Note 10. Investments

Dominion Energy

Equity and Debt Securities

Rabbi Trust Securities

Equity and debt securities and cash equivalents in Dominion Energy’s rabbi trusts and classified as trading totaled $114 million and $112 million at June 30, 2018 and December 31, 2017, respectively.

Decommissioning Trust Securities

Dominion Energy holds equity and debt securities, cash equivalents and cost method investments in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Dominion Energy’s decommissioning trust funds are summarized below:

	Amortized Cost		Total Unrealized Gains		Total Unrealized Losses				Fair Value
(millions)
June 30, 2018
Equity securities:⁽¹⁾
U.S.	$	1,695	$	1,896	$	(14	)		$	3,577
Fixed income securities:⁽²⁾
Corporate debt instruments		447		6		(8	)			445
Government securities		1,058		16		(14	)			1,060
Common/collective trust funds		72		—		—				72
Cash equivalents and other⁽³⁾		5		—		—				5
Total	$	3,277	$	1,918	$	(36	)	⁽⁴⁾	$	5,159
December 31, 2017
Equity securities:⁽²⁾
U.S.	$	1,569	$	1,857	$	—			$	3,426
Fixed income securities:⁽²⁾
Corporate debt instruments		430		15		(1	)			444
Government securities		1,039		27		(5	)			1,061
Common/collective trust funds		60		—		—				60
Cost method investments		68		—		—				68
Cash equivalents and other⁽³⁾		34		—		—				34
Total	$	3,200	$	1,899	$	(6	)	⁽⁴⁾	$	5,093

(1)

Effective January 2018, unrealized gains and losses on equity securities, including those previously classified as cost method investments, are included in other income and the nuclear decommissioning trust regulatory liability as discussed in Note 2.

(2)

Unrealized gains and losses on equity securities (for 2017) and fixed income securities are included in AOCI and the nuclear decommissioning trust regulatory liability as discussed in Note 2.

(3)

Includes pending purchases of securities of $3 million at June 30, 2018 and pending sales of securities of $5 million at December 31, 2017.

(4)

The fair value of securities in an unrealized loss position was $900 million and $565 million at June 30, 2018 and December 31, 2017, respectively.

The portion of unrealized gains and losses that relates to equity securities held within Dominion Energy’s nuclear decommissioning trusts is summarized below:

(millions)	Three Months Ended June 30, 2018			Six Months Ended June 30, 2018
Net gains recognized during the period	$	89		$	24
Less: Net gains recognized during the period on securities sold during the period		(16	)		(35	)
Unrealized gains (losses) recognized during the period on securities still held at June 30, 2018⁽¹⁾	$	73		$	(11	)

(1)	Included in other income and the nuclear decommissioning trust regulatory liability as discussed in Note 2.

The fair value of Dominion Energy’s debt securities with readily determinable fair values held in nuclear decommissioning trust funds at June 30, 2018 by contractual maturity is as follows:

	Amount
(millions)
Due in one year or less	$	321
Due after one year through five years		327
Due after five years through ten years		353
Due after ten years		576
Total	$	1,577

Presented below is selected information regarding Dominion Energy’s equity and debt securities with readily determinable fair values held in nuclear decommissioning trust funds.

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
(millions)
Proceeds from sales	$	425	$	363	$	844	$	1,119
Realized gains⁽¹⁾		36		23		72		117
Realized losses⁽¹⁾		23		16		42		36

(1)	Includes realized gains and losses recorded to the nuclear decommissioning trust regulatory liability.

Other-than-temporary impairment losses on investments held in nuclear decommissioning trust funds recognized in earnings for Dominion Energy were not material for the three and six months ended June 30, 2018 and 2017.

Virginia Power

Virginia Power holds equity and debt securities, cash equivalents and cost method investments in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Virginia Power’s decommissioning trust funds are summarized below:

	Amortized Cost		Total Unrealized Gains		Total Unrealized Losses				Fair Value
(millions)
June 30, 2018
Equity securities:⁽¹⁾
U.S.	$	837	$	861	$	(7	)		$	1,691
Fixed income securities:⁽²⁾
Corporate debt instruments		228		3		(4	)			227
Government securities		490		7		(5	)			492
Common/collective trust funds		32		—		—				32
Cash equivalents and other⁽³⁾		7		—		—				7
Total	$	1,594	$	871	$	(16	)	⁽⁴⁾	$	2,449
December 31, 2017
Equity securities:⁽²⁾
U.S.	$	734	$	831	$	—			$	1,565
Fixed income securities:⁽²⁾
Corporate debt instruments		216		8		—				224
Government securities		482		13		(2	)			493
Common/collective trust funds		27		—		—				27
Cost method investments		68		—		—				68
Cash equivalents and other⁽³⁾		22		—		—				22
Total	$	1,549	$	852	$	(2	)	⁽⁴⁾	$	2,399

(1)

(2)

Unrealized gains and losses on equity securities (for 2017) and fixed income securities are included in AOCI and the nuclear decommissioning trust regulatory liability as discussed in Note 2.

(3)

Includes pending sales of securities of $5 million and $6 million at June 30, 2018 and December 31, 2017, respectively.

(4)

The fair value of securities in an unrealized loss position was $414 million and $234 million at June 30, 2018 and December 31, 2017, respectively.

The portion of unrealized gains and losses that relates to equity securities held within Virginia Power’s nuclear decommissioning trusts is summarized below:

	Three Months Ended June 30, 2018			Six Months Ended June 30, 2018
(millions)
Net gains recognized during the period	$	44		$	12
Less: Net gains recognized during the period on securities sold during the period		(8	)		(23	)
Unrealized gains (losses) recognized during the period on securities still held at June 30, 2018⁽¹⁾	$	36		$	(11	)

(1)

Included in other income and the nuclear decommissioning trust regulatory liability as discussed in Note 2.

The fair value of Virginia Power’s debt securities with readily determinable fair values held in nuclear decommissioning trust funds at June 30, 2018 by contractual maturity is as follows:

	Amount
(millions)
Due in one year or less	$	49
Due after one year through five years		158
Due after five years through ten years		216
Due after ten years		328
Total	$	751

Presented below is selected information regarding Virginia Power’s equity and debt securities with readily determinable fair values held in nuclear decommissioning trust funds.

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
(millions)
Proceeds from sales	$	196	$	168	$	414	$	498
Realized gains⁽¹⁾		15		10		33		55
Realized losses⁽¹⁾		7		8		12		18

(1)	Includes realized gains and losses recorded to the nuclear decommissioning trust regulatory liability.

Other-than-temporary impairment losses on investments held in nuclear decommissioning trust funds recognized in earnings for Virginia Power were not material for the three and six months ended June 30, 2018 and 2017.

Equity Method Investments

Dominion Energy

Atlantic Coast Pipeline

Dominion Energy recorded contributions of $81 million and $85 million during the three months ended June 30, 2018 and 2017, respectively, and $159 million and $202 million during the six months ended June 30, 2018 and 2017, respectively, to Atlantic Coast Pipeline. At June 30, 2018, Dominion Energy had $33 million of contributions payable to Atlantic Coast Pipeline included within other current liabilities in the Consolidated Balance Sheets.

DETI provides services to Atlantic Coast Pipeline which totaled $60 million and $30 million for the three months ended June 30, 2018 and 2017, respectively, and $106 million and $61 million for the six months ended June 30, 2018 and 2017, respectively, included in operating revenue in Dominion Energy and Dominion Energy Gas’ Consolidated Statements of Income. Amounts receivable related to these services were $19 million and $12 million at June 30, 2018 and December 31, 2017, respectively, composed entirely of accrued unbilled revenue, included in other receivables in Dominion Energy and Dominion Energy Gas’ Consolidated Balance Sheets.

In October 2017, Dominion Energy entered into a guarantee agreement to support a portion of Atlantic Coast Pipeline’s obligation under its credit facility. See Note 16 for more information.

NedPower

Dominion Energy has a liability of $1 million and $17 million recorded to other deferred credits and other liabilities on the Consolidated Balance Sheets at June 30, 2018 and December 31, 2017, respectively, relating to its commitment to provide further financial support for NedPower.

Other

In July 2018, Dominion Energy entered into an agreement to sell its 25% limited partnership interest in Catalyst Old River Hydroelectric Limited Partnership, which is accounted for as an equity method investment with zero carrying value at June 30, 2018. The transaction is expected to close in the third quarter of 2018 with proceeds of approximately $90 million, subject to customary closing adjustments. As a result, Dominion Energy expects to recognize a gain of approximately $90 million ($65 million after-tax) in the third quarter of 2018.

Dominion Energy Gas

Iroquois

Dominion Energy Gas’ equity earnings totaled $14 million and $11 million for the six months ended June 30, 2018 and 2017, respectively. Dominion Energy Gas received distributions of $14 million and $11 million for the six months ended June 30, 2018 and 2017, respectively. At both June 30, 2018 and December 31, 2017, the carrying amount of Dominion Energy Gas’ investment of $95 million exceeded its share of underlying equity in net assets by $8 million. The difference reflects equity method goodwill and is not being amortized.