Regulatory Assets and Liabilities

9 Months Ended

Sep. 30, 2022

Note 12. Regulatory Assets and Liabilities

Regulatory assets and liabilities include the following:

	September 30, 2022		December 31, 2021
(millions)
Dominion Energy
Regulatory assets:
Deferred cost of fuel used in electric generation⁽¹⁾	$	571	$	251
Deferred project costs and DSM programs for gas utilities⁽²⁾		68		53
Unrecovered gas costs⁽³⁾		184		191
Deferred rider costs for Virginia electric utility⁽⁴⁾		149		72
Ash pond and landfill closure costs⁽⁵⁾		62		193
Deferred nuclear refueling outage costs⁽⁶⁾		55		79
NND Project costs⁽⁷⁾		138		138
Deferred early plant retirement charges⁽⁸⁾		226		226
Derivatives⁽⁹⁾		375		112
Other		236		177
Regulatory assets-current		2,064		1,492
Unrecognized pension and other postretirement benefit costs⁽¹⁰⁾		549		548
Deferred rider costs for Virginia electric utility⁽⁴⁾		312		489
Deferred project costs for gas utilities⁽²⁾		693		675
Interest rate hedges⁽¹¹⁾		170		899
AROs and related funding⁽¹²⁾		409		329
NND Project costs⁽⁷⁾		2,122		2,226
Ash pond and landfill closure costs⁽⁵⁾		2,245		2,223
Deferred cost of fuel used in electric generation⁽¹⁾		1,318		409
Deferred early plant retirement charges⁽⁸⁾		56		226
Derivatives⁽⁹⁾		562		35
Other		525		584
Regulatory assets-noncurrent		8,961		8,643
Total regulatory assets	$	11,025	$	10,135
Regulatory liabilities:
Provision for future cost of removal and AROs⁽¹³⁾		181		181
Reserve for refunds and rate credits to electric utility customers⁽¹⁴⁾		129		420
Income taxes refundable through future rates⁽¹⁵⁾		147		153
Monetization of guarantee settlement⁽¹⁶⁾		67		67
Derivatives⁽⁹⁾		325		69
Other		170		96
Regulatory liabilities-current		1,019		986
Income taxes refundable through future rates⁽¹⁵⁾		4,096		4,260
Provision for future cost of removal and AROs⁽¹³⁾		2,409		2,331
Nuclear decommissioning trust⁽¹⁷⁾		1,532		2,158
Monetization of guarantee settlement⁽¹⁶⁾		719		831
Interest rate hedges⁽¹¹⁾		202		67
Reserve for refunds and rate credits to electric utility customers⁽¹⁴⁾		358		448
Unrecognized pension and other postretirement benefit costs⁽¹⁰⁾		177		200
Overrecovered other postretirement benefit costs⁽¹⁸⁾		131		105
Derivatives⁽⁹⁾		227		169
Other		191		144
Regulatory liabilities-noncurrent		10,042		10,713
Total regulatory liabilities	$	11,061	$	11,699

(1)

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

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

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

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

(5)

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

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

(7)

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

(8)

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

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

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

(11)

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

(12)

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

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

(14)

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

(15)

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

(16)

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

(17)

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

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

	September 30, 2022		December 31, 2021
(millions)
Virginia Power
Regulatory assets:
Deferred cost of fuel used in electric generation⁽¹⁾	$	205	$	131
Deferred rider costs⁽²⁾		149		72
Ash pond and landfill closure costs⁽³⁾		62		193
Deferred nuclear refueling outage costs⁽⁴⁾		55		79
Deferred early plant retirement charges⁽⁵⁾		226		226
Derivatives⁽⁶⁾		369		105
Other		70		44
Regulatory assets-current		1,136		850
Deferred rider costs⁽²⁾		312		489
Interest rate hedges⁽⁷⁾		—		604
Ash pond and landfill closure costs⁽³⁾		2,242		2,223
Deferred cost of fuel used in electric generation⁽¹⁾		1,318		409
Deferred early plant retirement charges⁽⁵⁾		56		226
Derivatives⁽⁶⁾		453		34
Other		137		145
Regulatory assets-noncurrent		4,518		4,130
Total regulatory assets	$	5,654	$	4,980
Regulatory liabilities:
Provision for future cost of removal⁽⁸⁾		154		154
Reserve for refunds to Virginia electric customers⁽⁹⁾		27		306
Income taxes refundable through future rates⁽¹⁰⁾		63		63
Derivatives⁽⁶⁾		265		51
Other		139		73
Regulatory liabilities-current		648		647
Income taxes refundable through future rates⁽¹⁰⁾		2,280		2,335
Nuclear decommissioning trust⁽¹¹⁾		1,532		2,158
Provision for future cost of removal⁽⁸⁾		1,082		1,043
Interest rate hedges⁽⁷⁾		202		—
Reserve for refunds to Virginia electric customers⁽⁹⁾		6		25
Other		167		179
Regulatory liabilities-noncurrent		5,269		5,740
Total regulatory liabilities	$	5,917	$	6,387

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

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

(3)

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

(5)

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

(7)

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

(9)

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

(10)

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

(11)

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

At September 30, 2022, Dominion Energy and Virginia Power regulatory assets include $4.8 billion and $3.3 billion, respectively, on which they do not expect to earn a return during the applicable recovery period. With the exception of certain items discussed above, the majority of these expenditures are expected to be recovered within the next two years.