Derivatives and Hedge Accounting Activities

12 Months Ended

Dec. 31, 2022

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivatives and Hedge Accounting Activities

NOTE 7. DERIVATIVES AND HEDGE ACCOUNTING ACTIVITIES

See Note 2 for the Companies’ accounting policies, objectives, and strategies for using derivative instruments. See Notes 2 and 6 for further information about fair value measurements and associated valuation methods for derivatives.

Cash collateral is used in the table below to offset derivative assets and liabilities. In February 2022, Dominion Energy entered into contracts representing offsetting positions to certain existing exchange contracts with collateral requirements as well as new over-the-counter transactions that are not subject to collateral requirements. These contracts resulted in positions which limit the risk of increased cash collateral requirements. Certain accounts receivable and accounts payable recognized on the Companies’ Consolidated Balance Sheets, letters of credit and other forms of securities, as well as certain other long-term debt, all of which are not included in the tables below, are subject to offset under master netting or similar arrangements and would reduce the net exposure. See Note 18 for further information regarding other long-term debt, in the form of restructured derivatives, subject to offset under master netting or

similar agreements. See Note 24 for further information regarding credit-related contingent features for the Companies derivative instruments.

Balance Sheet Presentation

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

	Dominion Energy Gross Amounts Not Offset in the Consolidated Balance Sheet								Virginia Power Gross Amounts Not Offset in the Consolidated Balance Sheet
	Gross 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)
December 31, 2022
Commodity contracts:
Over-the-counter	$	408	$	28	$	—	$	380	$	238	$	7	$	—	$	231
Exchange		160		159		—		1		—		—		—		—
Interest rate contracts:
Over-the-counter		1,407		248		—		1,159		614		38		—		576
Total derivatives,    subject to a    master netting    or similar    arrangement	$	1,975	$	435	$	—	$	1,540	$	852	$	45	$	—	$	807
December 31, 2021
Commodity contracts:
Over-the-counter	$	153	$	13	$	—	$	140	$	110	$	8	$	—	$	102
Exchange		9		7		—		2		7		7		—		—
Interest rate contracts:
Over-the-counter		323		49		—		274		146		20		—		126
Foreign currency exchange rate contracts:
Over-the-counter		8		—		—		8		8		—		—		8
Total derivatives,    subject to a    master netting    or similar    arrangement	$	493	$	69	$	—	$	424	$	271	$	35	$	—	$	236

(1)Excludes derivative assets of $201 million and $120 million at Dominion Energy, and $30 million and $29 million at Virginia Power, at December 31, 2022 and 2021, respectively, which are not subject to master netting or similar arrangements.

	Dominion Energy Gross Amounts Not Offset in the Consolidated Balance Sheet								Virginia Power 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)
December 31, 2022
Commodity contracts:
Over-the-counter	$	443	$	34	$	71	$	338	$	146	$	13	$	71	$	62
Exchange		483		159		324		—		176		—		176		—
Interest rate contracts:
Over-the-counter		377		210		1		166		7		—		—		7
Foreign currency exchange rate contracts:
Over-the-counter		101		32		—		69		101		32		—		69
Total derivatives,    subject to a    master netting    or similar    arrangement	$	1,404	$	435	$	396	$	573	$	430	$	45	$	247	$	138
December 31, 2021
Commodity contracts:
Over-the-counter	$	95	$	13	$	54	$	28	$	84	$	8	$	54	$	22
Exchange		374		7		367		—		43		7		36		—
Interest rate contracts:
Over-the-counter		399		49		11		339		337		20		—		317
Total derivatives,    subject to a    master netting    or similar    arrangement	$	868	$	69	$	432	$	367	$	464	$	35	$	90	$	339

(1)Excludes derivative liabilities of $26 million and $6 million at Virginia Power at December 31, 2022 and 2021, respectively, which are not subject to master netting or similar arrangements. Dominion Energy did not have any derivative liabilities at December 31, 2022 or 2021 which were not subject to master netting or similar arrangements.

Volumes

The following table presents the volume of the Companies' derivative activity as of December 31, 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 their long and short positions.

	Dominion Energy				Virginia Power
	Current		Noncurrent		Current		Noncurrent
Natural Gas (bcf):
Fixed price		50		2		41		2
Basis(1)		154		414		140		407
Electricity (MWh in millions):
Fixed price		16		35		8		9
FTRs		45		—		45		—
Oil (Gal in millions)		6		—		6		—
Interest rate(2) (in millions)	$	2,003	$	10,707	$	1,600	$	1,950
Foreign currency exchange rate(2) (in millions)
Danish Krone	394 kr.		4,167 kr.		394 kr.		4,167 kr.
Euro	€780		€2,131		€780		€2,131

(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 the Companies' Consolidated Balance Sheets at December 31, 2022:

	Dominion Energy							Virginia Power
	AOCI After-Tax			Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax			Maximum Term	AOCI After-Tax		Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax			Maximum Term
(millions)
Interest rate	$	(249	)	$	(33	)	396 months	$	16	$	(1	)	396 months
Total	$	(249	)	$	(33	)		$	16	$	(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 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 years ended December 31, 2022, 2021 and 2020.

The following table presents the amounts recorded on Dominion Energy's Consolidated Balance Sheets related to cumulative basis adjustments for fair value hedges all of which related to discontinued hedging relationships at both December 2022 and 2021, respectively:

	Carrying Amount of the Hedged Assets (Liabilities)					Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Assets (Liabilities)
	December 31, 2022		December 31, 2021			December 31, 2022		December 31, 2021
(millions)
Long-term debt	$	—	$	(352	)	$	—	$	(2	)

Virginia Power had no amounts recorded in its Consolidated Balance Sheets related to fair value hedges at December 31, 2022 or 2021.

Fair Value and Gains and Losses on Derivative Instruments

The following tables present the fair values of the Companies' derivatives and where they are presented in their Consolidated Balance Sheets:

	Dominion Energy						Virginia Power
	Fair Value – Derivatives under Hedge Accounting		Fair Value – Derivatives not under Hedge Accounting		Total Fair Value		Fair Value – Derivatives under Hedge Accounting		Fair Value – Derivatives not under Hedge Accounting		Total Fair Value
(millions)
At December 31, 2022
ASSETS
Current Assets
Commodity	$	—	$	532	$	532	$	—	$	264	$	264
Interest rate		501		104		605		501		—		501
Total current derivative assets(1)		501		636		1,137		501		264		765
Noncurrent Assets
Commodity		—		237		237		—		4		4
Interest rate		113		689		802		113		—		113
Total noncurrent derivative assets(2)(3)		113		926		1,039		113		4		117
Total derivative assets	$	614	$	1,562	$	2,176	$	614	$	268	$	882
LIABILITIES
Current Liabilities
Commodity	$	—	$	700	$	700	$	—	$	290	$	290
Interest rate		—		70		70		—		—		—
Foreign currency    exchange rate		—		8		8		—		8		8
Total current derivative liabilities(4)		—		778		778		—		298		298
Noncurrent Liabilities
Commodity		—		226		226		—		58		58
Interest rate		7		300		307		7		—		7
Foreign currency    exchange rate		—		93		93		—		93		93
Total noncurrent derivative liabilities(5)(6)		7		619		626		7		151		158
Total derivative liabilities	$	7	$	1,397	$	1,404	$	7	$	449	$	456
At December 31, 2021
ASSETS
Current Assets
Commodity	$	—	$	103	$	103	$	—	$	74	$	74
Interest rate		1		17		18		1		—		1
Foreign currency    exchange rate		—		1		1		—		1		1
Total current derivative assets(1)		1		121		122		1		75		76
Noncurrent Assets
Commodity		—		179		179		—		72		72
Interest rate		145		160		305		145		—		145
Foreign currency    exchange rate		—		7		7		—		7		7
Total noncurrent derivative assets(3)		145		346		491		145		79		224
Total derivative assets	$	146	$	467	$	613	$	146	$	154	$	300
LIABILITIES
Current Liabilities
Commodity	$	—	$	304	$	304	$	—	$	92	$	92
Interest rate		42		13		55		42		—		42
Total current derivative liabilities(4)		42		317		359		42		92		134
Noncurrent Liabilities
Commodity		—		165		165		—		41		41
Interest rate		295		49		344		295		—		295
Total noncurrent derivative liabilities(5)(6)		295		214		509		295		41		336
Total derivative liabilities	$	337	$	531	$	868	$	337	$	133	$	470

(1)Includes $118 million and $6 million reported in current assets held for sale in Dominion Energy's Consolidated Balance Sheets at December 31, 2022 and 2021, respectively.

(2)Includes $1 million reported in noncurrent assets held for sale in Dominion Energy's Consolidated Balance Sheets at December 31, 2022.

(3)Virginia Power’s noncurrent derivative assets are presented in other deferred charges and other assets in its Consolidated Balance Sheets.

(4)Includes $6 million and $3 million reported in current liabilities held for sale in Dominion Energy's Consolidated Balance Sheets at December 31, 2022 and 2021, respectively.

(5)Includes $1 million reported in noncurrent liabilities held for sale in Dominion Energy's Consolidated Balance Sheets at both December 31, 2022 and 2021.

(6)Virginia Power’s noncurrent derivative liabilities are presented in other deferred credits and other liabilities in its Consolidated Balance Sheets.

The following tables present the gains and losses on the Companies' derivatives, as well as where the associated activity is presented in their Consolidated Balance Sheets and Statements of Income:

	Dominion Energy									Virginia Power
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)			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)
Year Ended December 31, 2022
Derivative type and location of gains (losses):
Interest rate(3)	$	89		$	(57	)	$	855		$	80		$	(2	)	$	854
Total	$	89		$	(57	)	$	855		$	80		$	(2	)	$	854
Year Ended December 31, 2021
Derivative type and location of gains (losses):
Commodity(4)				$	(1	)
Interest rate(3)	$	21			(60	)	$	135		$	17		$	(3	)	$	130
Total	$	21		$	(61	)	$	135		$	17		$	(3	)	$	130
Year Ended December 31, 2020
Derivative type and location of gains (losses):
Commodity:
Operating revenue				$	25
Purchased gas					(4	)
Discontinued    operations					2
Total commodity	$	—		$	23		$	—		$	—		$	—		$	—
Interest rate:
Interest and    related charges				$	(83	)				$	(37	)	$	(2	)	$	(338	)
Discontinued    operations					(236	)
Total interest rate	$	(309	)	$	(319	)	$	(332	)	$	(37	)	$	(2	)	$	(338	)
Foreign currency    exchange rate(5)		(11	)		(6	)		—									—
Total	$	(320	)	$	(302	)	$	(332	)	$	(37	)	$	(2	)	$	(338	)

(1)Amounts deferred into AOCI have no associated effect in the Companies' 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 the Companies' Consolidated Statements of Income.

(3)Amounts recorded in the Companies' Consolidated Statements of Income are classified in interest and related charges.

(4)Amounts recorded in Dominion Energy’s Consolidated Statements of Income are classified in purchased gas.

(5)Amounts recorded in Dominion Energy’s Consolidated Statements of Income are classified in discontinued operations.

	Amount of Gain (Loss) Recognized in Income on Derivatives(1)(2)
Derivatives not designated as hedging instruments	Dominion Energy									Virginia Power
Year Ended December 31,	2022			2021			2020			2022			2021			2020
(millions)
Derivative type and location of gains (losses):
Commodity:
Operating revenue	$	(729	)	$	(487	)	$	73		$	(303	)	$	(62	)	$	(104	)
Purchased gas		13			(1	)		(20	)
Electric fuel and other energy-related purchases		514			16			(104	)		453			9			—
Discontinued operations		8			—			(11	)
Interest rate:
Interest and related charges		406			89			87
Discontinued operations		244			8			5
Foreign currency exchange rate:
Discontinued operations		—			—			12
Total	$	456		$	(375	)	$	42		$	150		$	(53	)	$	(104	)

(1)Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in the Companies' 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.