meeting the classification as held for sale and $18 million net income from discontinued operations, primarily associated with the Q-Pipe Group.
Outlook
As of June 30, 2023, there have been no material changes to Dominion Energy’s 2023 outlook as described in Item 7. MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. As discussed in Future Issues and Other Matters, legislation enacted in Virginia in April 2023 is expected to decrease Dominion Energy’s 2023 net income for riders combined into base rates effective July 2023.
Liquidity and Capital Resources
Dominion Energy depends on both cash generated from operations and external sources of liquidity to provide working capital and as a bridge to long-term financings. Dominion Energy’s material cash requirements include capital and investment expenditures, repaying short-term and long-term debt obligations and paying dividends on its common and preferred stock. This section should be read in conjunction with Item 7. MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Analysis of Cash Flows
Presented below are selected amounts related to Dominion Energy’s cash flows:
Cash, restricted cash and equivalents at January 1
Cash flows provided by (used in):
Operating activities
Investing activities
Financing activities
Net increase (decrease) in cash, restricted cash and equivalents
Cash, restricted cash and equivalents at June 30
Operating Cash Flows
Net cash provided by Dominion Energy's operating activities increased $1.8 billion, primarily due to higher deferred fuel and purchased gas cost recoveries ($1.3 billion), lower margin deposits ($602 million), a decrease in refund payments to Virginia electric customers associated with the settlement of the 2021 Triennial Review ($282 million), partially offset by an increase in interest payments driven by higher interest rates and borrowings ($300 million) and changes in working capital ($147 million).
Investing Cash Flows
Net cash used in Dominion Energy’s investing activities decreased $134 million, primarily due to the absence of an issuance of a short-term deposit ($2.0 billion) and lower acquisitions of solar development projects ($109 million), substantially offset by an increase in plant construction and other property additions ($1.6 billion), a decrease in proceeds from the sale of assets and equity method investments ($135 million) and the absence of withdrawals from Kewaunee's nuclear decommissioning trust ($80 million).
Financing Cash Flows
Net cash provided by Dominion Energy's financing activities decreased $2.0 billion primarily due to a $2.9 billion decrease due to net repayments of long-term debt in 2023 versus net issuances in 2022, the absence of the settlement of the stock purchase contract component of the 2019 Equity Units in 2022 ($1.6 billion) and a decrease in supplemental credit facility borrowings ($450 million), partially offset by the issuance of 364-day term loan facility borrowings ($2.5 billion) and higher net issuances of short-term debt ($387 million).
Credit Facilities and Short-Term Debt
As discussed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, Dominion Energy generally uses proceeds from short-term borrowings, including commercial paper, to satisfy short-term cash requirements not met through cash from operations. The levels of borrowing may vary significantly during the course of the year, depending on the timing and amount of cash requirements not satisfied by cash from operations. There have been no significant changes to Dominion Energy’s use of credit facilities and/or short-term debt during the six months ended June 30, 2023.
Joint Revolving Credit Facility
Dominion Energy maintains a $6.0 billion joint revolving credit facility which provides for a discount in the pricing of certain annual fees and amounts borrowed by Dominion Energy under the facility if Dominion Energy achieves certain annual renewable electric generation and diversity and inclusion objectives. At June 30, 2023, Dominion Energy had $1.8 billion of unused capacity under its joint revolving credit facility. See Note 16 to the Consolidated Financial Statements in this report for the balances of commercial paper and letters of credit outstanding.
Dominion Energy Reliability InvestmentSM Program
Dominion Energy has an effective shelf registration statement with the SEC for the sale of up to $3.0 billion of variable denomination floating rate demand notes, called Dominion Energy Reliability InvestmentSM. The registration limits the principal amount that may be outstanding at any one time to $1.0 billion. The notes are offered on a continuous basis and bear interest at a floating rate per annum determined by the Dominion Energy Reliability Investment Committee, or its designee, on a weekly basis. The notes have no stated maturity date, are non-transferable and may be redeemed in whole or in part by Dominion Energy or at the investor’s option at any time. At June 30, 2023, Dominion Energy’s Consolidated Balance Sheets include $403 million with respect to such notes presented within short-term debt. The proceeds are used for general corporate purposes and to repay debt.
Other Facilities
In addition to the primary sources of short-term liquidity discussed above, from time to time Dominion Energy enters into separate supplementary credit facilities or term loans as discussed in Note 16 to the Consolidated Financial Statements in this report.
In January 2023, Dominion Energy entered into a $2.5 billion 364-day term loan facility which bears interest at a variable rate and will mature in January 2024 with the proceeds to be used to repay existing long-term debt and short-term debt upon maturity and for other general corporate purposes. Concurrently, Dominion Energy borrowed an initial $1.0 billion with the proceeds used to repay long-term debt. In February and March 2023, Dominion Energy borrowed $500 million and $1.0 billion, respectively, with the proceeds used for general corporate purposes and to repay long-term debt.
In July 2023, Dominion Energy entered into two $600 million 364-day term loan facilities which bear interest at a variable rate and will mature in July 2024 with the proceeds to be used to repay existing long-term debt and/or short-term debt upon maturity and for other general corporate purposes. Subsequently in July 2023, Dominion Energy borrowed an initial $750 million in the aggregate under these facilities with the proceeds used to repay short-term debt and for general corporate purposes. Dominion Energy is permitted to make up to three additional borrowings under each agreement through November 2023, at which point any unused capacity will cease to be available to Dominion Energy. The agreements contain certain mandatory early repayment provisions, including that any after-tax proceeds in connection with a sale of Dominion Energy’s noncontrolling interest in Cove Point, following the repayment of DECP Holding’s term loan secured by its noncontrolling interest in Cove Point, be applied to any outstanding borrowings under the facilities.
Sustainability Revolving Credit Agreement
Dominion Energy maintains a $900 million Sustainability Revolving Credit Agreement which matures in 2024 and bears interest at a variable rate. The facility offers a reduced interest rate margin with respect to borrowed amounts allocated to certain environmental sustainability or social investment initiatives. In March 2023, Dominion Energy borrowed $450 million with the proceeds used for general corporate purposes. In April 2023, Dominion Energy repaid $450 million borrowed for general corporate purposes. At June 30, 2023, Dominion Energy had $450 million borrowed to support environmental sustainability and social investment initiatives.
Issuances and Borrowings of Long-Term Debt
During the six months ended June 30, 2023, Dominion Energy issued or borrowed the following long-term debt. Unless otherwise noted, the proceeds were used for the repayment of existing indebtedness and for general corporate purposes.
Month
Type
Public / Private
Entity
Principal
Rate
Stated Maturity
March
Senior notes
Public
750
5.000
2033
5.450
2053
Total issuances and borrowings
1,500
Dominion Energy currently meets the definition of a well-known seasoned issuer under SEC rules governing the registration, communication and offering processes under the Securities Act of 1933, as amended. The rules provide for a streamlined shelf registration process to provide registrants with timely access to capital. This allows Dominion Energy to use automatic shelf registration statements to register any offering of securities, other than those for exchange offers or business combination transactions.
As the comprehensive business review announced in November 2022 is still in progress, Dominion Energy is uncertain as to the amount of long-term debt it anticipates issuing in 2023. Dominion Energy expects to issue long-term debt to satisfy cash needs for capital expenditures and maturing long-term debt to the extent such amounts are not satisfied from cash available from operations
following the payment of dividends and any borrowings made from unused capacity of Dominion Energy’s credit facilities discussed above. The raising of external capital is subject to certain regulatory requirements, including registration with the SEC for certain issuances.
Repayments, Repurchases and Redemptions of Long-Term Debt
Dominion Energy may from time to time reduce its outstanding debt and level of interest expense through redemption of debt securities prior to maturity or repurchases of debt securities in the open market, in privately negotiated transactions, through tender offers or otherwise.
The following long-term debt was repaid, repurchased or redeemed during the six months ended June 30, 2023:
Principal (1)
Debt scheduled to mature in 2023
Multiple
1,787
various
Early redemptions
None
Total repayments, repurchases and redemptions
See Note 18 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 for additional information regarding scheduled maturities of Dominion Energy’s long-term debt, including related average interest rates.
As discussed in Note 10 to the Consolidated Financial Statements in this report, DECP Holding's term loan secured by its noncontrolling interest in Cove Point is required to be repaid in connection with closing of Dominion Energy's July 2023 agreement with BHE for the sale of its 50% noncontrolling limited partnership interest in Cove Point, which is expected to occur by the end of 2023.
Remarketing of Long-Term Debt
In June 2023, Virginia Power remarketed three series of tax-exempt bonds, with an aggregate outstanding principal of $160 million to new investors. All three bonds will bear interest at a coupon of 3.65% until October 2027, after which they will bear interest at a market rate to be determined at that time. Dominion Energy does not expect to remarket any other long-term debt in 2023.
Credit Ratings
As discussed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, Dominion Energy’s credit ratings affect its liquidity, cost of borrowing under credit facilities and collateral posting requirements under commodity contracts, as well as the rates at which it is able to offer debt securities. The credit ratings for Dominion Energy are affected by its financial profile, mix of regulated and nonregulated businesses and respective cash flows, changes in methodologies used by the ratings agencies and event risk, if applicable, such as major acquisitions or dispositions. A credit rating is not a recommendation to buy, sell or hold securities and should be evaluated independently of any other rating. In April 2023, Standard & Poor’s affirmed its credit ratings but revised its outlook for Dominion Energy from stable to negative. Dominion Energy cannot predict the potential impact the negative outlook at Standard & Poor’s could have on its liquidity, cost of borrowing under credit facilities and collateral posting requirements under commodity contracts, as well as the rates at which it is able to offer debt securities. There have been no other changes in Dominion Energy’s credit ratings from those described in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Financial Covenants
As discussed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, Dominion Energy is subject to various covenants present in the enabling agreements underlying Dominion Energy’s debt. As of June 30, 2023, there have been no material changes to covenants, nor any events of default under Dominion Energy’s covenants.
Common Stock, Preferred Stock and Other Equity Securities
In the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, there is a discussion of Dominion Energy’s existing equity financing programs, including an at-the-market program and Dominion Energy Direct®. During the six months ended June 30, 2023, Dominion Energy issued $85 million of stock through these programs. Dominion Energy's at-the-market program expired in June 2023. See Note 16 to the Consolidated Financial Statements in this report for additional information.
As the comprehensive business review announced in November 2022 is still in progress, Dominion Energy is uncertain as to the amount of common stock that it anticipates issuing in 2023. However, Dominion Energy anticipates raising similar amounts of capital through Dominion Energy Direct® in 2023 compared to 2022 and 2021. The raising of external capital is subject to certain regulatory requirements, including registration with the SEC for certain issuances.
As of June 30, 2023, there have been no material changes to the Board of Directors authorization to repurchase Dominion Energy stock, or the remaining available capacity under this authorization, disclosed in the Repurchases of Equity Securities section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. Dominion Energy has not repurchased through June 30 and does not plan to repurchase in the remainder of 2023 any shares of its common stock, except for shares tendered by employees to satisfy tax withholding obligations on vested restricted stock.
Capital Expenditures
As of June 30, 2023, there have been no material changes to Dominion Energy’s expectation for planned capital expenditures as disclosed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dividends
Dominion Energy believes that its operations provide a stable source of cash flow to contribute to planned levels of capital expenditures and maintain or grow the dividend on common shares. See Note 16 to the Consolidated Financial Statements in this report for additional information regarding Dominion Energy’s outstanding preferred stock and associated dividend rates.
Subsidiary Dividend Restrictions
As of June 30, 2023, there have been no material changes to the subsidiary dividend restrictions disclosed in the Dividends section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Collateral and Credit Risk
As of June 30, 2023, there have been no material changes to the collateral requirements disclosed in the Collateral and Credit Risk section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dominion Energy’s exposure to potential concentrations of credit risk results primarily from its energy marketing and price risk management activities. Presented below is a summary of Dominion Energy’s credit exposure at June 30, 2023 for these activities. Gross credit exposure for each counterparty is calculated as outstanding receivables plus any unrealized on- or off-balance sheet exposure, taking into account contractual netting rights.
Gross CreditExposure
CreditCollateral
Net CreditExposure
Investment grade(1)
Non-investment grade(2)
No external ratings:
Internally rated—investment grade(3)
Internally rated—non-investment grade(4)
Total(5)
Fuel and Other Purchase Commitments
There have been no material changes outside of the ordinary course of business to Dominion Energy’s fuel and other purchase commitments included in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Other Material Cash Requirements
As of June 30, 2023, there have been no material changes outside of the ordinary course of business to Dominion Energy’s other material cash requirements included in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. Such obligations include:
Future Issues and Other Matters
See Item 1. Business, Future Issues and Other Matters in MD&A and Notes 13 and 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 and Notes 13 and 17 to the Consolidated Financial Statements in this report for additional information on various environmental, regulatory, legal and other matters that may impact future results of operations, financial condition and/or cash flows.
Business Review
In November 2022, Dominion Energy announced the commencement of a business review of value-maximizing strategic business actions, alternatives to its current business mix and capital allocation and regulatory options which may assist customers to manage costs and provide greater predictability to its long-term, state-regulated utility value proposition. In April 2023, the legislative process in Virginia was substantially completed resulting in new legislation which will shift $350 million of annual revenue requirement for costs currently recovered through riders into base rates effective July 2023, eliminate the ability of Virginia Power to utilize CCROs and adjust the parameters for determining an authorized ROE and revenue sharing. In addition, new legislation allows Virginia Power to apply for the securitization of certain deferred fuel costs as well as seek approval for a noncontrolling equity financing partner for the CVOW Commercial Project. In July 2023, Dominion Energy entered an agreement to sell its 50% noncontrolling limited partner interest in Cove Point to BHE as discussed in Note 10 to the Consolidated Financial Statements in this report. As part of the on-going business review, Dominion Energy may consider additional divestiture of all or a portion of certain operations. While the ultimate impacts cannot be estimated until the review is completed, which is expected to occur in the third quarter of 2023, implementation of recommendations resulting from the business review could have a material impact on Dominion Energy's future results of operations, financial condition and/or cash flows.
Virginia Legislation
The 2023 General Assembly session in Virginia included several proposals, including those ultimately enacted into law, related to Virginia Power’s retail base rates and other cost recovery mechanisms. In April 2023, legislation was enacted that amended several key provisions of the Regulation Act, as previously amended by the GTSA. The new legislation will shift $350 million of annual revenue requirement for costs currently recovered under riders into base rates effective July 2023, eliminate the ability of Virginia Power to utilize CCROs and adjust the parameters for determining an authorized ROE and revenue sharing. In addition, this legislation reestablishes biennial base rate reviews, sets a target capitalization ratio and permits Virginia Power to apply for the securitization of certain deferred fuel costs. See Note 13 to the Consolidated Financial Statements for additional information. In March 2023, legislation was enacted that permits Virginia Power to seek approval for a noncontrolling equity financing partner for the CVOW Commercial Project. In addition, in May 2023 legislation was enacted that amended certain portions of the VCEA, which qualifies generation produced by Virginia Power’s biomass electric generating stations as renewable energy and eliminates the
mandated retirement by the end of 2028 of such facilities. While Dominion Energy is unable to estimate the ultimate financial statement impacts related to the newly enacted legislation, it expects there could be a material impact to its results of operations, financial condition and/or cash flows.
Future Environmental Regulations
In March 2023, the EPA released a proposed rule to further revise the Effluent Limitations Guidelines for the Steam Electric Power Generating Category, which apply primarily to wastewater discharges at coal and oil steam generating stations. Also in March 2023, the EPA released its first proposed rule to establish national drinking water standards for PFAS. Dominion Energy anticipates that the EPA will release additional rulemakings as part of an overall strategy to identify and mitigate PFAS exposure. In April 2023, the EPA released a proposal to tighten aspects of the Mercury and Air Toxics Standards, including the reduction of emissions limits for filterable particulate matter, and requiring the use of continuous emissions monitoring systems to demonstrate compliance. In May 2023, the EPA proposed a package of rules designed to reduce CO2 emissions from certain fossil fuel-fired electric generating units. The proposal sets standards of performance and emission guidelines for CO2 emissions from new gas-fired combustion turbines and modified coal-fired steam generating units. The proposed rulemaking package also proposes emission guidelines, including presumptive emission limits, for existing coal, oil and gas-fired steam generating units and certain gas-fired combustion turbines. Also in May 2023, the EPA released a proposed rule to regulate inactive surface impoundments located at retired generating stations that contained CCR and liquids after October 2015, and certain other inactive or previously closed surface impoundments, landfills or other areas that contain accumulations of CCR. Until the EPA ultimately takes final action on these rulemakings, Dominion Energy is unable to predict whether or to what extent the new rules will ultimately require additional controls. The expenditures required to implement additional controls could have a material impact on Dominion Energy’s financial condition and cash flows.
Federal Income Tax Laws
In April 2023, the IRS issued safe harbor guidance to taxpayers on the treatment of amounts paid to repair, maintain, replace, or improve natural gas distribution property, including whether expenditures should be deducted as repairs or capitalized and depreciated on tax returns. The guidance includes safe harbor tax accounting methods which a taxpayer may choose to elect and provides special transition rules and incentives that vary depending on which tax year is the year of change. Dominion Energy is evaluating this new guidance and cannot currently estimate the potential financial statement impacts, but there could be a material impact to its results of operations, financial condition and/or cash flows.
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.
In July 2023, the U.S. Court of Appeals for the District of Columbia Circuit vacated certain of FERC’s previous orders authorizing the SEEM market, including the tariff amendments to provide transmission service for transactions in SEEM. Dominion Energy is evaluating this ruling and currently cannot estimate the potential financial statement impacts.
ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The matters discussed in this Item may contain “forward-looking statements” as described in the introductory paragraphs under Part I., Item 2. MD&A in this report. The reader’s attention is directed to those paragraphs for discussion of various risks and uncertainties that may impact the Companies.
Market Risk Sensitive Instruments and Risk Management
The Companies’ financial instruments, commodity contracts and related financial derivative instruments are exposed to potential losses due to adverse changes in commodity prices, interest rates, foreign currency exchange rates and equity securities prices as described below. Commodity price risk is present in the Companies’ electric operations and Dominion Energy’s natural gas procurement and marketing operations due to the exposure to market shifts in prices received and paid for electricity, natural gas and other commodities. The Companies use commodity derivative contracts to manage price risk exposures for these operations. Interest rate risk is generally related to their outstanding debt and future issuances of debt. In addition, the Companies are exposed to investment price risk through various portfolios of equity and debt securities. The Companies’ exposure to foreign currency exchange rate risk is related to certain fixed price contracts associated with the CVOW Commercial Project which it manages through foreign currency exchange rate derivatives. The contracts include services denominated in currencies other than the U.S. dollar for approximately €2.6 billion and 5.1 billion kr. In addition, certain of the fixed price contracts, approximately €0.7 billion, contain commodity indexing provisions linked to steel.
The following sensitivity analysis estimates the potential loss of future earnings or fair value from market risk sensitive instruments over a selected time period due to a 10% change in commodity prices, interest rates or foreign currency exchange rates.
Commodity Price Risk
To manage price risk, the Companies hold commodity-based derivative instruments held for non-trading purposes associated with purchases and sales of electricity, natural gas and other energy-related products.
The derivatives used to manage commodity price risk are executed within established policies and procedures and may include instruments such as futures, forwards, swaps, options and FTRs that are sensitive to changes in the related commodity prices. For sensitivity analysis purposes, the hypothetical change in market prices of commodity-based derivative instruments is determined based on models that consider the market prices of commodities in future periods, the volatility of the market prices in each period, as well as the time value factors of the derivative instruments. Prices and volatility are principally determined based on observable market prices.
A hypothetical 10% increase in commodity prices would have resulted in a decrease of $98 million and $52 million in the fair value of Dominion Energy’s commodity-based derivative instruments as of June 30, 2023 and December 31, 2022, respectively.
A hypothetical 10% increase in commodity prices would have resulted in a decrease of $45 million and $25 million in the fair value of Virginia Power’s commodity-based derivative instruments as of June 30, 2023 and December 31, 2022, respectively.
The impact of a change in energy commodity prices on the Companies' commodity-based derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net losses from commodity-based financial derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction, such as revenue from physical sales of the commodity.
Interest Rate Risk
The Companies manage their interest rate risk exposure predominantly by maintaining a balance of fixed and variable rate debt. For variable rate debt outstanding for Dominion Energy, a hypothetical 10% increase in market interest rates would result in a $64 million and $37 million decrease in earnings at June 30, 2023 and December 31, 2022, respectively. For variable rate debt outstanding for Virginia Power, a hypothetical 10% increase in market interest rates would result in a $20 million and $14 million decrease in earnings at June 30, 2023 or December 31, 2022, respectively.
The Companies also use interest rate derivatives, including forward-starting swaps, interest rate swaps and interest rate lock agreements to manage interest rate risk. As of June 30, 2023, Dominion Energy and Virginia Power had $12.3 billion and $2.9 billion, respectively, in aggregate notional amounts of these interest rate derivatives outstanding. A hypothetical 10% decrease in market interest rates would have resulted in a decrease of $253 million and $121 million, respectively, in the fair value of Dominion Energy and Virginia Power’s interest rate derivatives at June 30, 2023. As of December 31, 2022, Dominion Energy and Virginia Power had $12.7 billion and $3.6 billion, respectively, in aggregate notional amounts of these interest rate derivatives outstanding. A hypothetical
10% decrease in market interest rates would have resulted in a decrease of $274 million and $156 million, respectively, in the fair value of Dominion Energy and Virginia Power’s interest rate derivatives at December 31, 2022.
The impact of a change in interest rates on the Companies’ interest rate-based financial derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net gains and/or losses from interest rate derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction.
Foreign Currency Exchange Rate Risk
The Companies utilize foreign currency swaps to economically hedge the foreign currency exchange risk associated with fixed price contracts related to the CVOW Commercial Project denominated in foreign currencies. As of June 30, 2023 and December 31, 2022, Dominion Energy had €2.6 billion and €2.9 billion, respectively, in aggregate notional amounts of these foreign currency forward purchase agreements outstanding. A hypothetical 10% increase in exchange rates would have resulted in a decrease of $251 million and $284 million in the fair value of Dominion Energy’s foreign currency swaps at June 30, 2023 and December 31, 2022, respectively.
The impact of a change in exchange rates on the Companies’ foreign currency-based financial derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net gains and/or losses from foreign exchange derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction.
Investment Price Risk
The Companies are subject to investment price risk due to securities held as investments in nuclear decommissioning and rabbi trust funds that are managed by third-party investment managers. These trust funds primarily hold marketable securities that are reported in the Companies’ Consolidated Balance Sheets at fair value.
Dominion Energy recognized net investment gains (including investment income) on nuclear decommissioning and rabbi trust investments of $562 million for the six months ended June 30, 2023, and net investment losses (including investment income) on nuclear decommissioning and rabbi trust investments of $981 million and $888 million for the six months ended June 30, 2022 and the year ended December 31, 2022, respectively. Net realized gains and losses include gains and losses from the sale of investments as well as any other-than-temporary declines in fair value. Dominion Energy recorded in AOCI and regulatory liabilities, a net increase in unrealized gains on debt investments of $39 million for the six months ended June 30, 2023, and a net decrease in unrealized gains on debt investments of $191 million and $196 million for six months ended June 30, 2022 and the year ended December 31, 2022, respectively.
Virginia Power recognized net investment gains (including investment income) on nuclear decommissioning trust investments of $283 million for the six months ended June 30, 2023, and net investment losses (including investment income) on nuclear decommissioning trust investments of $468 million and $426 million for the six months ended June 30, 2022 and the year ended December 31, 2022, respectively. Net realized gains and losses include gains and losses from the sale of investments as well as any other-than-temporary declines in fair value. Virginia Power recorded in AOCI and regulatory liabilities, a net increase in unrealized gains on debt investments of $24 million for the six months ended June 30, 2023, and a net decrease in unrealized gains on debt investments of $106 million for both the six months ended June 30, 2022 and the year ended December 31, 2022, respectively.
Dominion Energy sponsors pension and other postretirement employee benefit plans that hold investments in trusts to fund employee benefit payments. Virginia Power employees participate in these plans. Differences between actual and expected returns on plan assets are accumulated and amortized during future periods. As such, any investment-related declines in these trusts will result in future increases in the net periodic cost recognized for employee benefit plans and will be included in the determination of the amount of cash to be contributed to the employee benefit plans.
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.
In the second quarter of 2023, Virginia Power transitioned to a new customer engagement and billing system. Throughout this system implementation, Dominion Energy and Virginia Power appropriately considered internal controls over financial reporting.
Other than with respect to this item, 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:
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. 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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Purchases of Equity Securities
Period
Total Number ofShares (or Units)Purchased(1)
AveragePrice Paidper 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)
4/1/23 - 4/30/23
$ 0.92 billion
5/1/23 - 5/31/23
63.10
0.92 billion
6/1/23 - 6/30/23
1,366
49.02
1,672
51.60
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.
ITEM 6. EXHIBITS
Exhibit
Description
3.1.a
Dominion Energy, Inc. Amended and Restated Articles of Incorporation, dated as of September 2, 2022 (Exhibit 3.1, Form 8-K filed September 2, 2022, File No.1-8489).
3.1.b
Virginia Electric and Power Company Amended and Restated Articles of Incorporation, as in effect on October 30, 2014 (Exhibit 3.1.b, Form 10-Q filed November 3, 2014, File No. 1-2255).
3.2.a
Dominion Energy, Inc. Bylaws, as amended and restated, effective May 10, 2023 (Exhibit 3.1, Form 8-K filed May 11, 2023, File No. 1-8489).
3.2.b
Virginia Electric and Power Company Amended and Restated Bylaws, effective June 1, 2009 (Exhibit 3.1, Form 8-K filed June 3, 2009, File No. 1-2255).
Dominion Energy, Inc. and Virginia Electric and Power Company agree to furnish to the Securities and Exchange Commission upon request any other instrument with respect to long-term debt as to which the total amount of securities authorized does not exceed 10% of any of their total consolidated assets.
10.1
Dominion Energy, Inc. Deferred Compensation Plan, effective July 1, 2021 (Exhibit 10.18, Form 10-K for the fiscal year ended December 31, 2020, filed February 25, 2021, File No. 1-8489), as amended September 23, 2021 (Exhibit 10.1, Form 10-Q filed November 5, 2021, File No. 1-8489), as amended May 10, 2023 (filed herewith).
31.a
Certification by Chief Executive Officer of Dominion Energy, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.b
Certification by Chief Financial Officer of Dominion Energy, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
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).
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).
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).
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).
Condensed consolidated earnings statements (filed herewith).
The following financial statements from Dominion Energy, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed on August 4, 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 June 30, 2023, filed on August 4, 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.
Cover Page Interactive Data File formatted in iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101.
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.
August 4, 2023
/s/ Michele L. Cardiff
Michele L. Cardiff
Senior Vice President, Controller and
Chief Accounting Officer