Exhibit 99.1
Glossary of Terms
The following abbreviations or acronyms used in this Form 10-K are defined below:
Abbreviation or Acronym |
|
Definition |
2017 Tax Reform Act |
|
An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (previously known as The Tax Cuts and Jobs Act) enacted on December 22, 2017 |
2019 Equity Units |
|
Dominion Energy’s 2019 Series A Equity Units issued in June 2019, initially in the form of 2019 Series A Corporate Units, which consisted of a stock purchase contract and a 1/10 interest in a share of the Series A Preferred Stock |
2021 Triennial Review |
|
Virginia Commission review of Virginia Power’s earned return on base rate generation and distribution services for the four successive 12-month test periods beginning January 1, 2017 and ending December 31, 2020 |
ABO |
|
Accumulated benefit obligation |
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. |
Altavista |
|
Altavista biomass power station |
AMI |
|
Advanced Metering Infrastructure |
AOCI |
|
Accumulated other comprehensive income (loss) |
ARO |
|
Asset retirement obligation |
Atlantic Coast Pipeline |
|
Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy and Duke Energy |
Atlantic Coast Pipeline Project |
|
A previously proposed approximately 600-mile natural gas pipeline running from West Virginia through Virginia to North Carolina which would have been owned by Dominion Energy and Duke Energy |
bcf |
|
Billion cubic feet |
Bear Garden |
|
A 622 MW combined-cycle, natural gas-fired power station in Buckingham County, Virginia |
BHE |
|
The legal entity, Berkshire Hathaway Energy Company, one or more of its consolidated subsidiaries (including 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 |
Birdseye |
|
Birdseye Renewable Energy, LLC |
BP |
|
BP Wind Energy North America Inc. |
Brookfield |
|
Brookfield Super-Core Infrastructure Partners, an infrastructure fund managed by Brookfield Asset Management Inc. |
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 |
CEP |
|
Capital Expenditure Program, as established by House Bill 95, Ohio legislation enacted in 2011, deployed by East Ohio to recover certain costs associated with capital investment |
CERCLA |
|
Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as Superfund |
CFIUS |
|
The Committee on Foreign Investment in the U.S. |
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 |
CNG |
|
Consolidated Natural Gas Company |
CO2 |
|
Carbon dioxide |
Colonial Trail West |
|
A 142 MW utility-scale solar power station located in Surry County, Virginia |
Abbreviation or Acronym |
|
Definition |
Companies |
|
Dominion Energy and Virginia Power, collectively |
Contracted Energy |
|
Contracted Energy operating segment, formerly known as the Contracted Assets operating segment |
Cove Point |
|
Cove Point LNG, LP (formerly known as Dominion Energy Cove Point LNG, LP) |
Cove Point LNG Facility |
|
An LNG import/export and storage facility, including the Liquefaction Facility, located on the Chesapeake Bay in Lusby, Maryland |
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.) |
DECP Holdings |
|
The legal entity DECP Holdings, Inc., which holds Dominion Energy’s noncontrolling interest in Cove Point |
DEQPS |
|
MountainWest Pipeline Services, Inc. (formerly known as Dominion Energy Questar Pipeline Services, Inc.) |
DES |
|
Dominion Energy Services, Inc. |
DESC |
|
The legal entity, Dominion Energy South Carolina, Inc., one or more of its consolidated entities or operating segment, or the entirety of Dominion Energy South Carolina, Inc. and its consolidated entities |
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 Direct® |
|
A dividend reinvestment and open enrollment direct stock purchase plan |
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 joint venture between Dominion Energy and Patriot |
DSM |
|
Demand-side management |
2
Abbreviation or Acronym |
|
Definition |
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 |
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 |
Eagle Solar |
|
Eagle Solar, LLC, a wholly-owned subsidiary of DGI |
East Ohio |
|
The East Ohio Gas Company, doing business as Dominion Energy Ohio |
East Ohio Transaction |
|
The proposed sale by Dominion Energy to Enbridge of all issued and outstanding capital stock in Dominion Energy Questar Corporation and its consolidated subsidiaries, which following a proposed reorganization will include East Ohio and Dominion Energy Gas Distribution, LLC, pursuant to a purchase and sale agreement entered into on September 5, 2023 |
Enbridge |
|
The legal entity, Enbridge Inc., one or more of its consolidated subsidiaries (including Enbridge Elephant Holdings, LLC, Enbridge Parrot Holdings, LLC, and Enbridge Quail Holdings, LLC), or the entirety of Enbridge Inc. and its consolidated subsidiaries |
EnergySolutions |
|
EnergySolutions, LLC |
EPA |
|
U.S. Environmental Protection Agency |
EPS |
|
Earnings per common share |
ERISA |
|
Employee Retirement Income Security Act of 1974 |
Excess Tax Benefits |
|
Benefits of tax deductions in excess of the compensation cost recognized for stock-based compensation |
FASB |
|
Financial Accounting Standards Board |
FCC |
|
Federal Communications Commission |
FERC |
|
Federal Energy Regulatory Commission |
FILOT |
|
Fee in lieu of taxes |
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 |
Fowler Ridge |
|
Fowler I Holdings LLC, a wind-turbine facility in Benton County, Indiana |
FTRs |
|
Financial transmission rights |
GAAP |
|
U.S. generally accepted accounting principles |
GENCO |
|
South Carolina Generating Company, Inc. |
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 |
Green Mountain |
|
Green Mountain Power Corporation |
Greensville County |
|
A 1,629 MW combined-cycle, natural gas-fired power station in Greensville County, Virginia |
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 |
Hope |
|
Hope Gas, Inc., doing business as Dominion Energy West Virginia through August 2022 |
Hopewell |
|
Polyester biomass power station |
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 |
3
Abbreviation or Acronym |
|
Definition |
Iroquois |
|
Iroquois Gas Transmission System, L.P. |
IRS |
|
Internal Revenue Service |
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 |
July 2016 hybrids |
|
Dominion Energy’s 2016 Series A Enhanced Junior Subordinated Notes due 2076 |
Kewaunee |
|
Kewaunee nuclear power station |
kV |
|
Kilovolt |
LIBOR |
|
London Interbank Offered Rate |
LIFO |
|
Last-in-first-out inventory method |
Liquefaction Facility |
|
A natural gas export/liquefaction facility at the Cove Point LNG Facility |
LNG |
|
Liquefied natural gas |
LTIP |
|
Long-term incentive program |
Massachusetts Municipal |
|
Massachusetts Municipal Wholesale Electric Company |
mcfe |
|
Thousand cubic feet equivalent |
MGD |
|
Million gallons per day |
Millstone |
|
Millstone nuclear power station |
MW |
|
Megawatt |
MWh |
|
Megawatt hour |
Natural Gas Rate Stabilization Act |
|
Legislation effective February 2005 designed to improve and maintain natural gas service infrastructure to meet the needs of customers in South Carolina |
NAV |
|
Net asset value |
NEIL |
|
Nuclear Electric Insurance Limited |
NGL |
|
Natural gas liquid |
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 |
NWP 12 |
|
A nationwide permit from the U.S. Army Corps of Engineers authorizing activities required for the construction, maintenance, repair and removal of utility lines, including electric transmission, gas pipelines, water and communications conduit and associate facilities in waters of the U.S. |
NYSE |
|
New York Stock Exchange |
October 2014 hybrids |
|
Dominion Energy’s 2014 Series A Enhanced Junior Subordinated Notes due 2054 |
ODEC |
|
Old Dominion Electric Cooperative |
offshore wind turbine installation season |
|
The period May 1st through October 31st for waters off the coast of the Mid-Atlantic and Northeast |
4
Abbreviation or Acronym |
|
Definition |
Ohio Commission |
|
Public Utilities Commission of Ohio |
Patriot |
|
Patriot Utility Privatizations, LLC, a joint venture 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 |
PSNC Transaction |
|
The proposed sale by Dominion Energy to Enbridge of all of its membership interests in Fall North Carolina Holdco LLC and its consolidated subsidiaries, which following a proposed reorganization will include PSNC, pursuant to a purchase and sale agreement entered into on September 5, 2023 |
Q-Pipe Group |
|
Collectively, Dominion Energy Questar Pipeline, DEQPS and MountainWest Energy Holding Company, LLC (formerly known as QPC Holding Company, LLC and its subsidiary MountainWest Southern Trails Pipeline Company (formerly known as Questar Southern Trails Pipeline Company)) |
Q-Pipe Transaction |
|
A previously proposed sale by Dominion Energy to BHE 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 |
Questar Gas Transaction |
|
The proposed sale by Dominion Energy to Enbridge of all of its membership interests in Fall West Holdco LLC and its consolidated subsidiaries, which following a proposed reorganization will include Questar Gas, Wexpro, Wexpro II Company, Wexpro Development Company, Dominion Energy Wexpro Services Company, Questar InfoComm Inc. and Dominion Gas Projects Company, LLC, pursuant to a purchase and sale agreement entered into on September 5, 2023 |
Regulation Act |
|
Legislation effective July 1, 2007, that amended the Virginia Electric Utility Restructuring Act and fuel factor statute, which legislation is also known as the Virginia Electric Utility Regulation Act, as amended in 2015 and 2018 |
RGGI |
|
Regional Greenhouse Gas Initiative |
RICO |
|
Racketeer Influenced and Corrupt Organizations Act |
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 the related portion of uncollectible expenses as well as losses on negotiated gas and transportation sales |
Rider E |
|
A rate adjustment clause associated with the recovery of costs related to certain capital projects at Virginia Power’s electric generating stations to comply with federal and state environmental laws and regulations |
Rider GT |
|
A rate adjustment clause associated with the recovery of costs associated with electric distribution grid transformation projects that the Virginia Commission has approved as authorized by the GTSA |
5
Abbreviation or Acronym |
|
Definition |
|
Rider GV |
|
A rate adjustment clause associated with the recovery of costs related to Greensville County |
|
Rider OSW |
|
A rate adjustment clause associated with costs incurred to construct, own and operate the CVOW Commercial Project |
|
Rider PPA |
|
A rate adjustment clause associated with the recovery of costs associated with power purchase agreements for the energy, capacity, ancillary services and renewable energy credits owned by third parties |
|
Rider R |
|
A rate adjustment clause associated with the recovery of costs related to Bear Garden |
|
Rider RGGI |
|
A rate adjustment clause associated with the recovery of costs related to the purchase of allowances through the RGGI market-based trading program for CO2 |
|
Rider RPS |
|
A rate adjustment clause associated with the recovery of costs related to the mandatory renewable portfolio standard program established by the VCEA |
|
Rider S |
|
A rate adjustment clause associated with the recovery of costs related to the Virginia City Hybrid Energy Center |
|
Rider SNA |
|
A rate adjustment clause associated with costs relating to the preparation of the applications for subsequent license renewal to the NRC to extend the operating licenses of Surry and North Anna and related projects |
|
Rider T1 |
|
A rate adjustment clause to recover the difference between revenues produced from transmission rates included in base rates, and the new total revenue requirement developed annually for the rate years effective September 1 |
|
Rider U |
|
A rate adjustment clause associated with the recovery of costs of new underground distribution facilities |
|
Rider US-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 |
|
ROIC |
|
Return on invested capital |
|
RTO |
|
Regional transmission organization |
|
Sadler Solar |
|
A 100 MW utility-scale solar power station located in Greensville County, Virginia |
|
Santee Cooper |
|
South Carolina Public Service Authority |
|
SBL Holdco |
|
SBL Holdco, LLC, a wholly-owned subsidiary of DGI through December 2021 |
|
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 |
|
SOFR |
|
Secured Overnight Financing Rate |
|
South Carolina Commission |
|
Public Service Commission of South Carolina |
|
Southampton |
|
Southampton biomass power station |
6
Abbreviation or Acronym |
|
Definition |
Southern |
|
The legal entity, The Southern Company, one or more of its consolidated subsidiaries, or the entirety of The Southern Company and its consolidated subsidiaries |
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 |
Summer |
|
V.C. Summer nuclear power station |
Supply Header Project |
|
A project previously intended for DETI to provide approximately 1,500,000 Dths of firm transportation service to various customers in connection with the Atlantic Coast Pipeline Project |
Surry |
|
Surry nuclear power station |
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 |
TSR |
|
Total shareholder return |
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 City Hybrid Energy Center |
|
A 610 MW baseload carbon-capture compatible, clean coal powered electric generation facility in Wise County, Virginia |
Virginia Commission |
|
Virginia State Corporation Commission |
Virginia 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 |
WECTEC |
|
WECTEC Global Project Services, Inc., a wholly-owned subsidiary of Westinghouse |
West Virginia Commission |
|
Public Service Commission of West Virginia |
Westinghouse |
|
Westinghouse Electric Company LLC |
Wexpro |
|
The legal entity, Wexpro Company, one or more of its consolidated subsidiaries, or the entirety of Wexpro Company and its consolidated subsidiaries |
Wexpro Agreement |
|
An agreement which sets forth the rights of Questar Gas to receive certain benefits from Wexpro’s operations, including cost-of-service gas |
Wexpro II Agreement |
|
An agreement with the states of Utah and Wyoming modeled after the Wexpro Agreement that allows for the addition of properties under the cost-of-service methodology for the benefit of Questar Gas customers |
Wexpro Agreements |
|
Collectively, the Wexpro Agreement, Wexpro II Agreement and two stipulation agreements approved by the Utah Commission allowing for the inclusion of certain property at Canyon Creek and the Trail Unit under the Wexpro II Agreement |
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. |
Wyoming Commission |
|
Wyoming Public Service Commission |
7
Item 8. Financial Statements and Supplementary Data
8
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Dominion Energy, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Dominion Energy, Inc. and subsidiaries ("Dominion Energy") at December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Dominion Energy at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), Dominion Energy's internal control over financial reporting at December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 21, 2023, expressed an unqualified opinion on Dominion Energy's internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of Dominion Energy's management. Our responsibility is to express an opinion on Dominion Energy's consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Dominion Energy in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Regulatory Assets and Liabilities - Impact of Rate Regulation on the Consolidated Financial Statements — Refer to Notes 2, 12 and 13 to the Consolidated Financial Statements
Critical Audit Matter Description
Dominion Energy, through its regulated electric and gas subsidiaries, is subject to rate regulation by certain state public utility commissions and the Federal Energy Regulatory Commission (“FERC”) (collectively, the “relevant commissions”) which have jurisdiction with respect to the rates of electric utility and natural gas distribution companies. Management has determined its rate-regulated subsidiaries meet the requirements under accounting principles generally accepted in the United States of America to apply the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures, such as property, plant and equipment, net; regulatory assets; regulatory liabilities; operating revenues; electric fuel and other energy-related purchases; purchased gas; other operations and maintenance expense; depreciation, depletion and amortization expense; and impairment of assets and other charges, collectively, the “financial statement impacts of rate regulation.”
Revenue provided by Dominion Energy’s electric transmission, distribution and generation operations and its gas distribution operations is based primarily on rates approved by the relevant commissions. Further, Virginia Electric and Power Company’s (“Virginia Power”) retail base rates, terms and conditions for generation and distribution services to customers in Virginia are
9
reviewed by the Virginia State Corporation Commission (the “Virginia Commission”) in a proceeding that involves the determination of Virginia Power’s actual earned return on equity (“ROE”) during a historic test period, and determination of Virginia Power’s authorized ROE prospectively. Under certain circumstances, Virginia Power may be required to credit a portion of its earnings to customers.
When it is probable that regulators will permit the recovery of current costs through future rates charged to customers, these costs that otherwise would be expensed by nonregulated companies are deferred as regulatory assets. Likewise, regulatory liabilities are recognized when it is probable that regulators will require customer refunds or other benefits through future rates or when revenue is collected from customers for expenditures that have yet to be incurred. Dominion Energy evaluates whether recovery of its regulatory assets through future rates is probable as well as whether a regulatory liability due to customers is probable and makes various assumptions in its analyses. These analyses are generally based on orders issued by regulatory commissions, legislation and judicial actions; past experience; discussions with applicable regulatory authorities and legal counsel; forecasted earnings; and considerations around the likelihood of impacts from events such as unusual weather conditions, extreme weather events and other natural disasters, and unplanned outages of facilities.
We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about the financial statement impacts of rate regulation. Management judgments include assessing the likelihood of (1) recovery of its regulatory assets through future rates and (2) whether a regulatory liability is due to customers. Given management’s accounting judgments are based on assumptions about the outcome of future decisions by the relevant commissions, auditing these judgments required specialized knowledge of the accounting for rate regulation and the rate setting process due to its inherent complexities.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the assessment of whether recovery of regulatory assets through future rates or a regulatory liability due to customers is probable included the following, among others:
/s/ Deloitte & Touche LLP
Richmond, Virginia
February 21, 2023 (November 8, 2023, as to the effects of the matters discussed in Note 1 pertaining to the sales of certain regulated gas distribution operations and investments as well as revised operating segments)
We have served as Dominion Energy’s auditor since 1988.
10
Dominion Energy, Inc.
Consolidated Statements of Income
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|||
(millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|||
Operating Revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|||
Electric fuel and other energy-related purchases |
|
|
|
|
|
|
|
|
|
|||
Purchased electric capacity |
|
|
|
|
|
|
|
|
|
|||
Purchased gas |
|
|
|
|
|
|
|
|
|
|||
Other operations and maintenance |
|
|
|
|
|
|
|
|
|
|||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|||
Other taxes |
|
|
|
|
|
|
|
|
|
|||
Impairment of assets and other charges |
|
|
|
|
|
|
|
|
|
|||
Losses (gains) on sales of assets |
|
|
|
|
|
|
|
|
( |
) |
||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|||
Income from operations |
|
|
|
|
|
|
|
|
|
|||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|||
Interest and related charges |
|
|
|
|
|
|
|
|
|
|||
Income (loss) from continuing operations including noncontrolling interests before |
|
|
( |
) |
|
|
|
|
|
|
||
Income tax expense (benefit) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net Income From Continuing Operations Including Noncontrolling Interests |
|
|
|
|
|
|
|
|
|
|||
Net Income (Loss) From Discontinued Operations Including Noncontrolling |
|
|
|
|
|
|
|
|
( |
) |
||
Net Income (Loss) Including Noncontrolling Interests |
|
|
|
|
|
|
|
|
( |
) |
||
Noncontrolling Interests |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Net Income (Loss) Attributable to Dominion Energy |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
Amounts attributable to Dominion Energy |
|
|
|
|
|
|
|
|
|
|||
Net income from continuing operations |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net income (loss) from discontinued operations |
|
|
|
|
|
|
|
|
( |
) |
||
Net income (loss) attributable to Dominion Energy |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
EPS - Basic |
|
|
|
|
|
|
|
|
|
|||
Net income (loss) from continuing operations |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Net income (loss) discontinued operations |
|
|
|
|
|
|
|
|
( |
) |
||
Net income (loss) attributable to Dominion Energy |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
EPS - Diluted |
|
|
|
|
|
|
|
|
|
|||
Net income (loss) from continuing operations |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Net income (loss) discontinued operations |
|
|
|
|
|
|
|
|
( |
) |
||
Net income (loss) attributable to Dominion Energy |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
11
Dominion Energy, Inc.
Consolidated Statements of Comprehensive Income
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Net income (loss) including noncontrolling interests |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
|
|
|||
Net deferred gains (losses) on derivatives-hedging activities, net of $( |
|
|
|
|
|
|
|
|
( |
) |
||
Changes in unrealized net gains (losses) on investment securities, net of |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Changes in net unrecognized pension and other postretirement benefit |
|
|
( |
) |
|
|
|
|
|
|
||
Amounts reclassified to net income (loss): |
|
|
|
|
|
|
|
|
|
|||
Net derivative (gains) losses-hedging activities, net of $( |
|
|
|
|
|
|
|
|
|
|||
Net realized (gains) losses on investment securities, net of $( |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Net pension and other postretirement benefit costs, net of $( |
|
|
|
|
|
|
|
|
|
|||
Changes in other comprehensive income from equity method investees, |
|
|
|
|
|
( |
) |
|
|
|
||
Total other comprehensive income (loss) |
|
|
( |
) |
|
|
|
|
|
|
||
Comprehensive income (loss) including noncontrolling interests |
|
|
|
|
|
|
|
|
( |
) |
||
Comprehensive income (loss) attributable to noncontrolling interests |
|
|
— |
|
|
|
|
|
|
( |
) |
|
Comprehensive income (loss) attributable to Dominion Energy |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
12
Dominion Energy, Inc.
Consolidated Balance Sheets
At December 31, |
|
2022 |
|
|
2021 |
|
||
(millions) |
|
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Current Assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Customer receivables (less allowance for doubtful accounts of $ |
|
|
|
|
|
|
||
Other receivables (less allowance for doubtful accounts of $ |
|
|
|
|
|
|
||
Inventories: |
|
|
|
|
|
|
||
Materials and supplies |
|
|
|
|
|
|
||
Fossil fuel |
|
|
|
|
|
|
||
Gas stored |
|
|
|
|
|
|
||
Derivative assets |
|
|
|
|
|
|
||
Margin deposit assets |
|
|
|
|
|
|
||
Prepayments |
|
|
|
|
|
|
||
Regulatory assets |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Current assets held for sale |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Investments |
|
|
|
|
|
|
||
Nuclear decommissioning trust funds |
|
|
|
|
|
|
||
Investment in equity method affiliates |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total investments |
|
|
|
|
|
|
||
Property, Plant and Equipment |
|
|
|
|
|
|
||
Property, plant and equipment |
|
|
|
|
|
|
||
Accumulated depreciation, depletion and amortization |
|
|
( |
) |
|
|
( |
) |
Total property, plant and equipment, net |
|
|
|
|
|
|
||
Deferred Charges and Other Assets |
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Pension and other postretirement benefit assets |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Derivative assets |
|
|
|
|
|
|
||
Regulatory assets |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total deferred charges and other assets |
|
|
|
|
|
|
||
Noncurrent Assets Held for Sale |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
13
At December 31, |
|
2022 |
|
|
2021 |
|
||
(millions) |
|
|
|
|
|
|
||
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
|
||
Current Liabilities |
|
|
|
|
|
|
||
Securities due within one year |
|
$ |
|
|
$ |
|
||
Short-term debt |
|
|
|
|
|
|
||
Accounts payable |
|
|
|
|
|
|
||
Accrued interest, payroll and taxes |
|
|
|
|
|
|
||
Derivative liabilities |
|
|
|
|
|
|
||
Regulatory liabilities |
|
|
|
|
|
|
||
Other(1) |
|
|
|
|
|
|
||
Current liabilities held for sale |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-Term Debt |
|
|
|
|
|
|
||
Long-term debt |
|
|
|
|
|
|
||
Junior subordinated notes |
|
|
|
|
|
|
||
Supplemental credit facility borrowings |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total long-term debt |
|
|
|
|
|
|
||
Deferred Credits and Other Liabilities |
|
|
|
|
|
|
||
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
||
Regulatory liabilities |
|
|
|
|
|
|
||
Asset retirement obligations |
|
|
|
|
|
|
||
Derivative liabilities |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total deferred credits and other liabilities |
|
|
|
|
|
|
||
Noncurrent Liabilities Held for Sale |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Mezzanine Equity |
|
|
|
|
|
|
||
Preferred stock (See Note 19) |
|
|
|
|
|
|
||
Shareholders' Equity |
|
|
|
|
|
|
||
Preferred stock (See Note 19) |
|
|
|
|
|
|
||
Common stock – no par(2) |
|
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
|
||
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Shareholders' equity |
|
|
|
|
|
|
||
Noncontrolling interests |
|
|
— |
|
|
|
— |
|
Total shareholders' equity |
|
|
|
|
|
|
||
Total liabilities, mezzanine equity and shareholders' equity |
|
$ |
|
|
$ |
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
14
Dominion Energy, Inc.
Consolidated Statements of Equity
|
Preferred Stock |
|
Common Stock |
|
Dominion Energy Shareholders |
|
|
|
|
|
|
|
|||||||||||||||
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Retained Earnings |
|
AOCI |
|
Total Shareholders' Equity |
|
Noncontrolling |
|
Total |
|
|||||||||
(millions except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
December 31, 2019 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
|
$ |
|
||||||||
Cumulative-effect of in accounting |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
||||||
Net loss including noncontrolling interests |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
( |
) |
|
( |
) |
|||||
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Stock repurchases |
|
|
|
|
|
( |
) |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|||||
Stock awards (net of change in unearned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Preferred stock dividends (See Note 19) |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
||||||
Common dividends ($ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
( |
) |
|
( |
) |
|||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
GT&S Transaction closing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
( |
) |
|||||||
Other |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
( |
) |
||||||
December 31, 2020 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
|
$ |
|
||||||||
Net income including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Stock awards (net of change in unearned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Preferred stock dividends (See Note 19) |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
||||||
Common dividends ($ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
( |
) |
|
( |
) |
|||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Reclassification of Series A Preferred Stock to |
|
( |
) |
|
( |
) |
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
( |
) |
||||
Sale of non-wholly-owned nonregulated solar |
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
( |
) |
|
( |
) |
||||||
Other |
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
( |
) |
||||||
December 31, 2021 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
— |
|
$ |
|
|||||||
Net income including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Stock awards (net of change in unearned |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Preferred stock dividends (See Note 19) |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
||||||
Common dividends ($ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
||||||
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
( |
) |
|
|
|
( |
) |
||||||
December 31, 2022 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
— |
|
$ |
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
15
Dominion Energy, Inc.
Consolidated Statements of Cash Flows
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Operating Activities |
|
|
|
|
|
|
|
|
|
|||
Net income (loss) including noncontrolling interests |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
Adjustments to reconcile net income (loss) including noncontrolling interests to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|||
Depreciation, depletion and amortization (including nuclear fuel) |
|
|
|
|
|
|
|
|
|
|||
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
|
|
( |
) |
||
Gain from sale of Q-Pipe Group and GT&S Transaction |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Contribution to pension plan |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net loss on sale of interest in renewable generation facilities |
|
|
— |
|
|
|
|
|
|
— |
|
|
Provision for refunds and rate credits to electric utility customers |
|
|
— |
|
|
|
|
|
|
— |
|
|
Impairment of assets and other charges |
|
|
|
|
|
|
|
|
|
|||
Loss from investment in Atlantic Coast Pipeline |
|
|
|
|
|
|
|
|
|
|||
Losses (gains) on sales of assets and equity method investments |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Net (gains) losses on nuclear decommissioning trusts funds and other investments |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Other adjustments |
|
|
( |
) |
|
|
|
|
|
|
||
Changes in: |
|
|
|
|
|
|
|
|
|
|||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Inventories |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Deferred fuel and purchased gas costs, net |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Prepayments |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Accounts payable |
|
|
|
|
|
|
|
|
|
|||
Accrued interest, payroll and taxes |
|
|
|
|
|
|
|
|
( |
) |
||
Margin deposit assets and liabilities |
|
|
|
|
|
( |
) |
|
|
|
||
Net realized and unrealized changes related to derivative activities |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Pension and other postretirement benefits |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other operating assets and liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
|||
Investing Activities |
|
|
|
|
|
|
|
|
|
|||
Plant construction and other property additions (including nuclear fuel) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Acquisition of solar development projects |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of Hope |
|
|
|
|
|
— |
|
|
|
— |
|
|
Proceeds from GT&S Transaction and sale of Q-Pipe Group |
|
|
|
|
|
|
|
|
|
|||
Repayment of Q-Pipe Transaction deposit |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Proceeds from sale of non-wholly-owned nonregulated solar facilities |
|
|
— |
|
|
|
|
|
|
— |
|
|
Proceeds from sales of securities |
|
|
|
|
|
|
|
|
|
|||
Purchases of securities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of assets and equity method investments |
|
|
|
|
|
|
|
|
|
|||
Contributions to equity method affiliates |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Acquisition of equity method investments |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Short-term deposit |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Return of short-term deposit |
|
|
|
|
|
— |
|
|
|
— |
|
|
Other |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Financing Activities |
|
|
|
|
|
|
|
|
|
|||
Issuance (repayment) of short-term debt, net |
|
|
|
|
|
|
|
|
( |
) |
||
Issuance of short-term notes |
|
|
— |
|
|
|
|
|
|
|
||
Repayment and repurchase of short-term notes |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Issuance of supplemental 364-day credit facility borrowings |
|
|
— |
|
|
|
— |
|
|
|
|
|
Repayment of supplemental 364-day credit facility borrowings |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Issuance and remarketing of long-term debt |
|
|
|
|
|
|
|
|
|
|||
Repayment and repurchase of long-term debt (including redemption premiums) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Supplemental credit facility borrowings |
|
|
|
|
|
|
|
|
— |
|
||
Supplemental credit facility repayments |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Issuance of preferred stock |
|
|
— |
|
|
|
|
|
|
— |
|
|
Series A Preferred Stock redemption |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Issuance of common stock |
|
|
|
|
|
|
|
|
|
|||
Repurchase of common stock |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Common dividend payments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) financing activities |
|
|
|
|
|
|
|
|
( |
) |
||
Increase (decrease) in cash, restricted cash and equivalents |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Cash, restricted cash and equivalents at beginning of period |
|
|
|
|
|
|
|
|
|
|||
Cash, restricted cash and equivalents at end of period |
|
$ |
|
|
$ |
|
|
$ |
|
See Note 2 for disclosure of supplemental cash flow information.
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
16
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholder of Virginia Electric and Power Company
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Virginia Electric and Power Company (a wholly-owned subsidiary of Dominion Energy, Inc.) and subsidiaries ("Virginia Power") at December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, common shareholder's equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Virginia Power at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of Virginia Power's management. Our responsibility is to express an opinion on Virginia Power's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Virginia Power in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Virginia Power is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of Virginia Power’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Regulatory Assets and Liabilities - Impact of Rate Regulation on the Consolidated Financial Statements — Refer to Notes 2, 12 and 13 to the Consolidated Financial Statements
Critical Audit Matter Description
Virginia Power is subject to utility rate regulation by certain state public utility commissions and the Federal Energy Regulatory Commission (“FERC”) (collectively, the “relevant commissions”), which have jurisdiction with respect to the rates of electric utility companies in the territories Virginia Power serves. Management has determined Virginia Power meets the requirements under accounting principles generally accepted in the United States of America to apply the specialized rules to account for the effects of cost-based rate regulation. Accounting for the economics of rate regulation impacts multiple financial statement line items and disclosures such as property, plant, and equipment, net; regulatory assets; regulatory liabilities; operating revenues; electric fuel and other energy-related purchases; other operations and maintenance expense; depreciation and amortization expense; and impairment of assets and other charges, collectively, the “financial statement impacts of rate regulation”.
Revenue provided by Virginia Power’s electric transmission, distribution and generation operations is based on rates approved by the relevant commissions. Further, Virginia Power’s retail base rates, terms and conditions for generation and distribution services to
17
customers in Virginia are reviewed by the Virginia State Corporation Commission (the “Virginia Commission”) in a proceeding that involves the determination of Virginia Power’s actual earned return on equity (“ROE”) during a historic test period and determination of Virginia Power’s authorized ROE prospectively. Under certain circumstances, Virginia Power may be required to credit a portion of its earnings to customers.
When it is probable that regulators will permit the recovery of current costs through future rates charged to customers, these costs that otherwise would be expensed by nonregulated companies are deferred as regulatory assets. Likewise, regulatory liabilities are recognized when it is probable that regulators will require customer refunds or other benefits through future rates or when revenue is collected from customers for expenditures that have yet to be incurred. Virginia Power evaluates whether recovery of its regulatory assets through future rates is probable as well as whether a regulatory liability due to customers is probable and makes various assumptions in its analyses. These analyses are generally based on orders issued by regulatory commissions, legislation and judicial actions; past experience; discussions with applicable regulatory authorities and legal counsel; forecasted earnings; and considerations around the likelihood of impacts from events such as unusual weather conditions, extreme weather events, and other natural disasters, and unplanned outages of facilities.
We identified the impact of rate regulation as a critical audit matter due to the significant judgments made by management to support its assertions about the financial statement impacts of rate regulation. Management judgments include assessing the likelihood of (1) recovery of its regulatory assets through future rates and (2) whether a regulatory liability is due to customers. Given management’s accounting judgments are based on assumptions about the outcome of future decisions by the relevant commissions, auditing these judgments required specialized knowledge of the accounting for rate regulation and the rate setting process due to its inherent complexities.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the assessment of whether recovery of regulatory assets through future rates or a regulatory liability due to customers is probable included the following, among others:
/s/ Deloitte & Touche LLP
Richmond, Virginia
February 21, 2023
We have served as Virginia Power's auditor since 1988.
18
Virginia Electric and Power Company
Consolidated Statements of Income
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Operating Revenue(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Operating Expenses |
|
|
|
|
|
|
|
|
|
|||
Electric fuel and other energy-related purchases(1) |
|
|
|
|
|
|
|
|
|
|||
Purchased (excess) capacity |
|
|
|
|
|
|
|
|
( |
) |
||
Other operations and maintenance: |
|
|
|
|
|
|
|
|
|
|||
Affiliated suppliers |
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
Other taxes |
|
|
|
|
|
|
|
|
|
|||
Impairment of assets and other charges (benefits) |
|
|
|
|
|
( |
) |
|
|
|
||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|||
Income from operations |
|
|
|
|
|
|
|
|
|
|||
Other income |
|
|
— |
|
|
|
|
|
|
|
||
Interest and related charges(1) |
|
|
|
|
|
|
|
|
|
|||
Income before income tax expense |
|
|
|
|
|
|
|
|
|
|||
Income tax expense |
|
|
|
|
|
|
|
|
|
|||
Net Income |
|
$ |
|
|
$ |
|
|
$ |
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
19
Virginia Electric and Power Company
Consolidated Statements of Comprehensive Income
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
|
|
|||
Net deferred gains (losses) on derivatives-hedging activities, net of $( |
|
|
|
|
|
|
|
|
( |
) |
||
Changes in unrealized net gains (losses) on nuclear decommissioning trust funds, net of |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Amounts reclassified to net income: |
|
|
|
|
|
|
|
|
|
|||
Net derivative (gains) losses-hedging activities, net of $( |
|
|
|
|
|
|
|
|
|
|||
Net realized (gains) losses on nuclear decommissioning trust funds, net of $ |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Other comprehensive income (loss) |
|
|
|
|
|
|
|
|
( |
) |
||
Comprehensive income |
|
$ |
|
|
$ |
|
|
$ |
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
20
Virginia Electric and Power Company
Consolidated Balance Sheets
|
|
2022 |
|
|
2021 |
|
||
(millions) |
|
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Current Assets |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Customer receivables (less allowance for doubtful accounts of $ |
|
|
|
|
|
|
||
Other receivables (less allowance for doubtful accounts of $ |
|
|
|
|
|
|
||
Affiliated receivables |
|
|
|
|
|
|
||
Inventories (average cost method): |
|
|
|
|
|
|
||
Materials and supplies |
|
|
|
|
|
|
||
Fossil fuel |
|
|
|
|
|
|
||
Derivative assets(1) |
|
|
|
|
|
|
||
Margin deposit assets |
|
|
|
|
|
|
||
Prepayments |
|
|
|
|
|
|
||
Regulatory assets |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total current assets |
|
|
|
|
|
|
||
Investments |
|
|
|
|
|
|
||
Nuclear decommissioning trust funds |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total investments |
|
|
|
|
|
|
||
Property, Plant and Equipment |
|
|
|
|
|
|
||
Property, plant and equipment |
|
|
|
|
|
|
||
Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Total property, plant and equipment, net |
|
|
|
|
|
|
||
Deferred Charges and Other Assets |
|
|
|
|
|
|
||
Pension and other postretirement benefit assets(1) |
|
|
|
|
|
|
||
Intangible assets, net |
|
|
|
|
|
|
||
Regulatory assets |
|
|
|
|
|
|
||
Other(1) |
|
|
|
|
|
|
||
Total deferred charges and other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
21
|
|
2022 |
|
|
2021 |
|
||
(millions) |
|
|
|
|
|
|
||
LIABILITIES AND COMMON SHAREHOLDER’S EQUITY |
|
|
|
|
|
|
||
Current Liabilities |
|
|
|
|
|
|
||
Securities due within one year |
|
$ |
|
|
$ |
|
||
Short-term debt |
|
|
|
|
|
|
||
Accounts payable |
|
|
|
|
|
|
||
Payables to affiliates |
|
|
|
|
|
|
||
Affiliated current borrowings |
|
|
|
|
|
|
||
Accrued interest, payroll and taxes |
|
|
|
|
|
|
||
Asset retirement obligations |
|
|
|
|
|
|
||
Regulatory liabilities |
|
|
|
|
|
|
||
Derivative liabilities (1) |
|
|
|
|
|
|
||
Other current liabilities |
|
|
|
|
|
|
||
Total current liabilities |
|
|
|
|
|
|
||
Long-Term Debt |
|
|
|
|
|
|
||
Long-term debt |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total long-term debt |
|
|
|
|
|
|
||
Deferred Credits and Other Liabilities |
|
|
|
|
|
|
||
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
||
Asset retirement obligations |
|
|
|
|
|
|
||
Regulatory liabilities |
|
|
|
|
|
|
||
Other (1) |
|
|
|
|
|
|
||
Total deferred credits and other liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
(see Note 23) |
|
|
|
|
|
|
||
Common Shareholder’s Equity |
|
|
|
|
|
|
||
Common stock – no par(2) |
|
|
|
|
|
|
||
Other paid-in capital |
|
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
|
||
Accumulated other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
Total common shareholder’s equity |
|
|
|
|
|
|
||
Total liabilities and shareholder’s equity |
|
$ |
|
|
$ |
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
22
Virginia Electric and Power Company
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Shares |
|
|
Amount |
|
|
Other Paid-In Capital |
|
|
Retained Earnings |
|
|
AOCI |
|
|
Total |
|
||||||
(millions, except for shares) |
|
(thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2019 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Dividends |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Dividends |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
23
Virginia Electric and Power Company
Consolidated Statements of Cash Flows
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Operating Activities |
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization (including nuclear fuel) |
|
|
|
|
|
|
|
|
|
|||
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
|
|
( |
) |
||
Impairment of assets and other charges (benefits) |
|
|
|
|
|
( |
) |
|
|
|
||
Provision for refunds to customers |
|
|
— |
|
|
|
|
|
|
— |
|
|
Other adjustments |
|
|
|
|
|
|
|
|
( |
) |
||
Changes in: |
|
|
|
|
|
|
|
|
|
|||
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Affiliated receivables and payables |
|
|
|
|
|
( |
) |
|
|
|
||
Inventories |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Prepayments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Deferred fuel expenses, net |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Accounts payable |
|
|
|
|
|
|
|
|
|
|||
Accrued interest, payroll and taxes |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Margin deposit assets and liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net realized and unrealized changes related to derivative activities |
|
|
|
|
|
— |
|
|
|
( |
) |
|
Other operating assets and liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
|||
Investing Activities |
|
|
|
|
|
|
|
|
|
|||
Plant construction and other property additions |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Purchases of nuclear fuel |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Acquisition of solar development projects |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of securities |
|
|
|
|
|
|
|
|
|
|||
Purchases of securities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
— |
|
|
|
|
||
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Financing Activities |
|
|
|
|
|
|
|
|
|
|||
Issuance (repayment) of short-term debt, net |
|
|
|
|
|
|
|
|
( |
) |
||
Issuance of affiliated current borrowings, net |
|
|
|
|
|
|
|
|
|
|||
Issuance and remarketing of long-term debt |
|
|
|
|
|
|
|
|
|
|||
Repayment and repurchase of long-term debt |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Common dividend payments to parent |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
|
|
|
|||
Increase (decrease) in cash, restricted cash and equivalents |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Cash, restricted cash and equivalents at beginning of year |
|
|
|
|
|
|
|
|
|
|||
Cash, restricted cash and equivalents at end of year |
|
$ |
|
|
$ |
|
|
$ |
|
See Note 2 for disclosure of supplemental cash flow information.
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
24
Combined Notes to Consolidated Financial Statements
NOTE 1. NATURE OF OPERATIONS
Dominion Energy, headquartered in Richmond, Virginia, is one of the nation’s largest producers and distributors of energy. Dominion Energy’s operations are conducted through various subsidiaries, including Virginia Power. Dominion Energy’s operations also include DESC, regulated gas distribution operations in the eastern and Rocky Mountain regions of the U.S. and nonregulated electric generation. In addition, see Note 3 for a description of the sale of substantially all of Dominion Energy’s gas transmission and storage operations through the GT&S Transaction completed in November 2020 and the sale of the Q-Pipe Group completed in December 2021.
In connection with the comprehensive business review announced in November 2022, Dominion Energy entered into agreements in September 2023 to sell all of its regulated gas distribution operations, expect for DESC's, to Enbridge. In addition, Dominion Energy completed the sale in September 2023 of its remaining
Subsequently in September 2023, Dominion Energy revised its primary operating segments and manages its daily operations through
Dominion Energy's Consolidated Financial Statements and Notes have been recast to reflect these changes in presentation.
Virginia Power is a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and northeastern North Carolina. Virginia Power is a member of PJM, an RTO, and its electric transmission facilities are integrated into the PJM wholesale electricity markets. All of Virginia Power’s stock is owned by Dominion Energy.
Virginia Power manages its daily operations through
See Note 26 for further discussion of the Companies’ operating segments.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
General
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, expenses and cash flows for the periods presented. Actual results may differ from those estimates.
The Companies’ 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), Terra Nova Renewable Partners’
The Companies report certain contracts, instruments and investments at fair value. See below and Note 6 for further information on fair value measurements.
The Companies consider acquisitions or dispositions in which substantially all of the fair value of the gross assets acquired or disposed of is concentrated into a single identifiable asset or group of similar identifiable assets to be an acquisition or a disposition of an asset, rather than a business. See Notes 3 and 10 for further information on such transactions.
25
Dominion Energy maintains pension and other postretirement benefit plans and Virginia Power participates in certain of these plans. See Note 22 for further information on these plans.
Certain amounts in the Companies’ 2021 and 2020 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. Effective in 2021, the Companies updated their Statements of Cash Flows to present net charges for allowance for credit risk and write-offs of accounts receivables within other adjustments to reconcile net income to net cash provided by operating activities from the previous presentation within changes in accounts receivable. All prior period information was previously conformed to this presentation, which did not result in a change to net cash provided by operating activities.
Amounts disclosed for Dominion Energy are inclusive of Virginia Power, where applicable.
Operating Revenue
Operating revenue is recorded on the basis of services rendered, commodities delivered, or contracts settled and includes amounts yet to be billed to customers. The Companies collect sales, consumption and consumer utility taxes; however, these amounts are excluded from revenue. Dominion Energy’s customer receivables and current assets held for sale at December 31, 2022 and 2021 included in aggregate $
The primary types of sales and service activities reported as operating revenue for Dominion Energy are as follows:
Revenue from Contracts with Customers
Other Revenue
The primary types of sales and service activities reported as operating revenue for Virginia Power are as follows:
Revenue from Contracts with Customers
26
Other Revenue
The Companies record refunds to customers as required by state commissions as a reduction to regulated electric sales or regulated gas sales, as applicable. The Companies’ revenue accounted for under the alternative revenue program guidance primarily consists of the equity return for under-recovery of certain riders. Alternative revenue programs compensate the Companies for certain projects and initiatives. Revenues arising from these programs are presented separately from revenue arising from contracts with customers in the categories above.
Revenues from electric and gas sales are recognized over time, as the customers of the Companies consume gas and electricity as it is delivered. Fixed fees are recognized ratably over the life of the contract as the stand-ready performance obligation is satisfied, while variable usage fees are recognized when Dominion Energy has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the performance obligation completed to date. Sales of products and services typically transfer control and are recognized as revenue upon delivery of the product or service. The customer is able to direct the use of, and obtain substantially all of the benefits from, the product at the time the product is delivered. The contract with the customer states the final terms of the sale, including the description, quantity and price of each product or service purchased. Payment for most sales and services varies by contract type but is typically due within a month of billing.
Operating revenue for the gas transmission and storage operations sold to BHE as part of the GT&S Transaction and sold to Southwest Gas as part of the Q-Pipe Group sale primarily consisted of FERC-regulated sales of transmission and storage services, LNG terminalling services, sales of extracted products and associated hedging activities and NGL activities, including gathering and processing and sales of production and condensate as well as services performed for Atlantic Coast Pipeline. This revenue is included in discontinued operations in Dominion Energy’s Consolidated Statements of Income.
Transportation and storage contracts associated with the operations sold to BHE as part of the GT&S Transaction and sold to Southwest Gas as part of the Q-Pipe Group sale were primarily stand-ready service contracts that include fixed reservation and variable usage fees. LNG terminalling services, included in discontinued operations, are also stand-ready service contracts, primarily consisting of fixed fees, offset by service credits associated with the start-up phase of the Liquefaction Facility. NGLs received during natural gas processing are recorded in discontinued operations at fair value as service revenue recognized over time, and revenue continued to be recognized from the subsequent sale of the NGLs to customers upon delivery.
Operating revenue for the gas distribution operations to be sold to Enbridge as part of the East Ohio, PSNC and Questar Gas Transactions primarily consists of state-regulated natural gas sales to residential, commercial and industrial customers and related distribution services, state regulated gas distribution charges to retail distribution service customers opting for alternate suppliers and sales of commodities related to nonregulated extraction activities. This revenue is included in discontinued operations in Dominion Energy's Consolidated Statements of Income.
Transportation and storage contracts associated with the operations to be sold to Enbridge as part of the East Ohio, PSNC and Questar Gas Transactions are primarily stand-ready service contracts that include fixed reservation and variable usage fees. Substantially all of the revenue associated with these local gas distribution companies is derived from performance obligations satisfied over time and month-to-month billings according to their respective tariffs.
Credit Risk
Credit risk is the risk of financial loss if counterparties fail to perform their contractual obligations. In order to minimize overall credit risk, credit policies are maintained, including the evaluation of counterparty financial condition, collateral requirements and the use of standardized agreements that facilitate the netting of cash flows associated with a single counterparty. In addition, counterparties may make available collateral, including letters of credit or cash held as margin deposits, as a result of exceeding agreed-upon credit limits, or may be required to prepay the transaction.
The Companies maintain a provision for credit losses based on factors surrounding the credit risk of their customers, historical trends and other information. Expected credit losses are estimated and recorded based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets held at amortized cost as well as expected credit losses on commitments with respect to financial guarantees.
27
Electric Fuel, Purchased Energy and Purchased Gas-Deferred Costs
Where permitted by regulatory authorities, the differences between the Companies’ actual electric fuel and purchased energy expenses and Dominion Energy’s purchased gas expenses and the related levels of recovery for these expenses in current rates are deferred and matched against recoveries in future periods. The deferral of costs in excess of current period fuel rate recovery is recognized as a regulatory asset, while rate recovery in excess of current period fuel expenses is recognized as a regulatory liability.
Of the cost of fuel used in electric generation and energy purchases to serve Virginia utility customers, at December 31, 2022, approximately
Virtually all of East Ohio, Questar Gas, DESC and PSNC’s natural gas purchases are either subject to deferral accounting or are recovered from the customer in the same accounting period as the sale.
Dominion Energy can earn certain cost saving sharing incentives under the Wexpro Agreements to the extent that the cost of gas supplied to Questar Gas is a certain amount lower than third-party market rates. In 2022, Dominion Energy recorded $
Income Taxes
A consolidated federal income tax return is filed for Dominion Energy and its subsidiaries, including Virginia Power. In addition, where applicable, combined income tax returns for Dominion Energy and its subsidiaries are filed in various states; otherwise, separate state income tax returns are filed.
Virginia Power participates in intercompany tax sharing agreements with Dominion Energy and its subsidiaries. Current income taxes are based on taxable income or loss and credits determined on a separate company basis.
Under the agreements, if a subsidiary incurs a tax loss or earns a credit, recognition of current income tax benefits is limited to refunds of prior year taxes obtained by the carryback of the net operating loss or credit or to the extent the tax loss or credit is absorbed by the taxable income of other Dominion Energy consolidated group members. Otherwise, the net operating loss or credit is carried forward and is recognized as a deferred tax asset until realized.
Accounting for income taxes involves an asset and liability approach. Deferred income tax assets and liabilities are provided, representing future effects on income taxes for temporary differences between the bases of assets and liabilities for financial reporting and tax purposes. Accordingly, deferred taxes are recognized for the future consequences of different treatments used for the reporting of transactions in financial accounting and income tax returns. The Companies establish a valuation allowance when it is more-likely-than-not that all, or a portion, of a deferred tax asset will not be realized. Where the treatment of temporary differences is different for rate-regulated operations, a regulatory asset is recognized if it is probable that future revenues will be provided for the payment of deferred tax liabilities.
The Companies recognize positions taken, or expected to be taken, in income tax returns that are more-likely-than-not to be realized, assuming that the position will be examined by tax authorities with full knowledge of all relevant information.
If it is not more-likely-than-not that a tax position, or some portion thereof, will be sustained, the related tax benefits are not recognized in the financial statements. Unrecognized tax benefits may result in an increase in income taxes payable, a reduction of income tax refunds receivable or changes in deferred taxes. Also, when uncertainty about the deductibility of an amount is limited to the timing of such deductibility, the increase in income taxes payable (or reduction in tax refunds receivable) is accompanied by a decrease in deferred tax liabilities. Except when such amounts are presented net with amounts receivable from or amounts prepaid to tax authorities, noncurrent income taxes payable related to unrecognized tax benefits are classified in other deferred credits and other liabilities on the Consolidated Balance Sheets and current payables are included in accrued interest, payroll and taxes on the Consolidated Balance Sheets.
The Companies recognize interest on underpayments and overpayments of income taxes in interest expense and other income, respectively. Penalties are also recognized in other income.
In 2021, Dominion Energy reflected a $
28
At December 31, 2022, Virginia Power had a net income tax-related affiliated payable of $
At December 31, 2021, Virginia Power had an income tax-related affiliated receivable of $
Investment tax credits are recognized by nonregulated operations in the year qualifying property is placed in service. For regulated operations, investment tax credits are deferred and amortized over the service lives of the properties giving rise to the credits. Production tax credits are recognized as energy is generated and sold. The IRA allows the election of either the investment tax credit or production tax credit for certain technologies including solar and wind. Such election is made on a project-by-project basis and the choice of credit may vary based on a combination of factors including, but not limited to, capital expenditures and net capacity factors.
Cash, Restricted Cash and Equivalents
Cash, restricted cash and equivalents include cash on hand, cash in banks and temporary investments purchased with an original maturity of three months or less.
Current banking arrangements generally do not require checks to be funded until they are presented for payment.
At December 31, |
|
2022 |
|
|
2021 |
|
||
(millions) |
|
|
|
|
|
|
||
Dominion Energy |
|
$ |
|
|
$ |
|
||
Virginia Power |
|
|
|
|
|
|
Restricted Cash and Equivalents
The Companies hold restricted cash and equivalent balances that primarily consist of amounts held for litigation settlements, customer deposits, federal assistance funds and future debt payments on SBL Holdco and Dominion Solar Projects III, Inc.’s term loan agreements (through December 2021), on DECP Holdings’ term loan agreement and on Eagle Solar’s senior note agreement.
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 years ended December 31, 2022, 2021, 2020 and 2019:
|
|
Cash, Restricted Cash and Equivalents at End/Beginning of Year |
|
|||||||||||||
|
|
December 31, 2022 |
|
|
December 31, 2021 |
|
|
December 31, 2020 |
|
|
December 31, 2019 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Restricted cash and equivalents(2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash, restricted cash and equivalents shown in the |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Restricted cash and equivalents(3) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Cash, restricted cash and equivalents shown in the |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
29
Supplemental Cash Flow Information
The following table provides supplemental disclosure of cash flow information related to Dominion Energy:
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Cash paid during the year for: |
|
|
|
|
|
|
|
|
|
|||
Interest and related charges, excluding capitalized amounts |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Income taxes |
|
|
|
|
|
|
|
|
|
|||
Significant noncash investing and financing activities:(1)(2) |
|
|
|
|
|
|
|
|
|
|||
Accrued capital expenditures |
|
|
|
|
|
|
|
|
|
|||
Leases(3) |
|
|
|
|
|
|
|
|
|
The following table provides supplemental disclosure of cash flow information related to Virginia Power:
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Cash paid (received) during the year for: |
|
|
|
|
|
|
|
|
|
|||
Interest and related charges, excluding capitalized amounts |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Income taxes |
|
|
( |
) |
|
|
|
|
|
|
||
Significant noncash investing activities:(1) |
|
|
|
|
|
|
|
|
|
|||
Accrued capital expenditures |
|
|
|
|
|
|
|
|
|
|||
Leases(2) |
|
|
|
|
|
|
|
|
|
Distributions from Equity Method Investees
Dominion Energy holds investments that are accounted for under the equity method of accounting and classifies distributions from equity method investees as either cash flows from operating activities or cash flows from investing activities in the Consolidated Statements of Cash Flows according to the nature of the distribution. Distributions received are classified on the basis of the nature of the activity of the investee that generated the distribution as either a return on investment (classified as cash flows from operating activities) or a return of an investment (classified as cash flows from investing activities) when such information is available to Dominion Energy.
Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. However, the use of a mid-market pricing convention (the mid-point between bid and ask prices) is permitted. Fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. This includes not only the credit standing of counterparties involved and the impact of credit enhancements but also the impact of the Companies’ own nonperformance risk on their liabilities. Fair value measurements assume that the transaction occurs in the principal market for the asset or liability (the market with the most volume and activity for the asset or liability from the perspective of the reporting entity), or in the absence of a principal market, the most advantageous market for the asset or liability (the market in which the reporting entity would be able to maximize the amount received or minimize the amount paid). Dominion Energy applies fair value measurements to certain assets and liabilities including commodity, interest rate and/or foreign currency exchange rate derivative instruments, and other investments including those held in nuclear decommissioning, rabbi, and pension and other postretirement benefit plan trusts, in accordance with the requirements discussed above. Virginia Power applies fair value measurements to certain assets and liabilities including commodity, interest rate and/or foreign currency exchange rate derivative instruments and other investments including those held in the nuclear decommissioning trust, in accordance with the requirements discussed above. The Companies apply credit adjustments to their derivative fair values in accordance with the requirements described above.
30
Inputs and Assumptions
Fair value is based on actively-quoted market prices, if available. In the absence of actively-quoted market prices, price information is sought from external sources, including industry publications, and to a lesser extent, broker quotes. When evaluating pricing information provided by Designated Contract Market settlement pricing, other pricing services, or brokers, the Companies consider the ability to transact at the quoted price, i.e. if the quotes are based on an active market or an inactive market and to the extent which pricing models are used, if pricing is not readily available. If pricing information from external sources is not available, or if the Companies believe that observable pricing is not indicative of fair value, judgment is required to develop the estimates of fair value. In those cases the unobservable inputs are developed and substantiated using historical information, available market data, third-party data and statistical analysis. Periodically, inputs to valuation models are reviewed and revised as needed, based on historical information, updated market data, market liquidity and relationships and changes in third-party sources.
For options and contracts with option-like characteristics where observable pricing information is not available from external sources, the Companies generally use a modified Black-Scholes Model that considers time value, the volatility of the underlying commodities and other relevant assumptions when estimating fair value. The Companies use other option models under special circumstances, including but not limited to Spread Approximation Model and a Swing Option Model. For contracts with unique characteristics, the Companies may estimate fair value using a discounted cash flow approach deemed appropriate in the circumstances and applied consistently from period to period. For individual contracts, the use of different valuation models or assumptions could have a significant effect on the contract’s estimated fair value.
The inputs and assumptions used in measuring fair value include the following:
|
|
Derivative Contracts |
|
|
||||
Inputs and assumptions |
|
Commodity |
|
Interest Rate |
|
Foreign Currency Exchange Rate |
|
Investments |
Forward commodity prices |
|
X |
|
|
|
|
|
|
Transaction prices |
|
X |
|
|
|
|
|
|
Price volatility |
|
X |
|
|
|
|
|
|
Price correlation |
|
X |
|
|
|
|
|
|
Volumes |
|
X |
|
|
|
|
|
|
Commodity location |
|
X |
|
|
|
|
|
|
Interest rate curves |
|
|
|
X |
|
|
|
|
Foreign currency forward exchange rates |
|
|
|
|
|
X |
|
|
Quoted securities prices and indices |
|
|
|
|
|
|
|
X |
Securities trading information including volume and restrictions |
|
|
|
|
|
|
|
X |
Maturity |
|
|
|
|
|
|
|
X |
Interest rates |
|
X |
|
|
|
X |
|
X |
Credit quality of counterparties and the Companies |
|
X |
|
X |
|
X |
|
X |
Credit enhancements |
|
X |
|
X |
|
|
|
|
Notional value |
|
|
|
X |
|
X |
|
|
Time value |
|
X |
|
X |
|
X |
|
|
Levels
The Companies also utilize the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:
31
The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. In these cases, the lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability. Alternative investments, consisting of investments in partnerships, joint ventures and other alternative investments held in nuclear decommissioning and benefit plan trust funds, are generally valued using NAV based on the proportionate share of the fair value as determined by reference to the most recent audited fair value financial statements or fair value statements provided by the investment manager adjusted for any significant events occurring between the investment manager’s and the Companies’ measurement date. Alternative investments recorded at NAV are not classified in the fair value hierarchy.
Transfers out of Level 3 represent assets and liabilities that were previously classified as Level 3 for which the inputs became observable for classification in either Level 1 or Level 2. Because the activity and liquidity of commodity markets vary substantially between regions and time periods, the availability of observable inputs for substantially the full term and value of the Companies’ over-the-counter derivative contracts is subject to change.
Derivative Instruments
The Companies are exposed to the impact of market fluctuations in the price of electricity, natural gas and other energy-related products they market and purchase, as well as interest rate and foreign currency exchange rate risks in their business operations. The Companies use derivative instruments such as physical and financial forwards, futures, swaps, options, foreign currency transactions and FTRs to manage the commodity, interest rate and/or foreign currency exchange rate risks of their business operations.
Derivative assets and liabilities are presented gross on the Companies’ Consolidated Balance Sheets. Derivative contracts representing unrealized gain positions and purchased options are reported as derivative assets. Derivative contracts representing unrealized losses and options sold are reported as derivative liabilities. All derivatives, except those for which an exception applies, are required to be reported at fair value. One of the exceptions to fair value accounting, normal purchases and normal sales, may be elected when the contract satisfies certain criteria, including a requirement that physical delivery of the underlying commodity is probable. Expenses and revenues resulting from deliveries under normal purchase contracts and normal sales contracts, respectively, are included in earnings at the time of contract performance. See Fair Value Measurements above for additional information about fair value measurements and associated valuation methods for derivatives.
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 offset through master netting arrangements, derivative clearing agreements and contract default provisions. In addition, the contracts are subject to conditional rights of offset 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.
The Companies do not offset amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral against amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement. Dominion Energy had margin assets of $
32
2021, respectively. Virginia Power had
To manage price and interest rate risk, the Companies hold derivative instruments that are not designated as hedges for accounting purposes. However, to the extent the Companies do not hold offsetting positions for such derivatives, they believe these instruments represent economic hedges that mitigate their exposure to fluctuations in commodity prices or interest rates. All income statement activity, including amounts realized upon settlement, is presented in operating revenue, operating expenses, interest and related charges or discontinued operations based on the nature of the underlying risk.
Changes in the fair value of derivative instruments result in the recognition of regulatory assets or regulatory liabilities for jurisdictions subject to cost-based rate regulation. Realized gains or losses on the derivative instruments are generally recognized when the related transactions impact earnings.
Derivative Instruments Designated as Hedging Instruments
In accordance with accounting guidance pertaining to derivatives and hedge accounting, the Companies designate a portion of their derivative instruments as either cash flow or fair value hedges for accounting purposes. For derivative instruments that are accounted for as cash flow hedges or fair value hedges, the cash flows from the derivatives and from the related hedged items are classified in operating cash flows.
Cash Flow Hedges
A majority of the Companies’ hedge strategies represents cash flow hedges of the variable price risk primarily associated with the use of interest rate swaps to hedge their exposure to variable interest rates on long-term debt. For transactions in which the Companies are hedging the variability of cash flows, changes in the fair value of the derivatives are reported in AOCI, to the extent they are effective at offsetting changes in the hedged item, or as appropriate to regulatory assets or regulatory liabilities. Any derivative gains or losses reported in AOCI are reclassified to earnings when the forecasted item is included in earnings, or earlier, if it becomes probable that the forecasted transaction will not occur. For cash flow hedge transactions, hedge accounting is discontinued if the occurrence of the forecasted transaction is no longer probable.
Fair Value Hedges
Dominion Energy may also designate interest rate swaps as fair value hedges on certain fixed rate long-term debt to manage interest rate exposure. For fair value hedge transactions, changes in the fair value of the derivative are generally offset currently in earnings by the recognition of changes in the hedged item’s fair value. Hedge accounting is discontinued if the hedged item no longer qualifies for hedge accounting.
Property, Plant and Equipment
Property, plant and equipment is recorded at lower of original cost or fair value, if impaired. Capitalized costs include labor, materials and other direct and indirect costs such as asset retirement costs, capitalized interest and, for certain operations subject to cost-of-service rate regulation, AFUDC and overhead costs. The cost of repairs and maintenance, including minor additions and replacements, is generally charged to expense as it is incurred.
In 2022, 2021 and 2020, Dominion Energy capitalized interest costs and AFUDC to property, plant and equipment of $
Under Virginia law, certain Virginia jurisdictional projects qualify for current recovery of AFUDC through rate adjustment clauses. AFUDC on these projects is calculated and recorded as a regulatory asset and is not capitalized to property, plant and equipment. In 2022, 2021 and 2020, Virginia Power recorded $
For property subject to cost-of-service rate regulation, including the Companies’ electric distribution, electric transmission and generation property and Dominion Energy’s natural gas distribution property, the undepreciated cost of such property, less salvage value, is generally charged to accumulated depreciation at retirement. Cost of removal collections from utility customers not representing AROs are recorded as regulatory liabilities. For property subject to cost-of-service rate regulation that will be abandoned
33
significantly before the end of its useful life, the net carrying value is reclassified from plant-in-service when it becomes probable it will be abandoned and recorded as a regulatory asset for amounts expected to be collected through future rates.
In March 2020, Virginia Power committed to retire certain coal- and oil-fired generating units before the end of their useful lives based on economic and other factors, including but not limited to market power prices and the VCEA. These units will be retired after they meet their capacity obligations to PJM in 2023. As a result, Virginia Power recorded a charge of $
For property that is not subject to cost-of-service rate regulation, including nonutility property, cost of removal not associated with AROs is charged to expense as incurred. The Companies also record gains and losses upon retirement based upon the difference between the proceeds received, if any, and the property’s net book value at the retirement date.
Depreciation of property, plant and equipment is computed on the straight-line method based on projected service lives.
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|||
(percent) |
|
|
|
|
|
|
|
|
|
|||
Dominion Energy(1) |
|
|
|
|
|
|
|
|
|
|||
Generation |
|
|
|
|
|
|
|
|
|
|||
Transmission |
|
|
|
|
|
|
|
|
|
|||
Distribution |
|
|
|
|
|
|
|
|
|
|||
Storage |
|
|
|
|
|
|
|
|
|
|||
General and other |
|
|
|
|
|
|
|
|
|
|||
Virginia Power |
|
|
|
|
|
|
|
|
|
|||
Generation |
|
|
|
|
|
|
|
|
|
|||
Transmission |
|
|
|
|
|
|
|
|
|
|||
Distribution |
|
|
|
|
|
|
|
|
|
|||
General and other |
|
|
|
|
|
|
|
|
|
In 2020, Virginia Power updated depreciation rates for its nuclear plants to reflect lower depreciation rates as a result of expected approval of license extensions from the NRC. For the year ended December 31, 2020, this adjustment resulted in a decrease of $
In January 2022, Dominion Energy revised the estimated useful life of its non-jurisdictional and certain nonregulated solar generation facilities to
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 $
Virginia Power’s non-jurisdictional solar generation property, plant and equipment is depreciated using the straight-line method over an estimated useful life of
Capitalized costs of development wells and leaseholds are amortized on a field-by-field basis using the unit-of-production method and the estimated proved developed or total proved gas and oil reserves, at a rate of $
34
Dominion Energy’s nonutility property, plant and equipment is depreciated using the straight-line method over the following estimated useful lives:
Asset |
|
Estimated Useful Lives |
Nonregulated generation-nuclear |
|
|
Nonregulated generation-other |
|
|
General and other |
|
Nuclear fuel used in electric generation is amortized over its estimated service life on a units-of-production basis. The Companies report the amortization of nuclear fuel in electric fuel and other energy-related purchases expense in their Consolidated Statements of Income and in depreciation and amortization in their Consolidated Statements of Cash Flows.
Long-Lived and Intangible Assets
The Companies perform an evaluation for impairment whenever events or changes in circumstances indicate that the carrying amount of long-lived assets or intangible assets with finite lives may not be recoverable. A long-lived or intangible asset is written down to fair value if the sum of its expected future undiscounted cash flows is less than its carrying amount. Intangible assets with finite lives are amortized over their estimated useful lives. See Note 6 for further discussion on the impairment of long-lived assets.
Regulatory Assets and Liabilities
The accounting for the Companies’ regulated electric and gas operations differs from the accounting for nonregulated operations in that the Companies are required to reflect the effect of rate regulation in their Consolidated Financial Statements. For regulated businesses subject to federal or state cost-of-service rate regulation, regulatory practices that assign costs to accounting periods may differ from accounting methods generally applied by nonregulated companies. When it is probable that regulators will permit the recovery of current costs through future rates charged to customers, these costs that otherwise would be expensed by nonregulated companies are deferred as regulatory assets. Likewise, regulatory liabilities are recognized when it is probable that regulators will require customer refunds or other benefits through future rates or when revenue is collected from customers for expenditures that have yet to be incurred.
The Companies evaluate whether or not recovery of their regulatory assets through future rates is probable as well as whether a regulatory liability due to customers is probable and make various assumptions in their analyses. These analyses are generally based on:
Generally, regulatory assets and liabilities are amortized into income over the period authorized by the regulator. If recovery of a regulatory asset is determined to be less than probable, it will be written off in the period such assessment is made. A regulatory liability, if considered probable, will be recorded in the period such assessment is made or reversed into earnings if no longer probable. See Notes 12 and 13 to the Consolidated Financial Statements for additional information.
Leases
The Companies lease certain assets including vehicles, real estate, office equipment and other operational assets under both operating and finance leases. For the Companies’ operating leases, rent expense is recognized on a straight-line basis over the term of the lease agreement, subject to regulatory framework. Rent expense associated with operating leases, short-term leases and variable leases is primarily recorded in other operations and maintenance expense in the Companies’ Consolidated Statements of Income. Rent expense associated with finance leases results in the separate presentation of interest expense on the lease liability and amortization expense of the related right-of-use asset in the Companies’ Consolidated Statements of Income or, subject to regulatory framework, is deferred within regulatory assets in the Consolidated Balance Sheets and amortized into the Consolidated Statements of Income.
Certain of the Companies’ leases include one or more options to renew, with renewal terms that can extend the lease from to
35
adjusted for consumer price or other indices or contain fixed dollar or percentage increases. The Companies also have leases with variable payments based upon usage of, or revenues associated with, the leased assets.
The determination of the discount rate utilized has a significant impact on the calculation of the present value of the lease liability included in the Companies’ Consolidated Balance Sheets. For the Companies’ fleet of leased vehicles, the discount rate is equal to the prevailing borrowing rate earned by the lessor. For the Companies’ remaining leased assets, the discount rate implicit in the lease is generally unable to be determined from a lessee perspective. As such, the Companies use internally-developed incremental borrowing rates as a discount rate in the calculation of the present value of the lease liability. The incremental borrowing rates are determined based on an analysis of the Companies’ publicly available unsecured borrowing rates, adjusted for a collateral discount, over various lengths of time that most closely correspond to the Companies’ lease maturities.
In addition, Dominion Energy acts as lessor under certain power purchase agreements in which the counterparty or counterparties purchase substantially all of the output of certain solar facilities. These leases are considered operating in nature. For such leasing arrangements, rental revenue and an associated accounts receivable are recorded when the monthly output of the solar facility is determined. Depreciation on these solar facilities is computed on a straight-line basis primarily over an estimated useful life of
Asset Retirement Obligations
The Companies recognize AROs at fair value as incurred or when sufficient information becomes available to determine a reasonable estimate of the fair value of future retirement activities to be performed, for which a legal obligation exists. These amounts are generally capitalized as costs of the related tangible long-lived assets. Since relevant market information is not available, fair value is estimated using discounted cash flow analyses. Quarterly, the Companies assess their AROs to determine if circumstances indicate that estimates of the amounts or timing of future cash flows associated with retirement activities have changed. AROs are adjusted when significant changes in the amounts or timing of future cash flows are identified. Dominion Energy reports accretion of AROs and depreciation on asset retirement costs associated with its natural gas pipelines of its distribution business as an adjustment to the related regulatory assets or liabilities when revenue is recoverable from customers for AROs. The Companies report accretion of AROs and depreciation on asset retirement costs associated with decommissioning its nuclear power stations as an adjustment to the regulatory asset or liability for certain jurisdictions. Additionally, the Companies report accretion of AROs and depreciation on asset retirement costs associated with certain rider and prospective rider projects and other electric generation and distribution facilities as an adjustment to the regulatory asset for certain jurisdictions. Accretion of all other AROs and depreciation of all other asset retirement costs are reported in other operations and maintenance expense and depreciation expense, respectively, in the Consolidated Statements of Income.
Debt Issuance Costs
The Companies defer and amortize debt issuance costs and debt premiums or discounts over the expected lives of the respective debt issues, considering maturity dates and, if applicable, redemption rights held by others. Deferred debt issuance costs are recorded as a reduction in long-term debt in the Consolidated Balance Sheets. Amortization of the issuance costs is reported as interest expense. Unamortized costs associated with redemptions of debt securities prior to stated maturity dates are generally recognized and recorded in interest expense immediately. As permitted by regulatory authorities, gains or losses resulting from the refinancing or redemption of debt allocable to utility operations subject to cost-based rate regulation are deferred and amortized.
Investments
Debt Securities
Dominion Energy accounts for and classifies investments in debt securities as trading or available-for-sale securities. Virginia Power classifies investments in debt securities as available-for-sale securities.
36
In determining realized gains and losses for debt securities, the cost basis of the security is based on the specific identification method.
Credit Impairment
The Companies periodically review their available-for-sale debt securities to determine whether a decline in fair value should be considered credit related. If a decline in the fair value of any available-for-sale debt security is determined to be credit related, the credit-related impairment is recorded to an allowance included in nuclear decommissioning trust funds in the Companies’ Consolidated Balance Sheets at the end of the reporting period, with such allowance for credit losses subject to reversal in subsequent evaluations.
Using information obtained from their nuclear decommissioning trust fixed-income investment managers, the Companies record in earnings, or defer as applicable for certain jurisdictions subject to cost-based regulation, any unrealized loss for a debt security when the manager intends to sell the debt security or it is more-likely-than-not that the manager will have to sell the debt security before recovery of its fair value up to its cost basis. If that is not the case, but the debt security is deemed to have experienced a credit loss, the Companies record the credit loss in earnings or defer as applicable for certain jurisdictions subject to cost-based regulation, with the remaining non-credit portion of the unrealized loss recorded in AOCI. Credit losses are evaluated primarily by considering the credit ratings of the issuer, prior instances of non-performance by the issuer and other factors
Equity Securities with Readily Determinable Fair Values
Equity securities with readily determinable fair values include securities held by Dominion Energy in rabbi trusts associated with certain deferred compensation plans and securities held by the Companies in the nuclear decommissioning trusts. The Companies record all equity securities with a readily determinable fair value, or for which they are permitted to estimate fair value using NAV (or its equivalent), at fair value in nuclear decommissioning trust funds and other investments in the Consolidated Balance Sheets. Net realized and unrealized gains and losses on equity securities held in the nuclear decommissioning trusts are deferred to a regulatory asset or liability, as applicable, for certain jurisdictions subject to cost-based regulation. For all other equity securities, including those held in Dominion Energy’s nonregulated generation nuclear decommissioning trusts and rabbi trusts, net realized and unrealized gains and losses are included in other income in the Consolidated Statements of Income.
Equity Securities without Readily Determinable Fair Values
The Companies account for illiquid and privately held securities without readily determinable fair values under either the equity method or cost method. Equity securities without readily determinable fair values include:
Other-Than-Temporary Impairment
The Companies periodically review their equity method investments to determine whether a decline in fair value should be considered other-than-temporary. If a decline in the fair value of any security is determined to be other-than-temporary, the investment is written down to its fair value at the end of the reporting period.
Inventories
Materials and supplies and fossil fuel inventories are valued primarily using the weighted-average cost method. Stored gas inventory is valued using the weighted-average cost method, except for East Ohio gas distribution operations, which are valued using the LIFO method and reflected in current assets held for sale in Dominion Energy's Consolidated Balance Sheets. Under the LIFO method, current stored gas inventory was valued at $
37
In 2022, Dominion Energy wrote off certain inventory balances associated with certain nonrenewable electric generation facilities resulting in a $40 million charge ($30 million after-tax) recorded in impairments and other charges (reflected in the Corporate and Other segment) in its Consolidated Statements of Income, including $19 million ($14 million after-tax) at Virginia Power for inventory not expected to be utilized at such facilities prior to their planned retirement in the first half of 2023.
Goodwill
Dominion Energy evaluates goodwill for impairment annually as of April 1 and whenever an event occurs or circumstances change in the interim that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount.
New Accounting Standards
Debt with Conversion Options and Contracts in an Entity’s Own Equity
In August 2020, the FASB issued revised accounting guidance for debt with conversion options and contracts in an entity’s own equity. The revised guidance eliminates the ability to assert cash settlement and exclude potential shares from the diluted EPS calculation for a contract that may be settled in stock or cash. The guidance became effective for Dominion Energy’s interim and annual reporting periods beginning January 1, 2022. Upon adoption, Dominion Energy applied the guidance using a modified retrospective approach and continued to apply the if-converted method to calculate diluted EPS in connection with any potentially dilutive instruments, or components of instruments, that may be settled in stock or cash.
NOTE 3. ACQUISITIONS AND DISPOSITIONS
Sales of Businesses Reflected as Discontinued Operations
Business Review Dispositions (as discussed in Note 1)
Sale of East Ohio
In September 2023, Dominion Energy entered into an agreement with Enbridge for the East Ohio Transaction, which includes the sale of East Ohio and is valued at approximately $
Upon closing, Dominion Energy will retain the pension and other postretirement benefit plan assets and obligations, including related income tax and other deferred balances, associated with retiree participants in both East Ohio's union pension and other postretirement benefit plans and retiree participants of the sale entities in the Dominion Energy Pension Plan and the Dominion Energy Retiree Health and Welfare Plan. The East Ohio Transaction is subject to termination by either party if not completed by September 2024, subject to a potential three-month extension for receipt of regulatory approvals, with a termination fee of $
Sale of PSNC
In September 2023, Dominion Energy entered into an agreement with Enbridge for the PSNC Transaction, which includes the sale of PSNC and is valued at approximately $
38
filing request for approval by CFIUS. In October 2023, Dominion Energy filed for approval from the North Carolina Commission. The proposed internal reorganization in connection with the PSNC Transaction is subject to approval by the North Carolina Commission. Dominion Energy filed for such approval in September 2023.
Upon closing, Dominion Energy will retain the entirety of the assets and obligations, including related income tax and other deferred balances, of the pension and other postretirement employee benefit plans associated with the operations included in the transaction and relating to services provided through closing. The PSNC Transaction is subject to termination by either party if not completed by September 2024, subject to a potential three-month extension for receipt of regulatory approvals, with a termination fee of $
Sale of Questar Gas and Wexpro
In September 2023, Dominion Energy entered into an agreement with Enbridge for the Questar Gas Transaction, which includes the sale of Questar Gas, Wexpro and related affiliates and is valued at approximately $
Upon closing, Dominion Energy will retain the pension and other postretirement benefit plan assets and obligations, including related income tax and other deferred balances, associated with retiree participants of the sale entities in the Dominion Energy Pension Plan and the Dominion Energy Retiree Health and Welfare Plan. The Questar Gas Transaction is subject to termination by either party if not completed by September 2024, subject to a potential three-month extension for receipt of regulatory approvals, with a termination fee of $
Other Sales
In August 2023, Dominion Energy entered into an agreement and completed the sale of Tredegar Solar Fund I, LLC to Spruce Power for cash consideration of $
Disposition of Gas Transmission & Storage Operations
In July 2020, Dominion Energy entered into an agreement with BHE with a total value of approximately $
39
In November 2020, Dominion Energy completed the GT&S Transaction and received cash proceeds of $
In connection with closing of the GT&S Transaction, Dominion Energy and BHE entered into a transition services agreement under which
Also in November 2020, BHE provided a $
In October 2021, Dominion Energy entered into an agreement with Southwest Gas to sell the Q-Pipe Group. The total value of this transaction was approximately $
In December 2021, Dominion Energy completed the sale of the Q-Pipe Group and received cash proceeds of $
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
The operations included in both the GT&S Transaction and the Q-Pipe Group are presented in discontinued operations effective July 2020. As a result, depreciation and amortization ceased on the applicable assets. As Cove Point had previously been consolidated within Dominion Energy’s financial statements, balances associated with Cove Point prior to the closing of the GT&S Transaction are presented within discontinued operations. See Note 9 for additional information regarding Dominion Energy’s equity method investment in Cove Point.
40
Financial Statement Information for Dispositions Presented as Discontinued Operations
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:
|
|
Business Review Dispositions |
|
|||||||||||||
Year Ended December 31, 2022 |
|
East Ohio Transaction |
|
|
PSNC Transaction |
|
|
Questar Gas Transaction |
|
|
Other |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Operating expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other income (expense) |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Interest and related charges |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|||
Net income attributable to Dominion Energy(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
|
Disposition of Gas Transportation & Storage Operations |
|
|
Business Review Dispositions |
|
||||||||||||||
Year Ended December 31, 2021 |
|
Q-Pipe Group(1) |
|
|
East Ohio Transaction |
|
|
PSNC Transaction |
|
|
Questar Gas Transaction |
|
|
Other |
|
|||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Operating expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other income (expense)(2) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|||
Interest and related charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
||||
Income (loss) before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Income tax expense (benefit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
||||
Net income (loss) attributable to Dominion Energy(3) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
Disposition of Gas Transportation & Storage Operations |
|
|
Business Review Dispositions |
|
||||||||||||||
Year Ended December 31, 2020 |
|
GT&S Transaction(1) |
|
|
Q-Pipe Group |
|
|
East Ohio Transaction |
|
|
PSNC Transaction |
|
|
Questar Gas Transaction |
|
|||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Operating expense(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Interest and related charges (benefit)(3) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Income before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Income tax expense (benefit)(4) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Net income (loss) including noncontrolling interests |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Noncontrolling interests |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net income (loss) attributable to Dominion Energy(5) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
41
The carrying value of major classes of assets and liabilities relating to the disposal groups, which are reported as held for sale in Dominion Energy's Consolidated Balance Sheets were as follows:
|
At December 31, 2022 |
|
|
At December 31, 2021 |
|
||||||||||||||||||||
|
Business Review Dispositions |
|
|
Business Review Dispositions |
|
||||||||||||||||||||
|
East |
|
PSNC Transaction |
|
Questar |
|
Other |
|
|
East |
|
PSNC Transaction |
|
Questar |
|
Other |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current assets(1) |
$ |
|
$ |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
Property, plant and equipment, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other deferred charges and other |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||||||
Current liabilities(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt(4) |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||||||
Other deferred credits and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures and significant noncash items relating to the disposal groups included the following:
|
|
Business Review Dispositions |
|
|||||||||||||
Year Ended December 31, 2022 |
|
East Ohio Transaction |
|
|
PSNC Transaction |
|
|
Questar Gas Transaction |
|
|
Other |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Capital expenditures |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|||
Significant noncash items |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accrued capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
Disposition of Gas Transportation & Storage Operations |
|
|
Business Review Dispositions |
|
||||||||||||||
Year Ended December 31, 2021 |
|
Q-Pipe Group(1) |
|
|
East Ohio Transaction |
|
|
PSNC Transaction |
|
|
Questar Gas Transaction |
|
|
Other |
|
|||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Capital expenditures(2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
||||
Significant noncash items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Depreciation, depletion and amortization |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accrued capital expenditures |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
42
|
|
Disposition of Gas Transportation & Storage Operations |
|
|
Business Review Dispositions |
|
||||||||||||||||||
Year Ended December 31, 2020 |
|
GT&S Transaction(1) |
|
|
Q-Pipe Group |
|
|
East Ohio Transaction |
|
|
PSNC Transaction |
|
|
Questar Gas Transaction |
|
|
Other |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|||||
Significant noncash items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Impairment of assets and other charges |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Accrued capital expenditures |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
In October 2020, Dominion Energy settled various derivatives related to, but not included in, the GT&S Transaction for a payment of $
Sale of Hope
In February 2022, Dominion Energy entered into an agreement to sell
In connection with closing, Dominion Energy recognized a pre-tax gain of $
All activity related to Hope is, effective September 2023, reflected in the Corporate and Other segment.
Sale of Kewaunee
In May 2021, Dominion Energy entered into an agreement to sell
In the second quarter of 2022, Dominion Energy recorded a loss of $
All activity related to Kewaunee prior to closing is included in Contracted Energy, with remaining activity reflected in the Corporate and Other segment.
Acquisition of Birdseye
In May 2021, Dominion Energy acquired
43
other assets in Dominion Energy’s Consolidated Balance Sheets, and $
NOTE 4. OPERATING REVENUE
The Companies’ operating revenue consists of the following:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Government and other retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Nonregulated electric sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Regulated gas sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Regulated gas transportation and storage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other regulated revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other nonregulated revenues(1)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total operating revenue from |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other revenues(1)(3) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
||
Total operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Neither Dominion Energy nor Virginia Power have any amounts for revenue to be recognized in the future on multi-year contracts in place at December 31, 2022.
Contract liabilities represent an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration, or the amount that is due, from the customer. At December 31, 2022 and 2021, Dominion Energy’s contract liability balances were $
The Companies recognize revenue as they fulfill their obligations to provide service to their customers. During the years ended December 31, 2022 and 2021, Dominion Energy recognized revenue of $
NOTE 5. INCOME TAXES
Judgment and the use of estimates are required in developing the provision for income taxes and reporting of tax-related assets and liabilities. The interpretation of tax laws and associated regulations involves uncertainty, since tax authorities may interpret the laws differently. The Companies are routinely audited by federal and state tax authorities. Ultimate resolution of income tax matters may result in favorable or unfavorable impacts to net income and cash flows, and adjustments to tax-related assets and liabilities could be material.
44
In August 2022, the IRA was enacted which, among other things, extends the investment and production tax credits for clean energy technologies until at least
In July 2020, the U.S. Department of Treasury issued final regulations providing guidance about the limitation on the deduction for business interest expenses under the 2017 Tax Reform Act. Under the 2017 Tax Reform Act, deductions for net interest expense are limited to
As indicated in Note 2, certain of the Companies’ operations, including accounting for income taxes, are subject to regulatory accounting treatment. For regulated operations, many of the changes in deferred taxes from the 2017 Tax Reform Act represent amounts probable of collection from or return to customers and were recorded as either an increase to a regulatory asset or liability.
Continuing Operations
Details of income tax expense for continuing operations including noncontrolling interests were as follows:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Federal |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
State |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|||
Total current expense (benefit) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Deferred: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Federal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Taxes before operating loss |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Tax utilization expense of operating |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investment tax credits |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
||
State |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total deferred expense (benefit) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||
Investment tax credit-gross deferral |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investment tax credit-amortization |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total income tax expense (benefit) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
In 2022, Dominion Energy’s current income taxes reflect a benefit from continuing operations as the income tax expense associated with the East Ohio, PSNC and Questar Gas Transactions and Cove Point operations is reflected in discontinued operations.
In 2021, Dominion Energy’s current income taxes reflect a benefit from continuing operations as the income tax expense associated with the East Ohio, PSNC and Questar Gas Transactions, Cove Point and Q-Pipe Group’s operations, including taxes on the gain, is reflected in discontinued operations. Dominion Energy’s income tax expense reflects the utilization of investment tax credit carryforwards to offset a portion of the federal tax gain on the sale.
In 2020, Dominion Energy’s current income taxes reflect a benefit from continuing operations as the income tax expense associated with the East Ohio, PSNC and Questar Gas Transactions, Cove Point and gas transmission and storage operations, including taxes on the gain, is reflected in discontinued operations. Dominion Energy’s income tax expense reflects the utilization of investment tax credit carryforwards to offset a portion of the federal tax gain on the sale. In addition, an $
45
Discontinued Operations
Income tax expense (benefit) reflected in discontinued operations is $
Continuing Operations
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 |
||||||||||||||||||||
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
||||||
U.S. statutory rate |
|
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||||
Increases (reductions) resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Recognition of taxes - sale of |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Recognition of taxes - privatization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
State taxes, net of federal benefit |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
||||
Investment tax credits |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
Production tax credits |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
Valuation allowances |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Reversal of excess deferred income |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
State legislative change |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
||||
Change in tax status |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|||||
AFUDC—equity |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
||
Changes in state deferred taxes |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
||||
Absence of tax on noncontrolling |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Settlements of uncertain tax positions |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Employee stock ownership plan |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
||||
Other, net |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
||
Effective tax rate |
|
|
|
% |
|
|
% |
|
( |
) |
% |
|
|
% |
|
|
% |
|
|
% |
As described in Note 3, Dominion Energy sold
In December 2021, unrecognized tax benefits related to several state uncertain tax positions acquired in the SCANA Combination were effectively settled through negotiations with the taxing authority. Management believed it was reasonably possible these unrecognized tax benefits could decrease through settlement negotiations or payments during 2021, however no income tax benefits could be recognized unless or until the positions were effectively settled. Resolution of these uncertain tax positions decreased income tax expense by $
46
Dominion Energy’s 2020 effective tax rate reflects an income tax benefit of $
The Companies’ deferred income taxes consist of the following:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
At December 31, |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total deferred income tax assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total deferred income tax liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total net deferred income tax liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total deferred income taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Plant and equipment, primarily depreciation method and basis differences |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Excess deferred income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unrecovered NND Project costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
DESC rate refund |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Toshiba Settlement |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
||
Nuclear decommissioning |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred state income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Federal benefit of deferred state income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Deferred fuel, purchased energy and gas costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Pension benefits |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Other postretirement benefits |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss and credit carryforwards |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Valuation allowances |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Partnership basis differences |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total net deferred income tax liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred Investment Tax Credits – Regulated Operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Deferred Taxes and Deferred Investment Tax Credits |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
At December 31, 2022, Dominion Energy had the following deductible loss and credit carryforwards:
|
|
Deductible |
|
|
Deferred |
|
|
Valuation |
|
|
Expiration |
|||
|
|
Amount |
|
|
Tax Asset |
|
|
Allowance |
|
|
Period |
|||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|||
Federal losses |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
|||
Federal investment credits |
|
— |
|
|
|
|
|
— |
|
|
||||
Federal production and other credits |
|
— |
|
|
|
|
|
— |
|
|
||||
State losses |
|
|
|
|
|
|
|
|
( |
) |
|
|||
State minimum tax credits |
|
— |
|
|
|
|
|
— |
|
|
No expiration |
|||
State investment and other credits |
|
— |
|
|
|
|
|
|
( |
) |
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
47
At December 31, 2022, Virginia Power had the following deductible loss and credit carryforwards:
|
|
Deductible |
|
|
Deferred |
|
|
Valuation |
|
|
Expiration |
|||
|
|
Amount |
|
|
Tax Asset |
|
|
Allowance |
|
|
Period |
|||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|||
Federal losses |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
Federal investment credits |
|
— |
|
|
|
|
|
— |
|
|
||||
Federal production and other credits |
|
— |
|
|
|
|
|
— |
|
|
||||
State losses |
|
|
|
|
|
|
|
— |
|
|
||||
State investment and other credits |
|
— |
|
|
|
|
|
|
( |
) |
|
|||
Total |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
A reconciliation of changes in Dominion Energy’s unrecognized tax benefits follows. Virginia Power does
|
|
Dominion Energy |
|
|
|||||||||
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|
|||
Beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
|||
Increases-prior period positions |
|
|
|
|
|
|
|
|
|
|
|||
Decreases-prior period positions |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Increases-current period positions |
|
|
|
|
|
|
|
|
|
|
|||
Settlements with tax authorities |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
Expiration of statutes of limitations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
Certain unrecognized tax benefits, or portions thereof, if recognized, would affect the effective tax rate. Changes in these unrecognized tax benefits may result from remeasurement of amounts expected to be realized, settlements with tax authorities and expiration of statutes of limitations. For Dominion Energy and its subsidiaries, these unrecognized tax benefits were $
Dominion Energy participates in the IRS Compliance Assurance Process which provides the opportunity to resolve complex tax matters with the IRS before filing its federal income tax returns, thus achieving certainty for such tax return filing positions agreed to by the IRS. The IRS has completed its audit of tax years through 2019. The statute of limitations has not yet expired for years after 2018. Although Dominion Energy has not received a final letter indicating no changes to its taxable income for tax years 2021 and 2020, no material adjustments are expected. The IRS examination of tax year 2022 is ongoing.
It is reasonably possible that settlement negotiations and expiration of statutes of limitations could result in a decrease in unrecognized tax benefits in 2023 by up to $
For each of the major states in which Dominion Energy operates or previously operated, the earliest tax year remaining open for examination is as follows:
State |
|
Earliest Open Tax Year |
Pennsylvania(1) |
|
|
Connecticut |
|
|
Virginia(2) |
|
|
Utah(1) |
|
|
South Carolina |
|
48
The Companies are also obligated to report adjustments resulting from IRS settlements to state tax authorities. In addition, if Dominion Energy utilizes operating losses or tax credits generated in years for which the statute of limitations has expired, such amounts are generally subject to examination.
NOTE 6. FAIR VALUE MEASUREMENTS
The Companies’ fair value measurements are made in accordance with the policies discussed in Note 2. See Note 7 for additional information about the Companies’ derivative and hedge accounting activities.
The Companies enter into certain physical and financial forwards, futures and options, which are considered Level 3 as they have one or more inputs that are not observable and are significant to the valuation. The discounted cash flow method is used to value Level 3 physical and financial forwards and futures contracts. An option model is used to value Level 3 physical options. The discounted cash flow model for forwards and futures calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return and credit spreads. The option model calculates mark-to-market valuations using variations of the Black-Scholes option model. The inputs into the models are the forward market prices, implied price volatilities, risk-free rate of return, the option expiration dates, the option strike prices, the original sales prices and volumes. For Level 3 fair value measurements, certain forward market prices and implied price volatilities are considered unobservable.
The following table presents the Companies' quantitative information about Level 3 fair value measurements at December 31, 2022. The range and weighted average are presented in dollars for market price inputs and percentages for price volatility.
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
Virginia Power |
|||||||||||
|
|
|
Valuation |
|
Unobservable |
|
|
Fair Value (millions) |
|
Range |
|
Weighted |
|
|
Fair Value (millions) |
|
|
Range |
|
Weighted |
||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
FTRs |
|
|
Discounted |
|
Market price |
(3) |
|
$ |
|
|
|
|
$ |
|
|
|
||||||
Electricity |
|
|
Discounted |
|
Market price |
(3) |
|
|
|
|
|
|
|
— |
|
|
— |
|
— |
|||
Physical options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Natural gas(2) |
|
|
Option model |
|
Market price |
(3) |
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
Price volatility |
(4) |
|
|
|
|
|
|
|
|
|
|
||||||
Total assets |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
|
|
|
||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Natural gas(2) |
|
|
Discounted |
|
Market price |
(3) |
|
$ |
|
( |
|
( |
|
|
$ |
|
|
( |
|
( |
||
FTRs |
|
|
Discounted |
|
Market price |
(3) |
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|
|
|
|
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) |
49
Nonrecurring Fair Value Measurements
See Note 3 for information on the nonrecurring fair value measurement associated with Dominion Energy's acquisition of Birdseye and its retained noncontrolling interest in Cove Point. See Note 9 for information regarding nonrecurring fair value measurements associated with charges related to Fowler Ridge, Dominion Energy's noncontrolling interest in businesses and assets contributed to Wrangler and Dominion Energy's noncontrolling ownership interest in Dominion Privatization. See Note 10 for information regarding impairment charges recorded by Dominion Energy associated with nonregulated solar facilities and non-wholly-owned nonregulated solar facilities in partnerships.
In 2021, Dominion Energy recorded a charge of $
In 2021, Dominion Energy recorded a charge of $
50
Recurring Fair Value Measurements
Fair value measurements are separately disclosed by level within the fair value hierarchy with a separate reconciliation of fair value measurements categorized as Level 3. Fair value disclosures for assets held in the Companies' pension and other postretirement benefit plans are presented in Note 22.
The following table presents the Companies' assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt instruments |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Government securities |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Foreign currency exchange |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total liabilities |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Foreign currency exchange |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt instruments |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Government securities |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Cash equivalents and other |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total liabilities |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
51
The following table presents the net change in the Companies' assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Beginning balance |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||||
Total realized and unrealized gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Included in earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating Revenue |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
and |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
||||
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Included in regulatory assets/liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Settlements |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
||
Purchases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Sales |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
Transfers out of Level 3 |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
The Companies’ had
Fair Value of Financial Instruments
Substantially all of the Companies’ financial instruments are recorded at fair value, with the exception of the instruments described below, which are reported at historical cost. Estimated fair values have been determined using available market information and valuation methodologies considered appropriate by management. The carrying amount of cash, restricted cash and equivalents, customer and other receivables, affiliated receivables, short-term debt, affiliated current borrowings, payables to affiliates and accounts payable are representative of fair value because of the short-term nature of these instruments.
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
|
|
Carrying |
|
|
Estimated Fair Value(1) |
|
|
Carrying |
|
|
Estimated Fair Value(1) |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt(2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Supplemental credit facility borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Junior subordinated notes(2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt(2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Junior subordinated notes(2) |
|
|
|
|
|
|
|
|
|
|
|
|
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
52
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 |
|
|
Financial |
|
|
Cash |
|
|
Net |
|
|
Gross Assets |
|
|
Financial |
|
|
Cash |
|
|
Net |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total derivatives, |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total derivatives, |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
53
|
|
Dominion Energy Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
Virginia Power Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
||||||||||||||||||||||||||
|
|
Gross Liabilities |
|
|
Financial |
|
|
Cash |
|
|
Net |
|
|
Gross Liabilities |
|
|
Financial |
|
|
Cash |
|
|
Net |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency exchange rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total derivatives, |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total derivatives, |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basis(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Electricity (MWh in millions): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fixed price |
|
|
|
|
|
|
|
|
|
|
|
|
||||
FTRs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil (Gal in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate(2) (in millions) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Foreign currency exchange rate(2) (in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Danish Krone |
|
|
|
|
|
|
|
|
||||||||
Euro |
|
€ |
|
|
€ |
|
|
€ |
|
|
€ |
|
54
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 |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
$ |
|
|
$ |
( |
) |
|
|||
Total |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
$ |
|
|
$ |
( |
) |
|
|
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
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 |
|
|
Cumulative Amount of Fair Value |
|
||||||||||
|
|
December 31, 2022 |
|
|
December 31, 2021 |
|
|
December 31, 2022 |
|
|
December 31, 2021 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
Virginia Power had
55
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 – |
|
|
Fair Value – |
|
|
Total Fair |
|
|
Fair Value – |
|
|
Fair Value – |
|
|
Total Fair |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
At December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total current derivative assets(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total noncurrent derivative assets(2)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivative assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total current derivative liabilities(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total noncurrent derivative liabilities(5)(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivative liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
At December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total current derivative assets(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total noncurrent derivative assets(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivative assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total current derivative liabilities(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total noncurrent derivative liabilities(5)(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivative liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
56
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 |
|
Amount of Gain |
|
|
Amount of Gain |
|
|
Increase (Decrease) |
|
|
Amount of Gain |
|
|
Amount of Gain |
|
|
Increase (Decrease) |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Year Ended December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest rate(3) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Year Ended December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Commodity(4) |
|
|
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest rate(3) |
|
$ |
|
|
|
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Year Ended December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating revenue |
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Purchased gas |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Discontinued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total commodity |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest and |
|
|
|
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
||
Discontinued |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total interest rate |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Foreign currency |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
57
|
|
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 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Purchased gas |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Electric fuel and other energy-related purchases |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
Discontinued operations |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||||
Interest rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest and related charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency exchange rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
NOTE 8. EARNINGS PER SHARE
The following table presents the calculation of Dominion Energy’s basic and diluted EPS:
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|||
Net income attributable to Dominion Energy from continuing operations |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Preferred stock dividends (see Note 19) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income attributable to Dominion Energy from continuing operations - Basic |
|
|
( |
) |
|
|
|
|
|
|
||
Dilutive effect of 2019 Equity Units(1) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net income attributable to Dominion Energy from continuing operations - Diluted |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Net income (loss) attributable to Dominion Energy from discontinued operations - |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
Average shares of common stock outstanding – Basic |
|
|
|
|
|
|
|
|
|
|||
Net effect of dilutive securities(2) |
|
|
|
|
|
|
|
|
— |
|
||
Average shares of common stock outstanding – Diluted |
|
|
|
|
|
|
|
|
|
|||
EPS from continuing operations - Basic |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
EPS from discontinued operations - Basic |
|
|
|
|
|
|
|
|
( |
) |
||
EPS attributable to Dominion Energy - Basic |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||
EPS from continuing operations - Diluted |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
EPS from discontinued operations - Diluted |
|
|
|
|
|
|
|
|
( |
) |
||
EPS attributable to Dominion Energy - Diluted |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
The 2019 Equity Units, prior to settlement in June 2022, and the Q-Pipe Transaction deposit, prior to being settled in cash in July 2021, were potentially dilutive instruments. See Notes 3 and 19 for additional information.
As a result of a net loss attributable to Dominion Energy from continuing operations for the year ended December 31, 2022, any adjustments to earnings or shares would be considered antidilutive and are therefore excluded from the calculation of diluted earnings per share from continuing operations.
For the years ended December 31, 2021 and 2020, the forward stock purchase contracts included within the 2019 Equity Units were excluded from the calculation of diluted EPS from continuing operations as the dilutive stock price threshold was not met. The Series
58
A Preferred Stock included within the 2019 Equity Units is excluded from the effect of dilutive securities within diluted EPS from continuing operations, but a fair value adjustment is reflected within net income attributable to Dominion Energy from continuing operations for the calculation of diluted EPS from continuing operations for the year ended December 31, 2020, based upon the expectation that the conversion would be settled in cash rather than through the issuance of Dominion Energy common stock. As described in Note 19, effective November 2021 any settlement of the conversion up to $1,000 per share was payable in cash, and any amount in excess of $1,000 per share could have been settled in cash, common stock or a combination thereof. For the year ended December 31, 2021, 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 for the years ending December 31, 2021 and 2020 based upon the expectation Dominion Energy would settle in cash, which occurred in July 2021, rather than through the issuance of shares of Dominion Energy common stock.
59
NOTE 9. 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 $
Rabbi Trust Securities
Equity and fixed income securities and cash equivalents in Dominion Energy’s rabbi trusts and classified as trading totaled $
Decommissioning Trust Securities
The Companies hold equity and fixed income securities and cash equivalents, and Dominion Energy also holds insurance contracts, in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants.
|
|
|
Dominion Energy |
|
|
|
|
Virginia Power |
|
||||||||||||||||||||||||
|
Amortized |
|
Total |
|
Total |
|
|
Allowance for Credit Losses |
|
Fair |
|
|
Amortized |
|
Total |
|
Total |
|
|
Allowance for Credit Losses |
|
Fair |
|
||||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. |
$ |
|
$ |
|
$ |
( |
) |
|
|
|
$ |
|
|
$ |
|
$ |
|
$ |
( |
) |
|
|
|
$ |
|
||||||||
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Corporate debt |
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|
|
||||||||
Government |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
||||||||
Common/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total |
$ |
|
$ |
|
$ |
( |
) |
(4) |
$ |
|
$ |
|
|
$ |
|
$ |
|
$ |
( |
) |
(4) |
$ |
|
$ |
|
||||||||
December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. |
$ |
|
$ |
|
$ |
( |
) |
|
|
|
$ |
|
|
$ |
|
$ |
|
$ |
( |
) |
|
|
|
$ |
|
||||||||
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Corporate debt |
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|
|
||||||||
Government |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
||||||||
Common/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash equivalents |
|
|
|
|
|
( |
) |
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
$ |
|
$ |
|
$ |
( |
) |
(4) |
$ |
|
$ |
|
|
$ |
|
$ |
|
$ |
( |
) |
(4) |
$ |
|
$ |
|
60
The portion of unrealized gains and losses that relates to equity securities held within Dominion Energy and Virginia Power's nuclear decommissioning trusts is summarized below:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||
Year Ended December 31, |
|
2022 |
|
2021 |
|
2020 |
|
|
2022 |
|
2021 |
|
2020 |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net gains (losses) recognized during the period |
|
$ |
( |
) |
$ |
|
$ |
|
|
$ |
( |
) |
$ |
|
$ |
|
||||
Less: Net (gains) losses recognized during the |
|
|
|
|
( |
) |
|
( |
) |
|
|
( |
) |
|
( |
) |
|
( |
) |
|
Unrealized gains (losses) recognized during the |
|
$ |
( |
) |
$ |
|
$ |
|
|
$ |
( |
) |
$ |
|
$ |
|
The fair value of Dominion Energy and Virginia Power's fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at December 31, 2022 by contractual maturity is as follows:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||
(millions) |
|
|
|
|
|
|
||
Due in one year or less |
|
$ |
|
|
$ |
|
||
Due after one year through five years |
|
|
|
|
|
|
||
Due after five years through ten years |
|
|
|
|
|
|
||
Due after ten years |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
Presented below is selected information regarding Dominion Energy and Virginia Power's equity and fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds.
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Proceeds from sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Realized gains(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Realized losses(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY METHOD INVESTMENTS
Investments that Dominion Energy accounts for under the equity method of accounting are as follows:
|
|
|
|
|
Investment |
|
|
|
||||||
Company |
|
Ownership% |
|
|
Balance |
|
|
Description |
||||||
As of December 31, |
|
|
|
|
2022 |
|
|
2021 |
|
|
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|||
Cove Point |
|
|
% |
|
$ |
|
(3) |
$ |
|
(3) |
||||
Atlantic Coast Pipeline |
|
|
% |
|
|
|
(4) |
|
|
(4) |
||||
Wrangler |
|
|
% |
(2) |
|
|
|
|
|
|
||||
Align RNG(1) |
|
|
% |
|
|
|
|
|
|
|
||||
Dominion Privatization |
|
|
% |
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
(5) |
|
|
(5) |
|
||||
Total |
|
|
|
|
$ |
|
|
$ |
|
|
|
61
Dominion Energy recorded equity earnings (losses) on its investments of $
Cove Point
In November 2020, in conjunction with the GT&S Transaction, Dominion Energy sold
Income before income taxes recorded for
Dominion Energy recorded distributions from Cove Point of $
In July 2023, Dominion Energy entered into an agreement to sell its
In September 2023, as a result of Dominion Energy entering agreements for the East Ohio, PSNC and Questar Gas Transactions, Dominion Energy’s
Amounts presented in discontinued operations within Dominion Energy's Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020 also include $
62
All activity relating to Dominion Energy’s noncontrolling interest in Cove Point is recorded, following the segment change discussed in Note 1, within the Corporate and Other segment. See Note 3 for further information regarding the GT&S Transaction.
Atlantic Coast Pipeline
In September 2014, Dominion Energy, along with Duke Energy and Southern, announced the formation of Atlantic Coast Pipeline for the purpose of constructing an approximately
In March 2020, Dominion Energy completed the acquisition from Southern of its
Atlantic Coast Pipeline continues to be accounted for as an equity method investment as the power to direct the activities most significant to Atlantic Coast Pipeline is shared with Duke Energy. As a result, Dominion Energy has the ability to exercise significant influence, but not control, over the investee.
The Atlantic Coast Pipeline Project had been the subject of challenges in federal courts including, among others, challenges of the Atlantic Coast Pipeline Project’s biological opinion and incidental take statement, permits providing right of way crossings of certain federal lands, the U.S. Army Corps of Engineers 404 permit, the air permit for a compressor station at Buckingham, Virginia, and the FERC order approving the CPCN. Each of these challenges alleged non-compliance on the part of federal and state permitting authorities and adverse ecological consequences if the Atlantic Coast Pipeline Project was permitted to proceed. Since December 2018, notable developments in these challenges included a stay in December 2018 issued by the U.S. Court of Appeals for the Fourth Circuit and the same court’s July 2019 vacatur of the biological opinion and incidental take statement (which stay and subsequent vacatur halted most project construction activity), the U.S. Court of Appeals for the Fourth Circuit decisions vacating the permits to cross certain federal forests and the air permit for a compressor station at Buckingham, Virginia, the U.S. Court of Appeals for the Fourth Circuit’s remand to the U.S. Army Corps of Engineers of Atlantic Coast Pipeline’s Huntington District 404 verification and the U.S. Court of Appeals for the Fourth Circuit’s remand to the National Park Service of Atlantic Coast Pipeline’s Blue Ridge Parkway right-of-way. In June 2019, the Solicitor General of the U.S. and Atlantic Coast Pipeline filed petitions requesting that the Supreme Court of the U.S. hear the case regarding the Appalachian Trail crossing and in June 2020, the Supreme Court of the U.S. ruled in favor of the Atlantic Coast Pipeline, reversing the lower court’s decision and remanding the case back to the U.S. Court of Appeals for the Fourth Circuit.
The project also faced new and serious challenges from uncertainty related to NWP 12, specifically, from the decision of the U.S. District Court for the District of Montana in April 2020 vacating an NWP 12 issued by the U.S. Army Corps of Engineers, including among other things gas pipelines, followed by a U.S. Court of Appeals for the Ninth Circuit ruling in May 2020 denying a stay of that decision. In July 2020, the Supreme Court of the U.S. issued an order allowing other new oil and gas pipeline projects to use the NWP 12 process pending appeal to the U.S. Court of Appeals for the Ninth Circuit; however, that did not decrease the uncertainty associated with an eventual ruling. The Montana district court decision was viewed as likely to prompt similar challenges in other federal circuit courts related to permits issued under NWP 12, including for the Atlantic Coast Pipeline Project.
In July 2020, as a result of ongoing permitting delays, growing legal uncertainties and the need to incur significant capital expenditures to maintain project timing before such uncertainties could be resolved, Dominion Energy and Duke Energy announced the cancellation of the Atlantic Coast Pipeline Project.
Dominion Energy recorded equity method losses of $
In October 2017, Dominion Energy entered into a guarantee agreement to support a portion of Atlantic Coast Pipeline’s obligation under a $
63
related to this guarantee agreement, reflected within equity as a cumulative effect of a change in accounting principle upon adoption of a new credit loss standard in January 2020.
Dominion Energy recorded contributions of $
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.
DETI provided services to Atlantic Coast Pipeline which totaled $
All activity relating to Atlantic Coast Pipeline is recorded within the Corporate and Other segment.
Fowler Ridge
In September 2020, Dominion Energy sold its
All activity relating to Fowler Ridge, unless otherwise specified, is recorded within Contracted Energy.
Wrangler
In September 2019, Dominion Energy entered into an agreement to form Wrangler, a partnership with Interstate Gas Supply, Inc. Wrangler operated a nonregulated natural gas retail energy marketing business with Dominion Energy contributing its nonregulated retail energy marketing operations and Interstate Gas Supply, Inc. contributing cash. At December 31, 2021 Dominion Energy had a
After an initial contribution of assets to Wrangler in 2019 for which Dominion Energy received cash and a
The final contribution, consisting of Dominion Energy’s remaining nonregulated natural gas retail energy marketing operations, closed in December 2021 for which Dominion Energy received $
Subsequently in December 2021, Dominion Energy sold
All activity relating to Wrangler is recorded within the Corporate and Other segment.
64
Dominion Privatization
In
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 $
The second contribution, consisting of privatization operations in Virginia, closed in December 2022 for which Dominion Energy received total consideration of $
All activity related to Dominion Privatization is reflected within the Corporate and Other segment.
NOTE 10. PROPERTY, PLANT AND EQUIPMENT
Major classes of property, plant and equipment and their respective balances for the Companies are as follows:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
At December 31, |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Utility: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Generation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Transmission |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Distribution |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Storage |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Nuclear fuel |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Plant under construction |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total utility |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Non-jurisdictional - including plant under construction |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nonutility: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nonregulated generation-nuclear |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Nonregulated generation-solar |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Nuclear fuel |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Other-including plant under construction |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total nonutility |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total property, plant and equipment |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
65
Jointly-Owned Power Stations
The Companies proportionate share of jointly-owned power stations at December 31, 2022 is as follows:
|
|
Bath County Pumped Storage Station(1) |
|
|
North Anna Units 1 and 2(1) |
|
|
Clover Power Station(1) |
|
|
Millstone Unit 3(2) |
|
|
Summer Unit 1 (2) |
|
|||||
(millions, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Ownership interest |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
|||||
Plant in service |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Nuclear fuel |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Accumulated amortization of nuclear fuel |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Plant under construction |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
The co-owners are obligated to pay their share of all future construction expenditures and operating costs of the jointly-owned facilities in the same proportion as their respective ownership interest. The Companies report their share of operating costs in the appropriate operating expense (electric fuel and other energy-related purchases, other operations and maintenance, depreciation, depletion and amortization and other taxes, etc.) in the Consolidated Statements of Income.
Nonregulated Solar Projects
The following table presents acquisitions by Virginia Power of non-jurisdictional solar projects (reflected in Dominion Energy Virginia). Virginia Power has claimed or expects to claim federal investment tax credits on the projects, except as otherwise noted.
Project Name |
|
Date Agreement |
|
Date Agreement |
|
Project Location |
|
Project Cost |
|
|
Date of Commercial |
|
MW Capacity |
|
||
Grasshopper(2) |
|
|
|
Virginia |
|
|
|
|
|
|
|
|||||
Chestnut |
|
|
|
North Carolina |
|
|
|
|
|
|
|
|||||
Ft. Powhatan |
|
|
|
Virginia |
|
|
|
|
|
|
|
|||||
Belcher(3) |
|
|
|
Virginia |
|
|
|
|
|
|
|
|||||
Bedford |
|
|
|
Virginia |
|
|
|
|
|
|
|
|||||
Maplewood |
|
|
|
Virginia |
|
|
|
|
|
|
|
|||||
Rochambeau |
|
|
|
Virginia |
|
|
|
|
|
|
|
|||||
Pumpkinseed |
|
|
|
Virginia |
|
|
|
|
|
|
|
|||||
Bookers Mill |
|
|
|
Virginia |
|
|
|
|
|
|
|
In addition, the following table presents acquisitions by Dominion Energy of solar projects (reflected in Contracted Energy). Dominion Energy has claimed or expects to claim federal investment tax credits on the projects, except as otherwise noted.
Project Name |
|
Date Agreement |
|
Date Agreement |
|
Project Location |
|
Project Cost |
|
|
Date of Commercial |
|
MW Capacity |
|
||
Greensville |
|
|
|
Virginia |
|
$ |
|
|
|
|
|
|||||
Myrtle |
|
|
|
Virginia |
|
|
|
|
|
|
|
|||||
Blackville |
|
|
|
South Carolina |
|
|
|
|
|
|
|
|||||
Denmark |
|
|
|
South Carolina |
|
|
|
|
|
|
|
|||||
Yemassee |
|
|
|
South Carolina |
|
|
|
|
|
|
|
|||||
Trask |
|
|
|
South Carolina |
|
|
|
|
|
|
|
|||||
Hardin I |
|
|
|
Ohio |
|
|
|
|
|
|
|
|||||
Madison |
|
|
|
Virginia |
|
|
|
|
|
|
|
|||||
Hardin II |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Atlanta Farms |
|
|
|
Ohio |
|
|
|
|
|
|
|
66
In addition to the facilities discussed above, Dominion Energy has also entered into various agreements to install solar facilities (reflected in the Corporate and Other segment effective September 2023), primarily at schools in Virginia. As of December 31, 2022, Dominion Energy had placed in service solar facilities with an aggregate generation capacity of
Impairment
In the fourth quarter of 2022, Dominion Energy modified its intentions for the ongoing growth and development of its nonregulated solar generation assets as part of the preliminary stages of its comprehensive business review announced in November 2022. In connection with that determination, Dominion Energy expects that it is more likely than not that the nonregulated solar generation projects within Contracted Energy will be sold before the end of their useful lives and therefore evaluated the associated long-lived assets for recoverability. Given their strategic alignment with Virginia Power’s operations, the non-jurisdictional solar generation projects reflected in Dominion Energy Virginia were not further evaluated for recoverability. Using a probability-weighted approach, Dominion Energy determined Contracted Energy’s nonregulated solar generation assets were impaired and recorded a charge of $
Non-Wholly-Owned Nonregulated Solar Facilities
Impairment
In the third quarter of 2020, Dominion Energy performed a strategic review of its long-term intentions for its contracted nonregulated solar generation assets in partnerships outside of its core electric service territories in consideration of the impact of the VCEA and Dominion Energy’s decision to sell substantially all of its gas transmission and storage operations. Based on an evaluation of Dominion Energy’s interests in these long-lived assets for recoverability under a probability weighted approach, Dominion Energy determined the assets were impaired. As a result of this evaluation, Dominion Energy recorded a charge of $
Sale to Terra Nova Renewable Partners
In August 2021, Dominion Energy entered into an agreement with Terra Nova Renewable Partners to sell SBL Holdco, which held Dominion Energy’s
Sale to Clearway
In August 2021, Dominion Energy entered an agreement with Clearway to sell its
67
the Corporate and Other segment), primarily associated with the derecognition of noncontrolling interest. Except as specifically identified, all activity related to Four Brothers and Three Cedars is recorded within Contracted Energy.
Virginia Power CCRO Utilization
In 2021, Virginia Power wrote off $
Sale of Utility Property
In 2022, Dominion Energy completed the sales of certain utility property in South Carolina, as approved by the South Carolina Commission, for total cash consideration of $
NOTE 11. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The changes in Dominion Energy’s carrying amount and segment allocation of goodwill are presented below:
|
|
Dominion Energy Virginia |
|
|
Dominion Energy South Carolina |
|
|
Contracted Energy |
|
|
Corporate and Other |
|
|
Total |
|
|||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Balance at December 31, 2020(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Acquisition of Birdseye(2) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Balance at December 31, 2021(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Sale of Hope(2) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at December 31, 2022(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
Other Intangible Assets
The Companies’ other intangible assets are subject to amortization over their estimated useful lives. Dominion Energy’s amortization expense for intangible assets was $
The components of intangible assets are as follows:
|
|
2022 |
|
|
2021 |
|
||||||||||
At December 31, |
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
|
Gross Carrying Amount |
|
|
Accumulated Amortization |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Software, licenses and other(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Software, licenses and other(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
2023 |
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
2027 |
|
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|||||
Dominion Energy |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||
Virginia Power |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
68
NOTE 12. REGULATORY ASSETS AND LIABILITIES
Regulatory assets and liabilities include the following:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
At December 31, |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Regulatory assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred cost of fuel used in electric generation(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred rider costs for Virginia electric utility(2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Ashpond and landfill closure costs(3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred nuclear refueling outage costs(4) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
NND Project costs(5) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred early plant retirement charges(6) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives(7) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Regulatory assets-current |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrecognized pension and other postretirement benefit costs(8) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred rider costs for Virginia electric utility(2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate hedges(9) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
AROs and related funding(10) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
NND Project costs(5) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Ash pond and landfill closure costs(3) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred cost of fuel used in electric generation(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred early plant retirement charges(6) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives(7) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Regulatory assets-noncurrent |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total regulatory assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Regulatory liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for future cost of removal and AROs(11) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reserve for refunds and rate credits to electric utility |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income taxes refundable through future rates(13) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Monetization of guarantee settlement(14) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives(7) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Regulatory liabilities-current |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Income taxes refundable through future rates(13) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Provision for future cost of removal and AROs(11) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nuclear decommissioning trust(15) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Monetization of guarantee settlement(14) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate hedges(9) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reserve for refunds and rate credits to electric utility |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unrecognized pension and other postretirement benefit costs(8) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Overrecovered other postretirement benefit costs(16) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Derivatives(7) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Regulatory liabilities-noncurrent |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total regulatory liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
69
At December 31, 2022, Dominion Energy and Virginia Power regulatory assets include $
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.
70
Other Regulatory Matters
Virginia Regulation – Key Legislation Affecting Operations
Regulation Act and Grid Transformation and Security Act of 2018
The Regulation Act enacted in 2007 instituted a cost-of-service rate model, ending Virginia’s planned transition to retail competition for electric supply service to most classes of customers.
The Regulation Act authorizes stand-alone rate adjustment clauses for recovery of costs for new generation projects, FERC-approved transmission costs, underground distribution lines, environmental compliance, conservation and energy efficiency programs, renewable energy programs and nuclear license renewals, and also contains statutory provisions directing Virginia Power to file annual fuel cost recovery cases with the Virginia Commission.
If the Virginia Commission’s future rate decisions, including actions relating to Virginia Power’s rate adjustment clause filings, differ materially from Virginia Power’s expectations, it may adversely affect its results of operations, financial condition and cash flows.
The GTSA reinstated base rate reviews commencing with the 2021 Triennial Review. In the triennial review proceedings, earnings that are more than 70 basis points above the utility’s authorized ROE that might have been refunded to customers and served as the basis for a reduction in future rates, may be reduced by Virginia Commission-approved investment amounts in qualifying solar or wind generation facilities or electric distribution grid transformation projects that Virginia Power elects to include in a CCRO. The legislation declares that electric distribution grid transformation projects are in the public interest and provides that the costs of such projects may be recovered through a rate adjustment clause if not the subject of a CCRO. Any costs that are the subject of a CCRO are deemed recovered in base rates during the triennial period under review and may not be included in base rates in future triennial review proceedings. In any triennial review in which the Virginia Commission determines that the utility’s earnings are more than 70 basis points above its authorized ROE, base rates are subject to reduction prospectively and customer refunds would be due unless the total CCRO elected by the utility equals or exceeds the amount of earnings in excess of the 70 basis points. For the purposes of measuring any customer refunds or CCRO amounts utilized under the GTSA, associated income taxes are factored into the determination of such amounts. In the 2021 Triennial Review, any such rate reduction was limited to $
Virginia 2020 Legislation
In April 2020, the Governor of Virginia signed into law the VCEA, which along with related legislation forms a comprehensive framework affecting Virginia Power’s operations. The VCEA replaces Virginia’s voluntary renewable energy portfolio standard for Virginia Power with a mandatory program setting annual renewable energy portfolio standard requirements based on the percentage of total electric energy sold by Virginia Power, excluding existing nuclear generation and certain new carbon-free resources, reaching
71
Virginia Power is incurring and expects to incur significant costs, including capital expenditures, to comply with the legislative requirements discussed above. The legislation allows for cost recovery under the existing or modified regulatory framework through rate adjustment clauses, rates for generation and distribution services or Virginia Power’s fuel factor, as approved by the Virginia Commission. Costs allocated to the North Carolina jurisdiction will be recovered, subject to approval by the North Carolina Commission, in accordance with the existing regulatory framework.
Virginia Regulation – Recent Developments
2021 Triennial Review
In 2020, Virginia Power recorded a net charge of $
Subsequently, in October 2021, Virginia Power, the Virginia Commission staff and other parties filed a comprehensive settlement agreement with the Virginia Commission for approval. The comprehensive settlement agreement provides for $
In connection with the settlement agreement, Virginia Power recorded a $
Utility Disconnection Moratorium
In November 2020, legislation was enacted in Virginia relating to the moratorium on utility disconnections during the COVID-19 pandemic and resulted in Virginia Power forgiving Virginia jurisdictional retail electric customer balances that were more than 30 days past due as of September 30, 2020. As a result, Virginia Power recorded a charge of $
72
in the Corporate and Other segment) for Virginia jurisdictional retail electric customer balances that were more than 30 days past due as of December 31, 2020 that Virginia Power is required to forgive.
Virginia Fuel Expenses
In May 2022, Virginia Power filed its annual fuel factor filing with the Virginia Commission to recover an estimated $
Renewable Generation Projects – Construction
In September 2021, Virginia Power filed a petition with the Virginia Commission for CPCNs to construct and operate
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 $
In October 2022, Virginia Power filed a petition with the Virginia Commission for CPCNs to construct and operate eight utility-scale projects totaling approximately
Nuclear Life Extension Program
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 $
73
Riders
Significant riders associated with various Virginia Power projects are as follows:
Rider Name |
|
Application Date |
|
Approval Date |
|
Rate Year |
|
Total Revenue Requirement (millions) |
|
|
Increase (Decrease) Over Previous Year (millions) |
|
||
Rider B |
|
|
|
|
|
|
|
$ |
|
|||||
Rider B |
|
|
|
|
|
|
|
|
— |
|
||||
Rider BW |
|
|
|
|
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|
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|
|||||
Rider BW |
|
|
|
|
|
|
|
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( |
) |
||||
Rider CCR |
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|
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|
|
|
|||||
Rider CE(1) |
|
|
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|
|||||
Rider CE(2) |
|
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|||||
Rider E |
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|||||
Rider E |
|
|
|
|
|
|
|
|
|
|||||
Rider GT |
|
|
|
|
|
|
|
N/A |
|
|||||
Rider GT |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider GV |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider OSW |
|
|
|
|
|
|
|
N/A |
|
|||||
Rider OSW |
|
|
|
|
|
|
|
|
|
|||||
Rider PPA |
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Rider R |
|
|
|
|
|
|
|
|
|
|||||
Rider R |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider RGGI(4) |
|
|
|
|
|
|
|
|
|
|
||||
Rider RGGI(5) |
|
|
|
|
|
|
|
N/A |
|
|||||
Rider RPS |
|
|
|
|
|
|
|
|
|
|||||
Rider RPS |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider S |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider SNA(6) |
|
|
|
|
|
|
|
N/A |
|
|||||
Rider SNA(6) |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider T1(7) |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider U(8) |
|
|
|
|
|
|
|
|
|
|||||
Rider U(9) |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider US-2 |
|
|
|
|
|
|
|
|
|
|||||
Rider US-3 |
|
|
|
|
|
|
|
|
|
|||||
Rider US-3 |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider US-4 |
|
|
|
|
|
|
|
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|
|||||
Rider US-4 |
|
|
|
|
|
|
|
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|
|||||
Rider W |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider W |
|
|
|
|
|
|
|
|
|
|||||
DSM Riders(10) |
|
|
|
|
|
|
|
|
|
|||||
DSM Riders(11) |
|
|
|
|
|
|
|
|
|
74
Electric Transmission Projects
Significant Virginia Power electric transmission projects approved or applied for are as follows:
Description and Location |
|
Application |
|
Approval |
|
Type of |
|
Miles of |
|
Cost Estimate |
|
|
Elmont-Ladysmith rebuild and related projects in the |
|
|
|
|
|
$ |
|
|||||
Rebuild transmission lines and related projects in the |
|
|
|
|
|
|
|
|||||
Build new Dulles Towne Center substation and line |
|
|
|
|
|
|
|
|||||
Build new Aviator substation and line loop in the |
|
|
|
|
|
|
|
|||||
Nimbus line loop and substation and new 230 kV line |
|
|
|
|
|
|
|
|||||
Partial rebuild of Bristers-Ox 115 kV line in Fauquier |
|
|
Pending |
|
|
|
|
|
||||
Construct new switching station, substations, |
|
|
Pending |
|
|
|
|
|
||||
Construct new switching station, substation, |
|
|
Pending |
|
|
|
|
|
||||
Construct new Mars and Wishing Star substations, |
|
|
Pending |
|
|
|
|
|
||||
Construct new Altair switching station, |
|
|
Pending |
|
|
|
|
|
||||
Construct new Cirrus and Keyser switching stations, |
|
|
Pending |
|
|
|
|
|
In November 2013, the Virginia Commission issued an order granting Virginia Power a CPCN to construct approximately
75
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 January 2020, the North Carolina Commission approved a
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 $
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, and received approval from, the North Carolina Commission for a $
In January 2023, PSNC submitted a filing with, and received approval from, the North Carolina Commission for a $
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 $
South Carolina Regulation
South Carolina Electric Base Rate Case
In August 2020, DESC filed its retail electric base rate case and schedules with the South Carolina Commission. In July 2021, DESC, the South Carolina Office of Regulatory Staff and other parties of record filed a comprehensive settlement agreement with the South Carolina Commission for approval. The comprehensive settlement agreement provided for a non-fuel, base rate increase of $
In connection with this matter, Dominion Energy recorded charges of $
DSM Programs
DESC has approval for a DSM rider through which it recovers expenditures related to its DSM programs.
76
In
In
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 $
Cost of Fuel
DESC’s retail electric rates include a cost of fuel component approved by the South Carolina Commission which may be adjusted periodically to reflect changes in the price of fuel purchased by DESC.
In February 2022, DESC filed with the South Carolina Commission a proposal to increase the total fuel cost component of retail electric rates. DESC’s proposed adjustment is designed to recover DESC’s current base fuel costs, including its existing under-collected balance, over the 12-month period beginning with the first billing cycle of May 2022. DESC also proposed to apply approximately $
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. The application requested an increase of the base fuel cost component of $
In
Electric - Other
DESC utilizes a pension costs rider approved by the South Carolina Commission which is designed to allow recovery of projected pension costs, including under-collected balances or net of over-collected balances, as applicable. The rider is typically reviewed for adjustment every 12 months with any resulting increase or decrease going into effect beginning with the first billing cycle in May. In February 2023, DESC requested that the South Carolina Commission approve an adjustment to this rider to increase annual revenue by $
Ohio Regulation
PIR Program
In 2008, East Ohio began PIR, aimed at replacing approximately
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 $
77
CEP Program
In 2011, East Ohio began CEP which enables East Ohio to defer depreciation expense, property tax expense and carrying costs at the debt rate of
In April 2021, East Ohio filed an application requesting approval to adjust the CEP cost recovery rates for 2019 and 2020 costs. The filing reflects gross plant investment for 2019 of $
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 $
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 $
UEX Rider
East Ohio has approval for a UEX Rider through which it recovers the bad debt expense of most customers not participating in the PIPP Plus Program. The UEX Rider is adjusted annually to achieve dollar for dollar recovery of East Ohio’s actual write-offs of uncollectible amounts. In July 2022, the Ohio Commission approved East Ohio’s application to adjust its UEX Rider to reflect an annual revenue requirement of $
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 $
Purchased Gas
In July 2022, the Utah Commission approved Questar Gas’ request for a $
In February 2023, Questar Gas filed an application with the Utah Commission seeking approval for a $
NOTE 14. ASSET RETIREMENT OBLIGATIONS
AROs represent obligations that result from laws, statutes, contracts and regulations related to the eventual retirement of certain of the Companies’ long-lived assets. The Companies AROs are primarily associated with the decommissioning of their nuclear generation facilities and ash pond and landfill closures.
The Companies have also identified, but not recognized, AROs related to the retirement of Dominion Energy’s storage wells in its underground natural gas storage network, certain Virginia Power electric transmission and distribution assets located on property with easements, rights of way, franchises and lease agreements, Virginia Power’s hydroelectric generation facilities and the abatement of certain asbestos not expected to be disturbed in the Companies’ generation facilities. The Companies currently do not have sufficient
78
information to estimate a reasonable range of expected retirement dates for any of these assets since the economic lives of these assets can be extended indefinitely through regular repair and maintenance and they currently have no plans to retire or dispose of any of these assets. As a result, a settlement date is not determinable for these assets and AROs for these assets will not be reflected in the Consolidated Financial Statements until sufficient information becomes available to determine a reasonable estimate of the fair value of the activities to be performed. The Companies continue to monitor operational and strategic developments to identify if sufficient information exists to reasonably estimate a retirement date for these assets.
The changes to AROs during 2021 and 2022 were as follows:
(millions) |
Dominion Energy |
|
|
Virginia Power |
|
||
AROs at December 31, 2020 |
$ |
|
|
$ |
|
||
Obligations incurred during the period |
|
|
|
|
|
||
Obligations settled during the period |
|
( |
) |
|
|
( |
) |
Revisions in estimated cash flows(1) |
|
|
|
|
|
||
Accretion |
|
|
|
|
|
||
Sale of non-wholly-owned nonregulated solar facilities |
|
( |
) |
|
|
|
|
AROs at December 31, 2021(2) |
$ |
|
|
$ |
|
||
Obligations incurred during the period |
|
|
|
|
|
||
Obligations settled during the period |
|
( |
) |
|
|
( |
) |
Revisions in estimated cash flows(3) |
|
|
|
|
|
||
Accretion |
|
|
|
|
|
||
Sales of Kewaunee and Hope |
|
( |
) |
|
|
|
|
AROs at December 31, 2022(2) |
$ |
|
|
$ |
|
Dominion Energy’s AROs at December 31, 2022 and 2021, include $
In addition, AROs at December 31, 2022 and 2021 include $
79
NOTE 15. LEASES
At December 31, 2022 and 2021, the Companies had the following lease assets and liabilities recorded in the Consolidated Balance Sheets:
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
At December 31, |
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
||||
Lease assets: |
|
|
|
|
|
|
|
|
|
|
|
||||
(1) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(2) |
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease assets |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Lease liabilities: |
|
|
|
|
|
|
|
|
|
|
|
||||
(3) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
(4) |
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease liabilities - current |
|
|
|
|
|
|
|
|
|
|
|
||||
(5) |
|
|
|
|
|
|
|
|
|
|
|
||||
(6) |
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease liabilities - noncurrent |
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease liabilities |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
80
For the years ended December 31, 2022, 2021 and 2020, total lease cost associated with the Companies’ leasing arrangements consisted of the following:
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||
Year ended December 31, |
2022 |
|
|
2021 |
|
|
2020 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Finance lease cost: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Amortization(1) |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest(2) |
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Operating lease cost(3) |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||||
Short-term lease cost(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Variable lease cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total lease cost |
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
For the years ended December 31, 2022, 2021 and 2020, cash paid for amounts included in the measurement of the lease liabilities consisted of the following amounts, included in the Companies’ Consolidated Statements of Cash Flows:
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||
Year ended December 31, |
2022 |
|
|
2021 |
|
|
2020 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating cash flows for |
$ |
|
|
$ |
( |
) |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Operating cash flows for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Financing cash flows for |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition to the amounts disclosed above, Dominion Energy’s Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020, include $
81
At December 31, 2022 and 2021, the weighted average remaining lease term and weighted discount rate for the Companies’ finance and operating leases were as follows:
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
December 31, |
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
Weighted average remaining lease term - |
|
|
|
|
|
|
|
||||||||
Weighted average remaining lease term - |
|
|
|
|
|
|
|
||||||||
Weighted average discount rate - |
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Weighted average discount rate - |
|
% |
|
|
% |
|
|
% |
|
|
% |
The Companies’ lease liabilities have the following maturities:
Maturity of Lease Liabilities |
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
(millions) |
|
Operating |
|
|
Finance |
|
|
Operating |
|
|
Finance |
|
||||
2023 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2026 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2027 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
After 2027 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total undiscounted lease payments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Present value adjustment |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Present value of lease liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
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 $
Offshore Wind Vessel Leasing Arrangement
In December 2020, Dominion Energy signed an agreement (subsequently amended in December 2022) with a lessor to complete construction of and lease a Jones Act compliant offshore wind installation vessel. This vessel is designed to handle current turbine technologies as well as next generation turbines. The lessor is providing equity and has obtained financing commitments from debt investors, totaling $
The initial lease term will commence once construction is substantially complete and the vessel is delivered and will mature in
82
NOTE 16. VARIABLE INTEREST ENTITIES
The primary beneficiary of a VIE is required to consolidate the VIE and to disclose certain information about its significant variable interests in the VIE. The primary beneficiary of a VIE is the entity that has both 1) the power to direct the activities that most significantly impact the entity’s economic performance and 2) the obligation to absorb losses or receive benefits from the entity that could potentially be significant to the VIE.
Dominion Energy
At December 31, 2022, Dominion Energy owns a
At December 31, 2022, Dominion Energy owns a
Dominion Energy and Virginia Power
The Companies’ nuclear decommissioning trust funds and Dominion Energy’s rabbi trusts hold investments in limited partnerships or similar type entities (see Note 9 for additional details). Dominion Energy and Virginia Power concluded that these partnership investments are VIEs due to the limited partners lacking the characteristics of a controlling financial interest. Dominion Energy and Virginia Power have concluded neither is the primary beneficiary as they do not have the power to direct the activities that most significantly impact these VIEs’ economic performance. Dominion Energy and Virginia Power are obligated to provide capital contributions to the partnerships as required by each partnership agreement based on their ownership percentages. Dominion Energy and Virginia Power’s maximum exposure to loss is limited to their current and future investments.
Virginia Power
Virginia Power purchased shared services from DES, an affiliated VIE, of $
83
NOTE 17. SHORT-TERM DEBT AND CREDIT AGREEMENTS
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.
Dominion Energy
Dominion Energy’s short-term financing is supported by its $
|
|
Facility Limit |
|
|
Outstanding Commercial Paper(1) |
|
|
Outstanding Letters of Credit |
|
|
Facility Capacity Available |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
At December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Joint revolving credit facility(2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
At December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Joint revolving credit facility(2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
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 December 31, 2022, the sub-limits for DESC and Questar Gas were $
In March 2021, FERC granted DESC authority through
In addition to the joint revolving credit facility mentioned above, Dominion Energy also has a credit facility which allows Dominion Energy to issue up to approximately $
In December 2021, in connection with the sale of certain non-wholly owned nonregulated solar facilities, as discussed in Note 10, SBL Holdco terminated $
In July 2021, Dominion Energy entered into an approximately $
In December 2021, DECP Holdings entered into a credit facility, which allows it to issue up to $
Dominion Energy has an effective shelf registration statement with the SEC for the sale of up to $
84
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 December 31, 2022 and December 31, 2021, Dominion Energy’s Consolidated Balance Sheets include $
In January 2023, Dominion Energy entered into a $
Virginia Power
Virginia Power’s short-term financing is supported through its access as co-borrower to Dominion Energy’s $
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 were as follows:
|
|
Facility Limit |
|
|
Outstanding Commercial Paper(1) |
|
|
Outstanding Letters of Credit |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
At December 31, 2022 |
|
|
|
|
|
|
|
|
|
|||
Joint revolving credit facility(2) |
|
$ |
|
|
$ |
|
|
$ |
|
|||
At December 31, 2021 |
|
|
|
|
|
|
|
|
|
|||
Joint revolving credit facility(2) |
|
$ |
|
|
$ |
|
|
$ |
|
In January 2023, Virginia Power entered into a letter of credit facility which allows Virginia Power to issue up to $
85
NOTE 18. LONG-TERM DEBT
|
|
2022 |
|
|
|
Dominion Energy |
|
|
Virginia Power |
|
|||||||||||
At December 31, |
|
|
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|||||
(millions, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Sustainability Revolving Credit Agreement, variable rate, due 2024(2) |
|
|
% |
|
|
$ |
|
|
$ |
— |
|
|
|
|
|
|
|
||||
Unsecured Senior Notes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Variable rate, due 2023 |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Unsecured Junior Subordinated Notes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payable to Affiliated Trust, |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Enhanced Junior Subordinated Notes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Virginia Electric and Power Company: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Unsecured Senior Notes, |
|
|
% |
|
|
|
|
|
|
|
|
$ |
|
|
$ |
|
|||||
Tax-Exempt Financings, |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
DECP Holdings, Term Loan, variable rate, due 2024(6) |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
DESC: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
First Mortgage Bonds, |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Tax-Exempt Financings(7): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Variable rate due 2038 |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
GENCO, variable rate due 2038 |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Other |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Secured Senior Notes, |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Tax-Exempt Financing, |
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Principal |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Fair value hedge valuation(9) |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Securities due within one year(10) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Unamortized discount, premium and debt issuance costs, net |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Derivative restructuring(11) |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Finance leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total long-term debt |
|
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
86
Based on stated maturity dates rather than early redemption dates that could be elected by instrument holders, the scheduled principal payments of long-term debt, at December 31, 2022 were as follows:
|
2023 |
|
2024 |
|
2025 |
|
2026 |
|
2027 |
|
Thereafter |
|
Total |
|
|||||||
(millions, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Term Loans |
$ |
|
$ |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
|
|||
Sustainability Revolving Credit |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
||
First Mortgage Bonds |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
||
Unsecured Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Secured Senior Notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Tax-Exempt Financings |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
||
Unsecured Junior Subordinated |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
||
Unsecured Junior Subordinated |
|
— |
|
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
||
Enhanced Junior Subordinated |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
||
Total |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||
Weighted-average Coupon |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
|
|
|||||||
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Unsecured Senior Notes |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||
Tax-Exempt Financings |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
||
Total |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||
Weighted-average Coupon |
|
% |
|
% |
|
% |
|
% |
|
% |
|
% |
|
|
The Companies’ credit facilities and debt agreements, both short-term and long-term, contain customary covenants and default provisions. As of December 31, 2022, there were no events of default under these covenants.
Enhanced Junior Subordinated Notes
In October 2014, Dominion Energy issued $
In July 2016, Dominion Energy issued $
Dominion Energy may defer interest payments on the hybrids on one or more occasions for up to
Derivative Restructuring
In June 2020, Dominion Energy amended a portfolio of interest rate swaps with a notional value of $
87
debt. In August 2022, Dominion Energy settled certain of the outstanding interest rate swaps which would have otherwise matured in
In August 2020, Virginia Power amended a portfolio of interest rate swaps with a notional value of $
NOTE 19. PREFERRED STOCK
Dominion Energy is authorized to issue up to
DESC is authorized to issue up to
Virginia Power is authorized to issue up to
2019 Corporate Units
In June 2019, Dominion Energy issued $
Each 2019 Series A Corporate Unit consisted of a stock purchase contract and a 1/10, or
The stock purchase contracts obligated the holders to purchase shares of Dominion Energy common stock in June 2022. The purchase price paid under the stock purchase contracts was $
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
Selected information about Dominion Energy’s 2019 Equity Units is presented below:
88
Issuance Date |
|
Units Issued |
|
Total Net |
|
|
Total Preferred |
|
|
Cumulative |
|
|
Stock Purchase |
|
|
Stock Purchase |
|
|
Stock Purchase |
|||||
(millions except interest rates) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
6/14/2019 |
|
|
$ |
|
|
$ |
|
|
|
% |
|
|
% |
|
$ |
|
|
Series B Preferred Stock
In December 2019, Dominion Energy issued
Dominion Energy may, at its option, redeem the Series B Preferred Stock in whole or in part on December 15, 2024 or on any subsequent fifth anniversary of such date at a price equal to $
Holders of the Series B Preferred Stock have no voting rights except in the limited circumstances provided for in the terms of the Series B Preferred Stock or as otherwise required by applicable law. The Series B Preferred Stock is not subject to any sinking fund or other obligation of ours to redeem, repurchase or retire the Series B Preferred Stock. The preferred stock contains no conversion rights.
Series C Preferred Stock
In December 2021, Dominion Energy issued
Dominion Energy may, at its option, redeem the Series C Preferred Stock in whole or in part anytime from and including January 15, 2027 through and including April 15, 2027 or during any subsequent fifth anniversary of such period at a price equal to $
Holders of the Series C Preferred Stock have no voting rights except in the limited circumstances provided for in the terms of the Series C Preferred Stock or as otherwise required by applicable law. The Series C Preferred Stock is not subject to any sinking fund or other obligation of ours to redeem, repurchase or retire the Series C Preferred Stock. The preferred stock contains no conversion rights.
89
NOTE 20. EQUITY
Common Stock
Dominion Energy
During 2022, 2021 and 2020, Dominion Energy recorded, net of fees and commissions, $
Dominion Energy Direct® and Employee Savings Plans
Dominion Energy maintains Dominion Energy Direct® and a number of employee savings plans through which contributions may be invested in Dominion Energy’s common stock. These shares may either be newly issued or purchased on the open market with proceeds contributed to these plans. In August 2020, Dominion Energy began purchasing its common stock on the open market for these direct stock purchase plans. During 2020, Dominion Energy received cash of $
At-the-Market Program
In March 2020, Dominion Energy entered into sales agency agreements to effect sales under a $
In August 2020, Dominion Energy entered into sales agency agreements to effect sales under a new at-the-market program. Under the sales agency agreements, Dominion Energy may, from time to time, offer and sell shares of its common stock through the sales agents or enter into one or more forward sale agreements with respect to shares of its common stock. Sales by Dominion Energy through the sales agents or by forward sellers pursuant to a forward sale agreement cannot exceed $
Other Issuances
In August 2021, Dominion Energy issued
In June 2022, Dominion Energy issued
In June 2022, Dominion Energy issued
In July 2021, Dominion Energy issued
In September 2020, Dominion Energy issued
Repurchase of Common Stock
Dominion Energy did
90
In July 2020, in contemplation of Dominion Energy entering the July 2020 agreement to sell substantially all of its gas transmission and storage operations to BHE, the Board of Directors authorized the repurchase of up to $
In August 2020, Dominion Energy began repurchasing shares under an open market agreement with a financial institution. During the third quarter of 2020, Dominion Energy repurchased
In September 2020, Dominion Energy repurchased
In September 2020, Dominion Energy entered into
In December 2020, Dominion Energy entered into a new prepaid accelerated share repurchase agreement with one financial institution as the counterparty. Dominion Energy paid $
Virginia Power
In 2022, 2021 and 2020, Virginia Power did not issue any shares of its common stock to Dominion Energy.
Noncontrolling Interests
GT&S Transaction Closing
In November 2020, as part of the GT&S Transaction, Dominion Energy sold a
Non-Wholly-Owned Nonregulated Solar Facilities
In December 2021, Dominion Energy completed the sale of SBL Holdco, which held Dominion Energy’s
91
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 |
|
|
Total |
|
|
Investment |
|
|
Pension and |
|
|
Equity |
|
|
Total |
|
|||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Year Ended December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning balance |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Other |
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Amounts reclassified from AOCI (gains) losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest and |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Other income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Income tax |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Total, net of tax |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Net current |
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Ending balance |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Year Ended December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Other |
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||||
Amounts reclassified from AOCI (gains) losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Purchased gas |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Interest and |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Other income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
|
||
Total |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
|
|||||
Income tax |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Total, net of tax |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
|
|||||
Net current |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|||||
Ending balance |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
92
Virginia Power
The following table presents Virginia Power’s changes in AOCI (net of tax) and reclassification out of AOCI by component:
|
|
Interest Rate |
|
|
Total |
|
|
Investment |
|
|
Total |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Year Ended December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
||||||
Beginning balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Other |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Amounts reclassified from AOCI (gains) losses: |
|
|||||||||||||||
Interest and related |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Income tax expense |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Total, net of tax |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Net current period other |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
Year Ended December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
||||||
Beginning balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Other |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Amounts reclassified from AOCI (gains) losses: |
|
|||||||||||||||
Interest and related |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Other income |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Total |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
||
Income tax expense |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
— |
|
|
Total, net of tax |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
||
Net current period other |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
Ending balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
Stock-Based Awards
The 2014 Incentive Compensation Plan permits stock-based awards that include restricted stock, performance grants, goal-based stock, stock options and stock appreciation rights. The Non-Employee Directors Compensation Plan permits grants of restricted stock and stock options. Under provisions of these plans, employees and non-employee directors may be granted options to purchase common stock at a price not less than its fair market value at the date of grant with a maximum term of
Goal-based stock awards are granted in lieu of cash-based performance grants to certain officers who have not achieved a certain targeted level of share ownership. At December 31, 2022 and December 31, 2021, unrecognized compensation cost related to nonvested goal-based stock awards was inconsequential.
Dominion Energy measures and recognizes compensation expense relating to share-based payment transactions over the vesting period based on the fair value of the equity or liability instruments issued. Dominion Energy’s results for the years ended December 31, 2022, 2021 and 2020 include $
93
Restricted Stock
Restricted stock grants are made to officers under Dominion Energy’s LTIP and may also be granted to certain key non-officer employees. The fair value of Dominion Energy’s restricted stock awards is equal to the closing price of Dominion Energy’s stock on the date of grant. New shares are issued for restricted stock awards on the date of grant and generally vest over a
|
|
Shares (millions) |
|
|
Weighted - Average Grant Date Fair Value |
|
||
Nonvested at December 31, 2019 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Cancelled and forfeited |
|
|
( |
) |
|
|
|
|
Nonvested at December 31, 2020 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Cancelled and forfeited |
|
|
( |
) |
|
|
|
|
Nonvested at December 31, 2021 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Vested |
|
|
( |
) |
|
|
|
|
Cancelled and forfeited |
|
|
( |
) |
|
|
|
|
Nonvested at December 31, 2022 |
|
|
|
|
$ |
|
As of December 31, 2022, unrecognized compensation cost related to nonvested restricted stock awards totaled $
Cash-Based Performance Grants
Cash-based performance grants are made to Dominion Energy’s officers under Dominion Energy’s LTIP. The actual payout of cash-based performance grants will vary between
In February 2019, a cash-based performance grant was made to officers. Payout of the performance grant occurred in January 2022 based on the achievement of two performance metrics during 2019, 2020 and 2021: TSR relative to that of companies that are members of Dominion Energy’s compensation peer group and ROIC with an additional payout based on Dominion Energy’s price-earnings ratio relative to that of the members of Dominion Energy’s peer compensation group. The total payout under the grant was $
In February 2020, a cash-based performance grant was made to officers. Payout of the performance grant occurred in January 2023 based on the achievement of two performance metrics during 2020, 2021 and 2022: TSR relative to that of companies that are members of Dominion Energy’s compensation peer group and ROIC with an additional payout based on Dominion Energy’s price-earnings ratio relative to that of the members of Dominion Energy’s peer compensation group. The total of the payout under the grant was $
In February 2021, a cash-based performance grant was made to officers. Payout of the performance grant is expected to occur by March 15, 2024 based on the achievement of two performance metrics during 2021, 2022 and 2023: TSR relative to that of companies that are members of Dominion Energy’s compensation peer group and ROIC. There is an additional opportunity to earn a portion of the award based on Dominion Energy’s relative price-earnings ratio performance. At December 31, 2022, the targeted amount of the three-year grant was $
In February 2022, a cash-based performance grant was made to officers. Payout of the performance grant is expected to occur by March 15, 2025 based on the achievement of three performance metrics during 2022, 2023 and 2024: TSR relative to that of companies that are members of Dominion Energy’s compensation peer group, Cumulative Operating EPS, and Non-Carbon Emitting Generation Capacity Performance. At December 31, 2022, the targeted amount of the three-year grant was $
94
NOTE 21. DIVIDEND RESTRICTIONS
The Virginia Commission may prohibit any public service company, including Virginia Power, from declaring or paying a dividend to an affiliate if found to be inconsistent with the public interest. At December 31, 2022, the Virginia Commission had not restricted the payment of dividends by Virginia Power.
The North Carolina Commission, in its order approving the SCANA Combination, limited cumulative dividends payable to Dominion Energy by Virginia Power and PSNC to (i) the amount of retained earnings the day prior to closing of the SCANA Combination plus (ii) any future earnings recorded by Virginia Power and PSNC after such closing.
The Ohio and Utah Commissions may prohibit any public service company, including East Ohio and Questar Gas, from declaring or paying a dividend to an affiliate if found to be detrimental to the public interest. At December 31, 2022, neither the Ohio Commission nor the Utah Commission had restricted the payment of dividends by East Ohio or Questar Gas, respectively.
There is no specific restriction from the South Carolina Commission on the payment of dividends paid by DESC. Pursuant to the SCANA Merger Approval Order, the amount of any DESC dividends paid must be reasonable and consistent with the long-term payout ratio of the electric utility industry and gas distribution industry.
DESC’s bond indenture under which it issues first mortgage bonds contains provisions that could limit the payment of cash dividends on its common stock. DESC's bond indenture permits the payment of dividends on DESC's common stock only either (1) out of its Surplus (as defined in the bond indenture) or (2) in case there is no Surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. In addition, pursuant to the SCANA Merger Approval Order, the amount of any DESC dividends paid must be reasonable and consistent with the long-term payout ratio of the electric utility industry and gas distribution industry.
At December 31, 2022, DESC’s retained earnings exceed the balance established by the Federal Power Act as a reserve on earnings attributable to hydroelectric generation plants. As a result, DESC is permitted to pay dividends without additional regulatory approval provided that such amounts would not bring the retained earnings balance below the established threshold.
See Notes 18 and 19 for a description of potential restrictions on common stock dividend payments by Dominion Energy in connection with the deferral of interest payments on the enhanced junior subordinated notes or a failure to pay dividends on the Series B Preferred Stock or Series C Preferred Stock.
NOTE 22. EMPLOYEE BENEFIT PLANS
Dominion Energy—Defined Benefit Plans
Dominion Energy provides certain retirement benefits to eligible active employees, retirees and qualifying dependents. Under the terms of its benefit plans, Dominion Energy reserves the right to change, modify or terminate the plans. From time to time in the past, benefits have changed, and some of these changes have reduced benefits.
Dominion Energy maintains qualified noncontributory defined benefit pension plans covering virtually all employees who commenced employment prior to July 2021. Retirement benefits are based primarily on years of service, age and the employee’s compensation. Dominion Energy’s funding policy is to contribute annually an amount that is in accordance with the provisions of ERISA. The pension programs also provide benefits to certain retired executives under company-sponsored nonqualified employee benefit plans. The nonqualified plans are funded through contributions to grantor trusts. Dominion Energy also provides retiree healthcare and life insurance benefits with annual employee premiums based on several factors such as age, retirement date and years of service.
Pension and other postretirement benefit costs are affected by employee demographics (including age, compensation levels and years of service), the level of contributions made to the plans and earnings on plan assets. These costs may also be affected by changes in key assumptions, including expected long-term rates of return on plan assets, discount rates, healthcare cost trend rates, mortality rates and the rate of compensation increases.
Dominion Energy uses December 31 as the measurement date for all of its employee benefit plans. Dominion Energy uses the market-related value of pension plan assets to determine the expected return on plan assets, a component of net periodic pension cost, for all pension plans. The market-related value recognizes changes in fair value on a straight-line basis over a four-year period, which reduces year-to-year volatility. Changes in fair value are measured as the difference between the expected and actual plan asset
95
returns, including dividends, interest and realized and unrealized investment gains and losses. Since the market-related value recognizes changes in fair value over a four-year period, the future market-related value of pension plan assets will be impacted as previously unrecognized changes in fair value are recognized.
Dominion Energy’s pension and other postretirement benefit plans hold investments in trusts to fund employee benefit payments. Dominion Energy’s pension and other postretirement plan assets experienced aggregate actual returns (losses) of $(
In 2021, Dominion Energy recognized the effects of a curtailment for certain pension plans resulting from an option that provided certain active employees a one-time choice to transition to an enhanced defined contribution plan in lieu of accruing pension benefits for future services. The curtailment resulted in a decrease in the pension benefit obligation of $
96
Funded Status
The following table summarizes the changes in pension plan and other postretirement benefit plan obligations and plan assets and includes a statement of the plans’ funded status for Dominion Energy:
|
|
Pension Benefits |
|
|
Other Postretirement Benefits |
|
||||||||||
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
(millions, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Changes in benefit obligation: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Benefit obligation at beginning of year |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Service cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Benefits paid |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Actuarial (gains) losses during the year |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Plan amendments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Sale of Hope |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Settlements and curtailments(1) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Benefit obligation at end of year |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Changes in fair value of plan assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value of plan assets at beginning of year |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Actual return (loss) on plan assets |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Employer contributions |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Benefits paid |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Sale of Hope |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Settlements(2) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Fair value of plan assets at end of year |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Funded status at end of year |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Amounts recognized in the Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Noncurrent pension and other postretirement benefit assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Noncurrent assets held for sale |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Other current liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Noncurrent pension and other postretirement benefit liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Noncurrent liabilities held for sale |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Net amount recognized |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Significant assumptions used to determine benefit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Discount rate |
|
|
|
|
|
|
|
|
||||||||
Weighted average rate of increase for compensation |
|
|
|
|
|
n/a |
|
|
n/a |
|
||||||
Crediting interest rate for cash balance and similar plans |
|
|
|
|
|
n/a |
|
|
n/a |
|
Actuarial gains recognized during 2022 in Dominion Energy’s pension benefit obligations were $
The ABO for all of Dominion Energy’s defined benefit pension plans was $
Under its funding policies, Dominion Energy evaluates plan funding requirements annually, usually in the fourth quarter after receiving updated plan information from its actuary. Based on the funded status of each plan and other factors, Dominion Energy determines the amount of contributions for the current year, if any, at that time. In December 2021, Dominion Energy issued
97
Certain of Dominion Energy’s subsidiaries fund other postretirement benefit costs through VEBAs. Dominion Energy’s remaining subsidiaries do
The following table provides information on the benefit obligations and fair value of plan assets for plans with a benefit obligation in excess of plan assets for Dominion Energy:
|
|
Pension Benefits |
|
|
Other Postretirement |
|
||||||||||
As of December 31, |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Benefit obligation |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Fair value of plan assets |
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides information on the ABO and fair value of plan assets for Dominion Energy’s pension plans with an ABO in excess of plan assets:
As of December 31, |
|
2022 |
|
|
2021 |
|
||
(millions) |
|
|
|
|
|
|
||
Accumulated benefit obligation |
|
$ |
|
|
$ |
|
||
Fair value of plan assets |
|
|
|
|
|
|
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for Dominion Energy’s plans:
|
|
Estimated Future Benefit Payments |
|
|||||
|
|
Pension Benefits |
|
|
Other Postretirement |
|
||
(millions) |
|
|
|
|
|
|
||
2023 |
|
$ |
|
|
$ |
|
||
2024 |
|
|
|
|
|
|
||
2025 |
|
|
|
|
|
|
||
2026 |
|
|
|
|
|
|
||
2027 |
|
|
|
|
|
|
||
2028-2032 |
|
|
|
|
|
|
Plan Assets
Dominion Energy’s overall objective for investing its pension and other postretirement plan assets is to achieve appropriate long-term rates of return commensurate with prudent levels of risk. To minimize risk, funds are broadly diversified among asset classes, investment strategies and investment advisors. The long-term strategic target asset allocations for substantially all of Dominion Energy’s pension funds are
98
Dominion Energy also utilizes common/collective trust funds as an investment vehicle for its defined benefit plans. A common/collective trust fund is a pooled fund operated by a bank or trust company for investment of the assets of various organizations and individuals in a well-diversified portfolio. Common/collective trust funds are funds of grouped assets that follow various investment strategies.
Strategic investment policies are established for Dominion Energy’s prefunded benefit plans based upon periodic asset/liability studies. Factors considered in setting the investment policy include employee demographics, liability growth rates, future discount rates, the funded status of the plans and the expected long-term rate of return on plan assets. Deviations from the plans’ strategic allocation are a function of Dominion Energy’s assessments regarding short-term risk and reward opportunities in the capital markets and/or short-term market movements which result in the plans’ actual asset allocations varying from the strategic target asset allocations. Through periodic rebalancing, actual allocations are brought back in line with the target. Future asset/liability studies will focus on strategies to further reduce pension and other postretirement plan risk, while still achieving attractive levels of returns. Financial derivatives may be used to obtain or manage market exposures and to hedge assets and liabilities.
For fair value measurement policies and procedures related to pension and other postretirement benefit plan assets, see Note 2.
The fair values of Dominion Energy’s pension plan assets by asset category are as follows:
At December 31, |
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2022 |
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2021 |
|
||||||||||||||||||||||||||
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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||||||||
(millions) |
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||||||||
Cash and cash equivalents |
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$ |
|
|
$ |
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|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
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||||||
Common and preferred stocks: |
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||||||||
U.S.(1) |
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— |
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— |
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||||||
International |
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— |
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— |
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||||||
Insurance contracts |
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— |
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— |
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— |
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— |
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||||
Corporate debt instruments |
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— |
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— |
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Government securities |
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— |
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— |
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||||||
Total recorded at fair value |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
Assets recorded at NAV(2): |
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Common/collective trust funds |
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Alternative investments: |
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Real estate funds |
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Private equity funds |
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Debt funds |
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Hedge funds |
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||||||||
Total recorded at NAV |
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$ |
|
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|
|
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$ |
|
||||||||
Total investments(3) |
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|
$ |
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|
|
|
|
|
|
|
|
|
|
$ |
|
99
The fair values of Dominion Energy’s other postretirement plan assets by asset category are as follows:
At December 31, |
|
2022 |
|
|
2021 |
|
||||||||||||||||||||||||||
|
|
Level 1 |
|
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Level 2 |
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Level 3 |
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Total |
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|
Level 1 |
|
|
Level 2 |
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Level 3 |
|
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Total |
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||||||||
(millions) |
|
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|
||||||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
Common and preferred stocks: |
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||||||||
U.S.(1) |
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— |
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— |
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||||||
International |
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— |
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— |
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— |
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|||||
Insurance contracts |
|
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— |
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— |
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— |
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— |
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|
||||
Corporate debt instruments |
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— |
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— |
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||||||
Government securities |
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— |
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|
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— |
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|
||||||
Total recorded at fair value |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
Assets recorded at NAV(2): |
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||||||||
Common/collective trust funds |
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||||||||
Alternative investments: |
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Real estate funds |
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Private equity funds |
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Debt funds |
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||||||||
Hedge funds |
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— |
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|
|||||||
Total recorded at NAV |
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|
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|
|
$ |
|
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|
|
|
|
|
|
$ |
|
||||||||
Total investments(3) |
|
|
|
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|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
$ |
|
The plan assets investments are determined based on the fair values of the investments and the underlying investments, which have been determined as follows:
100
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, except for $
|
|
Pension Benefits |
|
|
Other Postretirement Benefits |
|
||||||||||||||||||
Year Ended December 31, |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
||||||
(millions, except percentages) |
|
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|
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|
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|
|
|
|
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|
||||||
Service cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
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|
|||||||
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Amortization of prior service (credit) cost |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Amortization of net actuarial (gain) loss |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
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|
|||||
Settlements, curtailments and special termination |
|
|
— |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
||
Net periodic benefit (credit) cost |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Changes in plan assets and benefit obligations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current year net actuarial (gain) loss |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|||
Prior service (credit) cost |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Settlements and curtailments(1) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
|
||
Less amounts included in net periodic benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Amortization of net actuarial gain (loss) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Amortization of prior service credit (cost) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Sale of Hope |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total recognized in other comprehensive |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
||
Significant assumptions used to determine |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Discount rate |
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|
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|
|
|
||||||||||||
Expected long-term rate of return on plan assets |
|
|
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|
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|
|
|
|
|
||||||||||||
Weighted average rate of increase for |
|
|
|
|
|
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|||||||||
Crediting interest rate for cash balance and similar |
|
|
|
|
|
|
|
n/a |
|
|
n/a |
|
|
n/a |
|
|||||||||
Healthcare cost trend rate(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Rate to which the cost trend rate is assumed to |
|
|
|
|
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|
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|
|
|
|
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|
|||||||||
Year that the rate reaches the ultimate trend rate(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
The components of AOCI and regulatory assets and liabilities for Dominion Energy’s plans that have not been recognized as components of net periodic benefit (credit) cost are as follows:
|
|
Pension Benefits |
|
|
Other |
|
||||||||||
At December 31, |
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net actuarial loss |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|||
Prior service (credit) cost |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||
Total(1) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
The expected long-term rates of return on plan assets, discount rates, healthcare cost trend rates and mortality are critical assumptions in determining net periodic benefit (credit) cost. Dominion Energy develops non-investment related assumptions, which are then compared to the forecasts of an independent investment advisor to ensure reasonableness. An internal committee selects the final assumptions used for Dominion Energy’s pension and other postretirement plans including discount rates, expected long-term rates of return, healthcare cost trend rates and mortality rates.
Dominion Energy determines the expected long-term rates of return on plan assets for its pension plans and other postretirement benefit plans by using a combination of:
Dominion Energy determines discount rates from analyses of AA/Aa rated bonds with cash flows matching the expected payments to be made under its plans.
Mortality rates are developed from actual and projected plan experience for postretirement benefit plans. Dominion Energy’s actuary conducts an experience study periodically as part of the process to select its best estimate of mortality. Dominion Energy considers both standard mortality tables and improvement factors as well as the plans’ actual experience when selecting a best estimate.
Assumed healthcare cost trend rates have a significant effect on the amounts reported for Dominion Energy’s retiree healthcare plans. Dominion Energy establishes the healthcare cost trend rate assumption based on analyses of various factors including the specific provisions of its medical plans, actual cost trends experienced and projected and demographics of plan participants.
Virginia Power—Participation in Defined Benefit Plans
Virginia Power employees are covered by the Dominion Energy Pension Plan described above. As a participating employer, Virginia Power is subject to Dominion Energy’s funding policy, which is to contribute annually an amount that is in accordance with ERISA. During 2022, 2021 and 2020, Virginia Power made payments to Dominion Energy of $
Retiree healthcare and life insurance benefits, for Virginia Power employees are covered by the Dominion Energy Retiree Health and Welfare Plan described above. Virginia Power’s net periodic benefit (credit) cost related to this plan was $(
102
and $(
Dominion Energy holds investments in trusts to fund employee benefit payments for the pension and other postretirement benefit plans in which Virginia Power’s employees participate. Any investment-related declines in these trusts will result in future increases in the net periodic cost recognized for such employee benefit plans and will be included in the determination of the amount of cash that Virginia Power will provide to Dominion Energy for its share of employee benefit plan contributions.
Virginia Power funds other postretirement benefit costs through VEBAs. During 2022, 2021 and 2020, Virginia Power made
Defined Contribution Plans
Dominion Energy also sponsors defined contribution employee savings plans that cover substantially all employees. During 2022, 2021 and 2020, Dominion Energy recognized $
NOTE 23. COMMITMENTS AND CONTINGENCIES
As a result of issues generated in the ordinary course of business, the Companies are involved in legal proceedings before various courts and are periodically subject to governmental examinations (including by regulatory authorities), inquiries and investigations. Certain legal proceedings and governmental examinations involve demands for unspecified amounts of damages, are in an initial procedural phase, involve uncertainty as to the outcome of pending appeals or motions, or involve significant factual issues that need to be resolved, such that it is not possible for the Companies to estimate a range of possible loss. For such matters that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the litigation or investigative processes such that the Companies are able to estimate a range of possible loss. For legal proceedings and governmental examinations that the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. The Companies maintain various insurance programs, including general liability insurance coverage which provides coverage for personal injury or wrongful death cases. Any accrued liability is recorded on a gross basis with a receivable also recorded for any probable insurance recoveries. Estimated ranges of loss are inclusive of legal fees and net of any anticipated insurance recoveries. Any estimated range is based on currently available information and involves elements of judgment and significant uncertainties. Any estimated range of possible loss may not represent the Companies’ maximum possible loss exposure. The circumstances of such legal proceedings and governmental examinations will change from time to time and actual results may vary significantly from the current estimate. For current proceedings not specifically reported below, management does not anticipate that the liabilities, if any, arising from such proceedings would have a material effect on the Companies’ financial position, liquidity or results of operations.
Environmental Matters
The Companies are subject to costs resulting from a number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of compliance, remediation, containment and monitoring obligations.
Air
The CAA, as amended, is a comprehensive program utilizing a broad range of regulatory tools to protect and preserve the nation’s air quality. At a minimum, states are required to establish regulatory programs to meet applicable requirements of the CAA. However, states may choose to develop regulatory programs that are more restrictive. Many of the Companies’ facilities are subject to the CAA’s permitting and other requirements.
Ozone Standards
The EPA published final non-attainment designations for the October 2015 ozone 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
103
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
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
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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
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
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. No reference to, or disclosure of, any proceeding, item or matter described
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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 December 31, 2022 and 2021 include reserves of $
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 $
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 $
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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 $
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 $
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 $
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Matters Fully Resolved Prior to 2022
Ratepayer Class Actions
In May 2018, a consolidated complaint against DESC, SCANA and the State of South Carolina was filed in the State Court of Common Pleas in Hampton County, South Carolina (the DESC Ratepayer Case). The plaintiffs alleged, among other things, that DESC was negligent and unjustly enriched, breached alleged fiduciary and contractual duties and committed fraud and misrepresentation in failing to properly manage the NND Project, and that DESC committed unfair trade practices and violated state anti-trust laws. In December 2018, the State Court of Common Pleas in Hampton County entered an order granting preliminary approval of a class action settlement. The court entered an order granting final approval of the settlement in June 2019, which became effective in July 2019. The settlement agreement, contingent upon the closing of the SCANA Combination, provided that SCANA and DESC establish an escrow account and proceeds from the escrow account would be distributed to the plaintiffs, after payment of certain taxes, attorneys' fees and other expenses and administrative costs. The escrow account would include (1) up to $
In September 2017, a purported class action was filed by Santee Cooper ratepayers against Santee Cooper, DESC, Palmetto Electric Cooperative, Inc. and Central Electric Power Cooperative, Inc. in the State Court of Common Pleas in Hampton County, South Carolina (the Santee Cooper Ratepayer Case). The allegations were substantially similar to those in the DESC Ratepayer Case. In March 2020, the parties executed a settlement agreement relating to this matter as well as the Luquire Case and the Glibowski Case described below. The settlement agreement provided that Dominion Energy and Santee Cooper establish a fund for the benefit of class members in the amount of $
In July 2019, a similar purported class action was filed by certain Santee Cooper ratepayers against DESC, SCANA, Dominion Energy and former directors and officers of SCANA in the State Court of Common Pleas in Orangeburg, South Carolina (the Luquire Case). In August 2019, DESC, SCANA and Dominion Energy were voluntarily dismissed from the case. The claims were similar to the Santee Cooper Ratepayer Case. In March 2020, the parties executed a settlement agreement as described above relating to this matter as well as the Santee Cooper Ratepayer Case and the Glibowski Case. This case was dismissed as part of the Santee Cooper Ratepayer Case settlement described above.
RICO Class Action
In January 2018, a purported class action was filed, and subsequently amended, against SCANA, DESC and certain former executive officers in the U.S. District Court for the District of South Carolina (the Glibowski Case). The plaintiff alleged, among other things, that SCANA, DESC and the individual defendants participated in an unlawful racketeering enterprise in violation of RICO and conspired to violate RICO by fraudulently inflating utility bills to generate unlawful proceeds. In March 2020, the parties executed a settlement agreement as described above relating to this matter as well as the Santee Cooper Ratepayer Case and the Luquire Case. This case was dismissed as part of the Santee Cooper Ratepayer Case settlement described above.
SCANA Shareholder Litigation
In September 2017, a purported class action was filed against SCANA and certain former executive officers and directors in the U.S. District Court for the District of South Carolina. Subsequent additional purported class actions were separately filed against all or nearly all of these defendants (collectively the SCANA Securities Class Action). In January 2018, the U.S. District Court for the District of South Carolina consolidated these suits, and the plaintiffs filed a consolidated amended complaint in March 2018. The plaintiffs alleged, among other things, that the defendants violated §10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, and that the individually named defendants are liable under §20(a) of the same act. In December 2019, the parties executed a settlement agreement pursuant to which SCANA would pay $
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U.S. District Court for the District of South Carolina granted preliminary approval of the settlement agreement, pending a fairness hearing, and granted final approval in July 2020. In March 2020, SCANA funded an escrow account with $
FILOT Litigation and Related Matters
In November 2017, Fairfield County filed a complaint and a motion for temporary injunction against DESC in the State Court of Common Pleas in Fairfield County, South Carolina, making allegations of breach of contract, fraud, negligent misrepresentation, breach of fiduciary duty, breach of implied duty of good faith and fair dealing and unfair trade practices related to DESC’s termination of the FILOT agreement between DESC and Fairfield County related to the NND Project. The plaintiff sought a temporary and permanent injunction to prevent DESC from terminating the FILOT agreement. The plaintiff withdrew the motion for temporary injunction in December 2017. In July 2021, the parties executed a settlement agreement requiring DESC to pay $
Governmental Proceedings and Investigations
In September and October 2017, SCANA was served with subpoenas issued by the U.S. Attorney’s Office for the District of South Carolina and the Staff of the SEC’s Division of Enforcement seeking documents related to the NND Project. In February 2020, the SEC filed a complaint against SCANA, two of its former executive officers and DESC in the U.S. District Court for the District of South Carolina alleging that the defendants violated federal securities laws by making false and misleading statements about the NND Project. In April 2020, SCANA and DESC reached an agreement in principle with the Staff of the SEC’s Division of Enforcement to settle, without admitting or denying the allegations in the complaint. In December 2020, the U.S. District Court for the District of South Carolina issued an order approving the settlement which required SCANA to pay a civil monetary penalty totaling $
In addition, the South Carolina Law Enforcement Division is conducting a criminal investigation into the handling of the NND Project by SCANA and DESC. Dominion Energy is cooperating fully with the investigations by the U.S. Attorney’s Office and the South Carolina Law Enforcement Division, including responding to additional subpoenas and document requests. Dominion Energy has also entered into a cooperation agreement with the U.S. Attorney’s Office and the South Carolina Attorney General’s Office. The cooperation agreement provides that in consideration of its full cooperation with these investigations to the satisfaction of both agencies, neither such agency will criminally prosecute or bring any civil action against Dominion Energy or any of its current, previous, or future direct or indirect subsidiaries related to the NND Project. A former executive officer of SCANA entered a plea agreement with the U.S. Attorney’s Office and the South Carolina Attorney General’s Office in June 2020 and entered a guilty plea with the U.S. District Court for the District of South Carolina in July 2020. Another former executive officer of SCANA entered a plea agreement with the U.S. Attorney's Office and the South Carolina Attorney General's Office in November 2020 and entered guilty pleas in the U.S. District Court for the District of South Carolina and in South Carolina state court in February 2021. As a result of the pleas, Dominion Energy has terminated indemnity for these former executive officers related to these two cases.
Abandoned NND Project
DESC, for itself and as agent for Santee Cooper, entered into an engineering, construction and procurement contract with Westinghouse and WECTEC in 2008 for the design and construction of the NND Project, of which DESC’s ownership share is
Based on the results of SCANA’s analysis, and in light of Santee Cooper's decision to suspend construction on the NND Project, in July 2017, SCANA determined to stop the construction of the units and to pursue recovery of costs incurred in connection with the
109
construction under the abandonment provisions of the Base Load Review Act or through other means. This decision by SCANA became the focus of numerous legislative, regulatory and legal proceedings. Some of these proceedings are described above.
In September 2017, DESC, for itself and as agent for Santee Cooper, filed with the U.S. Bankruptcy Court for the Southern District of New York Proofs of Claim for unliquidated damages against each of Westinghouse and WECTEC. These Proofs of Claim were based upon the anticipatory repudiation and material breach by Westinghouse and WECTEC of the contract, and assert against Westinghouse and WECTEC any and all claims that are based thereon or that may be related thereto.
Westinghouse’s reorganization plan was confirmed by the U.S. Bankruptcy Court for the Southern District of New York and became effective in August 2018. In connection with the effectiveness of the reorganization plan, the contract associated with the NND Project was deemed rejected. DESC contested approximately $
DESC and Santee Cooper were responsible for amounts owed to Westinghouse for valid work performed by Westinghouse subcontractors on the NND Project after the Westinghouse bankruptcy filing until termination of the interim assessment agreement. In December 2019, DESC and Santee Cooper entered into a confidential settlement agreement with W Wind Down Co LLC resolving claims relating to the interim assessment agreement.
Further, some Westinghouse subcontractors that made claims against Westinghouse in the bankruptcy proceeding also filed claims against DESC and Santee Cooper in South Carolina state court for damages. Many of these claimants asserted construction liens against the NND Project site. In December 2021, settlements were reached to resolve all remaining claims made by Westinghouse subcontractors. All amounts for which Dominion Energy was ultimately responsible were funded utilizing, and did not exceed, the portion of the Toshiba Settlement allocated for such balances within the SCANA Merger Approval Order recorded in regulatory liabilities on Dominion Energy’s Consolidated Balance Sheets.
Nuclear Operations
Nuclear Decommissioning – Minimum Financial Assurance
The NRC requires nuclear power plant owners to annually update minimum financial assurance amounts for the future decommissioning of their nuclear facilities. Decommissioning involves the decontamination and removal of radioactive contaminants from a nuclear power station once operations have ceased, in accordance with standards established by the NRC. The 2022 calculation for the NRC minimum financial assurance amount, aggregated for Dominion Energy and Virginia Power’s nuclear units, excluding joint owners’ assurance amounts and Millstone Unit 1, as this unit is in a decommissioning state, was $
Nuclear Insurance
The Price-Anderson Amendments Act of 1988 provides the public up to $
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The Companies’ nuclear property insurance coverage for Millstone, Summer, Surry and North Anna meets or exceeds the NRC minimum requirement for nuclear power plant licensees of $
Millstone, Virginia Power and Summer also purchase accidental outage insurance from NEIL to mitigate certain expenses, including replacement power costs, associated with the prolonged outage of a nuclear unit due to direct physical damage. Under this program, the Companies are subject to a retrospective premium assessment for any policy year in which losses exceed funds available to NEIL. Dominion Energy and Virginia Power's maximum retrospective premium assessment for the current policy period is $
ODEC, a part owner of North Anna, Santee Cooper, a part owner of Summer and Massachusetts Municipal and Green Mountain, part owners of Millstone’s Unit 3, are responsible to the Companies for their share of the nuclear decommissioning obligation and insurance premiums on applicable units, including any retrospective premium assessments and any losses not covered by insurance.
Spent Nuclear Fuel
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. The DOE failed to begin accepting the spent fuel on January 31, 1998, the date provided by the Nuclear Waste Policy Act and by the Companies’ contracts with the DOE. The Companies have previously received damages award payments and settlement payments related to these contracts.
By mutual agreement of the parties, the settlement agreements are extendable to provide for resolution of damages incurred after 2013. The settlement agreements for the Surry, North Anna and Millstone nuclear power stations have been extended and provided for periodic payments for damages incurred through December 31, 2022. In November 2022, the DOE notified the Companies that it intends to extend these agreements through December 31, 2025 and future additional extensions are contemplated by the settlement agreements. A similar agreement for Summer extends until the DOE has accepted the same amount of spent fuel from the facility as if it has fully performed its contractual obligations.
In June 2018, a lawsuit for Kewaunee was filed in the U.S. Court of Federal Claims for recovery of spent nuclear fuel storage costs incurred after 2013. In March 2019, Dominion Energy amended its filing for recovery of spent nuclear fuel storage to include costs incurred for the year ended December 31, 2018. In January 2022, a settlement agreement was entered into for $
In 2022, Virginia Power received payments of $
In 2021, Virginia Power received payments of $
In 2020, Virginia Power received payments of $
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The Companies continue to recognize receivables for certain spent nuclear fuel-related costs that they believe are probable of recovery from the DOE. Dominion Energy’s receivables for spent nuclear fuel-related costs totaled $
The Companies will continue to manage their spent fuel until it is accepted by the DOE.
Long-Term Purchase Agreements
At December 31, 2022, Dominion Energy had the following long-term commitments that are noncancelable or are cancelable only under certain conditions, and that a third party has used to secure financing for the facility that will provide the contracted goods or services:
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2023 |
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2024 |
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2025 |
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2026 |
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2027 |
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Thereafter |
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Total |
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(millions) |
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|
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|
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|
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|
|
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|
|
|
|||||||
Purchased electric capacity(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Guarantees, Surety Bonds and Letters of Credit
At December 31, 2022, Dominion Energy had issued
In addition, at December 31, 2022, Dominion Energy had issued an additional $
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 December 31, 2022, Dominion Energy had issued the following subsidiary guarantees:
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Maximum |
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(millions) |
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|
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|
Commodity transactions(1) |
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$ |
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|
Nuclear obligations(2) |
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Solar(3) |
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Other(4) |
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Total(5)(6) |
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$ |
|
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Additionally, at December 31, 2022, Dominion Energy had purchased $
Indemnifications
As part of commercial contract negotiations in the normal course of business, the Companies may sometimes agree to make payments to compensate or indemnify other parties for possible future unfavorable financial consequences resulting from specified events. The specified events may involve an adverse judgment in a lawsuit or the imposition of additional taxes due to a change in tax law or interpretation of the tax law. The Companies are unable to develop an estimate of the maximum potential amount of any other future payments under these contracts because events that would obligate them have not yet occurred or, if any such event has occurred, they have not been notified of its occurrence. However, at December 31, 2022, the Companies believe any other future payments, if any, that could ultimately become payable under these contract provisions, would not have a material impact on their results of operations, cash flows or financial position.
Charitable Commitments
In 2020, Dominion Energy made unconditional promises to several charitable organizations, including to support its commitment to diversity and social justice through scholarship programs and donations to historically black colleges and universities. As a result, Dominion Energy recorded charges totaling $
NOTE 24. CREDIT RISK
Dominion Energy
As a diversified energy company, Dominion Energy transacts primarily with major companies in the energy industry and with commercial and residential energy consumers. These transactions principally occur in the Northeast, mid-Atlantic, Midwest and Rocky Mountain and Southeast regions of the U.S. Dominion Energy does not believe that this geographic concentration contributes significantly to its overall exposure to credit risk. In addition, as a result of its large and diverse customer base, Dominion Energy is not exposed to a significant concentration of credit risk for receivables arising from electric and gas utility operations.
Dominion Energy’s exposure to credit risk is concentrated primarily within its energy marketing and price risk management activities, as Dominion Energy transacts with a smaller, less diverse group of counterparties and transactions may involve large notional volumes and potentially volatile commodity prices. Energy marketing and price risk management activities include marketing of nonregulated generation output, structured transactions and the use of financial contracts for enterprise-wide hedging purposes. 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 is calculated prior to the application of any collateral. At December 31, 2022, Dominion Energy’s credit exposure totaled $
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Virginia Power
Virginia Power sells electricity and provides distribution and transmission services to customers in Virginia and northeastern North Carolina. Management believes that this geographic concentration risk is mitigated by the diversity of Virginia Power’s customer base, which includes residential, commercial and industrial customers, as well as rural electric cooperatives and municipalities. Credit risk associated with trade accounts receivable from energy consumers is limited due to the large number of customers. Virginia Power’s exposure to potential concentrations of credit risk results primarily from sales to wholesale customers. Virginia Power’s 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 is calculated prior to the application of collateral. At December 31, 2022, Virginia Power’s credit exposure totaled $
Credit-Related Contingent Provisions
Certain of Dominion Energy and Virginia Power's derivative instruments contain credit-related contingent provisions. These provisions require Dominion Energy and Virginia Power to provide collateral upon the occurrence of specific events, primarily a credit rating downgrade. If the credit-related contingent features underlying these instruments that are in a liability position and not fully collateralized with cash were fully triggered, Dominion Energy and Virginia Power would have been required to post additional collateral to its counterparties of $
See Note 7 for further information about derivative instruments.
NOTE 25. RELATED-PARTY TRANSACTIONS
Dominion Energy’s transactions with equity method investments are described in Note 9. 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. See Note 2 for further information. A discussion of Virginia Power's significant related party transactions follows.
Virginia Power transacts with affiliates for certain quantities of natural gas and other commodities in the ordinary course of business. Virginia Power also enters into certain commodity derivative contracts with affiliates. Virginia Power uses these contracts, which are principally comprised of forward commodity purchases, to manage commodity price risks associated with purchases of natural gas. See Notes 7 and 20 for more information. At December 31, 2022, Virginia Power’s derivative assets and liabilities with affiliates were $
Virginia Power participates in certain Dominion Energy benefit plans as described in Note 22. At December 31, 2022 and 2021, Virginia Power’s amounts due to Dominion Energy associated with the Dominion Energy Pension Plan and reflected in pension and other postretirement benefit liabilities in the Consolidated Balance Sheets were $
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
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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:
Year Ended December 31, |
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2022 |
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2021 |
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2020 |
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(millions) |
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Commodity purchases from |
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$ |
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$ |
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$ |
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Services provided by (1) |
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Services provided to |
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Virginia Power has borrowed funds from Dominion Energy under short-term borrowing arrangements. In November 2022, Virginia Power amended its intercompany credit facility with Dominion Energy to increase the maximum capacity to $
There were
In January 2023, Virginia Power entered into a lease contract with an entity for the use of a Jones Act compliant offshore wind installation vessel currently under development with commencement of the
NOTE 26. 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 effective September 2023 is as follows:
Primary Operating Segment |
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Description of Operations |
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Dominion Energy |
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Virginia Power |
Dominion Energy Virginia |
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Regulated electric distribution |
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X |
|
X |
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Regulated electric transmission |
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X |
|
X |
|
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Regulated electric generation fleet(1) |
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X |
|
X |
Dominion Energy South Carolina |
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Regulated electric distribution |
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X |
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Regulated electric transmission |
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X |
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Regulated electric generation fleet |
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X |
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Regulated gas distribution and storage |
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X |
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Contracted Energy(2) |
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Nonregulated electric generation fleet(3) |
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X |
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In addition to the operating segments above, the Companies also report a Corporate and Other segment.
Dominion Energy
The Corporate and Other Segment of Dominion Energy includes, effective September 2023, its corporate, service company and other functions (including unallocated debt) as well as its noncontrolling interest in Dominion Privatization and its nonregulated retail energy marketing operations (prior to December 2021), including its noncontrolling interest in Wrangler (through March 2022) and Hope (through August 2022). In addition, Corporate and Other includes specific items attributable to Dominion Energy’s operating segments that are not included in profit measures evaluated by executive management in assessing the segments’ performance or in allocating resources, as well as the net impact of the operations included in the East Ohio, PSNC and Questar Gas Transactions, its noncontrolling interest in Cove Point and gas transmission and storage operations, including its noncontrolling interest in Atlantic Coast Pipeline, reported as discontinued operations which are discussed in Notes 3 and 9.
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In 2022, Dominion Energy reported after-tax net expenses of $
The net expenses for specific items attributable to Dominion Energy’s operating segments in 2022 primarily related to the impact of the following items:
In 2021, Dominion Energy reported after-tax net income of $
The net expenses for specific items attributable to Dominion Energy’s operating segments in 2021 primarily related to the impact of the following items:
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In 2020, Dominion Energy reported after-tax net expenses of $
The net expenses for specific items attributable to Dominion Energy’s operating segments in 2020 primarily related to the impact of the following items:
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The following table presents segment information pertaining to Dominion Energy’s operations:
Year Ended December 31, |
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Dominion Energy Virginia |
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Dominion Energy South Carolina |
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Contracted Energy |
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Corporate |
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Adjustments & |
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Consolidated |
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||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenue from external customers |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Depreciation, depletion and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity in earnings of equity method |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Interest and related charges (benefit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Income tax expense (benefit) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Net income from discontinued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Investment in equity method |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total assets (billions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenue from external customers |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Depreciation, depletion and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity in earnings of equity method |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Interest income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Interest and related charges (benefit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Income tax expense (benefit) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||||
Net income from discontinued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Investment in equity method |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total assets (billions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total revenue from external customers |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Depreciation, depletion and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity in earnings of equity method |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Interest income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Interest and related charges (benefit) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Income tax expense (benefit) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|||
Net loss from discontinued |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Net income (loss) attributable to |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118
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.
In 2022, Virginia Power reported after-tax net expenses of $
The net expenses for specific items attributable to its operating segment in 2022 primarily related to the impact of the following items:
In 2021, Virginia Power reported after-tax net expenses of $
The net expenses for specific items attributable to its operating segment in 2021 primarily related to the impact of the following items:
In 2020, Virginia Power reported after-tax net expenses of $
The net expenses for specific items attributable to its operating segment in 2020 primarily related to a $
119
The following table presents segment information pertaining to Virginia Power’s operations:
Year Ended December 31, |
|
Dominion Energy Virginia |
|
|
Corporate and Other |
|
|
Consolidated |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
2022 |
|
|
|
|
|
|
|
|
|
|||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
|
|
|
|
|
|
|
|||
Interest and related charges (benefit) |
|
|
|
|
|
( |
) |
|
|
|
||
Income tax expense (benefit) |
|
|
|
|
|
( |
) |
|
|
|
||
Net income (loss) |
|
|
|
|
|
( |
) |
|
|
|
||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|||
Total assets (billions) |
|
|
|
|
|
|
|
|
|
|||
2021 |
|
|
|
|
|
|
|
|
|
|||
Operating revenue |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
|
|
|
|
|
|
|
|||
Interest and related charges (benefit) |
|
|
|
|
|
( |
) |
|
|
|
||
Income tax expense (benefit) |
|
|
|
|
|
( |
) |
|
|
|
||
Net income (loss) |
|
|
|
|
|
( |
) |
|
|
|
||
Capital expenditures |
|
|
|
|
|
|
|
|
|
|||
Total assets (billions) |
|
|
|
|
|
|
|
|
|
|||
2020 |
|
|
|
|
|
|
|
|
|
|||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
|
|
|
|
|
|
|
|||
Interest and related charges (benefit) |
|
|
|
|
|
( |
) |
|
|
|
||
Income tax expense (benefit) |
|
|
|
|
|
( |
) |
|
|
|
||
Net income (loss) |
|
|
|
|
|
( |
) |
|
|
|
||
Capital expenditures |
|
|
|
|
|
|
|
|
|
NOTE 27. QUARTERLY FINANCIAL DATA (UNAUDITED)
A summary of the Companies’ quarterly results of operations for the years ended December 31, 2022 and 2021 follows. Amounts reflect all adjustments necessary in the opinion of management for a fair statement of the results for the interim periods. Results for interim periods may fluctuate as a result of weather conditions, changes in rates and other factors. In addition, Dominion Energy’s results have been recast reflecting the presentation of operations included as discontinued operations. See Notes 3 and 9 for more information.
120
Dominion Energy
|
|
First Quarter |
|
|
Second Quarter |
|
|
Third Quarter |
|
|
Fourth Quarter |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Income (loss) from continuing operations |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net income (loss) from continuing operations including |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net income from discontinued operations including |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) including noncontrolling interests |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net income (loss) attributable to Dominion Energy |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Basic EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) from continuing operations |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net income from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to Dominion Energy |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Diluted EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) from continuing operations |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Net income from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) attributable to Dominion Energy |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Dividends declared per preferred share (Series A) |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Dividends declared per preferred share (Series B) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dividends declared per preferred share (Series C) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dividends declared per common share |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Income from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income from continuing operations including |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income from discontinued operations including |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income continuing operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dividends per share (Series A Preferred Stock) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dividends per share (Series B Preferred Stock) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dividends per share (Series C Preferred Stock) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Dividends declared per common share |
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy’s 2022 results include the impact of the following significant items:
121
Dominion Energy’s 2021 results include the impact of the following significant items:
Virginia Power
|
|
First Quarter |
|
|
Second Quarter |
|
|
Third Quarter |
|
|
Fourth Quarter |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Income from operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Income (loss) from operations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Virginia Power’s 2022 results include the impact of the following significant items:
Virginia Power’s 2021 results include the impact of the following significant items:
122