Regulatory Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2021

Schedule of Regulatory Assets and Liabilities

Regulatory assets and liabilities include the following:

	September 30, 2021		December 31, 2020
(millions)
Dominion Energy
Regulatory assets:
Deferred cost of fuel used in electric generation⁽¹⁾	$	147	$	—
Deferred project costs and DSM programs for gas utilities⁽²⁾		37		35
Unrecovered gas costs⁽³⁾		161		78
Deferred rider costs for Virginia electric utility⁽⁴⁾		49		98
Deferred nuclear refueling outage costs⁽⁵⁾		70		53
NND Project costs⁽⁶⁾		138		138
PJM transmission rates⁽⁷⁾		9		71
Deferred early plant retirement charges⁽⁸⁾		226		—
Derivatives⁽⁹⁾		161		33
Other		195		193
Regulatory assets-current		1,193		699
Pension and other postretirement benefit costs⁽¹⁰⁾		1,274		1,363
Deferred rider costs for Virginia electric utility⁽⁴⁾		442		311
Deferred project costs for gas utilities⁽²⁾		668		632
Interest rate hedges⁽¹¹⁾		838		1,042
AROs and related funding⁽¹²⁾		332		331
Cost of reacquired debt⁽¹³⁾		11		245
NND Project costs⁽⁶⁾		2,261		2,364
Ash pond and landfill closure costs⁽¹⁴⁾		2,361		2,301
Deferred cost of fuel used in electric generation⁽¹⁾		139		—
Deferred early plant retirement charges⁽⁸⁾		282		—
Other		605		544
Regulatory assets-noncurrent		9,213		9,133
Total regulatory assets	$	10,406	$	9,832
Regulatory liabilities:
Deferred cost of fuel used in electric generation⁽¹⁾	$	1	$	58
Provision for future cost of removal and AROs⁽¹⁵⁾		183		183
Reserve for refunds to electric utility customers⁽¹⁶⁾		422		128
Reserve for future credits to Virginia electric customers⁽¹⁷⁾		—		120
Cost-of-service impact of 2017 Tax Reform Act⁽¹⁸⁾		—		12
Income taxes refundable through future rates⁽¹⁹⁾		140		124
Monetization of guarantee settlement⁽²⁰⁾		67		67
Commodity derivatives⁽²¹⁾		106		9
Other		140		108
Regulatory liabilities-current		1,059		809
Income taxes refundable through future rates⁽¹⁹⁾		4,274		4,376
Provision for future cost of removal and AROs⁽¹⁵⁾		2,321		2,150
Nuclear decommissioning trust⁽²²⁾		1,958		1,719
Monetization of guarantee settlement⁽²⁰⁾		848		903
Reserve for refunds to electric utility customers⁽¹⁶⁾		480		540
Overrecovered other postretirement benefit costs⁽²³⁾		97		111
Other		368		388
Regulatory liabilities-noncurrent		10,346		10,187
Total regulatory liabilities	$	11,405	$	10,996

(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 gas costs at regulated gas operations, which are recovered 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. See Note 13 for more information.

(5)	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.

(6)

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, 2020 for more information.

(7)	Reflects current portion of amounts to be recovered through retail rates in Virginia for payments Virginia Power expects to make to PJM through 2026 under the terms of a FERC settlement agreement in May 2018 resolving a PJM cost allocation matter.

(8)	Reflects amounts from the early retirements of certain coal- and oil-fired generating units to be amortized through 2023 in accordance with the proposed settlement of the 2021 Triennial Review. See Note 13 for additional information.

(9)	For jurisdictions subject to cost-based rate regulation, changes in the fair value of derivative instruments result in the recognition of regulatory assets or regulatory liabilities as they are expected to be recovered from or refunded to customers.

(10)	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.

(11)

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, 2021.

(12)

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.

(13)

During the second quarter of 2021, DESC recorded a charge of $237 million ($178 million after-tax) in impairment of assets and other charges to write-off the balance of a regulatory asset that is no longer probable of recovery under the settlement agreement approved in DESC’s retail electric base rate case. See Note 13 for more information.

(14)

Primarily reflects legislation enacted in Virginia in 2019, 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 once expenditures have been made. See Note 13 for additional information.

(15)

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. Reflects an increase of $66 million associated with the revision of certain gas distribution pipeline AROs in the third quarter of 2021. See Note 2 for more information.

(16)

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, 2020 for more information. Also reflects amounts to be refunded to jurisdictional retail electric customers in Virginia associated with the proposed settlement of the 2021 Triennial Review. See Note 13 for additional information.

(17)	Represents a reserve related to the expected use of a CCRO in accordance with the GTSA associated with the 2021 Triennial Review. See Note 13 for additional 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, 2020 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, 2020 for more information.

(21)	For jurisdictions subject to cost-based rate regulation, changes in the fair value of derivative instruments result in the recognition of regulatory assets or regulatory liabilities as they are expected to be recovered from or refunded to customers.

(22)

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.

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

	September 30, 2021		December 31, 2020
(millions)
Virginia Power
Regulatory assets:
Deferred cost of fuel used in electric generation⁽¹⁾	$	147	$	—
Deferred rider costs⁽²⁾		49		98
Deferred nuclear refueling outage costs⁽³⁾		70		53
PJM transmission rates⁽⁴⁾		9		71
Deferred early plant retirement charges⁽⁵⁾		226		—
Derivatives⁽⁶⁾		153		40
Other		36		33
Regulatory assets-current		690		295
Deferred rider costs⁽²⁾		442		311
Interest rate hedges⁽⁷⁾		540		733
Ash pond and landfill closure costs⁽⁸⁾		2,361		2,301
Deferred cost of fuel used in electric generation⁽¹⁾		139		—
Deferred early plant retirement charges⁽⁵⁾		282		—
Other		177		164
Regulatory assets-noncurrent		3,941		3,509
Total regulatory assets	$	4,631	$	3,804
Regulatory liabilities:
Deferred cost of fuel used in electric generation⁽¹⁾	$	1	$	58
Provision for future cost of removal⁽⁹⁾		152		152
Reserve for refunds to Virginia electric customers⁽¹⁰⁾		299		—
Reserve for future credits to Virginia electric customers⁽¹¹⁾		—		120
Income taxes refundable through future rates⁽¹²⁾		54		54
Derivatives⁽⁶⁾		92		8
Other		87		33
Regulatory liabilities-current		685		425
Income taxes refundable through future rates⁽¹²⁾		2,356		2,404
Nuclear decommissioning trust⁽¹³⁾		1,958		1,719
Provision for future cost of removal⁽⁹⁾		1,042		980
Deferred cost of fuel used in electric generation⁽¹⁾		—		54
Reserve for refunds to Virginia electric customers⁽¹⁰⁾		31		—
Other		173		181
Regulatory liabilities-noncurrent		5,560		5,338
Total regulatory liabilities	$	6,245	$	5,763

(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. See Note 13 for more information.

(3)	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.

(4)	Reflects current portion of amounts to be recovered through retail rates in Virginia for payments Virginia Power expects to make to PJM through 2026 under the terms of a FERC settlement agreement in May 2018 resolving a PJM cost allocation matter.

(5)	Reflects amounts from the early retirements of certain coal- and oil-fired generating units to be amortized through 2023 in accordance with the proposed settlement of the 2021 Triennial Review. See Note 13 for additional information.

(6)	For jurisdictions subject to cost-based rate regulation, changes in the fair value of derivative instruments result in the recognition of regulatory assets or regulatory liabilities as they are expected to be recovered from or refunded to customers.

(7)

(8)

(9)	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.

(10)	Reflects amounts to be refunded to jurisdictional retail electric customers in Virginia associated with the proposed settlement of the 2021 Triennial Review. See Note 13 for additional information.

(11)	Represents a reserve related to the expected use of a CCRO in accordance with the GTSA associated with the 2021 Triennial Review. See Note 13 for additional information.

(12)

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.

(13)

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.