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Income Taxes (Tables)
Nov. 18, 2019
Income Tax Disclosure [Abstract]  
Income tax expense for continuing operations including noncontrolling interests
Details of income tax expense for continuing operations including noncontrolling interests were as follows:
                                                                         
             
                   
 
Dominion Energy
 
    
Virginia Power
 
    
Dominion Energy Gas
 
  
             
Year Ended December 31,
 
2018    
 
  
    2017    
    
    2016    
    
    2018    
 
  
    2017    
    
    2016    
    
    2018    
 
  
    2017    
    
    2016    
  
                                                                 
(millions)
 
   
   
   
   
   
   
   
   
 
Current:
   
     
     
     
     
     
     
     
     
 
Federal
 
$
(45
)
  $
(1
 )   $
(155
 )  
$
36
 
   $
432
    $
168
   
$
(227
)
   $
75
    $
176
 
State
 
 
108
 
    
(26
 )    
85
   
 
40
 
    
73
     
90
   
 
31
 
    
13
     
32
 
                                                                 
Total current expense (benefit)
 
 
63
 
    
(27
 )    
(70
 )  
 
76
 
    
505
     
258
   
 
(196
)
    
88
     
208
 
                                                                 
Deferred:
 
 
 
    
     
   
 
 
    
     
   
 
 
    
     
 
Federal
 
 
 
    
     
   
 
 
    
     
   
 
 
    
     
 
2017 Tax Reform Act impact
(1)
  
 
46
 
    
(851
 )    
—
   
 
21
 
    
(93
 )    
—
   
 
(6
)
    
(246
 )    
—
 
Taxes before operating loss carryforwards
 
and
investment tax credits
  
 
436
 
    
739
     
1,050
   
 
199
 
    
319
     
435
   
 
343
 
    
88
     
7
 
Tax utilization expense (benefit) of operating
loss carryforwards
 
 
92
 
    
174
     
(161
 )  
 
—
 
    
4
     
(2
 )  
 
—
 
    
—
     
—
 
Investment tax credits
 
 
(56
)
   
(200
 )    
(248
 )  
 
(51
)
   
(23
 )    
(25
 )  
 
—
 
    
—
     
—
 
State
 
 
(1
)
   
132
     
50
   
 
55
 
    
59
     
27
   
 
(17
)
    
5
     
(18
 )
                                                                 
Total deferred expense (benefit)
 
 
517
 
    
(6
 )    
691
   
 
224
 
    
266
     
435
   
 
320
 
    
(153
 )    
(11
)
Investment tax credit-gross deferral
 
 
2
 
    
5
     
35
   
 
2
 
    
5
     
35
   
 
—
 
    
—
     
—
 
Investment tax credit-amortization
 
 
(2
)
   
(2
 )    
(1
 )  
 
(2
)
   
(2
 )    
(1
 )  
 
—
 
    
—
     
—
 
                                                                 
Total income tax expense (benefit)
 
$
580
 
   $
(30
 )   $
655
   
$
300
 
   $
774
    $
727
   
$
124
 
   $
(65
 )   $
197
 
                                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
The 2017 Tax Reform Act impact includes an expense of $8 million for the year ended December 31, 2018 and a benefit of $93 million for the year ended December 31, 2017 arising from discontinued operations.
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Income Tax
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
   
Dominion Energy Gas
 
                   
Year Ended December 31,
 
    2018    
 
  
    2017    
    
    2016    
    
    2018    
 
  
    2017    
    
    2016    
    
    2018    
 
  
    2017    
  
 
 
 
  
    2016    
  
                                                                         
U.S. statutory rate
 
 
21.0
%
   
35.0
 %    
35.0
 %  
 
21.0
%
   
35.0
 %    
35.0
 %  
 
21.0
%
   
35.0
 %    
35.0
 %
Increases (reductions) resulting from:
   
     
     
     
     
     
     
     
     
 
State taxes, net of federal benefit
 
 
3.0
 
    
2.0
     
2.4
   
 
4.7
 
    
3.7
     
3.8
   
 
3.2
 
    
2.6
     
2.0
 
Investment tax credits
 
 
(1.9
)
   
(6.3
 )    
(11.7
 )  
 
(3.5
)
   
(0.8
 )    
—
   
 
—
 
    
—
     
—
 
Production tax credits
 
 
(0.7
)
   
(0.7
 )    
(0.8
 )  
 
(0.7
)
   
(0.4
 )    
(0.5
 )  
 
—
 
    
—
     
—
 
Valuation allowances
 
 
0.3
 
    
0.2
     
1.2
   
 
—
 
    
—
     
0.1
   
 
—
 
    
0.3
     
—
 
Reversal of excess deferred income taxes
 
 
(2.0
)
   
—
     
—
   
 
(3.2
)
   
—
     
—
   
 
(0.6
)
    
—
     
—
 
Federal legislative change
 
 
1.5
 
    
(27.5
 )    
—
   
 
1.3
 
    
(4.0
 )    
—
   
 
(0.5
)
    
(41.0
 )    
—
 
State legislative change
 
 
(0.6
)
   
—
     
(0.6
 )  
 
—
 
    
—
     
—
   
 
(2.0
)
    
(0.7
 )    
—
 
AFUDC—equity
 
 
(0.8
)
   
(1.4
 )    
(0.6
 )  
 
(0.5
)
   
(0.6
 )    
(0.6
 )  
 
(0.3
)
    
(0.9
 )    
(0.2
 )
Employee stock ownership plan
 
deduction
 
 
 
 
 
 
 
  
 
(0.4
)
   
(0.6
 )    
(0.6
 )  
 
—
 
    
—
     
—
   
 
—
 
    
—
     
—
 
Other, net
 
 
(0.9
)
 
 
(1.7
)
 
 
(1.4
)
 
 
(0.1
)
 
 
0.6
 
 
 
(0.4
)
 
 
(4.4
)
(1)
 
 
(6.0
)
(1)
 
 
(5.2
)
(1)
Effective tax rate
 
 
18.5
%
   
(1.0
 )%    
22.9
 %  
 
19.0
%
   
33.5
 %    
37.4
 %  
 
16.4
%
   
(10.7
 )
%
    
31.6
 %
 
(1)
Includes (4.6)%, (6.7)% and (6.0)%
 
relating to the absence of tax on noncontrolling interest in 2018, 2017 and 2016, respectively.
Deferred income taxes components
The Companies’ deferred income taxes consist of the following:
 
        Dominion Energy        
    
        Virginia Power        
    
        Dominion Energy Gas        
  
At December 31,                                                                                                        
  
2018
 
  
2017
   
2018
 
  
2017
   
2018
 
  
2017
 
(millions)
 
   
   
   
   
   
 
Deferred income taxes:
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
Total deferred income tax assets
 
$
2,748
 
   $
2,686
   
$
1,054
 
   $
923
   
$
296
 
   $
293
 
Total deferred income tax liabilities
 
 
7,813
 
    
7,158
   
 
4,020
 
    
3,600
   
 
1,626
 
    
1,299
 
                                                 
Total net deferred income tax liabilities
 
$
     
5,065
 
   $
     
4,472​​​​​​​
    
$
     
2,966
 
   $
     
2,677
    
$
    
 
1,330
 
   $
     
1,006
  
                                                 
Total deferred income taxes:
 
 
 
  
 
 
  
 
 
  
 
 
  
 
 
  
 
 
Plant and equipment, primarily depreciation method and basis differences
 
$
4,933
 
   $
5,056
   
$
3,367
 
   $
2,969
   
$
671
 
   $
645
 
Excess deferred income taxes
 
 
(993
)
   
(1,050
 )  
 
(678
)
   
(687
 )  
 
(156
)
   
(155
 )
Nuclear decommissioning
 
 
815
 
    
829
   
 
273
 
    
260
   
 
—
 
    
—
 
Deferred state income taxes
 
 
626
 
    
834
   
 
284
 
    
378
   
 
203
 
    
258
 
Federal benefit of deferred state income taxes
 
 
(132
)
   
(175
 )  
 
(60
)
   
(79
 )  
 
(43
)
    
(51
 )
Deferred fuel, purchased energy and gas costs
 
 
60
 
    
1
   
 
59
 
    
(3
 )  
 
(1
)
    
-
 
Pension benefits
 
 
81
 
    
141
   
 
(132
)
   
(104
 )  
 
134
 
    
139
 
Other postretirement benefits
 
 
(5
)
   
(51
 )  
 
55
 
    
44
   
 
(3
)
    
(3
 )
Loss and credit carryforwards
 
 
(1,546
)
   
(1,536
 )  
 
(183
)
   
(111
 )  
 
(5
)
    
(5
 )
Valuation allowances
 
 
158
 
    
146
   
 
5
 
    
5
   
 
6
 
    
4
 
Partnership basis differences
 
 
1,135
 
    
473
   
 
—
 
    
—
   
 
570
 
    
220
 
Other
 
 
(67
)
   
(196
 )  
 
(24
)
   
5
   
 
(46
)
    
(46
 )
                                                 
Total net deferred income tax liabilities
 
$
5,065
 
   $
4,472
   
$
2,966
 
   $
2,677
   
$
1,330
 
   $
1,006
 
Deferred Investment Tax Credits – Regulated Operations
 
 
51
 
    
51
   
 
51
 
    
51
   
 
—
 
    
—
 
                                                 
Total Deferred Taxes and Deferred Investment Tax Credits
 
$
5,116
 
   $
4,523
   
$
3,017
 
   $
2,728
   
$
1,330
 
   $
1,006
 
                                                 
Summary of deductible loss and credit carryforwards
At December 31, 2018, Dominion Energy had the following deductible loss and credit carryforwards:
 
Deductible
   
Deferred
   
Valuation
   
Expiration
 
                         
  
        Amount        
    
        Tax Asset        
    
        Allowance        
    
        Period        
  
(millions)
 
   
   
   
 
Federal losses
 
$
120
 
  
$
25
 
  
$
—
 
  
 
2034
 
Federal investment credits
 
 
—
 
  
 
1,007
 
  
 
—
 
  
 
2033-2038
 
Federal production credits
 
 
—
 
  
 
150
 
  
 
—
 
  
 
2031-2038
 
Other federal credits
 
 
—
 
  
 
62
 
  
 
—
 
  
 
2031-2038
 
State losses
 
 
1,126
 
  
 
73
 
  
 
(61
)
 
 
2019-2038
 
State minimum tax credits
 
 
—
 
  
 
122
 
  
 
—
 
  
 
No expiration
 
State investment and other credits
 
 
—
 
  
 
107
 
  
 
(90
)
 
 
2019-2025
 
                                 
Total
 
$
1,246
 
  
$
1,546
 
  
$
(151
)
    
 
                                 
At December 31, 2018, Virginia Power had the following deductible loss and credit carryforwards:
 
Deductible
   
Deferred
   
Valuation
   
Expiration
 
                         
  
        Amount        
    
        Tax Asset        
    
        Allowance        
    
        Period        
  
(millions)
 
   
   
   
 
Federal losses
 
$
1
 
  
$
—
 
  
$
—
 
  
 
2034
 
Federal investment credits
 
 
—
 
  
 
113
 
  
 
—
 
  
 
2034-2038
 
Federal production and other credits
 
 
—
 
  
 
61
 
  
 
—
 
  
 
2031-2038
 
State investment credits
 
 
—
 
  
 
9
 
  
 
(5
)
 
 
2024
 
                                 
Total
 
$
1
 
  
$
183
 
  
$
(5
)
    
 
                                 
At December 31, 2018, Dominion Energy Gas had the following deductible loss and credit carryforwards:
 
Deductible
   
Deferred
   
Valuation
   
Expiration
 
                         
  
        Amount        
    
        Tax Asset        
    
        Allowance        
    
        Period        
  
(millions)
 
   
   
   
 
Federal losses
 
$
1
 
  
$
—
 
  
$
—
 
  
 
2034
 
State losses
(1)
  
 
62
 
  
 
3
 
  
 
(3
)
  
 
2021
 
                                 
Total
 
$
63
 
  
$
3
 
  
$
(3
)
    
 
                                 
(1)
Discontinued operations includes $53 million of deductible loss carryforwards which expire between 2036 and 2038, and are reflected as a deferred tax asset with an offsetting valuation allowance of $5 million.
Reconciliation of changes in unrecognized tax benefits
A reconciliation of changes in the Companies’ unrecognized tax benefits follows:
 
Dominion Energy
   
Virginia Power
   
Dominion Energy Gas
 
  
    2018    
 
  
    2017    
    
    2016    
    
    2018    
 
  
    2017    
    
    2016    
    
    2018    
 
  
    2017    
    
    2016    
  
(millions)
 
   
   
   
   
   
   
   
   
 
Balance at January 1
 
$
38
 
   $
64
    $
103
   
$
4
 
   $
13
    $
12
   
$
2
 
   $
9
    $
31
 
Increases-prior period positions
 
 
10
 
    
1
     
9
   
 
—
 
    
—
     
4
   
 
—
 
    
—
     
1
 
Decreases-prior period positions
 
 
—
 
    
(9
 )    
(44
 )  
 
—
 
    
(1
 )    
(3
 )  
 
—
 
    
—
     
(19
 )
Increases-current period positions
 
 
10
 
    
5
     
6
   
 
—
 
    
—
     
—
   
 
—
 
    
—
     
—
 
Settlements with tax authorities
 
 
(6
)
   
(23
 )    
(8
 )  
 
(1
)
   
(8
 )    
—
   
 
—
 
    
(7
 )    
(4
 )
Expiration of statutes of limitations
 
 
(8
)
   
—
     
(2
 )  
 
(1
)
   
—
     
—
   
 
—
 
    
—
     
—
 
                                                                         
Balance at December 31
 
$
     44
 
   $
     38
    $
     64
   
$
     2
 
   $
     4
    $
     13
   
$
     2
 
   $
     2
    $
     9
 
                                                                         
Earliest tax year remaining
For each of the major states in which Dominion Energy operates, the earliest tax year remaining open for examination is as follows:
State
 
                    Earliest                    
Open Tax
Year
 
Pennsylvania
(1)
  
 
2012
 
Connecticut
 
 
2015
 
Virginia
(2)
  
 
2015
 
West Virginia
(1)
  
 
2015
 
New York
(1)
  
 
2011
 
Utah
(1)
  
 
2015
 
 
(1)
Considered a major state for Dominion Energy Gas’ operations.
(2)
Considered a major state for Virginia Power’s operations.