Regulatory Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Regulatory Assets and Liabilities

Regulatory assets and liabilities include the following:

	September 30, 2020		December 31, 2019
(millions)
Dominion Energy
Regulatory assets:
Deferred cost of fuel used in electric generation⁽¹⁾	$	—	$	48
Deferred project costs and DSM programs for gas utilities⁽²⁾		38		21
Unrecovered gas costs⁽³⁾		89		99
Deferred rate adjustment clause costs for Virginia electric utility⁽⁴⁾⁽⁵⁾		14		109
Deferred nuclear refueling outage costs⁽⁶⁾		57		68
NND Project costs⁽⁷⁾		138		138
PJM transmission rates⁽⁸⁾		95		121
Other		232		267
Regulatory assets-current		663		871
Pension and other postretirement benefit costs⁽⁹⁾		1,598		1,431
Deferred rate adjustment clause costs for Virginia electric utility^{(4)(5)(10)(11)}		390		235
PJM transmission rates⁽⁸⁾		46		85
Deferred project costs for gas utilities⁽²⁾		588		521
Interest rate hedges⁽¹²⁾		1,207		709
AROs and related funding⁽¹³⁾		311		311
Cost of reacquired debt⁽¹⁴⁾		248		262
NND Project costs⁽⁷⁾		2,399		2,503
Ash pond and landfill closure costs⁽¹⁵⁾		2,160		1,016
Other		502		579
Regulatory assets-noncurrent		9,449		7,652
Total regulatory assets	$	10,112	$	8,523
Regulatory liabilities:
Deferred cost of fuel used in electric generation⁽¹⁾	$	82	$	—
Provision for future cost of removal and AROs⁽¹⁶⁾		124		124
Reserve for refunds and rate credits to electric utility customers⁽¹⁷⁾		133		143
Cost-of-service impact of 2017 Tax Reform Act⁽¹⁸⁾		23		4
Income taxes refundable through future rates⁽¹⁹⁾		135		71
Monetization of guarantee settlement⁽²⁰⁾		67		67
Other		152		46
Regulatory liabilities-current		716		455
Income taxes refundable through future rates⁽¹⁹⁾		4,378		4,529
Provision for future cost of removal and AROs⁽¹⁶⁾		2,183		2,208
Nuclear decommissioning trust⁽²¹⁾		1,496		1,471
Monetization of guarantee settlement⁽²⁰⁾		920		970
Reserve for refunds and rate credits to electric utility customers⁽¹⁷⁾		570		656
Reserve for future credits to Virginia electric customers⁽²²⁾		200		—
Overrecovered other postretirement benefit costs⁽²³⁾		74		54
Other		349		316
Regulatory liabilities-noncurrent		10,170		10,204
Total regulatory liabilities	$	10,886	$	10,659

(1)	Reflects deferred fuel expenses for the Virginia, North Carolina and South Carolina jurisdictions of Dominion Energy’s electric generation operations.

(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 more information.

(3)	Reflects unrecovered or overrecovered gas costs at regulated gas operations, which are recovered or refunded 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, net of excess deferred income taxes from the 2017 Tax Reform Act for Virginia Power. See Note 13 for more information.

(5)

As a result of actions from the Virginia Commission in the first quarter of 2019 regarding the ratemaking treatment of excess deferred taxes from the adoption of the 2017 Tax Reform Act for all existing rate adjustment clauses, Virginia Power recorded a $29 million ($22 million after-tax) charge in operating revenue in the Consolidated Statements of Income for amounts which are probable of being returned to customers.

(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, 2019 for more information.

(8)	Reflects amounts to be recovered through retail rates in Virginia for payments Virginia Power will make to PJM over a ten-year period ending 2028 under the terms of a FERC settlement agreement in May 2018 resolving a PJM cost allocation matter.

(9)	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.

(10)	During the first quarter of 2019, Virginia Power recorded a charge of $17 million ($13 million after-tax) in impairment of assets and other charges to write-off the balance of a regulatory asset for which it is no longer seeking recovery.

(11)	During the second quarter of 2020, Virginia Power recorded a charge of $16 million ($15 million after-tax) in impairment of assets and other charges to write off the balance of a regulatory asset for which it is no longer seeking recovery.

(12)

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 27 years as of September 30, 2020.

(13)

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.

(14) Costs of the reacquisition of debt are deferred and amortized as interest expense over the would-be remaining life of the reacquired debt. The reacquired debt costs had a weighted-average life of approximately 26 years as of September 30, 2020.

(15)

Primarily reflects legislation enacted in Virginia in March 2019 which requires any CCR unit located at certain Virginia Power stations to be closed by removing the CCRs to an approved landfill or through recycling for beneficial reuse. Subject to approval by the Virginia Commission, amounts are expected to be collected over a period between 15 and 18 years commencing no earlier than 2021. Virginia Power is entitled to collect carrying costs once expenditures have been made. See Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019 for additional information. As a result of the March 2020 planned early retirement of certain facilities, amounts recoverable through riders were reclassified from property, plant and equipment.

(16)	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.

(17)

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, 2019 for more information.

(18)

Balance refundable to customers related to the decrease in revenue requirements for recovery of income taxes at the Companies’ regulated electric generation and electric and natural gas distribution operations. 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, 2019 for more information.

(19)

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.

(20)

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, 2019 for more information.

(21)

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.

(22)

Represents a reserve for benefits expected to be provided to retail electric customers in Virginia in connection with the quadrennial review of Virginia Power’s base rates scheduled to occur in 2021. During the third quarter of 2020, Virginia Power recorded a reserve of $200 million reflected in impairment of assets and other charges in its Consolidated Statements of Income for benefits expected to be provided through the use of a customer credit reinvestment offset in accordance with the GTSA. See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019 for additional information.

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

	September 30, 2020		December 31, 2019
(millions)
Virginia Power
Regulatory assets:
Deferred cost of fuel used in electric generation⁽¹⁾	$	—	$	48
Deferred rate adjustment clause costs⁽²⁾⁽³⁾		14		109
Deferred nuclear refueling outage costs⁽⁴⁾		57		68
PJM transmission rates⁽⁵⁾		95		121
Other		52		87
Regulatory assets-current		218		433
Deferred rate adjustment clause costs^(2)(3)(6)(7)		390		235
PJM transmission rates⁽⁵⁾		46		85
Interest rate hedges⁽⁸⁾		895		404
Ash pond and landfill closure costs⁽⁹⁾		2,160		1,016
Other		119		123
Regulatory assets-noncurrent		3,610		1,863
Total regulatory assets	$	3,828	$	2,296
Regulatory liabilities:
Deferred cost of fuel used in electric generation⁽¹⁾	$	82	$	—
Provision for future cost of removal⁽¹⁰⁾		103		103
Income taxes refundable through future rates⁽¹¹⁾		54		54
Other		73		10
Regulatory liabilities-current		312		167
Income taxes refundable through future rates⁽¹¹⁾		2,406		2,438
Nuclear decommissioning trust⁽¹²⁾		1,496		1,471
Provision for future cost of removal⁽¹⁰⁾		1,014		1,054
Reserve for future credits to Virginia electric customers⁽¹³⁾		200		—
Deferred cost of fuel used in electric generation⁽¹⁾		42		30
Other		166		81
Regulatory liabilities-noncurrent		5,324		5,074
Total regulatory liabilities	$	5,636	$	5,241

(1)	Reflects deferred fuel expenses for the Virginia and North Carolina jurisdictions of Virginia Power’s 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, net of excess deferred income taxes from the 2017 Tax Reform Act for Virginia Power. See Note 13 for more 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)	Reflects amounts to be recovered through retail rates in Virginia for payments Virginia Power will make to PJM over a ten-year period ending 2028 under the terms of a FERC settlement agreement in May 2018 resolving a PJM cost allocation matter.

(6)	During the first quarter of 2019, Virginia Power recorded a charge of $17 million ($13 million after-tax) in impairment of assets and other charges to write-off the balance of a regulatory asset for which it is no longer seeking recovery.

(7)	During the second quarter of 2020, Virginia Power recorded a charge of $16 million ($15 million after-tax) in impairment of assets and other charges to write off the balance of a regulatory asset for which it is no longer seeking recovery.

(8)

(9)

Primarily reflects legislation enacted in Virginia in March 2019 which requires any CCR unit located at certain Virginia Power stations to be closed by removing the CCR to an approved landfill or through recycling for beneficial reuse. Subject to approval by the Virginia Commission, amounts are expected to be collected over a period between 15 and 18 years commencing no earlier than 2021. Virginia Power is entitled to collect carrying costs once expenditures have been made. See Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019 for additional information. As a result of the March 2020 planned early retirement of certain facilities, amounts recoverable through riders were reclassified from property, plant and equipment.

(10)	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.

(11)

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.

(12) 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.

(13) Represents a reserve for benefits expected to be provided to retail electric customers in Virginia in connection with the quadrennial review of Virginia Power’s base rates scheduled to occur in 2021. During the third quarter of 2020, Virginia Power recorded a reserve of $200 million reflected in impairment of assets and other charges in its Consolidated Statements of Income for benefits expected to be provided through the use of a customer credit reinvestment offset in accordance with the GTSA. See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019 for additional information.