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Regulatory Assets and Liabilities
6 Months Ended
Jun. 30, 2023
Regulated Operations [Abstract]  
Regulatory Assets and Liabilities

Note 12. Regulatory Assets and Liabilities

Regulatory assets and liabilities include the following:

 

 

 

Dominion Energy

 

 

Virginia Power

 

 

 

June 30,
2023

 

December 31,
2022

 

 

June 30,
2023

 

December 31,
2022

 

(millions)

 

 

 

 

 

 

 

 

 

 

Regulatory assets:

 

 

 

 

 

 

 

 

 

 

Deferred cost of fuel used in electric generation(1)

 

$

401

 

$

603

 

 

$

50

 

$

133

 

Deferred rider costs for Virginia electric utility(2)

 

 

57

 

 

152

 

 

 

57

 

 

152

 

Ash pond and landfill closure costs(3)

 

 

181

 

 

221

 

 

 

181

 

 

221

 

Deferred nuclear refueling outage costs(4)

 

 

84

 

 

83

 

 

 

82

 

 

83

 

NND Project costs(5)

 

 

138

 

 

138

 

 

 

 

 

 

Deferred early plant retirement charges(6)

 

 

113

 

 

226

 

 

 

113

 

 

226

 

Derivatives(7)

 

 

84

 

 

256

 

 

 

81

 

 

251

 

Other

 

 

236

 

 

204

 

 

 

63

 

 

74

 

Regulatory assets-current

 

 

1,294

 

 

1,883

 

 

 

627

 

 

1,140

 

Unrecognized pension and other postretirement benefit costs(8)

 

 

873

 

 

891

 

 

 

 

 

4

 

Deferred rider costs for Virginia electric utility(2)

 

 

610

 

 

363

 

 

 

610

 

 

363

 

Interest rate hedges(9)

 

 

169

 

 

169

 

 

 

 

 

 

AROs and related funding(10)

 

 

384

 

 

380

 

 

 

 

 

 

NND Project costs(5)

 

 

2,018

 

 

2,088

 

 

 

 

 

 

Ash pond and landfill closure costs(3)

 

 

2,024

 

 

2,051

 

 

 

2,021

 

 

2,049

 

Deferred cost of fuel used in electric generation(1)

 

 

1,310

 

 

1,551

 

 

 

1,310

 

 

1,551

 

Derivatives(7)

 

 

183

 

 

254

 

 

 

79

 

 

148

 

Other

 

 

494

 

 

518

 

 

 

131

 

 

132

 

Regulatory assets-noncurrent

 

 

8,065

 

 

8,265

 

 

 

4,151

 

 

4,247

 

Total regulatory assets

 

$

9,359

 

$

10,148

 

 

$

4,778

 

$

5,387

 

Regulatory liabilities:

 

 

 

 

 

 

 

 

 

 

Provision for future cost of removal and AROs(11)

 

 

111

 

 

111

 

 

 

111

 

 

111

 

Reserve for refunds and rate credits to electric utility customers(12)

 

 

102

 

 

125

 

 

 

10

 

 

25

 

Income taxes refundable through future rates(13)

 

 

99

 

 

100

 

 

 

65

 

 

65

 

Monetization of guarantee settlement(14)

 

 

67

 

 

67

 

 

 

 

 

 

Derivatives(7)

 

 

12

 

 

211

 

 

 

 

 

176

 

Other

 

 

46

 

 

134

 

 

 

45

 

 

129

 

Regulatory liabilities-current

 

 

437

 

 

748

 

 

 

231

 

 

506

 

Income taxes refundable through future rates(13)

 

 

3,126

 

 

3,169

 

 

 

2,243

 

 

2,272

 

Provision for future cost of removal and AROs(11)

 

 

1,771

 

 

1,731

 

 

 

1,164

 

 

1,135

 

Nuclear decommissioning trust(15)

 

 

1,936

 

 

1,685

 

 

 

1,936

 

 

1,685

 

Monetization of guarantee settlement(14)

 

 

669

 

 

702

 

 

 

 

 

 

Interest rate hedges(9)

 

 

196

 

 

240

 

 

 

196

 

 

240

 

Reserve for refunds and rate credits to electric utility customers(12)

 

 

274

 

 

325

 

 

 

 

 

 

Overrecovered other postretirement benefit costs(16)

 

 

152

 

 

140

 

 

 

 

 

 

Derivatives(7)

 

 

189

 

 

234

 

 

 

 

 

 

Other

 

 

263

 

 

191

 

 

 

260

 

 

167

 

Regulatory liabilities-noncurrent

 

 

8,576

 

 

8,417

 

 

 

5,799

 

 

5,499

 

Total regulatory liabilities

 

$

9,013

 

$

9,165

 

 

$

6,030

 

$

6,005

 

 

(1)
Reflects deferred fuel expenses for the Virginia and North Carolina jurisdictions of Virginia Power's electric generation operations and additionally for Dominion Energy, deferred fuel expenses for the South Carolina jurisdiction of its electric generation operations.
(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. In the second quarter of 2023, Virginia Power recorded a charge of $36 million ($27 million after-tax), included in impairment of assets and other charges in its Consolidated Statements of Income, for the write-off of certain previously deferred amounts related to Riders R, S and W in connection with the cessation of such riders effective July 2023. See Note 13 for additional information.
(3)
Primarily reflects legislation in Virginia 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.
(4)
Legislation in Virginia 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)
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.
(6)
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, 2022 for additional information.
(7)
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.
(8)
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. Includes $314 million and $302 million of regulatory assets in aggregate at June 30, 2023 and December 31, 2022, respectively, related to retained pension and other postretirement benefit plan assets and obligations for the East Ohio, PSNC and Questar Gas Transactions which will be reclassified to AOCI upon closing of each transaction.
(9)
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 and 24 years for Dominion Energy and Virginia Power, respectively, as of June 30, 2023.
(10)
Represents uncollected costs, including 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.
(11)
Rates charged to customers by Dominion Energy and 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.
(12)
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. 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, 2022 for additional information.
(13)
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.
(14)
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.
(15)
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 Virginia Power's utility nuclear generation stations, in excess of the related AROs.
(16)
Reflects a regulatory liability for the collection of postretirement benefit costs allowed in rates in excess of expense incurred.

At June 30, 2023, Dominion Energy and Virginia Power regulatory assets include $4.4 billion and $2.7 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.