Exhibit 99.1
GLOSSARY OF TERMS
The following abbreviations or acronyms used in this Form 10-Q are defined below:
Abbreviation or Acronym |
|
Definition |
2017 Tax Reform Act |
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An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (previously known as The Tax Cuts and Jobs Act) enacted on December 22, 2017 |
2019 Equity Units |
|
Dominion Energy’s 2019 Series A Equity Units issued in June 2019, initially in the form of 2019 Series A Corporate Units, which consisted of a stock purchase contract and a 1/10 interest in a share of the Series A Preferred Stock |
2021 Triennial Review |
|
Virginia Commission review of Virginia Power’s earned return on base rate generation and distribution services for the four successive 12-month test periods beginning January 1, 2017 and ending December 31, 2020 |
2023 Biennial Review |
|
Virginia Commission review of Virginia Power’s earned return on base rate generation and distribution services for the two successive 12-month test periods beginning January 1, 2021 and ending December 31, 2022 and prospective rate base setting for the succeeding two-year period beginning January 1, 2024 and ending December 31, 2025 |
ACE Rule |
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Affordable Clean Energy Rule |
AFUDC |
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Allowance for funds used during construction |
AMI |
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Advanced Metering Infrastructure |
AOCI |
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Accumulated other comprehensive income (loss) |
ARO |
|
Asset retirement obligation |
Atlantic Coast Pipeline |
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Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy and Duke Energy |
Atlantic Coast Pipeline Project |
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A previously proposed approximately 600-mile natural gas pipeline running from West Virginia through Virginia to North Carolina which would have been owned by Dominion Energy and Duke Energy |
bcf |
|
Billion cubic feet |
Bear Garden |
|
A 622 MW combined-cycle, natural gas-fired power station in Buckingham County, Virginia |
BHE |
|
The legal entity, Berkshire Hathaway Energy Company, one or more of its consolidated subsidiaries (including Eastern Energy Gas Holdings, LLC, Northeast Midstream Partners, LP and Cove Point effective November 2020), or the entirety of Berkshire Hathaway Energy Company and its consolidated subsidiaries |
CAA |
|
Clean Air Act |
CCR |
|
Coal combustion residual |
CCRO |
|
Customer credit reinvestment offset |
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. |
CO2 |
|
Carbon dioxide |
Colonial Trail West |
|
A 142 MW utility-scale solar power station located in Surry County, Virginia |
Companies |
|
Dominion Energy and Virginia Power, collectively |
Contracted 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) |
CPCN |
|
Certificate of Public Convenience and Necessity |
1
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 |
DEQPS |
|
MountainWest Pipeline Services, Inc. (formerly known as Dominion Energy Questar Pipeline Services, Inc.) |
DES |
|
Dominion Energy Services, Inc. |
DESC |
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The legal entity, Dominion Energy South Carolina, Inc., one or more of its consolidated entities or operating segment, or the entirety of Dominion Energy South Carolina, Inc. and its consolidated entities |
DGI |
|
Dominion Generation, Inc. |
DOE |
|
U.S. Department of Energy |
Dominion Energy |
|
The legal entity, Dominion Energy, Inc., one or more of its consolidated subsidiaries (other than Virginia Power) or operating segments, or the entirety of Dominion Energy, Inc. and its consolidated subsidiaries |
Dominion Energy Direct® |
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A dividend reinvestment and open enrollment direct stock purchase plan |
Dominion Energy Questar Pipeline |
|
The legal entity, MountainWest Pipeline, LLC (formerly known as Dominion Energy Questar Pipeline, LLC), one or more of its consolidated subsidiaries (including its 50% noncontrolling interest in White River Hub), or the entirety of Dominion Energy Questar Pipeline, LLC and its consolidated subsidiaries |
Dominion Energy South Carolina |
|
Dominion Energy South Carolina operating segment |
Dominion Energy Virginia |
|
Dominion Energy Virginia operating segment |
Dominion Privatization |
|
Dominion Utility Privatization, LLC, a joint venture between Dominion Energy and Patriot |
DSM |
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Demand-side management |
Dth |
|
Dekatherm |
Duke Energy |
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The legal entity, Duke Energy Corporation, one or more of its consolidated subsidiaries, or the entirety of Duke Energy Corporation and its consolidated subsidiaries |
East Ohio |
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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 |
EPA |
|
U.S. Environmental Protection Agency |
EPS |
|
Earnings per common share |
FCC |
|
Federal Communications Commission |
FERC |
|
Federal Energy Regulatory Commission |
FTRs |
|
Financial transmission rights |
GAAP |
|
U.S. generally accepted accounting principles |
Gas Distribution |
|
Gas Distribution operating segment |
GENCO |
|
South Carolina Generating Company, Inc. |
2
GHG |
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Greenhouse gas |
GTSA |
|
Virginia Grid Transformation and Security Act of 2018 |
GW |
|
Gigawatt |
Hope |
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Hope Gas, Inc., doing business as Dominion Energy West Virginia through August 2022 |
Jones Act |
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The Coastwise Merchandise Statute (commonly known as the Jones Act) 46 U.S.C. §55102 regulating U.S. maritime commerce |
kV |
|
Kilovolt |
LNG |
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Liquefied natural gas |
MGD |
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Million gallons per day |
MW |
|
Megawatt |
MWh |
|
Megawatt hour |
NAV |
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Net asset value |
NND Project |
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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 Carolina Commission |
|
North Carolina Utilities Commission |
NOX |
|
Nitrogen oxide |
Ohio Commission |
|
Public Utilities Commission of Ohio |
ozone season |
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The period May 1st through September 30th, as determined on a federal level |
Patriot |
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Patriot Utility Privatizations, LLC, a joint venture between Foundation Infrastructure Partners, LLC and John Hancock Life Insurance Company (U.S.A.) and affiliates |
PIR |
|
Pipeline Infrastructure Replacement program deployed by East Ohio |
PSD |
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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)) |
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 |
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Legislation effective July 1, 2007, that amended the Virginia Electric Utility Restructuring Act and fuel factor statute, which legislation is also known as the Virginia Electric Utility Regulation Act, as amended in 2015, 2018 and 2023 |
Rider CCR |
|
A rate adjustment clause associated with the recovery of costs related to the removal of CCR at certain power stations |
Rider CE |
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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 |
3
Rider D |
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A rate mechanism which allows PSNC to recover from customers all prudently incurred gas costs and the related portion of uncollectible expenses as well as losses on negotiated gas and transportation sales |
Rider GT |
|
A rate adjustment clause associated with the recovery of costs associated with electric distribution grid transformation projects that the Virginia Commission has approved as authorized by the GTSA |
Rider R |
|
A rate adjustment clause associated with the recovery of costs related to Bear Garden |
Rider S |
|
A rate adjustment clause associated with the recovery of costs related to the Virginia City Hybrid Energy Center |
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 |
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A rate adjustment clause associated with the recovery of costs of new underground distribution facilities |
Rider US-3 |
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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 |
Sadler Solar |
|
A 100 MW utility-scale solar power station located in Greensville County, Virginia |
Santee Cooper |
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South Carolina Public Service Authority |
SCANA |
|
The legal entity, SCANA Corporation, one or more of its consolidated subsidiaries, or the entirety of SCANA Corporation and its consolidated subsidiaries |
SCANA Combination |
|
Dominion Energy’s acquisition of SCANA completed on January 1, 2019 pursuant to the terms of the agreement and plan of merger entered on January 2, 2018 between Dominion Energy and SCANA |
SCANA Merger Approval Order |
|
Final order issued by the South Carolina Commission on December 21, 2018 setting forth its approval of the SCANA Combination |
SCDOR |
|
South Carolina Department of Revenue |
SEC |
|
U.S. Securities and Exchange Commission |
Series A Preferred Stock |
|
Dominion Energy’s Series A Cumulative Perpetual Convertible Preferred Stock, without par value, with a liquidation preference of $1,000 per share (previously designated the 1.75% Series A Cumulative Perpetual Convertible Preferred Stock) |
Series B Preferred Stock |
|
Dominion Energy’s 4.65% Series B Fixed-Rate Cumulative Redeemable Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000 per share |
Series C Preferred Stock |
|
Dominion Energy’s 4.35% Series C Fixed-Rate Cumulative Redeemable Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000 per share |
South Carolina Commission |
|
Public Service Commission of South Carolina |
Southwest Gas |
|
The legal entity, Southwest Gas Holdings, Inc., one or more of its consolidated subsidiaries, or the entirety of Southwest Gas Holdings, Inc. and its consolidated subsidiaries |
Spring Grove 1 |
|
A 98 MW utility-scale solar power station located in Surry County, Virginia |
Summer |
|
V.C. Summer nuclear power station |
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 |
4
Virginia Commission |
|
Virginia State Corporation Commission |
Virginia Power |
|
The legal entity, Virginia Electric and Power Company, one or more of its consolidated subsidiaries or operating segment, or the entirety of Virginia Electric and Power Company and its consolidated subsidiaries |
Warren County |
|
A 1,349 MW combined-cycle, natural gas-fired power station in Warren County, Virginia |
Wexpro |
|
The legal entity, Wexpro Company, one or more of its consolidated subsidiaries, or the entirety of Wexpro Company and its consolidated subsidiaries |
White River Hub |
|
MountainWest White River Hub, LLC (formerly known as White River Hub, LLC) |
Wrangler |
|
Wrangler Retail Gas Holdings, LLC, a partnership between Dominion Energy (through March 2022) and Interstate Gas Supply, Inc. |
5
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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Three Months Ended March 31, |
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2023 |
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2022 |
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(millions, except per share amounts) |
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Operating Revenue |
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$ |
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$ |
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Operating Expenses |
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Electric fuel and other energy-related purchases |
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Purchased electric capacity |
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Purchased gas |
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Other operations and maintenance |
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Depreciation, depletion and amortization |
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Other taxes |
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Impairment of assets and other charges (benefits) |
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( |
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Losses (gains) on sales of assets |
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( |
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( |
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Total operating expenses |
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Income from operations |
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Other income (expense) |
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Interest and related charges |
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Income from continuing operations including noncontrolling |
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Income tax expense |
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Net Income From Continuing Operations |
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Net Income From Discontinued Operations(1) |
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Net Income Including Noncontrolling Interests |
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Noncontrolling Interests |
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— |
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— |
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Net Income Attributable to Dominion Energy |
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$ |
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$ |
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Amounts attributable to Dominion Energy |
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Net income from continuing operations |
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$ |
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$ |
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Net income from discontinued operations |
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Net income attributable to Dominion Energy |
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$ |
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$ |
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EPS - Basic |
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Net income from continuing operations |
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$ |
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$ |
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Net income from discontinued operations |
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Net income attributable to Dominion Energy |
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$ |
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$ |
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EPS - Diluted |
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Net income from continuing operations |
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$ |
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$ |
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Net income from discontinued operations |
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Net income attributable to Dominion Energy |
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$ |
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$ |
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The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
6
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
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Three Months Ended March 31, |
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2023 |
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2022 |
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(millions) |
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Net income including noncontrolling interests |
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$ |
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$ |
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Other comprehensive income (loss), net of taxes: |
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Net deferred gains (losses) on derivatives-hedging |
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( |
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Changes in unrealized net gains (losses) on investment |
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( |
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Changes in net unrecognized pension and other |
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— |
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Amounts reclassified to net income: |
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Net derivative (gains) losses-hedging activities(4) |
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Net realized (gains) losses on investment securities(5) |
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Net pension and other postretirement benefit costs (credits) (6) |
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( |
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Changes in other comprehensive income from equity |
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Total other comprehensive income |
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Comprehensive income including noncontrolling interests |
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Comprehensive income attributable to noncontrolling |
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— |
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— |
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Comprehensive income attributable to Dominion Energy |
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$ |
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$ |
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(1)
(2)
(3)
(4)
(5)
(6)
(7)
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
7
DOMINION ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
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March 31, 2023 |
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December 31, 2022(1) |
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(millions) |
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ASSETS |
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Current Assets |
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Cash and cash equivalents |
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$ |
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$ |
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Customer receivables (less allowance for doubtful accounts of $ |
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Other receivables (less allowance for doubtful accounts of $ |
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Inventories |
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Derivative assets |
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Margin deposit assets |
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Regulatory assets |
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Other |
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Current assets held for sale |
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Total current assets |
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Investments |
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Nuclear decommissioning trust funds |
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Investment in equity method affiliates |
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Other |
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Total investments |
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Property, Plant and Equipment |
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Property, plant and equipment |
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Accumulated depreciation, depletion and amortization |
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( |
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( |
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Total property, plant and equipment, net |
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Deferred Charges and Other Assets |
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Goodwill |
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Regulatory assets |
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Other |
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Total deferred charges and other assets |
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Noncurrent Assets Held for Sale |
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Total assets |
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$ |
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$ |
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(1)
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
8
DOMINION ENERGY, INC.
CONSOLIDATED BALANCE SHEETS—(Continued)
(Unaudited)
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March 31, 2023 |
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December 31, 2022(1) |
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(millions) |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current Liabilities |
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Securities due within one year |
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$ |
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$ |
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Short-term debt |
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Accounts payable |
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Accrued interest, payroll and taxes |
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Derivative liabilities |
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Regulatory liabilities |
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Other(2) |
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Current liabilities held for sale |
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Total current liabilities |
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Long-Term Debt |
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Long-term debt |
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Junior subordinated notes |
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Supplemental credit facility borrowings |
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Other |
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Total long-term debt |
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Deferred Credits and Other Liabilities |
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Deferred income taxes and investment tax credits |
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Regulatory liabilities |
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Other |
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Total deferred credits and other liabilities |
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Noncurrent Liabilities Held for Sale |
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Total liabilities |
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(see Note 17) |
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Shareholders' Equity |
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Preferred stock (see Note 16) |
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Common stock – no par(3) |
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Retained earnings |
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Accumulated other comprehensive loss |
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( |
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( |
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Shareholders' equity |
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Noncontrolling interests |
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Total shareholders' equity |
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Total liabilities and shareholders' equity |
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$ |
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$ |
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(1)
(2)
(3)
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
9
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
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Preferred Stock |
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Common Stock |
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Dominion Energy Shareholders |
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Shares |
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Amount |
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Shares |
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Amount |
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Retained Earnings |
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AOCI |
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Total |
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Noncontrolling |
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Total |
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(millions, except per share amounts) |
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December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
) |
$ |
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$ |
— |
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$ |
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Net income including noncontrolling |
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— |
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Issuance of stock |
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|||||||||
Stock awards (net of change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
||||||
Common stock dividends ($ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
— |
|
|
( |
) |
|||||
Other comprehensive income, net of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
March 31, 2022 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
— |
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
December 31, 2022 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
— |
|
$ |
|
|||||||
Net income including noncontrolling |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
||||||||
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Stock awards (net of change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Preferred stock dividends (see |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
|
|
( |
) |
||||||
Common stock dividends ($ |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
( |
) |
|
— |
|
|
( |
) |
|||||
Other comprehensive income, net of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
March 31, 2023 |
|
|
$ |
|
|
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
— |
|
$ |
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
10
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31, |
|
2023 |
|
|
2022 |
|
||
(millions) |
|
|
|
|
|
|
||
Operating Activities |
|
|
|
|
|
|
||
Net income including noncontrolling interests |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income including noncontrolling interests to net cash |
|
|
|
|
|
|
||
Depreciation, depletion and amortization (including nuclear fuel) |
|
|
|
|
|
|
||
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
||
Impairment of assets and other charges (benefits) |
|
|
|
|
|
( |
) |
|
Losses (gains) on sales of assets and equity method investments |
|
|
|
|
|
( |
) |
|
Net (gains) losses on nuclear decommissioning trust 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 sales of securities |
|
|
|
|
|
|
||
Purchases of securities |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of assets and equity method investments |
|
|
|
|
|
|
||
Contributions to equity method affiliates |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
( |
) |
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Financing Activities |
|
|
|
|
|
|
||
Issuance of short-term debt, net |
|
|
|
|
|
|
||
364-day term loan facility borrowings |
|
|
|
|
|
— |
|
|
Issuance of long-term debt |
|
|
|
|
|
|
||
Repayment of long-term debt |
|
|
( |
) |
|
|
( |
) |
Supplemental credit facility borrowings |
|
|
|
|
|
— |
|
|
Issuance of common stock |
|
|
|
|
|
|
||
Common dividend payments |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
Increase 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.
11
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
Three Months Ended March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
(millions) |
|
|
|
|
|
|
||
Operating Revenue(1) |
|
$ |
|
|
$ |
|
||
Operating Expenses |
|
|
|
|
|
|
||
Electric fuel and other energy-related purchases(1) |
|
|
|
|
|
|
||
Purchased electric capacity |
|
|
|
|
|
|
||
Other operations and maintenance: |
|
|
|
|
|
|
||
Affiliated suppliers |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Other taxes |
|
|
|
|
|
|
||
Impairment of assets and other charges |
|
|
|
|
|
|
||
Total operating expenses |
|
|
|
|
|
|
||
Income from operations |
|
|
|
|
|
|
||
Other income (expense) |
|
|
|
|
|
|
||
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.
12
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
Three Months Ended March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
(millions) |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
||
Net deferred gains (losses) on derivatives-hedging activities(1) |
|
|
( |
) |
|
|
|
|
Changes in unrealized net gains (losses) on investment securities(2) |
|
|
|
|
|
( |
) |
|
Amounts reclassified to net income: |
|
|
|
|
|
|
||
Net derivative (gains) losses-hedging activities(3) |
|
|
|
|
|
|
||
Net realized (gains) losses on investment securities(4) |
|
|
|
|
|
( |
) |
|
Total other comprehensive income (loss) |
|
|
( |
) |
|
|
|
|
Comprehensive income |
|
$ |
|
|
$ |
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
13
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
March 31, 2023 |
|
|
December 31, 2022(1) |
|
||
(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 (average cost method) |
|
|
|
|
|
|
||
Margin deposit assets |
|
|
|
|
|
|
||
Derivative assets(2) |
|
|
|
|
|
|
||
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 |
|
|
|
|
|
|
||
Regulatory assets |
|
|
|
|
|
|
||
Other(2) |
|
|
|
|
|
|
||
Total deferred charges and other assets |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
14
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETS—(Continued)
(Unaudited)
|
|
March 31, 2023 |
|
|
December 31, 2022(1) |
|
||
(millions) |
|
|
|
|
|
|
||
LIABILITIES AND SHAREHOLDER’S EQUITY |
|
|
|
|
|
|
||
Current Liabilities |
|
|
|
|
|
|
||
Securities due within one year |
|
$ |
|
|
$ |
|
||
Short-term debt |
|
|
|
|
|
|
||
Accounts payable |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Accrued interest, payroll and taxes |
|
|
|
|
|
|
||
Regulatory liabilities |
|
|
|
|
|
|
||
Derivative liabilities(2) |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
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 |
|
|
|
|
|
|
||
Regulatory liabilities |
|
|
|
|
|
|
||
Other(2) |
|
|
|
|
|
|
||
Total deferred credits and other liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|||
Common Shareholder’s Equity |
|
|
|
|
|
|
||
Common stock – no par(3) |
|
|
|
|
|
|
||
Other paid-in capital |
|
|
|
|
|
|
||
Retained earnings |
|
|
|
|
|
|
||
Accumulated other comprehensive income |
|
|
|
|
|
|
||
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.
15
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER’S EQUITY
(Unaudited)
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Shares |
|
|
Amount |
|
|
Other Paid-In Capital |
|
|
Retained Earnings |
|
|
AOCI |
|
|
Total |
|
||||||
(millions, except for shares) |
|
(thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2021 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||||
March 31, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2022 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
March 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
16
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31, |
|
2023 |
|
|
2022 |
|
||
(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 (benefit) |
|
|
|
|
|
— |
|
|
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 |
|
|
|
|
|
( |
) |
|
Repayment of affiliated current borrowings, net |
|
|
( |
) |
|
|
( |
) |
Issuance of long-term debt |
|
|
|
|
|
|
||
Repayment of long-term debt |
|
|
( |
) |
|
|
— |
|
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 Virginia Power’s Consolidated Financial Statements.
17
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Nature of Operations
Dominion Energy, headquartered in Richmond, Virginia, is one of the nation’s largest producers and distributors of energy. Dominion Energy’s operations are conducted through various subsidiaries, including Virginia Power. Dominion Energy’s operations also include DESC, regulated gas distribution operations primarily in the eastern and Rocky Mountain regions of the U.S., nonregulated electric generation and a noncontrolling interest in Cove Point.
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, except for DESC’s, to Enbridge. In addition, Dominion Energy completed the sale in September 2023 of its remaining
Note 2. Significant Accounting Policies
As permitted by the rules and regulations of the SEC, the Companies’ accompanying unaudited Consolidated Financial Statements contain certain condensed financial information and exclude certain footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with GAAP. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
In the Companies’ opinion, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly their financial position at March 31, 2023, and their results of operations, changes in equity and cash flows for the three months ended March 31, 2023 and 2022. Such adjustments are normal and recurring in nature unless otherwise noted.
The Companies make certain estimates and assumptions in preparing their Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from those estimates.
The Companies’ accompanying unaudited Consolidated Financial Statements include, after eliminating intercompany transactions and balances, their accounts, those of their respective majority-owned subsidiaries and non-wholly-owned entities in which they have a controlling financial interest. For certain partnership structures, income is allocated based on the liquidation value of the underlying contractual arrangements.
The results of operations for interim periods are not necessarily indicative of the results expected for the full year. Information for quarterly periods is affected by seasonal variations in sales, rate changes, electric fuel and other energy-related purchases, purchased gas expenses and other factors.
Certain amounts in the Companies’ 2022 Consolidated Financial Statements and Notes have been reclassified to conform to the 2023 presentation for comparative purposes; however, such reclassifications did not affect the Companies’ net income, total assets, liabilities, equity or cash flows.
Amounts disclosed for Dominion Energy are inclusive of Virginia Power, where applicable. There have been no significant changes from Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, with the exception of the items described below.
18
Cash, Restricted Cash and Equivalents
Restricted Cash and Equivalents
The following table provides a reconciliation of the total cash, restricted cash and equivalents reported within the Companies’ Consolidated Balance Sheets to the corresponding amounts reported within the Companies’ Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022:
|
|
Cash, Restricted Cash and Equivalents |
|
|
Cash, Restricted Cash and Equivalents |
|
||||||||||
|
|
March 31, 2023 |
|
|
March 31, 2022 |
|
|
December 31, 2022 |
|
|
December 31, 2021 |
|
||||
(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 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Supplemental Cash Flow Information
The following table provides supplemental disclosure of cash flow information related to Dominion Energy:
Three Months Ended March 31, |
|
2023 |
|
|
2022 |
|
||
(millions) |
|
|
|
|
|
|
||
Significant noncash investing and financing activities:(1) |
|
|
|
|
|
|
||
Accrued capital expenditures |
|
$ |
|
|
$ |
|
||
Leases(2) |
|
|
|
|
|
|
The following table provides supplemental disclosure of cash flow information related to Virginia Power:
Three Months Ended March 31, |
|
2023 |
|
|
2022 |
|
||
(millions) |
|
|
|
|
|
|
||
Significant noncash investing and financing activities: |
|
|
|
|
|
|
||
Accrued capital expenditures |
|
$ |
|
|
$ |
|
||
Leases(1) |
|
|
|
|
|
|
19
Note 3. Acquisitions and Dispositions
Business Review Dispositions
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 $
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 $
20
Transactions. The sale will be treated as a stock sale for tax purposes and is expected to close in 2024, subject to clearance or approval under or by the Hart-Scott-Rodino Act, CFIUS, FCC and Utah and Wyoming Commissions as well as other customary closing and regulatory conditions. In November 2023, the waiting period under the Hart-Scott-Rodino Act expired. Also in November 2023, Dominion Energy submitted its initial filing request for approval by CFIUS. In October 2023, Dominion Energy filed for approvals from the Utah and Wyoming Commissions. In October 2023, Dominion Energy filed the notice with the Idaho Commission required for closing of the Questar Gas Transaction. The proposed internal reorganization in connection with the Questar Gas Transaction is subject to approval by the Utah and Wyoming Commissions. Dominion Energy filed for such approvals in September 2023 and received approval from the Utah Commission in November 2023.
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 $
Financial Statement Information
The operations included in each of the East Ohio, PSNC and Questar Gas Transactions are presented as held for sale and discontinued operations within the Corporate and Other segment effective September 2023. In addition, operations associated with the other sales related to the comprehensive business review are also presented as discontinued operations within the Corporate and Other segment effective September 2023. As a result, the previously reported amounts have been recast to reflect this presentation and depreciation and amortization ceased on the applicable assets.
The following table represents selected information for each disposal group regarding the results of operations reported within discontinued operations in Dominion Energy's Consolidated Statements of Income:
|
Three Months Ended March 31, 2023 |
|
|
Three Months Ended March 31, 2022 |
|
|||||||||||||||||||||
|
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Operating revenue |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
Operating expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other income (expense) |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
— |
|
|||||
Interest and related charges |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||||||
Income (loss) before income |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
— |
|
||||||
Income tax expense (benefit) |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
— |
|
||||||
Net income (loss) attributable |
|
$ |
|
$ |
|
$ |
|
$ |
( |
) |
|
$ |
|
$ |
|
$ |
|
$ |
— |
|
21
The carrying amount 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 March 31, 2023 |
|
|
At December 31, 2022 |
|
||||||||||||||||||||
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current assets(1) |
$ |
|
$ |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
Property, plant and equipment, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other deferred charges and other |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||||||
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
||||||
Other deferred credits and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures and significant noncash items relating to the disposal groups included the following:
|
Three Months Ended March 31, 2023 |
|
|
Three Months Ended March 31, 2022 |
|
|||||||||||||||||||||
|
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
|
East Ohio Transaction |
|
PSNC Transaction |
|
Questar Gas Transaction |
|
Other |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Capital expenditures |
|
$ |
|
$ |
|
$ |
|
$ |
— |
|
|
$ |
|
$ |
|
$ |
|
$ |
— |
|
||||||
Significant noncash items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation, depletion |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accrued capital expenditures |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
Disposition of Gas Transmission & Storage Operations
In December 2021, Dominion Energy completed the sale of the Q-Pipe Group to Southwest Gas, as discussed in Note 3 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. In the first quarter of 2022, Dominion Energy recognized a gain of $
22
Note 4. Operating Revenue
The Companies’ operating revenue consists of the following:
|
|
Dominion Energy |
|
|
|
Virginia Power |
|
||||||||||
Three Months Ended March 31, |
|
2023 |
|
|
2022 |
|
|
|
2023 |
|
|
2022 |
|
||||
(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 contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
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 March 31, 2023.
At March 31, 2023 and December 31, 2022, Dominion Energy’s contract liability balances were $
The Companies recognize revenue as they fulfill their obligations to provide service to their customers. During the three months ended March 31, 2023 and 2022, Dominion Energy recognized revenue of $
23
Note 5. Income Taxes
For continuing operations, including noncontrolling interests, the statutory U.S. federal income tax rate reconciles to the Companies’ effective income tax rate as follows:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
Three Months Ended March 31, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
U.S. statutory rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Increases (reductions) resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Recognition of taxes - sale of |
|
|
|
|
|
|
|
|
|
|
|
|
||||
State taxes, net of federal benefit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment tax credits |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Production tax credits |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Reversal of excess deferred income |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Changes in state deferred taxes associated |
|
|
|
|
|
|
|
|
|
|
|
|
||||
AFUDC - equity |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Other, net |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Effective tax rate |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
In the first quarter of 2022, Dominion Energy entered into an agreement to sell
As of March 31, 2023, there have been no material changes in the Companies’ unrecognized tax benefits or possible changes that could reasonably be expected to occur during the next twelve months. See Note 5 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2021, for a discussion of these unrecognized tax benefits.
Discontinued operations
Income tax (benefit) expense reflected in discontinued operations is $
The following table presents the calculation of Dominion Energy’s basic and diluted EPS:
Three Months Ended March 31, |
2023 |
|
|
2022 |
|
|||
(millions, except EPS) |
|
|
|
|
|
|
||
Net income attributable to Dominion Energy from continuing operations |
|
$ |
|
|
$ |
|
||
Preferred stock dividends (see Note 16) |
|
|
( |
) |
|
|
( |
) |
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 |
|
$ |
|
|
$ |
|
24
The 2019 Equity Units, prior to settlement in June 2022, were a potentially dilutive instrument. See Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022 for additional information.
Note 7. Accumulated Other Comprehensive Income (Loss)
Dominion Energy
The following table presents Dominion Energy’s changes in AOCI (net of tax) and reclassifications out of AOCI by component:
|
|
Total Derivative-Hedging Activities(1)(2) |
|
|
Investment |
|
|
Pension |
|
|
Equity Method Investees(5) |
|
|
Total |
|
|||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Beginning balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income (loss) before |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Amounts reclassified from AOCI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest and related charges (benefit) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other income (expense) |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
Total |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
||
Income tax expense (benefit) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
Total, net of tax |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
||
Net current period other comprehensive |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|||
Ending balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Other comprehensive income (loss) before |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
( |
) |
|||
Amounts reclassified from AOCI: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest and related charges (benefit) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Other income (expense) |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Income tax expense (benefit) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Total, net of tax |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Net current period other comprehensive |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
||||
Ending balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
25
Virginia Power
The following table presents Virginia Power’s changes in AOCI (net of tax) and reclassifications out of AOCI by component:
|
|
Total Derivative-Hedging Activities(1)(2) |
|
|
Investment |
|
|
Total |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|||
Beginning balance |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Other comprehensive income (loss) before |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Net current period other comprehensive income (loss) |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Ending balance |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|||
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Other comprehensive income (loss) before |
|
|
|
|
|
( |
) |
|
|
|
||
Amounts reclassified from AOCI: (gains) losses |
|
|
|
|
|
|
|
|
|
|||
Interest and related charges (benefit) |
|
|
|
|
|
— |
|
|
|
|
||
Other income (expense) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Total |
|
|
|
|
|
( |
) |
|
|
— |
|
|
Income tax expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total, net of tax |
|
|
|
|
|
( |
) |
|
|
— |
|
|
Net current period other comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
|
||
Ending balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Note 8. Fair Value Measurements
The Companies’ fair value measurements are made in accordance with the policies discussed in Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. See Note 9 in this report for additional information about the Companies’ derivatives and hedge accounting activities.
The Companies enter into certain physical and financial forwards, futures and options, which are considered Level 3 as they have one or more inputs that are not observable and are significant to the valuation. The discounted cash flow method is used to value Level 3 physical and financial forwards and futures contracts. An option model is used to value Level 3 physical options. The discounted cash flow model for forwards and futures calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return and credit spreads. The option model calculates mark-to-market valuations using variations of the Black-Scholes option model. The inputs into the models are the forward market prices, implied price volatilities, risk-free rate of return, the option expiration dates, the option strike prices, the original sales prices and volumes. For Level 3 fair value measurements, certain forward market prices and implied price volatilities are considered unobservable.
26
The following table presents the Companies' quantitative information about Level 3 fair value measurements at March 31, 2023. 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: |
|
|
|
|
|
|
|
|
|
|
|
|||
Natural gas(2) |
Discounted |
Market price |
(3) |
$ |
|
( |
— |
|
$ |
|
( |
— |
||
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) |
|
|
|
|
|
||||||
Electricity |
Discounted |
Market price |
(3) |
|
|
|
|
— |
|
— |
— |
|||
Total |
|
|
|
$ |
|
|
|
|
$ |
|
|
|
Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:
Significant Unobservable |
|
Position |
|
Change to Input |
|
Impact on Fair Value |
Market price |
|
Buy |
|
Increase (decrease) |
|
Gain (loss) |
Market price |
|
Sell |
|
Increase (decrease) |
|
Loss (gain) |
Price volatility |
|
Buy |
|
Increase (decrease) |
|
Gain (loss) |
Price volatility |
|
Sell |
|
Increase (decrease) |
|
Loss (gain) |
Nonrecurring Fair Value Measurements
See Note 10 for information regarding nonrecurring fair value measurements associated with Dominion Energy’s noncontrolling ownership interest in Dominion Privatization.
In the first quarter of 2023, Dominion Energy recorded a charge of $
27
Recurring Fair Value Measurements
The following table presents the Companies' assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Foreign currency exchange rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Corporate debt instruments |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Government securities |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Cash equivalents and other |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Total assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Commodity |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Interest rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Foreign currency exchange rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total liabilities |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
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 rate |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total liabilities |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
28
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 |
|
||||||||||
Three Months Ended March 31, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Total realized and unrealized gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Included in earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
and |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
||
Included in regulatory assets/liabilities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Settlements |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Purchases |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Transfers out of Level 3 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Dominion Energy had less than $
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 |
|
|
Carrying |
|
|
Estimated |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt(2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Supplemental credit facility borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Junior subordinated notes(2) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Long-term debt(2) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Supplemental credit facility borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Junior subordinated notes(2) |
|
|
|
|
|
|
|
|
|
|
|
|
Note 9. Derivatives and Hedge Accounting Activities
The Companies’ accounting policies, objectives and strategies for using derivative instruments are discussed in Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. See Note 8 in this report for additional information about fair value measurements and associated valuation methods for derivatives.
Cash collateral is used in the table below to offset derivative assets and liabilities. In February 2022, Dominion Energy entered into contracts representing offsetting positions to certain existing exchange contracts with collateral requirements as well as new over-the-counter transactions that are not subject to collateral requirements. These contracts resulted in positions which limit the risk of increased cash collateral requirements. Certain accounts receivable and accounts payable recognized on the Companies’ Consolidated Balance Sheets, letters of credit and other forms of securities, as well as certain other long-term debt, all of which are not included in the tables below, are subject to offset under master netting or similar arrangements and would reduce the net exposure. See Note 18 for additional information regarding credit-related contingent features for the Companies’ derivative instruments.
29
Balance Sheet Presentation
The tables below present the Companies' derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in their Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:
|
|
Dominion Energy Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
Virginia Power Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
||||||||||||||||||||||||||
|
|
Gross Assets |
|
|
Financial |
|
|
Cash |
|
|
Net |
|
|
Gross Assets |
|
|
Financial |
|
|
Cash |
|
|
Net |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
Exchange |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Foreign currency exchange rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||||
Total derivatives, |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
Exchange |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Total derivatives, |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
30
|
|
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||||
Foreign currency exchange rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Over-the-counter |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||||
Total derivatives, |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
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, |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
Volumes
The following table presents the volume of the Companies' derivative activity at March 31, 2023. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.
|
|
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 |
|
€ |
|
|
€ |
|
|
€ |
|
|
€ |
|
31
AOCI
The following table presents selected information related to gains and losses on cash flow hedges included in AOCI in the Companies' Consolidated Balance Sheets at March 31, 2023:
|
|
Dominion Energy |
|
Virginia Power |
||||||||||||||||
|
|
AOCI After-Tax |
|
|
Amounts Expected to be |
|
|
Maximum Term |
|
AOCI After-Tax |
|
|
Amounts Expected to be |
|
|
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.
32
Fair Value and Gains and Losses on Derivative Instruments
The following table presents the fair values of the Companies' derivatives and where they are presented in their Consolidated Balance Sheets:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||||||||||
|
|
Fair Value – |
|
|
Fair Value – |
|
|
Total Fair |
|
|
Fair Value – |
|
|
Fair Value – |
|
|
Total Fair |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
At March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency exchange rate |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Total current derivative assets(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Total noncurrent derivative assets(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivative assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||
Interest rate |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Foreign currency exchange rate |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Total current derivative liabilities(3) |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency exchange rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total noncurrent derivative liabilities(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivative liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivative assets |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Interest rate |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Foreign currency exchange rate |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total current derivative liabilities(3) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency exchange rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total noncurrent derivative liabilities(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total derivative liabilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
33
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 |
|
Amount of Gain |
|
|
Amount of Gain |
|
|
Increase (Decrease) |
|
|
Amount of Gain |
|
|
Amount of Gain |
|
|
Increase (Decrease) |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest rate(3) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Total |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest rate(3) |
|
$ |
|
|
|
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
|
Amount of Gain (Loss) Recognized in Income on Derivatives(1)(2) |
|
|||||||||||||
Derivatives not designated as hedging instruments |
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
Three Months Ended March 31, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
(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 |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Total |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
Note 10. Investments
Dominion Energy
Equity and Debt Securities
Rabbi Trust Securities
Equity and fixed income securities and cash equivalents in Dominion Energy’s rabbi trusts and classified as trading totaled $
34
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. |
$ |
|
$ |
|
$ |
( |
) |
|
|
|
$ |
|
|
$ |
|
$ |
|
$ |
( |
) |
|
|
|
$ |
|
||||||||
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Corporate debt |
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|
|
||||||||
Government |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
||||||||
Common/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total |
$ |
|
$ |
|
$ |
( |
) |
(4) |
$ |
|
$ |
|
|
$ |
|
$ |
|
$ |
( |
) |
(4) |
$ |
|
$ |
|
||||||||
December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. |
$ |
|
$ |
|
$ |
( |
) |
|
|
|
$ |
|
|
$ |
|
$ |
|
$ |
( |
) |
|
|
|
$ |
|
||||||||
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Corporate debt |
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|
|
||||||||
Government |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
||||||||
Common/ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total |
$ |
|
$ |
|
$ |
( |
) |
(4) |
$ |
|
$ |
|
|
$ |
|
$ |
|
$ |
( |
) |
(4) |
$ |
|
$ |
|
35
|
|
|
|
|
|
|
||||||||||
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
Three Months Ended March 31, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net gains (losses) recognized during the period |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Less: Net (gains) losses recognized during the period |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Unrealized gains (losses) recognized during the period |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
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 March 31, 2023 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 |
|
||||||||||
Three Months Ended March 31, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Proceeds from sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Realized gains(1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Realized losses(1) |
|
|
|
|
|
|
|
|
|
|
|
|
Equity Method Investments
Dominion Energy recorded equity earnings on its investments of $
Cove Point
Prior to the completion of the sale in September 2023 as discussed below, Dominion Energy held a
36
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 within discontinued operations within Dominion Energy’s Consolidated Statements of Income for the three months ended March 31, 2023 include $
Atlantic Coast Pipeline
A description of Dominion Energy’s investment in Atlantic Coast Pipeline, including events that led to the cancellation of the Atlantic Coast Pipeline Project in July 2020, is included in Note 9 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
At March 31, 2023 and December 31, 2022, Dominion Energy has recorded a liability of $
Dominion Energy recorded $
Dominion Energy expects to incur additional losses from Atlantic Coast Pipeline as it completes wind-down activities. While Dominion Energy is unable to precisely estimate the amounts to be incurred by Atlantic Coast Pipeline, the portion of such amounts attributable to Dominion Energy is not expected to be material to Dominion Energy’s results of operations, financial position or statement of cash flows.
Wrangler
A description of Dominion Energy’s investment in Wrangler (through March 2022) is included in Note 9 to the Consolidated Financial Statements in Dominion Energy’s Annual Report on Form 10-K for the year ended December 31, 2022.
In March 2022, Dominion Energy sold its remaining
Dominion Privatization
Dominion Energy holds a
In March 2022, Dominion Energy completed its initial contribution of privatization operations in South Carolina (excluding contracts held by DESC), Texas and Pennsylvania to Dominion Privatization for total consideration of $
37
Note 11. Property, Plant and Equipment
Acquisitions of Nonregulated Solar Projects
Other than the item discussed below, there have been no significant updates to acquisitions of solar projects by the Companies from those discussed in Note 10 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
In
38
Note 12. Regulatory Assets and Liabilities
Regulatory assets and liabilities include the following:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||
|
|
March 31, |
|
December 31, |
|
|
March 31, |
|
December 31, |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
||||
Regulatory assets: |
|
|
|
|
|
|
|
|
|
|
||||
Deferred cost of fuel used in electric generation(1) |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
||||
Deferred rider costs for Virginia electric utility(2) |
|
|
|
|
|
|
|
|
|
|
||||
Ash pond 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) |
|
|
|
|
|
|
|
|
|
|
||||
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 customers(12) |
|
|
|
|
|
|
|
|
|
|
||||
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 customers(12) |
|
|
|
|
|
|
|
|
|
|
||||
Overrecovered other postretirement benefit costs(16) |
|
|
|
|
|
|
|
|
|
|
||||
Derivatives(7) |
|
|
|
|
|
|
|
|
|
|
||||
Other |
|
|
|
|
|
|
|
|
|
|
||||
Regulatory liabilities-noncurrent |
|
|
|
|
|
|
|
|
|
|
||||
Total regulatory liabilities |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
39
At March 31, 2023, Dominion Energy and Virginia Power regulatory assets include $4
Note 13. Regulatory Matters
Regulatory Matters Involving Potential Loss Contingencies
As a result of issues generated in the ordinary course of business, the Companies are involved in various regulatory matters. Certain regulatory matters may ultimately result in a loss; however, as such matters are in an initial procedural phase, involve uncertainty as to the outcome of pending reviews or orders, and/or involve significant factual issues that need to be resolved, it is not possible for the Companies to estimate a range of possible loss. For regulatory matters that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the regulatory process such that the Companies are able to estimate a range of possible loss. For regulatory matters that the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any estimated range is based on currently available information, involves elements of judgment and significant uncertainties and may not represent the Companies’ maximum possible loss exposure. The circumstances of such regulatory matters will change from time to time and actual results may vary significantly from the current estimate. For current matters not specifically reported below, management does not anticipate that the outcome from such matters would have a material effect on the Companies’ financial position, liquidity or results of operations.
Other Regulatory Matters
Other than the following matters, there have been no significant developments regarding the pending regulatory matters disclosed in Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Virginia Regulation - Key Legislation Affecting Operations
Virginia 2023 Legislation
In April 2023, legislation was enacted that amended several key provisions of the Regulation Act, as previously amended by the GTSA, and revised portions of the existing regulatory framework affecting Virginia Power’s operations. See Note 13 to the
40
Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, for additional information on the Regulation Act and GTSA.
The legislation resets the frequency of base rate reviews from a triennial period, as established under the GTSA, to a biennial period commencing with the 2023 Biennial Review. Such biennial reviews shall include the establishment of an authorized ROE to be utilized for base rates and riders, prospective base rates for the upcoming two-year period based on projected cost of service and a determination by the Virginia Commission as to Virginia Power’s base rate earned return for the most recently completed two-year period against the previously authorized ROE, including any potential credits to customers’ bills.
The legislation provides that the Virginia Commission will establish an authorized ROE of
The legislation directs that if the Virginia Commission determines as part of the 2023 Biennial Review that Virginia Power has earned more than 70 basis points above its authorized ROE of
In addition to the biennial review mechanisms discussed above, the legislation also includes provisions related to other aspects of Virginia Power’s ratemaking framework.
Virginia Regulation - Recent Developments
Virginia Fuel Expenses
In May 2023, Virginia Power filed its annual fuel factor filing with the Virginia Commission to recover an estimated $
41
reflects recovery of the total $
GTSA Filing
In March 2023, Virginia Power filed a petition with the Virginia Commission for approval of Phase III, covering 2024 through 2026, of its plan for electric distribution grid transformation projects as authorized by the GTSA. The plan includes
Renewable Generation Projects
In October 2022, Virginia Power filed a petition with the Virginia Commission for CPCNs to construct and operate eight utility-scale projects totaling approximately
Riders
Developments for significant riders associated with various Virginia Power projects are as follows:
Rider Name |
|
Application Date |
|
Approval Date |
|
Rate Year |
|
Total Revenue |
|
|
Increase (Decrease) |
|
||
Rider CCR |
|
|
|
|
$ |
|
|
$ |
( |
) |
||||
Rider CE(1) |
|
|
|
|
|
|
|
|
|
|||||
Rider GT |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider R |
|
|
|
|
|
|
(4) |
|
( |
) |
||||
Rider S |
|
|
|
|
|
|
(4) |
|
( |
) |
||||
Rider T1(2) |
|
|
|
|
|
|
|
|
|
|||||
Rider U(3) |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider US-3 |
|
|
|
|
|
|
|
|
( |
) |
||||
Rider US-4 |
|
|
|
|
|
|
|
|
|
|||||
Rider W(5) |
|
|
|
|
|
|
(4) |
|
( |
) |
42
Electric Transmission Projects
Developments for significant Virginia Power electric transmission projects approved or applied for are as follows:
Description and Location |
|
Application Date |
|
Approval Date |
|
Type of |
|
Miles of |
|
Cost Estimate |
|
|
Partial rebuild of Bristers-Ox 115 kV line in |
|
|
|
|
|
$ |
|
|||||
Construct new Mars and Wishing Star substations, |
|
|
|
|
|
|
|
|||||
Rebuild of Lines #2019 and #2007 in the City of |
|
|
Pending |
|
|
|
|
|
||||
Install transformer at Possum Point substation, |
|
|
Pending |
|
|
|
|
|
||||
Partial rebuild of Line #2011 in the Cities of |
|
|
Pending |
|
|
|
|
|
North Carolina Regulation
PSNC Rider D
Rider D allows PSNC to recover from customers all prudently incurred gas costs and the related portion of uncollectible expenses as well as losses on negotiated gas and transportation sales. In February 2023, PSNC submitted a filing with the North Carolina Commission for a $
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
South Carolina Regulation
DSM Programs
DESC has approval for a DSM rider through which it recovers expenditures related to its DSM programs. In January 2023, DESC filed an application with the South Carolina Commission seeking approval to recover $
Cost of Fuel
DESC's retail electric rates include a cost of fuel component approved by the South Carolina Commission which may be adjusted periodically to reflect changes in the price of fuel purchased by DESC. In February 2023, DESC filed with the South Carolina Commission a proposal to increase the total fuel cost component of retail electric rates. DESC's proposed adjustment is designed to recover DESC's current base fuel costs, including its existing under-collected balance, over the 12-month period beginning with the first billing cycle of May 2023, along with a requested decrease to DESC's variable environmental and avoided capacity cost component. The net effect of the proposal is an annual increase of $
Electric Transmission Project
In
43
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 $
Natural Gas Base Rate Case
In March 2023, DESC filed its natural gas base rate case and schedules with the South Carolina Commission. DESC proposed a non-fuel, base rate increase of $
Ohio Regulation
PIR Program
In 2008, East Ohio began PIR, aimed at replacing approximately
In
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
Utah Regulation
Purchased Gas
In
Note 14. Leases
Other than the items discussed below, there have been no significant changes regarding the Companies’ leases as described in Note 15 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dominion Energy’s Consolidated Statements of Income include $
Note 15. Variable Interest Entities
There have been no significant changes regarding the entities the Companies consider VIEs as described in Note 16 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
44
Virginia Power
Virginia Power purchased shared services from DES, an affiliated VIE, of $
Note 16. Significant Financing Transactions
Credit Facilities and Short-term Debt
The Companies use short-term debt to fund working capital requirements and as a bridge to long-term debt financings. The levels of borrowing may vary significantly during the course of the year, depending upon the timing and amount of cash requirements not satisfied by cash from operations. In addition, Dominion Energy utilizes cash and letters of credit to fund collateral requirements. Collateral requirements are impacted by commodity prices, hedging levels, Dominion Energy’s credit ratings and the credit quality of its counterparties. Other than the items discussed below, there have been no significant changes regarding the Companies’ credit facilities and short-term debt as described in Note 17 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Dominion Energy
Dominion Energy’s short-term financing is supported by its $
At March 31, 2023, Dominion Energy’s commercial paper and letters of credit outstanding, as well as its capacity available under the credit facility, were as follows:
|
|
Facility |
|
|
Outstanding |
|
|
Outstanding |
|
|
Facility |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Joint revolving credit facility(1) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
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 March 31, 2023, the sub-limits for DESC and Questar Gas were $
In March 2023, FERC granted DESC authority through March 2025 to issue short-term indebtedness (pursuant to Section 204 of the Federal Power Act) in amounts not to exceed $
In addition to the credit facility mentioned above and Virginia Power's letter of credit facilities mentioned below, Dominion Energy also has a credit facility which allows Dominion Energy to issue up to approximately $
In March 2023, Dominion Energy entered into an agreement with a financial institution which it expects to allow it to issue up to $
Dominion Energy has an effective shelf registration statement with the SEC for the sale of up to $
In January 2023, Dominion Energy entered into a $
45
long-term debt. In February and March 2023, Dominion Energy borrowed $
Virginia Power
Virginia Power’s short-term financing is supported through its access as co-borrower to Dominion Energy’s $
At March 31, 2023, Virginia Power’s share of commercial paper and letters of credit outstanding under the joint revolving credit facility with Dominion Energy, Questar Gas and DESC was as follows:
|
|
Facility |
|
|
Outstanding |
|
|
Outstanding |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Joint revolving credit facility(1) |
|
$ |
|
|
$ |
|
|
$ |
|
In January 2023, Virginia Power entered into a letter of credit facility which allows Virginia Power to issue up to $
In March 2023, Virginia Power entered into an agreement with a financial institution which it expects to allow it to issue up to $
Long-term Debt
Unless otherwise noted, the proceeds of long-term debt issuances were used for general corporate purposes and/or to repay short-term debt.
In March 2023, Dominion Energy borrowed $
In March 2023, Virginia Power issued $
Derivative Restructuring
In August 2020, Virginia Power amended a portfolio of interest rate swaps with a notional value of $
Preferred Stock
Dominion Energy is authorized to issue up to
46
Dominion Energy recorded dividends of $
There have been no significant changes to Dominion Energy’s Series B Preferred Stock and Series C Preferred Stock as described in Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Issuance of Common Stock
Dominion Energy recorded, net of fees and commissions, $
At-the-Market Program
In August 2020, Dominion Energy entered into sales agency agreements to effect sales under an at-the-market program as discussed in Note 20 to the Consolidated Financial Statements in the Companies’ Annual Report Form 10-K for the year ended December 31, 2022. Dominion Energy did not issue any shares or enter into any forward sale agreements under this program during the three months ended March 31, 2023.
Repurchase of Common Stock
In November 2020, the Board of Directors authorized the repurchase of up to $
Dominion Energy did
Note 17. Commitments and Contingencies
As a result of issues generated in the ordinary course of business, the Companies are involved in legal proceedings before various courts and are periodically subject to governmental examinations (including by regulatory authorities), inquiries and investigations. Certain legal proceedings and governmental examinations involve demands for unspecified amounts of damages, are in an initial procedural phase, involve uncertainty as to the outcome of pending appeals or motions, or involve significant factual issues that need to be resolved, such that it is not possible for the Companies to estimate a range of possible loss. For such matters that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the litigation or investigative processes such that the Companies are able to estimate a range of possible loss. For legal proceedings and governmental examinations that the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. The Companies maintain various insurance programs, including general liability insurance coverage which provides coverage for personal injury or wrongful death cases. Any accrued liability is recorded on a gross basis with a receivable also recorded for any probable insurance recoveries. Estimated ranges of loss are inclusive of legal fees and net of any anticipated insurance recoveries. Any estimated range is based on currently available information and involves elements of judgment and significant uncertainties. Any estimated range of possible loss may not represent the Companies’ maximum possible loss exposure. The circumstances of such legal proceedings and governmental examinations will change from time to time and actual results may vary significantly from the current estimate. For current proceedings not specifically reported below, management does not anticipate that the liabilities, if any, arising from such proceedings would have a material effect on the Companies’ financial position, liquidity or results of operations.
Environmental Matters
The Companies are subject to costs resulting from a number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of compliance, remediation, containment and monitoring obligations.
47
Air
The CAA, as amended, is a comprehensive program utilizing a broad range of regulatory tools to protect and preserve the nation’s air quality. At a minimum, states are required to establish regulatory programs to meet applicable requirements of the CAA. However, states may choose to develop regulatory programs that are more restrictive. Many of the Companies’ facilities are subject to the CAA’s permitting and other requirements.
Ozone Standards
The EPA published final non-attainment designations for the October 2015 ozone standards in June 2018 with states required to develop plans to address the new standard. Certain states in which the Companies operate have developed plans, and had such plans approved or partially approved by the EPA, which are not expected to have a material impact on the Companies’ results of operations or cash flows. In March 2023, the EPA issued a final rule specifying an interstate federal implementation plan to comply with certain aspects of planning for the 2015 ozone standards which will be applicable 60 days after publication in the Federal Register for certain states, including Virginia. The interstate federal implementation plan imposes tighter NOX emissions limits during the ozone season and includes provisions for the use of allowances to cover such emissions. Until implementation plans for the 2015 ozone standards are fully developed and approved for all states in which the Companies operate, the Companies are unable to predict whether or to what extent the new rules will ultimately require additional controls. The expenditures required to implement additional controls could have a material impact on the Companies’ results of operations, financial condition and/or cash flows.
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
48
regulators are to make case-by-case entrainment technology determinations after an examination of
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
49
Other Legal Matters
The Companies are defendants in a number of lawsuits and claims involving unrelated incidents of property damage and personal injury. Due to the uncertainty surrounding these matters, the Companies are unable to make an estimate of the potential financial statement impacts; however, they could have a material impact on results of operations, financial condition and/or cash flows.
SCANA Legal Proceedings
The following describes certain legal proceedings involving Dominion Energy, SCANA or DESC relating primarily to events occurring before closing of the SCANA Combination. In addition, certain legal matters which have been resolved are discussed in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. No reference to, or disclosure of, any proceeding, item or matter described below shall be construed as an admission or indication that such proceeding, item or matter is material. For certain of these matters, and unless otherwise noted therein, Dominion Energy is unable to estimate a reasonable range of possible loss and the related financial statement impacts, but for any such matter there could be a material impact to its results of operations, financial condition and/or cash flows. For the matters for which Dominion Energy is able to reasonably estimate a probable loss, Dominion Energy’s Consolidated Balance Sheets at March 31, 2023 and December 31, 2022 include reserves of $
Governmental Proceedings and Investigations
In June 2018, DESC received a notice of proposed assessment of approximately $
Nuclear Operations
Nuclear Insurance
There have been no significant changes regarding the Companies’ nuclear insurance as described in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
Spent Nuclear Fuel
As discussed in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022, the Companies entered into contracts with the DOE for the disposal of spent nuclear fuel under provisions of the Nuclear Waste Policy Act of 1982.
Guarantees, Surety Bonds and Letters of Credit
At March 31, 2023, Dominion Energy had issued
50
In addition, at March 31, 2023, 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 March 31, 2023, Dominion Energy had issued the following subsidiary guarantees:
|
|
Maximum |
|
|
(millions) |
|
|
|
|
Commodity transactions(1) |
|
$ |
|
|
Nuclear obligations(2) |
|
|
|
|
Solar(3) |
|
|
|
|
Other(4) |
|
|
|
|
Total(5)(6) |
|
$ |
|
Additionally, at March 31, 2023, Dominion Energy had purchased $
Note 18. Credit Risk
The Companies’ accounting policies for credit risk are discussed in Note 24 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022.
At March 31, 2023, Dominion Energy’s credit exposure totaled $
51
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 9 for additional information about derivative instruments.
Note 19. Related-Party Transactions
Dominion Energy’s transactions with equity method investments are described in Note 10. Virginia Power engages in related-party transactions primarily with other Dominion Energy subsidiaries (affiliates). Virginia Power’s receivable and payable balances with affiliates are settled based on contractual terms or on a monthly basis, depending on the nature of the underlying transactions. Virginia Power is included in Dominion Energy's consolidated federal income tax return and, where applicable, combined income tax returns for Dominion Energy are filed in various states. A discussion of Virginia Power's significant related-party transactions follows.
Virginia Power transacts with affiliates for certain quantities of natural gas and other commodities in the ordinary course of business. Virginia Power also enters into certain commodity derivative contracts with affiliates. Virginia Power uses these contracts, which are principally comprised of forward commodity purchases, to manage commodity price risks associated with purchases of natural gas. At March 31, 2023, Virginia Power’s derivative assets and liabilities with affiliates were $
Virginia Power participates in certain Dominion Energy benefit plans described in Note 22 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. At March 31, 2023 and December 31, 2022, amounts due to Dominion Energy associated with the Dominion Energy Pension Plan and included in other deferred credits and other liabilities in the Consolidated Balance Sheets were $
DES and other affiliates provide accounting, legal, finance and certain administrative and technical services and licenses to Virginia Power. In addition, Virginia Power provides certain services to affiliates, including charges for facilities and equipment usage.
The financial statements for all years presented include costs for certain general, administrative and corporate expenses assigned by DES to Virginia Power on the basis of direct and allocated methods in accordance with Virginia Power’s services agreements with DES. Where costs incurred cannot be determined by specific identification, the costs are allocated based on the proportional level of effort devoted by DES resources that is attributable to the entity, determined by reference to number of employees, salaries and wages and other similar measures for the relevant DES service. Management believes the assumptions and methodologies underlying the allocation of general corporate overhead expenses are reasonable.
Presented below are Virginia Power’s significant transactions with DES and other affiliates:
|
|
|
|
|
|
|
||
Three Months Ended March 31, |
2023 |
|
|
2022 |
|
|||
(millions) |
|
|
|
|
|
|
||
Commodity purchases from affiliates |
|
$ |
|
|
$ |
|
||
Services provided by affiliates(1) |
|
|
|
|
|
|
||
Services provided to affiliates |
|
|
|
|
|
|
52
Virginia Power has borrowed funds from Dominion Energy under short-term borrowing arrangements. There were $
There were
In January 2023, Virginia Power entered into a lease contract with an affiliated entity for the use of a Jones Act compliant offshore wind installation vessel currently under development with commencement of the
Note 20. Employee Benefit Plans
Net Periodic Benefit (Credit) Cost
The service cost component of net periodic benefit (credit) cost is reflected in other operations and maintenance expense in Dominion Energy’s Consolidated Statements of Income, except for $
|
|
Pension Benefits |
|
|
Other Postretirement Benefits |
|
||||||||||
Three Months Ended March 31, |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of prior service cost (credit) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amortization of net actuarial (gain) loss |
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
Net periodic benefit (credit) cost |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Employer Contributions
During the three months ended March 31, 2023, Dominion Energy made
Note 21. Operating Segments
The Companies are organized primarily on the basis of products and services sold in the U.S. A description of the operations included in the Companies’ primary operating segments effective September 2023 is as follows:
Primary Operating Segment |
|
Description of Operations |
|
Dominion |
|
Virginia |
Dominion Energy Virginia |
|
Regulated electric distribution |
|
X |
|
X |
|
|
Regulated electric transmission |
|
X |
|
X |
|
|
Regulated electric generation fleet(1) |
|
X |
|
X |
Dominion Energy South Carolina |
|
Regulated electric distribution |
|
X |
|
|
|
|
Regulated electric transmission |
|
X |
|
|
|
|
Regulated electric generation fleet |
|
X |
|
|
|
|
Regulated gas distribution and storage |
|
X |
|
|
Contracted Energy(2) |
|
Nonregulated electric generation fleet(3) |
|
X |
|
|
In addition to the operating segments above, the Companies also report a Corporate and Other segment.
53
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 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 10 as well as Notes 3 and 9 to the Consolidated Financial Statements in Dominion Energy’s Annual Report on Form 10-K for the year ended December 31, 2022.
In the three months ended March 31, 2023, Dominion Energy reported after-tax net income of $
The net income for specific items attributable to Dominion Energy’s operating segments in 2023 primarily related to the impact of the following items:
The net expenses for specific items attributable to Dominion Energy’s operating segments in 2022 primarily related to the impact of the following items:
54
The following table presents segment information pertaining to Dominion Energy’s operations:
|
|
Dominion |
|
|
Dominion |
|
|
Contracted |
|
|
Corporate |
|
|
Adjustments |
|
|
Consolidated |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenue from external |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Intersegment revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Net income from discontinued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total revenue from external |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|||||
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
||||
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||||
Net income from discontinued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income attributable to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 the three months ended March 31, 2023, Virginia Power reported after-tax net expenses of $
The net expenses for specific items attributable to Virginia Power’s operating segment in 2023 primarily related to the impact of the following item:
The net expenses for specific items attributable to Virginia Power’s operating segment in 2022 primarily related to the impact of the following items:
55
The following table presents segment information pertaining to Virginia Power’s operations:
|
|
Dominion |
|
|
Corporate |
|
|
Consolidated |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|||
Three Months Ended March 31, 2023 |
|
|
|
|
|
|
|
|
|
|||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net income (loss) |
|
|
|
|
|
( |
) |
|
|
|
||
Three Months Ended March 31, 2022 |
|
|
|
|
|
|
|
|
|
|||
Operating revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net income (loss) |
|
|
|
|
|
( |
) |
|
|
|
56