D 10-Q Quarterly Report Sept. 30, 2022 | Alphaminr
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D 10-Q Quarter ended Sept. 30, 2022

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DOMINION ENERGY, INC
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d-10q_20220930.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark one)

 

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2022

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) 819-2000

 

 

 

State or other jurisdiction of incorporation or organization of the registrants: Virginia

 

Securities registered pursuant to Section 12(b) of the Act:

 

Registrant

Trading Symbol

Title of Each Class

Name of Each Exchange

on Which Registered

DOMINION ENERGY, INC.

D

Common Stock, no par value

New York Stock Exchange

 

 

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Dominion Energy, Inc.    Yes  ☒    No  ☐             Virginia Electric and Power Company    Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Dominion Energy, Inc.    Yes  ☒    No  ☐             Virginia Electric and Power Company    Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Dominion Energy, Inc.

 

Large accelerated filer

☒

 

Accelerated filer

☐

Emerging growth company

☐

Non-accelerated filer

☐

 

Smaller reporting company

☐

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Virginia Electric and Power Company

 

Large accelerated filer

☐

 

Accelerated filer

☐

Emerging growth company

☐

Non-accelerated filer

☒

 

Smaller reporting company

☐

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Dominion Energy, Inc.    Yes  ☐    No  ☒             Virginia Electric and Power Company    Yes  ☐    No  ☒

At October 28, 2022, the latest practicable date for determination, Dominion Energy, Inc. had 833,275,205 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

Number

 

Glossary of Terms

3

 

 

 

 

PART I. Financial Information

 

 

 

 

Item 1.

Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

77

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

96

Item 4.

Controls and Procedures

97

 

 

 

 

PART II. Other Information

 

 

 

 

Item 1.

Legal Proceedings

98

Item 1A.

Risk Factors

98

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

98

Item 6.

Exhibits

99

 

 

 

 

 

 

2

 

GLOSSARY OF TERMS

The following abbreviations or acronyms used in this Form 10-Q are defined below:

 

Abbreviation or Acronym

 

Definition

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

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

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

ACE Rule

 

Affordable Clean Energy Rule

AFUDC

 

Allowance for funds used during construction

Align RNG

 

Align RNG, LLC, a joint venture between Dominion Energy and Smithfield Foods, Inc.

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 Dominion Energy Gas, Dominion Energy Midstream and Cove Point effective November 1, 2020), or the entirety of Berkshire Hathaway Energy Company and its consolidated subsidiaries

Brunswick County

 

A 1,376 MW combined-cycle, natural gas-fired power station in Brunswick County, Virginia

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

Clearway

 

The legal entity, Clearway Energy, Inc. (a subsidiary of Global Infrastructure Partners), one or more of its consolidated subsidiaries, or the entirety of Clearway Energy, Inc. and its consolidated subsidiaries

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

3

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

DCP

 

The legal entity, CPMLP Holding Company, LLC (formerly known as Dominion Cove Point, LLC), one or more of its consolidated subsidiaries (including Dominion Energy Midstream), or the entirety of CPMLP Holding Company, LLC and its consolidated subsidiaries

DECGS

 

Carolina Gas Services, Inc. (formerly known as Dominion Energy Carolina Gas Services, Inc.)

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

DETI

 

Eastern Gas Transmission and Storage, Inc. (formerly known as Dominion Energy Transmission, Inc.)

DGI

 

Dominion Generation, Inc.

DGP

 

Eastern Gathering and Processing, Inc. (formerly known as Dominion Gathering and Processing, Inc.)

DMLPHCII

 

Eastern MLP Holding Company II, LLC (formerly known as Dominion MLP Holding Company II, LLC)

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 Gas

 

The legal entity, Eastern Energy Gas Holdings, LLC (formerly known as Dominion Energy Gas Holdings, LLC), one or more of its consolidated subsidiaries (consisting of DETI, DCP, DMLPHCII and Dominion Iroquois), or the entirety of Eastern Energy Gas Holdings, LLC and its consolidated subsidiaries

Dominion Energy Midstream

 

The legal entity, Northeast Midstream Partners, LP (formerly known as Dominion Energy Midstream Partners, LP), one or more of its consolidated subsidiaries, or the entirety of Northeast Midstream Partners, LP and its consolidated subsidiaries

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), 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 Iroquois

 

The legal entity Iroquois Inc. (formerly known as Dominion Iroquois Inc.), one or more of its consolidated subsidiaries, or the entirety of Iroquois, Inc. and its consolidated subsidiaries, which held a 50% noncontrolling interest in Iroquois

Dominion Privatization

 

Dominion Utility Privatization, LLC, a partnership between Dominion Energy and Patriot

DSM

 

Demand-side management

DSM Riders

 

Rate adjustment clauses, designated Riders C1A, C2A, C3A and C4A, associated with the recovery of costs related to certain Virginia DSM programs in approved DSM cases

4

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

Four Brothers

 

Four Brothers Solar, LLC, a limited liability company owned by Dominion Energy (through December 2021) and Four Brothers Holdings, LLC, a subsidiary of Clearway

FTRs

 

Financial transmission rights

GAAP

 

U.S. generally accepted accounting principles

Gas Distribution

 

Gas Distribution operating segment

GHG

 

Greenhouse gas

Granite Mountain

 

Granite Mountain Holdings, LLC, a limited liability company owned by Dominion Energy (through December 2021) and Granite Mountain Renewables, LLC, a subsidiary of Clearway

GT&S Transaction

 

The sale by Dominion Energy to BHE of Dominion Energy Gas, DGP, DECGS, Eastern Energy Field Services, Inc. (formerly known as Dominion Energy Field Services, Inc.) and Modular LNG Holdings, Inc. (formerly known as Dominion Modular LNG Holdings, Inc.) (which holds a 50% noncontrolling interest in JAX LNG) pursuant to a purchase and sale agreement entered into on July 3, 2020, which was completed on November 1, 2020

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

IRA

 

An Act to Provide for Reconciliation Pursuant to Title II of Senate Concurrent Resolution 14 of the 117th Congress (also known as the Inflation Reduction Act of 2022) enacted on August 16, 2022

Iron Springs

 

Iron Springs Holdings, LLC, a limited liability company owned by Dominion Energy (through December 2021) and Iron Springs Renewables, LLC, a subsidiary of Clearway

ISO

 

Independent system operator

JAX LNG

 

JAX LNG, LLC, an LNG supplier in Florida serving the marine and LNG markets

Jones Act

 

The Coastwise Merchandise Statute (commonly known as the Jones Act) 46 U.S.C. §55102 regulating U.S. maritime commerce

Kewaunee

 

Kewaunee nuclear power station

kV

 

Kilovolt

LNG

 

Liquefied natural gas

MD&A

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

MGD

 

Million gallons per day

Millstone

 

Millstone nuclear power station

MW

 

Megawatt

MWh

 

Megawatt hour

5

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

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

Patriot

 

Patriot Utility Privatizations, LLC, a partnership between Foundation Infrastructure Partners, LLC and John Hancock Life Insurance Company (U.S.A.) and affiliates

PIPP

 

Percentage of Income Payment Plan deployed by East Ohio

PIR

 

Pipeline Infrastructure Replacement program deployed by East Ohio

PJM

 

PJM Interconnection, LLC

PSD

 

Prevention of significant deterioration

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))

Q-Pipe Transaction

 

A previously proposed sale by Dominion Energy to Berkshire Hathaway Energy Company of the Q-Pipe Group pursuant to a purchase and sale agreement entered into on October 5, 2020 and terminated on July 9, 2021

Questar Gas

 

Questar Gas Company, doing business as Dominion Energy Utah, Dominion Energy Wyoming and Dominion Energy Idaho

RGGI

 

Regional Greenhouse Gas Initiative

Rider B

 

A rate adjustment clause associated with the recovery of costs related to the conversion of three of Virginia Power’s coal-fired power stations to biomass

Rider BW

 

A rate adjustment clause associated with the recovery of costs related to Brunswick County

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 certain uncollectible expenses as well as losses on negotiated gas and transportation sales

Rider E

 

A rate adjustment clause associated with the recovery of costs related to certain capital projects at Virginia Power’s electric generating stations to comply with federal and state environmental laws and regulations

Rider GT

 

A rate adjustment clause associated with the recovery of costs associated with electric distribution grid transformation projects that the Virginia Commission has approved as authorized by the GTSA

Rider OSW

 

A rate adjustment clause associated with costs incurred to construct, own and operate the CVOW Commercial Project

Rider R

 

A rate adjustment clause associated with the recovery of costs related to Bear Garden

6

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 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-2

 

A rate adjustment clause associated with the recovery of costs related to Woodland Solar, Scott Solar and Whitehouse Solar

Rider US-3

 

A rate adjustment clause associated with the recovery of costs related to Colonial Trail West and Spring Grove 1

Rider US-4

 

A rate adjustment clause associated with the recovery of costs related to Sadler Solar

Rider W

 

A rate adjustment clause associated with the recovery of costs related to Warren County

ROE

 

Return on equity

RTO

 

Regional transmission organization

Sadler Solar

 

A 100 MW utility-scale solar power station located in Greensville County, Virginia, also referred to as Dry Bread

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

Scott Solar

 

A 17 MW utility-scale solar power station in Powhatan County, Virginia

SEC

 

U.S. Securities and Exchange Commission

Series A Preferred Stock

 

Dominion Energy’s Series A Cumulative Perpetual Convertible Preferred Stock, without par value, with a liquidation preference of $1,000 per share (previously designated the 1.75% Series A Cumulative Perpetual Convertible Preferred Stock)

Series B Preferred Stock

 

Dominion Energy’s 4.65% Series B Fixed-Rate Cumulative Redeemable Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000 per share

Series C Preferred Stock

 

Dominion Energy’s 4.35% Series C Fixed-Rate Cumulative Redeemable Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000 per share

South Carolina Commission

 

Public Service Commission of South Carolina

Southwest Gas

 

The legal entity, Southwest Gas Holdings, Inc., one or more of its consolidated subsidiaries, or the entirety of Southwest Gas Holdings, Inc. and its consolidated subsidiaries

Spring Grove 1

 

A 98 MW utility-scale solar power station located in Surry County, Virginia

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

7

Terra Nova Renewable Partners

 

The legal entity, Terra Nova Renewable Partners, LLC, a partnership comprised primarily of institutional investors advised by J.P. Morgan Asset Management-Global Real Assets, or one or more of its consolidated subsidiaries

Three Cedars

 

Granite Mountain and Iron Springs, collectively

UEX

 

Uncollectible Expense Rider deployed by East Ohio

Ullico

 

The legal entity, Ullico Inc., one or more of its consolidated subsidiaries, or the entirety of Ullico Inc. and its consolidated subsidiaries

Utah Commission

 

Utah Public Service Commission

VCEA

 

Virginia Clean Economy Act of March 2020

VEBA

 

Voluntary Employees’ Beneficiary Association

VIE

 

Variable interest entity

Virginia Commission

 

Virginia State Corporation Commission

Virginia Facilities

 

Proposed electric interconnection and transmission facilities in and around Virginia Beach, Virginia, comprising transmission facilities required to interconnect the CVOW Commercial Project reliably with the existing transmission system; including 3 miles of 230 kV offshore export circuits, 4 miles of underground 230 kV onshore export circuits, a new Harpers switching station, 14 miles of three new overhead 230 kV transmission circuits between a new Harpers switching station and the Fentress substation, rebuild eight miles of two existing 230 kV overhead lines and an expansion of the Fentress substation

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

West Virginia Commission

 

Public Service Commission of West Virginia

Wexpro

 

The legal entity, Wexpro Company, one or more of its consolidated subsidiaries, or the entirety of Wexpro Company and its consolidated subsidiaries

Whitehouse Solar

 

A 20 MW utility-scale solar power station in Louisa County, Virginia

White River Hub

 

MountainWest White River Hub, LLC (formerly known as White River Hub, LLC)

Wisconsin Commission

 

Public Service Commission of Wisconsin

Woodland Solar

 

A 19 MW utility-scale solar power station in Isle of Wight County, Virginia

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.

 

8

 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue

 

$

4,386

 

 

$

3,176

 

 

$

12,261

 

 

$

10,084

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electric fuel and other energy-related purchases

 

 

1,217

 

 

 

703

 

 

 

2,625

 

 

 

1,740

 

Purchased electric capacity

 

 

16

 

 

 

26

 

 

 

45

 

 

 

62

 

Purchased gas

 

 

138

 

 

 

60

 

 

 

985

 

 

 

665

 

Other operations and maintenance

 

 

991

 

 

 

927

 

 

 

3,030

 

 

 

2,808

 

Depreciation, depletion and amortization

 

 

727

 

 

 

621

 

 

 

2,120

 

 

 

1,833

 

Other taxes

 

 

231

 

 

 

223

 

 

 

719

 

 

 

702

 

Impairment of assets and other charges (benefits)

 

 

21

 

 

 

(222

)

 

 

426

 

 

 

194

 

Losses (gains) on sales of assets

 

 

(27

)

 

 

(3

)

 

 

581

 

 

 

(2

)

Total operating expenses

 

 

3,314

 

 

 

2,335

 

 

 

10,531

 

 

 

8,002

 

Income from operations

 

 

1,072

 

 

 

841

 

 

 

1,730

 

 

 

2,082

 

Earnings from equity method investees

 

 

92

 

 

 

69

 

 

 

255

 

 

 

214

 

Other income (expense)

 

 

70

 

 

 

133

 

 

 

(171

)

 

 

732

 

Interest and related charges

 

 

329

 

 

 

407

 

 

 

550

 

 

 

978

 

Income from continuing operations including noncontrolling

     interests before income tax expense

 

 

905

 

 

 

636

 

 

 

1,264

 

 

 

2,050

 

Income tax expense

 

 

124

 

 

 

35

 

 

 

243

 

 

 

200

 

Net Income From Continuing Operations

 

 

781

 

 

 

601

 

 

 

1,021

 

 

 

1,850

 

Net Income (Loss) From Discontinued Operations(1)

 

 

(3

)

 

 

65

 

 

 

15

 

 

 

119

 

Net Income Including Noncontrolling Interests

 

 

778

 

 

 

666

 

 

 

1,036

 

 

 

1,969

 

Noncontrolling Interests

 

 

—

 

 

 

12

 

 

 

—

 

 

 

22

 

Net Income Attributable to Dominion Energy

 

$

778

 

 

$

654

 

 

$

1,036

 

 

$

1,947

 

Amounts attributable to Dominion Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

$

781

 

 

$

589

 

 

$

1,021

 

 

$

1,828

 

Net income (loss) from discontinued operations

 

 

(3

)

 

 

65

 

 

 

15

 

 

 

119

 

Net income attributable to Dominion Energy

 

$

778

 

 

$

654

 

 

$

1,036

 

 

$

1,947

 

EPS - Basic

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

$

0.91

 

 

$

0.71

 

 

$

1.16

 

 

$

2.20

 

Net income (loss) from discontinued operations

 

 

—

 

 

 

0.08

 

 

 

0.02

 

 

 

0.15

 

Net income attributable to Dominion Energy

 

$

0.91

 

 

$

0.79

 

 

$

1.18

 

 

$

2.35

 

EPS - Diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

$

0.91

 

 

$

0.71

 

 

$

1.15

 

 

$

2.20

 

Net income (loss) from discontinued operations

 

 

—

 

 

 

0.08

 

 

 

0.02

 

 

 

0.15

 

Net income attributable to Dominion Energy

 

$

0.91

 

 

$

0.79

 

 

$

1.17

 

 

$

2.35

 

 

 

(1)

Includes income tax expense (benefit) of $(6) million for the three months ended September 30, 2021 and $4 million and $5 million for the nine months ended September 30, 2022 and 2021, respectively. There were no such amounts recorded during the three months ended September 30, 2022.

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

9

DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

$

778

 

 

$

666

 

 

$

1,036

 

 

$

1,969

 

Other comprehensive income (loss), net of taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net deferred gains (losses) on derivatives-hedging

    activities(1)

 

 

10

 

 

 

(2

)

 

 

64

 

 

 

21

 

Changes in unrealized net gains (losses) on investment

    securities(2)

 

 

(27

)

 

 

4

 

 

 

(116

)

 

 

(15

)

Changes in net unrecognized pension and other

    postretirement benefit costs(3)

 

 

—

 

 

 

(1

)

 

 

30

 

 

 

5

 

Amounts reclassified to net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net derivative (gains) losses-hedging activities(4)

 

 

12

 

 

 

10

 

 

 

33

 

 

 

35

 

Net realized (gains) losses on investment securities(5)

 

 

1

 

 

 

(3

)

 

 

13

 

 

 

(5

)

Net pension and other postretirement benefit costs(6)

 

 

26

 

 

 

19

 

 

 

59

 

 

 

63

 

Changes in other comprehensive income from equity

    method investees(7)

 

 

—

 

 

 

(3

)

 

 

1

 

 

 

(3

)

Total other comprehensive income

 

 

22

 

 

 

24

 

 

 

84

 

 

 

101

 

Comprehensive income including noncontrolling interests

 

 

800

 

 

 

690

 

 

 

1,120

 

 

 

2,070

 

Comprehensive income attributable to noncontrolling

    interests

 

 

—

 

 

 

12

 

 

 

—

 

 

 

22

 

Comprehensive income attributable to Dominion Energy

 

$

800

 

 

$

678

 

 

$

1,120

 

 

$

2,048

 

 

(1)

Net of $(4) million and $— million tax for the three months ended September 30, 2022 and 2021, respectively, and net of $(22) million and $(8) million tax for the nine months ended September 30, 2022 and 2021, respectively.

(2)

Net of $9 million and $— million tax for the three months ended September 30, 2022 and 2021, respectively, and net of $37 million and $8 million tax for the nine months ended September 30, 2022 and 2021, respectively.

(3)

Net of $— million and $(1) million tax for the three months ended September 30, 2022 and 2021, respectively, and net of $(8) million and $(8) million tax for the nine months ended September 30, 2022 and 2021, respectively.

(4)

Net of $(4) million and $(4) million tax for the three months ended September 30, 2022 and 2021, respectively, and net of $(11) million and $(12) million tax for the nine months ended September 30, 2022 and 2021, respectively.

(5)

Net of $(1) million and $1 million tax for the three months ended September 30, 2022 and 2021, respectively, and net of $(5) million and $2 million tax for the nine months ended September 30, 2022 and 2021, respectively.

(6)

Net of $(9) million and $(6) million tax for the three months ended September 30, 2022 and 2021, respectively, and net of $(21) million and $(22) million tax for the nine months ended September 30, 2022 and 2021, respectively.

(7)

Net of $— million and $1 million tax for the three months ended September 30, 2022 and 2021, respectively, and net of $— million and $1 million tax for the nine months ended September 30, 2022 and 2021, respectively.

 

 

 

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

 

10

 

DOMINION ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

September 30, 2022

 

 

December 31, 2021(1)

 

(millions)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

163

 

 

$

283

 

Customer receivables (less allowance for doubtful accounts of $38 and $40)

 

 

2,170

 

 

 

2,219

 

Other receivables (less allowance for doubtful accounts of $4 at both dates)

 

 

275

 

 

 

349

 

Inventories

 

 

1,766

 

 

 

1,631

 

Derivative assets

 

 

670

 

 

 

122

 

Margin deposit assets

 

 

829

 

 

 

678

 

Regulatory assets

 

 

2,064

 

 

 

1,492

 

Other

 

 

640

 

 

 

470

 

Current assets held for sale

 

 

122

 

 

 

25

 

Total current assets

 

 

8,699

 

 

 

7,269

 

Investments

 

 

 

 

 

 

 

 

Nuclear decommissioning trust funds

 

 

5,590

 

 

 

7,950

 

Investment in equity method affiliates

 

 

2,940

 

 

 

2,932

 

Other

 

 

384

 

 

 

394

 

Total investments

 

 

8,914

 

 

 

11,276

 

Property, Plant and Equipment

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

90,785

 

 

 

86,503

 

Accumulated depreciation, depletion and amortization

 

 

(27,891

)

 

 

(26,729

)

Total property, plant and equipment, net

 

 

62,894

 

 

 

59,774

 

Deferred Charges and Other Assets

 

 

 

 

 

 

 

 

Goodwill

 

 

7,295

 

 

 

7,405

 

Derivative assets

 

 

1,799

 

 

 

491

 

Regulatory assets

 

 

8,961

 

 

 

8,643

 

Other

 

 

4,973

 

 

 

4,732

 

Total deferred charges and other assets

 

 

23,028

 

 

 

21,271

 

Total assets

 

$

103,535

 

 

$

99,590

 

 

(1)

Dominion Energy’s Consolidated Balance Sheet at December 31, 2021 has been derived from the audited Consolidated Balance Sheet at that date.

 

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

11

DOMINION ENERGY, INC.

CONSOLIDATED BALANCE SHEETS—(Continued)

(Unaudited)

 

 

 

September 30, 2022

 

 

December 31, 2021(1)

 

(millions)

 

 

 

 

 

 

 

 

LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Securities due within one year

 

$

2,889

 

 

$

841

 

Short-term debt

 

 

2,943

 

 

 

2,314

 

Accounts payable

 

 

1,105

 

 

 

1,197

 

Accrued interest, payroll and taxes

 

 

1,186

 

 

 

1,169

 

Derivative liabilities

 

 

1,179

 

 

 

359

 

Regulatory liabilities

 

 

1,019

 

 

 

986

 

Other(2)

 

 

1,851

 

 

 

1,807

 

Total current liabilities

 

 

12,172

 

 

 

8,673

 

Long-Term Debt

 

 

 

 

 

 

 

 

Long-term debt

 

 

35,634

 

 

 

35,190

 

Junior subordinated notes

 

 

1,387

 

 

 

1,386

 

Supplemental credit facility borrowings

 

 

450

 

 

 

—

 

Other

 

 

691

 

 

 

850

 

Total long-term debt

 

 

38,162

 

 

 

37,426

 

Deferred Credits and Other Liabilities

 

 

 

 

 

 

 

 

Deferred income taxes and investment tax credits

 

 

7,003

 

 

 

6,658

 

Derivative liabilities

 

 

1,192

 

 

 

509

 

Regulatory liabilities

 

 

10,042

 

 

 

10,713

 

Other

 

 

6,391

 

 

 

6,693

 

Total deferred credits and other liabilities

 

 

24,628

 

 

 

24,573

 

Total liabilities

 

 

74,962

 

 

 

70,672

 

Commitments and Contingencies (see Note 17)

 

 

 

 

 

 

 

 

Mezzanine Equity

 

 

 

 

 

 

 

 

Preferred stock (see Note 16)

 

 

—

 

 

 

1,610

 

Shareholders' Equity

 

 

 

 

 

 

 

 

Preferred stock (see Note 16)

 

 

1,783

 

 

 

1,783

 

Common stock – no par(3)

 

 

23,480

 

 

 

21,610

 

Retained earnings

 

 

4,684

 

 

 

5,373

 

Accumulated other comprehensive loss

 

 

(1,374

)

 

 

(1,458

)

Shareholders' equity

 

 

28,573

 

 

 

27,308

 

Total liabilities, mezzanine equity and shareholders' equity

 

$

103,535

 

 

$

99,590

 

 

(1)

Dominion Energy’s Consolidated Balance Sheet at December 31, 2021 has been derived from the audited Consolidated Balance Sheet at that date.

(2)

See Note 10 for amounts attributable to related parties.

(3)

1.8 billion shares authorized; 833 million and 810 million shares outstanding at September 30, 2022 and December 31, 2021, respectively.

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.


12

 

DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

 

QUARTER-TO-DATE

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Dominion Energy Shareholders

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Retained Earnings

 

 

AOCI

 

 

Shareholders'

Equity

 

 

Noncontrolling

Interests

 

 

Total

Equity

 

(millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

 

2

 

 

$

2,387

 

 

 

807

 

 

$

21,369

 

 

$

4,434

 

 

$

(1,640

)

 

$

26,550

 

 

$

334

 

 

$

26,884

 

Net income including

     noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

654

 

 

 

 

 

 

 

654

 

 

 

12

 

 

 

666

 

Issuance of stock

 

 

 

 

 

 

 

 

 

 

3

 

 

 

195

 

 

 

 

 

 

 

 

 

 

 

195

 

 

 

 

 

 

 

195

 

Stock awards (net of change in

     unearned compensation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

9

 

Preferred stock dividends (see

     Note 16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16

)

 

 

 

 

 

 

(16

)

 

 

 

 

 

 

(16

)

Common stock dividends ($0.630 per

     share) and distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(510

)

 

 

 

 

 

 

(510

)

 

 

(19

)

 

 

(529

)

Other comprehensive income, net of

     tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24

 

 

 

24

 

 

 

 

 

 

 

24

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

—

 

 

$

(1

)

 

 

(1

)

September 30, 2021

 

 

2

 

 

$

2,387

 

 

 

810

 

 

$

21,573

 

 

$

4,562

 

 

$

(1,616

)

 

$

26,906

 

 

$

326

 

 

$

27,232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2022

 

 

2

 

 

$

1,783

 

 

 

832

 

 

$

23,427

 

 

$

4,483

 

 

$

(1,396

)

 

$

28,297

 

 

$

—

 

 

$

28,297

 

Net income including

     noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

778

 

 

 

 

 

 

 

778

 

 

 

 

 

 

 

778

 

Issuance of stock

 

 

 

 

 

 

 

 

 

 

1

 

 

 

44

 

 

 

 

 

 

 

 

 

 

 

44

 

 

 

 

 

 

 

44

 

Stock awards (net of change in

     unearned compensation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

9

 

Preferred stock dividends (see

     Note 16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(20

)

 

 

 

 

 

 

(20

)

 

 

 

 

 

 

(20

)

Common stock dividends ($0.6675 per

     share) and distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(557

)

 

 

 

 

 

 

(557

)

 

 

 

 

 

 

(557

)

Other comprehensive income, net of

     tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22

 

 

 

22

 

 

 

 

 

 

 

22

 

September 30, 2022

 

 

2

 

 

$

1,783

 

 

 

833

 

 

$

23,480

 

 

$

4,684

 

 

$

(1,374

)

 

$

28,573

 

 

$

—

 

 

$

28,573

 

 

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

 

13

 

DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

 

YEAR-TO-DATE

 

 

 

 

Preferred Stock

 

 

Common Stock

 

 

Dominion Energy Shareholders

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Retained Earnings

 

 

AOCI

 

 

Shareholders'

Equity

 

 

Noncontrolling

Interests

 

 

Total

Equity

 

(millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

2

 

 

$

2,387

 

 

 

806

 

 

$

21,258

 

 

$

4,189

 

 

$

(1,717

)

 

$

26,117

 

 

$

344

 

 

$

26,461

 

Net income including noncontrolling

     interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,947

 

 

 

 

 

 

 

1,947

 

 

 

22

 

 

 

1,969

 

Issuance of stock

 

 

 

 

 

 

 

 

 

 

4

 

 

 

292

 

 

 

 

 

 

 

 

 

 

 

292

 

 

 

 

 

 

 

292

 

Stock awards (net of change in

     unearned compensation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24

 

 

 

 

 

 

 

 

 

 

 

24

 

 

 

 

 

 

 

24

 

Preferred stock dividends (see Note 16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(48

)

 

 

 

 

 

 

(48

)

 

 

 

 

 

 

(48

)

Common stock dividends ($1.890 per

     common share) and distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,526

)

 

 

 

 

 

 

(1,526

)

 

 

(40

)

 

 

(1,566

)

Other comprehensive income, net of

     tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

101

 

 

 

101

 

 

 

 

 

 

 

101

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

(1

)

September 30, 2021

 

 

2

 

 

$

2,387

 

 

 

810

 

 

$

21,573

 

 

$

4,562

 

 

$

(1,616

)

 

$

26,906

 

 

$

326

 

 

$

27,232

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

2

 

 

$

1,783

 

 

 

810

 

 

$

21,610

 

 

$

5,373

 

 

$

(1,458

)

 

$

27,308

 

 

$

—

 

 

$

27,308

 

Net income including noncontrolling

     interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,036

 

 

 

 

 

 

 

1,036

 

 

 

 

 

 

 

1,036

 

Issuance of stock

 

 

 

 

 

 

 

 

 

 

23

 

 

 

1,847

 

 

 

 

 

 

 

 

 

 

 

1,847

 

 

 

 

 

 

 

1,847

 

Stock awards (net of change in

     unearned compensation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

 

 

 

 

23

 

Preferred stock dividends (see Note 16)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(72

)

 

 

 

 

 

 

(72

)

 

 

 

 

 

 

(72

)

Common stock dividends ($2.025 per

     share) and distributions

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,653

)

 

 

 

 

 

 

(1,653

)

 

 

 

 

 

 

(1,653

)

Other comprehensive income, net of

     tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

84

 

 

 

84

 

 

 

 

 

 

 

84

 

September 30, 2022

 

 

2

 

 

$

1,783

 

 

 

833

 

 

$

23,480

 

 

$

4,684

 

 

$

(1,374

)

 

$

28,573

 

 

$

—

 

 

$

28,573

 

 

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

14

DOMINION ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

Nine Months Ended September 30,

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

 

 

 

Net income including noncontrolling interests

 

$

1,036

 

 

$

1,969

 

Adjustments to reconcile net income including noncontrolling interests to net cash

   provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation, depletion and amortization (including nuclear fuel)

 

 

2,334

 

 

 

2,058

 

Deferred income taxes and investment tax credits

 

 

269

 

 

 

199

 

Provision for refunds to electric utility customers

 

 

—

 

 

 

350

 

Impairment of assets and other charges

 

 

394

 

 

 

194

 

Losses (gains) on sales of assets and equity method investments

 

 

601

 

 

 

—

 

Net (gains) losses on nuclear decommissioning trust funds and other investments

 

 

658

 

 

 

(370

)

Other adjustments

 

 

(85

)

 

 

273

 

Changes in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(56

)

 

 

207

 

Inventories

 

 

(206

)

 

 

(45

)

Deferred fuel and purchased gas costs, net

 

 

(1,525

)

 

 

(531

)

Prepayments

 

 

(103

)

 

 

(121

)

Accounts payable

 

 

(54

)

 

 

(29

)

Accrued interest, payroll and taxes

 

 

28

 

 

 

51

 

Margin deposit assets and liabilities

 

 

(152

)

 

 

(539

)

Net realized and unrealized changes related to derivative activities

 

 

114

 

 

 

432

 

Pension and other postretirement benefits

 

 

(344

)

 

 

(103

)

Other operating assets and liabilities

 

 

(238

)

 

 

(460

)

Net cash provided by operating activities

 

 

2,671

 

 

 

3,535

 

Investing Activities

 

 

 

 

 

 

 

 

Plant construction and other property additions (including nuclear fuel)

 

 

(5,251

)

 

 

(4,142

)

Acquisition of solar development projects

 

 

(139

)

 

 

(87

)

Proceeds from sale of Hope

 

 

722

 

 

 

—

 

Proceeds from sales of securities

 

 

2,686

 

 

 

3,324

 

Purchases of securities

 

 

(2,479

)

 

 

(3,288

)

Repayment of Q-Pipe Transaction deposit

 

 

—

 

 

 

(1,265

)

Proceeds from sale of assets and equity method investments

 

 

146

 

 

 

—

 

Contributions to equity method affiliates

 

 

(34

)

 

 

(1,006

)

Short-term deposit

 

 

(2,000

)

 

 

—

 

Return of short-term deposit

 

 

2,000

 

 

 

—

 

Other

 

 

(170

)

 

 

(143

)

Net cash used in investing activities

 

 

(4,519

)

 

 

(6,607

)

Financing Activities

 

 

 

 

 

 

 

 

Issuance of short-term debt, net

 

 

629

 

 

 

2,990

 

Issuance of short-term notes

 

 

—

 

 

 

1,265

 

Repayment of supplemental 364-day credit facility borrowings

 

 

—

 

 

 

(225

)

Issuance and remarketing of long-term debt

 

 

3,588

 

 

 

2,500

 

Repayment and repurchase of long-term debt

 

 

(1,213

)

 

 

(2,708

)

Supplemental credit facility borrowings

 

 

900

 

 

 

900

 

Repayment of supplemental credit facility borrowings

 

 

(450

)

 

 

—

 

Series A Preferred Stock redemption

 

 

(1,610

)

 

 

—

 

Issuance of common stock

 

 

1,744

 

 

 

144

 

Common dividend payments

 

 

(1,653

)

 

 

(1,526

)

Other

 

 

(155

)

 

 

(248

)

Net cash provided by financing activities

 

 

1,780

 

 

 

3,092

 

Increase (decrease) in cash, restricted cash and equivalents

 

 

(68

)

 

 

20

 

Cash, restricted cash and equivalents at beginning of period

 

 

408

 

 

 

247

 

Cash, restricted cash and equivalents at end of period

 

$

340

 

 

$

267

 

 

See Note 2 for disclosure of supplemental cash flow information.

The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.

15

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue(1)

 

$

2,875

 

 

$

1,976

 

 

$

7,217

 

 

$

5,547

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electric fuel and other energy-related purchases(1)

 

 

981

 

 

 

515

 

 

 

2,030

 

 

 

1,270

 

Purchased electric capacity

 

 

11

 

 

 

15

 

 

 

33

 

 

 

16

 

Other operations and maintenance:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Affiliated suppliers

 

 

81

 

 

 

77

 

 

 

256

 

 

 

242

 

Other

 

 

450

 

 

 

393

 

 

 

1,323

 

 

 

1,140

 

Depreciation and amortization

 

 

451

 

 

 

343

 

 

 

1,305

 

 

 

990

 

Other taxes

 

 

80

 

 

 

86

 

 

 

238

 

 

 

262

 

Impairment of assets and other charges (benefit)

 

 

19

 

 

 

(230

)

 

 

432

 

 

 

(269

)

Total operating expenses

 

 

2,073

 

 

 

1,199

 

 

 

5,617

 

 

 

3,651

 

Income from operations

 

 

802

 

 

 

777

 

 

 

1,600

 

 

 

1,896

 

Other income (expense)

 

 

3

 

 

 

21

 

 

 

(37

)

 

 

93

 

Interest and related charges(1)

 

 

168

 

 

 

136

 

 

 

461

 

 

 

400

 

Income before income tax expense

 

 

637

 

 

 

662

 

 

 

1,102

 

 

 

1,589

 

Income tax expense

 

 

66

 

 

 

106

 

 

 

127

 

 

 

245

 

Net Income

 

$

571

 

 

$

556

 

 

$

975

 

 

$

1,344

 

 

(1)

See Note 19 for amounts attributable to affiliates.

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

 


16

 

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

571

 

 

$

556

 

 

$

975

 

 

$

1,344

 

Other comprehensive income (loss), net of taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net deferred gains (losses) on derivatives-hedging activities(1)

 

 

13

 

 

 

(2

)

 

 

57

 

 

 

18

 

Changes in unrealized net gains (losses) on nuclear decommissioning

    trust funds(2)

 

 

(4

)

 

 

—

 

 

 

(14

)

 

 

(2

)

Amounts reclassified to net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net derivative (gains) losses-hedging activities(3)

 

 

—

 

 

 

—

 

 

 

1

 

 

 

1

 

Net realized (gains) losses on nuclear decommissioning trust

    funds(4)

 

 

—

 

 

 

(1

)

 

 

(1

)

 

 

(1

)

Total other comprehensive income (loss)

 

 

9

 

 

 

(3

)

 

 

43

 

 

 

16

 

Comprehensive income

 

$

580

 

 

$

553

 

 

$

1,018

 

 

$

1,360

 

 

(1)

Net of $(5) million and $— million tax for the three months ended September 30, 2022 and 2021, respectively, and net of $(20) million and $(6) million tax for the nine months ended September 30, 2022 and 2021, respectively.   

(2)

Net of $— million and $— million tax for the three months ended September 30, 2022 and 2021, respectively, and net of $4 million and $— million tax for the nine months ended September 30, 2022 and 2021, respectively.  

(3)

Net of $(1) million and $(1) million tax for the three months ended September 30, 2022 and 2021, respectively, and net of $(1) million and $(1) million tax for the nine months ended September 30, 2022 and 2021, respectively.

(4)

Net of $— million and $— million tax for the three months ended September 30, 2022 and 2021, respectively, and net of $— million and $— million tax for the nine months ended September 30, 2022 and 2021, respectively.

 

 

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

 

17

 

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

September 30, 2022

 

 

December 31, 2021(1)

 

(millions)

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

18

 

 

$

26

 

Customer receivables (less allowance for doubtful accounts of $28 at both dates)

 

 

1,443

 

 

 

1,172

 

Other receivables (less allowance for doubtful accounts of $2 at both dates)

 

 

73

 

 

 

112

 

Affiliated receivables

 

 

84

 

 

 

37

 

Inventories (average cost method)

 

 

905

 

 

 

871

 

Margin deposit assets

 

 

498

 

 

 

167

 

Derivative assets(2)

 

 

363

 

 

 

76

 

Regulatory assets

 

 

1,136

 

 

 

850

 

Other

 

 

139

 

 

 

39

 

Total current assets

 

 

4,659

 

 

 

3,350

 

Investments

 

 

 

 

 

 

 

 

Nuclear decommissioning trust funds

 

 

3,004

 

 

 

3,734

 

Other

 

 

3

 

 

 

3

 

Total investments

 

 

3,007

 

 

 

3,737

 

Property, Plant and Equipment

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

53,149

 

 

 

49,890

 

Accumulated depreciation and amortization

 

 

(16,028

)

 

 

(15,234

)

Total property, plant and equipment, net

 

 

37,121

 

 

 

34,656

 

Deferred Charges and Other Assets

 

 

 

 

 

 

 

 

Regulatory assets

 

 

4,518

 

 

 

4,130

 

Other(2)

 

 

2,683

 

 

 

2,059

 

Total deferred charges and other assets

 

 

7,201

 

 

 

6,189

 

Total assets

 

$

51,988

 

 

$

47,932

 

 

 

 

(1)

Virginia Power’s Consolidated Balance Sheet at December 31, 2021 has been derived from the audited Consolidated Balance Sheet at that date.

(2)

See Note 19 for amounts attributable to affiliates.

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

18

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED BALANCE SHEETS—(Continued)

(Unaudited)

 

 

 

 

September 30, 2022

 

 

December 31, 2021(1)

 

(millions)

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDER’S EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Securities due within one year

 

$

715

 

 

$

313

 

Short-term debt

 

 

1,009

 

 

 

745

 

Accounts payable

 

 

478

 

 

 

402

 

Payables to affiliates

 

 

168

 

 

 

121

 

Affiliated current borrowings

 

 

784

 

 

 

699

 

Accrued interest, payroll and taxes

 

 

408

 

 

 

274

 

Asset retirement obligations

 

 

303

 

 

 

191

 

Regulatory liabilities

 

 

648

 

 

 

647

 

Derivative liabilities(2)

 

 

442

 

 

 

134

 

Other

 

 

744

 

 

 

567

 

Total current liabilities

 

 

5,699

 

 

 

4,093

 

Long-Term Debt

 

 

 

 

 

 

 

 

Long-term debt

 

 

14,914

 

 

 

13,453

 

Other

 

 

509

 

 

 

503

 

Total long-term debt

 

 

15,423

 

 

 

13,956

 

Deferred Credits and Other Liabilities

 

 

 

 

 

 

 

 

Deferred income taxes and investment tax credits

 

 

3,435

 

 

 

3,183

 

Asset retirement obligations

 

 

3,687

 

 

 

3,732

 

Regulatory liabilities

 

 

5,269

 

 

 

5,740

 

Other(2)

 

 

1,477

 

 

 

1,248

 

Total deferred credits and other liabilities

 

 

13,868

 

 

 

13,903

 

Total liabilities

 

 

34,990

 

 

 

31,952

 

Commitments and Contingencies (see Note 17)

 

 

 

 

 

 

 

 

Common Shareholder’s Equity

 

 

 

 

 

 

 

 

Common stock – no par(3)

 

 

5,738

 

 

 

5,738

 

Other paid-in capital

 

 

1,113

 

 

 

1,113

 

Retained earnings

 

 

10,145

 

 

 

9,170

 

Accumulated other comprehensive income (loss)

 

 

2

 

 

 

(41

)

Total common shareholder’s equity

 

 

16,998

 

 

 

15,980

 

Total liabilities and shareholder’s equity

 

$

51,988

 

 

$

47,932

 

 

(1)

Virginia Power’s Consolidated Balance Sheet at December 31, 2021 has been derived from the audited Consolidated Balance Sheet at that date.

(2)

See Note 19 for amounts attributable to affiliates.

(3)

500,000 shares authorized; 274,723 shares outstanding at September 30, 2022 and December 31, 2021.

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

19

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER’S EQUITY

(Unaudited)

 

QUARTER-TO-DATE

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Other Paid-In Capital

 

 

Retained Earnings

 

 

AOCI

 

 

Total

 

(millions, except for shares)

 

(thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2021

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

8,246

 

 

$

(33

)

 

$

15,064

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

556

 

 

 

 

 

 

 

556

 

Other comprehensive loss, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

(3

)

September 30, 2021

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

8,802

 

 

$

(36

)

 

$

15,617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2022

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

9,574

 

 

$

(7

)

 

$

16,418

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

571

 

 

 

 

 

 

 

571

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

9

 

September 30, 2022

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

10,145

 

 

$

2

 

 

$

16,998

 

 

 

 

YEAR-TO-DATE

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Other Paid-In Capital

 

 

Retained Earnings

 

 

AOCI

 

 

Total

 

(millions, except for shares)

 

(thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2020

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

7,758

 

 

$

(52

)

 

$

14,557

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,344

 

 

 

 

 

 

 

1,344

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(300

)

 

 

 

 

 

 

(300

)

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16

 

 

 

16

 

September 30, 2021

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

8,802

 

 

$

(36

)

 

$

15,617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2021

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

9,170

 

 

$

(41

)

 

$

15,980

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

975

 

 

 

 

 

 

 

975

 

Other comprehensive income, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43

 

 

 

43

 

September 30, 2022

 

 

275

 

 

$

5,738

 

 

$

1,113

 

 

$

10,145

 

 

$

2

 

 

$

16,998

 

 

 

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

20

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

Nine Months Ended September 30,

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

975

 

 

$

1,344

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization (including nuclear fuel)

 

 

1,428

 

 

 

1,109

 

Deferred income taxes and investment tax credits

 

 

183

 

 

 

198

 

Impairment of assets and other charges (benefit)

 

 

403

 

 

 

(269

)

Provision for refunds to customers

 

 

—

 

 

 

350

 

Net (gains) losses on nuclear decommissioning trust funds and other investments

 

 

89

 

 

 

(46

)

Other adjustments

 

 

(46

)

 

 

127

 

Changes in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(351

)

 

 

(98

)

Affiliated receivables and payables

 

 

1

 

 

 

(123

)

Inventories

 

 

(34

)

 

 

36

 

Prepayments

 

 

(4

)

 

 

(5

)

Deferred fuel expenses, net

 

 

(1,207

)

 

 

(396

)

Accounts payable

 

 

90

 

 

 

66

 

Accrued interest, payroll and taxes

 

 

134

 

 

 

121

 

Margin deposit assets and liabilities

 

 

(331

)

 

 

(121

)

Net realized and unrealized changes related to derivative activities

 

 

88

 

 

 

8

 

Other operating assets and liabilities

 

 

(24

)

 

 

(61

)

Net cash provided by operating activities

 

 

1,394

 

 

 

2,240

 

Investing Activities

 

 

 

 

 

 

 

 

Plant construction and other property additions

 

 

(3,322

)

 

 

(2,525

)

Purchases of nuclear fuel

 

 

(169

)

 

 

(73

)

Acquisition of solar development projects

 

 

(51

)

 

 

(61

)

Proceeds from sales of securities

 

 

1,289

 

 

 

1,465

 

Purchases of securities

 

 

(1,334

)

 

 

(1,470

)

Other

 

 

(10

)

 

 

(45

)

Net cash used in investing activities

 

 

(3,597

)

 

 

(2,709

)

Financing Activities

 

 

 

 

 

 

 

 

Issuance of short-term debt, net

 

 

264

 

 

 

851

 

Issuance (repayment) of affiliated current borrowings, net

 

 

85

 

 

 

(70

)

Issuance and remarketing of long-term debt

 

 

2,338

 

 

 

—

 

Repayment and repurchase of long-term debt

 

 

(438

)

 

 

—

 

Common dividend payments to parent

 

 

—

 

 

 

(300

)

Other

 

 

(52

)

 

 

(8

)

Net cash provided by financing activities

 

 

2,197

 

 

 

473

 

Increase (decrease) in cash, restricted cash and equivalents

 

 

(6

)

 

 

4

 

Cash, restricted cash and equivalents at beginning of period

 

 

26

 

 

 

35

 

Cash, restricted cash and equivalents at end of period

 

$

20

 

 

$

39

 

 

 

 

 

 

 

 

 

 

 

See Note 2 for disclosure of supplemental cash flow information. 

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

 

21

 

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

Note 1. Nature of Operations

Dominion Energy, headquartered in Richmond, Virginia, is one of the nation’s largest producers and distributors of energy. Dominion Energy’s operations are conducted through various subsidiaries, including Virginia Power. Dominion Energy’s operations also include DESC, regulated gas distribution operations primarily in the eastern and Rocky Mountain regions of the U.S., nonregulated electric generation and a noncontrolling interest in Cove Point.

 

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, 2021.

In the Companies’ opinion, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly their financial position at September 30, 2022, their results of operations and changes in equity for the three and nine months ended September 30, 2022 and 2021 and their cash flows for the nine months ended September 30, 2022 and 2021. 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. Clearway’s ownership interest in Four Brothers and Three Cedars (through December 2021) and Terra Nova Renewable Partners’ 33% interest in certain Dominion Energy nonregulated solar projects (through December 2021) are reflected as noncontrolling interest in Dominion Energy’s Consolidated Financial Statements. See Note 10 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

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’ 2021 Consolidated Financial Statements and Notes have been reclassified to conform to the 2022 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, 2021, with the exception of the items described below.

22

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 nine months ended September 30, 2022 and 2021:

 

 

 

Cash, Restricted Cash and Equivalents

at End of Period

 

 

Cash, Restricted Cash and Equivalents

at Beginning of Period

 

 

 

September 30, 2022

 

 

September 30, 2021

 

 

December 31, 2021

 

 

December 31, 2020

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominion Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents(1)

 

$

163

 

 

$

195

 

 

$

283

 

 

$

179

 

Restricted cash and equivalents(2)(3)

 

 

177

 

 

 

72

 

 

 

125

 

 

 

68

 

Cash, restricted cash and equivalents shown in the

   Consolidated Statements of Cash Flows

 

$

340

 

 

$

267

 

 

$

408

 

 

$

247

 

Virginia Power

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

18

 

 

$

38

 

 

$

26

 

 

$

35

 

Restricted cash and equivalents(3)

 

 

2

 

 

 

1

 

 

 

—

 

 

 

—

 

Cash, restricted cash and equivalents shown in the

   Consolidated Statements of Cash Flows

 

$

20

 

 

$

39

 

 

$

26

 

 

$

35

 

 

(1)

At September 30, 2021 and December 31, 2020, Dominion Energy had $15 million and $7 million of cash and cash equivalents included in current assets held for sale, respectively. No amounts were included in current assets held for sale at September 30, 2022 and December 31, 2021.

(2)

At September 30, 2021 and December 31, 2020, Dominion Energy had $22 million and $3 million of restricted cash and equivalents included in current assets held for sale, respectively. No amounts were included in current assets held for sale at September 30, 2022 and December 31, 2021.

(3)

Restricted cash and equivalents balances are presented within other current assets in the Companies’ Consolidated Balance Sheets.

 

Supplemental Cash Flow Information

 

The following table provides supplemental disclosure of cash flow information related to Dominion Energy:

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

Significant noncash investing and financing activities:(1)

 

 

 

 

 

 

 

 

Accrued capital expenditures

 

$

745

 

 

$

374

 

Leases(2)

 

 

129

 

 

 

75

 

(1)

See Note 10 for noncash investing activities related to the acquisition of a noncontrolling interest in Dominion Privatization and Notes 16 and 17 for noncash financing activities related to the remarketing of Series A Preferred Stock and the issuance of common stock and transfer of property associated with the settlement of litigation.

(2)

Includes $29 million and $34 million of financing leases at September 30, 2022 and 2021, respectively, and $100 million and $41 million of operating leases at September 30, 2022 and 2021, respectively.

 

The following table provides supplemental disclosure of cash flow information related to Virginia Power:

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

Significant noncash investing and financing activities:

 

 

 

 

 

 

 

 

Accrued capital expenditures

 

$

454

 

 

$

238

 

Leases(1)

 

 

113

 

 

 

59

 

(1)

Includes $20 million and $24 million of financing leases at September 30, 2022 and 2021, respectively, and $93 million and $35 million of operating leases at September 30, 2022 and 2021, respectively.

23

Property, Plant and Equipment

In the first quarter of 2022, Virginia Power revised the depreciation rates for its assets to reflect the results of a new depreciation study. The change resulted in a decrease in depreciation expense in Virginia Power’s Consolidated Statements of Income of $15 million ($11 million after-tax) and $45 million ($33 million after-tax) for the three and nine months ended September 30, 2022, respectively, and an increase in Dominion Energy’s EPS of $0.01 and $0.04 for the three and nine months ended September 30, 2022, respectively. The revision is expected to decrease Virginia Power’s annual depreciation expense by approximately $60 million ($45 million after-tax) and increase Dominion Energy’s EPS by approximately $0.05.

For the three and nine months ended September 30, 2022, Virginia Power recorded charges of $18 million ($14 million after-tax) and $60 million ($45 million after-tax), respectively, associated with dismantling certain coal- and oil-fired generating units retired before the end of their useful lives, recorded in impairment of assets and other charges (benefits) in its Consolidated Statements of Income.

Asset Retirement Obligations

In the second quarter of 2021, Dominion Energy revised its estimated cash flow projections associated with the recovery of spent nuclear fuel costs for its AROs associated with the decommissioning of Kewaunee. As a result, Dominion Energy recorded a charge of $44 million ($35 million after-tax) within other operations and maintenance expense in its Consolidated Statements of Income.

 

 

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 Company’s Annual Report on Form 10-K for the year ended December 31, 2021. 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.

In connection with the closing of the sale of the Q-Pipe Group, Dominion Energy and Southwest Gas entered into a transition services agreement under which Dominion Energy will continue to provide specified administrative services to support the operations of the disposed businesses for up to 12 months after closing, subject to extension. Dominion Energy recorded $2 million and $5 million associated with the transition services agreement in operating revenue in the Consolidated Statements of Income for the three and nine months ended September 30, 2022, respectively.

The following table represents selected information regarding the results of operations, which were reported within discontinued operations in Dominion Energy’s Consolidated Statements of Income:

 

 

 

Three Months Ended

September 30, 2021

 

 

Nine Months Ended

September 30, 2021

 

 

 

Q-Pipe Group

 

 

Q-Pipe Group

 

(millions)

 

 

 

 

 

 

 

 

Operating revenue

 

$

62

 

 

$

188

 

Operating expense

 

 

24

 

 

 

52

 

Other income(1)

 

 

26

 

 

 

27

 

Interest and related charges

 

 

7

 

 

 

17

 

Income before income taxes(2)

 

 

57

 

 

 

146

 

Income tax expense

 

 

12

 

 

 

29

 

Net income attributable to Dominion Energy

 

$

45

 

 

$

117

 

(1)

Includes a $25 million benefit associated with the termination of the Q-Pipe Transaction in the third quarter of 2021.

(2)

Excludes $18 million income tax benefit recorded in the third quarter of 2021 associated with the GT&S Transaction.

Capital expenditures and significant noncash items relating to the Q-Pipe Group included the following:

 

 

 

Nine Months Ended

September 30, 2021

 

(millions)

 

 

 

 

Capital expenditures

 

$

26

 

Significant noncash items:

 

 

 

 

Accrued capital expenditures

 

 

2

 

 

 

 

24

 

Sale of Hope

In February 2022, Dominion Energy entered into an agreement to sell 100% of the equity interests in Hope to Ullico for $690 million of cash consideration, subject to customary closing adjustments, which closed in August 2022 after all customary closing and regulatory conditions were satisfied, including clearance under the Hart-Scott-Rodino Act and approval from the West Virginia Commission. The sale is treated as a stock sale for tax purposes.

Upon closing, Dominion Energy recognized a pre-tax gain of $8 million, subject to customary closing adjustments, (net of $110 million write-off of goodwill which was not deductible for tax purposes) in losses (gains) on sales of assets in its Consolidated Statements of Income. The transaction resulted in an after-tax loss of $89 million. Upon meeting the classification as held for sale in the first quarter of 2022 and through the second quarter of 2022, Dominion Energy had recorded charges of $90 million in deferred income tax expense in its Consolidated Statements of Income to reflect the recognition of deferred taxes on the outside basis of Hope’s stock. This deferred income tax expense reversed upon closing of the sale and became a component of current income tax expense on the sale disclosed above. See Note 5 for additional information. In addition, a curtailment was recorded related to other postretirement benefit plans as discussed in Note 20.

All activity related to Hope prior, or not related, to closing, is included in Gas Distribution.

 

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 is 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.

All activity related to Kewaunee prior to closing is included in Contracted Assets.

 

25

 

Note 4. Operating Revenue

The Companies’ operating revenue consists of the following:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominion Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated electric sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

1,609

 

 

$

1,281

 

 

$

4,013

 

 

$

3,453

 

Commercial

 

 

1,349

 

 

 

831

 

 

 

3,336

 

 

 

2,311

 

Industrial

 

 

253

 

 

 

194

 

 

 

670

 

 

 

547

 

Government and other retail

 

 

353

 

 

 

258

 

 

 

922

 

 

 

670

 

Wholesale

 

 

66

 

 

 

52

 

 

 

181

 

 

 

131

 

Nonregulated electric sales

 

 

345

 

 

 

271

 

 

 

948

 

 

 

754

 

Regulated gas sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

 

154

 

 

 

132

 

 

 

1,154

 

 

 

950

 

Commercial

 

 

83

 

 

 

61

 

 

 

462

 

 

 

346

 

Other

 

 

62

 

 

 

31

 

 

 

158

 

 

 

88

 

Nonregulated gas sales

 

 

2

 

 

 

7

 

 

 

7

 

 

 

74

 

Regulated gas transportation and storage

 

 

229

 

 

 

208

 

 

 

767

 

 

 

698

 

Other regulated revenues

 

 

76

 

 

 

47

 

 

 

195

 

 

 

187

 

Other nonregulated revenues(1)

 

 

74

 

 

 

61

 

 

 

183

 

 

 

149

 

Total operating revenue from contracts with customers

 

 

4,655

 

 

 

3,434

 

 

 

12,996

 

 

 

10,358

 

Other revenues(2)(3)

 

 

(269

)

 

 

(258

)

 

 

(735

)

 

 

(274

)

Total operating revenue

 

$

4,386

 

 

$

3,176

 

 

$

12,261

 

 

$

10,084

 

Virginia Power

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated electric sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential

 

$

1,238

 

 

$

935

 

 

$

3,069

 

 

$

2,572

 

Commercial

 

 

1,105

 

 

 

604

 

 

 

2,696

 

 

 

1,715

 

Industrial

 

 

134

 

 

 

94

 

 

 

347

 

 

 

268

 

Government and other retail

 

 

335

 

 

 

241

 

 

 

874

 

 

 

625

 

Wholesale

 

 

38

 

 

 

31

 

 

 

101

 

 

 

79

 

Nonregulated electric sales

 

 

17

 

 

 

18

 

 

 

62

 

 

 

32

 

Other regulated revenues

 

 

64

 

 

 

37

 

 

 

195

 

 

 

165

 

Other nonregulated revenues(1)(4)

 

 

28

 

 

 

27

 

 

 

50

 

 

 

61

 

Total operating revenue from contracts

   with customers

 

 

2,959

 

 

 

1,987

 

 

 

7,394

 

 

 

5,517

 

Other revenues(2)(4)

 

 

(84

)

 

 

(11

)

 

 

(177

)

 

 

30

 

Total operating revenue

 

$

2,875

 

 

$

1,976

 

 

$

7,217

 

 

$

5,547

 

 

(1)

Includes sales which are considered to be goods transferred at a point in time of $10 million and $9 million for the three months ended September 30, 2022 and 2021, respectively, and $35 million and $24 million for the nine months ended September 30, 2022 and 2021, respectively, at Dominion Energy, primarily consisting of sales of commodities related to nonregulated extraction activities and other miscellaneous products. Additionally, sales of renewable energy credits were $21 million and $16 million for the three months ended September 30, 2022 and 2021, respectively, and $32 million and $29 million for the nine months ended September 30, 2022 and 2021, respectively, at Dominion Energy and $13 million for both the three months ended September 30, 2022 and 2021 and $13 million and $22 million for the nine months ended September 30, 2022 and 2021, respectively, at Virginia Power.

(2)

Includes alternative revenue of $20 million and $3 million at Dominion Energy and $20 million and $3 million at Virginia Power for the three months ended September 30, 2022 and 2021, respectively, and $90 million and $50 million at Dominion Energy and $47 million and $41 million at Virginia Power for the nine months ended September 30, 2022 and 2021, respectively.

(3)

Includes revenue associated with services provided to discontinued operations of $1 million and $3 million for the three and nine months ended September 30, 2021, respectively.

(4)

See Note 19 for amounts attributable to affiliates.

 

 

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.

 

26

 

Revenue expected to be recognized on multi-year

   contracts in place at September 30, 2022

 

2022

 

 

2023

 

 

2024

 

 

2025

 

 

2026

 

 

Thereafter

 

 

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominion Energy

 

$

18

 

 

$

68

 

 

$

61

 

 

$

54

 

 

$

48

 

 

$

449

 

 

$

698

 

 

At September 30, 2022 and December 31, 2021, Dominion Energy’s contract liability balances were $159 million and $124 million, respectively, and are recorded in other current liabilities and other deferred credits and other liabilities in the Consolidated Balance Sheets.  At September 30, 2022 and December 31, 2021, Virginia Power’s contract liability balances were $43 million and $33 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 nine months ended September 30, 2022 and 2021, Dominion Energy recognized revenue of $120 million and $124 million, respectively, from the beginning contract liability balances. During the nine months ended September 30, 2022 and 2021, Virginia Power recognized $33 million and $36 million, respectively, from the beginning contract liability balances.  

Note 5. Income Taxes

For continuing operations, including noncontrolling interests, the statutory U.S. federal income tax rate reconciles to the Companies’ effective income tax rate as follows:

 

 

 

Dominion Energy

 

 

Virginia Power

 

Nine Months Ended September 30,

 

2022

 

 

2021

 

 

2022

 

 

2021

 

U.S. statutory rate

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

 

 

21.0

%

Increases (reductions) resulting from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Recognition of taxes - sale of

   subsidiary stock

 

 

7.3

 

 

 

—

 

 

 

—

 

 

 

—

 

State taxes, net of federal benefit

 

 

4.7

 

 

 

2.0

 

 

 

4.4

 

 

 

4.5

 

Investment tax credits

 

 

(6.4

)

 

 

(5.6

)

 

 

(8.9

)

 

 

(5.8

)

Production tax credits

 

 

(0.7

)

 

 

(0.5

)

 

 

(1.0

)

 

 

(0.6

)

Reversal of excess deferred income

   taxes

 

 

(6.1

)

 

 

(3.8

)

 

 

(3.7

)

 

 

(2.2

)

State legislative change

 

 

—

 

 

 

(1.0

)

 

 

—

 

 

 

(1.0

)

Changes in state deferred taxes associated

   with assets held for sale

 

 

0.4

 

 

 

(0.5

)

 

 

—

 

 

 

—

 

AFUDC - equity

 

 

(0.6

)

 

 

(0.5

)

 

 

(0.8

)

 

 

(0.5

)

Absence of tax on noncontrolling interest

 

 

—

 

 

 

(0.2

)

 

 

—

 

 

 

—

 

Other, net

 

 

(0.4

)

 

 

(1.1

)

 

 

0.5

 

 

 

—

 

Effective tax rate

 

 

19.2

%

 

 

9.8

%

 

 

11.5

%

 

 

15.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As described in Note 3, Dominion Energy sold 100% of the equity interests in Hope in a stock sale for income tax purposes. Dominion Energy’s 2022 effective tax rate reflects the current income tax expense on the sale of Hope’s stock.    

 

As of September 30, 2022, there have been no material changes in the Companies’ unrecognized tax benefits.  It is reasonably possible that recent case law and interactions with the taxing authority could result in a decrease in unrecognized tax benefits by up to $26 million during the next twelve months. If such changes were to occur, other than revisions of the accrual for interest on tax underpayments and overpayments, earnings could increase by up to $26 million for Dominion Energy.  See Note 5 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021, for a discussion of these unrecognized tax benefits.

  

The Companies’ 2021 effective tax rates reflect the benefit of a state legislative change enacted in April 2021 for tax years beginning January 1, 2022. Dominion Energy’s effective tax rate reflects a $21 million deferred tax benefit, inclusive of a $16 million deferred tax benefit at Virginia Power.

 

27

 

Discontinued operations

Income tax expense reflected in discontinued operations is $4 million and $5 million for the nine months ended September 30, 2022 and 2021, respectively. 2021 income taxes include a $15 million benefit related to finalizing income tax returns on the GT&S Transaction.

 

Note 6. Earnings Per Share

The following table presents the calculation of Dominion Energy’s basic and diluted EPS:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions, except EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Dominion Energy from

    continuing operations

 

$

781

 

 

$

589

 

 

$

1,021

 

 

$

1,828

 

Preferred stock dividends (see Note 16)

 

 

(20

)

 

 

(16

)

 

 

(72

)

 

 

(48

)

Net income attributable to Dominion Energy from

    continuing operations – Basic

 

 

761

 

 

 

573

 

 

 

949

 

 

 

1,780

 

Dilutive effect of 2019 Equity Units (1)

 

 

—

 

 

 

—

 

 

 

12

 

 

 

—

 

Net income attributable to Dominion Energy from

    continuing operations - Diluted

 

$

761

 

 

$

573

 

 

$

961

 

 

$

1,780

 

Net income (loss) attributable to Dominion Energy from

    discontinued operations - Basic & Diluted

 

$

(3

)

 

$

65

 

 

$

15

 

 

$

119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares of common stock outstanding – Basic

 

 

832.6

 

 

 

808.7

 

 

 

820.6

 

 

 

807.1

 

Net effect of dilutive securities (2)

 

 

0.6

 

 

 

1.3

 

 

 

12.1

 

 

 

0.5

 

Average shares of common stock outstanding – Diluted

 

 

833.2

 

 

 

810.0

 

 

 

832.7

 

 

 

807.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS from continuing operations – Basic

 

$

0.91

 

 

$

0.71

 

 

$

1.16

 

 

$

2.20

 

EPS from discontinued operations – Basic

 

 

—

 

 

 

0.08

 

 

 

0.02

 

 

 

0.15

 

EPS attributable to Dominion Energy – Basic

 

$

0.91

 

 

$

0.79

 

 

$

1.18

 

 

$

2.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EPS from continuing operations – Diluted

 

$

0.91

 

 

$

0.71

 

 

$

1.15

 

 

$

2.20

 

EPS from discontinued operations – Diluted

 

 

—

 

 

 

0.08

 

 

 

0.02

 

 

 

0.15

 

EPS attributable to Dominion Energy – Diluted

 

$

0.91

 

 

$

0.79

 

 

$

1.17

 

 

$

2.35

 

 

 

(1)

As discussed in Note 16, effective in June 2022 through its settlement in September 2022, the Series A Preferred Stock was considered to be mandatorily redeemable and was classified in current liabilities. In accordance with revised accounting standards effective January 2022, a fair value adjustment, if dilutive, of the Series A Preferred Stock was no longer included in applying the if converted method to the 2019 Equity Units. In addition, diluted net income was no longer reduced by the Series A Preferred Stock dividends. No fair value adjustment was necessary for the three and nine months ended September 30, 2021.

(2)

Dilutive securities for the three and nine months ended September 30, 2022 consist primarily of the 2019 Equity Units through their settlement in June 2022 (applying the if converted method as updated effective January 2022), stock potentially to be issued to satisfy the obligation under a settlement agreement with the SCDOR (applying the if converted method) as well as forward sales agreements entered into in November 2021 (applying the treasury stock method). See Notes 16 and 17 for additional information.

 

The 2019 Equity Units, prior to settlement in June 2022, and the Q-Pipe Transaction deposit, prior to being settled in cash in July 2021, were potentially dilutive instruments. See Note 16 to the Consolidated Financial Statements in this report and Note 3 and Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

 

For the three and nine months ended September 30, 2021, the forward stock purchase contracts included within the 2019 Equity Units are excluded from the calculation of diluted EPS from continuing operations as the dilutive stock price threshold was not met, the Series A Preferred Stock included within the 2019 Equity Units is excluded from the calculation of diluted EPS from continuing operations based upon the expectation that the conversion would settle in cash rather than through the issuance of Dominion Energy common stock and a fair value adjustment related to the Series A Preferred Stock included within the 2019 Equity Units is excluded from the calculation of diluted EPS from continuing operations, as such fair value adjustment was not dilutive during the period.

 

The impact of settling the deposit associated with the Q-Pipe Transaction in shares is excluded from the calculation of diluted EPS from continuing operations for the three and nine months ended September 30, 2021 based upon the expectation Dominion Energy would settle in cash, which occurred in July 2021, rather than through the issuance of Dominion Energy common stock.

28

 

Note 7. Accumulated Other Comprehensive Income (Loss)

Dominion Energy

The following table presents Dominion Energy’s changes in AOCI (net of tax) and reclassifications out of AOCI by component:

 

 

 

Commodity

 

 

 

 

Interest Rate

 

 

 

 

Total Derivative-Hedging Activities(1)

 

 

 

 

Investment

Securities(2)

 

 

 

 

Pension and other postretirement benefit costs(3)

 

 

 

 

Equity Method Investees(4)

 

 

 

 

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

—

 

 

 

 

$

(283

)

 

 

 

$

(283

)

 

 

 

$

(40

)

 

 

 

$

(1,070

)

 

 

 

$

(3

)

 

 

 

$

(1,396

)

Other comprehensive income

    before reclassifications:

    gains (losses)

 

 

—

 

 

 

 

 

10

 

 

 

 

 

10

 

 

 

 

 

(27

)

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

(17

)

Amounts reclassified from

    AOCI: (gains) losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and related

    charges

 

 

—

 

 

 

 

 

16

 

 

 

 

 

16

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

16

 

           Other income (expense)

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

2

 

 

 

 

 

35

 

 

 

 

 

—

 

 

 

 

 

37

 

Total

 

 

—

 

 

 

 

 

16

 

 

 

 

 

16

 

 

 

 

 

2

 

 

 

 

 

35

 

 

 

 

 

—

 

 

 

 

 

53

 

Income tax expense (benefit)

 

 

—

 

 

 

 

 

(4

)

 

 

 

 

(4

)

 

 

 

 

(1

)

 

 

 

 

(9

)

 

 

 

 

—

 

 

 

 

 

(14

)

Total, net of tax

 

 

—

 

 

 

 

 

12

 

 

 

 

 

12

 

 

 

 

 

1

 

 

 

 

 

26

 

 

 

 

 

—

 

 

 

 

 

39

 

Net current period other comprehensive

   income (loss)

 

 

—

 

 

 

 

 

22

 

 

 

 

 

22

 

 

 

 

 

(26

)

 

 

 

 

26

 

 

 

 

 

—

 

 

 

 

 

22

 

Ending balance

 

$

—

 

 

 

 

$

(261

)

 

 

 

$

(261

)

 

 

 

$

(66

)

 

 

 

$

(1,044

)

 

 

 

$

(3

)

 

 

 

$

(1,374

)

Three Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

—

 

 

 

 

$

(371

)

 

 

 

$

(371

)

 

 

 

$

41

 

 

 

 

$

(1,309

)

 

 

 

$

(1

)

 

 

 

$

(1,640

)

Other comprehensive income

    before reclassifications:

    gains (losses)

 

 

—

 

 

 

 

 

(2

)

 

 

 

 

(2

)

 

 

 

 

4

 

 

 

 

 

(1

)

 

 

 

 

(3

)

 

 

 

 

(2

)

Amounts reclassified from

    AOCI: (gains) losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and related

    charges

 

 

—

 

 

 

 

 

14

 

 

 

 

 

14

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

14

 

Other income (expense)

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

(4

)

 

 

 

 

25

 

 

 

 

 

—

 

 

 

 

 

21

 

Total

 

 

—

 

 

 

 

 

14

 

 

 

 

 

14

 

 

 

 

 

(4

)

 

 

 

 

25

 

 

 

 

 

—

 

 

 

 

 

35

 

Income tax expense (benefit)

 

 

—

 

 

 

 

 

(4

)

 

 

 

 

(4

)

 

 

 

 

1

 

 

 

 

 

(6

)

 

 

 

 

—

 

 

 

 

 

(9

)

Total, net of tax

 

 

—

 

 

 

 

 

10

 

 

 

 

 

10

 

 

 

 

 

(3

)

 

 

 

 

19

 

 

 

 

 

—

 

 

 

 

 

26

 

Net current period other comprehensive

   income (loss)

 

 

—

 

 

 

 

 

8

 

 

 

 

 

8

 

 

 

 

 

1

 

 

 

 

 

18

 

 

 

 

 

(3

)

 

 

 

 

24

 

Ending balance

 

$

—

 

 

 

 

$

(363

)

 

 

 

$

(363

)

 

 

 

$

42

 

 

 

 

$

(1,291

)

 

 

 

$

(4

)

 

 

 

$

(1,616

)

 

(1)

Net of $87 million, $94 million, $121 million and $125 million tax at September 30, 2022, June 30, 2022, September 30, 2021 and June 30, 2021, respectively.

(2)

Net of $23 million, $14 million, $(11) million and $(12) million tax at September 30, 2022, June 30, 2022, September 30, 2021 and June 30, 2021, respectively.

(3)

Net of $367 million, $376 million, $448 million and $455 million tax at September 30, 2022, June 30, 2022, September 30, 2021 and June 30, 2021, respectively.

(4)

Net of $1 million, $1 million, $1 million and $— million tax at September 30, 2022, June 30, 2022, September 30, 2021 and June 30, 2021, respectively.

29

 

 

 

Commodity

 

 

 

 

Interest Rate

 

 

 

 

Total Derivative-Hedging Activities(1)

 

 

 

 

Investment

Securities(2)

 

 

 

 

Pension and other postretirement benefit costs(3)

 

 

 

 

Equity Method Investees(4)

 

 

 

 

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

—

 

 

 

 

$

(358

)

 

 

 

$

(358

)

 

 

 

$

37

 

 

 

 

$

(1,133

)

 

 

 

$

(4

)

 

 

 

$

(1,458

)

Other comprehensive income

    before reclassifications:

    gains (losses)

 

 

—

 

 

 

 

 

64

 

 

 

 

 

64

 

 

 

 

 

(116

)

 

 

 

 

30

 

 

 

 

 

1

 

 

 

 

 

(21

)

Amounts reclassified from

    AOCI: (gains) losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and related

    charges

 

 

—

 

 

 

 

 

44

 

 

 

 

 

44

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

44

 

Other income (expense)

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

18

 

 

 

 

 

80

 

 

 

 

 

—

 

 

 

 

 

98

 

Total

 

 

—

 

 

 

 

 

44

 

 

 

 

 

44

 

 

 

 

 

18

 

 

 

 

 

80

 

 

 

 

 

—

 

 

 

 

 

142

 

Income tax expense (benefit)

 

 

—

 

 

 

 

 

(11

)

 

 

 

 

(11

)

 

 

 

 

(5

)

 

 

 

 

(21

)

 

 

 

 

—

 

 

 

 

 

(37

)

Total, net of tax

 

 

—

 

 

 

 

 

33

 

 

 

 

 

33

 

 

 

 

 

13

 

 

 

 

 

59

 

 

 

 

 

—

 

 

 

 

 

105

 

Net current period other comprehensive

   income (loss)

 

 

—

 

 

 

 

 

97

 

 

 

 

 

97

 

 

 

 

 

(103

)

 

 

 

 

89

 

 

 

 

 

1

 

 

 

 

 

84

 

Ending balance

 

$

—

 

 

 

 

$

(261

)

 

 

 

$

(261

)

 

 

 

$

(66

)

 

 

 

$

(1,044

)

 

 

 

$

(3

)

 

 

 

$

(1,374

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(1

)

 

 

 

$

(418

)

 

 

 

$

(419

)

 

 

 

$

62

 

 

 

 

$

(1,359

)

 

 

 

$

(1

)

 

 

 

$

(1,717

)

Other comprehensive income

    before reclassifications:

    gains (losses)

 

 

—

 

 

 

 

 

21

 

 

 

 

 

21

 

 

 

 

 

(15

)

 

 

 

 

5

 

 

 

 

 

(3

)

 

 

 

 

8

 

Amounts reclassified from

    AOCI: (gains) losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchased gas

 

 

1

 

 

 

 

 

—

 

 

 

 

 

1

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

1

 

Interest and related

    charges

 

 

—

 

 

 

 

 

46

 

 

 

 

 

46

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

46

 

Other income (expense)

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

(7

)

 

 

 

 

85

 

 

 

 

 

—

 

 

 

 

 

78

 

Total

 

 

1

 

 

 

 

 

46

 

 

 

 

 

47

 

 

 

 

 

(7

)

 

 

 

 

85

 

 

 

 

 

—

 

 

 

 

 

125

 

Income tax expense (benefit)

 

 

—

 

 

 

 

 

(12

)

 

 

 

 

(12

)

 

 

 

 

2

 

 

 

 

 

(22

)

 

 

 

 

—

 

 

 

 

 

(32

)

Total, net of tax

 

 

1

 

 

 

 

 

34

 

 

 

 

 

35

 

 

 

 

 

(5

)

 

 

 

 

63

 

 

 

 

 

—

 

 

 

 

 

93

 

Net current period other comprehensive

   income (loss)

 

 

1

 

 

 

 

 

55

 

 

 

 

 

56

 

 

 

 

 

(20

)

 

 

 

 

68

 

 

 

 

 

(3

)

 

 

 

 

101

 

Ending balance

 

$

—

 

 

 

 

$

(363

)

 

 

 

$

(363

)

 

 

 

$

42

 

 

 

 

$

(1,291

)

 

 

 

$

(4

)

 

 

 

$

(1,616

)

 

(1)

Net of $87 million, $119 million, $121 million and $141 million tax at September 30, 2022, December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

(2)

Net of $23 million, $(10) million, $(11) million and $(21) million tax at September 30, 2022, December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

(3)

Net of $367 million, $396 million, $448 million, and $478 million tax at September 30, 2022, December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

(4)

Net of $1 million, $1 million, $1 million and $— tax at September 30, 2022, December 31, 2021, September 30, 2021 and December 31, 2020, respectively.


30

 

Virginia Power

The following table presents Virginia Power’s changes in AOCI (net of tax) and reclassifications out of AOCI by component:

 

 

 

Interest Rate

 

 

 

 

Total Derivative-Hedging Activities(1)

 

 

 

 

Investment

Securities(2)

 

 

 

 

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

—

 

 

 

 

$

—

 

 

 

 

$

(7

)

 

 

 

$

(7

)

Other comprehensive income before

    reclassifications: gains (losses)

 

 

13

 

 

 

 

 

13

 

 

 

 

 

(4

)

 

 

 

 

9

 

Amounts reclassified from AOCI: (gains) losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

           Interest and related charges

 

 

1

 

 

 

 

 

1

 

 

 

 

 

—

 

 

 

 

 

1

 

           Other income (expense)

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

Total

 

 

1

 

 

 

 

 

1

 

 

 

 

 

—

 

 

 

 

 

1

 

Income tax expense (benefit)

 

 

(1

)

 

 

 

 

(1

)

 

 

 

 

—

 

 

 

 

 

(1

)

Total, net of tax

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

 

 

 

 

—

 

Net current period other comprehensive income (loss)

 

 

13

 

 

 

 

 

13

 

 

 

 

 

(4

)

 

 

 

 

9

 

Ending balance

 

$

13

 

 

 

 

$

13

 

 

 

 

$

(11

)

 

 

 

$

2

 

Three Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(39

)

 

 

 

$

(39

)

 

 

 

$

6

 

 

 

 

$

(33

)

Other comprehensive income before

    reclassifications: gains (losses)

 

 

(2

)

 

 

 

 

(2

)

 

 

 

 

—

 

 

 

 

 

(2

)

Amounts reclassified from AOCI: (gains) losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

           Interest and related charges

 

 

1

 

 

 

 

 

1

 

 

 

 

 

—

 

 

 

 

 

1

 

           Other income (expense)

 

 

—

 

 

 

 

 

—

 

 

 

 

 

(1

)

 

 

 

 

(1

)

Total

 

 

1

 

 

 

 

 

1

 

 

 

 

 

(1

)

 

 

 

 

—

 

Income tax expense (benefit)

 

 

(1

)

 

 

 

 

(1

)

 

 

 

 

—

 

 

 

 

 

(1

)

Total, net of tax

 

 

—

 

 

 

 

 

—

 

 

 

 

 

(1

)

 

 

 

 

(1

)

Net current period other comprehensive income (loss)

 

 

(2

)

 

 

 

 

(2

)

 

 

 

 

(1

)

 

 

 

 

(3

)

Ending balance

 

$

(41

)

 

 

 

$

(41

)

 

 

 

$

5

 

 

 

 

$

(36

)

(1)   Net of $(4) million, $— million, $14 million and $14 million tax at September 30, 2022, June 30, 2022, September 30, 2021 and June 30, 2021, respectively

 

(2)   Net of $4 million, $3 million, $(2) million and $(2) million tax at September 30, 2022, June 30, 2022, September 30, 2021 and June 30, 2021, respectively.

 

31

 

    

    

 

 

Interest Rate

 

 

 

 

Total Derivative-Hedging Activities(1)

 

 

 

 

Investment

Securities(2)

 

 

 

 

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(45

)

 

 

 

$

(45

)

 

 

 

$

4

 

 

 

 

$

(41

)

Other comprehensive income before

    reclassifications: gains (losses)

 

 

57

 

 

 

 

 

57

 

 

 

 

 

(14

)

 

 

 

 

43

 

Amounts reclassified from AOCI: (gains) losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

           Interest and related charges

 

 

2

 

 

 

 

 

2

 

 

 

 

 

—

 

 

 

 

 

2

 

           Other income (expense)

 

 

—

 

 

 

 

 

—

 

 

 

 

 

(1

)

 

 

 

 

(1

)

Total

 

 

2

 

 

 

 

 

2

 

 

 

 

 

(1

)

 

 

 

 

1

 

Income tax expense (benefit)

 

 

(1

)

 

 

 

 

(1

)

 

 

 

 

—

 

 

 

 

 

(1

)

Total, net of tax

 

 

1

 

 

 

 

 

1

 

 

 

 

 

(1

)

 

 

 

 

—

 

Net current period other comprehensive income (loss)

 

 

58

 

 

 

 

 

58

 

 

 

 

 

(15

)

 

 

 

 

43

 

Ending balance

 

$

13

 

 

 

 

$

13

 

 

 

 

$

(11

)

 

 

 

$

2

 

Nine Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

(60

)

 

 

 

$

(60

)

 

 

 

$

8

 

 

 

 

$

(52

)

Other comprehensive income before

    reclassifications: gains (losses)

 

 

18

 

 

 

 

 

18

 

 

 

 

 

(2

)

 

 

 

 

16

 

Amounts reclassified from AOCI: (gains) losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

           Interest and related charges

 

 

2

 

 

 

 

 

2

 

 

 

 

 

—

 

 

 

 

 

2

 

           Other income (expense)

 

 

—

 

 

 

 

 

—

 

 

 

 

 

(1

)

 

 

 

 

(1

)

Total

 

 

2

 

 

 

 

 

2

 

 

 

 

 

(1

)

 

 

 

 

1

 

Income tax expense (benefit)

 

 

(1

)

 

 

 

 

(1

)

 

 

 

 

—

 

 

 

 

 

(1

)

Total, net of tax

 

 

1

 

 

 

 

 

1

 

 

 

 

 

(1

)

 

 

 

 

—

 

Net current period other comprehensive income (loss)

 

 

19

 

 

 

 

 

19

 

 

 

 

 

(3

)

 

 

 

 

16

 

Ending balance

 

$

(41

)

 

 

 

$

(41

)

 

 

 

$

5

 

 

 

 

$

(36

)

(1)

Net of $(4) million, $16 million, $14 million and $21 million tax at September 30, 2022, December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

(2)

Net of $4 million, $(2) million, $(2) million and $(3) million tax at September 30, 2022, December 31, 2021, September 30, 2021 and December 31, 2020, respectively.

 

Note 8. Fair Value Measurements

The Companies’ fair value measurements are made in accordance with the policies discussed in Note 6 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021. 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.

32

The following table presents Dominion Energy’s quantitative information about Level 3 fair value measurements at September 30, 2022.  The range and weighted average are presented in dollars for market price inputs and percentages for price volatility.

 

 

 

Fair Value

(millions)

 

 

Valuation Techniques

 

Unobservable Input

 

 

Range

 

Weighted

Average(1)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

Physical and financial forwards:

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas(2)

 

$

1

 

 

Discounted cash flow

 

Market price (per Dth)

(3)

 

(2) - 6

 

(1)

FTRs

 

 

263

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

1-19

 

5

Electricity

 

 

211

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

28-199

 

51

Physical options:

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas(2)

 

 

24

 

 

Option model

 

Market price (per Dth)

(3)

 

4-17

 

10

 

 

 

 

 

 

 

 

Price volatility

(4)

 

13%-70%

 

51%

Total assets

 

$

499

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Physical and financial forwards:

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas(2)

 

$

12

 

 

Discounted cash flow

 

Market price (per Dth)

(3)

 

(2)-8

 

1

FTRs

 

 

5

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

1-10

 

4

Total liabilities

 

$

17

 

 

 

 

 

 

 

 

 

 

(1)

Averages weighted by volume.

(2)

Includes basis.

(3)

Represents market prices beyond defined terms for Levels 1 and 2. 

(4)

Represents volatilities unrepresented in published markets. 

Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:

 

Significant Unobservable

Inputs

 

Position

 

Change to Input

 

Impact on Fair Value

Measurement

Market price

 

Buy

 

Increase (decrease)

 

Gain (loss)

Market price

 

Sell

 

Increase (decrease)

 

Loss (gain)

Price volatility

 

Buy

 

Increase (decrease)

 

Gain (loss)

Price volatility

 

Sell

 

Increase (decrease)

 

Loss (gain)

Nonrecurring Fair Value Measurements

In the second quarter of 2021, Dominion Energy recorded a charge of $20 million ($15 million after-tax) in impairment of assets and other charges in its Consolidated Statements of Income to write off substantially all of the long-lived assets of its nonregulated retail software development operations to their estimated fair value, using a market approach, of less than $1 million. The valuation is considered a Level 2 fair value measurement given that it is based on bids received.  

See Note 10 for information regarding nonrecurring fair value measurements associated with Dominion Energy’s noncontrolling ownership interest in Dominion Privatization.

33

Recurring Fair Value Measurements

Dominion Energy

The following table presents Dominion Energy’s 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

 

 

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

371

 

 

$

499

 

 

$

870

 

Interest rate

 

 

—

 

 

 

1,593

 

 

 

—

 

 

 

1,593

 

Foreign currency exchange rate

 

 

—

 

 

 

6

 

 

 

—

 

 

 

6

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

3,514

 

 

 

—

 

 

 

—

 

 

 

3,514

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

—

 

 

 

563

 

 

 

—

 

 

 

563

 

Government securities

 

 

159

 

 

 

1,067

 

 

 

—

 

 

 

1,226

 

Total assets

 

$

3,673

 

 

$

3,600

 

 

$

499

 

 

$

7,772

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

1,492

 

 

$

17

 

 

$

1,509

 

Interest rate

 

 

—

 

 

 

475

 

 

 

—

 

 

 

475

 

Foreign currency exchange rate

 

 

—

 

 

 

387

 

 

 

—

 

 

 

387

 

Total liabilities

 

$

—

 

 

$

2,354

 

 

$

17

 

 

$

2,371

 

At December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

52

 

 

$

230

 

 

$

282

 

Interest rate

 

 

—

 

 

 

323

 

 

 

—

 

 

 

323

 

Foreign currency exchange rate

 

 

—

 

 

 

8

 

 

 

—

 

 

 

8

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

5,241

 

 

 

—

 

 

 

—

 

 

 

5,241

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

—

 

 

 

881

 

 

 

—

 

 

 

881

 

Government securities

 

 

199

 

 

 

1,256

 

 

 

—

 

 

 

1,455

 

Cash equivalents and other

 

 

(29

)

 

 

—

 

 

 

—

 

 

 

(29

)

Total assets

 

$

5,411

 

 

$

2,520

 

 

$

230

 

 

$

8,161

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

461

 

 

$

8

 

 

$

469

 

Interest rate

 

 

—

 

 

 

399

 

 

 

—

 

 

 

399

 

Total liabilities

 

$

—

 

 

$

860

 

 

$

8

 

 

$

868

 

(1)

Includes investments held in the nuclear decommissioning and rabbi trusts. Excludes $238 million and $366 million of assets at September 30, 2022 and December 31, 2021, respectively, measured at fair value using NAV (or its equivalent) as a practical expedient which are not required to be categorized in the fair value hierarchy.

34

The following table presents the net change in Dominion Energy's assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:

 

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

480

 

 

$

62

 

 

$

222

 

 

$

103

 

Total realized and unrealized gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

 

—

 

 

 

(6

)

 

 

—

 

 

 

(8

)

Electric fuel and other energy-related purchases

 

 

181

 

 

 

29

 

 

 

346

 

 

 

12

 

Included in regulatory assets/liabilities

 

 

2

 

 

 

88

 

 

 

243

 

 

 

49

 

Settlements

 

 

(181

)

 

 

(29

)

 

 

(346

)

 

 

(12

)

Purchases

 

 

—

 

 

 

—

 

 

 

17

 

 

 

—

 

Ending balance

 

$

482

 

 

$

144

 

 

$

482

 

 

$

144

 

There were $(6) million and $(8) million of unrealized gains and losses included in operating revenue in the Level 3 fair value category related to assets/liabilities still held at the reporting date for the three and nine months ended September 30, 2021, respectively, and no such amounts for the three and nine months ended September 30, 2022.  

 

Virginia Power

The following table presents Virginia Power’s quantitative information about Level 3 fair value measurements at September 30, 2022.  The range and weighted average are presented in dollars for market price inputs and percentages for price volatility.

 

 

 

Fair Value

(millions)

 

 

Valuation Techniques

 

Unobservable Input

 

 

Range

 

Weighted

Average(1)

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Physical and financial forwards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas(2)

 

$

1

 

 

Discounted cash flow

 

Market price (per Dth)

(3)

 

(2) - 6

 

(1)

 

FTRs

 

 

263

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

1 - 19

 

5

 

Physical options:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas(2)

 

 

24

 

 

Option model

 

Market price (per Dth)

(3)

 

4-17

 

10

 

 

 

 

 

 

 

 

 

Price volatility

(4)

 

13%-70%

 

 

51

%

Total assets

 

$

288

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Physical and financial forwards:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas(2)

 

$

12

 

 

Discounted cash flow

 

Market price (per Dth)

(3)

 

(2) - 5

 

1

 

FTRs

 

 

5

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

1-10

 

4

 

Total liabilities

 

$

17

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Averages weighted by volume.

(2)

Includes basis.

(3)

Represents market prices beyond defined terms for Levels 1 and 2.

(4)

Represents volatilities unrepresented in published markets. 

Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:

 

Significant Unobservable

Inputs

 

Position

 

Change to Input

 

Impact on Fair Value

Measurement

Market price

 

Buy

 

Increase (decrease)

 

Gain (loss)

Market price

 

Sell

 

Increase (decrease)

 

Loss (gain)

Price volatility

 

Buy

 

Increase (decrease)

 

Gain (loss)

Price volatility

 

Sell

 

Increase (decrease)

 

Loss (gain)

 

35

 

The following table presents Virginia Power’s 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

 

 

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

71

 

 

$

288

 

 

$

359

 

Interest rate

 

 

—

 

 

 

596

 

 

 

—

 

 

 

596

 

Foreign currency exchange rate

 

 

—

 

 

 

6

 

 

 

—

 

 

 

6

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

1,870

 

 

 

—

 

 

 

—

 

 

 

1,870

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

—

 

 

 

372

 

 

 

—

 

 

 

372

 

Government securities

 

 

88

 

 

 

518

 

 

 

—

 

 

 

606

 

Total assets

 

$

1,958

 

 

$

1,563

 

 

$

288

 

 

$

3,809

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

486

 

 

$

17

 

 

$

503

 

Interest rate

 

 

—

 

 

 

27

 

 

 

—

 

 

 

27

 

Foreign currency exchange rate

 

 

—

 

 

 

387

 

 

 

—

 

 

 

387

 

Total liabilities

 

$

—

 

 

$

900

 

 

$

17

 

 

$

917

 

At December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

36

 

 

$

110

 

 

$

146

 

Interest rate

 

 

—

 

 

 

146

 

 

 

—

 

 

 

146

 

Foreign currency exchange rate

 

 

—

 

 

 

8

 

 

 

—

 

 

 

8

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

2,420

 

 

 

—

 

 

 

—

 

 

 

2,420

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

—

 

 

 

531

 

 

 

—

 

 

 

531

 

Government securities

 

 

93

 

 

 

506

 

 

 

—

 

 

 

599

 

Cash equivalents and other

 

 

(3

)

 

 

—

 

 

 

—

 

 

 

(3

)

Total assets

 

$

2,510

 

 

$

1,227

 

 

$

110

 

 

$

3,847

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

125

 

 

$

8

 

 

$

133

 

Interest rate

 

 

—

 

 

 

337

 

 

 

—

 

 

 

337

 

Total liabilities

 

$

—

 

 

$

462

 

 

$

8

 

 

$

470

 

 

(1)

Includes investments held in the nuclear decommissioning trusts. Excludes $150 million and $185 million of assets at September 30, 2022 and December 31, 2021, respectively, measured at fair value using NAV (or its equivalent) as a practical expedient which are not required to be categorized in the fair value hierarchy.

36

The following table presents the net change in Virginia Power’s assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

245

 

 

$

74

 

 

$

102

 

 

$

103

 

Total realized and unrealized gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Electric fuel and other energy-related purchases

 

 

142

 

 

 

27

 

 

 

293

 

 

 

10

 

Included in regulatory assets/liabilities

 

 

26

 

 

 

41

 

 

 

152

 

 

 

12

 

Settlements

 

 

(142

)

 

 

(27

)

 

 

(293

)

 

 

(10

)

Purchases

 

 

—

 

 

 

—

 

 

 

17

 

 

 

—

 

Ending balance

 

$

271

 

 

$

115

 

 

$

271

 

 

$

115

 

 

There were no unrealized gains or losses included in earnings in the Level 3 fair value category relating to assets/liabilities still held at the reporting date for the three and nine months ended September 30, 2022 and 2021.

 

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, mandatorily redeemable preferred stock, 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:

 

 

 

September 30, 2022

 

 

December 31, 2021

 

 

 

Carrying

Amount

 

 

Estimated

Fair

Value(1)

 

 

Carrying

Amount

 

 

Estimated

Fair

Value(1)

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominion Energy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt(2)

 

$

38,487

 

 

$

34,700

 

 

$

35,996

 

 

$

40,947

 

Supplemental credit facility borrowings

 

 

450

 

 

 

450

 

 

 

—

 

 

 

—

 

Junior subordinated notes(3)

 

 

1,387

 

 

 

1,338

 

 

 

1,386

 

 

 

1,470

 

Virginia Power

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt(3)

 

$

15,618

 

 

$

13,840

 

 

$

13,753

 

 

$

16,021

 

 

(1)

Fair value is estimated using market prices, where available, and interest rates currently available for issuance of debt with similar terms and remaining maturities. All fair value measurements are classified as Level 2. The carrying amount of debt issuances with short-term maturities and variable rates refinanced at current market rates is a reasonable estimate of their fair value.

(2)

Carrying amount includes current portions included in securities due within one year and amounts which represent the unamortized debt issuance costs and discount or premium. At December 31, 2021 the carrying amount includes the valuation of certain fair value hedges associated with fixed rate debt of $2 million. There were no fair value hedges associated with fixed rate debt at September 30, 2022.

(3)

Carrying amount includes current portions included in securities due within one year and amounts which represent the unamortized debt issuance costs, discount or premium.

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, 2021. See Note 8 in this report for additional information about fair value measurements and associated valuation methods for derivatives.

 

Derivative assets and liabilities are presented gross on the Companies’ Consolidated Balance Sheets. The Companies’ derivative contracts include both over-the-counter transactions and those that are executed on an exchange or other trading platform (exchange contracts) and centrally cleared. Over-the-counter contracts are bilateral contracts that are transacted directly with a third party. Exchange contracts utilize a financial intermediary, exchange, or clearinghouse to enter, execute or clear the transactions. Certain over-the-counter and exchange contracts contain contractual rights of setoff through master netting arrangements, derivative clearing

37

agreements and contract default provisions. In addition, the contracts are subject to conditional rights of setoff through counterparty nonperformance, insolvency or other conditions.

 

In general, most over-the-counter transactions and all exchange contracts are subject to collateral requirements. Types of collateral for over-the-counter and exchange contracts include cash, letters of credit, and in some cases other forms of security, none of which are subject to restrictions. 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.

 

Dominion Energy

Balance Sheet Presentation

The tables below present Dominion Energy’s derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in its Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:

 

 

 

September 30, 2022

 

 

December 31, 2021

 

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

 

Gross Assets

Presented in the

Consolidated

Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Received

 

 

Net

Amounts

 

 

Gross Assets

Presented in the

Consolidated

Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Received

 

 

Net

Amounts

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

$

367

 

 

$

11

 

 

$

—

 

 

$

356

 

 

$

153

 

 

$

13

 

 

$

—

 

 

$

140

 

Exchange

 

 

292

 

 

 

287

 

 

 

—

 

 

 

5

 

 

 

9

 

 

 

7

 

 

 

—

 

 

 

2

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

 

1,593

 

 

 

410

 

 

 

—

 

 

 

1,183

 

 

 

323

 

 

 

49

 

 

 

—

 

 

 

274

 

Foreign currency exchange rate

   contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

 

6

 

 

 

6

 

 

 

—

 

 

 

—

 

 

 

8

 

 

 

—

 

 

 

—

 

 

 

8

 

Total derivatives, subject to a

   master netting or similar

   arrangement

 

$

2,258

 

 

$

714

 

 

$

—

 

 

$

1,544

 

 

$

493

 

 

$

69

 

 

$

—

 

 

$

424

 

 

(1)

Excludes $211 million and $120 million of derivative assets at September 30, 2022 and December 31, 2021, respectively, which are not subject to master netting or similar arrangements.

 

38

 

 

 

September 30, 2022

 

 

December 31, 2021

 

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

 

Gross

Liabilities

Presented in the

Consolidated

Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Paid

 

 

Net

Amounts

 

 

Gross

Liabilities

Presented in the

Consolidated

Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Paid

 

 

Net

Amounts

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

$

660

 

 

$

17

 

 

$

121

 

 

$

522

 

 

$

95

 

 

$

13

 

 

$

54

 

 

$

28

 

Exchange

 

 

849

 

 

 

287

 

 

 

562

 

 

 

—

 

 

 

374

 

 

 

7

 

 

 

367

 

 

 

—

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

 

475

 

 

 

257

 

 

 

3

 

 

 

215

 

 

 

399

 

 

 

49

 

 

 

11

 

 

 

339

 

Foreign currency exchange rate

   contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

 

387

 

 

 

153

 

 

 

—

 

 

 

234

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total derivatives, subject to a

   master netting or similar

   arrangement

 

$

2,371

 

 

$

714

 

 

$

686

 

 

$

971

 

 

$

868

 

 

$

69

 

 

$

432

 

 

$

367

 

 

(1)

There were no derivative liabilities that are not subject to master netting or similar arrangements at September 30, 2022 or December 31, 2021.  

Volumes

The following table presents the volume of Dominion Energy’s derivative activity at September 30, 2022. 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

 

 

47

 

 

 

7

 

Basis(1)

 

 

159

 

 

 

439

 

Electricity (MWh in millions):

 

 

 

 

 

 

 

 

Fixed price

 

 

16

 

 

 

31

 

FTRs

 

 

72

 

 

 

—

 

Oil (Gal in millions)

 

 

6

 

 

 

—

 

Interest rate(2) (in millions)

 

$

358

 

 

$

12,581

 

Foreign currency exchange rate(2)(in millions):

 

 

 

 

 

 

 

 

Danish Krone

 

468 kr.

 

 

4,167 kr.

 

Euro

 

€351

 

 

€2,651

 

 

(1)

Includes options.

(2)

Maturity is determined based on final settlement period.

AOCI

The following table presents selected information related to losses on cash flow hedges included in AOCI in Dominion Energy’s Consolidated Balance Sheet at September 30, 2022:

 

 

 

AOCI

After-Tax

 

 

Amounts Expected to be

Reclassified to Earnings

During the Next 12 Months

After-Tax

 

 

Maximum Term

(millions)

 

 

 

 

 

 

 

 

 

 

Interest rate

 

$

(261

)

 

$

(33

)

 

387 months

Total

 

$

(261

)

 

$

(33

)

 

 

 

39

 

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 Hedges

For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings and presented in the same line item. There were no derivative instruments designated as fair value hedges during the three and nine months ended September 30, 2022 and 2021.

 

The following table presents the amounts recorded on the Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges, all of which related to discontinued hedging relationships at both September 30, 2022 and December 31, 2021:

 

 

 

Carrying Amount of the Hedged Asset

(Liability)

 

 

Cumulative Amount of Fair Value Hedging

Adjustments Included in the Carrying Amount

of the Hedged Assets (Liabilities)

 

 

 

September 30, 2022

 

 

December 31, 2021

 

 

September 30, 2022

 

 

December 31, 2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

$

—

 

 

$

(352

)

 

$

—

 

 

$

(2

)

 

40

 

Fair Value and Gains and Losses on Derivative Instruments

The following table presents the fair values of Dominion Energy’s derivatives and where they are presented in its Consolidated Balance Sheets: 

 

 

 

Fair Value –

Derivatives under

Hedge

Accounting

 

 

Fair Value –

Derivatives not under

Hedge

Accounting

 

 

Total Fair Value

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

610

 

 

$

610

 

Interest rate

 

 

—

 

 

 

54

 

 

 

54

 

Foreign currency exchange rate

 

 

—

 

 

 

6

 

 

 

6

 

Total current derivative assets

 

 

—

 

 

 

670

 

 

 

670

 

Noncurrent Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

—

 

 

 

260

 

 

 

260

 

Interest rate

 

 

596

 

 

 

943

 

 

 

1,539

 

Total noncurrent derivative assets

 

 

596

 

 

 

1,203

 

 

 

1,799

 

Total derivative assets

 

$

596

 

 

$

1,873

 

 

$

2,469

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

1,083

 

 

$

1,083

 

Interest rate

 

 

—

 

 

 

46

 

 

 

46

 

Foreign currency exchange rate

 

 

—

 

 

 

50

 

 

 

50

 

Total current derivative liabilities

 

 

—

 

 

 

1,179

 

 

 

1,179

 

Noncurrent Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

—

 

 

 

426

 

 

 

426

 

Interest rate

 

 

27

 

 

 

402

 

 

 

429

 

Foreign currency exchange rate

 

 

—

 

 

 

337

 

 

 

337

 

Total noncurrent derivative liabilities

 

 

27

 

 

 

1,165

 

 

 

1,192

 

Total derivative liabilities

 

$

27

 

 

$

2,344

 

 

$

2,371

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

103

 

 

$

103

 

Interest rate

 

 

1

 

 

 

17

 

 

 

18

 

Foreign currency exchange rate

 

 

—

 

 

 

1

 

 

 

1

 

Total current derivative assets

 

 

1

 

 

 

121

 

 

 

122

 

Noncurrent Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

—

 

 

 

179

 

 

 

179

 

Interest rate

 

 

145

 

 

 

160

 

 

 

305

 

Foreign currency exchange rate

 

 

—

 

 

 

7

 

 

 

7

 

Total noncurrent derivative assets

 

 

145

 

 

 

346

 

 

 

491

 

Total derivative assets

 

$

146

 

 

$

467

 

 

$

613

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

304

 

 

$

304

 

Interest rate

 

 

42

 

 

 

13

 

 

 

55

 

Total current derivative liabilities

 

 

42

 

 

 

317

 

 

 

359

 

Noncurrent Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

—

 

 

 

165

 

 

 

165

 

Interest rate

 

 

295

 

 

 

49

 

 

 

344

 

Total noncurrent derivative liabilities

 

 

295

 

 

 

214

 

 

 

509

 

Total derivative liabilities

 

$

337

 

 

$

531

 

 

$

868

 

      

 

41

 

The following tables present the gains and losses on Dominion Energy’s derivatives, as well as where the associated activity is presented in its 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)

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate(3)

 

$

14

 

 

$

(16

)

 

$

182

 

Total

 

$

14

 

 

$

(16

)

 

$

182

 

Three Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate(3)

 

$

(2

)

 

$

(14

)

 

$

9

 

Total

 

$

(2

)

 

$

(14

)

 

$

9

 

Nine Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate (3)

 

$

86

 

 

$

(44

)

 

$

815

 

Total

 

$

86

 

 

$

(44

)

 

$

815

 

Nine Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate (3)

 

$

29

 

 

$

(46

)

 

$

198

 

Commodity(4)

 

 

—

 

 

 

(1

)

 

 

—

 

Total

 

$

29

 

 

$

(47

)

 

$

198

 

 

(1)

Amounts deferred into AOCI have no associated effect in Dominion Energy’s Consolidated Statements of Income.

(2)

Represents net derivative activity deferred into and amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Dominion Energy’s Consolidated Statements of Income.

(3)

Amounts recorded in Dominion Energy’s Consolidated Statement of Income are classified in interest and related charges.

(4)

Amounts recorded in Dominion Energy’s Consolidated Statement of Income are classified in purchased gas.

Derivatives not designated as hedging instruments

 

Amount of Gain (Loss) Recognized

in Income on Derivatives(1)(2)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

$

(306

)

 

 

 

$

(334

)

 

$

(908

)

 

$

(521

)

Purchased gas

 

 

1

 

 

 

 

 

25

 

 

 

6

 

 

 

32

 

Electric fuel and other energy-related purchases

 

 

205

 

 

 

 

 

44

 

 

 

401

 

 

 

7

 

Interest rate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest and related charges

 

 

92

 

 

 

 

 

(20

)

 

 

628

 

 

 

142

 

Total

 

$

(8

)

 

 

 

$

(285

)

 

$

127

 

 

$

(340

)

 

(1)

Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Dominion Energy’s Consolidated Statements of Income.  

(2)

Excludes amounts related to foreign currency exchange rate derivatives that are deferred to plant under construction within property, plant and equipment and regulatory assets/liabilities that will begin to amortize once the CVOW Commercial Project is placed in service.  

42

Virginia Power

Balance Sheet Presentation

The tables below present Virginia Power’s derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in its Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:

 

 

 

September 30, 2022

 

 

December 31, 2021

 

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

 

Gross Assets Presented

in the

Consolidated

Balance Sheet(1)

 

 

Financial Instruments

 

 

Cash

Collateral

Received

 

 

Net

Amounts

 

 

Gross

Assets Presented

in the

Consolidated

Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Received

 

 

Net

Amounts

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

$

297

 

 

$

7

 

 

$

—

 

 

$

290

 

 

$

110

 

 

$

8

 

 

$

—

 

 

$

102

 

Exchange

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

7

 

 

 

7

 

 

 

—

 

 

 

—

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

 

596

 

 

 

163

 

 

 

—

 

 

 

433

 

 

 

146

 

 

 

20

 

 

 

—

 

 

 

126

 

Foreign currency exchange rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

 

6

 

 

 

6

 

 

 

—

 

 

 

—

 

 

 

8

 

 

 

—

 

 

 

—

 

 

 

8

 

Total derivatives, subject to a

   master netting or similar

   arrangement

 

$

899

 

 

$

176

 

 

$

—

 

 

$

723

 

 

$

271

 

 

$

35

 

 

$

—

 

 

$

236

 

 

(1)

Excludes $62 million and $29 million of derivative assets at September 30, 2022 and December 31, 2021, respectively, which are not subject to master netting or similar arrangements.

 

 

 

 

September 30, 2022

 

 

December 31, 2021

 

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

Gross Amounts Not Offset

in the Consolidated

Balance Sheet

 

 

 

Gross

Liabilities

Presented in the

Consolidated

Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Paid

 

 

Net

Amounts

 

 

Gross

Liabilities

Presented in the Consolidated Balance Sheet(1)

 

 

Financial

Instruments

 

 

Cash

Collateral

Paid

 

 

Net

Amounts

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

$

233

 

 

$

13

 

 

$

121

 

 

$

99

 

 

$

84

 

 

$

8

 

 

$

54

 

 

$

22

 

Exchange

 

 

268

 

 

 

—

 

 

 

268

 

 

 

—

 

 

 

43

 

 

 

7

 

 

 

36

 

 

 

—

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

 

27

 

 

 

10

 

 

 

—

 

 

 

17

 

 

 

337

 

 

 

20

 

 

 

—

 

 

 

317

 

Foreign currency exchange rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

 

387

 

 

 

153

 

 

 

—

 

 

 

234

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Total derivatives, subject to a

   master netting or similar

   arrangement

 

$

915

 

 

$

176

 

 

$

389

 

 

$

350

 

 

$

464

 

 

$

35

 

 

$

90

 

 

$

339

 

 

(1)

Excludes $2 million and $6 million of derivative liabilities at September 30, 2022 and December 31, 2021, respectively, which are not subject to master netting or similar arrangements.

43

Volumes

The following table presents the volume of Virginia Power’s derivative activity at September 30, 2022. 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

 

 

34

 

 

 

7

 

Basis(1)

 

 

145

 

 

 

428

 

Electricity (MWh in millions):

 

 

 

 

 

 

 

 

Fixed price

 

 

8

 

 

 

5

 

FTRs

 

 

72

 

 

 

—

 

Oil (Gal in millions)

 

 

6

 

 

 

—

 

Interest rate(2) (in millions)

 

$

250

 

 

$

3,050

 

Foreign currency exchange rate(2)(in millions):

 

 

 

 

 

 

 

 

Danish Krone

 

468 kr.

 

 

4,167 kr.

 

Euro

 

€351

 

 

€2,651

 

(1)

Includes options.

(2)

Maturity is determined based on final settlement period.

 

AOCI

The following table presents selected information related to losses on cash flow hedges included in AOCI in Virginia Power’s Consolidated Balance Sheet at September 30, 2022:

 

 

 

AOCI

After-Tax

 

 

Amounts Expected to be

Reclassified to Earnings

During the Next 12

Months After-Tax

 

 

Maximum Term

(millions)

 

 

 

 

 

 

 

 

 

 

Interest rate

 

$

13

 

 

$

(1

)

 

387 months

Total

 

$

13

 

 

$

(1

)

 

 

 

The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interest payments) in earnings, thereby achieving the realization of interest rates contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in interest rates.

44

Fair Value and Gains and Losses on Derivative Instruments

The following table presents the fair values of Virginia Power’s derivatives and where they are presented in its Consolidated Balance Sheets:

 

 

 

Fair Value –

Derivatives under

Hedge

Accounting

 

 

Fair Value –

Derivatives not under

Hedge

Accounting

 

 

Total Fair Value

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

357

 

 

$

357

 

Foreign currency exchange rate

 

 

—

 

 

 

6

 

 

 

6

 

Total current derivative assets

 

 

—

 

 

 

363

 

 

 

363

 

Noncurrent Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

—

 

 

 

2

 

 

 

2

 

Interest rate

 

 

596

 

 

 

—

 

 

 

596

 

Total noncurrent derivative assets(1)

 

 

596

 

 

 

2

 

 

 

598

 

Total derivative assets

 

$

596

 

 

$

365

 

 

$

961

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

392

 

 

$

392

 

Foreign currency exchange rate

 

 

—

 

 

 

50

 

 

 

50

 

Total current derivative liabilities

 

 

—

 

 

 

442

 

 

 

442

 

Noncurrent Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

—

 

 

 

111

 

 

 

111

 

Interest rate

 

 

27

 

 

 

—

 

 

 

27

 

Foreign currency exchange rate

 

 

—

 

 

 

337

 

 

 

337

 

Total noncurrent derivative liabilities(2)

 

 

27

 

 

 

448

 

 

 

475

 

Total derivative liabilities

 

$

27

 

 

$

890

 

 

$

917

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

74

 

 

$

74

 

Interest rate

 

 

1

 

 

 

—

 

 

 

1

 

Foreign currency exchange rate

 

 

—

 

 

 

1

 

 

 

1

 

Total current derivative assets

 

 

1

 

 

 

75

 

 

 

76

 

Noncurrent Assets

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

—

 

 

 

72

 

 

 

72

 

Interest rate

 

 

145

 

 

 

—

 

 

 

145

 

Foreign currency exchange rate

 

 

—

 

 

 

7

 

 

 

7

 

Total noncurrent derivative assets(1)

 

 

145

 

 

 

79

 

 

 

224

 

Total derivative assets

 

$

146

 

 

$

154

 

 

$

300

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

92

 

 

$

92

 

Interest rate

 

 

42

 

 

 

—

 

 

 

42

 

Total current derivative liabilities

 

 

42

 

 

 

92

 

 

 

134

 

Noncurrent Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

 

—

 

 

 

41

 

 

 

41

 

Interest rate

 

 

295

 

 

 

—

 

 

 

295

 

Total noncurrent derivative liabilities(2)

 

 

295

 

 

 

41

 

 

 

336

 

Total derivative liabilities

 

$

337

 

 

$

133

 

 

$

470

 

 

(1)

Noncurrent derivative assets are presented in other deferred charges and other assets in Virginia Power’s Consolidated Balance Sheets. 

(2)

Noncurrent derivative liabilities are presented in other deferred credits and other liabilities in Virginia Power’s Consolidated Balance Sheets.

45

 

 

The following tables present the gains and losses on Virginia Power’s derivatives, as well as where the associated activity is presented in its 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)

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate(3)

 

$

18

 

 

$

(1

)

 

$

182

 

Total

 

$

18

 

 

$

(1

)

 

$

182

 

Three Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate(3)

 

$

(2

)

 

$

(1

)

 

$

8

 

Total

 

$

(2

)

 

$

(1

)

 

$

8

 

Nine Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate(3)

 

$

77

 

 

$

(2

)

 

$

814

 

Total

 

$

77

 

 

$

(2

)

 

$

814

 

Nine Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate(3)

 

$

24

 

 

$

(2

)

 

$

194

 

Total

 

$

24

 

 

$

(2

)

 

$

194

 

 

(1)

Amounts deferred into AOCI have no associated effect in Virginia Power’s Consolidated Statements of Income.

(2)

Represents net derivative activity deferred into and amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Virginia Power’s Consolidated Statements of Income.

(3)   Amounts recorded in Virginia Power’s Consolidated Statements of Income are classified in interest and related charges.  

 

 

Derivatives not designated as hedging instruments

 

Amount of Gain (Loss) Recognized

in Income on Derivatives(1)(2)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue

 

$

(108

)

 

 

 

$

(19

)

 

$

(237

)

 

$

(25

)

Electric fuel and other energy-related purchases

 

 

166

 

 

 

 

 

42

 

 

 

348

 

 

 

5

 

Total

 

$

58

 

 

 

 

$

23

 

 

$

111

 

 

$

(20

)

 

(1)

Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Virginia Power’s Consolidated Statements of Income.

(2)   Excludes amounts related to foreign currency exchange rate derivatives that are deferred to plant under construction within property, plant                       and equipment and regulatory assets/liabilities that will begin to amortize once the CVOW Commercial Project is placed in service.  

 

Note 10. Investments

Dominion Energy

Equity and Debt Securities

Short-Term Deposit

In May 2022, Dominion Energy entered into an agreement with a financial institution and committed to make a short-term deposit of at least $1.6 billion but not more than $2.0 billion to be posted as collateral to secure its $1.6 billion redemption obligation of the Series A Preferred Stock as described in Note 16. In May 2022, Dominion Energy funded the short-term deposit in the amount of $2.0 billion, which earned interest income at an annual rate of 1.75% through its maturity in September 2022.

46

Rabbi Trust Securities

Equity and fixed income securities and cash equivalents in Dominion Energy’s rabbi trusts and classified as trading totaled $109 million and $122 million at September 30, 2022 and December 31, 2021, respectively.

Decommissioning Trust Securities

Dominion Energy holds equity and fixed income securities, insurance contracts and cash equivalents in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Dominion Energy’s decommissioning trust funds are summarized below:

 

 

 

Amortized

Cost

 

 

Total

Unrealized

Gains

 

 

Total

Unrealized

Losses

 

 

Allowance for Credit Losses

 

 

Fair

Value

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

1,375

 

 

$

2,209

 

 

$

(37

)

 

 

 

 

 

$

3,547

 

Fixed income securities:(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

649

 

 

 

—

 

 

 

(86

)

 

$

—

 

 

 

563

 

Government securities

 

 

1,291

 

 

 

1

 

 

 

(101

)

 

 

—

 

 

 

1,191

 

Common/collective trust funds

 

 

62

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

62

 

Insurance contracts

 

 

214

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

214

 

Cash equivalents and other(3)

 

 

13

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

13

 

Total

 

$

3,604

 

 

$

2,210

 

 

$

(224

)

(4)

$

—

 

 

$

5,590

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

1,567

 

 

$

3,734

 

 

$

(13

)

 

 

 

 

 

$

5,288

 

Fixed income securities:(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

854

 

 

 

32

 

 

 

(5

)

 

$

—

 

 

 

881

 

Government securities

 

 

1,382

 

 

 

43

 

 

 

(7

)

 

 

—

 

 

 

1,418

 

Common/collective trust funds

 

 

168

 

 

 

4

 

 

 

—

 

 

 

—

 

 

 

172

 

Insurance contracts

 

 

255

 

 

 

—

 

 

 

—

 

 

 

 

 

 

 

255

 

Cash equivalents and other(3)

 

 

9

 

 

 

2

 

 

 

(75

)

 

 

—

 

 

 

(64

)

Total

 

$

4,235

 

 

$

3,815

 

 

$

(100

)

(4)

$

—

 

 

$

7,950

 

 

(1)

Unrealized gains and losses on equity securities are included in other income and the nuclear decommissioning trust regulatory liability.

(2)

Unrealized gains and losses on fixed income securities are included in AOCI and the nuclear decommissioning trust regulatory liability. Changes in allowance for credit losses are included in other income.

(3)

Includes pending sales of securities of $13 million at September 30, 2022, and pending purchases of securities of $35 million at December 31, 2021.

(4)

The fair value of securities in an unrealized loss position was $1.9 billion and $883 million at September 30, 2022 and December 31, 2021, respectively.

The portion of unrealized gains and losses that relates to equity securities held within Dominion Energy’s nuclear decommissioning trusts is summarized below:

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gains (losses) recognized during the period

 

$

(205

)

 

$

(15

)

 

$

(1,123

)

 

$

616

 

Less: Net (gains) losses recognized during the period

   on securities sold during the period

 

 

(2

)

 

 

(11

)

 

 

3

 

 

 

(323

)

Unrealized gains (losses) recognized during the period

   on securities still held at period end(1)

 

$

(207

)

 

$

(26

)

 

$

(1,120

)

 

$

293

 

 

(1)

Included in other income and the nuclear decommissioning trust regulatory liability.

47

 

The fair value of Dominion Energy’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at September 30, 2022 by contractual maturity is as follows:

 

 

 

Amount

 

(millions)

 

 

 

 

Due in one year or less

 

$

122

 

Due after one year through five years

 

 

512

 

Due after five years through ten years

 

 

453

 

Due after ten years

 

 

729

 

Total

 

$

1,816

 

 

Presented below is selected information regarding Dominion Energy’s equity and fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds.

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from sales

 

$

605

 

 

$

614

 

 

$

2,686

 

 

$

3,324

 

Realized gains(1)

 

 

17

 

 

 

25

 

 

 

132

 

 

 

405

 

Realized losses(1)

 

 

50

 

 

 

7

 

 

 

247

 

 

 

81

 

 

(1)

Includes realized gains and losses recorded to the nuclear decommissioning trust regulatory liability.

Virginia Power

Virginia Power holds equity and fixed income securities and cash equivalents in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Virginia Power’s decommissioning trust funds are summarized below:

 

 

 

Amortized

Cost

 

 

Total

Unrealized

Gains

 

 

Total

Unrealized

Losses

 

 

Allowance for Credit Losses

 

 

Fair

Value

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

856

 

 

$

1,151

 

 

$

(32

)

 

 

 

 

 

$

1,975

 

Fixed income securities:(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

434

 

 

 

—

 

 

 

(62

)

 

$

—

 

 

 

372

 

Government securities

 

 

654

 

 

 

—

 

 

 

(48

)

 

 

—

 

 

 

606

 

Common/collective trust funds

 

 

45

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

45

 

Cash equivalents and other(3)

 

 

6

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

6

 

Total

 

$

1,995

 

 

$

1,151

 

 

$

(142

)

(4)

$

—

 

 

$

3,004

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

841

 

 

$

1,720

 

 

$

(11

)

 

 

 

 

 

$

2,550

 

Fixed income securities:(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

517

 

 

 

17

 

 

 

(3

)

 

$

—

 

 

 

531

 

Government securities

 

 

584

 

 

 

16

 

 

 

(2

)

 

 

—

 

 

 

598

 

Common/collective trust funds

 

 

53

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

53

 

Cash equivalents and other(3)

 

 

2

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

2

 

Total

 

$

1,997

 

 

$

1,753

 

 

$

(16

)

(4)

$

—

 

 

$

3,734

 

 

(1)

Unrealized gains and losses on equity securities are included in other income and the nuclear decommissioning trust regulatory liability.

(2)

Unrealized gains and losses on fixed income securities are included in AOCI and the nuclear decommissioning trust regulatory liability. Changes in allowance for credit losses are included in other income.

(3)

Includes pending sales of securities of $6 million and $5 million at September 30, 2022 and December 31, 2021, respectively.

(4)

The fair value of securities in an unrealized loss position was $1.1 billion and $425 million at September 30, 2022 and December 31, 2021, respectively.

 

48

 

The portion of unrealized gains and losses that relates to equity securities held within Virginia Power’s nuclear decommissioning trusts is summarized below:

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gains (losses) recognized during the period

 

$

(118

)

 

$

6

 

 

$

(581

)

 

$

319

 

Less: Net (gains) losses recognized during the period

    on securities sold during the period

 

 

(4

)

 

 

(9

)

 

 

(8

)

 

 

(182

)

Unrealized gains (losses) recognized during the period

    on securities still held at period end(1)

 

$

(122

)

 

$

(3

)

 

$

(589

)

 

$

137

 

 

(1)

Included in other income and the nuclear decommissioning trust regulatory liability.

The fair value of Virginia Power’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at September 30, 2022 by contractual maturity is as follows:

 

 

 

Amount

 

(millions)

 

 

 

 

Due in one year or less

 

$

64

 

Due after one year through five years

 

 

277

 

Due after five years through ten years

 

 

301

 

Due after ten years

 

 

381

 

Total

 

$

1,023

 

 

Presented below is selected information regarding Virginia Power’s equity and fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds.

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from sales

 

$

425

 

 

$

216

 

 

$

1,289

 

 

$

1,465

 

Realized gains(1)

 

 

14

 

 

 

17

 

 

 

40

 

 

 

213

 

Realized losses(1)

 

 

33

 

 

 

2

 

 

 

85

 

 

 

28

 

 

(1)

Includes realized gains and losses recorded to the nuclear decommissioning trust regulatory liability.

Equity Method Investments

Dominion Energy recorded equity earnings on its investments of $255 million and $214 million for the nine months ended September 30, 2022 and 2021, respectively, in earnings from equity method investees in its Consolidated Statements of Income. In addition, Dominion Energy recorded equity losses of $6 million and $19 million for the nine months ended September 30, 2022 and 2021, respectively, in discontinued operations related to its investment in Atlantic Coast Pipeline. Dominion Energy received distributions of $268 million and $263 million for the nine months ended September 30, 2022 and 2021, respectively. Dominion Energy made contributions of $93 million and $1.0 billion for the nine months ended September 30, 2022 and 2021, respectively. At September 30, 2022 and December 31, 2021, the net difference between the carrying amount of Dominion Energy’s investments and its share of underlying equity in net assets was $227 million and $244 million, respectively. At September 30, 2022, these differences are primarily comprised of $11 million of equity method goodwill that is not being amortized and a $216 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, 2021, these differences are comprised of $27 million of equity method goodwill that is not being amortized, a $221 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 $(4) million basis difference primarily attributable to an unfunded commitment made to Align RNG.

Cove Point

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, 2021.

49

Income before income taxes recorded for 100% of Cove Point was $197 million and $136 million for the three months ended September 30, 2022 and 2021, respectively, and $506 million and $410 million for the nine months ended September 30, 2022 and 2021, respectively. Earnings attributable to Dominion Energy are presented within earnings from equity method investees in its Consolidated Statements of Income.

Dominion Energy recorded distributions from Cove Point of $98 million and $85 million for the three months ended September 30, 2022 and 2021, respectively, and $259 million and $235 million for the nine months ended September 30, 2022 and 2021, respectively.

Atlantic Coast Pipeline

A description of Dominion Energy’s investment in Atlantic Coast Pipeline, including events that led to the cancellation of the Atlantic Coast Pipeline Project in July 2020, is included in Note 9 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

At September 30, 2022 and December 31, 2021, Dominion Energy has recorded a liability of $119 million and $113 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 contributions of $965 million during the nine months ended September 30, 2021 to Atlantic Coast Pipeline. Dominion Energy recorded no contributions during the nine months ended September 30, 2022 to Atlantic Coast Pipeline.  

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.

Wrangler

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 nine months ended September 30, 2022.

All activity related to Wrangler is recorded within the Corporate and Other segment.

Dominion Privatization

 

In February 2022, Dominion Energy entered into an agreement to form Dominion Privatization, a partnership with Patriot. Dominion Privatization, through its wholly-owned subsidiaries, will maintain and operate electric and gas distribution infrastructure under service concession arrangements with certain U.S. military installations. Under the agreement, Dominion Energy will contribute its existing privatization operations, excluding contracts held by DESC, and Patriot will contribute cash.

The initial contribution, consisting of privatization operations in South Carolina, Texas and Pennsylvania, closed in March 2022 for which Dominion Energy received 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 is considered a Level 2 fair value measurement given that it is 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. Dominion Energy’s 50% noncontrolling ownership interest in Dominion Privatization is accounted for as an equity method investment as Dominion Energy has the ability to exercise significant influence, but not control, over the investee.

Dominion Energy expects to contribute its existing privatization operations in Virginia to Dominion Privatization by the end of 2022, contingent on clearance or approval under the Hart-Scott-Rodino Act and other customary closing and regulatory conditions. In April 2022, Dominion Energy filed with the Federal Trade Commission for approval under the Hart-Scott-Rodino Act. In May 2022, the waiting period under the Hart-Scott-Rodino Act expired. The contribution of the service concession arrangements currently held by Virginia Power also requires approval from the Virginia and North Carolina Commissions. In May 2022, Virginia Power filed for such approval with the Virginia and North Carolina Commissions. In July and September 2022, the Virginia Commission and North Carolina Commission, respectively, approved the request to transfer at net book value. Upon closing of the second contribution, Dominion Energy expects to receive cash proceeds totaling $108 million, subject to customary closing adjustments, and to recognize a gain of approximately $130 million ($100 million after-tax). When this future contribution occurs, Dominion Energy expects to maintain a 50% noncontrolling ownership interest in Dominion Privatization.

At September 30, 2022, $83 million of contracts and related assets and $4 million of liabilities associated with existing privatization operations in Virginia are classified as held for sale and reflected in current assets held for sale and other current liabilities,

50

respectively, in Dominion Energy’s Consolidated Balance Sheets and in other current assets and other current liabilities, respectively, in Virginia Power’s Consolidated Balance Sheets.

All activity related to Dominion Privatization is reflected within the Corporate and Other segment.

Note 11. Property, Plant and Equipment

Acquisitions of Nonregulated Solar Projects

Other than the items 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, 2021.

The following table presents acquisitions by Virginia Power of non-jurisdictional solar projects. Virginia Power has claimed or expects to claim federal investment tax credits on the projects.

Project Name

 

Date Agreement Entered

 

Date Agreement

Closed

 

Project

Location

 

Project Cost

(millions)(1)

 

 

Date of

Commercial

Operations

 

MW Capacity

 

Pumpkinseed

 

May 2020

 

May 2020

 

Virginia

 

$

138

 

 

September 2022

 

 

60

 

Bookers Mill

 

February 2021

 

June 2021

 

Virginia

 

 

225

 

 

Expected 2023

 

 

127

 

(1)

Includes acquisition cost.

 

 

The following table presents acquisitions by Dominion Energy of solar projects in addition to the Virginia Power projects presented above. Dominion Energy expects to claim federal investment tax credits on the projects.

Project Name

 

Date Agreement Entered

 

Date Agreement

Closed

 

Project

Location

 

Project Cost

(millions)(1)

 

 

Date of

Commercial

Operations

 

MW Capacity

 

Madison

 

July 2020

 

July 2020

 

Virginia

 

$

130

 

 

Expected 2023

 

 

62

 

Atlanta Farms

 

March 2022

 

May 2022

 

Ohio

 

 

390

 

 

Expected split(2)

 

 

200

 

Hardin II

 

August 2020

 

Expected 2022

 

Ohio

 

 

290

 

 

Expected 2023

 

 

150

 

(1)

Includes acquisition cost.

(2)

Expected to be split between 2023 and 2024.

 

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 nine months ended September 30, 2022.

 

51

 

Note 12. Regulatory Assets and Liabilities

Regulatory assets and liabilities include the following:

 

 

 

September 30, 2022

 

 

December 31, 2021

 

(millions)

 

 

 

 

 

 

 

 

Dominion Energy

 

 

 

 

 

 

 

 

Regulatory assets:

 

 

 

 

 

 

 

 

Deferred cost of fuel used in electric generation(1)

 

$

571

 

 

$

251

 

Deferred project costs and DSM programs for gas utilities(2)

 

 

68

 

 

 

53

 

Unrecovered gas costs(3)

 

 

184

 

 

 

191

 

Deferred rider costs for Virginia electric utility(4)

 

 

149

 

 

 

72

 

Ash pond and landfill closure costs(5)

 

 

62

 

 

 

193

 

Deferred nuclear refueling outage costs(6)

 

 

55

 

 

 

79

 

NND Project costs(7)

 

 

138

 

 

 

138

 

Deferred early plant retirement charges(8)

 

 

226

 

 

 

226

 

Derivatives(9)

 

 

375

 

 

 

112

 

Other

 

 

236

 

 

 

177

 

Regulatory assets-current

 

 

2,064

 

 

 

1,492

 

Unrecognized pension and other postretirement benefit costs(10)

 

 

549

 

 

 

548

 

Deferred rider costs for Virginia electric utility(4)

 

 

312

 

 

 

489

 

Deferred project costs for gas utilities(2)

 

 

693

 

 

 

675

 

Interest rate hedges(11)

 

 

170

 

 

 

899

 

AROs and related funding(12)

 

 

409

 

 

 

329

 

NND Project costs(7)

 

 

2,122

 

 

 

2,226

 

Ash pond and landfill closure costs(5)

 

 

2,245

 

 

 

2,223

 

Deferred cost of fuel used in electric generation(1)

 

 

1,318

 

 

 

409

 

Deferred early plant retirement charges(8)

 

 

56

 

 

 

226

 

Derivatives(9)

 

 

562

 

 

 

35

 

Other

 

 

525

 

 

 

584

 

Regulatory assets-noncurrent

 

 

8,961

 

 

 

8,643

 

Total regulatory assets

 

$

11,025

 

 

$

10,135

 

Regulatory liabilities:

 

 

 

 

 

 

 

 

Provision for future cost of removal and AROs(13)

 

 

181

 

 

 

181

 

Reserve for refunds and rate credits to electric utility customers(14)

 

 

129

 

 

 

420

 

Income taxes refundable through future rates(15)

 

 

147

 

 

 

153

 

Monetization of guarantee settlement(16)

 

 

67

 

 

 

67

 

Derivatives(9)

 

 

325

 

 

 

69

 

Other

 

 

170

 

 

 

96

 

Regulatory liabilities-current

 

 

1,019

 

 

 

986

 

Income taxes refundable through future rates(15)

 

 

4,096

 

 

 

4,260

 

Provision for future cost of removal and AROs(13)

 

 

2,409

 

 

 

2,331

 

Nuclear decommissioning trust(17)

 

 

1,532

 

 

 

2,158

 

Monetization of guarantee settlement(16)

 

 

719

 

 

 

831

 

Interest rate hedges(11)

 

 

202

 

 

 

67

 

Reserve for refunds and rate credits to electric utility customers(14)

 

 

358

 

 

 

448

 

Unrecognized pension and other postretirement benefit costs(10)

 

 

177

 

 

 

200

 

Overrecovered other postretirement benefit costs(18)

 

 

131

 

 

 

105

 

Derivatives(9)

 

 

227

 

 

 

169

 

Other

 

 

191

 

 

 

144

 

Regulatory liabilities-noncurrent

 

 

10,042

 

 

 

10,713

 

Total regulatory liabilities

 

$

11,061

 

 

$

11,699

 

 

(1)

Reflects deferred fuel expenses for the Virginia, North Carolina and South Carolina jurisdictions of Dominion Energy’s electric generation operations. Reflects a $66 million reduction recorded in the first quarter of 2022 from the application of a portion of the monetization of guarantee settlement previously reflected as regulatory liabilities associated with the approval of DESC’s cost of fuel proceedings. See Note 13 for additional information.

(2)

Primarily reflects amounts expected to be collected from or owed to gas customers in Dominion Energy’s service territories associated with current and prospective rider projects, including CEP, PIR and pipeline integrity management. See Note 13 for additional information.

52

(3)

Reflects unrecovered gas costs at regulated gas operations, which are recovered through filings with the applicable regulatory authority.

(4)

Reflects deferrals under Virginia Power’s electric transmission FERC formula rate and the deferral of costs associated with certain current and prospective rider projects. See Note 13 for additional information.

 

(5)

Primarily reflects legislation enacted in Virginia in 2019, which requires any CCR asset located at certain Virginia Power stations to be closed by removing the CCR to an approved landfill or through beneficial reuse. These deferred costs are expected to be collected over a period between 15 and 18 years commencing December 2021 through Rider CCR. Virginia Power is entitled to collect carrying costs on uncollected  expenditures once expenditures have been made. See Note 13 for additional information.

(6)

Legislation enacted in Virginia in April 2014 requires Virginia Power to defer operation and maintenance costs incurred in connection with the refueling of any nuclear-powered generating plant. These deferred costs will be amortized over the refueling cycle, not to exceed 18 months.

(7)

Reflects expenditures by DESC associated with the NND Project, which pursuant to the SCANA Merger Approval Order, will be recovered from DESC electric service customers over a 20-year period ending in 2039. See Note 3 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

(8)

Reflects amounts from the early retirements of certain coal- and oil-fired generating units to be amortized through 2023 in accordance with the settlement of the 2021 Triennial Review. See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

(9)

Represents changes in the fair value of derivatives, excluding separately presented interest rate hedges, that following settlement are expected to be recovered from or refunded to customers.

(10)

Represents unrecognized pension and other postretirement employee benefit costs expected to be recovered or refunded through future rates generally over the expected remaining service period of plan participants by certain of Dominion Energy's rate-regulated subsidiaries.

(11)

Reflects interest rate hedges recoverable from or refundable to customers. Certain of these instruments are settled and any related payments are being amortized into interest expense over the life of the related debt, which has a weighted-average useful life of approximately 25 years as of September 30, 2022. 

(12)

Represents deferred depreciation and accretion expense related to legal obligations associated with the future retirement of generation, transmission and distribution properties. The AROs primarily relate to DESC’s electric generating facilities, including Summer, and are expected to be recovered over the related property lives and periods of decommissioning which may range up to approximately 105 years.

(13)

Rates charged to customers by Dominion Energy’s regulated businesses include a provision for the cost of future activities to remove assets that are expected to be incurred at the time of retirement.

(14)

Reflects amounts previously collected from retail electric customers of DESC for the NND Project to be credited over an estimated 11-year period effective February 2019, in connection with the SCANA Merger Approval Order. See Notes 3 and 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021 for additional information. Also reflects amounts to be refunded to jurisdictional retail electric customers in Virginia associated with the settlement of the 2021 Triennial Review. See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

(15)

Amounts recorded to pass the effect of reduced income taxes from the 2017 Tax Reform Act to customers in future periods, which will primarily reverse at the weighted average tax rate that was used to build the reserves over the remaining book life of the property, net of amounts to be recovered through future rates to pay income taxes that become payable when rate revenue is provided to recover AFUDC equity.

(16)

Reflects amounts to be refunded to DESC electric service customers over a 20-year period ending in 2039 associated with the monetization of a bankruptcy settlement agreement.  See Note 3 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

(17)

Primarily reflects a regulatory liability representing amounts collected from Virginia jurisdictional customers and placed in external trusts (including income, losses and changes in fair value thereon, as applicable) for the future decommissioning of Dominion Energy’s utility nuclear generation stations, in excess of the related AROs.

(18)

Reflects a regulatory liability for the collection of postretirement benefit costs allowed in rates in excess of expense incurred.

 

53

 

 

 

September 30, 2022

 

 

December 31, 2021

 

(millions)

 

 

 

 

 

 

 

 

Virginia Power

 

 

 

 

 

 

 

 

Regulatory assets:

 

 

 

 

 

 

 

 

Deferred cost of fuel used in electric generation(1)

 

$

205

 

 

$

131

 

Deferred rider costs(2)

 

 

149

 

 

 

72

 

Ash pond and landfill closure costs(3)

 

 

62

 

 

 

193

 

Deferred nuclear refueling outage costs(4)

 

 

55

 

 

 

79

 

Deferred early plant retirement charges(5)

 

 

226

 

 

 

226

 

Derivatives(6)

 

 

369

 

 

 

105

 

Other

 

 

70

 

 

 

44

 

Regulatory assets-current

 

 

1,136

 

 

 

850

 

Deferred rider costs(2)

 

 

312

 

 

 

489

 

Interest rate hedges(7)

 

 

—

 

 

 

604

 

Ash pond and landfill closure costs(3)

 

 

2,242

 

 

 

2,223

 

Deferred cost of fuel used in electric generation(1)

 

 

1,318

 

 

 

409

 

Deferred early plant retirement charges(5)

 

 

56

 

 

 

226

 

Derivatives(6)

 

 

453

 

 

 

34

 

Other

 

 

137

 

 

 

145

 

Regulatory assets-noncurrent

 

 

4,518

 

 

 

4,130

 

Total regulatory assets

 

$

5,654

 

 

$

4,980

 

Regulatory liabilities:

 

 

 

 

 

 

 

 

Provision for future cost of removal(8)

 

 

154

 

 

 

154

 

Reserve for refunds to Virginia electric customers(9)

 

 

27

 

 

 

306

 

Income taxes refundable through future rates(10)

 

 

63

 

 

 

63

 

Derivatives(6)

 

 

265

 

 

 

51

 

Other

 

 

139

 

 

 

73

 

Regulatory liabilities-current

 

 

648

 

 

 

647

 

Income taxes refundable through future rates(10)

 

 

2,280

 

 

 

2,335

 

Nuclear decommissioning trust(11)

 

 

1,532

 

 

 

2,158

 

Provision for future cost of removal(8)

 

 

1,082

 

 

 

1,043

 

Interest rate hedges(7)

 

 

202

 

 

 

—

 

Reserve for refunds to Virginia electric customers(9)

 

 

6

 

 

 

25

 

Other

 

 

167

 

 

 

179

 

Regulatory liabilities-noncurrent

 

 

5,269

 

 

 

5,740

 

Total regulatory liabilities

 

$

5,917

 

 

$

6,387

 

(1)

Reflects deferred fuel expenses for the Virginia and North Carolina jurisdictions of Virginia Power’s generation operations. See Note 13 for additional information.

(2)

Reflects deferrals under Virginia Power’s electric transmission FERC formula rate and the deferral of costs associated with certain current and prospective rider projects. See Note 13 for additional information.

(3)

Primarily reflects legislation enacted in Virginia in 2019, which requires any CCR asset located at certain Virginia Power stations to be closed by removing the CCR to an approved landfill or through beneficial reuse. These deferred costs are expected to be collected over a period between 15 and 18 years commencing December 2021 through Rider CCR. Virginia Power is entitled to collect carrying costs on uncollected expenditures once expenditures have been made. See Note 13 for additional information.  

(4)

Legislation enacted in Virginia in April 2014 requires Virginia Power to defer operation and maintenance costs incurred in connection with the refueling of any nuclear-powered generating plant. These deferred costs will be amortized over the refueling cycle, not to exceed 18 months.

(5)

Reflects amounts from the early retirements of certain coal- and oil-fired generating units to be amortized through 2023 in accordance with the settlement of the 2021 Triennial Review.  See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.

(6)

Represents changes in the fair value of derivatives, excluding separately presented interest rate hedges, that following settlement are expected to be recovered from or refunded to customers.  

(7)

Reflects interest rate hedges recoverable from or refundable to customers. Certain of these instruments are settled and any related payments are being amortized into interest expense over the life of the related debt, which has a weighted-average useful life of approximately 24 years as of September 30, 2022.

(8)

Rates charged to customers by Virginia Power's regulated businesses include a provision for the cost of future activities to remove assets that are expected to be incurred at the time of retirement.

(9)

Reflects amounts to be refunded to jurisdictional retail electric customers in Virginia associated with the settlement of the 2021 Triennial Review. See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021 for additional information.  

54

(10)

Amounts recorded to pass the effect of reduced income taxes from the 2017 Tax Reform Act to customers in future periods, which will reverse at the weighted average tax rate that was used to build the reserves over the remaining book life of the property, net of amounts to be recovered through future rates to pay income taxes that become payable when rate revenue is provided to recover AFUDC equity.  

(11)

Primarily reflects a regulatory liability representing amounts collected from Virginia jurisdictional customers and placed in external trusts (including income, losses and changes in fair value thereon) for the future decommissioning of Virginia Power’s utility nuclear generation stations, in excess of the related AROs. 

At September 30, 2022, Dominion Energy and Virginia Power regulatory assets include $4.8 billion and $3.3 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, 2021.

Virginia Regulation

Virginia Fuel Expenses

In May 2022, Virginia Power filed its annual fuel factor filing with the Virginia Commission to recover an estimated $2.3 billion in Virginia jurisdictional projected fuel expense for the rate year beginning July 1, 2022 and a projected $1.0 billion under-recovered balance as of June 30, 2022. Virginia Power’s proposed fuel rate represents a fuel revenue increase of $1.8 billion when applied to projected kilowatt-hour sales for that period. Virginia Power also proposed alternatives to recover this under-collected balance over a two- or three-year period.  Under these alternatives, Virginia Power’s fuel revenues for the rate year would increase by $1.3 billion or $1.2 billion, respectively. In addition, Virginia Power proposed a change in the timing of fuel cost recovery for certain customers who elect market-based rates that would consider those customers’ portion of the projected under-recovered balance to have been recovered as of June 30, 2022. In July 2022, Virginia Power, the Virginia Commission staff and another party filed a comprehensive settlement agreement with the Virginia Commission for approval. The comprehensive settlement agreement provides for the collection of the requested under-recovered projected fuel expense over a three-year period beginning July 1, 2022 and that Virginia Power will exclude from recovery through base rates one half of the related financing costs over the three-year period. In addition, the proposed settlement agreement affirmed Virginia Power’s proposal regarding fuel cost recovery for market-based rate 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 Statement of Income. In September 2022, the Virginia Commission approved the comprehensive settlement agreement.

Renewable Generation Projects

In September 2021, Virginia Power filed a petition with the Virginia Commission for CPCNs to construct and operate 13 utility-scale projects totaling approximately 661 MW of solar generation and 70 MW of energy storage as part of its efforts to meet the renewable generation development requirements under the VCEA. The projects, as of September 2021, are expected to cost approximately $1.4 billion in the aggregate, excluding financing costs, and be placed into service between 2022 and 2023. In March 2022, the Virginia Commission approved the petition.

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

55

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. This matter is pending.

In November 2021, Virginia Power filed an application with the Virginia Commission requesting approval and certification of the Virginia Facilities component of the CVOW Commercial Project. The onshore Virginia Facilities have an estimated cost of approximately $1.1 billion, excluding financing costs, which is included within the overall cost of the CVOW Commercial Project. In addition, Virginia Power requested approval from the Virginia Commission to enter into financial hedges with U.S. financial institutions to mitigate the foreign currency exchange risk associated with certain supplier contracts associated with the CVOW Commercial Project. In August 2022, the Virginia Commission approved the application for certification of the Virginia Facilities component of the CVOW Commercial Project and noted that no further action was required with respect to Virginia Power’s foreign currency risk mitigation plan. Also in August 2022, Virginia Power filed a petition for limited reconsideration relating to the performance standard for operation of the CVOW Commercial Project included in the Virginia Commission’s August order. The Virginia Commission granted reconsideration and suspended in part the August order pending its reconsideration. In October 2022, Virginia Power, Office of the Attorney General of Virginia and other parties filed a settlement agreement with the Virginia Commission for approval. The settlement agreement provides for certain cost sharing mechanisms of total construction costs between $10.3 billion and $13.7 billion, as subject to potential adjustment to the extent construction costs are decreased by the IRA, and includes enhanced performance reporting provisions associated with operation of the CVOW Commercial Project in lieu of a performance guarantee. This matter is pending.

Nuclear Life Extension

In October 2021, Virginia Power filed a petition with the Virginia Commission requesting a determination that it is reasonable and prudent for Virginia Power to pursue a nuclear life extension program to extend the operating licenses of Surry and North Anna and to carry out projects to upgrade or replace systems and equipment necessary to continue to safely and reliably operate these nuclear power stations.  The nuclear life extension program is expected to cost approximately $3.9 billion, excluding financing costs. In July 2022, the Virginia Commission approved the petition.

56

Riders

Developments for significant riders associated with various Virginia Power projects are as follows:

 

Rider Name

 

Application Date

 

Approval Date

 

Rate Year

Beginning

 

Total Revenue

Requirement

(millions)

 

 

Increase (Decrease)

Over Previous Year

(millions)

 

Rider B

 

June 2022

 

Pending

 

April 2023

 

$

34

 

 

$

18

 

Rider B

 

June 2022

 

Pending

 

April 2024

 

 

34

 

 

 

—

 

Rider BW

 

October 2021

 

May 2022

 

September 2022

 

 

145

 

 

 

32

 

Rider BW

 

October 2021

 

May 2022

 

September 2023

 

 

120

 

 

 

(25

)

Rider CCR

 

February 2022

 

October 2022

 

December 2022

 

 

231

 

 

 

15

 

Rider CE(1)

 

September 2021

 

March 2022

 

May 2022

 

 

71

 

 

 

61

 

Rider CE(2)

 

October 2022

 

Pending

 

May 2023

 

 

89

 

 

 

18

 

Rider E

 

January 2022

 

September 2022

 

November 2022

 

 

101

 

 

 

34

 

Rider GT

 

August 2021

 

May 2022

 

June 2022

 

 

56

 

 

N/A

 

Rider GT

 

August 2022

 

Pending

 

June 2023

 

 

16

 

 

 

(40

)

Rider OSW

 

November 2021

 

August 2022(3)

 

September 2022

 

 

79

 

 

N/A

 

Rider OSW

 

November 2022

 

Pending

 

September 2023

 

 

271

 

 

 

192

 

Rider R

 

June 2021

 

March 2022

 

April 2022

 

 

59

 

 

 

1

 

Rider R

 

June 2021

 

March 2022

 

April 2023

 

 

55

 

 

 

(4

)

Rider RGGI(4)

 

December 2021

 

Withdrawn

 

 

 

 

 

 

 

 

 

 

Rider RPS

 

December 2021

 

June 2022

 

September 2022

 

 

140

 

 

 

127

 

Rider SNA(5)

 

October 2021

 

July 2022

 

September 2022

 

 

107

 

 

N/A

 

Rider SNA(5)

 

October 2022

 

Pending

 

September 2023

 

 

50

 

 

 

(57

)

Rider T1(6)

 

May 2022

 

July 2022

 

September 2022

 

 

706

 

 

 

(168

)

Rider U(7)

 

June 2021

 

March 2022

 

April 2022

 

 

95

 

 

 

15

 

Rider U(8)

 

June 2022

 

Pending

 

April 2023

 

 

74

 

 

 

(21

)

Rider US-2

 

October 2021

 

June 2022

 

September 2022

 

 

11

 

 

 

2

 

Rider US-3

 

August 2021

 

March 2022

 

June 2022

 

 

50

 

 

 

12

 

Rider US-3

 

August 2022

 

Pending

 

June 2023

 

 

40

 

 

 

(10

)

Rider US-4

 

August 2021

 

March 2022

 

June 2022

 

 

15

 

 

 

5

 

Rider US-4

 

August 2022

 

Pending

 

June 2023

 

 

17

 

 

 

2

 

Rider W

 

June 2022

 

Pending

 

April 2023

 

 

106

 

 

 

(15

)

Rider W

 

June 2022

 

Pending

 

April 2024

 

 

109

 

 

 

3

 

DSM Riders(9)

 

December 2021

 

August 2022

 

September 2022

 

 

91

 

 

 

17

 

(1)

Associated with solar generation and energy storage projects approved in March 2022, solar generation projects approved in April 2021 and certain small-scale solar projects.

(2)

Associated with solar generation and energy storage projects requested for approval in October 2022 and certain small-scale solar projects in addition to previously approved Rider CE projects.

(3)

In August 2022, Virginia Power filed a petition for limited reconsideration relating to a performance standard for operation of the CVOW Commercial Project included in the Virginia Commission’s August order. The Virginia Commission granted reconsideration and suspended in part the August order pending its reconsideration with Rider OSW approved on an interim basis.

(4)

In January 2022, Virginia Power filed a motion to withdraw its application as a result of the announcement by the Governor of Virginia that he intends to withdraw Virginia from RGGI. The Virginia Commission granted Virginia Power’s motion in April 2022. See additional discussion below.

(5)

Virginia Power also requested approval of cost recovery of approximately $1.2 billion through Rider SNA for the first phase of nuclear life extension program which includes investments through 2024. In April 2022, Virginia Power, the Virginia Commission staff and certain interested parties filed a proposed stipulation recommending that costs incurred after February 2022 associated with the first phase of the nuclear life extension program for North Anna be deferred and requested for recovery in a subsequent Rider SNA filing.

(6)

Consists of $482 million for the transmission component of Virginia Power’s base rates and $224 million for Rider T1.

(7)

Consists of $60  million for previously approved phases and $35  million for phase six costs for Rider U.

(8)

As amended in June 2022, application consists of $74 million for previously approved phases of Rider U.

(9)

Associated with an additional nine new energy efficiency programs with a $140 million cost cap, with the ability to exceed the cost cap by no more than 15%.

 

In May 2022, Virginia Power filed a petition with the Virginia Commission requesting a 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. Virginia Power recorded $33 million ($25 million after-tax) in depreciation and amortization in the third quarter of 2022.

57

Electric Transmission Projects

Description and Location

of Project

 

Application

Date

 

Approval

Date

 

Type of

Line

 

Miles of

Lines

 

Cost Estimate

(millions)

 

Elmont-Ladysmith rebuild and related projects in the Counties of Hanover and Caroline, Virginia

 

April 2021

 

April 2022

 

500 kV

 

26

 

$

95

 

Rebuild transmission lines and related projects in the City of Staunton and County of Augusta, Virginia

 

November 2021

 

August 2022

 

230 kV

 

21

 

 

45

 

Build new Dulles Towne Center substation and line loop in the County of Loudoun, Virginia

 

December 2021

 

July 2022

 

230 kV

 

1

 

 

105

 

Nimbus line loop and substation and new 230 kV line in the County of Loudon, Virginia

 

February 2022

 

October 2022

 

230 kV

 

1

 

 

40

 

Partial rebuild of Bristers-Ox 115 kV line in Fauquier and Prince William Counties, Virginia

 

August 2022

 

Pending

 

115 kV

 

15

 

 

40

 

Construct new switching station, substations, transmission lines and related projects in Lunenberg and Mecklenburg Counties, Virginia

 

October 2022

 

Pending

 

230 kV

 

18

 

 

230

 

Construct new switching station, substation, transmission lines and related projects in Charlotte, Halifax and Mecklenburg Counties, Virginia

 

October 2022

 

Pending

 

230 kV

 

26

 

 

215

 

Construct new switching stations, substation, transmission lines and related projects in Loudoun County, Virginia

 

October 2022

 

Pending

 

500/230 kV

 

4

 

 

720

 

North Carolina Regulation

Virginia Power North Carolina Base Rate Case

In March 2019, Virginia Power filed its base rate case and schedules with the North Carolina Commission. In February 2020, the North Carolina Commission issued its final order relating to base rates. In July 2020, Virginia Power filed a notice of appeal and exceptions to the Supreme Court of North Carolina, arguing that the North Carolina Commission committed reversible error on certain issues relating to the ratemaking treatment of certain coal ash remediation costs. In June 2022, the Supreme Court of North Carolina affirmed the North Carolina Commission’s order.

Virginia Power North Carolina Fuel Filing

In August 2022, Virginia Power submitted its annual filing to the North Carolina Commission to adjust the fuel component of its electric rates. Virginia Power updated its filing in October 2022 to reflect the increased commodity cost of fuel and proposed a total  $107 million increase to the fuel component of its electric rates for the rate year beginning February 1, 2023. Virginia Power also submitted an alternative to recover the increase over a two-year period. Under this approach, Virginia Power proposed a total $80 million increase to the fuel component of its electric rates implemented on a staggered timeline for the rate year beginning February 1, 2023 with remaining unrecovered balances to be recovered in the rate year beginning February 1, 2024. This matter is pending.

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 May 2022, PSNC submitted a filing with the North Carolina Commission for a $56 million gas cost increase. The North Carolina Commission approved the filing in May 2022 with rates effective June 2022. In September 2022, PSNC submitted a filing with the North Carolina Commission for a $126 million gas cost increase. The North Carolina Commission approved the filing in September 2022 with rates effective October 2022.

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 September 2022, PSNC submitted a filing with the North Carolina Commission for a $46 million increase relating to the customer usage tracker. The North Carolina Commission approved the filing in September 2022 with rates effective October 2022.

South Carolina Regulation

DSM Programs

DESC has approval for a DSM rider through which it recovers expenditures related to its DSM programs. In January 2022, DESC filed an application with the South Carolina Commission seeking approval to recover $60 million of costs and net lost revenues

58

associated with these programs, along with an incentive to invest in such programs. In April 2022, the South Carolina Commission approved the request, effective with the first billing cycle of May 2022.

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 April 2022, the South Carolina Commission approved DESC’s request to increase the total fuel cost component of retail electric rates, effective with the first billing cycle of May 2022. The South Carolina Commission also approved DESC’s request to apply approximately $66 million representing the net balance of funds associated with the monetization of the bankruptcy settlement with Toshiba Corporation following the satisfaction of liens against NND Project property previously recorded in regulatory liabilities, as a reduction to its under-collected base fuel cost balance, along with a requested increase to DESC’s variable environmental and avoided capacity cost component. The net effect is an annual increase of $143 million.

In August 2022, DESC filed an application with the South Carolina Commission seeking a mid-period adjustment to increase the base fuel component of retail electric rates for the recovery of electric fuel costs. If approved, the increase of the base fuel cost component is expected to be effective with the first billing cycle of January 2023. The estimated annual increase is $399 million. This matter is pending.

Natural Gas Rates

In June 2022, DESC filed with the South Carolina Commission its monitoring report for the 12-month period ended March 31, 2022 with a total revenue requirement of $553 million. This represents a $129 million overall annual increase to its natural gas rates including a $16 million base rate increase under the terms of the Natural Gas Rate Stabilization Act effective with the first billing cycle of November 2022. In October 2022, the South Carolina Commission issued an order approving a total revenue requirement of $549 million effective with the first billing cycle of November 2022. This represents a $125 million overall annual increase to DESC’s natural gas rates including a $12 million base rate increase under the terms of the Natural Gas Rate Stabilization Act.

Ohio Regulation 

PIR Program

In 2008, East Ohio began PIR, aimed at replacing approximately 25% of its pipeline system. In April 2022, the Ohio Commission approved an extension of East Ohio’s PIR program for capital investments through 2026 with continuation of 3% increases of annual capital expenditures per year.

In June 2022, the Ohio Commission approved East Ohio’s application to adjust the PIR cost recovery rates for 2021 costs. The filing reflects gross plant investment for 2021 of $225 million, cumulative gross plant investment of $2.2 billion and a revenue requirement of $273 million.

CEP Program

In 2011, East Ohio began CEP which enables East Ohio to defer depreciation expense, property tax expense and carrying costs associated with CEP investments. 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 February 2022, the Ohio Commission approved adjustments to CEP cost recovery rates for 2019 and 2020 costs. The approved rates reflect gross plant investment for 2019 and 2020 of $231 million, cumulative gross plant investment of $952 million and a revenue requirement of $118 million. The Ohio Commission also ordered that East Ohio should file its next base rate case by October 2023.

In November 2022, the Ohio Commission approved adjustments to CEP cost recovery rates for 2021 costs. The approved rates reflect gross plant investment for 2021 of $146 million, cumulative gross plant investment of $1.1 billion and a revenue requirement of $131 million.

PIPP Plus Program

Under the Ohio PIPP Plus Program, eligible customers can make reduced payments based on their ability to pay their bill. The difference between the customer’s total bill and the PIPP amount is deferred and collected under the PIPP rider in accordance with the rules of the Ohio Commission. In July 2022, East Ohio’s annual update of the PIPP rider filed in May 2022 with the Ohio Commission was approved. The revised rider rate reflects recovery over the twelve-month period from July 2022 through June 2023 of projected deferred program costs of approximately $22 million from April 2022 through June 2023, net of over-recovery of accumulated arrearages of approximately $4 million as of March 31, 2022.

59

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 writeoffs of uncollectible amounts. In July 2022, the Ohio Commission approved East Ohio’s application to adjust its UEX rider to reflect an annual revenue requirement of $20 million to provide for recovery of an under-recovered accumulated bad debt expense of $7 million as of March 31, 2022, and recovery of net bad debt expense projected to total $13 million for the twelve-month period ending March 2023.

West Virginia Regulation

West Virginia Base Rate Case

In September 2020, Hope filed its base rate case and schedules with the West Virginia Commission. Hope proposed a non-fuel, base rate increase of $28 million. The base rate increase was proposed to recover the significant investment in distribution infrastructure and costs associated with the acquisition of over 2,000 miles of gathering assets, both for the benefit of West Virginia customers.  The proposed rates would provide for an ROE of 10.25% compared to the authorized ROE of 9.45%. In July 2021, the West Virginia Commission approved a non-fuel, base rate increase of $13 million for rates effective July 2021 with an ROE of 9.54%. In August 2021, Hope filed a petition for reconsideration with the West Virginia Commission regarding certain return calculations included in the July 2021 approval order. In June 2022, the West Virginia Commission issued an order resolving this petition without material modification to Hope’s base rates.

Utah Regulation

Utah Base Rate Case

In May 2022, Questar Gas filed its base rate case and schedules with the Utah Commission. Questar Gas proposed a non-fuel, base rate increase of $71 million effective January 2023. The base rate increase was proposed to recover the significant investment in distribution infrastructure for the benefit of Utah customers. The proposed rates would provide for an ROE of 10.3% compared to the currently authorized ROE of 9.5%. This matter is pending.

Purchased Gas

In July 2022, the Utah Commission approved Questar Gas’ request for a $94 million gas cost increase with rates effective August 2022.

In October 2022, the Utah Commission approved Questar Gas’ request for a $128 million gas cost increase with rates effective November 2022.

 

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, 2021.

 

Dominion Energy’s Consolidated Statements of Income include $6 million and $17 million for the three and nine months ended September 30, 2022, respectively, and $58 million and $147 million for the three and nine months ended September 30, 2021, respectively, of rental revenue included in operating revenue. Dominion Energy’s Consolidated Statements of Income include $9 million and $26 million for the three and nine months ended September 30, 2022, respectively, and $29 million and $87 million for the three and nine months ended September 30, 2021, 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.

 

Corporate Office Leasing Arrangement

 

In December 2019, Dominion Energy signed an agreement with a lessor, as amended in May 2020, to construct and lease a new corporate office property in Richmond, Virginia. The lessor provided equity and had obtained financing commitments from debt investors, totaling $465 million, to fund the estimated project costs. In March 2021, Dominion Energy notified the lessor of its intention to terminate the leasing arrangement effective April 2021. As a result, Dominion Energy recorded a charge of $71 million ($53 million after-tax) in the first quarter of 2021, included in impairments of assets and other charges in its Consolidated Statements of Income, primarily for amounts required to be repaid to the lessor.

 

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, 2021.

 

60

 

Virginia Power

Virginia Power purchased shared services from DES, an affiliated VIE, of $96 million and $89 million for the three months ended September 30, 2022 and 2021, respectively, and $290 million and $278 million for the nine months ended September 30, 2022 and 2021, respectively. Virginia Power’s Consolidated Balance Sheets include amounts due to DES of $27 million and $20 million at September 30, 2022 and December 31, 2021, 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, 2021.

Dominion Energy

Dominion Energy’s short-term financing is supported by its $6.0 billion joint revolving credit facility that provides for a discount in the pricing of certain annual fees and amounts borrowed by Dominion Energy under the facility if Dominion Energy achieves certain annual renewable electric generation and diversity and inclusion objectives.

At September 30, 2022, Dominion Energy’s commercial paper and letters of credit outstanding, as well as its capacity available under the credit facility, were as follows:

 

 

 

Facility

Limit

 

 

Outstanding

Commercial

Paper

 

 

Outstanding

Letters of

Credit

 

 

Facility

Capacity

Available

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joint revolving credit facility(1)

 

$

6,000

 

 

$

2,600

 

 

$

251

 

 

$

3,149

 

 

(1)

This credit facility matures in June 2026, with the potential to be extended by the borrowers to June 2028, and can be used by the borrowers under the credit facility to support bank borrowings and the issuance of commercial paper, as well as to support up to a combined $2.0 billion of letters of credit.

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 September 30, 2022, the sub-limits for DESC and Questar Gas were $500 million and $250 million, respectively.

In addition to the credit facility mentioned above, Dominion Energy also has a credit facility which allows Dominion Energy to issue up to approximately $30 million in letters of credit and was scheduled to mature in June 2022. In April 2022, Dominion Energy entered into an agreement to amend and restate this facility to extend the maturity date to June 2025. In May 2022, Dominion Energy further amended and restated this facility to have a maturity date of June 2024. At September 30, 2022 and December 31, 2021, Dominion Energy had $20 million and $29 million in letters of credit outstanding under this facility, respectively.

 

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, 2021. At September 30, 2022 and December 31, 2021, Dominion Energy’s Consolidated Balance Sheets include $343 million and $431 million, respectively, with respect to such notes presented within short-term debt. The proceeds are used for general corporate purposes and to repay debt.

 

61

 

Virginia Power

Virginia Power’s short-term financing is supported through its access as co-borrower to Dominion Energy’s $6.0 billion joint revolving credit facility. The credit facility can be used for working capital, as support for the combined commercial paper programs of the borrowers under the credit facility and for other general corporate purposes.

At September 30, 2022, Virginia Power’s share of commercial paper and letters of credit outstanding under the joint revolving credit facility with Dominion Energy, Questar Gas and DESC was as follows:  

 

 

 

Facility

Limit(1)

 

 

Outstanding

Commercial

Paper

 

 

Outstanding

Letters of

Credit

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

Joint revolving credit facility(1)

 

$

6,000

 

 

$

1,009

 

 

$

180

 

 

 

(1)

The full amount of the facility is available to Virginia Power, less any amounts outstanding to co-borrowers Dominion Energy, Questar Gas and DESC. The sub-limit for Virginia Power is set pursuant to the terms of the facility but can be changed at the option of the borrowers multiple times per year. At September 30, 2022, the sub-limit for Virginia Power was $1.75 billion. If Virginia Power has liquidity needs in excess of its sub-limit, the sub-limit may be changed or such needs may be satisfied through short-term intercompany borrowings from Dominion Energy. This credit facility matures in June 2026, with the potential to be extended by the borrowers to June 2028. The credit facility can be used to support bank borrowings and the issuance of commercial paper, as well as to support up to $2.0 billion (or the sub-limit, whichever is less) of letters of credit.

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 January 2022, Virginia Power issued $600 million of 2.40% senior notes and $400 million of 2.95% senior notes that mature in 2032 and 2051, respectively.

In April 2022, Virginia Power remarketed two series of tax-exempt bonds, with an aggregate outstanding principal of approximately $138 million to new investors. Both bonds will bear interest at a coupon of 1.65% until May 2024, after which they will bear interest at a market rate to be determined at that time.

In May 2022, Dominion Energy borrowed $900 million under its Sustainability Revolving Credit Facility which matures in 2024 and bears interest at a variable rate. The proceeds from these borrowings were used to support environmental sustainability and social investment initiatives ($450 million) and for general corporate purposes ($450 million). In June 2022, Dominion Energy repaid $450 million borrowed for general corporate purposes.

In May 2022, Virginia Power issued $600 million of 3.75% senior notes and $600 million of 4.625% senior notes that mature in 2027 and 2052, respectively.

In August 2022, Dominion Energy issued $400 million of 4.35% senior notes and $600 million of 4.85% senior notes that mature in 2032 and 2052, respectively.

In August 2022, Questar Gas issued through private placement $125 million of 4.39% senior notes and $125 million of 4.70% senior notes that will mature in 2032 and 2052, respectively.

In the third quarter of 2022, Dominion Energy repurchased $149 million of senior notes with various interest rates and maturity dates. Gains related to the early redemption of the senior notes were $17 million ($13 million after-tax) reflected within interest and related charges in Dominion Energy’s Consolidated Statements of Income for the three and nine months ended September 30, 2022. In October 2022, Dominion Energy repurchased $61 million of senior notes with various interest rates and maturity dates.

In October 2022, Dominion Energy remarketed its $27 million Peninsula Ports Authority of Virginia Coal Terminal Revenue Refunding Bonds, Series 2003 due in 2033 to new investors. The bonds will bear interest at a coupon rate of 3.80% until October 2024, after which they will bear interest at a market rate to be determined at that time.

In October 2022, East Ohio completed pricing and expects to issue through private placement by December 2022 $250 million of 6.19% and $250 million of 6.38% senior notes that will mature in 2032 and 2052, respectively.

 

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Derivative Restructuring

 

In June 2020, Dominion Energy amended a portfolio of interest rate swaps with a notional value of $2.0 billion, 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, 2021.  In August 2022, Dominion Energy settled certain of the outstanding interest rate swaps which would have otherwise matured in December 2024, resulting in a $154 million reduction in other long-term debt.

 

Preferred Stock

 

Dominion Energy is authorized to issue up to 20 million shares of preferred stock, which may be designated into separate classes. At September 30, 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. At December 31, 2021, Dominion Energy had issued and outstanding 3.4 million shares of preferred stock, 1.6 million, 0.8 million and 1.0 million of which were designated as the Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock, respectively.

 

Dominion Energy recorded dividends of $7 million ($4.375 per share) for the three months ended September 30, 2021, and $12 million ($7.292 per share) and $21 million ($13.125 per share) for the nine months ended September 30, 2022 and 2021, respectively, on the Series A Preferred Stock. In addition, Dominion Energy recorded interest expense of $5 million and $7 million on the Series A Preferred Stock for the three and nine months ended September 30, 2022, respectively, following the reclassification of these shares to a mandatorily redeemable liability effective June 2022 as discussed below. Dominion Energy recorded dividends of $9 million ($11.625 per share) for both the three months ended September 30, 2022 and 2021, and $27 million ($34.875 per share) for both the nine months ended September 30, 2022 and 2021, on the Series B Preferred Stock. Dominion Energy recorded dividends of $11 million ($10.875 per share) for the three months ended September 30, 2022, and $33 million ($32.625 per share) for the nine months ended September 30, 2022, on the Series C Preferred Stock.  

 

Other than as discussed below, there have been no significant changes to Dominion Energy’s Series A Preferred Stock, 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, 2021.

 

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, 2021.

 

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. In September 2022, Dominion Energy redeemed all outstanding shares of Series A Preferred Stock for $1.6 billion.

 

The stock purchase contract liability associated with Dominion Energy’s 2019 Equity Units was $44 million at December 31, 2021. Stock purchase contract payments of $44 million and $64 million were made during the nine months ended September 30, 2022 and 2021, respectively.

 

Issuance of Common Stock

Dominion Energy recorded, net of fees and commissions, $134 million from the issuance of 2 million shares of common stock for the nine months ended September 30, 2022 and $292 million from the issuance of 4 million shares of common stock for the nine months ended September 30, 2021, 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, 2021.

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In August 2021, Dominion Energy issued 0.6 million shares of its common stock, valued at $45 million, to satisfy DESC’s obligation for the initial payment under a settlement agreement with the SCDOR discussed in Note 17. 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 the settlement agreement.

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.

In July 2021, Dominion Energy issued 1.4 million shares of its common stock, valued at $104 million, to satisfy DESC’s obligation under a settlement agreement for the FILOT litigation discussed in Note 17.

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, 2021. Dominion Energy did not issue any shares or enter into any forward sale agreements under this program during the nine months ended September 30, 2022.

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, 2021.

Dominion Energy did not repurchase any shares of common stock during the nine months ended September 30, 2022.

 

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.

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Ozone Standards

The EPA published final non-attainment designations for the October 2015 ozone standard 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. However, until implementation plans for the standard are 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 and cash flows.

ACE Rule

In July 2019, the EPA published the final rule informally referred to as the ACE Rule, as a replacement for the Clean Power Plan. The ACE Rule regulated GHG emissions from existing coal-fired power plants pursuant to Section 111(d) of the CAA and required states to develop plans by July 2022 establishing unit-specific performance standards for existing coal-fired power plants. In January 2021, the U.S. Court of Appeals for the D.C. Circuit vacated the ACE Rule and remanded it to the EPA. This decision would take effect upon issuance of the court’s mandate. In March 2021, the court issued a partial mandate vacating and remanding all parts of the ACE Rule except for the portion of the ACE Rule that repealed the Clean Power Plan. In October 2021, the U.S. Supreme Court agreed to hear a challenge of the U.S. Court of Appeals for the D.C. Circuit’s decision on the ACE Rule. In June 2022, the U.S. Supreme Court reversed the D.C. Circuit’s decision on the ACE Rule and remanded the case back to the D.C. Circuit. Until the case is resolved by the D.C. Circuit and/or the EPA issues new 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

65

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 with one site at Virginia Power and expects to commence remediation activities in 2023 depending on receipt of final permits and approvals. At September 30, 2022 and December 31, 2021, Dominion Energy had $47 million and $45 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

66

Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021. 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 September 30, 2022 and December 31, 2021 include reserves of $96 million and $274 million, respectively, included in other current liabilities, and insurance receivables of $68 million and $118 million, respectively, included within other receivables. These balances at September 30, 2022 and December 31, 2021 include $68 million and $85 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 nine months ended September 30, 2022, charges included in Dominion Energy’s Consolidated Statements of Income were inconsequential. During the nine months ended September 30, 2021, Dominion Energy’s Consolidated Statements of Income include charges of $100 million ($75 million after-tax), included within impairment of assets and other charges.

SCANA Shareholder Litigation

In September 2017, a shareholder derivative action was filed against certain former executive officers and directors of SCANA in the State Court of Common Pleas in Richland County, South Carolina (the State Court Derivative Case). In September 2018, this action was consolidated with another action in the Business Court Pilot Program in Richland County. The plaintiffs allege, among other things, that the defendants breached their fiduciary duties to shareholders by their gross mismanagement of the NND Project, and that the defendants were unjustly enriched by bonuses they were paid in connection with the project. In January 2019, the defendants filed a motion to dismiss the consolidated action. In February 2019, one action was voluntarily dismissed. In March 2020, the court denied the defendants’ motion to dismiss. In April 2020, the defendants filed a notice of appeal with the South Carolina Court of Appeals and a petition with the Supreme Court of South Carolina seeking appellate review of the denial of the motion to dismiss. In June 2020, the plaintiffs filed a motion to dismiss the appeal with the South Carolina Court of Appeals, which was granted in July 2020. In August 2020, the Supreme Court of South Carolina denied the defendants’ petition seeking appellate review. Also in August 2020, the defendants filed a petition for rehearing with the South Carolina Court of Appeals relating to the July 2020 ruling by the court, which was denied in October 2020. In November 2020, SCANA filed a petition of certiorari with the Supreme Court of South Carolina seeking appellate review of the denial of SCANA’s motion to dismiss. This petition was denied in June 2021. Also in June 2021, the parties reached an agreement in principle in the amount of $33 million to resolve this matter, subject to court approval. This settlement was reached in contemplation of and to be utilized to satisfy a portion of the Federal Court Merger Case and the State Court Merger Case discussed below. In November 2021, the parties executed a settlement agreement and filed with the State Court of Common Pleas in Richland County, South Carolina for approval. In June 2022, the State Court of Common Pleas in Richland County, South Carolina issued final approval of the settlement agreement with the funds utilized to satisfy a portion of the State Court Merger Case as discussed below.

In January 2018, a purported class action was filed against SCANA, Dominion Energy and certain former executive officers and directors of SCANA in the State Court of Common Pleas in Lexington County, South Carolina (the City of Warren Lawsuit). The plaintiff alleges, among other things, that defendants violated their fiduciary duties to shareholders by executing a merger agreement that would unfairly deprive plaintiffs of the true value of their SCANA stock, and that Dominion Energy aided and abetted these actions. Among other remedies, the plaintiff seeks to enjoin and/or rescind the merger.

In February 2018, a purported class action was filed against Dominion Energy and certain former directors of SCANA and DESC in the State Court of Common Pleas in Richland County, South Carolina (the Metzler Lawsuit). The allegations made and the relief sought by the plaintiffs are substantially similar to that described for the City of Warren Lawsuit.

In September 2019, the U.S. District Court for the District of South Carolina granted the plaintiffs’ motion to consolidate the City of Warren Lawsuit and the Metzler Lawsuit (the Federal Court Merger Case). In October 2019, the plaintiffs filed an amended complaint against certain former directors and executive officers of SCANA and DESC, which stated substantially similar allegations to those in the City of Warren Lawsuit and the Metzler Lawsuit as well as an inseparable fraud claim. In November 2019, the defendants filed a motion to dismiss. In April 2020, the U.S. District Court for the District of South Carolina denied the motion to dismiss. In May 2020, SCANA filed a motion to intervene, which was denied in August 2020. In September 2020, SCANA filed a notice of appeal with the U.S. Court of Appeals for the Fourth Circuit. In June 2021, the parties reached an agreement in principle in the amount of $63 million to resolve this matter as well as the State Court Merger Case described below, subject to court approval. This settlement was reached in contemplation of and to be partially satisfied by the State Court Derivative Case settlement described above. In November 2021, the parties executed a settlement agreement, as described above relating to this matter as well as the State Court Derivative Case and the State Court Merger Case, and filed with the State Court of Common Pleas in Richland County, South Carolina for approval. In June 2022, this case was dismissed in connection with the final approval by the State Court of Common Pleas in Richland County, South Carolina of the settlement agreement.

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In May 2019, a case was filed against certain former executive officers and directors of SCANA in the State Court of Common Pleas in Richland County, South Carolina (the State Court Merger Case). The plaintiff alleges, among other things, that the defendants breached their fiduciary duties to shareholders by their gross mismanagement of the NND Project, were unjustly enriched by the bonuses they were paid in connection with the project and breached their fiduciary duties to secure and obtain the best price for the sale of SCANA. Also in May 2019, the case was removed to the U.S. District Court of South Carolina by the non-South Carolina defendants. In June 2019, the plaintiffs filed a motion to remand the case to state court. In January 2020, the case was remanded to state court. In February 2020, the defendants filed a motion to dismiss. In June 2021, the parties reached an agreement in principle as described above relating to this matter as well as the Federal Court Merger Case and the State Court Derivative Case. In November 2021, the parties executed a settlement agreement, as described above relating to this matter as well as the State Court Derivative Case and the Federal Court Merger Case, and filed with the State Court of Common Pleas in Richland County, South Carolina for approval. In June 2022, the State Court of Common Pleas in Richland County, South Carolina issued final approval of the settlement agreement.  Also in June 2022, Dominion Energy utilized the $33 million of insurance proceeds from the State Court Derivative Case settlement, the issuance of 0.4 million shares of its common stock and paid $2 million in cash to satisfy its obligations under the settlement agreement.

 

Employment Class Actions and Indemnification

In August 2017, a case was filed in the U.S. District Court for the District of South Carolina on behalf of persons who were formerly employed at the NND Project. In July 2018, the court certified this case as a class action. In February 2019, certain of these plaintiffs filed an additional case, which case has been dismissed and the plaintiffs have joined the case filed August 2017. The plaintiffs allege, among other things, that SCANA, DESC, Fluor Corporation and Fluor Enterprises, Inc. violated the Worker Adjustment and Retraining Notification Act in connection with the decision to stop construction at the NND Project. The plaintiffs allege that the defendants failed to provide adequate advance written notice of their terminations of employment and are seeking damages, which could be as much as $100 million for 100% of the NND Project. In January 2021, the U.S. District Court for the District of South Carolina granted summary judgment in favor of SCANA, DESC, Fluor Corporation and Fluor Enterprises, Inc. In February 2021, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Fourth Circuit. In November 2021, the U.S Court of Appeals for the Fourth Circuit affirmed the lower court ruling. In March 2022, the deadline to file an appeal to the Supreme Court of the United States expired.

In September 2018, a case was filed in the State Court of Common Pleas in Fairfield County, South Carolina by Fluor Enterprises, Inc. and Fluor Daniel Maintenance Services, Inc. against DESC and Santee Cooper. The plaintiffs make claims for indemnification, breach of contract and promissory estoppel arising from, among other things, the defendants' alleged failure and refusal to defend and indemnify the Fluor defendants in the aforementioned case. As a result of the ruling in favor of the defendants in the aforementioned case, DESC was able to resolve Fluor’s claims for an inconsequential amount.

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, resulting in a gain of $18 million ($14 million after-tax) recorded in losses (gains) on sales of assets in Dominion Energy’s Consolidated Statements of Income for the three and nine months ended September 30, 2022. Certain additional utility property representing $3 million of the value to be conveyed is expected to transfer by the end of 2022. The transfer of the remaining real estate remains subject to the approval of FERC. In October 2022, DESC filed for such approval with FERC. If such approval is received, the transfer of such utility and non-utility properties is expected to result in a gain of approximately $20 million upon completion.

 

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Nuclear Operations

Nuclear Insurance

Other than the items discussed below, 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, 2021.

During the second quarter of 2022, Dominion Energy reduced the levels of nuclear property insurance coverage for the reactor site at Summer from $2.75 billion to the NRC minimum requirement of $1.06 billion. As a result of this reduction in nuclear property insurance coverage, Dominion Energy’s maximum retrospective premium assessment for the current annual policy period was reduced to $65 million. Additionally, DESC maintains an excess property insurance policy with the European Mutual Association for Nuclear Insurance which provides coverage to Summer for property damage and outage costs resulting from an event of a non-nuclear origin. Dominion Energy reduced the levels of coverage from $415 million to $1 million.

During the third quarter of 2022, the total liability protection per nuclear incident available to all participants in the Secondary Financial Protection Program increased from $13.5 billion to $13.7 billion. This increase does not impact Dominion Energy’s responsibility per active unit under the Price-Anderson Amendments Act of 1988.

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, 2021, 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 September 30, 2022, 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 September 30, 2022, 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 September 30, 2022, Dominion Energy had issued the following subsidiary guarantees:

 

 

 

Maximum

Exposure

 

(millions)

 

 

 

 

Commodity transactions(1)

 

$

2,514

 

Nuclear obligations(2)

 

 

243

 

Solar(3)

 

 

303

 

Other(4)

 

 

1,268

 

Total(5)(6)

 

$

4,328

 

 

(1)

Guarantees related to commodity commitments of certain subsidiaries. These guarantees were provided to counterparties in order to facilitate physical and financial transaction related commodities and services.

(2)

Guarantees primarily related to certain DGI subsidiaries regarding all aspects of running a nuclear facility.

(3)

Includes guarantees to facilitate the development of solar projects.

(4)

Guarantees related to other miscellaneous contractual obligations such as leases, environmental obligations, construction projects and insurance programs. Also includes guarantees entered into by Dominion Energy RNG Holdings II, Inc. on behalf of a subsidiary to facilitate construction of renewable natural gas facilities. Due to the uncertainty of workers’ compensation claims, the parental guarantee has no stated limit.

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(5)

Excludes Dominion Energy’s guarantee of an offshore wind installation vessel discussed in Note 15 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021.

(6)

In July 2016, Dominion Energy signed an agreement with a lessor to construct and lease a new corporate office property in Richmond, Virginia. The lessor provided equity and obtained financing commitments from debt investors, totaling $365 million, which funded total project costs. The project became substantially complete in August 2019 at which point the facility was available for Dominion Energy’s use and the five-year lease term commenced. At the end of the initial lease term, Dominion Energy can (i) extend the term of the lease for an additional five years, subject to the approval of the participants, at current market terms, (ii) purchase the property for an amount equal to the 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 project costs, Dominion Energy may be required to make a payment to the lessor, up to 87% of project costs, for the difference between the project costs and sale proceeds. At September 30, 2022, no amounts have been recorded related to this guarantee.

 

Additionally, at September 30, 2022, Dominion Energy had purchased $248 million of surety bonds, including $172 million at Virginia Power, and authorized the issuance of letters of credit by financial institutions of $251 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, 2021.

At September 30, 2022, Dominion Energy’s credit exposure totaled $133 million, primarily related to price risk management activities. Of this amount, investment grade counterparties, including those internally rated, represented 88%. No single counterparty, whether investment grade or non-investment grade, exceeded $45 million of exposure. At September 30, 2022, Virginia Power’s exposure related to wholesale customers totaled $17 million. Of this amount, investment grade counterparties, including those internally rated, represented 78%. No single counterparty, whether investment grade or non-investment grade, exceeded $4 million of exposure.

Credit-Related Contingent Provisions

Certain of Dominion Energy’s derivative instruments contain credit-related contingent provisions. These provisions require Dominion Energy 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 as of September 30, 2022 and December 31, 2021, Dominion Energy would have been required to post $189 million and $31 million, respectively, of additional collateral to its counterparties. 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 $124 million and $66 million of collateral at September 30, 2022 and December 31, 2021, respectively, related to derivative instruments with credit-related contingent provisions that are in a liability position and not fully collateralized with cash. In addition, Dominion Energy had posted letters of credit as collateral with counterparties covering $53 million of fair value of derivative instruments in a liability position at September 30, 2022. 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 was $313 million and $97 million at September 30, 2022 and December 31, 2021, respectively, which does not include the impact of any offsetting asset positions.

 

Certain of Virginia Power’s derivative instruments contain credit-related contingent provisions. These provisions require Virginia Power to provide collateral upon the occurrence of specific events, primarily a credit rate 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 as of September 30, 2022 and December 31, 2021, Virginia Power would have been required to post $58 million and $22 million, respectively, of additional collateral to its counterparties. The collateral that would be required to be posted includes the impacts of any offsetting asset position and any amounts already posted for derivatives and non-derivative contracts, per contractual terms. Virginia Power had posted $121 million and $54 million of collateral at September 30, 2022 and December 31, 2021, respectively, related to derivative instruments with credit-related contingent provisions that are in a liability position and not fully collateralized with cash. In addition, Virginia Power had posted letters of credit as collateral with counterparties covering $53 million of fair value of derivative instruments in a liability position at September 30, 2022. 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 was $179 million and $76 million at September 30, 2022 and December 31, 2021, respectively, which does not include the impact of any offsetting asset positions.

 

See Note 9 for additional information about derivative instruments.

70

Note 19. Related-Party Transactions

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. Dominion Energy’s transactions with equity method investments are described in Note 10. A discussion of significant related-party transactions follows.

Virginia Power

Transactions with Affiliates

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 September 30, 2022, Virginia Power’s derivative assets and liabilities with affiliates were $64 million and $3 million, respectively. At December 31, 2021, Virginia Power’s derivative assets and liabilities with affiliates were $29 million and $6 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, 2021. At September 30, 2022 and December 31, 2021, 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 $576 million and $522 million, respectively.  At September 30, 2022 and December 31, 2021, 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 $493 million and $431 million, respectively. While Virginia Power has not been notified by Dominion Energy of any required contributions to be made in 2022, it anticipates that it may have to contribute approximately $175 million as a result of Dominion Energy’s contribution made to its qualified defined benefit pension plans in December 2021.

DES and other affiliates provide accounting, legal, finance and certain administrative and technical services 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:

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity purchases from affiliates

 

$

515

 

 

$

219

 

 

$

1,099

 

 

$

526

 

Services provided by affiliates(1)

 

 

125

 

 

 

116

 

 

 

378

 

 

 

363

 

Services provided to affiliates

 

 

4

 

 

 

6

 

 

 

13

 

 

 

15

 

 

(1)

Includes capitalized expenditures of $44 million and $39 million for the three months ended September 30, 2022 and 2021, respectively, and $122 million and $121 million for the nine months ended September 30, 2022 and 2021, respectively.

Virginia Power has borrowed funds from Dominion Energy under short-term borrowing arrangements. There were $784 million and $699 million in short-term demand note borrowings from Dominion Energy as of September 30, 2022 and December 31, 2021, respectively. Virginia Power had no outstanding borrowings, net of repayments, under the Dominion Energy money pool for its nonregulated subsidiaries as of September 30, 2022 and December 31, 2021. Interest charges related to Virginia Power’s borrowings from Dominion Energy were inconsequential for both the three and nine months ended September 30, 2022 and 2021.

There were no issuances of Virginia Power’s common stock to Dominion Energy for the three and nine months ended September 30, 2022 and 2021.

 

71

 

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

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

35

 

 

$

43

 

 

$

5

 

 

$

6

 

Interest cost

 

 

83

 

 

 

80

 

 

 

11

 

 

 

11

 

Expected return on plan assets

 

 

(221

)

 

 

(209

)

 

 

(47

)

 

 

(43

)

Amortization of prior service cost (credit)

 

 

—

 

 

 

—

 

 

 

(10

)

 

 

(11

)

Amortization of net actuarial loss

 

 

39

 

 

 

48

 

 

 

—

 

 

 

1

 

Curtailment(1)

 

 

—

 

 

 

—

 

 

 

(8

)

 

 

—

 

Net periodic benefit (credit) cost

 

$

(64

)

 

$

(38

)

 

$

(49

)

 

$

(36

)

Nine Months Ended September 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service cost

 

$

106

 

 

$

127

 

 

$

16

 

 

$

18

 

Interest cost

 

 

250

 

 

 

238

 

 

 

34

 

 

 

35

 

Expected return on plan assets

 

 

(667

)

 

 

(625

)

 

 

(143

)

 

 

(130

)

Amortization of prior service (credit) cost

 

 

—

 

 

 

—

 

 

 

(29

)

 

 

(32

)

Amortization of net actuarial loss

 

 

119

 

 

 

145

 

 

 

(1

)

 

 

3

 

Settlements and curtailment(1)

 

 

—

 

 

 

5

 

 

 

(8

)

 

 

—

 

Net periodic benefit (credit) cost

 

$

(192

)

 

$

(110

)

 

$

(131

)

 

$

(106

)

(1)  2022 amounts relate primarily to Dominion Energy’s sale of Hope. 2021 amounts relate primarily to the Dominion Energy executive nonqualified pension plan.

Employer Contributions

During the three and nine months ended September 30, 2022, 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 2022. 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

 

Dominion

Energy

 

Virginia

Power

Dominion Energy Virginia

 

Regulated electric distribution

 

X

 

X

 

 

Regulated electric transmission

 

X

 

X

 

 

Regulated electric generation fleet(1)

 

X

 

X

Gas Distribution

 

Regulated gas distribution and storage(2)

 

X

 

 

Dominion Energy South Carolina

 

Regulated electric distribution

 

X

 

 

 

 

Regulated electric transmission

 

X

 

 

 

 

Regulated electric generation fleet

 

X

 

 

 

 

Regulated gas distribution and storage

 

X

 

 

Contracted Assets

 

Nonregulated electric generation fleet(3)

 

X

 

 

 

 

Noncontrolling interest in Cove Point

 

X

 

 

(1)

Includes Virginia Power’s non-jurisdictional generation operations.

(2)

Includes renewable natural gas operations as well as Wexpro’s gas development and production operations.

(3)

Includes solar generation facility development operations.

 

In addition to the operating segments above, the Companies also report a Corporate and Other segment.

72

Dominion Energy

The Corporate and Other Segment of Dominion Energy includes its corporate, service company and other functions (including unallocated debt) as well as nonregulated retail energy marketing operations (prior to December 2021), including Dominion Energy’s noncontrolling interests in Wrangler (through March 2022) and Dominion Privatization. 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 presented in discontinued operations, which are discussed in Note 3.

In the nine months ended September 30, 2022, Dominion Energy reported after-tax net expenses of $1.7 billion in the Corporate and Other segment, including $1.6 billion of after-tax net expenses for specific items with $1.8 billion of after-tax net expenses attributable to its operating segments. In the nine months ended September 30, 2021, Dominion Energy reported after-tax net expenses of $642 million in the Corporate and Other segment, including $492 million of after-tax net expenses for specific items with $617 million of after-tax net expenses attributable to its operating segments.

The net expenses for specific items attributable to Dominion Energy’s operating segments in 2022 primarily related to the impact of the following items:

•

A $691 million ($536 million after-tax) loss related to investments in nuclear decommissioning trust funds, attributable to:

 

 

•

Contracted Assets ($465 million after-tax); and

 

•

Dominion Energy Virginia ($71 million after-tax);

•

A $649 million ($513 million after-tax) loss associated with the sale of Kewaunee, attributable to Contracted Assets;

•

A $213 million ($159 million after-tax) charge for RGGI compliance costs deemed recovered through base rates, attributable to Dominion Energy Virginia;

•

A $191 million ($142 million after-tax) charge in connection with a comprehensive settlement agreement for Virginia fuel expenses, attributable to Dominion Energy Virginia;

•

A $183 million ($136 million after-tax) charge for amortization of a regulatory asset established in connection with the settlement of the 2021 Triennial Review, attributable to Dominion Energy Virginia;

•

A $135 million ($94 million after-tax) loss related to economic hedging activities, attributable to Contracted Assets;

•

A $94 million ($70 million after-tax) charge associated with storm damage and service restoration in Virginia Power’s service territory, attributable to Dominion Energy Virginia;

•

A $60 million ($45 million after-tax) charge for dismantling costs associated with certain retired electric generation facilities, attributable to Dominion Energy Virginia; and

•

A $17 million benefit ($82 million after-tax loss) associated with the sale of Hope, attributable to Gas Distribution.

73

 

The net expenses for specific items attributable to Dominion Energy’s operating segments in 2021 primarily related to the impact of the following items:

•

A $447 million ($336 million after-tax) loss related to economic hedging activities, attributable to Contracted Assets;

•

$266 million ($199 million after-tax) of charges associated with the settlement of the South Carolina electric base rate case, attributable to Dominion Energy South Carolina;

•

A $151 million ($112 million after-tax) loss from an unbilled revenue reduction at Virginia Power, attributable to Dominion Energy Virginia;

•

A $119 million ($89 million after-tax) net charge associated with the settlement of the 2021 Triennial Review, attributable to Dominion Energy Virginia;

•

A $77 million ($57 million after-tax) charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to Virginia’s 2021 budget process, attributable to Dominion Energy Virginia;

•

A $70 million ($53 million after-tax) charge associated with litigation acquired in the SCANA Combination, attributable to Dominion Energy South Carolina;

•

A $68 million ($50 million after-tax) charge associated with storm damage and service restoration in Virginia Power’s service territory, attributable to Dominion Energy Virginia; and

•

A $44 million ($35 million after-tax) charge related to a revision in estimated recovery of spent nuclear fuel costs associated with the decommissioning of Kewaunee, attributable to Contracted Assets; partially offset by

•

A $309 million ($248 million after-tax) gain related to investments in nuclear decommissioning trust funds, attributable to:

 

 

•

Contracted Assets ($218 million after-tax); and

 

•

Dominion Energy Virginia ($30 million after-tax); and

•

A $130 million ($97 million after-tax) benefit for a change in the CCRO reserve associated with the 2021 Triennial Review, attributable to Dominion Energy Virginia.

 

 

74

 

 

The following table presents segment information pertaining to Dominion Energy’s operations:

 

 

 

Dominion

Energy

Virginia

 

 

Gas

Distribution

 

 

Dominion

Energy

South

Carolina

 

 

Contracted

Assets

 

 

Corporate

and Other

 

 

Adjustments

& Eliminations

 

 

Consolidated

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue from external

      customers

 

$

2,871

 

 

$

436

 

 

$

915

 

 

$

239

 

 

$

(75

)

 

$

—

 

 

$

4,386

 

Intersegment revenue

 

 

(4

)

 

 

1

 

 

 

2

 

 

 

5

 

 

 

224

 

 

 

(228

)

 

 

—

 

Total operating revenue

 

 

2,867

 

 

 

437

 

 

 

917

 

 

 

244

 

 

 

149

 

 

 

(228

)

 

 

4,386

 

Net loss from discontinued

      operations

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(3

)

 

 

—

 

 

 

(3

)

Net income (loss) attributable to

      Dominion Energy

 

 

617

 

 

 

67

 

 

 

175

 

 

 

121

 

 

 

(202

)

 

 

—

 

 

 

778

 

Three Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue from external

      customers

 

$

2,333

 

 

$

372

 

 

$

799

 

 

$

265

 

 

$

(612

)

 

$

18

 

 

$

3,175

 

Intersegment revenue

 

 

(3

)

 

 

1

 

 

 

1

 

 

 

17

 

 

 

221

 

 

 

(236

)

 

 

1

 

Total operating revenue

 

 

2,330

 

 

 

373

 

 

 

800

 

 

 

282

 

 

 

(391

)

 

 

(218

)

 

 

3,176

 

Net income from discontinued

      operations

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

65

 

 

 

—

 

 

 

65

 

Net income (loss) attributable to

      Dominion Energy

 

 

599

 

 

 

69

 

 

 

151

 

 

 

119

 

 

 

(284

)

 

 

—

 

 

 

654

 

Nine Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue from external

      customers

 

$

7,218

 

 

$

2,230

 

 

$

2,525

 

 

$

645

 

 

$

(357

)

 

$

—

 

 

$

12,261

 

Intersegment revenue

 

 

(10

)

 

 

2

 

 

 

6

 

 

 

15

 

 

 

686

 

 

 

(699

)

 

 

—

 

Total operating revenue

 

 

7,208

 

 

 

2,232

 

 

 

2,531

 

 

 

660

 

 

 

329

 

 

 

(699

)

 

 

12,261

 

Net income from discontinued

      operations

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

15

 

 

 

—

 

 

 

15

 

Net income (loss) attributable to

      Dominion Energy

 

 

1,575

 

 

 

486

 

 

 

408

 

 

 

242

 

 

 

(1,675

)

 

 

—

 

 

 

1,036

 

Nine Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue from external

     customers

 

$

6,072

 

 

$

1,800

 

 

$

2,230

 

 

$

790

 

 

$

(857

)

 

$

46

 

 

$

10,081

 

Intersegment revenue

 

 

(10

)

 

 

4

 

 

 

5

 

 

 

55

 

 

 

686

 

 

 

(737

)

 

 

3

 

Total operating revenue

 

 

6,062

 

 

 

1,804

 

 

 

2,235

 

 

 

845

 

 

 

(171

)

 

 

(691

)

 

 

10,084

 

Net income from discontinued

     operations

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

119

 

 

 

—

 

 

 

119

 

Net income (loss) attributable to

     Dominion Energy

 

 

1,464

 

 

 

415

 

 

 

337

 

 

 

373

 

 

 

(642

)

 

 

—

 

 

 

1,947

 

 

Intersegment sales and transfers for Dominion Energy are based on contractual arrangements and may result in intersegment profit or loss that is eliminated in consolidation, including amounts related to entities presented within discontinued operations.

Virginia Power

The Corporate and Other Segment of Virginia Power primarily includes specific items attributable to its operating segment that are not included in profit measures evaluated by executive management in assessing the segment’s performance or in allocating resources.

75

In the nine months ended September 30, 2022, Virginia Power reported after-tax net expenses of $601 million in the Corporate and Other segment, including $641 million of after-tax net expenses for specific items with $635 million of after-tax net expenses attributable to its operating segment. In the nine months ended September 30, 2021, Virginia Power reported after-tax net expenses of $118 million in the Corporate and Other segment, including $186 million of after-tax net expenses for specific items all of which was attributable to its operating segment.

 

The net expenses for specific items attributable to Virginia Power’s operating segment in 2022 primarily related to the impact of the following items:

•

A $213 million ($159 million after-tax) charge for RGGI compliance costs deemed recovered through base rates;

•

A $191 million ($142 million after-tax) charge in connection with a comprehensive settlement agreement for Virginia fuel expenses;

•

A $183 million ($136 million after-tax) charge for amortization of a regulatory asset established in connection with the settlement of the 2021 Triennial Review;

•

A $96 million ($71 million after-tax) loss related to investments in nuclear decommissioning trust funds;

•

A $94 million ($70 million after-tax) charge associated with storm damage and service restoration in its service territory; and

•

A $60 million ($45 million after-tax) charge for dismantling costs associated with certain retired electric generation facilities.

 

The net expenses for specific items attributable to Virginia Power’s operating segment in 2021 primarily related to the impact of the following items:

•

A $151 million ($112 million after-tax) loss from an unbilled revenue reduction;

•

A $119 million ($89 million after-tax) net charge associated with the settlement of the 2021 Triennial Review;

•

A $77 million ($57 million after-tax) charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to Virginia’s 2021 budget process; and

•

A $68 million ($50 million after-tax) charge associated with storm damage and service restoration in its service territory; partially offset by

•

A $130 million ($97 million after-tax) benefit for a change in the CCRO reserve associated with the 2021 Triennial Review.

 

The following table presents segment information pertaining to Virginia Power’s operations:

 

 

 

Dominion

Energy

Virginia

 

 

Corporate

and Other

 

 

Consolidated

Total

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

$

2,865

 

 

$

10

 

 

$

2,875

 

Net income (loss)

 

 

618

 

 

 

(47

)

 

 

571

 

Three Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

$

2,326

 

 

$

(350

)

 

$

1,976

 

Net income (loss)

 

 

601

 

 

 

(45

)

 

 

556

 

Nine Months Ended September 30, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

$

7,200

 

 

$

17

 

 

$

7,217

 

Net income (loss)

 

 

1,576

 

 

 

(601

)

 

 

975

 

Nine Months Ended September 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

$

6,048

 

 

$

(501

)

 

$

5,547

 

Net income (loss)

 

 

1,462

 

 

 

(118

)

 

 

1,344

 

 

 

 

 

76

 

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

•

Accounting Matters – Dominion Energy

•

Dominion Energy

 

•

Results of Operations

 

•

Outlook

 

•

Segment Results of Operations

•

Virginia Power

 

•

Results of Operations

•

Liquidity and Capital Resources – Dominion Energy

•

Future Issues and Other Matters – Dominion Energy

Forward-Looking Statements

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

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

77

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

Changes in operating, maintenance and construction costs;

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

Counterparty credit and performance risk;

•

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

78

•

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

•

Fluctuations in interest rates;

•

Fluctuations in currency exchange rates of the Euro or Danish Krone associated with the CVOW Commercial Project;

•

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

•

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

 

•

Political and economic conditions, including inflation and deflation;

•

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

•

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

Additionally, other risks that could cause actual results to differ from predicted results are set forth in Part I. Item 1A. Risk Factors in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021.

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

Critical Accounting Policies and Estimates

As of September 30, 2022, 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, 2021. 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, employee benefit plans and held for sale classification.

Dominion Energy

Results of Operations

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

 

 

2022

 

 

2021

 

 

$ Change

 

(millions, except EPS)

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Dominion Energy

 

$

778

 

 

$

654

 

 

$

124

 

Diluted EPS

 

 

0.91

 

 

 

0.79

 

 

 

0.12

 

Year-To-Date

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Dominion Energy

 

$

1,036

 

 

$

1,947

 

 

$

(911

)

Diluted EPS

 

 

1.17

 

 

 

2.35

 

 

 

(1.18

)

Overview

Third Quarter 2022 vs. 2021

Net income attributable to Dominion Energy increased 19%, primarily due to increased unrealized gains on economic hedging activities, partially offset by a decrease in net investment earnings on nuclear decommissioning trust funds.

Year-To-Date 2022 vs. 2021

Net income attributable to Dominion Energy decreased 47%, primarily due to a loss associated with the sale of Kewaunee, a decrease in net investment earnings on nuclear decommissioning trust funds, a net decrease associated with the impacts of Virginia Power’s 2021 Triennial Review, 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. These decreases were partially offset by the absence of charges associated with the settlement of the South Carolina electric base rate case and increased unrealized gains on economic hedging activities.

79

 

Analysis of Consolidated Operations

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

 

 

 

Third Quarter

 

 

Year-To-Date

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

2022

 

 

2021

 

 

$ Change

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

$

4,386

 

 

$

3,176

 

 

$

1,210

 

 

$

12,261

 

 

$

10,084

 

 

$

2,177

 

Electric fuel and other energy-related purchases

 

 

1,217

 

 

 

703

 

 

 

514

 

 

 

2,625

 

 

 

1,740

 

 

 

885

 

Purchased electric capacity

 

 

16

 

 

 

26

 

 

 

(10

)

 

 

45

 

 

 

62

 

 

 

(17

)

Purchased gas

 

 

138

 

 

 

60

 

 

 

78

 

 

 

985

 

 

 

665

 

 

 

320

 

Other operations and maintenance

 

 

991

 

 

 

927

 

 

 

64

 

 

 

3,030

 

 

 

2,808

 

 

 

222

 

Depreciation, depletion and amortization

 

 

727

 

 

 

621

 

 

 

106

 

 

 

2,120

 

 

 

1,833

 

 

 

287

 

Other taxes

 

 

231

 

 

 

223

 

 

 

8

 

 

 

719

 

 

 

702

 

 

 

17

 

Impairment of assets and other charges (benefits)

 

 

21

 

 

 

(222

)

 

 

243

 

 

 

426

 

 

 

194

 

 

 

232

 

Losses (gains) on sales of assets

 

 

(27

)

 

 

(3

)

 

 

(24

)

 

 

581

 

 

 

(2

)

 

 

583

 

Earnings from equity method investees

 

 

92

 

 

 

69

 

 

 

23

 

 

 

255

 

 

 

214

 

 

 

41

 

Other income (expense)

 

 

70

 

 

 

133

 

 

 

(63

)

 

 

(171

)

 

 

732

 

 

 

(903

)

Interest and related charges

 

 

329

 

 

 

407

 

 

 

(78

)

 

 

550

 

 

 

978

 

 

 

(428

)

Income tax expense

 

 

124

 

 

 

35

 

 

 

89

 

 

 

243

 

 

 

200

 

 

 

43

 

Net income (loss) from discontinued operations

   including noncontrolling interests

 

 

(3

)

 

 

65

 

 

 

(68

)

 

 

15

 

 

 

119

 

 

 

(104

)

Noncontrolling interests

 

 

—

 

 

 

12

 

 

 

(12

)

 

 

—

 

 

 

22

 

 

 

(22

)

 

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

Third Quarter 2022 vs. 2021

Operating revenue increased 38%, primarily reflecting:

•

A $569 million increase in fuel-related revenue as a result of an increase in commodity costs associated with sales to electric utility retail customers ($495 million) and gas utility customers ($74 million);

•

The absence of a $350 million decrease for refunds provided to retail electric customers in Virginia associated with the settlement of the 2021 Triennial Review;

•

A $195 million increase associated with market prices affecting Millstone, including economic hedging impacts of net realized and unrealized gains on freestanding derivatives ($109 million);

•

A $131 million increase to recover the costs and an authorized return, as applicable, associated with Virginia Power non-fuel riders; and

•

A $16 million increase from gas utility capital cost riders.

These increases were partially offset by:

•

A $54 million decrease from the sale of non-wholly-owned nonregulated solar facilities; and

•

A $20 million decrease reflecting a reduction in base rates associated with the settlement of the 2021 Triennial Review.

Electric fuel and other energy-related purchases increased 73%, primarily due to higher commodity costs for electric utilities ($495 million) and an increase in the use of purchased renewable energy credits at Virginia Power ($15 million), which are offset in operating revenue and do not impact net income.

Purchased gas increased $78 million, primarily due to an increase in commodity costs for gas utilities, which are offset in operating revenue and do not impact net income.

 

Other operations and maintenance increased 7%, primarily due to an increase in certain Virginia Power expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($38 million) and an increase in the materials and supplies expense primarily as a result of higher prices ($26 million), partially offset by a decrease in salaries, wages and benefits ($17 million).

80

Depreciation, depletion and amortization increased 17%, primarily due to an increase for amortization of a regulatory asset established in the settlement of the 2021 Triennial Review ($61 million), an increase due to various projects being placed into service ($52 million) and an increase in RGGI related amortization ($33 million), which except for the suspended period of Rider RGGI is offset in operating revenue and does not impact net income, partially offset by depreciation rates revised in the first quarter of 2022 at Virginia Power ($21 million).

 

Impairment of assets and other charges (benefits) increased $243 million, primarily due to the absence of a benefit from the establishment of a regulatory asset associated with the early retirements of certain coal- and oil-fired generating units associated with the settlement of the 2021 Triennial Review ($549 million) and dismantling costs associated with certain retired electric generation facilities at Virginia Power ($18 million), partially offset by the absence of charges for CCRO benefits provided to retail electric customers in Virginia associated with Virginia Power’s 2021 Triennial Review ($318 million).

Losses (gains) on sales of assets decreased $24 million, primarily due to a gain on the transfer of certain non-utility property in South Carolina.

Earnings from equity method investees increased 33%, primarily due to an increase in equity method earnings from Cove Point as a result of additional processing services provided to existing customers during 2022.

Other income decreased 47%, primarily due to net investment losses in 2022 compared to net investment gains in 2021 on nuclear decommissioning trust funds ($99 million), partially offset by an increase in non-service components of pension and other postretirement employee benefit plan credits ($30 million).

 

Interest and related charges decreased 19%, primarily due to unrealized gains in 2022 compared to unrealized losses in 2021 associated with freestanding derivatives ($100 million), the absence of charges associated with the early redemption of certain securities in the third quarter of 2021 ($23 million), benefits associated with the early redemption of certain securities in the third quarter of 2022 ($17 million) and higher premiums received on interest rate derivatives ($17 million), partially offset by an increase from net debt issuances ($52 million) and increased interest on commercial paper borrowings due to higher interest rates ($18 million).

 

Income tax expense increased $89 million, primarily due to higher pre-tax income including lower state income tax benefits on pre-tax losses from nuclear decommissioning trusts and economic hedges.

 

Net income from discontinued operations including noncontrolling interests decreased $68 million, primarily due to the absence of operations in connection with the sale of the Q-Pipe Group.

Year-To-Date 2022 vs. 2021

Operating revenue increased 22%, primarily reflecting:

•

A $1.2 billion increase in fuel-related revenue as a result of an increase in commodity costs associated with sales to electric utility retail customers ($827 million) and gas utility customers ($362 million);

•

The absence of a $350 million decrease for refunds provided to retail electric customers in Virginia associated with the settlement of the 2021 Triennial Review;

•

A $345 million increase to recover the costs and an authorized return, as applicable, associated with Virginia Power non-fuel riders;

•

The absence of a $151 million decrease from an unbilled revenue reduction at Virginia Power;

•

A $78 million net increase from electric utility customers who elect to pay market based or other negotiated rates, including settlements of economic hedges at Virginia Power;

•

A $59 million net increase associated with market prices affecting Millstone, including economic hedging impacts of net realized and unrealized losses on freestanding derivatives ($182 million);

•

A $50 million increase in sales to electric utility retail customers associated with economic and other usage factors;

•

A $42 million increase from gas utility capital cost riders;

•

A $42 million increase following the approved base rate case for PSNC;

•

A $37 million increase in sales to electric utility retail customers associated with growth;

•

A $32 million increase in sales to customers from non-jurisdictional solar generation facilities at Virginia Power;

81

 

•

A $25 million increase in sales to electric utility retail customers from an increase in heating degree days during the heating season ($20 million) and a net increase in cooling degree days during the cooling season ($5 million); and

•

A $20 million increase in non-fuel base rates associated with the settlement in 2021 of the South Carolina electric base rate case.

These increases were partially offset by:

•

A $136 million decrease from the sale of non-wholly-owned nonregulated solar facilities;

•

A $72 million decrease as a result of the contribution of certain nonregulated gas retail energy contracts to Wrangler;

•

A $56 million decrease from a planned outage at Millstone; and

•

A $45 million decrease reflecting a reduction in base rates associated with the settlement of the 2021 Triennial Review.

Electric fuel and other energy-related purchases increased 51%, primarily due to higher commodity costs for electric utilities ($827 million) and an increase in the use of purchased renewable energy credits at Virginia Power ($27 million), which are offset in operating revenue and do not impact net income.

Purchased gas increased 48%, primarily due to an increase in commodity costs for gas utilities ($362 million), which are offset in operating revenue and do not impact net income, partially offset by a decrease as a result of the contribution of certain nonregulated natural gas retail energy contracts to Wrangler ($51 million).

 

Other operations and maintenance increased 8%, primarily reflecting:

•

A $76 million increase in certain Virginia Power expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income;

•

A $73 million increase in outage costs at Millstone ($61 million) and Virginia Power ($12 million);

•

A $36 million increase in the materials and supplies expense primarily as a result of higher prices;

•

A $33 million increase in storm damage and restoration costs in Virginia Power’s service territory; and

•

A $23 million increase in bad debt expense; partially offset by

•

The absence of a $44 million charge related to a revision in estimated recovery of spent nuclear fuel costs associated with the decommissioning of Kewaunee;

•

A $27 million decrease in salaries, wages and benefits; and

•

A $26 million decrease in merger and integration-related costs associated with the SCANA Combination.

Depreciation, depletion and amortization increased 16%, primarily due to an increase for amortization of a regulatory asset established in the settlement of the 2021 Triennial Review ($183 million), an increase in RGGI related amortization ($120 million), which except for the suspended period of Rider RGGI is offset in operating revenue and does not impact net income, and an increase due to various projects being placed into service ($115 million), partially offset by depreciation rates revised in the first quarter of 2022 at Virginia Power ($62 million) and a decrease from the sale of non-wholly-owned nonregulated solar facilities ($40 million).

 

Impairment of assets and other charges (benefits) increased $232 million, primarily reflecting:

•

The absence of a benefit from the establishment of a regulatory asset associated with the early retirement of certain coal- and oil-fired generating units associated with the settlement of the 2021 Triennial Review ($549 million);

•

A charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million);

•

A charge for RGGI compliance costs deemed recovered through base rates ($180 million); and

•

Dismantling costs associated with certain retired electric generation facilities at Virginia Power ($60 million); partially offset by

•

The absence of charges associated with the settlement of the South Carolina electric base rate case ($249 million);

•

The absence of charges for CCRO benefits provided to retail electric customers in Virginia associated with Virginia Power’s 2021 Triennial Review ($188 million);

•

The absence of charges associated with litigation acquired in the SCANA Combination ($100 million);

82

 

•

The absence of a charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to Virginia’s 2021 budget process ($77 million);

•

The absence of a charge for corporate office lease termination ($62 million); and

•

The absence of a write-off of nonregulated retail software development assets ($20 million).

Losses (gains) on sales of assets increased $583 million, primarily due to a loss associated with the sale of Kewaunee ($649 million), partially offset by a gain on the contribution of certain privatization operations to Dominion Privatization ($23 million), a gain on the transfer of certain non-utility property in South Carolina ($18 million) and a gain on the sale of certain utility property in South Carolina ($16 million).

Earnings from equity method investees increased 19%, primarily due to an increase in equity method earnings from Cove Point as a result of additional processing services provided to existing customers during 2022.

Other income decreased $903 million, primarily due to net investment losses in 2022 compared to net investment gains in 2021 on nuclear decommissioning trust funds ($999 million), partially offset by an increase in non-service components of pension and other postretirement employee benefit plan credits ($84 million) and the absence of charges associated with the settlement of the South Carolina electric base rate case ($18 million).

 

Interest and related charges decreased 44%, primarily due to higher unrealized gains associated with freestanding derivatives ($445 million), a decrease due to junior subordinated note repayments in 2021 ($52 million), higher premiums received on interest rate derivatives ($47 million), the absence of charges associated with the early redemption of certain securities in the third quarter of 2021 ($23 million) and benefits associated with the early redemption of certain securities in the third quarter of 2022 ($17 million), partially offset by an increase from net debt issuances ($119 million) and increased interest on commercial paper borrowings due to higher interest rates ($25 million).

 

Income tax expense increased 22%, primarily due to tax expense on the sale of Hope’s stock ($90 million), lower interim period allocation of investment tax credits ($34 million) and the absence of the benefit from a state legislative change ($21 million), partially offset by lower pre-tax income including lower state income tax benefits on pre-tax losses from nuclear decommissioning trusts and economic hedges ($109 million).

 

Net income from discontinued operations including noncontrolling interests decreased 87%, primarily due to the absence of operations in connection with the sale of the Q-Pipe Group.

 

Noncontrolling interests decreased $22 million, primarily due to the absence of operations in connection with the sale of certain nonregulated solar generating projects held in partnerships.

Outlook

As of September 30, 2022, there have been no material changes to Dominion Energy’s 2022 outlook as described in Item 2. MD&A in the Companies’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.

83

Segment Results of Operations

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

 

 

 

Net Income (Loss) Attributable to

Dominion Energy

 

 

EPS(1)

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

2022

 

 

2021

 

 

$ Change

 

(millions, except EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Third Quarter

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominion Energy Virginia

 

$

617

 

 

$

599

 

 

$

18

 

 

$

0.74

 

 

$

0.74

 

 

$

—

 

Gas Distribution

 

 

67

 

 

 

69

 

 

 

(2

)

 

 

0.08

 

 

 

0.08

 

 

 

—

 

Dominion Energy South Carolina

 

 

175

 

 

 

151

 

 

 

24

 

 

 

0.21

 

 

 

0.19

 

 

 

0.02

 

Contracted Assets

 

 

121

 

 

 

119

 

 

 

2

 

 

 

0.15

 

 

 

0.15

 

 

 

—

 

Corporate and Other

 

 

(202

)

 

 

(284

)

 

 

82

 

 

 

(0.27

)

 

 

(0.37

)

 

 

0.10

 

Consolidated

 

$

778

 

 

$

654

 

 

$

124

 

 

$

0.91

 

 

$

0.79

 

 

$

0.12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year-To-Date

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Dominion Energy Virginia

 

$

1,575

 

 

$

1,464

 

 

$

111

 

 

$

1.92

 

 

$

1.81

 

 

$

0.11

 

Gas Distribution

 

 

486

 

 

 

415

 

 

 

71

 

 

 

0.59

 

 

 

0.52

 

 

 

0.07

 

Dominion Energy South Carolina

 

 

408

 

 

 

337

 

 

 

71

 

 

 

0.50

 

 

 

0.42

 

 

 

0.08

 

Contracted Assets

 

 

242

 

 

 

373

 

 

 

(131

)

 

 

0.29

 

 

 

0.46

 

 

 

(0.17

)

Corporate and Other

 

 

(1,675

)

 

 

(642

)

 

 

(1,033

)

 

 

(2.13

)

 

 

(0.86

)

 

 

(1.27

)

Consolidated

 

$

1,036

 

 

$

1,947

 

 

$

(911

)

 

$

1.17

 

 

$

2.35

 

 

$

(1.18

)

(1)

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

Dominion Energy Virginia

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

 

 

 

Third Quarter

 

 

Year-To-Date

 

 

 

2022

 

 

2021

 

 

% Change

 

 

2022

 

 

2021

 

 

% Change

 

Electricity delivered (million MWh)

 

 

24.9

 

 

 

24.0

 

 

 

4

%

 

 

67.9

 

 

 

65.0

 

 

 

4

%

Electricity supplied (million MWh):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Utility

 

 

25.0

 

 

 

24.1

 

 

 

4

 

 

 

68.1

 

 

 

65.5

 

 

 

4

 

Non-Jurisdictional

 

 

0.5

 

 

 

0.3

 

 

 

67

 

 

 

1.3

 

 

 

0.8

 

 

 

63

 

Degree days (electric distribution and utility service area):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cooling

 

 

1,222

 

 

 

1,176

 

 

 

4

 

 

 

1,735

 

 

 

1,696

 

 

 

2

 

Heating

 

 

17

 

 

 

—

 

 

 

N/A

 

 

 

2,209

 

 

 

2,174

 

 

 

2

 

Average electric distribution customer accounts

   (thousands)

 

 

2,727

 

 

 

2,702

 

 

 

1

 

 

 

2,721

 

 

 

2,693

 

 

 

1

 

 

84

 

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

 

 

 

Third Quarter

2022 vs. 2021

Increase (Decrease)

 

 

Year-To-Date

2022 vs. 2021

Increase (Decrease)

 

 

 

Amount

 

 

EPS

 

 

Amount

 

 

EPS

 

(millions, except EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weather

 

$

(6

)

 

$

(0.01

)

 

$

1

 

 

$

—

 

Customer usage and other factors

 

 

11

 

 

 

0.01

 

 

 

41

 

 

 

0.05

 

Customer-elected rate impacts

 

 

(14

)

 

 

(0.02

)

 

 

42

 

 

 

0.05

 

Base rate case impacts

 

 

(15

)

 

 

(0.02

)

 

 

(33

)

 

 

(0.04

)

Rider equity return

 

 

28

 

 

 

0.03

 

 

 

56

 

 

 

0.07

 

Electric capacity

 

 

6

 

 

 

0.01

 

 

 

(6

)

 

 

(0.01

)

Depreciation and amortization

 

 

9

 

 

 

0.01

 

 

 

25

 

 

 

0.03

 

Renewable energy investment tax credits

 

 

28

 

 

 

0.03

 

 

 

51

 

 

 

0.06

 

Interest expense, net

 

 

(5

)

 

 

(0.01

)

 

 

(16

)

 

 

(0.02

)

Other

 

 

(24

)

 

 

(0.01

)

 

 

(50

)

 

 

(0.05

)

Share dilution

 

 

—

 

 

 

(0.02

)

 

 

—

 

 

 

(0.03

)

Change in net income contribution

 

$

18

 

 

$

—

 

 

$

111

 

 

$

0.11

 

Gas Distribution

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

 

 

 

Third Quarter

 

 

Year-To-Date

 

 

 

2022(1)

 

 

2021

 

 

% Change

 

 

2022(1)

 

 

2021

 

 

% Change

 

Gas distribution throughput (bcf):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

 

13

 

 

 

14

 

 

 

(7

%)

 

 

128

 

 

 

124

 

 

 

3

%

Transportation

 

 

240

 

 

 

216

 

 

 

11

 

 

 

758

 

 

 

705

 

 

 

8

 

Heating degree days (gas distribution service area):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North Carolina

 

 

24

 

 

 

6

 

 

 

300

 

 

 

1,796

 

 

 

1,979

 

 

 

(9

)

Ohio and West Virginia

 

 

80

 

 

 

40

 

 

 

100

 

 

 

3,614

 

 

 

3,489

 

 

 

4

 

Utah, Wyoming and Idaho

 

 

3

 

 

 

49

 

 

 

(94

)

 

 

3,143

 

 

 

2,982

 

 

 

5

 

Average gas distribution customer accounts

   (thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

 

1,948

 

 

 

1,936

 

 

 

1

 

 

 

1,959

 

 

 

1,929

 

 

 

2

 

Transportation

 

 

1,127

 

 

 

1,126

 

 

 

—

 

 

 

1,134

 

 

 

1,133

 

 

 

—

 

(1)

Includes Hope through August 2022.

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

 

 

 

Third Quarter

2022 vs. 2021

Increase (Decrease)

 

 

Year-To-Date

2022 vs. 2021

Increase (Decrease)

 

 

 

Amount

 

 

EPS

 

 

Amount

 

 

EPS

 

(millions, except EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weather

 

$

1

 

 

$

—

 

 

$

3

 

 

$

—

 

Customer usage and other factors

 

 

6

 

 

 

0.01

 

 

 

25

 

 

 

0.03

 

Base rate case impacts

 

 

(2

)

 

 

—

 

 

 

33

 

 

 

0.04

 

Rider equity return

 

 

6

 

 

 

0.01

 

 

 

19

 

 

 

0.02

 

Interest expense, net

 

 

(5

)

 

 

(0.01

)

 

 

(7

)

 

 

(0.01

)

Other

 

 

(8

)

 

 

(0.01

)

 

 

(2

)

 

 

—

 

Share dilution

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(0.01

)

Change in net income contribution

 

$

(2

)

 

$

—

 

 

$

71

 

 

$

0.07

 

 

85

 

Dominion Energy South Carolina

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

 

 

 

Third Quarter

 

 

Year-To-Date

 

 

 

2022

 

 

2021

 

 

% Change

 

 

2022

 

 

2021

 

 

% Change

 

Electricity delivered (million MWh)

 

 

6.6

 

 

 

6.6

 

 

 

—

%

 

 

17.7

 

 

 

17.3

 

 

 

2

%

Electricity supplied (million MWh)

 

 

6.9

 

 

 

6.8

 

 

 

1

 

 

 

18.6

 

 

 

18.1

 

 

 

3

 

Degree days (electric distribution service areas):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cooling

 

 

514

 

 

 

448

 

 

 

15

 

 

 

767

 

 

 

620

 

 

 

24

 

Heating

 

 

—

 

 

 

—

 

 

 

—

 

 

 

783

 

 

 

839

 

 

 

(7

)

Average electric distribution customer accounts

   (thousands)

 

 

779

 

 

 

769

 

 

 

1

 

 

 

776

 

 

 

765

 

 

 

1

 

Gas distribution throughput (bcf):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

 

15

 

 

 

16

 

 

 

(6

)

 

 

50

 

 

 

51

 

 

 

(2

)

Average gas distribution customer accounts

   (thousands)

 

 

428

 

 

 

414

 

 

 

3

 

 

 

425

 

 

 

411

 

 

 

3

 

 

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

 

 

 

Third Quarter

2022 vs. 2021

Increase (Decrease)

 

 

Year-To-Date

2022 vs. 2021

Increase (Decrease)

 

 

 

Amount

 

 

EPS

 

 

Amount

 

 

EPS

 

(millions, except EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weather

 

$

5

 

 

$

0.01

 

 

$

18

 

 

$

0.02

 

Customer usage and other factors

 

 

9

 

 

 

0.01

 

 

 

27

 

 

 

0.03

 

Customer-elected rate impacts

 

 

5

 

 

 

0.01

 

 

 

15

 

 

 

0.02

 

Base rate case & Natural Gas Rate Stabilization Act impacts

 

 

5

 

 

 

0.01

 

 

 

19

 

 

 

0.02

 

Capital cost rider

 

 

(2

)

 

 

—

 

 

 

(6

)

 

 

(0.01

)

Depreciation and amortization

 

 

(4

)

 

 

—

 

 

 

(12

)

 

 

(0.01

)

Interest expense, net

 

 

(7

)

 

 

(0.01

)

 

 

(10

)

 

 

(0.01

)

Other

 

 

13

 

 

 

—

 

 

 

20

 

 

 

0.03

 

Share dilution

 

 

—

 

 

 

(0.01

)

 

 

—

 

 

 

(0.01

)

Change in net income contribution

 

$

24

 

 

$

0.02

 

 

$

71

 

 

$

0.08

 

 

Contracted Assets

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

 

 

 

Third Quarter

 

 

Year-To-Date

 

 

 

2022

 

 

2021

 

 

% Change

 

 

2022

 

 

2021

 

 

% Change

 

Electricity supplied (million MWh)

 

 

5.0

 

 

 

5.7

 

 

 

(12

%)

 

 

13.0

 

 

 

16.4

 

 

 

(21

%)

 

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

 

 

 

Third Quarter

2022 vs. 2021

Increase (Decrease)

 

 

Year-To-Date

2022 vs. 2021

Increase (Decrease)

 

 

 

Amount

 

 

EPS

 

 

Amount

 

 

EPS

 

(millions, except EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Margin(1)

 

$

30

 

 

$

0.04

 

 

$

3

 

 

$

—

 

Sale of non-wholly-owned nonregulated solar facilities

 

 

(10

)

 

 

(0.01

)

 

 

(19

)

 

 

(0.02

)

Planned outage costs

 

 

5

 

 

 

0.01

 

 

 

(44

)

 

 

(0.05

)

Renewable energy investment tax credits

 

 

—

 

 

 

—

 

 

 

(29

)

 

 

(0.04

)

Interest expense, net

 

 

(14

)

 

 

(0.02

)

 

 

(39

)

 

 

(0.05

)

Other

 

 

(9

)

 

 

(0.02

)

 

 

(3

)

 

 

—

 

Share dilution

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(0.01

)

Change in net income contribution

 

$

2

 

 

$

—

 

 

$

(131

)

 

$

(0.17

)

86

 

(1)

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

Corporate and Other

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

 

 

 

Third Quarter

 

 

Year-To-Date

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

2022

 

 

2021

 

 

$ Change

 

(millions, except EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Specific items attributable to operating

   segments

 

$

(269

)

 

$

(303

)

 

$

34

 

 

$

(1,792

)

 

$

(617

)

 

$

(1,175

)

Specific items attributable to Corporate and

   Other segment

 

 

103

 

 

 

39

 

 

 

64

 

 

 

226

 

 

 

125

 

 

 

101

 

Total specific items

 

 

(166

)

 

 

(264

)

 

 

98

 

 

 

(1,566

)

 

 

(492

)

 

 

(1,074

)

Other corporate operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(77

)

 

 

(100

)

 

 

23

 

 

 

(238

)

 

 

(317

)

 

 

79

 

Other

 

 

41

 

 

 

80

 

 

 

(39

)

 

 

129

 

 

 

167

 

 

 

(38

)

Total other corporate operations

 

 

(36

)

 

 

(20

)

 

 

(16

)

 

 

(109

)

 

 

(150

)

 

 

41

 

Total net expense

 

$

(202

)

 

$

(284

)

 

$

82

 

 

$

(1,675

)

 

$

(642

)

 

$

(1,033

)

EPS impact

 

$

(0.27

)

 

$

(0.37

)

 

$

0.10

 

 

$

(2.13

)

 

$

(0.86

)

 

$

(1.27

)

Total Specific Items

Corporate and Other includes specific items attributable to Dominion Energy’s primary operating segments that are not included in profit measures evaluated by executive management in assessing the segments' performance or in allocating resources. See Note 21 to the Consolidated Financial Statements in this report for discussion of these items in more detail. Corporate and Other also includes items attributable to the Corporate and Other segment. For the three months ended September 30, 2022, other than the effects of required interim period provision for income taxes, this primarily included a $90 million benefit for the reversal of a deferred tax charge upon closing of the sale of Hope. For the nine months ended September 30, 2022, other than the effects of required interim period provision for income taxes, this primarily included a $231 million after-tax benefit for derivative mark-to-market changes and $15 million net income from discontinued operations, primarily associated with the Q-Pipe Group.

For the three months ended September 30, 2021, this primarily included $65 million net income from discontinued operations, primarily associated with the Q-Pipe Group, $17 million of after-tax charges associated with the early redemption of certain debt securities and an $11 million after-tax loss for derivative mark-to-market changes. For the nine months ended September 30, 2021, this primarily included $119 million net income from discontinued operations, primarily associated with the Q-Pipe Group, a $105 million after-tax benefit for derivative mark-to-market changes, $61 million of after-tax charges for workplace realignment, primarily related to a corporate office lease termination, $31 million of after-tax charges for merger and integration-related costs associated with the SCANA Combination and $17 million of after-tax charges associated with the early redemption of certain debt securities.

Virginia Power

Results of Operations

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

 

 

 

Third Quarter

 

 

Year-To-Date

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

2022

 

 

2021

 

 

$ Change

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

571

 

 

$

556

 

 

$

15

 

 

$

975

 

 

$

1,344

 

 

$

(369

)

 

Overview

Third Quarter 2022 vs. 2021

Net income increased 3%, primarily due to a net increase associated with the impacts of the 2021 Triennial Review.

 

Year-To-Date 2022 vs. 2021

Net income decreased 27%, primarily due to a decrease in net investment earnings on nuclear decommissioning trust funds, a net decrease associated with the impacts of the 2021 Triennial Review, 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.

87

 

Analysis of Consolidated Operations

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

 

 

 

Third Quarter

 

 

Year-To-Date

 

 

 

2022

 

 

2021

 

 

$ Change

 

 

2022

 

 

2021

 

 

$ Change

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

$

2,875

 

 

$

1,976

 

 

$

899

 

 

$

7,217

 

 

$

5,547

 

 

$

1,670

 

Electric fuel and other energy-related purchases

 

 

981

 

 

 

515

 

 

 

466

 

 

 

2,030

 

 

 

1,270

 

 

 

760

 

Purchased electric capacity

 

 

11

 

 

 

15

 

 

 

(4

)

 

 

33

 

 

 

16

 

 

 

17

 

Other operations and maintenance

 

 

531

 

 

 

470

 

 

 

61

 

 

 

1,579

 

 

 

1,382

 

 

 

197

 

Depreciation and amortization

 

 

451

 

 

 

343

 

 

 

108

 

 

 

1,305

 

 

 

990

 

 

 

315

 

Other taxes

 

 

80

 

 

 

86

 

 

 

(6

)

 

 

238

 

 

 

262

 

 

 

(24

)

Impairment of assets and other charges (benefit)

 

 

19

 

 

 

(230

)

 

 

249

 

 

 

432

 

 

 

(269

)

 

 

701

 

Other income (expense)

 

 

3

 

 

 

21

 

 

 

(18

)

 

 

(37

)

 

 

93

 

 

 

(130

)

Interest and related charges

 

 

168

 

 

 

136

 

 

 

32

 

 

 

461

 

 

 

400

 

 

 

61

 

Income tax expense

 

 

66

 

 

 

106

 

 

 

(40

)

 

 

127

 

 

 

245

 

 

 

(118

)

 

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

Third Quarter 2022 vs. 2021

Operating revenue increased 45%, primarily reflecting:

•

A $445 million increase in fuel-related revenue as a result of a net increase in commodity costs associated with sales to electric utility retail customers;

•

The absence of a $350 million decrease for refunds provided to retail electric customers in Virginia associated with the settlement of the 2021 Triennial Review; and

•

A $131 million increase to recover the costs and an authorized return, as applicable, associated with non-fuel riders; partially offset by

•

A $20 million decrease reflecting a reduction in base rates associated with the settlement of the 2021 Triennial Review; and

•

A $18 million net decrease from electric utility customers who elect to pay market based or other negotiated rates, including settlements of economic hedges.

 

Electric fuel and other energy-related purchases increased 90%, primarily due to higher commodity costs for electric utilities ($445 million) and an increase in the use of purchased renewable energy credits ($15 million), which are offset in operating revenue and do not impact net income.

 

Other operations and maintenance increased 13%, primarily due to an increase in certain expenses which are primarily recovered through state- and FERC-regulated rates and do not impact net income.

 

Depreciation and amortization increased 31%, primarily due to an increase for amortization of a regulatory asset established in the settlement of the 2021 Triennial Review ($61 million), an increase in RGGI related amortization ($33 million), which except for the suspended period of Rider RGGI is offset in operating revenue and does not impact net income, and an increase due to various projects being placed into service ($33 million), partially offset by depreciation rates revised in the first quarter of 2022 ($21 million).

 

Impairment of assets and other charges increased $249 million, primarily due to the absence of a benefit from the establishment of a regulatory asset associated with the early retirements of certain coal- and oil-fired generating units associated with the settlement of the 2021 Triennial Review ($549 million) and dismantling costs associated with certain retired electric generation facilities ($18 million), partially offset by the absence of charges for CCRO benefits provided to retail electric customers in Virginia associated with Virginia Power’s 2021 Triennial Review ($318 million).

 

Other income decreased 86%, primarily due to net investment losses in 2022 compared to net investment gains in 2021 on nuclear decommissioning trust funds.

 

88

 

Interest and related charges increased 24%, primarily due to an increase from net debt issuances in 2022 and 2021.

 

Income tax expense decreased 38%, primarily due to higher interim period tax allocation benefits.

Year-To-Date 2022 vs. 2021

Operating revenue increased 30%, primarily reflecting:

•

A $717 million increase in fuel-related revenue as a result of a net increase in commodity costs associated with sales to electric utility retail customers;

•

The absence of a $350 million decrease for refunds provided to retail electric customers in Virginia associated with the settlement of the 2021 Triennial Review;

•

A $345 million increase to recover the costs and an authorized return, as applicable, associated with non-fuel riders;

•

The absence of a $151 million decrease from an unbilled revenue reduction;

•

A $58 million net increase from electric utility customers who elect to pay market based or other negotiated rates, including settlements of economic hedges;

•

A $35 million increase in sales to electric utility retail customers associated with economic and other usage factors;

•

A $32 million increase in sales to customers from non-jurisdictional solar generation facilities;

•

A $20 million increase in sales to electric utility retail customers associated with growth; and

•

A $1 million net increase in sales to retail customers from an increase in heating degree days during the heating season ($19 million), partially offset by a decrease in cooling degree days during the cooling season ($18 million).

These increases were partially offset by:

•

A $45 million decrease reflecting a reduction in base rates associated with the settlement of the 2021 Triennial Review.

 

Electric fuel and other energy-related purchases increased 60%, primarily due to higher commodity costs for electric utilities ($717 million) and an increase in the use of purchased renewable energy credits ($27 million), which are offset in operating revenue and do not impact net income.

 

Purchased electric capacity increased $17 million, primarily due to an increase in expense related to the annual PJM capacity performance market effective June 2021.

 

Other operations and maintenance increased 14%, primarily reflecting:

•

A $76 million increase in certain expenses which are primarily recovered through state- and FERC-regulated rates and do not impact net income;

•

A $33 million increase in storm damage and service restoration costs;

•

A $25 million increase in outside services;

•

A $17 million increase in bad debt expense; and

•

A $17 million increase in the materials and supplies expense primarily as a result of higher prices.

 

Depreciation and amortization increased 32%, primarily due to an increase for amortization of a regulatory asset established in the settlement of the 2021 Triennial Review ($183 million), an increase in RGGI related amortization ($120 million), which except for the suspended period of Rider RGGI is offset in operating revenue and does not impact net income, and an increase due to various projects being placed into service ($72 million), partially offset by depreciation rates revised in the first quarter of 2022 ($62 million).

 

Impairment of assets and other charges increased $701 million, primarily reflecting:

•

The absence of a benefit from the establishment of a regulatory asset associated with the early retirement of certain coal- and oil-fired generating units associated with the settlement of the 2021 Triennial Review ($549 million);

•

A charge in connection with a comprehensive settlement agreement for Virginia fuel expenses ($191 million);

89

 

•

A charge for RGGI compliance costs deemed recovered through base rates ($180 million); and

•

Dismantling costs associated with certain retired electric generation facilities ($60 million); partially offset by

•

The absence of charges for CCRO benefits provided to retail electric customers in Virginia associated with Virginia Power’s 2021 Triennial Review ($188 million); and

•

The absence of a charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to Virginia’s 2021 budget process ($77 million).

 

Other income decreased $130 million, primarily due to net investment losses in 2022 compared to net investment gains in 2021 on nuclear decommissioning trust funds.

 

Interest and related charges increased 15%, primarily due to an increase from net debt issuances in 2022 and 2021.

 

Income tax expense decreased 48%, primarily due to lower pre-tax income ($141 million), partially offset by the absence of the benefit from a state legislative change ($16 million).

 

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, 2021.

 

Analysis of Cash Flows

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

 

 

 

2022

 

 

2021

 

(millions)

 

 

 

 

 

 

 

 

Cash, restricted cash and equivalents at January 1

 

$

408

 

 

$

247

 

Cash flows provided by (used in):

 

 

 

 

 

 

 

 

Operating activities

 

 

2,671

 

 

 

3,535

 

Investing activities

 

 

(4,519

)

 

 

(6,607

)

Financing activities

 

 

1,780

 

 

 

3,092

 

Net increase (decrease) in cash, restricted cash and equivalents

 

 

(68

)

 

 

20

 

Cash, restricted cash and equivalents at September 30

 

$

340

 

 

$

267

 

 

Operating Cash Flows

Net cash provided by Dominion Energy's operating activities decreased $864 million, inclusive of a $172 million decrease from discontinued operations. Net cash from continuing operations decreased $692 million, primarily due to lower deferred fuel cost recoveries ($994 million), current year refund payments to Virginia electric customers associated with the settlement of the 2021 Triennial Review ($315 million) and changes in working capital ($469 million), partially offset by lower margin deposits ($387 million) and an increase of $699 million primarily as the result of higher operating cash flows from electric utility and gas distribution operations driven by riders, customer usage and other factors.

Investing Cash Flows

Net cash used in Dominion Energy’s investing activities decreased $2.1 billion, primarily due to the absence of the repayment of the Q-Pipe Transaction deposit ($1.3 billion), a decrease in contributions to equity method affiliates including Atlantic Coast Pipeline ($972 million) and net proceeds from the sale of Hope ($722 million), partially offset by an increase in plant construction and other property additions ($1.1 billion).

Financing Cash Flows

Net cash provided by Dominion Energy's financing activities decreased $1.3 billion primarily due to lower net issuances of short-term debt ($2.4 billion), the redemption of the Series A Preferred Stock ($1.6 billion) and lower issuance of short-term notes ($1.3 billion), partially offset by higher net issuances of long-term debt ($2.6 billion) and settlement of the stock purchase contract component of the 2019 Equity Units ($1.6 billion).

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Credit Facilities and Short-Term Debt

As discussed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021, Dominion Energy generally uses proceeds from short-term borrowings, including commercial paper, to satisfy short-term cash requirements not met through cash from operations. The levels of borrowing may vary significantly during the course of the year, depending on the timing and amount of cash requirements not satisfied by cash from operations. There have been no significant changes to Dominion Energy’s use of credit facilities and/or short-term debt during the nine months ended September 30, 2022.

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 September 30, 2022, Dominion Energy’s Consolidated Balance Sheets include $343 million with respect to such notes presented within short-term debt. The proceeds are used for general corporate purposes and to repay debt.

Credit Facilities

Dominion Energy maintains a $6.0 billion joint revolving credit facility which provides for a discount in the pricing of certain annual fees and amounts borrowed by Dominion Energy under the facility if Dominion Energy achieves certain annual renewable electric generation and diversity and inclusion objectives. At September 30, 2022, Dominion Energy had $3.1 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.

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.

Long-Term Debt

Sustainability Revolving Credit Facility

Dominion Energy maintains a $900 million Sustainability Revolving Credit Facility 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 May 2022, Dominion Energy borrowed $900 million with the proceeds used to support environmental sustainability and social investment initiatives ($450 million) and for general corporate purposes ($450 million). In June 2022, Dominion Energy repaid $450 million borrowed for general corporate purposes. At September 30, 2022, Dominion Energy had $450 million outstanding under this supplemental credit facility.

Issuances and Borrowings of Long-Term Debt

Through September 30, 2022, Dominion Energy issued or borrowed the following long-term debt. Unless otherwise noted, the proceeds were used for general corporate purposes and/or to repay short-term debt.

Month

 

Type

 

Public / Private

 

Entity

 

Principal

 

 

Rate

 

 

 

Stated Maturity

 

 

 

 

 

 

 

 

(millions)

 

 

 

 

 

 

 

 

January

 

Senior notes

 

Public

 

Virginia Power

 

$

600

 

 

 

2.400

 

%

 

2032

January

 

Senior notes

 

Public

 

Virginia Power

 

 

400

 

 

 

2.950

 

%

 

2051

May

 

Senior notes

 

Public

 

Virginia Power

 

 

600

 

 

 

3.750

 

%

 

2027

May

 

Senior notes

 

Public

 

Virginia Power

 

 

600

 

 

 

4.625

 

%

 

2052

August

 

Senior notes

 

Public

 

Dominion Energy

 

 

400

 

 

 

4.350

 

%

 

2032

August

 

Senior notes

 

Public

 

Dominion Energy

 

 

600

 

 

 

4.850

 

%

 

2052

August

 

Senior notes

 

Private

 

Questar Gas

 

 

125

 

 

 

4.390

 

%

 

2032

August

 

Senior notes

 

Private

 

Questar Gas

 

 

125

 

 

 

4.700

 

%

 

2052

Total issuances and borrowings

 

 

 

 

 

$

3,450

 

 

 

 

 

 

 

 

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

91

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.

Dominion Energy anticipates, excluding potential opportunistic financings, issuing between approximately $3.2 billion and $4.4 billion of long-term debt during 2022, inclusive of amounts issued through September 30, 2022 as shown in the table above. The raising of external capital is subject to certain regulatory requirements, including registration with the SEC for certain issuances.

Repayment, 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 through September 30, 2022:

Month

 

Type

 

Entity

 

Principal (1)

 

 

Rate

 

 

Stated Maturity

 

 

 

 

 

 

(millions)

 

 

 

 

 

 

 

Debt scheduled to mature in 2022

 

 

 

$

772

 

 

various

 

 

 

Early repurchases & redemptions

 

 

 

 

 

 

 

 

 

 

 

 

July

 

Senior Note

 

Dominion Energy

 

5

 

 

 

4.250

%

 

2028

Multiple

 

Senior Note

 

Dominion Energy

 

98

 

 

 

2.250

%

 

2031

Multiple

 

Senior Note

 

Dominion Energy

 

14

 

 

 

3.300

%

 

2041

Multiple

 

Senior Note

 

Dominion Energy

 

28

 

 

 

1.450

%

 

2026

September

 

Senior Note

 

Dominion Energy

 

4

 

 

 

4.700

%

 

2044

Total repayments, repurchases and redemptions

 

 

$

921

 

 

 

 

 

 

 

(1)

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

In addition, in October 2022, Dominion Energy repurchased $61 million of senior notes with various interest rates and maturity dates.

See Note 16 to the Consolidated Financial Statements in this report and Note 18 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for additional information regarding scheduled maturities of Dominion Energy’s long-term debt, including related average interest rates.

Remarketing of Long-Term Debt

In 2022, Dominion Energy completed the remarketing of $165 million of its tax-exempt bonds, composed of the Virginia Power bonds remarketed in April 2022 and the Dominion Energy bonds remarketed in October 2022. See Note 16 to the Consolidated Financial Statements in this report for additional information.

Credit Ratings

As discussed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021, 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. As of September 30, 2022, there have been no changes in Dominion Energy’s credit ratings. In August 2022, Standard & Poor’s revised its credit ratings outlook for Dominion Energy from positive to stable and affirmed all other current ratings.

Financial Covenants

As discussed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021, Dominion Energy is subject to various covenants present in the enabling agreements underlying Dominion Energy’s debt. As of September 30, 2022, there have been no material changes to covenants, nor any events of default under Dominion Energy’s covenants.

92

Common Stock, Preferred Stock and Other Equity Securities

In the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021, there is a discussion of Dominion Energy’s existing equity financing programs, including an at-the-market program and Dominion Energy Direct®. Through September 30, 2022, Dominion Energy has issued $134 million of stock through these programs. See Note 16 to the Consolidated Financial Statements in this report for additional information. Dominion Energy anticipates raising between $300 million and $500 million of capital through the issuance of common stock in 2022 and may issue up to $150 million of stock under settlement agreements associated with litigation acquired in the SCANA Combination as discussed in Note 17 to the Consolidated Financial Statements in this report, inclusive of 1.3 million shares of its common stock, valued at $102 million, issued through September 30, 2022. As discussed in Note 16 to the Consolidated Financial Statements in this report, 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. Dominion Energy redeemed all outstanding shares of Series A Preferred Stock in September 2022 for $1.6 billion.

Through September 30, 2022, Dominion Energy has not repurchased and does not plan to repurchase in 2022 any shares of common stock, except for shares tendered by employees to satisfy tax withholding obligations on vested restricted stock. 

Capital Expenditures

As of September 30, 2022, there have been no material changes to Dominion Energy’s total planned capital expenditures for each segment through 2026 as disclosed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021.

Dividends

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

 

Subsidiary Dividend Restrictions

As of September 30, 2022, 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, 2021.

Credit Risk

Dominion Energy’s exposure to potential concentrations of credit risk results primarily from its energy marketing and price risk management activities. Presented below is a summary of Dominion Energy’s credit exposure at September 30, 2022 for these activities. Gross credit exposure for each counterparty is calculated as outstanding receivables plus any unrealized on- or off-balance sheet exposure, taking into account contractual netting rights.

 

 

 

Gross Credit

Exposure

 

 

Credit

Collateral

 

 

Net Credit

Exposure

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

Investment grade(1)

 

$

28

 

 

$

—

 

 

$

28

 

Non-investment grade(2)

 

 

35

 

 

 

34

 

 

 

1

 

No external ratings:

 

 

 

 

 

 

 

 

 

 

 

 

Internally rated—investment grade(3)

 

 

111

 

 

 

21

 

 

 

90

 

Internally rated—non-investment grade(4)

 

 

14

 

 

 

—

 

 

 

14

 

Total(5)

 

$

188

 

 

$

55

 

 

$

133

 

 

(1)

Designations as investment grade are based upon minimum credit ratings assigned by Moody’s Investors Service and Standard & Poor’s. The five largest counterparty exposures, combined, for this category represented approximately 13% of the total net credit exposure.

(2)

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

(3)

The five largest counterparty exposures, combined, for this category represented approximately 67% of the total net credit exposure.

(4)

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

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

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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, 2021.

Other Material Cash Requirements

As of September 30, 2022, 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, 2021. Such obligations include:

 

•

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

 

•

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

 

•

AROs – See Note 14 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021;

 

•

Employee benefit plan obligations – See Note 22 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021;

 

•

Charitable commitments – See Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021;

 

•

Off-balance sheet leasing arrangements – See Note 15 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021; and

 

•

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

Future Issues and Other Matters

See Item 1. Business, Future Issues and Other Matters in MD&A and Notes 13 and 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021 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. While the impacts cannot be estimated until the review is completed, which is expected in 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.

 

Federal Income Tax Laws

 

The IRA extends the investment and production tax credits for renewable technologies including wind and solar, and expands the qualifying technologies to include stand-alone storage, hydrogen, renewable natural gas, nuclear and, after 2024, other zero-emissions facilities. The IRA supersedes prior renewable energy legislation discussed in Note 5 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The IRA contains a two-tiered credit system applicable to both the production and investment tax credits with a lower base credit amount that can be increased up to five times if the taxpayer can satisfy certain labor requirements.  

 

The IRA imposes a 15% alternative minimum tax on GAAP net income, as adjusted for certain items, of corporations in excess of $1 billion, for tax years beginning after December 31, 2022. Entities that are subject to the alternative minimum tax may use tax credits to reduce the liability by up to 75% and will receive a tax credit carryforward with an indefinite life that can be claimed against the regular tax in future years. Deferred taxes will continue to be measured at the regular tax rate. Pending additional guidance, the alternative minimum tax is not expected to have an effect on the assessment of the realizability of Dominion Energy’s deferred tax assets or a material impact on Dominion Energy’s future results of operations or cash flows.

 

Future Environmental Regulations

 

The IRA includes provisions which impose an annual fee for waste methane emissions from the oil and natural gas industry beginning with emissions reported in calendar year 2024 to the extent that an entity’s emissions exceed a stated threshold, with implementation to be addressed by future rulemaking by the EPA. Pending the completion of such rulemaking, Dominion Energy currently does not expect these provisions to materially affect its future results of operations, financial condition and/or cash flows.

94

 

CVOW Commercial Project

In March 2022, the Virginia Commission approved Virginia Power’s application filed in December 2021 for approval of a lease contract with an affiliated entity for the use of a Jones Act compliant offshore wind installation vessel currently under development.  In April 2022, Virginia Power filed an application with the North Carolina Commission for approval of the same lease contract.

In May 2022, Virginia Power entered into forward purchase agreements with a notional amount of approximately €3.2 billion to hedge its foreign currency rate risk exposure to certain fixed price contracts for the major offshore construction and equipment components of the CVOW Commercial Project.

In August 2022, the Virginia Commission approved the application for certification of the Virginia Facilities component of the CVOW Commercial Project, the revenue requirement for the initial rate year of Rider OSW and noted that no further action was required with respect to Virginia Power’s foreign currency risk mitigation plan. The Virginia Commission also included a performance standard for operation of the CVOW Commercial Project, which would require that customers be held harmless for any shortfall in energy production below an annual net capacity factor of 42%, as determined on a three-year rolling average, with details on the implementation of such standard to be determined in a future proceeding. Also in August 2022, Virginia Power filed a petition for limited reconsideration relating to the performance standard for operation of the CVOW Commercial Project included in the Virginia Commission’s August order. The Virginia Commission granted reconsideration and suspended in part the August order pending its reconsideration with Rider OSW approved on an interim basis. In October 2022, Virginia Power, Office of the Attorney General of Virginia and other parties filed a settlement agreement with the Virginia Commission for approval. The settlement agreement provides for a voluntary cost sharing mechanism resulting from unforeseen construction cost increases; specifically, that Virginia Power will be eligible to recover 50% of such incremental costs which fall between $10.3 billion and $11.3 billion with no recovery of such incremental costs which fall between $11.3 billion and $13.7 billion. There is no voluntary cost sharing mechanism for any total construction costs in excess of $13.7 billion, the recovery of which would be determined in a future Virginia Commission preceding. The settlement agreement also provides for customers to receive the maximum benefits available under the IRA including that to the extent the IRA reduces the total construction costs, such reductions will also be applied to the cost sharing bands discussed above. In addition, the settlement agreement includes enhanced performance reporting provisions, in lieu of a performance guarantee, for the operation of the CVOW Commercial Project.  To the extent the annual net capacity factor is below 42%, as determined on a three-year rolling average, Virginia Power is required to provide detailed explanation of the factors contributing to any shortfall to the Virginia Commission which could determine in a future proceeding a remedy for incremental costs incurred associated with any deemed unreasonable or imprudent actions of Virginia Power. If the performance standard included in the August order is maintained in the Virginia Commission’s final order, it could result in cancellation of the project with Virginia Power eligible to recover costs incurred to date.

 

95

 

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 entered into in 2021 in connection with the CVOW Commercial Project. 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. As a result, any changes in applicable exchange rates or commodity indices could result in a change to the ultimate cost of the project. In May 2022, Virginia Power entered into forward purchase agreements with a notional amount of approximately €3.2 billion to economically hedge its foreign currency rate risk exposure to certain fixed price contracts for the major offshore construction and equipment components of the CVOW Commercial Project.  

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 $76 million and $16 million in the fair value of Dominion Energy’s commodity-based derivative instruments as of September 30, 2022 and December 31, 2021, respectively.

A hypothetical 10% increase in commodity prices would have resulted in a decrease of $8 million and $6 million in the fair value of Virginia Power’s commodity-based derivative instruments as of September 30, 2022 and December 31, 2021, 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 $25 million and $6 million decrease in earnings at September 30, 2022 and December 31, 2021, respectively. For variable rate debt outstanding for Virginia Power, a hypothetical 10% increase in market interest rates would not have resulted in a material change in earnings at September 30, 2022 or December 31, 2021.  

The Companies also use interest rate derivatives, including forward-starting swaps, interest rate swaps and interest rate lock agreements to manage interest rate risk. As of September 30, 2022, Dominion Energy and Virginia Power had $12.9 billion and $3.3 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 $260 million and $140 million, respectively, in the fair value of Dominion

96

Energy and Virginia Power’s interest rate derivatives at September 30, 2022. As of December 31, 2021, Dominion Energy and Virginia Power had $11.4 billion and $2.8 billion, respectively, in aggregate notional amounts of these interest rate derivatives outstanding. A hypothetical 10% decrease in market interest rates would have resulted in a decrease of $191 million and $111 million, respectively, in the fair value of Dominion Energy and Virginia Power’s interest rate derivatives at December 31, 2021.

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

Foreign Currency Exchange Rate Risk

The Companies utilize foreign currency swaps to economically hedge the foreign currency exchange risk associated with fixed price contracts related to the CVOW Commercial Project denominated in foreign currencies. As of September 30, 2022, Dominion Energy had €3.4 billion 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 $321 million in the fair value of Dominion Energy’s foreign currency swaps at September 30, 2022.

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 losses (including investment income) on nuclear decommissioning and rabbi trust investments of $1.2 billion for the nine months ended September 30, 2022, and net investment gains (including investment income) on nuclear decommissioning and rabbi trust investments of $678 million and $1.1 billion for the nine months ended September 30, 2021 and the year ended December 31, 2021, respectively. Net realized gains and losses include gains and losses from the sale of investments as well as any other-than-temporary declines in fair value. Dominion Energy recorded in AOCI and regulatory liabilities, a net decrease in unrealized gains on debt investments of $253 million, $50 million and $64 million for the nine months ended September 30, 2022 and 2021 and the year ended December 31, 2021, respectively.

 

Virginia Power recognized net investment losses (including investment income) on nuclear decommissioning trust investments of $593 million for the nine months ended September 30, 2022, and net investment gains (including investment income) on nuclear decommissioning trust investments of $335 million and $568 million for the nine months ended September 30, 2021 and the year ended December 31, 2021, respectively. Net realized gains and losses include gains and losses from the sale of investments as well as any other-than-temporary declines in fair value. Virginia Power recorded in AOCI and regulatory liabilities, a net decrease in unrealized gains on debt investments of $137 million, $24 million and $31 million for the nine months ended September 30, 2022 and 2021 and the year ended December 31, 2021, 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.

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.

97

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Companies are parties to various legal, environmental or other regulatory proceedings, including in the ordinary course of business. SEC regulations require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Companies reasonably believe will exceed a specified threshold. Pursuant to the SEC regulations, the Companies use a threshold of $1 million for such proceedings.

See the following for discussions on various legal, environmental and other regulatory proceedings to which the Companies are a party, which information is incorporated herein by reference:

•

Notes 13 and 23 to the Consolidated Financial Statements and Future Issues and Other Matters in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021.

•

Notes 13 and 17 to the Consolidated Financial Statements in this report.

ITEM 1A. RISK FACTORS

The Companies’ businesses are influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond the Companies’ control. A number of these risk factors have been identified in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021, 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, 2021. 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

Dominion Energy

Purchases of Equity Securities

 

Period

 

Total

Number of

Shares

(or Units)

Purchased(1)

 

 

Average

Price Paid

per Share

(or Unit)(2)

 

 

Total Number

of Shares (or Units)

Purchased as Part

of Publicly

Announced Plans or

Programs

 

 

Maximum Number (or Approximate Dollar

Value) of Shares (or Units)

that May Yet Be

Purchased under the Plans

or Programs(3)

7/1/22 - 7/31/22

 

 

70

 

 

$

81.24

 

 

 

—

 

 

$                0.92 billion

8/1/22 - 8/31/22

 

 

1,774

 

 

 

82.54

 

 

 

—

 

 

0.92 billion

9/1/22 - 9/30/22

 

 

1,310

 

 

 

82.36

 

 

 

—

 

 

0.92 billion

Total

 

 

3,154

 

 

$

82.44

 

 

 

—

 

 

$                0.92 billion

 

(1)

Represents shares of common stock that were tendered by employees to satisfy tax withholding obligations on vested restricted stock.

(2)

Represents the weighted-average price paid per share.

(3)

In November 2020, the Dominion Energy Board of Directors authorized the repurchase of up to $1.0 billion of shares of common stock.  This repurchase program has no expiration date or price or volume targets and may be modified, suspended or terminated at any time. Shares may be purchased through open market or privately negotiated transactions or otherwise at the discretion of management subject to prevailing market conditions, applicable securities laws and other factors.

98

ITEM 6. EXHIBITS

 

Exhibit

Number

 

Description

 

Dominion Energy

 

Virginia Power

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  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).

 

X

 

 

 

 

 

 

 

 

 

  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).

 

 

 

X

 

 

 

 

 

 

 

  3.2.a

 

Dominion Energy, Inc. Bylaws, as amended and restated, effective May 11, 2022 (Exhibit 3.1, Form 8-K filed May 12, 2022, File No. 1-8489).

 

X

 

 

 

 

 

 

 

 

 

  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).

 

 

 

X

 

 

 

 

 

 

 

  4

 

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.

 

X

 

X

 

 

 

 

 

 

 

4.1

 

Indenture, dated as of June 1, 2015, between Dominion Resources, Inc. and Deutsche Bank Trust Company Americas, as Trustee (Exhibit 4.1, Form 8-K filed June 15, 2015, File No. 1-8489); Second Supplemental Indenture, dated as of September 1, 2015 (Exhibit 4.2, Form 8-K filed September 24, 2015, File No. 1-8489); Fifth Supplemental Indenture, dated as of August 1, 2016 (Exhibit 4.3, Form 8-K filed August 9, 2016, File No. 1-8489); Sixth Supplemental Indenture, dated as of August 1, 2016 (Exhibit 4.4, Form 8-K filed August 9, 2016, File No. 1-8489); Tenth Supplemental Indenture, dated as of January 1, 2017 (Exhibit 4.3, Form 8-K filed January 12, 2017, File No. 1-8489); Eleventh Supplemental Indenture, dated as of March 1, 2017 (Exhibit 4.3, Form 10-Q filed May 4, 2017, File No. 1-8489); Thirteenth Supplemental Indenture, dated December 1, 2017 (Exhibit 4.8, Form 10-K for the fiscal year ended December 31, 2017 filed February 27, 2018, File No. 1-8489); Fifteenth Supplemental Indenture, dated June 1, 2018 (Exhibit 4.2, Form 8-K, filed June 5, 2018, File No. 1-8489); Sixteenth Supplemental Indenture, dated March 1, 2019 (Exhibit 4.2, Form 8-K filed March 13, 2019, File No. 1-8489); Seventeenth Supplemental Indenture, dated as of August 1, 2019 (Exhibit 4.2, Form 10-Q filed November 1, 2019, File No. 1-8489); Eighteenth Supplemental Indenture, dated as of March 1, 2020 (Exhibit 4.2, Form 8-K, filed March 19, 2020, File No. 1-8489); Nineteenth Supplemental Indenture, dated as of March 1, 2020 (Exhibit 4.3, Form 8-K, filed March 19, 2020, File No. 1-8489); Twentieth Supplemental Indenture, dated as of April 1, 2020 (Exhibit 4.2, Form 8-K, filed April 3, 2020, File No. 1-8489); Twenty-First Supplemental Indenture, dated as of September 1, 2020 (Exhibit 4.2, Form 8-K, filed September 17, 2020, File No. 1-8489); Twenty-Second Supplemental Indenture, dated as of April 1, 2021 (Exhibit 4.2, Form 8-K, filed April 5, 2021, File No. 1-8489); Twenty-Third Supplemental Indenture, dated as of April 1, 2021 (Exhibit 4.3, Form 8-K, filed April 5, 2021, File No. 1-8489); Twenty-Fourth Supplemental Indenture, dated as of August 1, 2021 (Exhibit 4.2, Form 8-K filed August 12, 2021, File No. 1-8489); Twenty-Fifth Supplemental Indenture, dated as of August 1, 2022 (Exhibit 4.2, Form 8-K filed August 19, 2022, File No. 1-8489); Twenty-Sixth Supplemental Indenture, dated as of August 1, 2022 (Exhibit 4.3, Form 8-K filed August 19, 2022, File No. 1-8489).

 

X

 

 

 

 

 

 

 

 

 

10.1

 

$6,000,000,000 Fifth Amended and Restated Revolving Credit Agreement, dated June 9, 2021, among Dominion Energy, Inc., Virginia Electric and Power Company, Questar Gas Company, Dominion Energy South Carolina, Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, Mizuho Bank, Ltd., Bank of America, N.A., The Bank of Nova Scotia and Wells Fargo Bank, N.A., as Syndication Agents, J.P. Morgan Securities LLC and Mizuho Bank, Ltd., as Co-Sustainability Structuring Agent, and other lenders named therein (Exhibit 10.1, Form 8-K filed June 10, 2021, File No. 1-8489); as amended by the First Amendment, dated September 28, 2022, to the Fifth Amended and Restated Revolving Credit Agreement (Exhibit 10.1, Form 8-K filed September 30, 2022, File No. 1-8489).

 

X

 

X

 

 

 

 

 

 

 

10.2

 

$900,000,000 Sustainability Revolving Credit Agreement, dated as of June 9, 2021, among Dominion Energy, Inc., Sumitomo Mitsui Banking Corporation, as Administrative Agent and Sustainability Coordinator, Sumitomo Mitsui Banking Corporation, The Bank of Nova Scotia and The Toronto- Dominion Bank, New York Branch, as Joint Lead Arrangers and Joint Bookrunners, and the other lenders named therein (Exhibit 10.2, Form 8-K filed June 10, 2021, File No. 1-8489); as amended by the First Amendment, dated October 12, 2022, to the Sustainability Revolving Credit Agreement (Exhibit 10.1, Form 8-K filed October 14, 2022, File No. 1-8489).

 

X

 

 

99

Exhibit

Number

 

Description

 

Dominion Energy

 

Virginia Power

 

 

 

 

 

 

 

31.a

 

Certification by Chief Executive Officer of Dominion Energy, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

 

X

 

 

 

 

 

 

 

 

 

31.b

 

Certification by Chief Financial Officer of Dominion Energy, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

 

X

 

 

 

 

 

 

 

 

 

31.c

 

Certification by Chief Executive Officer of Virginia Electric and Power Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

 

 

 

X

  

 

 

 

 

 

 

31.d

 

Certification by Chief Financial Officer of Virginia Electric and Power Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

 

 

 

X

 

 

 

 

 

 

 

32.a

 

Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Dominion Energy, Inc. as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

 

X

 

 

 

 

 

 

 

 

 

32.b

 

Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Virginia Electric and Power Company as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

 

 

 

X

 

 

 

 

 

 

 

99

 

Condensed consolidated earnings statements (filed herewith).

 

X

 

X

 

 

 

 

 

 

 

101

 

The following financial statements from Dominion Energy, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed on November 4, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. The following financial statements from Virginia Electric and Power Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed on November 4, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Common Shareholder’s Equity (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements.

 

X

 

X

 

 

 

 

 

 

 

104

 

Cover Page Interactive Data File formatted in iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101.

 

X

 

X

 

 

 

 

 

 

 

 

100

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

DOMINION ENERGY, INC.

Registrant

 

 

November 4, 2022

/s/ Michele L. Cardiff

 

Michele L. Cardiff

Senior Vice President, Controller and

Chief Accounting Officer

 

 

 

VIRGINIA ELECTRIC AND POWER COMPANY

Registrant

 

 

November 4, 2022

/s/ Michele L. Cardiff

 

Michele L. Cardiff

Senior Vice President, Controller and

Chief Accounting Officer

 

 

 

 

 

101

TABLE OF CONTENTS
Part I. Financial InformationprintItem 1. Financial StatementsprintNote 1. Nature Of OperationsprintNote 2. Significant Accounting PoliciesprintNote 3. Acquisitions and DispositionsprintNote 4. Operating RevenueprintNote 5. Income TaxesprintNote 6. Earnings Per ShareprintNote 7. Accumulated Other Comprehensive Income (loss)printNote 8. Fair Value MeasurementsprintNote 9. Derivatives and Hedge Accounting ActivitiesprintNote 10. InvestmentsprintNote 11. Property, Plant and EquipmentprintNote 12. Regulatory Assets and LiabilitiesprintNote 13. Regulatory MattersprintNote 14. LeasesprintNote 15. Variable Interest EntitiesprintNote 16. Significant Financing TransactionsprintNote 17. Commitments and ContingenciesprintNote 18. Credit RiskprintNote 19. Related-party TransactionsprintNote 20. Employee Benefit PlansprintNote 21. Operating SegmentsprintItem 2. Management S Discussion and AnalysisprintItem 1. Business, Future Issues and Other MattersprintItem 4. Controls and ProceduresprintPart II. Other InformationprintItem 1. Legal ProceedingsprintItem 1A. Risk FactorsprintItem 2. Unregistered Sales Of Equity Securities and Use Of ProceedsprintItem 6. Exhibitsprint

Exhibits

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 October30, 2014 (Exhibit 3.1.b, Form 10-Q filed November3, 2014, File No.1-2255). 3.2.a Dominion Energy, Inc. Bylaws, as amended and restated, effective May 11, 2022 (Exhibit 3.1, Form 8-K filed May 12, 2022, File No. 1-8489). 3.2.b Virginia Electric and Power Company Amended and Restated Bylaws, effective June1, 2009 (Exhibit 3.1, Form 8-K filed June3, 2009, File No.1-2255). 4.1 Indenture, dated as of June1, 2015, between Dominion Resources, Inc. and Deutsche Bank Trust Company Americas, as Trustee (Exhibit 4.1, Form 8-K filed June15, 2015, File No.1-8489);Second Supplemental Indenture, dated as of September1, 2015 (Exhibit 4.2, Form 8-K filed September24, 2015, File No.1-8489);Fifth Supplemental Indenture, dated as of August1, 2016 (Exhibit 4.3, Form 8-K filed August9, 2016, File No.1-8489);Sixth Supplemental Indenture, dated as of August1, 2016 (Exhibit 4.4, Form 8-K filed August9, 2016, File No.1-8489);Tenth Supplemental Indenture, dated as of January1, 2017 (Exhibit 4.3, Form 8-K filed January 12, 2017, File No. 1-8489);Eleventh Supplemental Indenture, dated as of March 1, 2017 (Exhibit 4.3, Form 10-Q filed May 4, 2017, File No. 1-8489);Thirteenth Supplemental Indenture, dated December 1, 2017 (Exhibit 4.8, Form 10-K for the fiscal year ended December 31, 2017 filed February 27, 2018, File No. 1-8489);Fifteenth Supplemental Indenture, dated June 1, 2018 (Exhibit 4.2, Form 8-K, filed June 5, 2018, File No. 1-8489);Sixteenth Supplemental Indenture, dated March 1, 2019 (Exhibit 4.2, Form 8-K filed March 13, 2019, File No. 1-8489);Seventeenth Supplemental Indenture, dated as of August 1, 2019 (Exhibit 4.2, Form 10-Q filed November 1, 2019, File No. 1-8489);Eighteenth Supplemental Indenture, dated as of March 1, 2020 (Exhibit 4.2, Form 8-K, filed March 19, 2020, File No. 1-8489);Nineteenth Supplemental Indenture, dated as of March 1, 2020 (Exhibit 4.3, Form 8-K, filed March 19, 2020, File No. 1-8489);Twentieth Supplemental Indenture, dated as of April 1, 2020 (Exhibit 4.2, Form 8-K, filed April 3, 2020, File No. 1-8489);Twenty-First Supplemental Indenture, dated as of September 1, 2020 (Exhibit 4.2, Form 8-K, filed September 17, 2020, File No. 1-8489);Twenty-Second Supplemental Indenture, dated as of April 1, 2021 (Exhibit 4.2, Form 8-K, filed April 5, 2021, File No. 1-8489);Twenty-Third Supplemental Indenture, dated as of April 1, 2021 (Exhibit 4.3, Form 8-K, filed April 5, 2021, File No. 1-8489);Twenty-Fourth Supplemental Indenture, dated as of August 1, 2021 (Exhibit 4.2, Form 8-K filed August 12, 2021, File No. 1-8489);Twenty-Fifth Supplemental Indenture, dated as of August 1, 2022 (Exhibit 4.2, Form 8-K filed August 19, 2022, File No. 1-8489);Twenty-Sixth Supplemental Indenture, dated as of August 1, 2022 (Exhibit 4.3, Form 8-K filed August 19, 2022, File No. 1-8489). 10.1 $6,000,000,000 Fifth Amended and Restated Revolving Credit Agreement, dated June 9, 2021, among Dominion Energy, Inc., Virginia Electric and Power Company, Questar Gas Company, Dominion Energy South Carolina, Inc., JPMorgan Chase Bank, N.A., as Administrative Agent, Mizuho Bank, Ltd., Bank of America, N.A., The Bank of Nova Scotia and Wells Fargo Bank, N.A., as Syndication Agents, J.P. Morgan Securities LLC and Mizuho Bank, Ltd., as Co-Sustainability Structuring Agent, and other lenders named therein (Exhibit 10.1, Form 8-K filed June 10, 2021, File No. 1-8489);as amended by the First Amendment, dated September 28, 2022, to the Fifth Amended and Restated Revolving Credit Agreement (Exhibit 10.1, Form 8-K filed September 30, 2022, File No. 1-8489). 10.2 $900,000,000 Sustainability Revolving Credit Agreement, dated as of June 9, 2021, among Dominion Energy, Inc., Sumitomo Mitsui Banking Corporation, as Administrative Agent and Sustainability Coordinator, Sumitomo Mitsui Banking Corporation, The Bank of Nova Scotia and The Toronto- Dominion Bank, New York Branch, as Joint Lead Arrangers and Joint Bookrunners, and the other lenders named therein (Exhibit 10.2, Form 8-K filed June 10, 2021, File No. 1-8489);as amended by the First Amendment, dated October 12, 2022, to the Sustainability Revolving Credit Agreement (Exhibit 10.1, Form 8-K filed October 14, 2022, File No. 1-8489). 31.a Certification by Chief Executive Officer of Dominion Energy, Inc. pursuant to Section302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 31.b Certification by Chief Financial Officer of Dominion Energy, Inc. pursuant to Section302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 31.c Certification by Chief Executive Officer of Virginia Electric and Power Company pursuant to Section302 of the Sarbanes-Oxley Act of 2002 (filed herewith). 31.d Certification by Chief Financial Officer of Virginia Electric and Power Company pursuant to Section302 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 Section906 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 Section906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). 99 Condensed consolidated earnings statements (filed herewith).