Equity

12 Months Ended

Dec. 31, 2019

Equity [Abstract]

Equity

Note 20. Equity

Common Stock

Dominion Energy

During 2019, 2018 and 2017, Dominion Energy recorded, net of fees and commissions, $11.0 billion, $2.5 billion and $1.3 billion from the issuance of approximately 157 million, 36 million and 17 million shares of common stock, respectively, for acquisitions, settlements of stock purchase contracts and through various programs including Dominion Energy Direct® and an at-the-market program.

Acquisitions

During 2019, Dominion Energy issued 95.6 million shares of common stock in connection with the acquisition of SCANA. At the time of issuance, these common stock shares were valued at $6.8 billion. See Note 3 for further information on the issuance of Dominion Energy common stock in connection with the SCANA Combination.

In January 2019, Dominion Energy and Dominion Energy Midstream closed on an agreement and plan of merger pursuant to which Dominion Energy acquired each outstanding common unit representing limited partner interests in Dominion Energy Midstream not already owned by Dominion Energy through the issuance of 22.5 million shares of common stock valued at $1.6 billion. Under the terms of the agreement and plan of merger, each publicly held outstanding common unit representing limited partner interests in Dominion Energy Midstream was converted into the right to receive 0.2492 shares of Dominion Energy common stock. Immediately prior to the closing, each Series A Preferred Unit representing limited partner interests in Dominion Energy Midstream was converted into common units representing limited partner interests in Dominion Energy Midstream in accordance with the terms of Dominion Energy Midstream’s partnership agreement. The merger was accounted for by Dominion Energy following the guidance for a change in a parent company’s ownership interest in a consolidated subsidiary. Because Dominion Energy controls Dominion Energy Midstream both before and after the merger, the changes in Dominion Energy’s ownership interest in Dominion Energy Midstream were accounted for as an equity transaction and no gain or loss was recognized. In connection with the merger, Dominion Energy recognized $40 million of income taxes in equity primarily attributable to establishing additional regulatory liabilities related to excess deferred income taxes and changes in state income taxes.

Subsequent to this activity, as a result of the Dominion Energy Gas Restructuring, Dominion Energy Gas is considered to have acquired all of the outstanding partnership interests of Dominion Energy Midstream and Dominion Energy Midstream became a wholly-owned subsidiary of Dominion Energy Gas.

Pension Plan Contribution

In December 2019, Dominion Energy contributed 6.1 million shares of its common stock valued at $499 million to the qualified defined benefit pension plans. See Note 22 for further information regarding activity surrounding pension plan contributions.

Dominion Energy Direct®

Dominion Energy maintains Dominion Energy Direct® and a number of employee savings plans through which contributions may be invested in Dominion Energy’s common stock. These shares may either be newly issued or purchased on the open market with proceeds contributed to these plans. Currently, Dominion Energy is issuing new shares of common stock for these direct stock purchase plans. During 2019, Dominion Energy received cash of $309 million from the issuance of 4.0 million of such shares through Dominion Energy Direct® and employee savings plans.

Stock Purchase Contracts

In August 2019, Dominion Energy issued 18.5 million shares under the related stock purchase contracts entered into as part of Dominion Energy’s 2016 Equity Units and received proceeds of $1.4 billion. In 2017, Dominion Energy issued 12.5 million shares under the related stock purchase contracts entered into as part of Dominion Energy’s 2014 Equity Units and received proceeds of $1.0 billion. See Note 18 for further information surrounding these stock purchase contracts.

At-the-Market Program

In June 2017, Dominion Energy filed an SEC shelf registration for the sale of debt and equity securities including the ability to sell common stock through an at-the-market program. Also, in June 2017, Dominion Energy entered into three separate sales agency agreements to effect sales under the program and pursuant to which it may offer from time to time up to $500 million aggregate amount of its common stock. Sales of common stock can be made by means of privately negotiated transactions, as transactions on the NYSE at market prices or in such other transactions as are agreed upon by Dominion Energy and the sales agents in conformance with applicable securities laws. In January 2018, Dominion Energy provided sales instructions to one of the sales agents and issued 6.6 million shares through at-the-market issuances and received cash proceeds of $495 million, net of fees and commissions paid of $5 million. Following these issuances, Dominion Energy had no remaining ability to issue stock under the 2017 sales agency agreements and completed the program. In February 2018, Dominion Energy entered into six separate sales agency agreements to effect sales under a new at-the-market program pursuant to which it may offer from time to time up to $1.0 billion aggregate amount of its common stock. These agreements replaced the sales agency agreements entered into by Dominion Energy in June 2017. Sales of common stock can be made by means of private negotiated transactions, as transactions

on the NYSE at market prices or in such other transactions as are agreed upon by Dominion Energy and the sales agents in conformance with applicable securities laws. In the fourth quarter of 2018, Dominion Energy provided sales instructions to two of the sales agents and issued 2.7 million shares through at-the-market issuances and received cash proceeds of $197 million, net of fees and commissions paid of $2 million. In the first quarter of 2019, Dominion Energy provided sales instructions to one of the sales agents and issued 2.1 million shares and received cash proceeds of $154 million, net of fees and commissions paid of $2 million. In the fourth quarter of 2019, Dominion Energy provided sales instructions to two of the sales agents and issued 7.8 million shares and received cash proceeds of $639 million, net of fees and commissions paid of $6 million. Following these issuances, Dominion Energy had no remaining ability to issue stock under the 2018 sales agency agreements and completed the program.

Forward Sale Agreements

In 2018, Dominion Energy entered into separate forward sale agreements with Goldman Sachs & Co. LLC and Credit Suisse Capital LLC, as forward purchasers, and an underwriting agreement with Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. LLC, as representatives of the several underwriters named therein, relating to an aggregate of 20 million shares of Dominion Energy common stock. The underwriting agreement granted the underwriters a 30-day option to purchase up to an additional three million shares of Dominion Energy common stock, which the underwriters exercised with respect to approximately 2.1 million shares in April 2018. Dominion Energy entered into separate forward sale agreements with the forward purchasers with respect to the additional shares. In December 2018, Dominion Energy received proceeds of $1.4 billion (after deducting underwriting discounts, but before deducting expenses, and subject to forward price adjustments under the forward sale agreements) upon the physical settlement of 22.1 million shares.

Repurchase of Common Stock

Dominion Energy did not repurchase any shares in 2019 or 2018 and does not plan to repurchase shares during 2020, except for shares tendered by employees to satisfy tax withholding obligations on vested restricted stock, which do not count against its stock repurchase authorization.

Virginia Power

In 2019, 2018 and 2017, Virginia Power did not issue any shares of its common stock to Dominion Energy.

Noncontrolling Interests

Sale of Interest in Cove Point

In December 2019, Dominion Energy completed the sale of its 25% noncontrolling limited partnership interest in Cove Point to Brookfield in exchange for cash consideration of $2.1 billion, subject to working capital adjustments. See Note 3 for further information on the sale of this interest.

Remeasurement of Dominion Energy Midstream Units

In May 2018, all of the subordinated units of Dominion Energy Midstream held by Dominion Energy were converted into common units on a 1:1 ratio following the payment of Dominion Energy Midstream’s distribution for the first quarter of 2018. In

June 2018, Dominion Energy, as general partner, exercised an incentive distribution right reset as defined in Dominion Energy Midstream’s partnership agreement and received 27 million common units representing limited partner interests in Dominion Energy Midstream. As a result of the increase in its ownership interest in Dominion Energy Midstream, Dominion Energy recorded a decrease in noncontrolling interest, and a corresponding increase in shareholders’ equity, of $375 million reflecting the change in the carrying value of the interest in the net assets of Dominion Energy Midstream held by others.

Accumulated Other Comprehensive Income (Loss)

Presented in the table below is a summary of AOCI by component:

At December 31,	2019			2018
(millions)
Dominion Energy
Net deferred losses on derivatives-hedging activities, net of $135 and $79 tax	$	(407	)	$	(234	)
Net unrealized gains on nuclear decommissioning trust funds, net of $(13) and $— tax		37			2
Net unrecognized pension and other postretirement benefit costs, net of $492 and $519 tax		(1,421	)		(1,465	)
Other comprehensive loss from equity method investees, net of $1 and $— tax		(2	)		(2	)
Total AOCI, including noncontrolling interests	$	(1,793	)	$	(1,699	)
Less other comprehensive income attributable to noncontrolling interests		—			1
Total AOCI, excluding noncontrolling interests	$	(1,793	)	$	(1,700	)
Virginia Power
Net deferred losses on derivatives-hedging activities, net of $11 and $4 tax	$	(34	)	$	(13	)
Net unrealized gains on nuclear decommissioning trust funds, net of $(1) and $— tax		5			1
Total AOCI	$	(29	)	$	(12	)
Dominion Energy Gas
Net deferred losses on derivatives-hedging activities, net of $28 and $8 tax	$	(82	)	$	(25	)
Net unrecognized pension costs, net of $41 and $56 tax		(106	)		(144	)
Total AOCI, including noncontrolling interests		(188	)		(169	)
Less other comprehensive income (loss) attributable to noncontrolling interests		(1	)		—
Total AOCI, excluding noncontrolling interests	$	(187	)	$	(169	)

Dominion Energy

The following table presents Dominion Energy’s changes in AOCI by component, net of tax:

	Deferred gains and losses on derivatives- hedging activities		Unrealized gains and losses on investment securities			Unrecognized pension and other postretirement benefit costs			Other comprehensive loss from equity method investees			Total
(millions)
Year Ended December 31, 2019
Beginning balance		$(235)		$     2			$(1,465	)		$(2	)		$(1,700)
Other comprehensive income before reclassifications: gains (losses)		(110)		39			(22)			—			(93)
Amounts reclassified from AOCI: (gains) losses(1)		(62)		(4)			66			—			—
Net current period other comprehensive income (loss)		(172)		35			44			—			(93	)
Ending balance		$(407)		$37			$(1,421	)		$(2	)		$(1,793	)
Year Ended December 31, 2018
Beginning balance		$(302)		$747			$(1,101)			$(3)			$(659	)
Other comprehensive income before reclassifications: gains (losses)		30		(18	)		(215)			1			(202	)
Amounts reclassified from AOCI: (gains) losses(1)		102		5			78			—			185
Net current period other comprehensive income (loss)		132		(13)			(137)			1			(17)
Cumulative-effect of changes in accounting principle		(64)		(732)			(227)			—			(1,023	)
Less other comprehensive income (loss) attributable to noncontrolling interests		1		—			—			—			1
Ending balance		$(235)		$     2			$(1,465)			$(2)			$  (1,700	)

(1) See table below for details about these reclassifications.

The following table presents Dominion Energy’s reclassifications out of AOCI by component:

Details about AOCI components	Amounts reclassified from AOCI			Affected line item in the Consolidated Statements of Income
(millions)
Year Ended December 31, 2019
Deferred (gains) and losses on derivatives-hedging activities:
Commodity contracts		$(146)		Operating revenue
		3		Purchased gas
Interest rate contracts		54		Interest and related charges
Foreign currency contracts		6		Other Income
Total		(83	)
Tax		21		Income tax expense
Total, net of tax		$(62	)
Unrealized (gains) and losses on investment securities:
Realized (gain) loss on sale of securities		$(5)		Other income
Total		(5)
Tax		1		Income tax expense
Total, net of tax		$(4	)
Unrecognized pension and other postretirement benefit costs:
Amortization of prior-service costs (credits)		$(24)		Other income
Amortization of actuarial losses		113		Other income
Total		89
Tax		(23	)	Income tax expense
Total, net of tax		$66
Year Ended December 31, 2018
Deferred (gains) and losses on derivatives-hedging activities:
Commodity contracts		$90		Operating revenue
		(14	)	Purchased gas
Interest rate contracts		48		Interest and related charges
Foreign currency contracts		13		Other Income
Total		137
Tax		(35	)	Income tax expense
Total, net of tax		$102
Unrealized (gains) and losses on investment securities:
Realized (gain) loss on sale of securities		$7		Other income
Total		7
Tax		(2	)	Income tax expense
Total, net of tax		$5
Unrecognized pension and other postretirement benefit costs:
Prior-service costs (credits)		$(21	)	Other income
Actuarial losses		120		Other income
Total		99
Tax		(21	)	Income tax expense
Total, net of tax		$78

Virginia Power

The following table presents Virginia Power’s changes in AOCI by component, net of tax:

	Deferred gains and losses on derivatives- hedging activities			Unrealized gains and losses on investment securities			Total
(millions)
Year Ended December 31, 2019
Beginning balance		$(13	)	$	1			$(12)
Other comprehensive income before reclassifications: gains (losses)		(22	)		5			(17)
Amounts reclassified from AOCI: (gains) losses(1)		1			(1	)		—
Net current period other comprehensive income (loss)		(21	)		4			(17)
Ending balance		$(34	)	$	5			$(29)
Year Ended December 31, 2018
Beginning balance		$(12	)	$	74		$	62
Other comprehensive income before reclassifications: gains (losses)		1			—			1
Amounts reclassified from AOCI: gains (losses)(1)		1			—			1
Net current period other comprehensive income (loss)		2			—			2
Cumulative-effect of changes in accounting principle		(3	)		(73	)		(76)
Ending balance		$(13	)	$	1		$	(12)

(1) See table below for details about these reclassifications.

The following table presents Virginia Power’s reclassifications out of AOCI by component:

Details about AOCI components	Amounts reclassified from AOCI		Affected line item in the Consolidated Statements of Income
(millions)
Year Ended December 31, 2019
(Gains) losses on cash flow hedges:
Interest rate contracts		$   1	Interest and related charges
Total		1
Tax		—	Income tax expense
Total, net of tax		$   1
Unrealized (gains) and losses on investment securities:
Realized (gain) loss on sale of securities		$ (2)	Other income
Impairment		—	Other income
Total		(2)
Tax		1	Income tax expense
Total, net of tax		$ (1)
Year Ended December 31, 2018
(Gains) losses on cash flow hedges:
Interest rate contracts		$   1	Interest and related charges
Total		1
Tax		—	Income tax expense
Total, net of tax		$   1

Dominion Energy Gas

The following table presents Dominion Energy Gas’ changes in AOCI by component, net of tax:

	Deferred gains and losses on derivatives- hedging activities			Unrecognized pension and other postretirement benefit costs			Total
(millions)
Year Ended December 31, 2019
Beginning balance		$(25	)		$(144	)	$	(169)
Other comprehensive income before reclassifications: gains (losses)		(61	)		33			(28	)
Amounts reclassified from AOCI: (gains) losses(1)		5			5			10
Net current period other comprehensive income (loss)		(56	)		38			(18	)
Dominion Energy Gas Restructuring		(1	)		—			(1	)
Less other comprehensive income attributable to noncontrolling interests		(1	)		—			(1	)
Ending balance		$(81	)		$(106	)	$	(187	)
Year Ended December 31, 2018
Beginning balance		$(23	)		$(75	)	$	(98	)
Other comprehensive income before reclassifications: gains (losses)		(16	)		(52	)		(68	)
Amounts reclassified from AOCI: gains (losses)(1)		19			4			23
Net current period other comprehensive income (loss)		3			(48	)		(45	)
Cumulative-effect of changes in accounting principle		(5	)		(21	)		(26	)
Ending balance		$(25	)		$(144	)		$(169	)

(1) See table below for details about these reclassifications.

The following table presents Dominion Energy Gas’ reclassifications out of AOCI by component:

Details about AOCI components	Amounts reclassified from AOCI		Affected line item in the Consolidated Statements of Income
(millions)
Year Ended December 31, 2019
Deferred (gains) and losses on derivatives-hedging activities:
Commodity contracts		$   (4)	Net income from discontinued operations
Interest rate contracts		5	Interest and related charges
Foreign currency contracts		6	Other income
Total		7
Tax		(2)	Income tax expense
Total, net of tax		$   5
Unrecognized pension costs:
Actuarial losses		$   7	Other income
Total		7
Tax		(2)	Income tax expense
Total, net of tax		$   5
Year Ended December 31, 2018
Deferred (gains) and losses on derivatives-hedging activities:
Commodity contracts		$   8	Net income from discontinued operations
Interest rate contracts		5	Interest and related charges
Foreign currency contracts		13	Other income
Total		26
Tax		(7)	Income tax expense
Total, net of tax		$19
Unrecognized pension costs:
Actuarial losses		$   6	Other income
Total		6
Tax		(2)	Income tax expense
Total, net of tax		$   4

Stock-Based Awards

The 2014 Incentive Compensation Plan permits stock-based awards that include restricted stock, performance grants, goal-based stock, stock options and stock appreciation rights. The Non-Employee Directors Compensation Plan permits grants of restricted stock and stock options. Under provisions of these plans, employees and non-employee directors may be granted options to purchase common stock at a price not less than its fair market value at the date of grant with a maximum term of eight years. Option terms are set at the discretion of the CGN Committee of the Board of Directors or the Board of Directors itself, as provided under each plan. No options are outstanding under either plan. At December 31, 2019, approximately 21 million shares were available for future grants under these plans.

Goal-based stock awards are granted in lieu of cash-based performance grants to certain officers who have not achieved a certain targeted level of share ownership. As of December 31, 2019, unrecognized compensation cost related to nonvested goal-based stock awards was immaterial.

Dominion Energy measures and recognizes compensation expense relating to share-based payment transactions over the vesting period based on the fair value of the equity or liability instruments issued. Dominion Energy’s results for the years ended December 31, 2019, 2018 and 2017 include $46 million, $48 million and $45 million, respectively, of compensation costs and $11 million, $12 million and $16 million, respectively of income tax benefits related to Dominion Energy’s stock-based compensation arrangements. Stock-based compensation cost is reported in other operations and maintenance expense in Dominion Energy’s Consolidated Statements of Income. Excess Tax Benefits are classified as a financing cash flow.

Restricted Stock

Restricted stock grants are made to officers under Dominion Energy’s LTIP and may also be granted to certain key non-officer employees. The fair value of Dominion Energy’s restricted stock awards is equal to the closing price of Dominion Energy’s stock on the date of grant. New shares are issued for restricted stock awards on the date of grant and generally vest over a three-year service period. The following table provides a summary of restricted stock activity for the years ended December 31, 2019, 2018 and 2017:

	Shares			Weighted—average Grant Date Fair Value
	(thousands)
Nonvested at December 31, 2016		886			$71.40
Granted		454			74.24
Vested		(287	)		68.90
Cancelled and forfeited		(10	)		72.37
Nonvested at December 31, 2017		1,043			$73.32
Granted		534			72.92
Vested		(316	)		73.59
Cancelled and forfeited		(53	)		74.25
Nonvested at December 31, 2018		1,208			$73.03
Granted		614			76.49
Vested		(324	)		71.75
Cancelled and forfeited		(96	)		77.16
Nonvested at December 31, 2019		1,402			$74.77

As of December 31, 2019, unrecognized compensation cost related to nonvested restricted stock awards totaled $59 million and is expected to be recognized over a weighted-average period of 2.1 years. The fair value of restricted stock awards that vested was $23 million, $23 million and $21 million in 2019, 2018 and 2017, respectively. Employees may elect to have shares of restricted stock withheld upon vesting to satisfy tax withholding obligations. The number of shares withheld will vary for each employee depending on the vesting date fair market value of Dominion Energy stock and the applicable federal, state and local tax withholding rates.

Cash-Based Performance Grants

Cash-based performance grants are made to Dominion Energy’s officers under Dominion Energy’s LTIP. The actual payout of cash-based performance grants will vary between zero and 200% of the targeted amount based on the level of performance metrics achieved.

In February 2017, two cash-based performance grants were made to officers as Dominion Energy transitioned from a two-year performance period to a three-year performance period. Payout of the two-year performance grant occurred in January 2019 based on the achievement of two performance metrics during 2017 and 2018: TSR relative to that of companies that are members of Dominion Energy’s compensation peer group and ROIC with an additional partial payout based on Dominion Energy’s price-earnings ratio relative to that of the members of Dominion Energy’s compensation peer group. The total payout under the two-year grant was $13 million. Payout of the three-year performance grant occurred in January 2020 based on the achievement of two performance metrics during 2017, 2018 and 2019: TSR relative to that of companies that are members of Dominion Energy’s compensation peer group and ROIC with an additional partial payout based on Dominion Energy’s price-earnings ratio relative to that of the members of Dominion Energy’s compensation peer group. The total of the payout under the three-year grant was $13 million and a liability of $13 million had been accrued for the award.

In February 2018, a cash-based performance grant was made to officers. Payout of the performance grant is expected to occur by March 15, 2021 based on the achievement of two performance metrics during 2018, 2019 and 2020: TSR relative to that of companies that are members of Dominion Energy’s compensation peer group and ROIC. There are additional opportunities to earn a portion of the award based on Dominion Energy’s absolute TSR or relative price-earnings ratio performance. At December 31, 2019, the targeted amount of the three-year grant was $15 million and a liability of $8 million had been accrued for this award.

In February 2019, a cash-based performance grant was made to officers. Payout of the performance grant is expected to occur by March 15, 2022 based on the achievement of two performance metrics during 2019, 2020 and 2021: TSR relative to that of companies that are members of Dominion Energy’s compensation peer group and ROIC. There are additional opportunities to earn a portion of the award based on Dominion Energy’s absolute TSR or relative price-earnings ratio performance. At December 31, 2019, the targeted amount of the three-year grant was $16 million and a liability of $5 million had been accrued for this award.