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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2025

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____ to _____

 

 

 

 

 

I.R.S. Employer

Commission File Number

 

Exact name of registrant as specified in its charter

 

Identification Number

 

 

 

 

 

001-3375

DOMINION ENERGY SOUTH CAROLINA, INC.

57-0248695

 

 

 

 

 

 

south carolina

 

 

(State or other jurisdiction of incorporation or organization)

 

 

 

 

 

 

 

 

220 OPERATION WAY

 

 

 

 

CAYCE, South Carolina

 

29033

 

 

(Address of principal executive offices)

 

(Zip Code)

 

 

 

 

 

 

 

(804) 819-2284

 

 

 

(Registrants’ telephone number)

 

Securities registered pursuant to Section 12(b) of the Act:

None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Emerging growth company

Non-accelerated filer

 

Smaller reporting company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. At April 25, 2025, Dominion Energy South Carolina, Inc. had outstanding 40,296,147 shares of common stock, all of which were held by SCANA Corporation, a wholly-owned subsidiary of Dominion Energy, Inc.

Dominion Energy South Carolina, Inc. meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is filing this Form 10-Q under the reduced disclosure format.

1
 



 

TABLE OF CONTENTS

 

 

 

 

 

Page

 

 

Glossary of Terms

 

3

 

 

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements

 

5

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

26

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

29

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

30

 

 

 

 

 

Item 1A.

 

Risk Factors

 

30

Item 5.

 

Other Information

 

30

 

 

 

 

 

Item 6.

 

Exhibits

 

31

 

 

 

 

 

 

 

 

 

2

 


 

GLOSSARY OF TERMS

The following abbreviations or acronyms used in this Form 10-Q are defined below:

 

Abbreviation or Acronym

 

Definition

2017 Tax Reform Act

 

An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (previously known as The Tax Cuts and Jobs Act) enacted on December 22, 2017

AFUDC

 

Allowance for funds used during construction

AOCI

 

Accumulated other comprehensive income (loss)

ARO

 

Asset retirement obligation

bcf

 

Billion cubic feet

BTA

 

Best technology available

CAA

 

Clean Air Act

CCR

 

Coal combustion residual

CEO

 

Chief Executive Officer

CERCLA

 

Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as Superfund

CFO

 

Chief Financial Officer

CO2

 

Carbon dioxide

Cooling degree days

 

Units measuring the extent to which the average daily temperature is greater than 75 degrees Fahrenheit, calculated as the difference between 75 degrees and the average temperature for that day

CODM

 

Chief Operating Decision Maker

CPCN

 

Certificate of Public Convenience and Necessity

CUA

 

Capacity Use Area

CWA

 

Clean Water Act

DES

 

Dominion Energy Services, Inc.

DESC

 

The legal entity, Dominion Energy South Carolina, Inc., one or more of its consolidated entities or operating segment, or the entirety of Dominion Energy South Carolina, Inc. and its consolidated entities

Dominion Energy

 

The legal entity, Dominion Energy, Inc., one or more of its consolidated subsidiaries (other than DESC) or operating segments, or the entirety of Dominion Energy, Inc. and its consolidated subsidiaries

Dominion Energy South Carolina

 

Dominion Energy South Carolina operating segment

 

DSM

 

Demand-side management

Dth

 

Dekatherm

ELG Rule

 

Effluent limitations guidelines for the steam electric power generating category

EPA

 

U.S. Environmental Protection Agency

FERC

 

Federal Energy Regulatory Commission

Fuel Company

 

South Carolina Fuel Company, Inc.

GAAP

 

U.S. generally accepted accounting principles

GENCO

 

South Carolina Generating Company, Inc.

GHG

 

Greenhouse gas

Heating degree days

 

Units measuring the extent to which the average daily temperature is less than 60 degrees Fahrenheit, calculated as the difference between 60 degrees and the average temperature for that day

kV

 

Kilovolt

MD&A

 

Managements Discussion and Analysis of Financial Condition and Results of Operations

MGD

 

Million gallons per day

MWh

 

Megawatt hour

Natural Gas Rate Stabilization Act

 

Legislation effective February 2005 designed to improve and maintain natural gas service infrastructure to meet the needs of customers in South Carolina

3


 

Abbreviation or Acronym

 

Definition

NND Project

 

V. C. Summer Units 2 and 3 nuclear development project under which DESC and Santee Cooper undertook to construct two Westinghouse AP1000 Advanced Passive Safety nuclear units in Jenkinsville, South Carolina

NOx

 

Nitrogen oxide

Order 1000

 

Order issued by FERC adopting requirements for electric transmission planning, cost allocation and development

PSD

 

Prevention of significant deterioration

Santee Cooper

 

South Carolina Public Service Authority

SCANA

 

The legal entity, SCANA Corporation, one or more of its consolidated subsidiaries (other than DESC) or the entirety of SCANA Corporation and its consolidated subsidiaries

SCANA Combination

 

Dominion Energys acquisition of SCANA completed on January 1, 2019 pursuant to the terms of the SCANA Merger Agreement

SCANA Merger Agreement

 

Agreement and plan of merger entered on January 2, 2018 between Dominion Energy and SCANA

SCANA Merger Approval Order

 

Final order issued by the South Carolina Commission on December 21, 2018 setting forth its approval of the SCANA Combination

SCDES

 

South Carolina Department of Environmental Services

SEC

 

U.S. Securities and Exchange Commission

SO2

 

Sulfur dioxide

South Carolina Commission

 

Public Service Commission of South Carolina

Summer

 

V. C. Summer nuclear power station

Toshiba

 

Toshiba Corporation, parent company of Westinghouse

Toshiba Settlement

 

Settlement Agreement dated as of July 27, 2017, by and among Toshiba, DESC and Santee Cooper

VIE

 

Variable interest entity

Virginia Power

 

The legal entity, Virginia Electric and Power Company, a wholly-owned subsidiary of Dominion Energy, one or more of its consolidated subsidiaries or operating segment, or the entirety of Virginia Electric and Power Company and its consolidated subsidiaries

Westinghouse

 

Westinghouse Electric Company LLC

 

 

4


 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Dominion Energy South Carolina, Inc.

Consolidated Balance Sheets

(Unaudited)

 

(millions)

 

March 31, 2025

 

 

December 31, 2024

 

ASSETS

 

 

 

 

 

 

Utility plant in service

 

$

16,488

 

 

$

16,300

 

Accumulated depreciation and amortization

 

 

(5,809

)

 

 

(5,761

)

Construction work in progress

 

 

913

 

 

 

899

 

Nuclear fuel, net of accumulated amortization

 

 

215

 

 

 

224

 

Utility plant, net ($822 and $824 related to VIEs)

 

 

11,807

 

 

 

11,662

 

Nonutility Property and Investments:

 

 

 

 

 

 

Nonutility property, net of accumulated depreciation

 

 

16

 

 

 

16

 

Assets held in trust, nuclear decommissioning

 

 

269

 

 

 

268

 

Nonutility property and investments, net

 

 

285

 

 

 

284

 

Current Assets:

 

 

 

 

 

 

Cash and cash equivalents

 

 

7

 

 

 

 

Receivables:

 

 

 

 

 

 

Customer, net of allowance for uncollectible accounts of $8 and $6

 

 

403

 

 

 

423

 

Affiliated and related party

 

 

3

 

 

 

4

 

Other

 

 

87

 

 

 

104

 

Inventories (at average cost):

 

 

 

 

 

 

Fuel

 

 

88

 

 

 

83

 

Gas storage

 

 

19

 

 

 

22

 

Materials and supplies

 

 

214

 

 

 

211

 

Prepayments

 

 

81

 

 

 

91

 

Derivative assets(1)

 

 

73

 

 

 

63

 

Regulatory assets

 

 

340

 

 

 

299

 

Other current assets

 

 

15

 

 

 

16

 

Total current assets ($83 and $79 related to VIEs)

 

 

1,330

 

 

 

1,316

 

Deferred Debits and Other Assets:

 

 

 

 

 

 

Derivative assets(1)

 

 

206

 

 

 

309

 

Regulatory assets

 

 

3,362

 

 

 

3,342

 

Affiliated receivables

 

 

26

 

 

 

26

 

Other

 

 

102

 

 

 

102

 

Total deferred debits and other assets ($27 and $25 related to VIEs)

 

 

3,696

 

 

 

3,779

 

Total assets

 

$

17,118

 

 

$

17,041

 

(1) See Note 12 for amounts attributable to affiliates.

 

See Notes to Consolidated Financial Statements.

5


 

Dominion Energy South Carolina, Inc.

Consolidated Balance Sheets—(Continued)

(Unaudited)

 

(millions)

 

March 31, 2025

 

 

December 31,
2024

 

CAPITALIZATION AND LIABILITIES

 

 

 

 

 

 

Common Stock - no par value, 40.3 million shares outstanding

 

$

4,338

 

 

$

4,088

 

Retained earnings

 

 

831

 

 

 

689

 

Accumulated other comprehensive loss

 

 

(1

)

 

 

(1

)

Total common equity

 

 

5,168

 

 

 

4,776

 

Noncontrolling interest

 

 

214

 

 

 

206

 

Total equity

 

 

5,382

 

 

 

4,982

 

Long-term debt, net

 

 

4,666

 

 

 

4,220

 

Affiliated long-term debt

 

 

230

 

 

 

230

 

Finance leases

 

 

2

 

 

 

2

 

Total long-term debt

 

 

4,898

 

 

 

4,452

 

Total capitalization

 

 

10,280

 

 

 

9,434

 

Current Liabilities:

 

 

 

 

 

 

Short-term borrowings

 

 

210

 

 

 

250

 

Securities due within one year

 

 

2

 

 

 

2

 

Accounts payable

 

 

201

 

 

 

273

 

Affiliated and related party payables

 

 

623

 

 

 

995

 

Customer deposits and customer prepayments

 

 

75

 

 

 

82

 

Taxes accrued

 

 

73

 

 

 

254

 

Interest accrued

 

 

90

 

 

 

83

 

Regulatory liabilities

 

 

227

 

 

 

201

 

Derivative liabilities

 

 

1

 

 

 

 

Other

 

 

159

 

 

 

201

 

Total current liabilities

 

 

1,661

 

 

 

2,341

 

Deferred Credits and Other Liabilities:

 

 

 

 

 

 

Deferred income taxes and investment tax credits

 

 

1,447

 

 

 

1,409

 

Asset retirement obligations

 

 

1,142

 

 

 

1,139

 

Pension and other postretirement benefits

 

 

109

 

 

 

109

 

Derivative liabilities

 

 

6

 

 

 

1

 

Regulatory liabilities

 

 

2,361

 

 

 

2,488

 

Other

 

 

112

 

 

 

120

 

Total deferred credits and other liabilities

 

 

5,177

 

 

 

5,266

 

Commitments and Contingencies (see Note 10)

 

 

 

 

 

 

Total capitalization and liabilities

 

$

17,118

 

 

$

17,041

 

 

See Notes to Consolidated Financial Statements.

6


 

Dominion Energy South Carolina, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)

 

 

 

Three Months Ended March 31,

 

(millions)

 

2025

 

 

2024

 

Operating Revenue(1)

 

$

986

 

 

$

775

 

Operating Expenses:

 

 

 

 

 

 

Fuel used in electric generation

 

 

204

 

 

 

145

 

Purchased power(1)

 

 

22

 

 

 

10

 

Gas purchased for resale

 

 

126

 

 

 

79

 

Other operations and maintenance

 

 

131

 

 

 

122

 

Other operations and maintenance – affiliated suppliers

 

 

43

 

 

 

41

 

Depreciation and amortization

 

 

140

 

 

 

136

 

Other taxes(1)

 

 

82

 

 

 

78

 

Total operating expenses

 

 

748

 

 

 

611

 

Operating income

 

 

238

 

 

 

164

 

Other income (expense), net

 

 

3

 

 

 

1

 

Interest charges, net of AFUDC of $6 and $4(1)

 

 

71

 

 

 

67

 

Income before income tax expense

 

 

170

 

 

 

98

 

Income tax expense

 

 

20

 

 

 

18

 

Net Income and Other Comprehensive Income

 

 

150

 

 

 

80

 

Comprehensive Income Attributable to Noncontrolling Interest

 

 

8

 

 

 

6

 

Comprehensive Income Available to Common Shareholder

 

$

142

 

 

$

74

 

(1) See Note 12 for amounts attributable to affiliates.

 

See Notes to Consolidated Financial Statements.

7


 

Dominion Energy South Carolina, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Three Months Ended March 31,

 

(millions)

 

2025

 

 

2024

 

Operating Activities

 

 

 

 

 

 

Net income

 

$

150

 

 

$

80

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

Deferred income taxes, net

 

 

38

 

 

 

5

 

Depreciation and amortization

 

 

140

 

 

 

136

 

Amortization of nuclear fuel

 

 

10

 

 

 

9

 

Other adjustments

 

 

5

 

 

 

 

Changes in certain assets and liabilities:

 

 

 

 

 

 

Receivables

 

 

29

 

 

 

45

 

Receivables - affiliated and related party

 

 

1

 

 

 

1

 

Inventories

 

 

(4

)

 

 

(1

)

Prepayments and deposits, net

 

 

3

 

 

 

2

 

Regulatory assets

 

 

(98

)

 

 

79

 

Regulatory liabilities

 

 

(100

)

 

 

41

 

Accounts payable

 

 

(34

)

 

 

(18

)

Accounts payable - affiliated and related party

 

 

12

 

 

 

43

 

Taxes accrued

 

 

(181

)

 

 

(177

)

Interest accrued

 

 

7

 

 

 

2

 

Net realized and unrealized changes related to commodity derivative activities

 

 

98

 

 

 

(78

)

Pension and other postretirement benefits

 

 

 

 

 

(1

)

Other assets and liabilities

 

 

(22

)

 

 

(2

)

Net cash provided by operating activities

 

 

54

 

 

 

166

 

Investing Activities

 

 

 

 

 

 

Property additions and construction expenditures

 

 

(297

)

 

 

(268

)

Proceeds from investments and sales or disposals of assets, including asset retirement costs

 

 

(23

)

 

 

(13

)

Purchase of investments

 

 

 

 

 

(5

)

Other

 

 

1

 

 

 

 

Net cash used in investing activities

 

 

(319

)

 

 

(286

)

 Financing Activities

 

 

 

 

 

 

Proceeds from issuance of debt

 

 

450

 

 

 

 

Dividend to parent

 

 

 

 

 

(62

)

Contribution from parent

 

 

250

 

 

 

 

Short-term borrowings, net

 

 

(40

)

 

 

(44

)

Short-term borrowings - affiliated, net

 

 

(384

)

 

 

230

 

Other

 

 

(4

)

 

 

(1

)

Net cash provided by financing activities

 

 

272

 

 

 

123

 

Net increase in cash, restricted cash and equivalents

 

 

7

 

 

 

3

 

Cash, restricted cash and equivalents at beginning of period(1)

 

 

 

 

 

1

 

Cash, restricted cash and equivalents at end of period(1)

 

$

7

 

 

$

4

 

Supplemental Cash Flow Information

 

 

 

 

 

 

Significant noncash investing and financing activities:

 

 

 

 

 

 

Accrued construction expenditures

 

$

73

 

 

$

56

 

Operating leases(2)

 

 

4

 

 

 

 

(1)
At March 31, 2025, December 31, 2024, March 31, 2024 and December 31, 2023 there were no restricted cash and equivalents balances.
(2)
Finance leases entered into, if any, were inconsequential for all periods presented.

 

See Notes to Consolidated Financial Statements.

8


 

Dominion Energy South Carolina, Inc.

Consolidated Statements of Changes in Common Equity

(Unaudited)

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

(millions)

 

Shares

 

 

Amount

 

 

Retained
Earnings

 

 

AOCI

 

 

Noncontrolling
Interest

 

 

Total
Equity

 

December 31, 2023

 

 

40

 

 

$

4,088

 

 

$

592

 

 

$

(1

)

 

$

183

 

 

$

4,862

 

Total comprehensive income available to
   common shareholder

 

 

 

 

 

 

 

 

74

 

 

 

 

 

 

6

 

 

 

80

 

Dividend to parent

 

 

 

 

 

 

 

 

(62

)

 

 

 

 

 

 

 

 

(62

)

March 31, 2024

 

 

40

 

 

$

4,088

 

 

$

604

 

 

$

(1

)

 

$

189

 

 

$

4,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2024

 

 

40

 

 

$

4,088

 

 

$

689

 

 

$

(1

)

 

$

206

 

 

$

4,982

 

Total comprehensive income available to
   common shareholder

 

 

 

 

 

 

 

 

142

 

 

 

 

 

 

8

 

 

 

150

 

Capital contribution from parent

 

 

 

 

250

 

 

 

 

 

 

 

 

 

 

 

 

250

 

March 31, 2025

 

 

40

 

 

$

4,338

 

 

$

831

 

 

$

(1

)

 

$

214

 

 

$

5,382

 

 

See Notes to Consolidated Financial Statements.

9


 

Dominion Energy South Carolina, Inc.

Notes to Consolidated Financial Statements

(Unaudited)

The following notes should be read in conjunction with the Notes to Consolidated Financial Statements appearing in DESC’s Annual Report on Form 10-K for the year ended December 31, 2024.

These are interim financial statements and, due to the seasonality of DESC’s business and matters that may occur during the rest of the year, the amounts reported in the Consolidated Statements of Comprehensive Income are not necessarily indicative of amounts expected for the full year. In the opinion of management, the information furnished herein reflects all adjustments which are necessary for a fair statement of the results for the interim periods reported, and such adjustments are of a normal recurring nature unless otherwise noted. In addition, the preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Certain amounts in DESC’s 2024 Consolidated Financial Statements and Notes have been reclassified to conform to the 2025 presentation for comparative purposes; however, such reclassifications did not affect DESC’s net income and other comprehensive income, total assets, liabilities, equity or cash flows.

DESC is a wholly-owned subsidiary of SCANA, which is a wholly-owned subsidiary of Dominion Energy.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation and Variable Interest Entities

DESC has determined that it has a controlling financial interest in each of GENCO and Fuel Company (which are considered to be VIEs) and, accordingly, DESC’s Consolidated Financial Statements include, after eliminating intercompany balances and transactions, the accounts of DESC, GENCO and Fuel Company. See Note 2 to the Consolidated Financial Statements included in DESC’s Annual Report on Form 10-K for the year ended December 31, 2024 for a description of GENCO and Fuel Company.

DESC purchases shared services from DES, an affiliated VIE that provides accounting, legal, finance and certain administrative and technical services to all Dominion Energy subsidiaries, including DESC. DESC has determined that it is not the primary beneficiary of DES as it does not have either the power to direct the activities that most significantly impact its economic performance or an obligation to absorb losses and benefits which could be significant to it. See Note 12 for amounts attributable to affiliates.

Significant Accounting Policies

There have been no significant changes from Note 2 to the Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2024.

2. RATE AND OTHER REGULATORY MATTERS

 

Regulatory Matters Involving Potential Loss Contingencies

As a result of issues generated in the ordinary course of business, DESC is involved in various regulatory matters. Certain regulatory matters may ultimately result in a loss; however, as such matters are in an initial procedural phase, involve uncertainty as to the outcome of pending reviews or orders, and/or involve significant factual issues that need to be resolved, it is not possible for DESC to estimate a range of possible loss. For regulatory matters that DESC cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the regulatory process such that DESC is able to estimate a range of possible loss. For regulatory matters that DESC is able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any estimated range is based on currently available information, involves elements of judgment and significant uncertainties and may not represent DESC’s maximum possible loss exposure. The circumstances of such regulatory matters will change from time to time and actual results may vary significantly from the current estimate. For current matters not specifically reported below, management does not anticipate that the outcome from such matters would have a material effect on DESC’s financial position, liquidity or results of operations.

Other Regulatory Matters

Other than the following matters, there have been no significant developments regarding the pending regulatory matters disclosed in Note 3 to the Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2024.

10


 

Electric – Cost of Fuel

DESC’s retail electric rates include a cost of fuel component approved by the South Carolina Commission which may be adjusted periodically to reflect changes in the price of fuel purchased by DESC. In February 2025, DESC filed with the South Carolina Commission a proposal to increase the total fuel cost component of retail electric rates. DESC’s proposed adjustment is designed to recover DESC’s current base fuel costs, including its existing under-collected balance, over the 12-month period beginning with the first billing cycle of May 2025. In addition, DESC proposed an increase to its variable environmental and avoided capacity cost component. The net effect is a proposed annual increase of $154 million. In March 2025, DESC and the South Carolina Office of Regulatory Staff filed a settlement agreement with the South Carolina Commission for approval to make certain adjustments to the February 2025 filing that would result in an inconsequential change to the proposed annual increase. In April 2025, the South Carolina Commission approved the settlement agreement, with rates effective with the first billing cycle of May 2025.

Electric - Transmission Project

In December 2024, DESC filed an application with the South Carolina Commission requesting approval of a CPCN to construct and operate the Ritter - Yemassee Transmission Line #2, comprised of a 17-mile 230 kV transmission line and associated facilities in Colleton and Hampton Counties, South Carolina with an estimated total project cost of $55 million. In April 2025, the South Carolina Commission approved the application.

Electric – Other

DESC has approval for a DSM rider through which it recovers expenditures related to its DSM programs. In January 2025, DESC filed an application with the South Carolina Commission seeking approval to recover $46 million of costs and net lost revenues associated with these programs, along with an incentive to invest in such programs. DESC requested that rates be effective with the first billing cycle of May 2025. In April 2025, the South Carolina Commission approved the request, effective with the first billing cycle of May 2025.

DESC utilizes a pension costs rider approved by the South Carolina Commission which is designed to allow recovery of projected pension costs, including under-collected balances or net of over-collected balances, as applicable. The rider is typically reviewed for adjustment every 12 months with any resulting increase or decrease going into effect beginning with the first billing cycle in May. In February 2025, DESC requested that the South Carolina Commission approve an adjustment to this rider to decrease annual revenue by $13 million. In April 2025, the South Carolina Commission approved the request.

 

11


 

Regulatory Assets and Regulatory Liabilities

Rate-regulated utilities recognize in their financial statements certain revenues and expenses in different periods than do other enterprises. As a result, DESC has recorded regulatory assets and regulatory liabilities which are summarized in the following table. Except for NND Project costs and certain other unrecovered costs referenced herein, substantially all regulatory assets are either explicitly excluded from rate base or are effectively excluded from rate base due to their being offset by related liabilities.

 

 

 

March 31,

 

 

December 31,

 

(millions)

 

2025

 

 

2024

 

Regulatory assets:

 

 

 

 

 

 

NND Project costs(1)

 

$

138

 

 

$

138

 

AROs(2)

 

 

6

 

 

 

8

 

Deferred employee benefit plan costs(3)

 

 

5

 

 

 

8

 

Other unrecovered plant(4)

 

 

18

 

 

 

18

 

DSM programs(5)

 

 

23

 

 

 

24

 

Cost of fuel and purchased gas under-collections(6)

 

 

92

 

 

 

35

 

Other

 

 

58

 

 

 

68

 

Regulatory assets - current

 

 

340

 

 

 

299

 

NND Project costs(1)

 

 

1,776

 

 

 

1,811

 

AROs(2)

 

 

704

 

 

 

695

 

Deferred employee benefit plan costs(3)

 

 

96

 

 

 

94

 

Interest rate hedges(7)

 

 

167

 

 

 

167

 

Other unrecovered plant(4)

 

 

94

 

 

 

89

 

DSM programs(5)

 

 

48

 

 

 

49

 

Environmental remediation costs(8)

 

 

42

 

 

 

42

 

Deferred storm damage costs(9)

 

 

77

 

 

 

76

 

Deferred transmission operating costs(10)

 

 

71

 

 

 

72

 

Derivatives(11)

 

 

94

 

 

 

95

 

Other(12)

 

 

193

 

 

 

152

 

Regulatory assets - noncurrent

 

 

3,362

 

 

 

3,342

 

Total regulatory assets

 

$

3,702

 

 

$

3,641

 

Regulatory liabilities:

 

 

 

 

 

 

Monetization of guaranty settlement(13)

 

$

67

 

 

$

67

 

Income taxes refundable through future rates(14)

 

 

17

 

 

 

24

 

Reserve for refunds to electric utility customers(15)

 

 

67

 

 

 

73

 

Derivatives(11)

 

 

44

 

 

 

27

 

Other

 

 

32

 

 

 

10

 

Regulatory liabilities - current

 

 

227

 

 

 

201

 

Monetization of guaranty settlement(13)

 

 

552

 

 

 

568

 

Income taxes refundable through future rates(14)

 

 

838

 

 

 

820

 

Asset removal costs(16)

 

 

597

 

 

 

598

 

Reserve for refunds to electric utility customers(15)

 

 

146

 

 

 

161

 

Derivatives(11)

 

 

223

 

 

 

328

 

Other

 

 

5

 

 

 

13

 

Regulatory liabilities - noncurrent

 

 

2,361

 

 

 

2,488

 

Total regulatory liabilities

 

$

2,588

 

 

$

2,689

 

 

(1)
Reflects expenditures associated with the NND Project, which pursuant to the SCANA Merger Approval Order, will be recovered from electric service customers over a 20-year period ending in 2039.
(2)
Represents uncollected costs, including 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. In addition, the balance reflects amounts related to the EPA’s May 2024 final rule concerning CCR as discussed in Note 10.
(3)
Employee benefit plan costs have historically been recovered as they have been recorded under GAAP. Deferred employee benefit plan costs represent amounts of pension and other postretirement benefit costs which were accrued as liabilities and treated as regulatory assets pursuant to FERC guidance, and costs deferred pursuant to specific South Carolina Commission regulatory orders. Based on rates currently in effect, DESC expects to recover certain deferred benefit costs through utility rates over average service periods of participating employees, which is approximately 11 years. DESC expects to recover other deferred pension costs through utility rates over periods through 2044.

12


 

(4)
Represents the carrying value of coal-fired generating units, including related materials and supplies inventory, retired from service prior to being fully depreciated. DESC is amortizing these amounts through cost of service rates following depreciation amounts that were designed to recover the retired units cost over their previous estimated remaining useful lives, which has been estimated to be through 2025. Based on current projections of remaining decommissioning costs, projected recovery is expected to extend through 2039. In addition, amounts include unrecovered costs of existing meters and equipment retired from service prior to being fully depreciated as part of the Advanced Metering Infrastructure project, which are being recovered through rates through 2028. This amount also includes certain inventory and preliminary survey and investigation charges being amortized through 2026 related to the transition or conversion from coal to gas fired generation at certain facilities. The majority of unamortized amounts are included in rate base and are earning a current return.
(5)
Primarily represents deferred costs associated with electric demand reduction programs, and such deferred costs are currently being recovered over three years through an approved rate rider.
(6)
Represents amounts under- or over-collected from customers pursuant to the cost of fuel and purchased gas components approved by the South Carolina Commission.
(7)
Represents settled interest rate derivatives designated as cash flow hedges expected to be amortized to interest expense over the lives of the underlying debt through 2065.
(8)
Reflects amounts associated with the assessment and clean-up of sites currently or formerly owned by DESC. Such remediation costs are expected to be recovered over periods of up to 24 years. See Note 10 for additional information.
(9)
Represents storm restoration costs for which DESC expects to receive future recovery. Pursuant to the settlement agreement approved in DESC’s retail electric base rate case in August 2024, for costs incurred prior to September 2024, DESC expects to receive future recovery through customer rates through 2034 and for costs incurred effective September 2024, DESC expects to receive future recovery through customer rates of approximately $2 million each year. Unamortized amounts are included in rate base and are earning a current return.
(10)
Includes deferred depreciation and property taxes associated with certain transmission assets for which DESC expects future recovery from customers through 2062. Unamortized amounts are included in rate base and earning a current return.
(11)
Represents changes in the fair value of derivatives, excluding separately presented interest rate hedges, that following settlement are expected to be recovered from or refunded to customers.
(12)
Various other regulatory assets are expected to be recovered through rates over varying periods through 2078.
(13)
Represents proceeds related to the monetization of the Toshiba Settlement. In accordance with the SCANA Merger Approval Order, this balance, net of amounts that may be required to satisfy liens, will be refunded to electric customers over a 20-year period ending in 2039.
(14)
Includes (i) excess deferred income taxes arising from the remeasurement of deferred income taxes in connection with the enactment of the 2017 Tax Reform Act (certain of which are protected under normalization rules and will be amortized over the remaining lives of related property, and certain of which will be amortized to the benefit of customers over prescribed periods as instructed by regulators) and (ii) deferred income taxes arising from investment tax credits, offset by (iii) deferred income taxes that arise from utility operations that have not been included in customer rates (a portion of which relate to depreciation and are expected to be recovered over the remaining lives of the related property which may range up to 85 years).
(15)
Reflects amounts previously collected from retail electric customers of DESC for the NND Project to be credited to customers over an estimated 11-year period effective February 2019 in connection with the SCANA Merger Approval Order.
(16)
Represents estimated net collections through depreciation rates of amounts to be expended for the removal of assets in the future.

 

Regulatory assets have been recorded based on the probability of their recovery. All regulatory assets represent incurred costs that may be deferred under GAAP for regulated operations. The South Carolina Commission or FERC has reviewed and approved through specific orders certain of the items shown as regulatory assets. In addition, regulatory assets include, but are not limited to, certain costs which have not been specifically approved for recovery by one of these regulatory agencies. While such costs are not currently being recovered, management believes that they would be allowable under existing rate-making concepts embodied in rate orders or applicable state law and expects to recover these costs through rates in future periods.

3. OPERATING REVENUE

DESC’s revenue consists of the following:

 

Three Months Ended March 31,

2025

 

 

2024

 

(millions)

Electric

 

 

Gas

 

 

Electric

 

 

Gas

 

Customer class:

 

 

 

 

 

 

 

 

 

 

 

Residential

$

371

 

 

$

151

 

 

$

283

 

 

$

117

 

Commercial

 

228

 

 

 

54

 

 

 

188

 

 

 

41

 

Industrial

 

109

 

 

 

27

 

 

 

87

 

 

 

18

 

Other

 

32

 

 

 

8

 

 

 

28

 

 

 

6

 

Revenues from contracts with customers

 

740

 

 

 

240

 

 

 

586

 

 

 

182

 

Other revenues

 

6

 

 

 

 

 

 

7

 

 

 

 

Total Operating Revenues

$

746

 

 

$

240

 

 

$

593

 

 

$

182

 

 

13


 

Contract liabilities represent the obligation to transfer goods or services to a customer for which consideration has already been received from the customer. DESC had contract liability balances of $5 million and $6 million at March 31, 2025 and December 31, 2024, respectively. During both the three months ended March 31, 2025 and 2024, DESC recognized revenue of $3 million from the beginning contract liability balances as DESC fulfilled its obligations to provide service to its customers. Contract liabilities are recorded in customer deposits and customer prepayments in the Consolidated Balance Sheets.

 

Balances and activity related to contract costs deferred as regulatory assets were as follows:

 

 

 

Regulatory Assets

 

(millions)

 

March 31, 2025

 

 

December 31, 2024

 

Beginning balance

 

$

10

 

 

$

11

 

Additional costs

 

 

4

 

 

 

 

Amortization

 

 

 

 

 

(1

)

Ending balance

 

$

14

 

 

$

10

 

 

4. EQUITY

For all periods presented, DESC’s authorized shares of common stock, no par value, were 50 million, of which 40.3 million were issued and outstanding, and DESC’s authorized shares of preferred stock, no par value, were 20 million, of which 1,000 shares were issued and outstanding. All outstanding shares of common and preferred stock are held by SCANA.

There have been no material changes to the dividend restrictions affecting DESC described in Note 5 to the Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2024.

During the first quarter of 2025, DESC received equity contributions of $250 million from Dominion Energy. DESC primarily used these funds for working capital needs including reducing short-term debt.

5. LONG-TERM AND SHORT-TERM DEBT

DESC’s short-term financing is supported through its access as co-borrower to Dominion Energy’s $7.0 billion joint revolving credit facility, as amended April 2025. The credit facility can be used for working capital, as support for the combined commercial paper programs of the borrowers under the credit facility and for other general corporate purposes. Other than the items discussed below, there have been no significant changes from Note 6 to the Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2024.

14


 

At March 31, 2025, DESC’s share of commercial paper and letters of credit outstanding under its joint credit facility with Dominion Energy was as follows:

 

(millions)

 

Maximum Facility Sub-Limit

 

 

Outstanding
Commercial Paper

 

 

Outstanding
Letters of Credit

 

Joint revolving credit facility(1)

 

$

1,000

 

 

$

210

 

 

$

 

 

(1)
A maximum of $1.0 billion of the facility is available to DESC, assuming adequate capacity is available after giving effect to uses by co-borrowers Dominion Energy and Virginia Power. A sub-limit for DESC is set within the facility limit but can be changed at the option of the co-borrowers multiple times per year. At March 31, 2025, the sub-limit for DESC was $500 million. In April 2025, the sub-limit was increased up to $1.0 billion. If DESC has liquidity needs in excess of its sub-limit, the sub-limit may be changed provided that it does not exceed $1.0 billion or such needs may be satisfied through short-term borrowings from Dominion Energy. This credit facility, as amended in April 2025, matures in April 2030, with the potential to be extended by the borrowers to April 2032. The credit facility can be used to support bank borrowings and the issuance of commercial paper, as well as to support up to $3.0 billion (or the sub-limit, whichever is less) of letters of credit.

In March 2025, FERC granted DESC authority through March 2027 to issue short-term indebtedness (pursuant to Section 204 of the Federal Power Act) in amounts not to exceed $1.8 billion outstanding with maturity dates of one year or less. At March 31, 2025, DESC had issued $210 million in commercial paper supported by its joint revolving credit facility with Dominion Energy as disclosed above and had drawn on $227 million of its intercompany credit facility with Dominion Energy, as permitted by this FERC authorization. In addition, in March 2025, FERC granted GENCO authority through March 2027 to issue short-term indebtedness not to exceed $300 million outstanding with maturity dates of one year or less. At March 31, 2025, GENCO had drawn on $63 million of its intercompany credit facility with Dominion Energy, as permitted by this FERC authorization.

DESC is obligated with respect to an aggregate of $68 million of industrial revenue bonds which are secured by letters of credit. These letters of credit expire, subject to renewal, in the fourth quarter of 2025.

DESC, GENCO and Fuel Company each have intercompany credit facilities with Dominion Energy with a maximum capacity of $900 million, $200 million and $400 million, respectively. At March 31, 2025 and December 31, 2024, DESC, GENCO and Fuel Company collectively had borrowings outstanding under these agreements totaling $558 million and $942 million, respectively, which are recorded in affiliated and related party payables in DESC’s Consolidated Balance Sheets. Interest charges associated with these agreements were $11 million and $10 million for the three months ended March 31, 2025 and 2024, respectively.

In January 2025, DESC issued $450 million of 5.30% first mortgage bonds that mature in 2035. The proceeds were used for general corporate purposes and/or to repay short-term debt.

6. INCOME TAXES

 

For continuing operations, including noncontrolling interests, the statutory U.S. federal income tax rate reconciles to DESC’s effective income tax rate as follows:

 

Three Months Ended March 31,

 

2025

 

 

2024

 

U.S. statutory rate

 

 

21.0

%

 

 

21.0

%

Increases (reductions) resulting from:

 

 

 

 

 

 

State taxes, net of federal benefit

 

 

10.8

 

 

 

3.9

 

Reversal of excess deferred income taxes

 

 

(2.4

)

 

 

(5.3

)

Allowance for equity funds used during construction

 

 

 

 

 

(0.7

)

Remeasurements and settlements of uncertain tax positions

 

 

(17.5

)

 

 

Other, net

 

 

(0.2

)

 

 

Effective tax rate

 

 

11.7

%

 

 

18.9

%

As of March 31, 2025, DESC’s effective tax rate reflects an income tax net benefit of $18 million reflecting a $30 million remeasurement of an unrecognized tax benefit partially deferred to regulatory liabilities. See Note 7 to the Consolidated Financial Statements in DESC's Annual Report on Form 10-K for the year ended December 31, 2024, for a discussion of these unrecognized tax benefits.

15


 

7. DERIVATIVE FINANCIAL INSTRUMENTS

DESC’s accounting policies, objectives, and strategies for using derivative instruments are discussed in Note 2 in the Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2024. See Note 8 for further information about fair value measurements and associated valuation methods for derivatives.

Cash collateral, as presented in the table below, is used to offset derivative assets and liabilities when applicable. Certain of DESC’s derivative instruments contain credit-related contingent provisions. These provisions require DESC to provide collateral upon the occurrence of specific events, primarily a credit rating downgrade. If the credit-related contingent features underlying the instruments that are in a liability position and not fully collateralized with cash were fully triggered as of March 31, 2025 and December 31, 2024, DESC would have been required to post $2 million and $1 million, respectively, of additional collateral to its counterparties. The collateral that would be required to be posted includes the impacts of any offsetting asset positions and any amounts already posted for derivatives and non-derivative contracts per contractual terms. DESC had not posted any collateral at March 31, 2025 and December 31, 2024 related to derivatives with credit-related contingent provisions that are in a liability position and not fully collateralized with cash. The aggregate fair value of all derivative instruments with credit-related contingent provisions that are in a liability position and not fully collateralized with cash as of March 31, 2025 and December 31, 2024 was $2 million and $1 million, respectively, which does not include the impact of any offsetting asset positions.

The table below presents derivative balances by type of financial instrument, if the gross amounts recognized in the Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:

 

 

March 31, 2025

 

 

December 31, 2024

 

 

 

Gross Amounts Not Offset in the Consolidated
Balance Sheet

 

 

Gross Amounts Not Offset in the Consolidated
Balance Sheet

 

(millions)

 

Gross
Assets
Presented in the
Consolidated
Balance Sheet
(1)

 

 

Financial
Instruments

 

 

Cash
Collateral
Received

 

 

Net
Amounts

 

 

Gross
Assets
Presented in the
Consolidated
Balance Sheet
(1)

 

 

Financial
Instruments

 

 

Cash
Collateral
Received

 

 

Net
Amounts

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

$

2

 

 

$

 

 

$

 

 

$

2

 

 

$

2

 

 

$

 

 

$

 

 

$

2

 

Commodity contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

$

78

 

 

$

 

 

$

 

 

$

78

 

 

$

81

 

 

$

 

 

$

 

 

$

81

 

Total derivatives

 

$

80

 

 

$

 

 

$

 

 

$

80

 

 

$

83

 

 

$

 

 

$

 

 

$

83

 

(1)
Excludes derivative assets of $199 million and $289 million at March 31, 2025 and December 31, 2024, respectively, which are not subject to master netting or similar arrangements.

 

 

 

March 31, 2025

 

 

December 31, 2024

 

 

 

Gross Amounts Not Offset in the Consolidated
Balance Sheet

 

 

Gross Amounts Not Offset in the Consolidated
Balance Sheet

 

(millions)

 

Gross
Liabilities
Presented in the
Consolidated
Balance Sheet
(1)

 

 

Financial
Instruments

 

 

Cash
Collateral
Paid

 

 

Net
Amounts

 

 

Gross
Liabilities
Presented in the
Consolidated
Balance Sheet
(1)

 

 

Financial
Instruments

 

 

Cash
Collateral
Paid

 

 

Net
Amounts

 

Interest rate contracts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Over-the-counter

 

$

2

 

 

$

 

 

$

 

 

$

2

 

 

$

1

 

 

$

 

 

$

 

 

$

1

 

Total derivatives

 

$

2

 

 

$

 

 

$

 

 

$

2

 

 

$

1

 

 

$

 

 

$

 

 

$

1

 

(1)
Excludes derivative liabilities of $5 million at March 31, 2025, which are not subject to master netting or similar arrangements. DESC did not have any derivative liabilities at December 31, 2024 which were not subject to master netting or similar arrangements.

16


 

Volumes

The following table presents the volume of derivative activity at March 31, 2025. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions.

 

Natural Gas (bcf):

 

Current

 

 

Noncurrent

 

Basis(1)

 

 

41

 

 

 

31

 

Electricity (MWh in millions):

 

 

 

 

 

 

Fixed price

 

 

2

 

 

 

22

 

Interest rate(2) (in millions)

 

 

 

 

 

71

 

 

(1)
Includes options.
(2)
Maturity is determined based on final settlement period.

Fair Value and Gains and Losses on Derivative Instruments

The following tables present the fair values of derivatives and where they are presented in the Consolidated Balance Sheets:

 

 

Assets

 

Liabilities

 

(millions)

 

 

 

 

At March 31, 2025

 

 

 

 

Current derivatives not under cash flow hedge accounting

 

 

 

 

Commodity

$

73

 

$

 

Interest rate

 

 

 

1

 

Total current derivatives

$

73

 

$

1

 

Noncurrent derivatives not under cash flow hedge accounting

 

 

 

 

Commodity

$

204

 

$

5

 

Interest rate

 

2

 

 

1

 

Total noncurrent derivatives

 

206

 

 

6

 

Total derivatives

$

279

 

$

7

 

At December 31, 2024

 

 

 

 

Current derivatives not under cash flow hedge accounting

 

 

 

 

Commodity

$

63

 

$

 

Total current derivatives

$

63

 

$

 

Noncurrent derivatives not under cash flow hedge accounting

 

 

 

 

Commodity

$

307

 

$

 

Interest rate

 

2

 

 

1

 

Total noncurrent derivatives

 

309

 

 

1

 

Total derivatives

$

372

 

$

1

 

 

The following tables present the gains and losses on derivatives, as well as where the associated activity is presented in the Consolidated Balance Sheets and Statements of Comprehensive Income:

Derivatives in Cash Flow Hedging Relationships

 

(millions)

 

Increase (Decrease) in Derivatives Subject to Regulatory Treatment(1)(2)

 

Three Months Ended March 31,

 

2025

 

 

2024

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

Interest rate

 

$

 

 

$

 

Total

 

$

 

 

$

 

 

(1)
Represents net derivative activity deferred into and amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/ liabilities have no associated effect in the Consolidated Statements of Comprehensive Income.
(2)
All derivatives in cash flow hedging relationships have settled and are being amortized over the life of the debt.

17


 

Derivatives Not Designated as Hedging Instruments

 

(millions)

 

Amount of Gain (Loss) Recognized in Income on Derivatives(1)

 

Three Months Ended March 31,

 

2025

 

 

2024

 

Derivative type and location of gains (losses):

 

 

 

 

 

 

Commodity:

 

 

 

 

 

 

            Purchased power

 

$

3

 

 

$

(2

)

Interest rate:

 

 

 

 

 

 

Interest charges

 

 

(1

)

 

 

(1

)

Total

 

$

2

 

 

$

(3

)

 

(1)
Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in the Consolidated Statements of Comprehensive Income.

8. FAIR VALUE MEASUREMENTS, INCLUDING DERIVATIVES

DESC’s fair value measurements are made in accordance with the policies discussed in Note 2 to the Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2024. See Note 7 in this report for further information about DESC’s derivatives and hedge accounting activities.

The following table presents DESC’s quantitative information about Level 3 fair value measurements at March 31, 2025. The range and weighted-average are presented in dollars for market price inputs and percentages for price volatility.

 

 

Fair Value
(millions)

 

 

Valuation Techniques

 

Unobservable Input

 

 

Range

 

Weighted-average(1)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Physical forwards:

 

 

 

 

 

 

 

 

 

 

 

 

Electricity

 

$

199

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

30-83

 

48

Physical options:

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas(2)

 

 

76

 

 

Option model

 

Market price (per Dth)

(3)

 

3-8

 

4

 

 

 

 

 

 

 

Price volatility

(4)

 

11%-74%

 

44%

Total assets

 

$

275

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Physical forwards:

 

 

 

 

 

 

 

 

 

 

 

 

Electricity

 

$

5

 

 

Discounted cash flow

 

Market price (per MWh)

(3)

 

30-81

 

50

Total liabilities

 

$

5

 

 

 

 

 

 

 

 

 

 

 

(1)
Averages weighted by volume.
(2)
Includes basis.
(3)
Represents market prices beyond defined terms for Levels 1 and 2.
(4)
Represents volatilities unrepresented in published markets.

Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:

 

Significant Unobservable Inputs

 

Position

 

Change to Input

 

Impact on Fair Value Measurement

Market price

 

Buy

 

Increase (decrease)

 

Gain (loss)

Market price

 

Sell

 

Increase (decrease)

 

Loss (gain)

Price volatility

 

Buy

 

Increase (decrease)

 

Gain (loss)

Price volatility

 

Sell

 

Increase (decrease)

 

Loss (gain)

 

18


 

Recurring Fair Value Measurements

The following table presents DESC’s assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:

 

(millions)

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

At March 31, 2025

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

 

 

$

2

 

 

$

275

 

 

$

277

 

Interest rate

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents and other

 

 

29

 

 

 

 

 

 

 

 

 

29

 

Total assets

 

$

29

 

 

$

4

 

 

$

275

 

 

$

308

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

 

 

$

 

 

$

5

 

 

$

5

 

Interest rate

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Total liabilities

 

$

 

 

$

2

 

 

$

5

 

 

$

7

 

At December 31, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

 

 

$

 

 

$

370

 

 

$

370

 

Interest rate

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

Cash equivalents and other

 

 

29

 

 

 

 

 

 

 

 

 

29

 

Total assets

 

$

29

 

 

$

2

 

 

$

370

 

 

$

401

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate

 

$

 

 

$

1

 

 

$

 

 

$

1

 

Total liabilities

 

$

 

 

$

1

 

 

$

 

 

$

1

 

 

The following table presents the net change in DESC’s assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category.

 

 

 

 

 

 

Three Months Ended March 31,

 

 

 

2025

 

 

2024

 

(millions)

 

 

 

 

 

 

Beginning balance

 

$

370

 

 

$

176

 

Total realized and unrealized gains (losses):

 

 

 

 

 

 

Included in earnings:

 

 

 

 

 

 

Purchased power

 

 

3

 

 

 

(2

)

Included in regulatory assets/liabilities

 

 

(89

)

 

 

70

 

Settlements

 

 

(14

)

 

 

2

 

Purchases

 

 

 

 

 

7

 

Ending balance

 

$

270

 

 

$

253

 

There are no unrealized gains and losses included in earnings in the Level 3 fair value category related to assets/liabilities still held at the reporting date for the three months ended March 31, 2025 and 2024.

19


 

Fair Value of Financial Instruments

Substantially all of DESC’s financial instruments are recorded at fair value, with the exception of the instruments described below which are reported at historical cost. Estimated fair values have been determined using available market information and valuation methodologies considered appropriate by management. The carrying amount of financial instruments classified within current assets and current liabilities are representative of fair value because of the short-term nature of these instruments. For financial instruments that are not recorded at fair value, the carrying amounts and estimated fair values are as follows:

 

 

 

March 31, 2025

 

 

December 31, 2024

 

(millions)

 

Carrying Amount

 

 

Estimated Fair Value(1)

 

 

Carrying Amount

 

 

Estimated Fair Value(1)

 

Long-term debt(2)

 

$

4,666

 

 

$

4,632

 

 

$

4,220

 

 

$

4,142

 

Affiliated long-term debt

 

 

230

 

 

 

230

 

 

 

230

 

 

 

230

 

 

(1)
Fair value is estimated using market prices, where available, and interest rates currently available for issuance of debt with similar terms and remaining maturities. All fair value measurements are classified as Level 2. The carrying amount of debt issuances with short-term maturities and variable rates refinanced at current market rates is a reasonable estimate of their fair value.
(2)
Carrying amount includes current portions, if any, included in securities due within one year and amounts which represent the unamortized debt issuance costs and discount or premium.

9. EMPLOYEE BENEFIT PLANS

In DESC’s Consolidated Statements of Comprehensive Income, the service cost component of net periodic benefit (credit) cost is reflected in other operations and maintenance expense with the non-service cost components reflected in other income (expense). Components of net periodic benefit cost (credit) recorded by DESC were as follows:

 

(millions)

 

Pension Benefits

 

 

Other Postretirement Benefits

 

Three Months Ended March 31,

 

2025

 

 

2024

 

 

2025

 

 

2024

 

Service cost

 

$

2

 

 

$

2

 

 

$

 

 

$

 

Interest cost

 

 

9

 

 

 

8

 

 

 

2

 

 

 

2

 

Expected return on assets

 

 

(10

)

 

 

(9

)

 

 

 

 

 

 

Amortization of actuarial losses

 

 

1

 

 

 

2

 

 

 

(1

)

 

 

(1

)

Net periodic benefit cost

 

$

2

 

 

$

3

 

 

$

1

 

 

$

1

 

 

During the three months ended March 31, 2025, DESC made less than $1 million of contributions to its qualified pension plan. During the three months ended March 31, 2024, DESC made no contributions to its pension trust. DESC expects to make $3 million of minimum required contributions to its qualified defined benefit pension plans in 2025 and expects to receive reimbursement for such contributions from Santee Cooper. DESC recovers current pension costs through either a rate rider that may be adjusted annually for retail electric operations or through cost of service rates for gas operations.

20


 

 

10. COMMITMENTS AND CONTINGENCIES

As a result of issues generated in the ordinary course of business, DESC is involved in legal proceedings before various courts and is periodically subject to governmental examinations (including by regulatory authorities), inquiries and investigations. Certain legal proceedings and governmental examinations involve demands for unspecified amounts of damages, are in an initial procedural phase, involve uncertainty as to the outcome of pending appeals or motions or involve significant factual issues that need to be resolved, such that it is not possible for DESC to estimate a range of possible loss. For such matters that DESC cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the litigation or investigative processes such that DESC is able to estimate a range of possible loss. For legal proceedings and governmental examinations that DESC is able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. DESC maintains various insurance programs, including general liability insurance coverage which provides coverage for personal injury or wrongful death cases. Any accrued liability is recorded on a gross basis with a receivable also recorded for any probable insurance recoveries. Estimated ranges of loss are inclusive of legal fees and net of any anticipated insurance recoveries. Any estimated range is based on currently available information and involves elements of judgment and significant uncertainties. Any estimated range of possible loss may not represent DESC’s maximum possible loss exposure. The circumstances of such legal proceedings and governmental examinations will change from time to time and actual results may vary significantly from the current estimate. For current proceedings not specifically reported below, management does not anticipate that the liabilities, if any, arising from such proceedings would have a material effect on DESC’s financial position, liquidity or results of operations. During the three months ended March 31, 2025 and 2024, DESC recorded less than $1 million and $6 million, respectively, of charges in aggregate for various personal injury or wrongful death cases. DESC’s Consolidated Balance Sheets at March 31, 2025 and December 31, 2024 include $19 million and $10 million, respectively, of insurance receivables and $16 million and $7 million of reserves, respectively, primarily related to personal injury or wrongful death cases.

Environmental Matters

DESC is subject to costs resulting from a number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of compliance, remediation, containment and monitoring obligations.

From a regulatory perspective, DESC continually monitors and evaluates its current and projected emission levels and strives to comply with all state and federal regulations regarding those emissions. DESC participates in the SO2 and NOx emission allowance programs with respect to coal plant emissions and also has constructed additional pollution control equipment at its coal-fired electric generating plants. These actions are expected to address many of the rules and regulations discussed herein.

Air

The CAA, as amended, is a comprehensive program utilizing a broad range of regulatory tools to protect and preserve the nation’s air quality. At a minimum, states are required to establish regulatory programs to meet applicable requirements of the CAA. However, states may choose to develop regulatory programs that are more restrictive. Many of DESC’s facilities are subject to the CAA’s permitting and other requirements.

Carbon Regulations

In August 2016, the EPA issued a draft rule proposing to reaffirm that a source’s obligation to obtain a PSD or Title V permit for GHGs is triggered only if such permitting requirements are first triggered by non-GHG, or conventional, pollutants that are regulated by the New Source Review program, and exceed a significant emissions rate of 75,000 tons per year of CO2 equivalent emissions. Until the EPA ultimately takes final action on this rulemaking, DESC cannot predict the impact to its results of operations, financial condition and/or cash flows.

Water

The CWA, as amended, is a comprehensive program requiring a broad range of regulatory tools including a permit program to authorize and regulate discharges to surface waters with strong enforcement mechanisms. DESC must comply with applicable aspects of the CWA programs at its operating facilities.

21


 

Regulation 316(b)

 

In October 2014, the final regulations under Section 316(b) of the CWA that govern existing facilities and new units at existing facilities that employ a cooling water intake structure and that have flow levels exceeding a minimum threshold became effective. The rule establishes a national standard for impingement based on seven compliance options, but forgoes the creation of a single technology standard for entrainment. Instead, the EPA has delegated entrainment technology decisions to state regulators. State regulators are to make case-by-case entrainment technology determinations after an examination of five mandatory facility-specific factors, including a social cost-benefit test, and six optional facility-specific factors. The rule governs all electric generating stations with water withdrawals above two MGD, with a heightened entrainment analysis for those facilities over 125 MGD. DESC has five facilities that are subject to the final regulations. DESC is also working with the EPA and state regulatory agencies to assess the applicability of Section 316(b) to five hydroelectric facilities. DESC anticipates that it may have to install impingement control technologies at certain of these stations that have once-through cooling systems. DESC is currently evaluating the need or potential for entrainment controls under the final rule as these decisions will be made on a case-by-case basis after a thorough review of detailed biological, technological and cost benefit studies. DESC is conducting studies and implementing plans as required by the rule to determine appropriate intake structure modifications at certain facilities to ensure compliance with this rule. While the impacts of this rule could be material to DESC’s results of operations, financial condition and/or cash flows, the existing regulatory framework in South Carolina provides rate recovery mechanisms that could substantially mitigate any such impacts for DESC.

Effluent Limitations Guidelines

 

In September 2015, the EPA released a final rule to revise the ELG Rule. The final rule established updated standards for wastewater discharges that apply primarily at coal and oil steam generating stations. Affected facilities are required to convert from wet to dry or closed cycle coal ash management, improve existing wastewater treatment systems and/or install new wastewater treatment technologies in order to meet the new discharge limits. In April 2017, the EPA granted two separate petitions for reconsideration of the final ELG Rule and stayed future compliance dates in the rule. Also in April 2017, the U.S. Court of Appeals for the Fifth Circuit granted the EPA’s request for a stay of the pending consolidated litigation challenging the rule while the EPA addresses the petitions for reconsideration. In September 2017, the EPA signed a rule to postpone the earliest compliance dates for certain waste streams regulations in the final ELG Rule from November 2018 to November 2020; however, the latest date for compliance for these regulations was December 2023. In October 2020, the EPA released the final rule that extended the latest dates for compliance with individual facilities’ compliance dates that would vary based on circumstances and the determination by state regulators and may range from 2021 to 2028. In May 2024, the EPA released a final rule revising the 2015 and 2020 Effluent Limitations Guidelines, establishing more stringent standards for wastewater discharges for the Steam Electric Power Generating Category, which apply primarily to wastewater discharges at coal and oil steam generating stations. Individual facilities’ compliance dates will vary based on circumstances and the determination by state regulators and may range to 2029, except in certain circumstances when a facility will be retired by 2034. DESC expects to complete wastewater treatment technology retrofits and modifications at the Williams generating station, with a similar project at the Wateree generation station under evaluation, to meet the requirements with the existing regulatory framework in South Carolina providing rate recovery mechanisms for costs of the projects. As discussed below, DESC recorded an increase to its AROs in the second quarter of 2024 in connection with the expected compliance costs associated with the EPA’s May 2024 final rule concerning CCR. DESC expects that such AROs would satisfy any AROs that would have otherwise been necessary for compliance with the EPA’s May 2024 Effluent Limitations Guidelines. DESC is currently unable to estimate what costs, if any, may be required in addition to the project for the Williams generating station, a potential project at the Wateree generating station and the recorded AROs to meet the requirements to operate certain facilities past 2034. However, DESC expects that while such costs for facility improvements, if required, could be material to its financial condition and/or cash flows, the existing regulatory framework in South Carolina provides rate recovery mechanisms that could substantially mitigate any such impacts.

Capacity Use Area

In November 2019, a new CUA was established in the counties surrounding the Cope Generating Station (Western Capacity Use Area) under the South Carolina Groundwater Use and Reporting Regulation. Under the regulation any groundwater well in a CUA that withdraws above three million gallons per month must be permitted. The Cope Generating Station is located within this new Western Capacity Use Area. Cope has been using four deep groundwater wells for cooling water and other house loads since 1996. Prior to designation of the new Western Capacity Use Area, the wells at Cope Station were only required to be registered not permitted. As a result of this designation, Cope will need to restore the surface water equipment to operable status to reduce reliance on groundwater wells. This includes completion of 316(b) requirements, (including SCDES BTA determination and modification of the station national pollutant discharge elimination system permit, which was obtained) and extensive inspection, repair and/or replacement of the associated surface water withdrawal equipment which has been idle since 1996. While the impacts of this rule change are potentially material to DESC’s results of operations, financial condition and/or cash flows, the existing regulatory framework in South Carolina provides rate recovery mechanisms that could substantially mitigate any such impacts for DESC.

 

22


 

Waste Management and Remediation

 

The operations of DESC are subject to a variety of state and federal laws and regulations governing the management and disposal of solid and hazardous waste, and release of hazardous substances associated with current and/or historical operations. The CERCLA, as amended, and similar state laws, may impose joint, several and strict liability for cleanup on potentially responsible parties who owned, operated or arranged for disposal at facilities affected by a release of hazardous substances. In addition, many states have created programs to incentivize voluntary remediation of sites where historical releases of hazardous substances are identified and property owners or responsible parties decide to initiate cleanups.

 

From time to time, DESC may be identified as a potentially responsible party in connection with the alleged release of hazardous substances or wastes at a site. Under applicable federal and state laws, DESC could be responsible for costs associated with the investigation or remediation of impacted sites, or subject to contribution claims by other responsible parties for their costs incurred at such sites. DESC also may identify, evaluate and remediate other potentially impacted sites under voluntary state programs. Remediation costs may be subject to reimbursement under DESC’s insurance policies, rate recovery mechanisms, or both. Except as described below, DESC does not believe these matters will have a material effect on results of operations, financial condition and/or cash flows.

 

DESC has four decommissioned manufactured gas plant sites in South Carolina that are in various states of investigation, remediation and monitoring under work plans approved by, or under review by, the SCDES or the EPA. In the fourth quarter of 2023, DESC completed the majority of remediation activities at one site. DESC anticipates the remaining activities at that site will be completed in 2025 at an estimated cost of less than $1 million, after which the site will continue to incur ongoing maintenance and monitoring obligations. DESC expects to recover costs arising from the remediation work at all four sites through rate recovery mechanisms and as of March 31, 2025, deferred amounts, net of amounts previously recovered through rates and insurance settlements, totaled $33 million and are included in regulatory assets.

 

Ash Pond and Landfill Closure Costs

 

In April 2015, the EPA enacted a final rule regulating CCR landfills, existing ash ponds that still receive and manage CCRs and inactive ash ponds that do not receive, but still store, CCRs. DESC currently has inactive and existing CCR ponds and CCR landfills subject to the final rule at three different facilities. This rule created a legal obligation for DESC to retrofit or close all of its inactive and existing ash ponds over a certain period of time, as well as perform required monitoring, corrective action, and post-closure care activities as necessary.

 

In December 2016, legislation was enacted that creates a framework for EPA-approved state CCR permit programs. In August 2017, the EPA issued interim guidance outlining the framework for state CCR program approval. The EPA has enforcement authority until state programs are approved. The EPA and states with approved programs both will have authority to enforce CCR requirements under their respective rules and programs. In September 2017, the EPA agreed to reconsider portions of the CCR rule in response to two petitions for reconsideration. In March 2018, the EPA proposed certain changes to the CCR rule related to issues remanded as part of the pending litigation and other issues the EPA is reconsidering. Several of the proposed changes would allow states with approved CCR permit programs additional flexibility in implementing their programs. In July 2018, the EPA promulgated the first phase of changes to the CCR rule. In August 2018, the U.S. Court of Appeals for the D.C. Circuit issued its decision in the pending challenges of the CCR rule, vacating and remanding to the EPA three provisions of the rule. In May 2024, the EPA released a final rule to regulate inactive surface impoundments located at retired generating stations that contained CCR and liquids after October 2015, and certain other inactive or previously closed surface impoundments, landfills or other areas that contain accumulations of CCR. DESC believes that it may have inactive or closed units or areas that could be subject to the final rule at up to seven different stations. As discussed in Note 12 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, DESC recorded adjustments in its AROs in 2024 in connection with this rule. The actual AROs related to CCRs may vary substantially from the estimates used to record the obligation.

Surety Bonds

At March 31, 2025, DESC had purchased $24 million of surety bonds. Under the terms of surety bonds, DESC is obligated to indemnify the respective surety bond company for any amounts paid.

 

23


 

11. OPERATING SEGMENTS

The Corporate and Other segment primarily includes specific items attributable to DESC’s operating segment that are not included in profit measures evaluated by executive management in assessing the segment’s performance or in allocating resources.

DESC’s CODM is Dominion Energy’s CEO. The CODM uses net income (loss) as the primary profit or loss measure at each segment. The CODM considers budget-to-actual variances on a quarterly basis when making decisions about allocating operating and capital resources to each segment, when assessing the performance of each segment and when determining the compensation of certain employees.

 

In the three months ended March 31, 2025 and 2024, DESC reported an insignificant amount of specific items in the Corporate and Other segment.

 

The following table presents segment information pertaining to DESC’s operations:

 

Three Months Ended March 31,

 

Dominion Energy
South Carolina

 

 

Corporate
and Other

 

 

Consolidated
Total

 

(millions)

 

 

 

 

 

 

 

 

 

2025

 

 

 

 

 

 

 

 

 

Operating Revenue

 

$

986

 

 

$

 

 

$

986

 

Fuel used in electric generation(1)

 

 

204

 

 

 

 

 

 

204

 

Purchased power(1)

 

 

22

 

 

 

 

 

 

22

 

Gas purchased for resale(1)

 

 

126

 

 

 

 

 

 

126

 

Other operations and maintenance(1)

 

 

174

 

 

 

 

 

 

174

 

Depreciation and amortization(1)

 

 

140

 

 

 

 

 

 

140

 

Other taxes(1)

 

 

82

 

 

 

 

 

 

82

 

Total Operating Expenses

 

 

748

 

 

 

 

 

 

748

 

Other income (expense), net(2)

 

 

3

 

 

 

 

 

 

3

 

Interest charges, net of AFUDC(1)

 

 

71

 

 

 

 

 

 

71

 

Income tax expense(1)

 

 

18

 

 

 

2

 

 

 

20

 

Comprehensive Income Attributable to Noncontrolling Interest(2)

 

 

8

 

 

 

 

 

 

8

 

Comprehensive Income (Loss) Available (Attributable) to
   Common Shareholder

 

 

144

 

 

 

(2

)

 

 

142

 

Capital expenditures

 

 

297

 

 

 

 

 

 

297

 

Total assets (billions)

 

 

17.1

 

 

 

 

 

 

17.1

 

2024

 

 

 

 

 

 

 

 

 

Operating Revenue

 

$

775

 

 

$

 

 

$

775

 

Fuel used in electric generation(1)

 

 

145

 

 

 

 

 

 

145

 

Purchased power(1)

 

 

10

 

 

 

 

 

 

10

 

Gas purchased for resale(1)

 

 

79

 

 

 

 

 

 

79

 

Other operations and maintenance(1)

 

 

163

 

 

 

 

 

 

163

 

Depreciation and amortization(1)

 

 

136

 

 

 

 

 

 

136

 

Other taxes(1)

 

 

78

 

 

 

 

 

 

78

 

Total Operating Expenses

 

 

611

 

 

 

 

 

 

611

 

Other income (expense), net(2)

 

 

1

 

 

 

 

 

 

1

 

Interest charges, net of AFUDC(1)

 

 

67

 

 

 

 

 

 

67

 

Income tax expense(1)

 

 

17

 

 

 

1

 

 

 

18

 

Comprehensive Income Attributable to Noncontrolling Interest(2)

 

 

6

 

 

 

 

 

 

6

 

Comprehensive Income (Loss) Available (Attributable) to
   Common Shareholder

 

 

75

 

 

 

(1

)

 

 

74

 

Capital expenditures

 

 

268

 

 

 

 

 

 

268

 

(1)
The significant expense categories and amounts in the segment information presented above align with the segment-level information that is regularly provided to DESC’s CODM.
(2)
Items designated are other segment items for each reportable segment.

 

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12. AFFILIATED AND RELATED PARTY TRANSACTIONS

DES, on behalf of itself and its parent company, provides the following services to DESC, which are rendered at direct or allocated cost: information systems, telecommunications, customer support, marketing and sales, human resources, corporate compliance, purchasing, financial, risk management, public affairs, legal, investor relations, gas supply and capacity management, strategic planning, general administrative and retirement benefits. Costs for these services include amounts capitalized. Amounts expensed are primarily recorded in other operations and maintenance - affiliated suppliers and other income (expense), net in the Consolidated Statements of Comprehensive Income.

DESC transacts with affiliates for certain quantities of electricity in the ordinary course of business. DESC also enters into certain commodity derivative contracts with affiliates. DESC uses these contracts, which are principally comprised of forward commodity purchases, to manage commodity price risks associated with purchases of electricity. See Note 7 for additional information.

 

 

 

Three Months Ended March 31,

 

(millions)

 

2025

 

 

2024

 

Direct and allocated costs from DES(1)

 

$

62

 

 

$

53

 

Operating Revenues - Electric from sales to affiliate

 

 

1

 

 

 

1

 

Operating Expenses - Other taxes from affiliate

 

 

3

 

 

 

3

 

Purchases of electricity from solar affiliates

 

 

3

 

 

 

1

 

 

(1)
Includes capitalized expenditures of $19 million and $12 million for the three months ended March 31, 2025 and 2024, respectively.

 

(millions)

 

March 31, 2025

 

 

December 31, 2024

 

Payable to DES

 

$

19

 

 

$

19

 

Payable to SCANA Corporation

 

 

7

 

 

 

7

 

Derivative assets with affiliates(1)

 

 

33

 

 

 

48

 

 

(1)
Includes amounts recorded in current derivative assets of $6 million and $4 million as of March 31, 2025 and December 31, 2024, respectively, and amounts recorded in noncurrent derivative assets of $27 million and $44 million as of March 31, 2025 and December 31, 2024, respectively.

 

Borrowings from an affiliate are described in Note 5.

13. OTHER INCOME (EXPENSE), NET

Components of other income (expense), net are as follows:

 

 

 

Three Months Ended March 31,

 

(millions)

 

2025

 

 

2024

 

Other income

 

$

5

 

 

$

2

 

Gains on sales of assets

 

 

 

 

 

1

 

Other expense

 

 

(2

)

 

 

(5

)

Allowance for equity funds used during construction

 

 

 

 

 

3

 

Other income (expense), net

 

$

3

 

 

$

1

 

 

 

25


 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MD&A discusses DESC’s results of operations. MD&A should be read in conjunction with DESC’s Consolidated Financial Statements. DESC meets the conditions to file under the reduced disclosure format, and therefore has omitted certain sections of MD&A.

 

Contents of MD&A

MD&A consists of the following information:

Forward-Looking Statements
Results of Operations

Forward-Looking Statements

This report contains statements concerning DESC’s expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, the reader can identify these forward-looking statements by such words as “path,” “anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,” “could,” “plan,” “may,” “continue,” “target” or other similar words.

DESC makes forward-looking statements with full knowledge that risks and uncertainties exist that may cause actual results to differ materially from predicted results. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Additionally, other factors may cause actual results to differ materially from those indicated in any forward-looking statement. These factors include but are not limited to:

Unusual weather conditions and their effect on energy sales to customers and energy commodity prices;
Extreme weather events and other natural disasters, including, but not limited to, hurricanes, high winds, severe storms, earthquakes, flooding, wildfires, climate changes and changes in water temperatures and availability that can cause outages and property damage to facilities;
The impact of extraordinary external events, such as the pandemic health event resulting from COVID-19, and their collateral consequences, including extended disruption of economic activity in DESC’s markets and global supply chains;
Federal, state and local legislative and regulatory developments;
Changes in or interpretations of federal and state tax laws and regulations, including those related to tax credits or other incentives;
Risks of operating businesses in regulated industries that are subject to changing regulatory structures;
Changes to regulated rates collected;
Timing and receipt of regulatory approvals necessary for planned construction or growth projects and compliance with conditions associated with such regulatory approvals;
The inability to complete planned construction, conversion or growth projects at all, or with the outcomes or within the terms and time frames initially anticipated, including as a result of increased public involvement, intervention or litigation in such projects;
Changes to federal, state and local environmental laws and regulations, including those related to climate change, the tightening of emission or discharge limits for GHGs and other substances, more extensive permitting requirements and the regulation of additional substances;
Cost of environmental strategy and compliance, including those costs related to climate change;
Changes in implementation and enforcement practices of regulators relating to environmental standards and litigation exposure for remedial activities;
Difficulty in anticipating mitigation requirements associated with environmental and other regulatory approvals or related appeals;
The impact of operational hazards, including adverse developments with respect to pipeline and plant safety or integrity, equipment loss, malfunction or failure, operator error and other catastrophic events;

26


 

Risks associated with the operation of nuclear facilities, including costs associated with the disposal of spent nuclear fuel, decommissioning, plant maintenance and changes in existing regulations governing such facilities;
Changes in operating, maintenance and construction costs;
The availability of nuclear fuel, natural gas, purchased power or other materials utilized by DESC to provide electric generation, transmission and distribution and/or gas distribution services to its customers;
Domestic terrorism and other threats to DESC’s physical and intangible assets, as well as threats to cybersecurity;
Additional competition from the development and deployment of alternative energy sources, such as self-generation and distributed generation technologies;
Competition in the development, construction and ownership of certain electric transmission facilities in connection with Order 1000;
Changes in technology, particularly with respect to new, developing or alternative sources of generation and smart grid technologies;
Changes in demand for services, including industrial, commercial and residential growth or decline in service areas, changes in customer growth or usage patterns, including as a result of energy conservation programs, the availability of energy efficient devices and the use of distributed generation methods;
Adverse outcomes in litigation matters or regulatory proceedings;
Counterparty credit and performance risk;
Fluctuations in the value of investments held in nuclear decommissioning and benefit plan trusts;
Fluctuations in energy-related commodity prices and the effect these could have on DESC’s liquidity position and the underlying value of its assets;
Fluctuations in interest rates;
Changes in rating agency requirements or credit ratings and their effect on availability and cost of capital;
Global capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms;
Political and economic conditions, including tariffs, inflation and deflation;
Employee workforce factors including collective bargaining agreements and labor negotiations with union employees; and
Changes in financial or regulatory accounting principles or policies imposed by governing bodies.

Additionally, other risks that could cause actual results to differ from predicted results are set forth in Part I. Item 1A. Risk Factors in DESC’s Annual Report on Form 10-K for the year ended December 31, 2024.

DESC’s forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. DESC cautions the reader not to place undue reliance on its forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. DESC undertakes no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

Results of Operations

Presented below is a summary of DESC’s results:

 

 

 

First Quarter

 

(millions)

 

2025

 

 

2024

 

 

$ Change

 

Net income

 

$

150

 

 

$

80

 

 

$

70

 

 

27


 

Overview

First Quarter 2025 vs. 2024

Net income increased 88%, primarily due to an increase in non-fuel base rates associated with the settlement of the electric base rate case and an increase in sales to utility customers from weather.

Analysis of Consolidated Operations

Presented below are selected amounts related to DESC’s results of operations:

 

 

 

First Quarter

 

(millions)

 

2025

 

 

2024

 

 

$ Change

 

Operating revenues

 

$

986

 

 

$

775

 

 

$

211

 

Fuel used in electric generation

 

 

204

 

 

 

145

 

 

 

59

 

Purchased power

 

 

22

 

 

 

10

 

 

 

12

 

Gas purchased for resale

 

 

126

 

 

 

79

 

 

 

47

 

Other operations and maintenance

 

 

174

 

 

 

163

 

 

 

11

 

Depreciation and amortization

 

 

140

 

 

 

136

 

 

 

4

 

Other taxes

 

 

82

 

 

 

78

 

 

 

4

 

Other income, net

 

 

3

 

 

 

1

 

 

 

2

 

Interest charges

 

 

71

 

 

 

67

 

 

 

4

 

Income tax expense

 

 

20

 

 

 

18

 

 

 

2

 

An analysis of DESC’s results of operations follows:

First Quarter 2025 vs. 2024

Operating revenues increased 27%, primarily reflecting:

A $118 million increase in fuel-related revenue primarily as a result of an increase in commodity costs and purchased power costs associated with sales to electric utility retail customers ($71 million) and gas utility customers ($47 million);
A $53 million increase in non-fuel base rates associated with the settlement of the electric base rate case;
A $26 million increase in sales to electric utility retail customers from an increase in heating degree days during the heating season;
A $6 million increase from electric utility customers who previously elected to pay market based or other negotiated rates; and
A $6 million increase associated with increased infrastructure cost recovery under the Natural Gas Rate Stabilization Act.

Fuel used in electric generation increased 41%, primarily due to increased fuel costs associated with electric utility retail customers, which are offset in operating revenue and do not impact net income.

Purchased power increased $12 million, primarily due to an increase in costs associated with electric utility customers, which are offset in operating revenue and do not impact net income.

Gas purchased for resale increased 59%, primarily due to an increase in costs associated with gas utility customers, which are offset in operating revenue and do not impact net income.

Other operations and maintenance increased 7%, primarily due to an increase in salaries, wages and benefits and administrative expenses ($14 million), partially offset by the absence of charges associated with various personal injury or wrongful death litigation cases ($6 million).

Income tax expense increased 11%, primarily due to higher pre-tax income ($20 million), partially offset by a benefit associated with the remeasurement of an uncertain tax position ($18 million).

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ITEM 4. CONTROLS AND PROCEDURES

 

Senior management of DESC, including DESC’s CEO and CFO, evaluated the effectiveness of DESC’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation process, DESC’s CEO and CFO have concluded that DESC’s disclosure controls and procedures are effective.

There were no changes that occurred during the last fiscal quarter that materially affected, or are reasonably likely to materially affect, DESC’s internal control over financial reporting.

29


 

PART II. OTHER INFORMATION

From time to time, DESC is party to various legal, environmental or other regulatory proceedings, including in the ordinary course of business. SEC regulations require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that DESC reasonably believes will exceed a specified threshold. Pursuant to the SEC regulations, DESC uses a threshold of $1 million for such proceedings.

See the following for discussions on various legal, environmental and other regulatory proceedings to which DESC is a party, which information is incorporated herein by reference:

Notes 3 and 12 to the Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2024.
Notes 2 and 10 to the Consolidated Financial Statements in this report.

ITEM 1A. RISK FACTORS

DESC’s business is influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond its control. A number of these risk factors have been identified in DESC’s Annual Report on Form 10-K for the year ended December 31, 2024, which should be taken into consideration when reviewing the information contained in this report. There have been no material changes with regard to the risk factors previously disclosed in DESC’s Annual Report on Form 10-K for the year ended December 31, 2024. For other factors that may cause actual results to differ materially from those indicated in any forward-looking statement or projection contained in this report, see Forward-Looking Statements in MD&A in this report.

ITEM 5. OTHER INFORMATION

During the last fiscal quarter, none of DESC’s directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

30


 

ITEM 6. EXHIBITS

 

Exhibit No.

 

Description

    3.1

 

Amended and Restated Articles of Incorporation, effective April 29, 2019 (Exhibit 3.1, Form 8-K filed April 29, 2019, File No. 1-3375).

    3.2

 

Amended and Restated Bylaws, effective April 29, 2019 (Exhibit 3.2, Form 8-K filed April 29, 2019, File No. 1-3375).

    4.1

 

Dominion Energy South Carolina, Inc. agrees to furnish to the U.S. Securities and Exchange Commission upon request any instrument with respect to long-term debt as to which the total amount of securities authorized does not exceed 10% of its total consolidated assets.

   31.a

 

Certification by Chief Executive Officer of Dominion Energy South Carolina, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

   31.b

 

Certification by Chief Financial Officer of Dominion Energy South Carolina, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

   32.a

 

Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Dominion Energy South Carolina, Inc. as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

   101

 

The following financial statements from Dominion Energy South Carolina, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, filed on May 1, 2025, formatted in iXBRL (Inline eXtensible Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Changes in Common Equity, and (v) the Notes to Consolidated Financial Statements.

   104

 

Cover Page Interactive Data File (formatted in iXBRL (Inline eXtensible Reporting Language) and contained in Exhibit 101).

 

31


 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

DOMINION ENERGY SOUTH CAROLINA, INC.

 

 

(Registrant)

 

 

 

By:

/s/ Michele L. Cardiff

Date: May 1, 2025

 

Michele L. Cardiff

 

 

Senior Vice President, Controller and Chief Accounting Officer

 

32