(1)	Included in other deferred charges and other assets in the Companies’ Consolidated Balance Sheets.

(2)	Included in property, plant and equipment in the Companies’ Consolidated Balance Sheets, net of $27 million, $4 million and $1 million of accumulated amortization at Dominion Energy, Virginia Power and Dominion Energy Gas, respectively, at December 31, 2019.

(3)	Included in other current liabilities in the Companies’ Consolidated Balance Sheets.

(4)	Included in securities due within one year in the Companies’ Consolidated Balance Sheets.

(5)	Included in other deferred credits and other liabilities in the Companies’ Consolidated Balance Sheets.

In addition to the amounts disclosed above, Dominion Energy’s Consolidated Balance Sheet at December 31, 2019 includes property plant and equipment and accumulated depreciation of $2.8 billion and $364 million, respectively, related to facilities subject to power purchase agreements under which Dominion Energy is the lessor.

For the year ended December 31, 2019, total lease cost associated with the Companies’ leasing arrangements consisted of the following:


	Year Ended December 31, 2019
(millions)
Dominion Energy
Finance lease cost:
Amortization	$	20
Interest		4
Operating lease cost		87
Short-term lease cost		30
Variable lease cost		6
Total lease cost	$	147
Virginia Power
Operating lease cost	$	41
Short-term lease cost		13
Variable lease cost		2
Total lease cost	$	56
Dominion Energy Gas
Operating lease cost	$	7
Short-term lease cost		7
Total lease cost	$	14

For the year ended December 31, 2019, cash paid for amounts included in the measurement of the lease liabilities consisted of the following amounts, included in the Companies’ Consolidated Statements of Cash Flows:


	Year Ended December 31, 2019
(millions)
Dominion Energy
Operating cash flows for finance leases	$	4
Operating cash flows for operating leases		121
Financing cash flows for finance leases		20
Virginia Power
Operating cash flows for operating leases		56
Dominion Energy Gas
Operating cash flows for operating leases		14

In addition to the amounts disclosed above, Dominion Energy’s Consolidated Statement of Income for the year ended December 31, 2019 includes $174 million of rental revenue included in operating revenue and $94 million of depreciation expense, included in depreciation, depletion and amortization, related to facilities subject to power purchase agreements under which Dominion Energy is the lessor.

At December 31, 2019, the weighted average remaining lease term and weighted discount rate for the Companies’ finance and operating leases were as follows:


	December 31, 2019
Dominion Energy
Weighted average remaining lease term—finance leases		5 years
Weighted average remaining lease term—operating leases		21 years
Weighted average discount rate—finance leases		3.84	%
Weighted average discount rate—operating leases		4.47	%
Virginia Power
Weighted average remaining lease term—finance leases		6 years
Weighted average remaining lease term—operating leases		20 years
Weighted average discount rate—finance leases		4.12	%
Weighted average discount rate—operating leases		4.29	%
Dominion Energy Gas
Weighted average remaining lease term—finance leases		6 years
Weighted average remaining lease term—operating leases		11 years
Weighted average discount rate—finance leases		4.08	%
Weighted average discount rate—operating leases		4.37	%

The Companies’ lease liabilities have the following maturities:


Maturity of Lease Liabilities	Dominion Energy						Virginia Power						Dominion Energy Gas
	Operating			Finance			Operating			Finance			Operating			Finance
(millions)
2020	$	72		$	34		$	34		$	4		$	7		$	2
2021		65			31			30			4			6			1
2022		55			29			24			4			5			1
2023		45			26			19			3			4			1
2024		36			19			14			3			3			1
After 2024		582			9			205			4			20			1
Total undiscounted lease payments		855			148			326			22			45			7
Present value adjustment		(377	)		(14	)		(139	)		(3	)		(10	)		(1	)
Present value of lease liabilities	$	478		$	134		$	187		$	19		$	35		$	6

Corporate Office Leasing Arrangements

In July 2016, Dominion Energy signed an agreement with a lessor to construct and lease a new corporate office property in Richmond, Virginia. The lessor provided equity and obtained financing commitments from debt investors, totaling $365 million, which funded total project costs. The project became substantially complete in August 2019 at which point the facility was available for Dominion Energy’s use and the five-year lease term commenced.

Upon commencement, the lease for the facility was classified as a finance lease. At the end of the initial lease term, Dominion Energy can (i) extend the term of the lease for an additional five years, subject to the approval of the participants, at current market terms, (ii) purchase the property for an amount equal to the project costs or, (iii) subject to certain terms and conditions, sell the property on behalf of the lessor to a third party using commercially reasonable efforts to obtain the highest cash purchase price for the

property. If the project is sold and the proceeds from the sale are insufficient to repay the investors for the project costs, Dominion Energy may be required to make a payment to the lessor, up to 87% of project costs, for the difference between the project costs and sale proceeds. No

end-of-term

options were deemed reasonably certain of exercise at commencement date. At commencement, Dominion Energy recorded a

right-of-use

asset and offsetting lease obligation of $67 million, representing the present value of consideration over the five-year term at the rate implicit in the lease. Dominion Energy is considered the owner of the leased property for tax purposes, and as a result, is entitled to tax deductions for depreciation and interest expense.

In December 2019, Dominion Energy signed an agreement with a lessor to construct and lease a new corporate office property in Richmond, Virginia. The lessor is providing equity and has obtained financing commitments from debt investors, totaling $465 million, to fund the estimated project costs.

If Dominion Energy ultimately proceeds with the

project

through completion, it

not

expected to be completed

earlier than

mid-2023.

Dominion Energy has been appointed to act as the construction agent for the lessor, during which time Dominion Energy will request cash draws from the lessor and debt investors to fund all project costs. If the project is terminated under certain events of default, Dominion Energy could be required to pay up to 89.9% of the then funded amount. For specific full recourse events, Dominion Energy could be required to pay up to 100% of the then funded amount.

The

51-month

lease term will commence once construction is substantially complete and the facility is able to be occupied. At the end of the initial lease term, Dominion Energy can (i) extend the term of the lease for an additional five years, subject to the approval of the participants, at current market terms, (ii) purchase the property for an amount equal to the project costs or, (iii) subject to certain terms and conditions, sell the property on behalf of the lessor to a third party using commercially reasonable efforts to obtain the highest cash purchase price for the property. If the project is sold and the proceeds from the sale are insufficient to repay the investors for the project costs, Dominion Energy may be required to make a payment to the lessor, up to 83% of project costs, for the difference between the project costs and sale proceeds.

Dominion Energy is not considered the owner during construction for financial accounting purposes and, therefore, will not reflect the construction activity in its consolidated financial statements. Dominion Energy expects to recognize a

right-of-use

asset and a corresponding finance lease liability at the commencement of the lease term. Dominion Energy will be considered the owner of the leased property for tax purposes, and as a result, will be entitled to tax deductions for depreciation and interest expense.