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Investments

3 Months Ended

Mar. 31, 2020

Investments Debt And Equity Securities [Abstract]

Investments

Note 10. Investments

Dominion Energy

Equity and Debt Securities

Rabbi Trust Securities

Equity and fixed income securities and cash equivalents in Dominion Energy’s rabbi trusts and classified as trading totaled $116 million and $120 million at March 31, 2020 and December 31, 2019, respectively.

Decommissioning Trust Securities

Dominion Energy holds equity and fixed income securities, insurance contracts and cash equivalents 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				Allowance for Credit Losses			Fair Value
(millions)
March 31, 2020
Equity securities:⁽¹⁾
U.S.	$	1,813	$	1,709	$	(161	)		$	—		$	3,361
Fixed income securities:⁽²⁾
Corporate debt instruments		491		18		—				(13	)		496
Government securities		1,084		55		—				(6	)		1,133
Common/collective trust funds		118		2		—				(2	)		118
Insurance contracts		209		—		—				—			209
Cash equivalents and other⁽³⁾		—		—		(4	)			—			(4	)
Total	$	3,715	$	1,784	$	(165	)	⁽⁴⁾	$	(21	)	$	5,313
December 31, 2019
Equity securities:⁽¹⁾
U.S.	$	1,807	$	2,451	$	(20	)		$	—		$	4,238
Fixed income securities:⁽²⁾
Corporate debt instruments		434		29		—				—			463
Government securities		1,108		39		(2	)			—			1,145
Common/collective trust funds		115		4		—				—			119
Insurance contracts		214		—		—				—			214
Cash equivalents and other⁽³⁾		13		—		—				—			13
Total	$	3,691	$	2,523	$	(22	)	⁽⁴⁾	$	—		$	6,192

(1)	Unrealized gains and losses on equity securities are included in other income and the nuclear decommissioning trust regulatory liability.

(2)	Unrealized gains and losses on fixed income securities are included in AOCI and the nuclear decommissioning trust regulatory liability. Effective January 2020, changes in allowance for credit losses are included in other income (expense).

(3)	Includes pending purchases of securities of $12 million and $1 million at March 31, 2020 and December 31, 2019, respectively.

(4)	The fair value of securities in an unrealized loss position was $415 million and $298 million at March 31, 2020 and December 31, 2019, respectively.

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

	Three Months Ended March 31,
	2020			2019
(millions)
Net gains (losses) recognized during the period	$	(898	)	$	414
Less: Net (gains) losses recognized during the period on securities sold during the period		14			(19	)
Unrealized gains (losses) recognized during the period on securities still held at March 31, 2020 and 2019⁽¹⁾	$	(884	)	$	395

(1)	Included in other income and the nuclear decommissioning trust regulatory liability.

The fair value of Dominion Energy’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at March 31, 2020 by contractual maturity is as follows:

	Amount
(millions)
Due in one year or less	$	178
Due after one year through five years		430
Due after five years through ten years		389
Due after ten years		750
Total	$	1,747

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

	Three Months Ended March 31,
	2020		2019
(millions)
Proceeds from sales	$	602	$	506
Realized gains⁽¹⁾		66		43
Realized losses⁽¹⁾		69		23

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

Virginia Power

Virginia Power holds equity and fixed income securities and cash equivalents 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				Allowance for Credit Losses			Fair Value
(millions)
March 31, 2020
Equity securities:⁽¹⁾
U.S.	$	898	$	796	$	(80	)		$	—		$	1,614
Fixed income securities:⁽²⁾
Corporate debt instruments		284		9		—				(8	)		285
Government securities		504		18		—				(4	)		518
Common/collective trust funds		49		—		—				—			49
Cash equivalents and other⁽³⁾		2		—		—				—			2
Total	$	1,737	$	823	$	(80	)	⁽⁴⁾	$	(12	)	$	2,468
December 31, 2019
Equity securities:⁽¹⁾
U.S.	$	894	$	1,144	$	(11	)		$	—		$	2,027
Fixed income securities:⁽²⁾
Corporate debt instruments		241		15		—				—			256
Government securities		534		14		(2	)			—			546
Common/collective trust funds		51		—		—				—			51
Cash equivalents and other		1		—		—				—			1
Total	$	1,721	$	1,173	$	(13	)	⁽⁴⁾	$	—		$	2,881

(1)	Unrealized gains and losses on equity securities are included in other income and the nuclear decommissioning trust regulatory liability.

(2)	Unrealized gains and losses on fixed income securities are included in AOCI and the nuclear decommissioning trust regulatory liability. Effective January 2020, changes in allowance for credit losses are included in other income (expense).

(3)	Includes pending sales of securities of $2 million at March 31, 2020.

(4)	The fair value of securities in an unrealized loss position was $241 million and $185 million at March 31, 2020 and December 31, 2019, 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 March 31,
	2020			2019
(millions)
Net gains (losses) recognized during the period	$	(423	)	$	186
Less: Net (gains) losses recognized during the period on securities sold during the period		6			(1	)
Unrealized gains (losses) recognized during the period on securities still held at March 31, 2020 and 2019⁽¹⁾	$	(417	)	$	185

(1)	Included in other income and the nuclear decommissioning trust regulatory liability.

The fair value of Virginia Power’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at March 31, 2020 by contractual maturity is as follows:

	Amount
(millions)
Due in one year or less	$	73
Due after one year through five years		200
Due after five years through ten years		211
Due after ten years		368
Total	$	852

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

	Three Months Ended March 31,
	2020		2019
(millions)
Proceeds from sales	$	294	$	253
Realized gains⁽¹⁾		31		10
Realized losses⁽¹⁾		31		9

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

Equity Method Investments

Dominion Energy

Atlantic Coast Pipeline

In September 2014, Dominion Energy, along with Duke and Southern, announced the formation of Atlantic Coast Pipeline. Atlantic Coast Pipeline is focused on constructing an approximately 600-mile natural gas pipeline running from West Virginia through Virginia to North Carolina. Subsidiaries and affiliates of Dominion Energy, Duke and Southern plan to be customers of the pipeline under 20-year contracts.

In March 2020, Dominion Energy completed the acquisition from Southern of its 5% membership interest in Atlantic Coast Pipeline and its 100% ownership interest in Pivotal LNG, Inc., for $184 million in aggregate, subject to certain purchase price adjustments. Pivotal LNG, Inc. includes a 50% noncontrolling interest in JAX LNG, LLC, an LNG supplier in Florida serving the growing marine and truck LNG markets. Following completion of the acquisition, Dominion Energy owns a 53% noncontrolling membership interest in Atlantic Coast Pipeline with Duke owning the remaining interest.

Atlantic Coast Pipeline continues to be reflected as an equity method investment as the power to direct the activities most significant to Atlantic Coast Pipeline is shared with Duke. As a result, Dominion Energy has the ability to exercise significant influence, but not control, over the investee.

Dominion Energy recorded contributions of $16 million and $95 million during the three months ended March 31, 2020 and 2019, respectively, to Atlantic Coast Pipeline. At March 31, 2020 and December 31, 2019, Dominion Energy had $5 million and $7 million, respectively, of contributions payable to Atlantic Coast Pipeline included within other current liabilities in the 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 17 for more information.

The Atlantic Coast Pipeline Project is the subject of challenges in federal courts including, among others, challenges of the Atlantic Coast Pipeline Project’s biological opinion and incidental take statement, permits providing right of way crossings of certain federal lands, the Army Corps of Engineers 404 permit, the air permit for a compressor station at Buckingham, Virginia, and the FERC order approving the CPCN. Each of these challenges alleges non-compliance on the part of federal and state permitting authorities and adverse ecological consequences if the Atlantic Coast Pipeline Project is permitted to proceed. Since December 2018, notable developments in these challenges include a stay in December 2018 issued by the U.S. Court of Appeals for the Fourth Circuit and the same court’s July 2019 vacatur of the biological opinion and incidental take statement (which stay and subsequent vacatur halted most project construction activity), U.S. Court of Appeals for the Fourth Circuit decisions vacating the permits to cross certain federal forests and the air permit for a compressor station at Buckingham, Virginia, the U.S. Court of Appeals for the Fourth Circuit’s remand to Army Corps of Engineers of Atlantic Coast Pipeline’s Huntington District 404 verification and the U.S. Court of Appeals for the Fourth Circuit’s remand to the National Park Service of Atlantic Coast Pipeline’s Blue Ridge Parkway right-of-way. Atlantic Coast Pipeline continues to vigorously defend these challenges and is coordinating with the federal and state authorities to obtain new authorizations. Atlantic Coast Pipeline continues coordinating and working with U.S. Fish and Wildlife Service and other parties in preparation for a reissuance of the biological opinion and incidental take statement. In June 2019, the Solicitor General of the U.S. and Atlantic Coast Pipeline filed petitions requesting that the Supreme Court of the U.S. hear the case regarding the Appalachian Trail crossing. In February 2020, the Supreme Court of the U.S. heard oral arguments in the case and is expected to issue a ruling no later than June 2020. If a favorable ruling is not received, Atlantic Coast Pipeline is also evaluating possible legislative and administrative remedies to this issue.

Given the legal challenges described above, the project is expected to enter full in-service in early 2022, with project costs estimated to be approximately $8 billion, excluding financing costs. Atlantic Coast Pipeline has reached agreements in principle with major customers to amend the contracted rate to share in certain delay cost increases, pending certain regulatory approvals. Project construction activities, schedules and costs are also subject to uncertainty due to permitting and/or work delays (including due to judicial or regulatory action), abnormal weather and other conditions that could result in further cost or schedule modifications, a suspension of AFUDC for Atlantic Coast Pipeline and/or impairment charges potentially material to Dominion Energy’s cash flows, financial position and/or results of operations.

Blue Racer

In the first quarter of 2019, Dominion Energy received $151 million of additional consideration, including applicable interest, in connection with the sale of Dominion Energy’s 50% limited partnership interest in Blue Racer in December 2018, as discussed in Note 9 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019.

Dominion Energy Gas

Dominion Energy Gas’ equity earnings totaled $15 million and $13 million for the three months ended March 31, 2020 and 2019, respectively. Dominion Energy Gas received distributions of $15 million for both the three months ended March 31, 2020 and 2019. At both March 31, 2020 and December 31, 2019, the carrying amount of Dominion Energy Gas’ investment of $312 million, exceeded its share of underlying equity in net assets by $146 million. The difference reflects equity method goodwill and is not being amortized.

Atlantic Coast Pipeline

DETI provides services to Atlantic Coast Pipeline which totaled $20 million and $31 million for the three months ended March 31, 2020 and 2019, respectively, included in operating revenue in Dominion Energy and Dominion Energy Gas’ Consolidated Statements of Income. Amounts receivable related to these services were $8 million and $7 million at March 31, 2020 and December 31, 2019, respectively, composed entirely of accrued unbilled revenue, included in other receivables in Dominion Energy and Dominion Energy Gas’ Consolidated Balance Sheets.