UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark one)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number |
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Exact name of registrants as specified in their charters, address of principal executive offices and registrants’ telephone number |
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I.R.S. Employer Identification Number |
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State or other jurisdiction of incorporation or organization of the registrants:
Securities registered pursuant to Section 12(b) of the Act:
Registrant |
Trading Symbol |
Title of Each Class |
Name of Each Exchange on Which Registered |
DOMINION ENERGY, INC. |
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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.
Dominion Energy, Inc.
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).
Dominion Energy, Inc.
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.
Dominion Energy, Inc.
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Accelerated filer |
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Emerging growth company |
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Non-accelerated filer |
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Smaller reporting company |
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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. ☐
Virginia Electric and Power Company
Large accelerated filer |
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Accelerated filer |
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Emerging growth company |
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Smaller reporting company |
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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).
Dominion Energy, Inc. Yes
At October 29,
This combined Form 10-Q represents separate filings by Dominion Energy, Inc. and Virginia Electric and Power Company. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Virginia Electric and Power Company makes no representation as to the information relating to Dominion Energy, Inc.’s other operations.
VIRGINIA ELECTRIC AND POWER COMPANY 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
COMBINED INDEX
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Page Number |
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3 |
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Item 1. |
10 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
83 |
Item 3. |
99 |
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Item 4. |
100 |
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Item 1. |
101 |
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Item 1A. |
101 |
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Item 2. |
102 |
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Item 5. |
102 |
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Item 6. |
103 |
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2
GLOSSARY OF TERMS
The following abbreviations or acronyms used in this Form 10-Q are defined below:
Abbreviation or Acronym |
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Definition |
2019 Equity Units |
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Dominion Energy’s 2019 Series A Equity Units issued in June 2019, initially in the form of 2019 Series A Corporate Units, consisting of a stock purchase contract and a 1/10 interest in a share of the Series A Preferred Stock |
2017 Tax Reform Act |
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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 |
2021 Triennial Review |
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Virginia Commission review of Virginia Power’s earned return on base rate generation and distribution services for the four successive 12-month test periods beginning January 1, 2017 and ending December 31, 2020 |
ACE Rule |
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Affordable Clean Energy Rule |
AFUDC |
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Allowance for funds used during construction |
Align RNG |
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Align RNG, LLC, a joint venture between Dominion Energy and Smithfield Foods, Inc. |
AMI |
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Advanced Metering Infrastructure |
AOCI |
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Accumulated other comprehensive income (loss) |
ARO |
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Asset retirement obligation |
Atlantic Coast Pipeline |
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Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy and Duke Energy |
Atlantic Coast Pipeline Project |
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A previously proposed approximately 600-mile natural gas pipeline running from West Virginia through Virginia to North Carolina which would have been owned by Dominion Energy and Duke Energy |
bcf |
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Billion cubic feet |
Birdseye |
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Birdseye Renewable Energy, LLC |
Bear Garden |
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A 590 MW combined-cycle, natural gas-fired power station in Buckingham County, Virginia |
BHE |
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The legal entity, Berkshire Hathaway Energy Company, one or more of its consolidated subsidiaries (including Dominion Energy Gas, Dominion Energy Midstream and Cove Point effective November 1, 2020), or the entirety of Berkshire Hathaway Energy Company and its consolidated subsidiaries |
BP |
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BP Wind Energy North America Inc. |
Brookfield |
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Brookfield Super-Core Infrastructure Partners, an infrastructure fund managed by Brookfield Asset Management Inc. |
Brunswick County |
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A 1,376 MW combined-cycle, natural gas-fired power station in Brunswick County, Virginia |
CAA |
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Clean Air Act |
CCR |
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Coal combustion residual |
CCRO |
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Customer credit reinvestment offset |
CEO |
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Chief Executive Officer |
CEP |
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Capital Expenditure Program, as established by House Bill 95, Ohio legislation enacted in 2011, deployed by East Ohio to recover certain costs associated with capital investment |
CERCLA |
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Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as Superfund |
CFO |
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Chief Financial Officer |
Clearway |
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The legal entity, Clearway Energy, Inc. (a subsidiary of Global Infrastructure Partners), one or more of its consolidated subsidiaries, or the entirety of Clearway Energy, Inc. and its consolidated subsidiaries |
CO2 |
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Carbon dioxide |
Colonial Trail West |
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A 142 MW utility-scale solar power station located in Surry County, Virginia |
3
Companies |
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Dominion Energy and Virginia Power, collectively |
Contracted Assets |
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Contracted Assets operating segment |
Cooling degree days |
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Units measuring the extent to which the average daily temperature is greater than 65 degrees Fahrenheit, or 75 degrees Fahrenheit in DESC’s service territory, calculated as the difference between 65 or 75 degrees, as applicable, and the average temperature for that day |
Cove Point |
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Cove Point LNG, LP (formerly known as Dominion Energy Cove Point LNG, LP) |
CPCN |
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Certificate of Public Convenience and Necessity |
CVOW Commercial Project |
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A proposed 2.6 GW wind generation facility 27 miles off the coast of Virginia Beach, Virginia in federal waters adjacent to the CVOW Pilot Project and associated interconnection facilities in and around Virginia Beach, Virginia |
CVOW Pilot Project |
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A 12 MW wind generation facility 27 miles off the coast of Virginia Beach, Virginia in federal waters |
CWA |
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Clean Water Act |
DCP |
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The legal entity, CPMLP Holding Company, LLC (formerly known as Dominion Cove Point, LLC), one or more of its consolidated subsidiaries (including Dominion Energy Midstream), or the entirety of CPMLP Holding Company, LLC and its consolidated subsidiaries |
DECGS |
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Carolina Gas Services, Inc. (formerly known as Dominion Energy Carolina Gas Services, Inc.) |
DEQPS |
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Dominion Energy Questar Pipeline Services, Inc. |
DES |
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Dominion Energy Services, Inc. |
DESC |
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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 |
DETI |
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Eastern Gas Transmission and Storage, Inc. (formerly known as Dominion Energy Transmission, Inc.) |
DGI |
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Dominion Generation, Inc. |
DGP |
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Eastern Gathering and Processing, Inc. (formerly known as Dominion Gathering and Processing, Inc.) |
DMLPHCII |
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Eastern MLP Holding Company II, LLC (formerly known as Dominion MLP Holding Company II, LLC) |
DOE |
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U.S. Department of Energy |
Dominion Energy |
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The legal entity, Dominion Energy, Inc., one or more of its consolidated subsidiaries (other than Virginia Power) or operating segments, or the entirety of Dominion Energy, Inc. and its consolidated subsidiaries |
Dominion Energy Gas |
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The legal entity, Eastern Energy Gas Holdings, LLC (formerly known as Dominion Energy Gas Holdings, LLC), one or more of its consolidated subsidiaries (consisting of DETI, DCP, DMLPHCII and Dominion Iroquois), or the entirety of Eastern Energy Gas Holdings, LLC and its consolidated subsidiaries |
Dominion Energy Gas Restructuring |
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The acquisition of DCP and DMLPHCII from, and the disposition of East Ohio and DGP to, Dominion Energy by Dominion Energy Gas on November 6, 2019 |
Dominion Energy Midstream |
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The legal entity, Northeast Midstream Partners, LP (formerly known as Dominion Energy Midstream Partners, LP), one or more of its consolidated subsidiaries, or the entirety of Northeast Midstream Partners, LP and its consolidated subsidiaries |
Dominion Energy Questar Pipeline |
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The legal entity, Dominion Energy Questar Pipeline, LLC, one or more of its consolidated subsidiaries (including its 50% noncontrolling interest in White River Hub), or the entirety of Dominion Energy Questar Pipeline, LLC and its consolidated subsidiaries |
Dominion Energy South Carolina |
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Dominion Energy South Carolina operating segment |
Dominion Energy Virginia |
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Dominion Energy Virginia operating segment |
4
Dominion Iroquois |
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The legal entity Iroquois, Inc. (formerly known as Dominion Iroquois, Inc.), one or more of its consolidated subsidiaries, or the entirety of Iroquois, Inc. and its consolidated subsidiaries, which held a 50% noncontrolling interest in Iroquois |
DSM |
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Demand-side management |
Dth |
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Dekatherm |
Duke Energy |
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The legal entity, Duke Energy Corporation, one or more of its consolidated subsidiaries, or the entirety of Duke Energy Corporation and its consolidated subsidiaries |
East Ohio |
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The East Ohio Gas Company, doing business as Dominion Energy Ohio |
EnergySolutions |
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EnergySolutions, LLC |
EPA |
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U.S. Environmental Protection Agency |
EPS |
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Earnings per common share |
FERC |
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Federal Energy Regulatory Commission |
FILOT |
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Fee in lieu of taxes |
Four Brothers |
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Four Brothers Solar, LLC, a limited liability company owned by Dominion Energy and Four Brothers Holdings, LLC, a subsidiary of Clearway |
Fowler Ridge |
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Fowler I Holdings LLC, a wind-turbine facility in Benton County, Indiana |
FTRs |
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Financial transmission rights |
GAAP |
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U.S. generally accepted accounting principles |
Gas Distribution |
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Gas Distribution operating segment |
GENCO |
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South Carolina Generating Company, Inc. |
GHG |
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Greenhouse gas |
Granite Mountain |
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Granite Mountain Holdings, LLC, a limited liability company owned by Dominion Energy and Granite Mountain Renewables, LLC, a subsidiary of Clearway |
Grassfield Solar |
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An approximate 20 MW utility-scale solar power station under development in Chesapeake, Virginia |
Greensville County |
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A 1,588 MW combined-cycle, natural gas-fired power station in Greensville County, Virginia |
GT&S Transaction |
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The sale by Dominion Energy to BHE of Dominion Energy Gas, DGP, DECGS, Eastern Energy Field Services, Inc. (formerly known as Dominion Energy Field Services, Inc.) and Modular LNG Holdings, Inc. (formerly known as Dominion Modular LNG Holdings, Inc.) (which holds a 50% noncontrolling interest in JAX LNG) pursuant to a purchase and sale agreement entered into on July 3, 2020, which was completed on November 1, 2020 |
GTSA |
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Virginia Grid Transformation and Security Act of 2018 |
GW |
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Gigawatt |
Heating degree days |
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Units measuring the extent to which the average daily temperature is less than 65 degrees Fahrenheit, or 60 degrees Fahrenheit in DESC’s service territory, calculated as the difference between 65 or 60 degrees, as applicable, and the average temperature for that day |
Hope |
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Hope Gas, Inc., doing business as Dominion Energy West Virginia |
Iron Springs |
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Iron Springs Holdings, LLC, a limited liability company owned by Dominion Energy and Iron Springs Renewables, LLC, a subsidiary of Clearway |
Iroquois |
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Iroquois Gas Transmission System, L.P. |
ISO |
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Independent system operator |
JAX LNG |
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JAX LNG, LLC, an LNG supplier in Florida serving the marine and LNG markets |
July 2016 hybrids |
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Dominion Energy’s 2016 Series A Enhanced Junior Subordinated Notes due 2076 |
Kewaunee |
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Kewaunee nuclear power station |
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kV |
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Kilovolt |
LIBOR |
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London Interbank Offered Rate |
LNG |
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Liquefied natural gas |
MD&A |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
MGD |
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Million gallons per day |
Millstone |
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Millstone nuclear power station |
Millstone 2019 power purchase agreements |
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Power purchase agreements with Eversource Energy and The United Illuminating Company for Millstone to provide nine million MWh per year of electricity for ten years |
MW |
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Megawatt |
MWh |
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Megawatt hour |
NAV |
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Net asset value |
NND Project |
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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 |
Norge Solar |
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An approximate 20 MW utility-scale solar power station under development in James City County, Virginia |
North Anna |
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North Anna nuclear power station |
North Carolina Commission |
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North Carolina Utilities Commission |
NRC |
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U.S. Nuclear Regulatory Commission |
NYSE |
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New York Stock Exchange |
Ohio Commission |
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Public Utilities Commission of Ohio |
Order 1000 |
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Order issued by FERC adopting requirements for electric transmission planning, cost allocation and development |
PIR |
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Pipeline Infrastructure Replacement program deployed by East Ohio |
PJM |
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PJM Interconnection, LLC |
PREP |
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Pipeline Replacement and Expansion Program, a program of replacing, upgrading and expanding natural gas utility infrastructure deployed by Hope |
PSD |
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Prevention of significant deterioration |
PSNC |
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Public Service Company of North Carolina, Incorporated, doing business as Dominion Energy North Carolina |
Q-Pipe Group |
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Collectively, Dominion Energy Questar Pipeline, DEQPS and QPC Holding Company, LLC (including its subsidiary Questar Southern Trails Pipeline Company) |
Q-Pipe Transaction |
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A previously proposed sale by Dominion Energy to BHE of the Q-Pipe Group pursuant to a purchase and sale agreement entered into on October 5, 2020 and terminated on July 9, 2021 |
Questar Gas |
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Questar Gas Company, doing business as Dominion Energy Utah, Dominion Energy Wyoming and Dominion Energy Idaho |
Regulation Act |
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Legislation effective July 1, 2007, that amended the Virginia Electric Utility Restructuring Act and fuel factor statute, which legislation is also known as the Virginia Electric Utility Regulation Act, as amended in 2015 and 2018 |
RGGI |
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Regional Greenhouse Gas Initiative |
RICO |
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Racketeer Influenced and Corrupt Organizations Act |
Rider B |
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A rate adjustment clause associated with the recovery of costs related to the conversion of three of Virginia Power’s coal-fired power stations to biomass |
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Rider BW |
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A rate adjustment clause associated with the recovery of costs related to Brunswick County |
Rider CCR |
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A rate adjustment clause associated with the recovery of costs related to the removal of CCR at certain power stations |
Rider CE |
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A rate adjustment clause associated with the recovery of costs related to certain renewable generation facilities in Virginia |
Rider D |
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A rate mechanism which allows PSNC to recover from customers all prudently incurred gas costs and certain uncollectible expenses as well as losses on negotiated gas and transportation sales. |
Rider E |
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A rate adjustment clause associated with the recovery of costs related to certain capital projects at Virginia Power’s electric generating stations to comply with federal and state environmental laws and regulations |
Rider GV |
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A rate adjustment clause associated with the recovery of costs related to Greensville County |
Rider R |
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A rate adjustment clause associated with the recovery of costs related to Bear Garden |
Rider RGGI |
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A rate adjustment clause associated with the recovery of costs related to the purchase of allowances through the RGGI market-based trading program for CO2 |
Rider RPS |
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A rate adjustment clause associated with the recovery of costs related to the mandatory renewable portfolio standard program established by the VCEA |
Rider S |
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A rate adjustment clause associated with the recovery of costs related to the Virginia City Hybrid Energy Center |
Rider T1 |
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A rate adjustment clause to recover the difference between revenues produced from transmission rates included in base rates, and the new total revenue requirement developed annually for the rate years effective September 1 |
Rider U |
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A rate adjustment clause associated with the recovery of costs of new underground distribution facilities |
Rider US-2 |
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A rate adjustment clause associated with the recovery of costs related to Woodland Solar, Scott Solar and Whitehouse Solar |
Rider US-3 |
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A rate adjustment clause associated with the recovery of costs related to Colonial Trail West and Spring Grove 1 |
Rider US-4 |
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A rate adjustment clause associated with the recovery of costs related to Sadler Solar |
Rider W |
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A rate adjustment clause associated with the recovery of costs related to Warren County |
Riders C1A, C2A, C3A and C4A |
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Rate adjustment clauses associated with the recovery of costs related to certain DSM programs approved in DSM cases |
ROE |
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Return on equity |
RTO |
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Regional transmission organization |
Sadler Solar |
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A 100 MW utility-scale solar power station located in Greensville County, Virginia |
Santee Cooper |
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South Carolina Public Service Authority |
SBL Holdco |
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SBL Holdco, LLC, a wholly-owned subsidiary of DGI |
SCANA |
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The legal entity, SCANA Corporation, one or more of its consolidated subsidiaries, or the entirety of SCANA Corporation and its consolidated subsidiaries |
SCANA Combination |
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Dominion Energy’s acquisition of SCANA completed on January 1, 2019 pursuant to the terms of the agreement and plan of merger entered on January 2, 2018 between Dominion Energy and SCANA |
SCANA Merger Approval Order |
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Final order issued by the South Carolina Commission on December 21, 2018 setting forth its approval of the SCANA Combination |
SCDHEC |
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South Carolina Department of Health and Environmental Control |
SCDOR |
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South Carolina Department of Revenue |
Scott Solar |
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A 17 MW utility-scale solar power station in Powhatan County, Virginia |
SEC |
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U.S. Securities and Exchange Commission |
7
Series A Preferred Stock |
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Dominion Energy’s 1.75% Series A Cumulative Perpetual Convertible Preferred Stock, without par value, with a liquidation preference of $1,000 per share |
Series B Preferred Stock |
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Dominion Energy’s 4.65% Series B Fixed-Rate Cumulative Redeemable Perpetual Preferred Stock, without par value, with a liquidation preference of $1,000 per share |
South Carolina Commission |
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Public Service Commission of South Carolina |
Southwest Gas
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The legal entity, Southwest Gas Holdings, Inc., one or more of its consolidated subsidiaries, or the entirety of Southwest Gas Holdings, Inc. and its consolidated subsidiaries |
Spring Grove 1 |
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A 98 MW utility-scale solar power station located in Surry County, Virginia |
Standard & Poor’s |
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Standard & Poor’s Ratings Services, a division of S&P Global Inc. |
Summer |
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V.C. Summer nuclear power station |
Supply Header Project |
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A project previously intended for DETI to provide approximately 1,500,000 Dths of firm transportation service to various customers in connection with the Atlantic Coast Pipeline Project |
Surry |
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Surry nuclear power station |
Sycamore Solar |
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An approximate 42 MW utility-scale solar power station under development in Pittsylvania County, Virginia |
Terra Nova Renewable Partners |
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The legal entity, Terra Nova Renewable Partners, LLC, a partnership comprised primarily of institutional investors advised by J.P. Morgan Asset Management-Global Real Assets, or one or more of its consolidated subsidiaries |
Three Cedars |
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Granite Mountain and Iron Springs, collectively |
UEX Rider |
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Uncollectible Expense Rider deployed by East Ohio |
Utah Commission |
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Utah Public Service Commission |
VCEA |
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Virginia Clean Economy Act of March 2020 |
VEBA |
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Voluntary Employees’ Beneficiary Association |
VIE |
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Variable interest entity |
Virginia City Hybrid Energy Center |
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A 610 MW baseload carbon-capture compatible, clean coal powered electric generation facility in Wise County, Virginia |
Virginia Commission |
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Virginia State Corporation Commission |
Virginia Facilities |
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Proposed electric interconnection and transmission facilities in and around Virginia Beach, Virginia, comprising transmission facilities required to interconnect the CVOW Commercial Project reliably with the existing transmission system; including 3 miles of 230 kV offshore export circuits, 4 miles of underground 230 kV onshore export circuits, a new Harpers switching station, 14 miles of three new overhead 230 kV transmission circuits between a new Harpers switching station and the Fentress substation, rebuild eight miles of two existing 230 kV overhead lines and an expansion of the Fentress substation |
Virginia Power |
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The legal entity, Virginia Electric and Power Company, one or more of its consolidated subsidiaries or operating segment, or the entirety of Virginia Electric and Power Company and its consolidated subsidiaries |
Warren County |
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A 1,350 MW combined-cycle, natural gas-fired power station in Warren County, Virginia |
WECTEC |
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WECTEC Global Project Services, Inc., a wholly-owned subsidiary of Westinghouse |
West Virginia Commission |
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Public Service Commission of West Virginia |
Westinghouse |
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Westinghouse Electric Company LLC |
Wexpro |
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The legal entity, Wexpro Company, one or more of its consolidated subsidiaries, or the entirety of Wexpro Company and its consolidated subsidiaries |
Whitehouse Solar |
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A 20 MW utility-scale solar power station in Louisa County, Virginia |
White River Hub |
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White River Hub, LLC |
8
Wisconsin Commission |
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Public Services Commission of Wisconsin |
Woodland Solar |
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A 19 MW utility-scale solar power station in Isle of Wight County, Virginia |
WP&L |
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Wisconsin Power and Light Company, a subsidiary of Alliant Energy Corporation |
WPSC |
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Wisconsin Public Service Corporation, a subsidiary of WEC Energy Group |
Wrangler |
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Wrangler Retail Gas Holdings, LLC, a partnership between Dominion Energy and Interstate Gas Supply, Inc. |
9
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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(millions, except per share amounts) |
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Operating Revenue |
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Operating Expenses |
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Electric fuel and other energy-related purchases |
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Purchased electric capacity |
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Purchased gas |
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Other operations and maintenance |
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Depreciation, depletion and amortization |
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Other taxes |
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Impairment of assets and other charges (benefits) |
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Total operating expenses |
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Income from operations |
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Earnings (loss) from equity method investees |
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Other income |
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Interest and related charges |
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Income from continuing operations including noncontrolling interests before income tax expense (benefit) |
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Income tax expense (benefit) |
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Net Income From Continuing Operations Including Noncontrolling Interests |
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Net Income (Loss) From Discontinued Operations Including Noncontrolling Interests(1)(2) |
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Net Income (Loss) Including Noncontrolling Interests |
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Noncontrolling Interests |
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|
|
( |
) |
|
|
|
|
|
|
( |
) |
Net Income (Loss) Attributable to Dominion Energy |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
Amounts attributable to Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income (loss) from discontinued operations |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Net income (loss) attributable to Dominion Energy |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
EPS - Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income (loss) from discontinued operations |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Net income (loss) attributable to Dominion Energy |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
EPS - Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income (loss) from discontinued operations |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Net income (loss) attributable to Dominion Energy |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
(1) |
See Note 10 for amounts attributable to related parties. |
(2) |
Includes income tax expense (benefit) of $( |
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
10
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) including noncontrolling interests |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred gains (losses) on derivatives-hedging activities(1) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
Changes in unrealized net gains (losses) on investment securities(2) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Changes in net unrecognized pension and other postretirement benefit costs(3) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Amounts reclassified to net income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net derivative (gains) losses-hedging activities(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized (gains) losses on investment securities(5) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net pension and other postretirement benefit costs(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in other comprehensive income from equity method investees(7) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Total other comprehensive income (loss) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Comprehensive income (loss) including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Comprehensive income (loss) attributable to noncontrolling interests |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Comprehensive income (loss) attributable to Dominion Energy |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
(1) |
|
(2) |
|
(3) |
|
(4) |
|
(5) |
|
(6) |
|
(7) |
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
11
DOMINION ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
September 30, 2021 |
|
|
December 31, 2020(1) |
|
||
(millions) |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
Customer receivables (less allowance for doubtful accounts of $ |
|
|
|
|
|
|
|
|
Other receivables (less allowance for doubtful accounts of $ |
|
|
|
|
|
|
|
|
Inventories |
|
|
|
|
|
|
|
|
Margin deposit assets |
|
|
|
|
|
|
|
|
Prepayments |
|
|
|
|
|
|
|
|
Regulatory assets |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Current assets held for sale |
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
|
|
|
Investments |
|
|
|
|
|
|
|
|
Nuclear decommissioning trust funds |
|
|
|
|
|
|
|
|
Investment in equity method affiliates |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total investments |
|
|
|
|
|
|
|
|
Property, Plant and Equipment |
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
|
|
|
|
|
|
Accumulated depreciation, depletion and amortization |
|
|
( |
) |
|
|
( |
) |
Total property, plant and equipment, net |
|
|
|
|
|
|
|
|
Deferred Charges and Other Assets |
|
|
|
|
|
|
|
|
Goodwill |
|
|
|
|
|
|
|
|
Regulatory assets |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total deferred charges and other assets |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
|
$ |
|
|
(1) |
Dominion Energy’s Consolidated Balance Sheet at December 31, 2020 has been derived from the audited Consolidated Balance Sheet at that date. |
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
12
DOMINION ENERGY, INC.
CONSOLIDATED BALANCE SHEETS—(Continued)
(Unaudited)
|
|
September 30, 2021 |
|
|
December 31, 2020(1) |
|
||
(millions) |
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Securities due within one year |
|
$ |
|
|
|
$ |
|
|
Supplemental 364-Day credit facility borrowings |
|
|
— |
|
|
|
|
|
Short-term debt |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
|
|
|
|
|
|
Accrued interest, payroll and taxes |
|
|
|
|
|
|
|
|
Derivative liabilities |
|
|
|
|
|
|
|
|
Regulatory liabilities |
|
|
|
|
|
|
|
|
Liability to Atlantic Coast Pipeline |
|
|
|
|
|
|
|
|
Q-Pipe Transaction deposit |
|
|
— |
|
|
|
|
|
Other(2) |
|
|
|
|
|
|
|
|
Current liabilities held for sale |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
|
|
|
Long-Term Debt |
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
|
|
Junior subordinated notes |
|
|
|
|
|
|
|
|
Supplemental credit facility borrowings |
|
|
|
|
|
|
— |
|
Other |
|
|
|
|
|
|
|
|
Total long-term debt |
|
|
|
|
|
|
|
|
Deferred Credits and Other Liabilities |
|
|
|
|
|
|
|
|
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
|
|
Regulatory liabilities |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total deferred credits and other liabilities |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
|
|
Commitments and Contingencies (see Note 17) |
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
Preferred stock (see Note 16) |
|
|
|
|
|
|
|
|
Common stock – no par(3) |
|
|
|
|
|
|
|
|
Retained earnings |
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Total shareholders' equity |
|
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
|
|
|
|
|
|
Total equity |
|
|
|
|
|
|
|
|
Total liabilities and equity |
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
See Note 10 for amounts attributable to related parties. |
(3) |
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
13
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF EQUITY - QUARTER-TO-DATE
(Unaudited)
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Dominion Energy Shareholders |
|
|
Total |
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Retained Earnings |
|
|
AOCI |
|
|
Shareholders' Equity |
|
|
Noncontrolling Interests |
|
|
Total Equity |
|
|||||||||
(millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income (loss) including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock repurchases |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Stock awards (net of change in unearned compensation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends (see Note 16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Common stock dividends ($ share) and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
( |
) |
September 30, 2020 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock awards (net of change in unearned compensation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends (see Note 16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Common stock dividends ($ share) and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
September 30, 2021 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
14
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF EQUITY - YEAR-TO-DATE
(Unaudited)
|
|
Preferred Stock |
|
|
Common Stock |
|
|
Dominion Energy Shareholders |
|
|
Total |
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Retained Earnings |
|
|
AOCI |
|
|
Shareholders' Equity |
|
|
Noncontrolling Interests |
|
|
Total Equity |
|
|||||||||
(millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Cumulative-effect of changes in accounting principles |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Net loss including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock repurchases |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Stock awards (net of change in unearned compensation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends (see Note 16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Common stock dividends ($ common share) and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
September 30, 2020 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock awards (net of change in unearned compensation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends (see Note 16) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Common stock dividends ($ share) and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
September 30, 2021 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
15
DOMINION ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30, |
|
2021 |
|
|
2020 |
|
||
(millions) |
|
|
|
|
|
|
|
|
Operating Activities |
|
|
|
|
|
|
|
|
Net income (loss) including noncontrolling interests |
|
$ |
|
|
|
$ |
( |
) |
Adjustments to reconcile net income (loss) including noncontrolling interests to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization (including nuclear fuel) |
|
|
|
|
|
|
|
|
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
( |
) |
Provision for refunds to electric utility customers |
|
|
|
|
|
|
— |
|
Impairment of assets and other charges (benefits) |
|
|
|
|
|
|
|
|
Loss from investment in Atlantic Coast Pipeline |
|
|
|
|
|
|
|
|
Net gains on nuclear decommissioning trust funds and other investments |
|
|
( |
) |
|
|
( |
) |
Other adjustments |
|
|
|
|
|
|
|
|
Changes in: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
|
|
|
|
|
|
Inventories |
|
|
( |
) |
|
|
|
|
Deferred fuel and purchased gas costs, net |
|
|
( |
) |
|
|
|
|
Prepayments |
|
|
( |
) |
|
|
( |
) |
Accounts payable |
|
|
( |
) |
|
|
( |
) |
Accrued interest, payroll and taxes |
|
|
|
|
|
|
( |
) |
Customer deposits |
|
|
( |
) |
|
|
( |
) |
Margin deposit assets and liabilities |
|
|
( |
) |
|
|
|
|
Net realized and unrealized changes related to derivative activities |
|
|
|
|
|
|
|
|
Pension and other postretirement benefits |
|
|
( |
) |
|
|
( |
) |
Other operating assets and liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
Plant construction and other property additions (including nuclear fuel) |
|
|
( |
) |
|
|
( |
) |
Acquisition of solar development projects |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of securities |
|
|
|
|
|
|
|
|
Purchases of securities |
|
|
( |
) |
|
|
( |
) |
Repayment of Q-Pipe Transaction deposit |
|
|
( |
) |
|
|
— |
|
Contributions to equity method affiliates |
|
|
( |
) |
|
|
( |
) |
Acquisition of equity method investments |
|
|
— |
|
|
|
( |
) |
Other |
|
|
( |
) |
|
|
|
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Financing Activities |
|
|
|
|
|
|
|
|
Issuance of short-term debt, net |
|
|
|
|
|
|
|
|
Issuance of short-term notes |
|
|
|
|
|
|
|
|
Repayment of short-term notes |
|
|
— |
|
|
|
( |
) |
Supplemental 364-Day credit facility borrowings |
|
|
— |
|
|
|
|
|
Repayment of supplemental 364-day credit facility borrowings |
|
|
( |
) |
|
|
— |
|
Issuance of long-term debt |
|
|
|
|
|
|
|
|
Repayment of long-term debt, including redemption premiums |
|
|
( |
) |
|
|
( |
) |
Supplemental credit facility borrowings |
|
|
|
|
|
|
— |
|
Issuance of common stock |
|
|
|
|
|
|
|
|
Repurchase of common stock |
|
|
— |
|
|
|
( |
) |
Common dividend payments |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
|
|
Increase in cash, restricted cash and equivalents |
|
|
|
|
|
|
|
|
Cash, restricted cash and equivalents at beginning of period |
|
|
|
|
|
|
|
|
Cash, restricted cash and equivalents at end of period |
|
$ |
|
|
|
$ |
|
|
See Note 2 for disclosure of supplemental cash flow information.
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
16
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenue(1) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric fuel and other energy-related purchases(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased (excess) electric capacity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Other operations and maintenance: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliated suppliers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of assets and other charges (benefits) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and related charges(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
17
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Other comprehensive income (loss), net of taxes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred gains (losses) on derivatives-hedging activities(1) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
Changes in unrealized net gains (losses) on nuclear decommissioning trust funds(2) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
Amounts reclassified to net income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net derivative (gains) losses-hedging activities(3) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized (gains) losses on nuclear decommissioning trust funds(4) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total other comprehensive income (loss) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
Comprehensive income |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
18
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
September 30, 2021 |
|
|
December 31, 2020(1) |
|
||
(millions) |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
Customer receivables (less allowance for doubtful accounts of $ |
|
|
|
|
|
|
|
|
Other receivables (less allowance for doubtful accounts of $ |
|
|
|
|
|
|
|
|
Affiliated receivables |
|
|
|
|
|
|
|
|
Inventories (average cost method) |
|
|
|
|
|
|
|
|
Regulatory assets |
|
|
|
|
|
|
|
|
Other(2) |
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
|
|
|
Investments |
|
|
|
|
|
|
|
|
Nuclear decommissioning trust funds |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total investments |
|
|
|
|
|
|
|
|
Property, Plant and Equipment |
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
|
|
|
|
|
|
Accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
Total property, plant and equipment, net |
|
|
|
|
|
|
|
|
Deferred Charges and Other Assets |
|
|
|
|
|
|
|
|
Regulatory assets |
|
|
|
|
|
|
|
|
Other(2) |
|
|
|
|
|
|
|
|
Total deferred charges and other assets |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
See Note 19 for amounts attributable to affiliates. |
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
19
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETS—(Continued)
(Unaudited)
|
|
September 30, 2021 |
|
|
December 31, 2020(1) |
|
||
(millions) |
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDER’S EQUITY |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Securities due within one year |
|
$ |
|
|
|
$ |
|
|
Short-term debt |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
|
|
|
|
|
|
Payables to affiliates |
|
|
|
|
|
|
|
|
Affiliated current borrowings |
|
|
|
|
|
|
|
|
Accrued interest, payroll and taxes |
|
|
|
|
|
|
|
|
Regulatory liabilities |
|
|
|
|
|
|
|
|
Derivative liabilities(2) |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
|
|
|
Long-Term Debt |
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total long-term debt |
|
|
|
|
|
|
|
|
Deferred Credits and Other Liabilities |
|
|
|
|
|
|
|
|
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
|
|
Asset retirement obligations |
|
|
|
|
|
|
|
|
Regulatory liabilities |
|
|
|
|
|
|
|
|
Other(2) |
|
|
|
|
|
|
|
|
Total deferred credits and other liabilities |
|
|
|
|
|
|
|
|
Total liabilities |
|
|
|
|
|
|
|
|
Commitments and Contingencies (see Note 17) |
|
|
|
|
|
|
|
|
Common Shareholder’s Equity |
|
|
|
|
|
|
|
|
Common stock – no par(3) |
|
|
|
|
|
|
|
|
Other paid-in capital |
|
|
|
|
|
|
|
|
Retained earnings |
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss |
|
|
( |
) |
|
|
( |
) |
Total common shareholder’s equity |
|
|
|
|
|
|
|
|
Total liabilities and shareholder’s equity |
|
$ |
|
|
|
$ |
|
|
(1) |
Virginia Power’s Consolidated Balance Sheet at December 31, 2020 has been derived from the audited Consolidated Balance Sheet at that date. |
(2) |
See Note 19 for amounts attributable to affiliates. |
(3) |
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
20
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDER’S EQUITY
(Unaudited)
QUARTER-TO-DATE
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Shares |
|
|
Amount |
|
|
Other Paid-In Capital |
|
|
Retained Earnings |
|
|
AOCI |
|
|
Total |
|
||||||
(millions, except for shares) |
|
(thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
September 30, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2021 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
$ |
( |
) |
September 30, 2021 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
YEAR-TO-DATE
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Shares |
|
|
Amount |
|
|
Other Paid-In Capital |
|
|
Retained Earnings |
|
|
AOCI |
|
|
Total |
|
||||||
(millions, except for shares) |
|
(thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
September 30, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
21
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30, |
|
2021 |
|
|
2020 |
|
||
(millions) |
|
|
|
|
|
|
|
|
Operating Activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
|
|
|
$ |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization (including nuclear fuel) |
|
|
|
|
|
|
|
|
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
( |
) |
Impairment of assets and other charges (benefits) |
|
|
( |
) |
|
|
|
|
Provision for refunds to customers |
|
|
|
|
|
|
— |
|
Other adjustments |
|
|
|
|
|
|
|
|
Changes in: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
( |
) |
|
|
( |
) |
Affiliated receivables and payables |
|
|
( |
) |
|
|
|
|
Inventories |
|
|
|
|
|
|
|
|
Prepayments |
|
|
( |
) |
|
|
|
|
Deferred fuel expenses, net |
|
|
( |
) |
|
|
|
|
Accounts payable |
|
|
|
|
|
|
( |
) |
Accrued interest, payroll and taxes |
|
|
|
|
|
|
|
|
Margin deposit assets and liabilities |
|
|
( |
) |
|
|
— |
|
Net realized and unrealized changes related to derivative activities |
|
|
|
|
|
|
( |
) |
Asset retirement obligations |
|
|
|
|
|
|
|
|
Pension and other postretirement benefits |
|
|
|
|
|
|
( |
) |
Other operating assets and liabilities |
|
|
( |
) |
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
Plant construction and other property additions |
|
|
( |
) |
|
|
( |
) |
Purchases of nuclear fuel |
|
|
( |
) |
|
|
( |
) |
Acquisition of solar development projects |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of securities |
|
|
|
|
|
|
|
|
Purchases of securities |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
|
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Financing Activities |
|
|
|
|
|
|
|
|
Issuance of short-term debt, net |
|
|
|
|
|
|
|
|
Issuance (repayment) of affiliated current borrowings, net |
|
|
( |
) |
|
|
|
|
Issuance of long-term debt, net |
|
|
— |
|
|
|
|
|
Repayment of long-term debt, net |
|
|
— |
|
|
|
( |
) |
Common dividend payments to parent |
|
|
( |
) |
|
|
( |
) |
Other |
|
|
( |
) |
|
|
( |
) |
Net cash provided by (used in) financing activities |
|
|
|
|
|
|
( |
) |
Increase in cash, restricted cash and equivalents |
|
|
|
|
|
|
|
|
Cash, restricted cash and equivalents at beginning of period |
|
|
|
|
|
|
|
|
Cash, restricted cash and equivalents at end of period |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
See Note 2 for disclosure of supplemental cash flow information.
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
22
COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Nature of Operations
Dominion Energy, headquartered in Richmond, Virginia, is one of the nation’s largest producers and distributors of energy. Dominion Energy’s operations are conducted through various subsidiaries, including Virginia Power. Dominion Energy’s operations also include DESC, regulated gas distribution operations primarily in the eastern and Rocky Mountain regions of the U.S., nonregulated electric generation and, following completion of the GT&S Transaction in November 2020, a noncontrolling interest in Cove Point. See Note 3 for a description of the sale of substantially all of Dominion Energy’s gas transmission and storage operations to BHE through the GT&S Transaction completed in November 2020 and the expected sale of Dominion Energy’s remaining regulated gas transmission and storage services in the Rocky Mountain region of the U.S. to Southwest Gas.
Note 2. Significant Accounting Policies
As permitted by the rules and regulations of the SEC, the Companies’ accompanying unaudited Consolidated Financial Statements contain certain condensed financial information and exclude certain footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with GAAP. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020.
In the Companies’ opinion, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly their financial position at September 30, 2021, their results of operations and changes in equity for the three and nine months ended September 30, 2021 and 2020 and their cash flows for the nine months ended September 30, 2021 and 2020. Such adjustments are normal and recurring in nature unless otherwise noted.
The Companies make certain estimates and assumptions in preparing their Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from those estimates.
The Companies’ accompanying unaudited Consolidated Financial Statements include, after eliminating intercompany transactions and balances, their accounts, those of their respective majority-owned subsidiaries and non-wholly-owned entities in which they have a controlling financial interest. For certain partnership structures, income is allocated based on the liquidation value of the underlying contractual arrangements. At September 30, 2021, Dominion Energy owns
The results of operations for interim periods are not necessarily indicative of the results expected for the full year. Information for quarterly periods is affected by seasonal variations in sales, rate changes, electric fuel and other energy-related purchases, purchased gas expenses and other factors.
Certain amounts in the Companies’ 2020 Consolidated Financial Statements and Notes have been reclassified to conform to the 2021 presentation for comparative purposes; however, such reclassifications did not affect the Companies’ net income, total assets, liabilities, equity or cash flows. Effective in the second quarter of 2021, the Companies updated their Statements of Cash Flows to present net charges for allowance for credit risk and write-offs of accounts receivables within other adjustments to reconcile net income to net cash provided by operating activities from the previous presentation within changes in accounts receivable. All prior period information has been conformed to this presentation, which does not result in a change to net cash provided by operating activities.
Amounts disclosed for Dominion Energy are inclusive of Virginia Power, where applicable. There have been no significant changes from Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, with the exception of the items described below.
23
Cash, Restricted Cash and Equivalents
Restricted Cash and Equivalents
|
|
Cash, Restricted Cash and Equivalents at End of Period |
|
|
Cash, Restricted Cash and Equivalents at Beginning of Period |
|
||||||||||
|
|
September 30, 2021 |
|
|
September 30, 2020 |
|
|
December 31, 2020 |
|
|
December 31, 2019 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents(1) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Restricted cash and equivalents(2)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Restricted cash and equivalents(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
|
Supplemental Cash Flow Information
The following table provides supplemental disclosure of cash flow information related to Dominion Energy:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
(millions) |
|
|
|
|
|
|
|
|
Significant noncash investing and financing activities:(1) |
|
|
|
|
|
|
|
|
Accrued capital expenditures |
|
$ |
|
|
|
$ |
|
|
Accrued contributions to equity method affiliates |
|
|
|
|
|
|
|
|
Leases(2) |
|
|
|
|
|
|
|
|
(1) |
See Notes 16 and 17 for noncash financing activities related to derivative restructuring and the issuance of stock associated with the settlement of litigation and noncash investing activities related to property, plant and equipment conveyed to satisfy litigation, respectively. |
(2) |
Includes $ |
24
The following table provides supplemental disclosure of cash flow information related to Virginia Power:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
(millions) |
|
|
|
|
|
|
|
|
Significant noncash investing and financing activities:(1) |
|
|
|
|
|
|
|
|
Accrued capital expenditures |
|
$ |
|
|
|
$ |
|
|
Leases(2) |
|
|
|
|
|
|
|
|
(1) |
|
(2) |
|
Property, Plant and Equipment
In March 2020, Virginia Power committed to retire certain coal- and oil-fired generating units before the end of their useful lives based on economic and other factors, including but not limited to market power prices and the VCEA. These units will be retired after they meet their capacity obligations to PJM in 2023. As a result, Virginia Power recorded a charge of $
In the second quarter of 2020, Virginia Power recorded charges of $
Asset Retirement Obligations
In the second quarter of 2021, Dominion Energy revised its estimated cash flow projections associated with the recovery of spent nuclear fuel costs for its AROs associated with the decommissioning of Kewaunee. As a result, Dominion Energy recorded a charge of $
In the third quarter of 2021, Dominion Energy revised its estimated cash flow projections associated with certain gas distribution pipeline AROs. As a result, Dominion Energy recorded a $
Note 3. Acquisitions and Dispositions
Disposition of Gas Transmission & Storage Operations
In July 2020, Dominion Energy entered into an agreement with BHE with a total value of approximately $
In connection with closing of the GT&S Transaction, Dominion Energy and BHE entered into a transition services agreement under which
25
Also in November 2020, BHE provided a $
In October 2021, Dominion Energy entered into an agreement with Southwest Gas to sell the Q-Pipe Group. The total value of this transaction is approximately $
The operations included in both the GT&S Transaction and the Q-Pipe Group are presented in held for sale and discontinued operations effective July 2020, at which time depreciation and amortization ceased on the applicable assets. As Cove Point had previously been consolidated within Dominion Energy’s financial statements, balances associated with Cove Point prior to the closing of the GT&S Transaction are presented within held-for-sale and discontinued operations. See Note 10 for further information regarding Dominion Energy’s equity method investment in Cove Point.
The following table represents selected information regarding the results of operations, which are reported within discontinued operations in Dominion Energy’s Consolidated Statements of Income:
|
|
Three Months Ended September 30, 2021 |
|
|
Three Months Ended September 30, 2020 |
|
|
Nine Months Ended September 30, 2021 |
|
|
Nine Months Ended September 30, 2020 |
|
||||||||||||
|
|
Q-Pipe Group |
|
|
GT&S Transaction |
|
|
Q-Pipe Group |
|
|
Q-Pipe Group |
|
|
GT&S Transaction |
|
|
Q-Pipe Group |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Operating expense(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income(2) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and related charges(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Income tax expense (benefit)(4) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Net income (loss) including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Noncontrolling interests |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
Net income (loss) attributable to Dominion Energy |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
26
(1) |
|
(2) |
Q-Pipe Group includes a $ |
(3) |
|
(4) |
Excludes $ |
The carrying amounts of major classes of assets and liabilities relating to the disposal groups, which are reported as held for sale in Dominion Energy’s Consolidated Balance Sheets were as follows:
|
|
At September 30, 2021 |
|
|
At December 31, 2020 |
|
||
|
|
Q-Pipe Group |
|
|
Q-Pipe Group |
|
||
(millions) |
|
|
|
|
|
|
|
|
Current assets(1) |
|
$ |
|
|
|
$ |
|
|
Equity method investments(2) |
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
|
|
|
|
|
|
Other deferred charges and other assets, including goodwill and intangible assets(3) |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
|
|
Other deferred credits and liabilities |
|
|
|
|
|
|
|
|
(1) |
|
(2) |
|
(3) |
|
Capital expenditures and significant noncash items relating to the disposal groups included the following:
|
|
Nine Months Ended September 30, 2021 |
|
|
Nine Months Ended September 30, 2020 |
|
||||||
|
|
Q-Pipe Group |
|
|
GT&S Transaction |
|
|
Q-Pipe Group |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Significant noncash items: |
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of assets and other charges |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
Accrued capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
Sale of Kewaunee
In May 2021, Dominion Energy entered into an agreement to sell
In May 2021, Dominion Energy and EnergySolutions submitted a license transfer application to the NRC. Also in May 2021, Dominion Energy submitted an application to the Wisconsin Commission for approval. In July 2021, WPSC and WP&L submitted a joint request to the Wisconsin Commission for the waiver of both of their rights of first refusal to purchase Kewaunee, such rights having been granted as the former owners of Kewaunee. At September 30, 2021, Dominion Energy determined that the assets and liabilities associated with the Kewaunee sale did not meet the criteria to be classified as held for sale due to the significant uncertainty surrounding the timing of or ability to obtain necessary regulatory approvals.
27
Dominion Energy expects to record a loss if and when it determines that criteria for the classification as held for sale have been met. If such classification had been made at September 30, 2021, Dominion Energy would have recognized a loss of approximately $
Acquisition of Birdseye
In May 2021, Dominion Energy acquired
28
Note 4. Operating Revenue
The Companies’ operating revenue consists of the following:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government and other retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonregulated electric sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated gas sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonregulated gas sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated gas transportation and storage |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other regulated revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other nonregulated revenues(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue from contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues(2)(3) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Total operating revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government and other retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other regulated revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other nonregulated revenues(1)(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue from contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues(2)(4) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
|
(4) See Note 19 for amounts attributable to affiliates.
The table below discloses the aggregate amount of the transaction price allocated to fixed-price performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period and when Dominion Energy expects to recognize this revenue. These revenues relate to contracts containing fixed prices where Dominion Energy will earn the associated revenue over time as it stands ready to perform services provided. This disclosure does not include revenue related to performance obligations that are part of a contract with original durations of one year or less. In addition, this disclosure does not include expected consideration related to performance obligations for which Dominion Energy elects to recognize revenue in the amount it has a right to invoice.
29
Revenue expected to be recognized on multi-year contracts in place at September 30, 2021 |
|
2021 |
|
|
2022 |
|
|
2023 |
|
|
2024 |
|
|
2025 |
|
|
Thereafter |
|
|
Total |
|
|||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy(1) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
Includes no amounts for Virginia Power. |
At September 30, 2021 and December 31, 2020, Dominion Energy’s contract liability balances were $
The Companies recognize revenue as they fulfill their obligations to provide service to their customers. During the nine months ended September 30, 2021 and 2020, Dominion Energy recognized revenue of $
Note 5. Income Taxes
For continuing operations, including noncontrolling interests, the statutory U.S. federal income tax rate reconciles to the Companies’ effective income tax rate as follows:
|
|
Dominion Energy |
|
|
Virginia Power |
|
||||||||||
Nine Months Ended September 30, |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
U.S. statutory rate |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
Increases (reductions) resulting from: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
State taxes, net of federal benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment tax credits |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Production tax credits |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Reversal of excess deferred income taxes |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
State legislative change |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Change in tax status |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
AFUDC - equity |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Changes in state deferred taxes associated with assets held for sale |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Absence of tax on noncontrolling interest |
|
|
( |
) |
|
|
|
|
|
|
— |
|
|
|
— |
|
Other, net |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
Effective tax rate |
|
|
|
% |
|
|
( |
)% |
|
|
|
% |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Companies’ rate-regulated entities, deferred taxes will reverse at the weighted average rate used to originate the deferred tax liability, which in some cases will be
For the nine months ended September 30, 2021, the Companies’ effective tax rates reflect the benefit of a state legislative change enacted in April 2021 for tax years beginning January 1, 2022. Dominion Energy’s effective tax rate reflects a $
For the nine months ended September 30, 2020, Dominion Energy’s effective tax rate reflects an income tax benefit of $
30
As of September 30, 2021, there have been no material changes in the Companies’ unrecognized tax benefits or possible changes that could reasonably be expected to occur during the next twelve months. See Note 5 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, for a discussion of these unrecognized tax benefits.
Discontinued operations
Income tax expense (benefit) included in discontinued operations is $
The following table presents the calculation of Dominion Energy’s basic and diluted EPS:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Dominion Energy from continuing operations |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Preferred stock dividends (see Note 16) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income attributable to Dominion Energy from continuing operations – Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilutive effect of Series A Preferred Stock |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net income attributable to Dominion Energy from continuing operations - Diluted |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income (loss) attributable to Dominion Energy from discontinued operations - Basic & Diluted |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares of common stock outstanding – Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of dilutive securities (1) |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
Average shares of common stock outstanding – Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS from continuing operations – Basic |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
EPS from discontinued operations – Basic |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
EPS attributable to Dominion Energy – Basic |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS from continuing operations – Diluted |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
EPS from discontinued operations – Diluted |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
EPS attributable to Dominion Energy – Diluted |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
(1) |
Primarily related to shares expected to be issued to settle litigation. |
The 2019 Equity Units and the Q-Pipe Transaction deposit, prior to being settled in cash in July 2021, are potentially dilutive securities. See Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 and Note 3, respectively, for additional information. Additionally, the two September 2020 accelerated share purchase agreements were potentially dilutive for the three and nine months ended September 30, 2020. See Note 16 for additional information.
The forward stock purchase contracts included within the 2019 Equity Units are excluded from the calculation of diluted EPS from continuing operations for the three and nine months ended September 30, 2021 and 2020, as the dilutive stock price threshold was not met. The Series A Preferred Stock included within the 2019 Equity Units is excluded from the calculation of diluted EPS from continuing operations based upon the expectation that the conversion will be settled in cash rather than through the issuance of Dominion Energy common stock. As described in Note 16, effective November 2021 any settlement of the conversion up to $1,000 per share is payable in cash, and any amount in excess of $1,000 per share may be settled in cash, common stock or a combination thereof. For the three and nine months ended September 30, 2021 and the three months ended September 30, 2020, a fair value adjustment related to the Series A Preferred Stock included within the 2019 Equity Units is excluded from the calculation of diluted EPS from continuing operations, as such fair value adjustment was not dilutive during the periods.
31
The impact of settling the deposit associated with the Q-Pipe Transaction in shares is excluded from the calculation of diluted EPS from continuing operations for the three and nine months ended September 30, 2021 based upon the expectation Dominion Energy would settle in cash, which occurred in July 2021, rather than through the issuance of Dominion Energy common stock.
The forward stock purchase contracts included within the September 2020 accelerated share repurchase agreements are excluded from the calculation of diluted EPS for the three and nine months ended September 30, 2020 as the dilutive stock price threshold was not met.
Note 7. Accumulated Other Comprehensive Income (Loss)
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) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income before reclassifications: gains (losses) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amounts reclassified from AOCI: (gains) losses(1) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net current period other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Ending balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Three Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income before reclassifications: gains (losses) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Amounts reclassified from AOCI: (gains) losses(1) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net current period other comprehensive income (loss) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Ending balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income before reclassifications: gains (losses) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Amounts reclassified from AOCI: (gains) losses(1) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net current period other comprehensive income (loss) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Ending balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Nine Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Other comprehensive income before reclassifications: gains (losses) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Amounts reclassified from AOCI: (gains) losses(1) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net current period other comprehensive income (loss) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Ending balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
(1) |
|
32
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) |
|
|
|
|
|
|
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Interest rate contracts |
|
$ |
|
|
|
Interest and related charges |
Total |
|
|
|
|
|
|
Tax |
|
|
( |
) |
|
Income tax expense (benefit) |
Total, net of tax |
|
$ |
|
|
|
|
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
|
Realized (gains) losses on sale of securities |
|
$ |
( |
) |
|
Other income |
Total |
|
|
( |
) |
|
|
Tax |
|
|
|
|
|
Income tax expense (benefit) |
Total, net of tax |
|
$ |
( |
) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Amortization of prior-service costs (credits) |
|
$ |
( |
) |
|
Other income |
Amortization of actuarial losses |
|
|
|
|
|
Other income |
Total |
|
|
|
|
|
|
Tax |
|
|
( |
) |
|
Income tax expense (benefit) |
Total, net of tax |
|
$ |
|
|
|
|
Three Months Ended September 30, 2020 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
|
$ |
( |
) |
|
Operating revenue |
Interest rate contracts |
|
|
|
|
|
Interest and related charges |
|
|
|
|
|
|
Discontinued operations |
Foreign currency contracts |
|
|
|
|
|
Discontinued operations |
Total |
|
|
|
|
|
|
Tax |
|
|
( |
) |
|
Income tax expense (benefit) |
Total, net of tax |
|
$ |
|
|
|
|
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
|
Realized (gains) losses on sale of securities |
|
$ |
( |
) |
|
Other income |
Total |
|
|
( |
) |
|
|
Tax |
|
|
|
|
|
Income tax expense (benefit) |
Total, net of tax |
|
$ |
( |
) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Amortization of prior-service costs (credits) |
|
$ |
( |
) |
|
Other income |
Amortization of actuarial losses |
|
|
|
|
|
Other income |
Total |
|
|
|
|
|
|
Tax |
|
|
( |
) |
|
Income tax expense (benefit) |
Total, net of tax |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
Details about AOCI components |
|
Amounts reclassified from AOCI |
|
|
Affected line item in the Consolidated Statements of Income |
|
(millions) |
|
|
|
|
|
|
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
|
$ |
|
|
|
Purchased gas |
Interest rate contracts |
|
|
|
|
|
Interest and related charges |
Total |
|
|
|
|
|
|
Tax |
|
|
( |
) |
|
Income tax expense (benefit) |
Total, net of tax |
|
$ |
|
|
|
|
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
|
Realized (gains) losses on sale of securities |
|
$ |
( |
) |
|
Other income |
Total |
|
|
( |
) |
|
|
33
Tax |
|
|
|
|
|
Income tax expense (benefit) |
Total, net of tax |
|
$ |
( |
) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Amortization of prior-service costs (credits) |
|
$ |
( |
) |
|
Other income |
Amortization of actuarial losses |
|
|
|
|
|
Other income |
Total |
|
|
|
|
|
|
Tax |
|
|
( |
) |
|
Income tax expense (benefit) |
Total, net of tax |
|
$ |
|
|
|
|
Nine Months Ended September 30, 2020 |
|
|
|
|
|
|
Deferred (gains) and losses on derivatives-hedging activities: |
|
|
|
|
|
|
Commodity contracts |
|
$ |
( |
) |
|
Operating revenue |
|
|
|
|
|
|
Purchased gas |
|
|
|
( |
) |
|
Discontinued operations |
Interest rate contracts |
|
|
|
|
|
Interest and related charges |
|
|
|
|
|
|
Discontinued operations |
Foreign currency contracts |
|
|
|
|
|
Discontinued operations |
Total |
|
|
|
|
|
|
Tax |
|
|
( |
) |
|
Income tax expense (benefit) |
Total, net of tax |
|
$ |
|
|
|
|
Unrealized (gains) and losses on investment securities: |
|
|
|
|
|
|
Realized (gains) losses on sale of securities |
|
$ |
( |
) |
|
Other income |
Total |
|
|
( |
) |
|
|
Tax |
|
|
|
|
|
Income tax expense (benefit) |
Total, net of tax |
|
$ |
( |
) |
|
|
Unrecognized pension and other postretirement benefit costs: |
|
|
|
|
|
|
Amortization of prior-service costs (credits) |
|
$ |
( |
) |
|
Other income |
Amortization of actuarial losses |
|
|
|
|
|
Other income |
Total |
|
|
|
|
|
|
Tax |
|
|
( |
) |
|
Income tax expense (benefit) |
Total, net of tax |
|
$ |
|
|
|
|
34
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) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
Other comprehensive income before reclassifications: gains (losses) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Amounts reclassified from AOCI: (gains) losses(1) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Net current period other comprehensive income (loss) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Ending balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
Three Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
Other comprehensive income before reclassifications: gains (losses) |
|
|
|
|
|
|
|
|
|
|
|
|
Amounts reclassified from AOCI: (gains) losses(1) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Net current period other comprehensive income (loss) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Ending balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
Other comprehensive income before reclassifications: gains (losses) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Amounts reclassified from AOCI: (gains) losses(1) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Net current period other comprehensive income (loss) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Ending balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
Nine Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
Other comprehensive income before reclassifications: gains (losses) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Amounts reclassified from AOCI: (gains) losses(1) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Net current period other comprehensive income (loss) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Ending balance |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
(1) |
|
Note 8. Fair Value Measurements
The Companies’ fair value measurements are made in accordance with the policies discussed in Note 6 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020. See Note 9 in this report for further information about the Companies’ derivatives and hedge accounting activities.
The Companies enter into certain physical and financial forwards, futures, options and swaps, which are considered Level 3 as they have one or more inputs that are not observable and are significant to the valuation. The discounted cash flow method is used to value Level 3 physical and financial forwards, futures and swaps contracts. An option model is used to value Level 3 physical options. The discounted cash flow model for forwards, futures and swaps calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return and credit spreads. The option model calculates mark-to-market valuations using variations of the Black-Scholes option model. The inputs into the models are the forward market prices, implied price volatilities, risk-free rate of return, the option expiration dates, the option strike prices, the original sales prices and volumes. For Level 3 fair value measurements, certain forward market prices and implied price volatilities are considered unobservable.
35
The following table presents Dominion Energy’s quantitative information about Level 3 fair value measurements at September 30, 2021. 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 and financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas(2) |
|
$ |
|
|
|
Discounted cash flow |
|
Market price (per Dth) |
(3) |
|
|
|
|
( |
) |
FTRs |
|
|
|
|
|
Discounted cash flow |
|
Market price (per MWh) |
(3) |
|
|
|
|
|
|
Electricity |
|
|
|
|
|
Discounted cash flow |
|
Market price (per MWh) |
(3) |
|
|
|
|
|
|
Physical options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas |
|
|
|
|
|
Option model |
|
Market price (per Dth) |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price volatility |
(4) |
|
|
|
|
|
% |
Total assets |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas(2) |
|
$ |
|
|
|
Discounted cash flow |
|
Market price (per Dth) |
(3) |
|
|
|
|
|
|
FTRs |
|
|
|
|
|
Discounted cash flow |
|
Market price (per MWh) |
(3) |
|
|
|
|
|
|
Electricity |
|
|
|
|
|
Discounted cash flow |
|
Market price (per MWh) |
(3) |
|
|
|
|
|
|
Total liabilities |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
(2) |
Includes basis. |
(3) |
|
(4)
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) |
Nonrecurring Fair Value Measurements
In the second quarter of 2021, Dominion Energy recorded a charge of $
In the third quarter of 2021, Dominion Energy recorded a charge of $
36
See Note 3 for information on the nonrecurring fair value measurement associated with the acquisition of Birdseye.
See Notes 10 and 11 for information on nonrecurring fair value measurements associated with charges recorded related to Fowler Ridge and non-wholly-owned nonregulated solar facilities, respectively.
Recurring Fair Value Measurements
Dominion Energy
The following table presents Dominion Energy’s assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
At December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
37
The following table presents the net change in Dominion Energy's assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
Total realized and unrealized gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Electric fuel and other energy-related purchases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Included in regulatory assets/liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlements |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Ending balance |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
There are $(
Virginia Power
The following table presents Virginia Power’s quantitative information about Level 3 fair value measurements at September 30, 2021. The range and weighted average are presented in dollars for market price inputs.
|
|
Fair Value (millions) |
|
|
Valuation Techniques |
|
Unobservable Input |
|
|
Range |
|
Weighted Average(1) |
|
||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas(2) |
|
$ |
|
|
|
Discounted cash flow |
|
Market price (per Dth) |
(3) |
|
|
|
|
( |
) |
FTRs |
|
|
|
|
|
Discounted cash flow |
|
Market price (per MWh) |
(3) |
|
|
|
|
|
|
Physical options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas |
|
|
|
|
|
Option model |
|
Market price (per Dth) |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price volatility |
(4) |
|
|
|
|
|
% |
Total assets |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Physical and financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas(2) |
|
$ |
|
|
|
Discounted cash flow |
|
Market price (per Dth) |
(3) |
|
|
|
|
|
|
FTRs |
|
|
|
|
|
Discounted cash flow |
|
Market price (per MWh) |
(3) |
|
|
|
|
|
|
Total liabilities |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Averages weighted by volume. |
(2) |
|
(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) |
38
The following table presents Virginia Power’s assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
At December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
The following table presents the net change in Virginia Power’s assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
Total realized and unrealized gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric fuel and other energy-related purchases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Included in regulatory assets/liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlements |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Ending balance |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
39
There were
Fair Value of Financial Instruments
Substantially all of the Companies’ 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 cash, restricted cash and equivalents, customer and other receivables, affiliated receivables, short-term debt, affiliated current borrowings, payables to affiliates and accounts payable are representative of fair value because of the short-term nature of these instruments.
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
||||||||||
|
|
Carrying Amount |
|
|
Estimated Fair Value(1) |
|
|
Carrying Amount |
|
|
Estimated Fair Value(1) |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt(2)(3) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Supplemental credit facility borrowings(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Junior subordinated notes(5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt(5) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
(5) |
|
Note 9. Derivatives and Hedge Accounting Activities
The Companies’ accounting policies, objectives and strategies for using derivative instruments are discussed in Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020. See Note 8 in this report for further information about fair value measurements and associated valuation methods for derivatives.
Derivative assets and liabilities are presented gross on the Companies’ Consolidated Balance Sheets. The Companies’ derivative contracts include both over-the-counter transactions and those that are executed on an exchange or other trading platform (exchange contracts) and centrally cleared. Over-the-counter contracts are bilateral contracts that are transacted directly with a third party. Exchange contracts utilize a financial intermediary, exchange, or clearinghouse to enter, execute or clear the transactions. Certain over-the-counter and exchange contracts contain contractual rights of setoff through master netting arrangements, derivative clearing agreements and contract default provisions. In addition, the contracts are subject to conditional rights of setoff through counterparty nonperformance, insolvency or other conditions.
In general, most over-the-counter transactions and all exchange contracts are subject to collateral requirements. Types of collateral for over-the-counter and exchange contracts include cash, letters of credit, and in some cases other forms of securities, none of which are subject to restrictions. Cash collateral, as presented in the table below, is used to offset derivative assets and liabilities. Certain accounts receivable and accounts payable recognized on the Companies’ Consolidated Balance Sheets, letters of credit and other forms of securities, as well as certain long-term debt, all of which are not included in the tables below, are subject to offset under master netting or similar arrangements and would reduce the net exposure. See Note 18 for further information regarding credit-related contingent features for the Companies’ derivative instruments.
40
Dominion Energy
Balance Sheet Presentation
The tables below present Dominion Energy’s derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in its Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
||||||||||||||||||||||||||
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
||||||||||||||||||||||||||
|
|
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 |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives, subject to a master netting or similar arrangement |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
||||||||||||||||||||||||||
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
||||||||||||||||||||||||||
|
|
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 |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives, subject to a master netting or similar arrangement |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
41
Volumes
The following table presents the volume of Dominion Energy’s derivative activity at September 30, 2021. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.
|
|
Current |
|
|
Noncurrent |
|
||
Natural Gas (bcf): |
|
|
|
|
|
|
|
|
Fixed price(1) |
|
|
|
|
|
|
|
|
Basis |
|
|
|
|
|
|
|
|
Electricity (MWh): |
|
|
|
|
|
|
|
|
Fixed price |
|
|
|
|
|
|
|
|
FTRs |
|
|
|
|
|
|
|
|
Interest rate(2) (millions) |
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
AOCI
The following table presents selected information related to losses on cash flow hedges included in AOCI in Dominion Energy’s Consolidated Balance Sheet at September 30, 2021:
|
|
AOCI After-Tax |
|
|
Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax |
|
|
Maximum Term |
||
(millions) |
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
Total |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interest rate payments) in earnings, thereby achieving the realization of prices contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in interest rates.
Fair Value Hedges
For derivative instruments that are designated and qualify as a fair value hedge, the gain or loss on the derivative instrument as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings and presented in the same line item. There were
The following table presents the amounts recorded on the balance sheet related to cumulative basis adjustments for fair value hedges, all of which related to discontinued hedging relationships at both September 30, 2021 and December 31, 2020:
|
|
Carrying Amount of the Hedged Asset (Liability) |
|
|
Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Assets (Liabilities) |
|
||||||||||
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
42
Fair Value and Gains and Losses on Derivative Instruments
The following table presents the fair values of Dominion Energy’s derivatives and where they are presented in its Consolidated Balance Sheets:
|
|
Fair Value – Derivatives under Hedge Accounting |
|
|
Fair Value – Derivatives not under Hedge Accounting |
|
|
Total Fair Value |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total current derivative assets(1) |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative assets(2) |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total current derivative liabilities(3) |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative liabilities(4) |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total current derivative assets(1) |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative assets(2) |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total current derivative liabilities(3) |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative liabilities(4) |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
|
(4 |
|
43
The following tables present the gains and losses on Dominion Energy’s derivatives, as well as where the associated activity is presented in its Consolidated Balance Sheets and Statements of Income.
Derivatives in cash flow hedging relationships |
|
Amount of Gain (Loss) Recognized in AOCI on Derivatives(1) |
|
|
Amount of Gain (Loss) Reclassified From AOCI to Income |
|
|
Increase (Decrease) in Derivatives Subject to Regulatory Treatment(2) |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate(3) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Total |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Three Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
|
|
|
|
$ |
|
|
|
|
|
|
Total commodity |
|
$ |
— |
|
|
$ |
|
|
|
$ |
— |
|
Interest rate: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and related charges |
|
|
|
|
|
$ |
( |
) |
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
( |
) |
|
|
|
|
Total interest rate |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Foreign currency(4) |
|
|
|
|
|
|
( |
) |
|
|
— |
|
Total |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
Purchased gas |
|
|
|
|
|
$ |
( |
) |
|
|
|
|
Total commodity |
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
— |
|
Interest rate (3) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Total |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Nine Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
|
|
|
|
$ |
|
|
|
|
|
|
Purchased gas |
|
|
|
|
|
|
( |
) |
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
Total commodity |
|
$ |
— |
|
|
$ |
|
|
|
$ |
— |
|
Interest rate: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and related charges |
|
|
|
|
|
$ |
( |
) |
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
( |
) |
|
|
|
|
Total interest rate |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Foreign currency (4) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Total |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
(1) |
|
(2) |
|
(3)
(4)
44
Derivatives not designated as hedging instruments |
|
Amount of Gain (Loss) Recognized in Income on Derivatives(1) |
|
|
|||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
Purchased gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
Electric fuel and other energy-related purchases |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Discontinued operations |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
Interest rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and related charges |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
Foreign Currency: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
(1) |
|
Virginia Power
Balance Sheet Presentation
The tables below present Virginia Power’s derivative asset and liability balances by type of financial instrument, if the gross amounts recognized in its Consolidated Balance Sheets were netted with derivative instruments and cash collateral received or paid:
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
||||||||||||||||||||||||||
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
||||||||||||||||||||||||||
|
|
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 |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Total derivatives, subject to a master netting or similar arrangement |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
45
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
||||||||||||||||||||||||||
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
|
Gross Amounts Not Offset in the Consolidated Balance Sheet |
|
||||||||||||||||||||||||||
|
|
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 |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Exchange |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Total derivatives, subject to a master netting or similar arrangement |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
Volumes
The following table presents the volume of Virginia Power’s derivative activity at September 30, 2021. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.
|
|
Current |
|
|
Noncurrent |
|
||
Natural Gas (bcf): |
|
|
|
|
|
|
|
|
Fixed price(1) |
|
|
|
|
|
|
|
|
Basis |
|
|
|
|
|
|
|
|
Electricity (MWh): |
|
|
|
|
|
|
|
|
Fixed price |
|
|
|
|
|
|
|
|
FTRs |
|
|
|
|
|
|
|
|
Interest rate(2) (millions) |
|
$ |
|
|
|
$ |
|
|
(1) |
Includes options. |
(2) |
Maturity is determined based on final settlement period. |
AOCI
The following table presents selected information related to losses on cash flow hedges included in AOCI in Virginia Power’s Consolidated Balance Sheet at September 30, 2021:
|
|
AOCI After-Tax |
|
|
Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax |
|
|
Maximum Term |
||
(millions) |
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
Total |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interest payments) in earnings, thereby achieving the realization of interest rates contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in interest rates.
46
Fair Value and Gains and Losses on Derivative Instruments
The following table presents the fair values of Virginia Power’s derivatives and where they are presented in its Consolidated Balance Sheets:
|
|
Fair Value – Derivatives under Hedge Accounting |
|
|
Fair Value – Derivatives not under Hedge Accounting |
|
|
Total Fair Value |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Total current derivative assets(1) |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative assets(2) |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total current derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative liabilities(3) |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Total current derivative assets(1) |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative assets(2) |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total current derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative liabilities(3) |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
|
47
The following tables present the gains and losses on Virginia Power’s derivatives, as well as where the associated activity is presented in its Consolidated Balance Sheets and Statements of Income:
Derivatives in cash flow hedging relationships |
|
Amount of Gain (Loss) Recognized in AOCI on Derivatives(1) |
|
|
Amount of Gain (Loss) Reclassified From AOCI to Income |
|
|
Increase (Decrease) in Derivatives Subject to Regulatory Treatment(2) |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate(3) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Total |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
Three Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate(3) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Total |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate(3) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Total |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Nine Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate(3) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Total |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
(1) |
|
(2) |
|
(3) |
|
Derivatives not designated as hedging instruments |
|
Amount of Gain (Loss) Recognized in Income on Derivatives(1) |
|
|
|||||||||||||
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
||||||||||
|
|
September 30, |
|
|
September 30, |
|
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenue |
|
$ |
( |
) |
|
$ |
|
|
|
|
( |
) |
|
$ |
|
|
|
Electric fuel and other energy-related purchases |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
Total |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
(1) |
|
Note 10. Investments
Dominion Energy
Equity and Debt Securities
Rabbi Trust Securities
Equity and fixed income securities and cash equivalents in Dominion Energy’s rabbi trusts and classified as trading totaled $
48
Decommissioning Trust Securities
Dominion Energy holds equity and fixed income securities, insurance contracts and cash equivalents in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants.
|
|
Amortized Cost |
|
|
Total Unrealized Gains |
|
|
Total Unrealized Losses |
|
|
Allowance for Credit Losses |
|
|
Fair Value |
|
|||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
|
|
|
|
$ |
|
|
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
|
|
Government securities |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
Common/collective trust funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance contracts |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Cash equivalents and other(3) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
(4) |
$ |
|
|
|
$ |
|
|
December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
|
|
|
|
$ |
|
|
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
|
|
Government securities |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
Common/collective trust funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and other(3) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
(4) |
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
The portion of unrealized gains and losses that relates to equity securities held within Dominion Energy’s nuclear decommissioning trusts is summarized below:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) recognized during the period |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Less: Net (gains) losses recognized during the period on securities sold during the period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unrealized gains (losses) recognized during the period on securities still held at period end(1) |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
49
The fair value of Dominion Energy’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at September 30, 2021 by contractual maturity is as follows:
|
|
Amount |
|
|
(millions) |
|
|
|
|
Due in one year or less |
|
$ |
|
|
Due after one year through five years |
|
|
|
|
Due after five years through ten years |
|
|
|
|
Due after ten years |
|
|
|
|
Total |
|
$ |
|
|
Presented below is selected information regarding Dominion Energy’s equity and fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Realized gains(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized losses(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Virginia Power
Virginia Power holds equity and fixed income securities and cash equivalents in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants.
|
|
Amortized Cost |
|
|
Total Unrealized Gains |
|
|
Total Unrealized Losses |
|
|
Allowance for Credit Losses |
|
|
Fair Value |
|
|||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
|
|
|
|
$ |
|
|
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
$ |
|
|
|
|
|
|
Government securities |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
Common/collective trust funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and other(3) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
( |
) |
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
(4) |
$ |
|
|
|
$ |
|
|
December 31, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
|
|
|
|
$ |
|
|
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
Government securities |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
Common/collective trust funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and other(3) |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
(4) |
$ |
|
|
|
$ |
|
|
(1) |
Unrealized gains and losses on equity securities are included in other income and the nuclear decommissioning trust regulatory liability. |
(2) |
Unrealized gains and losses on fixed income securities are included in AOCI and the nuclear decommissioning trust regulatory liability. Changes in allowance for credit losses are included in other income. |
50
(3) |
|
(4) |
|
The portion of unrealized gains and losses that relates to equity securities held within Virginia Power’s nuclear decommissioning trusts is summarized below:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) recognized during the period |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
Less: Net (gains) losses recognized during the period on securities sold during the period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unrealized gains (losses) recognized during the period on securities still held at period end(1) |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
(1) |
Included in other income and the nuclear decommissioning trust regulatory liability. |
The fair value of Virginia Power’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at September 30, 2021 by contractual maturity is as follows:
|
|
Amount |
|
|
(millions) |
|
|
|
|
Due in one year or less |
|
$ |
|
|
Due after one year through five years |
|
|
|
|
Due after five years through ten years |
|
|
|
|
Due after ten years |
|
|
|
|
Total |
|
$ |
|
|
Presented below is selected information regarding Virginia Power’s equity and fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds.
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Realized gains(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized losses(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes realized gains and losses recorded to the nuclear decommissioning trust regulatory liability. |
Equity Method Investments
Dominion Energy recorded equity earnings on its investments of $
51
not being amortized, a $
Cove Point
In November 2020, in conjunction with the GT&S Transaction, Dominion Energy sold
Income before income taxes recorded by Cove Point was $
Dominion Energy recorded distributions from Cove Point of $
Atlantic Coast Pipeline
A description of Dominion Energy’s investment in Atlantic Coast Pipeline, including events that led to the cancellation of the Atlantic Coast Pipeline Project in July 2020, is included in Note 9 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
At September 30, 2021 and December 31, 2020, Dominion Energy has recorded a liability of $
In February 2021, Atlantic Coast Pipeline repaid the outstanding borrowed amounts and terminated its revolving credit facility. As of December 31, 2020, Atlantic Coast Pipeline had borrowed $
Dominion Energy recorded contributions of $
Dominion Energy expects to incur additional losses from Atlantic Coast Pipeline as it completes wind-down activities. While Dominion Energy is unable to precisely estimate the amounts to be incurred by Atlantic Coast Pipeline, the portion of such amounts attributable to Dominion Energy is not expected to be material to Dominion Energy’s results of operations, financial position or statement of cash flows.
DETI provided services to Atlantic Coast Pipeline which totaled $
52
Wrangler
A description of Dominion Energy’s investment in Wrangler is included in Note 9 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. At September 30, 2021 and December 31, 2020, $
Fowler Ridge
In September 2020, Dominion Energy sold its
The $
Note 11. Property, Plant and Equipment
Acquisitions of Nonregulated Solar Projects
Other than the items discussed below, there have been no updates to acquisitions of solar projects by the Companies from those discussed in Note 10 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020.
The following table presents acquisitions by Virginia Power of non-jurisdictional solar projects. Virginia Power has claimed or expects to claim federal investment tax credits on the projects.
Project Name |
|
Date Agreement Entered |
|
Date Agreement Closed |
|
Project Location |
|
Project Cost (millions)(1) |
|
|
Date of Commercial Operations |
|
MW Capacity |
|
||
Bookers Mill |
|
|
|
|
|
Virginia |
|
$ |
|
|
|
|
|
|
|
|
Belcher |
|
|
|
|
|
Virginia |
|
|
|
|
|
|
|
|
|
|
(1) |
|
The following table presents acquisitions by Dominion Energy of solar projects. Dominion Energy has claimed or expects to claim federal investment tax credits on the projects.
Project Name |
|
Date Agreement Entered |
|
Date Agreement Closed |
|
Project Location |
|
Project Cost (millions)(1) |
|
|
Date of Commercial Operations |
|
MW Capacity |
|
||
Trask |
|
|
|
|
|
South Carolina |
|
$ |
|
|
|
|
|
|
|
|
Hardin II |
|
|
|
Expected 2021 |
|
Ohio |
|
|
|
|
|
|
|
|
|
|
(1) |
Includes acquisition cost. |
In addition to the facilities discussed above, Dominion Energy has also entered into various agreements to install solar facilities, primarily at schools in Virginia, with in-service dates through 2022. As of September 30, 2021, Dominion Energy anticipates a total projected cost of approximately $
Non-Wholly-Owned Nonregulated Solar Facilities
Sale to Terra Nova Renewable Partners
In August 2021, Dominion Energy entered into an agreement with Terra Nova Renewable Partners to sell SBL Holdco, which holds Dominion Energy’s remaining
53
subject to customary closing adjustments, with the amount of cash reduced by the amount of SBL Holdco’s debt outstanding at closing. The transaction is expected to close in the fourth quarter of 2021, contingent on clearance or approval under the Hart-Scott-Rodino Act and by FERC as well as other customary closing and regulatory conditions. In September 2021, the waiting period under the Hart-Scott-Rodino Act expired. In October 2021, FERC approved the proposed sale.
At September 30, 2021, $
Sale to Clearway
In August 2021, Dominion Energy entered an agreement with Clearway to sell its
At September 30, 2021, $
Impairment
In the third quarter of 2020, Dominion Energy performed a strategic review of its long-term intentions for its contracted nonregulated solar generation assets in partnerships outside of its core electric service territories in consideration of the impact of the VCEA and Dominion Energy’s decision to sell substantially all of its gas transmission and storage operations. Based on an evaluation of Dominion Energy’s interests in these long-lived assets for recoverability under a probability weighted approach, Dominion Energy determined the assets were impaired. As a result of this evaluation, Dominion Energy recorded a charge of $
Virginia Power CCRO Utilization
In the third quarter of 2021, Virginia Power wrote off $
Acquisition of Gathering and Processing Assets
In November 2021, Wexpro closed on an agreement with a natural gas gathering systems operator to purchase an existing natural gas gathering system in Wyoming including pipelines, compressors and dehydration equipment for total consideration of $
54
Note 12. Regulatory Assets and Liabilities
Regulatory assets and liabilities include the following:
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
||
(millions) |
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
|
|
|
|
|
|
Regulatory assets: |
|
|
|
|
|
|
|
|
Deferred cost of fuel used in electric generation(1) |
|
$ |
|
|
|
$ |
— |
|
Deferred project costs and DSM programs for gas utilities(2) |
|
|
|
|
|
|
|
|
Unrecovered gas costs(3) |
|
|
|
|
|
|
|
|
Deferred rider costs for Virginia electric utility(4) |
|
|
|
|
|
|
|
|
Deferred nuclear refueling outage costs(5) |
|
|
|
|
|
|
|
|
NND Project costs(6) |
|
|
|
|
|
|
|
|
PJM transmission rates(7) |
|
|
|
|
|
|
|
|
Deferred early plant retirement charges(8) |
|
|
|
|
|
|
— |
|
Derivatives(9) |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Regulatory assets-current |
|
|
|
|
|
|
|
|
Pension and other postretirement benefit costs(10) |
|
|
|
|
|
|
|
|
Deferred rider costs for Virginia electric utility(4) |
|
|
|
|
|
|
|
|
Deferred project costs for gas utilities(2) |
|
|
|
|
|
|
|
|
Interest rate hedges(11) |
|
|
|
|
|
|
|
|
AROs and related funding(12) |
|
|
|
|
|
|
|
|
Cost of reacquired debt(13) |
|
|
|
|
|
|
|
|
NND Project costs(6) |
|
|
|
|
|
|
|
|
Ash pond and landfill closure costs(14) |
|
|
|
|
|
|
|
|
Deferred cost of fuel used in electric generation(1) |
|
|
|
|
|
|
— |
|
Deferred early plant retirement charges(8) |
|
|
|
|
|
|
— |
|
Other |
|
|
|
|
|
|
|
|
Regulatory assets-noncurrent |
|
|
|
|
|
|
|
|
Total regulatory assets |
|
$ |
|
|
|
$ |
|
|
Regulatory liabilities: |
|
|
|
|
|
|
|
|
Deferred cost of fuel used in electric generation(1) |
|
$ |
|
|
|
$ |
|
|
Provision for future cost of removal and AROs(15) |
|
|
|
|
|
|
|
|
Reserve for refunds to electric utility customers(16) |
|
|
|
|
|
|
|
|
Reserve for future credits to Virginia electric customers(17) |
|
|
— |
|
|
|
|
|
Cost-of-service impact of 2017 Tax Reform Act(18) |
|
|
— |
|
|
|
|
|
Income taxes refundable through future rates(19) |
|
|
|
|
|
|
|
|
Monetization of guarantee settlement(20) |
|
|
|
|
|
|
|
|
Commodity derivatives(21) |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Regulatory liabilities-current |
|
|
|
|
|
|
|
|
Income taxes refundable through future rates(19) |
|
|
|
|
|
|
|
|
Provision for future cost of removal and AROs(15) |
|
|
|
|
|
|
|
|
Nuclear decommissioning trust(22) |
|
|
|
|
|
|
|
|
Monetization of guarantee settlement(20) |
|
|
|
|
|
|
|
|
Reserve for refunds to electric utility customers(16) |
|
|
|
|
|
|
|
|
Overrecovered other postretirement benefit costs(23) |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Regulatory liabilities-noncurrent |
|
|
|
|
|
|
|
|
Total regulatory liabilities |
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
|
55
(4) |
|
(5) |
|
(6) |
|
(7) |
|
(8) |
|
(9) |
|
(10) |
|
(11) |
|
(12) |
|
(13) |
|
(14) |
|
(15) |
|
(16) |
|
(17) |
|
(18) |
|
(19) |
|
(20) |
|
(21) |
For jurisdictions subject to cost-based rate regulation, changes in the fair value of derivative instruments result in the recognition of regulatory assets or regulatory liabilities as they are expected to be recovered from or refunded to customers. |
(22) |
|
(23) |
|
56
|
|
September 30, 2021 |
|
|
December 31, 2020 |
|
||
(millions) |
|
|
|
|
|
|
|
|
Virginia Power |
|
|
|
|
|
|
|
|
Regulatory assets: |
|
|
|
|
|
|
|
|
Deferred cost of fuel used in electric generation(1) |
|
$ |
|
|
|
$ |
— |
|
Deferred rider costs(2) |
|
|
|
|
|
|
|
|
Deferred nuclear refueling outage costs(3) |
|
|
|
|
|
|
|
|
PJM transmission rates(4) |
|
|
|
|
|
|
|
|
Deferred early plant retirement charges(5) |
|
|
|
|
|
|
— |
|
Derivatives(6) |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Regulatory assets-current |
|
|
|
|
|
|
|
|
Deferred rider costs(2) |
|
|
|
|
|
|
|
|
Interest rate hedges(7) |
|
|
|
|
|
|
|
|
Ash pond and landfill closure costs(8) |
|
|
|
|
|
|
|
|
Deferred cost of fuel used in electric generation(1) |
|
|
|
|
|
|
— |
|
Deferred early plant retirement charges(5) |
|
|
|
|
|
|
— |
|
Other |
|
|
|
|
|
|
|
|
Regulatory assets-noncurrent |
|
|
|
|
|
|
|
|
Total regulatory assets |
|
$ |
|
|
|
$ |
|
|
Regulatory liabilities: |
|
|
|
|
|
|
|
|
Deferred cost of fuel used in electric generation(1) |
|
$ |
|
|
|
$ |
|
|
Provision for future cost of removal(9) |
|
|
|
|
|
|
|
|
Reserve for refunds to Virginia electric customers(10) |
|
|
|
|
|
|
— |
|
Reserve for future credits to Virginia electric customers(11) |
|
|
— |
|
|
|
|
|
Income taxes refundable through future rates(12) |
|
|
|
|
|
|
|
|
Derivatives(6) |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Regulatory liabilities-current |
|
|
|
|
|
|
|
|
Income taxes refundable through future rates(12) |
|
|
|
|
|
|
|
|
Nuclear decommissioning trust(13) |
|
|
|
|
|
|
|
|
Provision for future cost of removal(9) |
|
|
|
|
|
|
|
|
Deferred cost of fuel used in electric generation(1) |
|
|
— |
|
|
|
|
|
Reserve for refunds to Virginia electric customers(10) |
|
|
|
|
|
|
— |
|
Other |
|
|
|
|
|
|
|
|
Regulatory liabilities-noncurrent |
|
|
|
|
|
|
|
|
Total regulatory liabilities |
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
Legislation enacted in Virginia in April 2014 requires Virginia Power to defer operation and maintenance costs incurred in connection with the refueling of any nuclear-powered generating plant. These deferred costs will be amortized over the refueling cycle, not to exceed |
(4) |
Reflects current portion of amounts to be recovered through retail rates in Virginia for payments Virginia Power expects to make to PJM through 2026 under the terms of a FERC settlement agreement in May 2018 resolving a PJM cost allocation matter. |
(5) |
|
(6) |
For jurisdictions subject to cost-based rate regulation, changes in the fair value of derivative instruments result in the recognition of regulatory assets or regulatory liabilities as they are expected to be recovered from or refunded to customers. |
(7) |
|
(8) |
Primarily reflects legislation enacted in Virginia in 2019, which requires any CCR asset located at certain Virginia Power stations to be closed by removing the CCR to an approved landfill or through beneficial reuse. These deferred costs are expected to be collected over a period between |
(9) |
|
(10) |
|
57
(11) |
Represents a reserve related to the expected use of a CCRO in accordance with the GTSA associated with the 2021 Triennial Review. See Note 13 for additional information. |
(12) |
|
(13) |
|
At September 30, 2021, Dominion Energy and Virginia Power regulatory assets include $
Note 13. Regulatory Matters
Regulatory Matters Involving Potential Loss Contingencies
As a result of issues generated in the ordinary course of business, the Companies are 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 the Companies to estimate a range of possible loss. For regulatory matters that the Companies 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 the Companies are able to estimate a range of possible loss. For regulatory matters that the Companies are 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 the Companies’ 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 the Companies’ 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 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020.
Virginia Regulation
2021 Triennial Review
In March 2021, Virginia Power filed its base rate case and accompanying schedules in support of the 2021 Triennial Review. In its filing, Virginia Power did not request an increase in base rates for generation and distribution services and proposed that base rates remain at their existing level. Virginia Power’s earnings test analysis, as filed, demonstrates it earned a combined ROE of
58
testimony to reflect updated test period earnings, including an earned ROE of
In the third and fourth quarters of 2020, Virginia Power recorded a net charge of $
In October 2021, Virginia Power, the Virginia Commission staff and other parties filed a comprehensive settlement agreement with the Virginia Commission for approval. The comprehensive settlement agreement provides for $
In connection with the proposed settlement agreement, Virginia Power recorded in the third quarter of 2021 a $
Utility Disconnection Moratorium Legislation
In November 2020, legislation was enacted in Virginia relating to the moratorium on utility disconnections during the COVID-19 pandemic and resulted in Virginia Power forgiving Virginia jurisdictional retail electric customer balances that were more than 30 days past due as of September 30, 2020. As a result, Virginia Power recorded a charge of $
Grid Transformation and Security Act of 2018
In June 2021, Virginia Power filed a petition with the Virginia Commission for approval of a plan for electric distribution grid transformation projects as authorized by the GTSA. The plan includes
Virginia Fuel Expenses
In May 2021, Virginia Power filed its annual fuel factor with the Virginia Commission to recover an estimated $
Renewable Generation Projects
In May 2020 and July 2020, Virginia Power entered into and closed on separate agreements to acquire Grassfield Solar, Norge Solar and Sycamore Solar. The projects are expected to cost approximately $
In September 2021, Virginia Power filed a petition with the Virginia Commission for CPCNs to construct and operate 13 utility-scale projects totaling approximately
59
In November 2021, Virginia Power filed an application with the Virginia Commission requesting approval and certification of the Virginia Facilities component of the CVOW Commercial Project. The onshore Virginia Facilities have an estimated cost of approximately $
Nuclear Life Extension Program
In October 2021, Virginia Power filed a petition with the Virginia Commission requesting a determination that it is reasonable and prudent for Virginia Power to pursue a nuclear life extension program to extend the operating licenses of Surry and North Anna and to carry out projects to upgrade or replace systems and equipment necessary to continue to safely and reliably operate these nuclear power stations. The nuclear life extension program is expected to cost approximately $
Riders
Below is a discussion of significant riders associated with various Virginia Power projects:
|
• |
The Virginia Commission previously approved Rider U in conjunction with cost recovery to move certain electric distribution facilities underground as authorized by Virginia legislation. In June 2020, Virginia Power proposed an $ |
In June 2021, Virginia Power proposed a $
|
• |
Pursuant to Virginia legislation, Virginia Power can recover the costs related to the closure of CCR units. In February 2021, Virginia Power filed for approval of Rider CCR with a proposed $ |
|
• |
In October 2020, Virginia Power applied for approval of Rider CE associated with Grassfield Solar, Norge Solar and Sycamore Solar described above. In April 2021, the Virginia Commission approved a $ |
|
• |
The Virginia Commission previously approved Rider T1 concerning transmission rates. In |
|
• |
Pursuant to the VCEA, Virginia Power can recover costs of compliance with the mandatory renewable portfolio standard program. In December 2020, Virginia Power filed for approval of Rider RPS with a proposed $ |
|
• |
The Virginia Commission previously approved Rider GV relating to Greensville County. In June 2021, Virginia Power proposed a biennial update procedure for Rider GV with two consecutive rate years. The filing proposed a revenue requirement of $ |
|
• |
The Virginia Commission previously approved Rider R relating to Bear Garden. In June 2021, Virginia Power proposed a biennial update procedure for Rider R with two consecutive rate years. The filing proposed a revenue requirement of $ |
|
• |
The Virginia Commission previously approved Rider S relating to Virginia City Hybrid Energy Center. In June 2021, Virginia Power proposed a biennial update procedure for Rider S with two consecutive rate years. The filing proposed a revenue requirement of $ |
|
• |
Pursuant to Virginia legislation, Virginia Power can recover costs associated with participating in a market-based carbon trading program consistent with RGGI. In August 2021, the Virginia Commission approved Rider RGGI with a $ |
60
|
Commission issued an order granting reconsideration and suspended its order approving the revenue requirement. This matter is pending. |
|
• |
Pursuant to Virginia legislation, Virginia Power can recover costs associated with electric distribution grid transformation projects that the Virginia Commission has approved as authorized by the GTSA. In August 2021, Virginia Power filed for approval of Rider GT with a proposed $ |
|
• |
The Virginia Commission previously approved Riders C1A, C2A and C3A in connection with cost recovery for DSM programs. In December 2020, Virginia Power filed a petition to approve an additional |
|
• |
In September 2021, Virginia Power applied for approval of Rider CE associated with solar generation and energy storage projects requested for approval in September 2021, solar generation projects approved in April 2021 and certain small-scale solar projects with a proposed $ |
|
• |
The Virginia Commission previously approved Rider BW relating to Brunswick County power station. In October 2021, Virginia Power proposed a biennial update procedure for Rider BW with two consecutive rate years. The filing proposed a revenue requirement of $ |
|
• |
In October 2021, Virginia Power filed a petition with the Virginia Commission for Rider SNA associated with costs relating to the preparation of the applications for subsequent license renewal to the NRC to extend the operating licenses of Surry and North Anna and related projects. Virginia Power requested approval of a cost recovery of approximately $ |
|
• |
In November 2021, Virginia Power filed an application with the Virginia Commission requesting approval of Rider OSW associated with costs incurred to construct, own and operate the CVOW Commercial Project. The filing proposed a revenue requirement of $ |
Additional significant riders associated with various Virginia Power projects are as follows:
Rider Name |
|
Application Date |
|
Approval Date |
|
Rate Year Beginning |
|
Total Revenue Requirement (millions) |
|
|
Increase (Decrease) Over Previous Year (millions) |
|
||
Rider B |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
( |
) |
Rider GV |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider R |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider S |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Rider W |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider US-3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider US-4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider BW |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider US-2 |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
Rider E |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Rider B |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Rider W |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider US-3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider US-4 |
|
|
|
|
|
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|
|
|
|
|
|
|
Rider US-2 |
|
|
|
|
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|
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|
|
|
|
|
61
Electric Transmission Projects
Description and Location of Project |
|
Application Date |
|
Approval Date |
|
Type of Line |
|
Miles of Lines |
|
Cost Estimate (millions) |
|
|
Rebuild Clubhouse-Dry Bread Line and Dry Bread-Lakeview Line in Greensville County, Virginia |
|
|
|
|
|
|
|
|
|
$ |
|
|
Elmont-Ladysmith rebuild and related projects in the Counties of Hanover and Caroline, Virginia |
|
|
|
|
|
|
|
|
|
|
|
|
Beaumeade-Belmont reconductor and rebuild projects in the County of Loudoun, Virginia |
|
|
|
|
|
|
|
|
|
|
|
|
Extension to Cloud Switching Station and Easters Switching Station in the County of Mecklenburg, Virginia |
|
|
|
|
|
|
|
|
|
|
|
|
North Carolina Regulation
Virginia Power North Carolina Fuel Filing
In August 2021, Virginia Power submitted its annual filing to the North Carolina Commission to adjust the fuel component of its electric rates. Virginia Power updated its filing in October 2021 to reflect the increased commodity cost of fuel and proposed a total $
PSNC Base Rate Case
In April 2021, PSNC filed its general rate case application, direct testimony, exhibits, and schedules with the North Carolina Commission. PSNC proposed a non-fuel, base rate increase of $
In October 2021, PSNC, the North Carolina Commission public staff and certain other parties of record filed a stipulation of settlement with the North Carolina Commission for approval. The stipulation of settlement provides for a non-fuel, base rate increase of $
Pipeline Integrity and Safety Program
The North Carolina Commission has authorized PSNC to use a tracker mechanism to recover the incurred capital investment and associated costs of complying with federal standards for pipeline integrity and safety requirements that are not in current base rates. In September 2021, the North Carolina Commission approved PSNC’s request to increase the integrity management annual revenue requirement to $
Rider D
Rider D allows PSNC to recover from customers all prudently incurred gas costs and certain related uncollectible expenses as well as losses on negotiated gas and transportation sales. In September 2021, PSNC submitted a filing with the North Carolina Commission for a $
South Carolina Regulation
South Carolina Electric Base Rate Case
In August 2020, DESC filed its retail electric base rate case and schedules with the South Carolina Commission. DESC proposed a non-fuel, base rate increase of $
62
proposal made by the South Carolina Office of Regulatory Staff, and agreed to by DESC and other intervenors, to stay the base rate case due to the current economic conditions and to allow the parties more time to negotiate a settlement with a final order to be issued no later than August 2021.
In July 2021, DESC, the South Carolina Office of Regulatory Staff and other parties of record filed a comprehensive settlement agreement with the South Carolina Commission for approval. The comprehensive settlement agreement provides for a non-fuel, base rate increase of $
In connection with this matter, in the second quarter of 2021, Dominion Energy recorded charges of $
DSM Programs
DESC has approval for a DSM rider through which it recovers expenditures related to its DSM programs. In
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
Natural Gas Rates
In June 2021, DESC filed with the South Carolina Commission its monitoring report for the 12-month period ended March 31, 2021 with a total revenue requirement of $
Ohio Regulation
PIR Program
In 2008, East Ohio began PIR, aimed at replacing approximately
CEP Program
In 2011, East Ohio began CEP which enables East Ohio to defer depreciation expense, property tax expense and carrying costs associated with CEP investments. In April 2021, East Ohio filed an application requesting approval to adjust the CEP cost recovery rates for 2019 and 2020 costs. The filing reflects gross plant investment for 2019 of $
UEX Rider
East Ohio has approval for a UEX Rider through which it recovers the bad debt expense of most customers not participating in the PIPP Plus Program. The UEX Rider is adjusted annually to achieve dollar for dollar recovery of East Ohio’s actual write-offs of uncollectible amounts. In July 2021, the Ohio Commission approved East Ohio’s application to adjust its UEX Rider to reflect an
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increased annual revenue requirement of $
West Virginia Regulation
West Virginia Base Rate Case
In September 2020, Hope filed its base rate case and schedules with the West Virginia Commission. Hope proposed a non-fuel, base rate increase of $
PREP
In
Utah Regulation
Purchased Gas
In May 2021, the Utah Commission approved Questar Gas’ request for a $
In October 2021, the Utah Commission approved Questar Gas’ request for an $
Note 14. Leases
Other than the items discussed below, there have been no significant changes regarding the Companies’ leases as described in Note 15 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020.
Dominion Energy’s Consolidated Statements of Income include $
Corporate Office Leasing Arrangement
In December 2019, Dominion Energy signed an agreement with a lessor, as amended in May 2020, to construct and lease a new corporate office property in Richmond, Virginia. The lessor provided equity and had obtained financing commitments from debt investors, totaling $
Note 15. Variable Interest Entities
There have been no significant changes regarding the entities the Companies consider VIEs as described in Note 16 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020.
Dominion Energy
Dominion Energy’s Consolidated Balance Sheets include $
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Virginia Power
Virginia Power purchased shared services from DES, an affiliated VIE, of $
Note 16. Significant Financing Transactions
Credit Facilities and Short-term Debt
The Companies use short-term debt to fund working capital requirements and as a bridge to long-term debt financings. The levels of borrowing may vary significantly during the course of the year, depending upon the timing and amount of cash requirements not satisfied by cash from operations. In addition, Dominion Energy utilizes cash and letters of credit to fund collateral requirements. Collateral requirements are impacted by commodity prices, hedging levels, Dominion Energy’s credit ratings and the credit quality of its counterparties.
Dominion Energy
In June 2021, Dominion Energy amended its $
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This credit facility matures in June 2026, with the potential to be extended by the borrowers to June 2028, and can be used by the borrowers under the credit facility to support bank borrowings and the issuance of commercial paper, as well as to support up to a combined $ |
DESC and Questar Gas’ short-term financings are supported through access as co-borrowers to the joint revolving credit facility discussed above with the Companies. At September 30, 2021, the sub-limits for DESC and Questar Gas were $
In January 2021, DESC and GENCO applied to FERC for a two-year short-term borrowing authorization. In March 2021, FERC granted DESC authority through
In addition to the credit facilities mentioned above, Dominion Energy also has a credit facility which allows Dominion Energy to issue up to approximately $
In addition to the credit facilities mentioned above, SBL Holdco has $
In March 2020, Dominion Energy entered into a $
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In July 2021, Dominion Energy entered into an approximately $
Dominion Energy has an effective shelf registration statement with the SEC for the sale of up to $
Virginia Power
Virginia Power’s short-term financing is supported through its access as co-borrower to Dominion Energy’s $
At September 30, 2021, Virginia Power’s share of commercial paper and letters of credit outstanding under the joint revolving credit facility with Dominion Energy, Questar Gas and DESC was as follows:
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The full amount of the facility is available to Virginia Power, less any amounts outstanding to co-borrowers Dominion Energy, Questar Gas and DESC. The sub-limit for Virginia Power is set pursuant to the terms of the facility but can be changed at the option of the borrowers multiple times per year. At September 30, 2021, the sub-limit for Virginia Power was $ |
Long-term Debt
Unless otherwise noted, the proceeds of long-term debt issuances were used for general corporate purposes and/or to repay short-term debt.
In March 2021, PSNC issued, through private placement, $
In April 2021, Dominion Energy issued $
In June 2021, Dominion Energy entered into a $
In July 2021, DESC redeemed the remaining principal outstanding of $
In July 2021, Dominion Energy redeemed the remaining principal outstanding of $
In August 2021, Dominion Energy issued $
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In August 2021, Dominion Energy redeemed the remaining principal outstanding of $
In August 2021, Questar Gas issued through private placements $
In November 2021, Virginia Power provided notice to redeem its
Derivative Restructuring
In June 2020, Dominion Energy amended a portfolio of interest rate swaps with a notional value of $
In August 2020, Virginia Power amended a portfolio of interest rate swaps with a notional value of $
Preferred Stock
Dominion Energy is authorized to issue up to
Dominion Energy recorded dividends of $
There have been no significant changes to Dominion Energy’s Series A Preferred Stock and Series B Preferred Stock as described in Note 19 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, other than the item described below.
Series A Preferred Stock – Conversion Settlement Modification
In November 2021, Dominion Energy’s Articles of Incorporation were amended to require that any conversion of its
Issuance of Common Stock
Dominion Energy recorded, net of fees and commissions, $
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In July 2021, Dominion Energy issued
In August 2021, Dominion Energy issued
In September 2020, Dominion Energy issued
At-the-Market Program
In August 2020, Dominion Energy entered into sales agency agreements to effect sales under an at-the-market program as discussed in Note 20 to the Consolidated Financial Statements in the Companies’ Annual Report Form 10-K for the year ended December 31, 2020. As of September 30, 2021, Dominion Energy has not issued any shares or entered into any forward sale agreements under this program.
Repurchase of Common Stock
In November 2020, the Board of Directors authorized the repurchase of up to $
In August 2020, Dominion Energy began repurchasing shares under an open market agreement with a financial institution. During the third quarter of 2020, Dominion Energy repurchased
In September 2020, Dominion Energy entered into
In September 2020, Dominion Energy repurchased
Dominion Energy did
Note 17. Commitments and Contingencies
As a result of issues generated in the ordinary course of business, the Companies are involved in legal proceedings before various courts and are 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 the Companies to estimate a range of possible loss. For such matters that the Companies 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 the Companies are able to estimate a range of possible loss. For legal proceedings and governmental examinations that the Companies are 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 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 the Companies’ 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 the Companies’ financial position, liquidity or results of operations.
Environmental Matters
The Companies are 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.
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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 the Companies’ facilities are subject to the CAA’s permitting and other requirements.
Ozone Standards
The EPA published final non-attainment designations for the October 2015 ozone standard in June 2018 with states required to develop plans to address the new standard. Until the states have developed implementation plans for the standard, the Companies are unable to predict whether or to what extent the new rules will ultimately require additional controls. The expenditures required to implement additional controls could have a material impact on the Companies’ results of operations and cash flows.
ACE Rule
In July 2019, the EPA published the final rule informally referred to as the ACE Rule, as a replacement for the Clean Power Plan. The ACE Rule regulated GHG emissions from existing coal-fired power plants pursuant to Section 111(d) of the CAA and required states to develop plans by July 2022 establishing unit-specific performance standards for existing coal-fired power plants. In January 2021, the U.S. Court of Appeals for the D.C. Circuit vacated the ACE Rule and remanded it to the EPA. This decision would take effect upon issuance of the court’s mandate. In March 2021, the court issued a partial mandate vacating and remanding all parts of the ACE Rule except for the portion of the ACE Rule that repealed the Clean Power Plan. In October 2021, the U.S. Supreme Court agreed to hear a challenge of the U.S. Court of Appeals for the D.C. Circuit’s decision on the ACE Rule. While the EPA has stated its intention to replace the ACE Rule, it is unknown at this time if or how the EPA will issue a replacement for the ACE Rule and how that replacement will affect the Companies’ operations, financial condition and/or cash flows.
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
In December 2018, the EPA proposed revised Standards of Performance for Greenhouse Gas Emissions from New, Modified, and Reconstructed Stationary Sources. The proposed rule would amend the previous determination that the best system of emission reduction for newly constructed coal-fired steam generating units is no longer partial carbon capture and storage. Instead, the proposed revised best system of emission reduction for this source category is the most efficient demonstrated steam cycle (e.g., supercritical steam conditions for large units and subcritical steam conditions for small units) in combination with best operating practices. In January 2021, the EPA published a final rule affirming that fossil fuel-fired electric generating units meet the requirement that a source category “significantly contribute” to endangering air pollution for the purposes of regulating GHG emissions from new, modified and reconstructed stationary sources. The January 2021 rule also established a threshold for the “significant contribution” threshold that would have meant that no other source category, such as oil and gas facilities, petroleum refineries, and boilers, would meet that requirement at this time. In April 2021, the U.S. Court of Appeals for the D.C. Circuit granted an unopposed motion by the EPA to vacate and remand the January 2021 rule. The proposed revision to the performance standards for coal-fired steam generating units remains pending. Until the EPA ultimately takes final action on this rulemaking, the Companies cannot predict the impact to their 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. The Companies must comply with applicable aspects of the CWA programs at their operating facilities.
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
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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
Effluent Limitations Guidelines
In September 2015, the EPA released a final rule to revise the Effluent Limitations Guidelines for the Steam Electric Power Generating Category. 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
Waste Management and Remediation
The operations of the Companies 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, the Companies 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, the Companies 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. The Companies also may identify, evaluate and remediate other potentially impacted sites under voluntary state programs. Remediation costs may be subject to reimbursement under the Companies’ insurance policies, rate recovery mechanisms, or both. Except as described below, the Companies do not believe these matters will have a material effect on results of operations, financial condition and/or cash flows.
Dominion Energy has determined that it is associated with former manufactured gas plant sites, including certain sites associated with Virginia Power. At
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state or federal environmental agency nor the subject of any current or proposed plans to perform remediation activities. Due to the uncertainty surrounding such sites, the Companies are unable to make an estimate of the potential financial statement impacts.
Other Legal Matters
The Companies are defendants in a number of lawsuits and claims involving unrelated incidents of property damage and personal injury. Due to the uncertainty surrounding these matters, the Companies are unable to make an estimate of the potential financial statement impacts; however, they could have a material impact on results of operations, financial condition and/or cash flows.
SCANA Legal Proceedings
The following describes certain legal proceedings involving Dominion Energy, SCANA or DESC relating to events occurring before closing of the SCANA Combination. No reference to, or disclosure of, any proceeding, item or matter described below shall be construed as an admission or indication that such proceeding, item or matter is material. For certain of these matters, and unless otherwise noted therein, Dominion Energy is unable to estimate a reasonable range of possible loss and the related financial statement impacts, but for any such matter there could be a material impact to its results of operations, financial condition and/or cash flows. For the matters for which Dominion Energy is able to reasonably estimate a probable loss, Dominion Energy’s Consolidated Balance Sheets at September 30, 2021 and December 31, 2020 include reserves of $
Ratepayer Class Actions
In May 2018, a consolidated complaint against DESC, SCANA and the State of South Carolina was filed in the State Court of Common Pleas in Hampton County, South Carolina (the DESC Ratepayer Case). The plaintiffs alleged, among other things, that DESC was negligent and unjustly enriched, breached alleged fiduciary and contractual duties and committed fraud and misrepresentation in failing to properly manage the NND Project, and that DESC committed unfair trade practices and violated state anti-trust laws. In December 2018, the State Court of Common Pleas in Hampton County entered an order granting preliminary approval of a class action settlement. The court entered an order granting final approval of the settlement in June 2019, which became effective in July 2019. The settlement agreement, contingent upon the closing of the SCANA Combination, provided that SCANA and DESC establish an escrow account and proceeds from the escrow account would be distributed to the plaintiffs, after payment of certain taxes, attorneys' fees and other expenses and administrative costs. The escrow account would include (1) up to $
In September 2017, a purported class action was filed by Santee Cooper ratepayers against Santee Cooper, DESC, Palmetto Electric Cooperative, Inc. and Central Electric Power Cooperative, Inc. in the State Court of Common Pleas in Hampton County, South Carolina (the Santee Cooper Ratepayer Case). The allegations were substantially similar to those in the DESC Ratepayer Case. In March 2020, the parties executed a settlement agreement relating to this matter as well as the Luquire Case and the Glibowski Case described below. The settlement agreement provided that Dominion Energy and Santee Cooper establish a fund for the benefit of class members in the amount of $
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In July 2019, a similar purported class action was filed by certain Santee Cooper ratepayers against DESC, SCANA, Dominion Energy and former directors and officers of SCANA in the State Court of Common Pleas in Orangeburg, South Carolina (the Luquire Case). In August 2019, DESC, SCANA and Dominion Energy were voluntarily dismissed from the case. The claims were similar to the Santee Cooper Ratepayer Case. In March 2020, the parties executed a settlement agreement as described above relating to this matter as well as the Santee Cooper Ratepayer Case and the Glibowski Case. This case was dismissed as part of the Santee Cooper Ratepayer Case settlement described above.
RICO Class Action
In January 2018, a purported class action was filed, and subsequently amended, against SCANA, DESC and certain former executive officers in the U.S. District Court for the District of South Carolina (the Glibowski Case). The plaintiff alleged, among other things, that SCANA, DESC and the individual defendants participated in an unlawful racketeering enterprise in violation of RICO and conspired to violate RICO by fraudulently inflating utility bills to generate unlawful proceeds. In March 2020, the parties executed a settlement agreement as described above relating to this matter as well as the Santee Cooper Ratepayer Case and the Luquire Case. This case was dismissed as part of the Santee Cooper Ratepayer Case settlement described above.
SCANA Shareholder Litigation
In September 2017, a purported class action was filed against SCANA and certain former executive officers and directors in the U.S. District Court for the District of South Carolina. Subsequent additional purported class actions were separately filed against all or nearly all of these defendants (collectively the SCANA Securities Class Action). In January 2018, the U.S. District Court for the District of South Carolina consolidated these suits, and the plaintiffs filed a consolidated amended complaint in March 2018. The plaintiffs alleged, among other things, that the defendants violated §10(b) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder, and that the individually named defendants are liable under §20(a) of the same act. In December 2019, the parties executed a settlement agreement pursuant to which SCANA would pay $
In September 2017, a shareholder derivative action was filed against certain former executive officers and directors of SCANA in the State Court of Common Pleas in Richland County, South Carolina (the State Court Derivative Case). In September 2018, this action was consolidated with another action in the Business Court Pilot Program in Richland County. The plaintiffs allege, among other things, that the defendants breached their fiduciary duties to shareholders by their gross mismanagement of the NND Project, and that the defendants were unjustly enriched by bonuses they were paid in connection with the project. In January 2019, the defendants filed a motion to dismiss the consolidated action. In February 2019, one action was voluntarily dismissed. In March 2020, the court denied the defendants’ motion to dismiss. In April 2020, the defendants filed a notice of appeal with the South Carolina Court of Appeals and a petition with the Supreme Court of South Carolina seeking appellate review of the denial of the motion to dismiss. In June 2020, the plaintiffs filed a motion to dismiss the appeal with the South Carolina Court of Appeals, which was granted in July 2020. In August 2020, the Supreme Court of South Carolina denied the defendants’ petition seeking appellate review. Also in August 2020, the defendants filed a petition for rehearing with the South Carolina Court of Appeals relating to the July 2020 ruling by the court, which was denied in October 2020. In November 2020, SCANA filed a petition of certiorari with the Supreme Court of South Carolina seeking appellate review of the denial of SCANA’s motion to dismiss. This petition was denied in June 2021. Also in June 2021, the parties reached an agreement in principle in the amount of $
In January 2018, a purported class action was filed against SCANA, Dominion Energy and certain former executive officers and directors of SCANA in the State Court of Common Pleas in Lexington County, South Carolina (the City of Warren Lawsuit). The plaintiff alleges, among other things, that defendants violated their fiduciary duties to shareholders by executing a merger agreement that would unfairly deprive plaintiffs of the true value of their SCANA stock, and that Dominion Energy aided and abetted these actions. Among other remedies, the plaintiff seeks to enjoin and/or rescind the merger. In February 2018, a purported class action was filed against Dominion Energy and certain former directors of SCANA and DESC in the State Court of Common Pleas in Richland County, South Carolina (the Metzler Lawsuit). The allegations made and the relief sought by the plaintiffs are substantially similar to that described for the City of Warren Lawsuit. In September 2019, the U.S. District Court for the District of South Carolina granted the plaintiffs’ motion to consolidate the City of Warren Lawsuit and the Metzler Lawsuit (the Federal Court Merger Case). In October 2019, the plaintiffs filed an amended complaint against certain former directors and executive officers of SCANA and DESC, which stated substantially similar allegations to those in the City of Warren Lawsuit and the Metzler Lawsuit as well as an inseparable fraud claim. In November 2019, the defendants filed a motion to dismiss. In April 2020, the U.S. District Court for the District of South Carolina denied the motion to dismiss. In May 2020, SCANA filed a motion to intervene, which was denied in August 2020. In
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September 2020, SCANA filed a notice of appeal with the U.S. Court of Appeals for the Fourth Circuit. In June 2021, the parties reached an agreement in principle in the amount of $
In May 2019, a case was filed against certain former executive officers and directors of SCANA in the State Court of Common Pleas in Richland County, South Carolina (the State Court Merger Case). The plaintiff alleges, among other things, that the defendants breached their fiduciary duties to shareholders by their gross mismanagement of the NND Project, were unjustly enriched by the bonuses they were paid in connection with the project and breached their fiduciary duties to secure and obtain the best price for the sale of SCANA. Also in May 2019, the case was removed to the U.S. District Court of South Carolina by the non-South Carolina defendants. In June 2019, the plaintiffs filed a motion to remand the case to state court. In January 2020, the case was remanded to state court. In February 2020, the defendants filed a motion to dismiss. In June 2021, the parties reached an agreement in principle as described above relating to this matter as well as the Federal Court Merger Case and the State Court Derivative Case.
Employment Class Actions and Indemnification
In August 2017, a case was filed in the U.S. District Court for the District of South Carolina on behalf of persons who were formerly employed at the NND Project. In July 2018, the court certified this case as a class action. In February 2019, certain of these plaintiffs filed an additional case, which case has been dismissed and the plaintiffs have joined the case filed August 2017. The plaintiffs allege, among other things, that SCANA, DESC, Fluor Corporation and Fluor Enterprises, Inc. violated the Worker Adjustment and Retraining Notification Act in connection with the decision to stop construction at the NND Project. The plaintiffs allege that the defendants failed to provide adequate advance written notice of their terminations of employment and are seeking damages, which could be as much as $
In September 2018, a case was filed in the State Court of Common Pleas in Fairfield County, South Carolina by Fluor Enterprises, Inc. and Fluor Daniel Maintenance Services, Inc. against DESC and Santee Cooper. The plaintiffs make claims for indemnification, breach of contract and promissory estoppel arising from, among other things, the defendants' alleged failure and refusal to defend and indemnify the Fluor defendants in the aforementioned case. This case is pending.
FILOT Litigation and Related Matters
In November 2017, Fairfield County filed a complaint and a motion for temporary injunction against DESC in the State Court of Common Pleas in Fairfield County, South Carolina, making allegations of breach of contract, fraud, negligent misrepresentation, breach of fiduciary duty, breach of implied duty of good faith and fair dealing and unfair trade practices related to DESC’s termination of the FILOT agreement between DESC and Fairfield County related to the NND Project. The plaintiff sought a temporary and permanent injunction to prevent DESC from terminating the FILOT agreement. The plaintiff withdrew the motion for temporary injunction in December 2017. In July 2021, the parties executed a settlement agreement requiring DESC to pay $
Governmental Proceedings and Investigations
In June 2018, DESC received a notice of proposed assessment of approximately $
In September and October 2017, SCANA was served with subpoenas issued by the U.S. Attorney’s Office for the District of South Carolina and the Staff of the SEC’s Division of Enforcement seeking documents related to the NND Project. In February 2020, the SEC filed a complaint against SCANA, two of its former executive officers and DESC in the U.S. District Court for the District of South Carolina alleging that the defendants violated federal securities laws by making false and misleading statements about the NND Project. In April 2020, SCANA and DESC reached an agreement in principle with the Staff of the SEC’s Division of Enforcement to settle, without admitting or denying the allegations in the complaint. In December 2020, the U.S. District Court for the District of
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South Carolina issued an order approving the settlement which required SCANA to pay a civil monetary penalty totaling $
In addition, the South Carolina Law Enforcement Division is conducting a criminal investigation into the handling of the NND Project by SCANA and DESC. Dominion Energy is cooperating fully with the investigations by the U.S. Attorney’s Office and the South Carolina Law Enforcement Division, including responding to additional subpoenas and document requests. Dominion Energy has also entered into a cooperation agreement with the U.S. Attorney’s Office and the South Carolina Attorney General’s Office. The cooperation agreement provides that in consideration of its full cooperation with these investigations to the satisfaction of both agencies, neither such agency will criminally prosecute or bring any civil action against Dominion Energy or any of its current, previous, or future direct or indirect subsidiaries related to the NND Project. A former executive officer of SCANA entered a plea agreement with the U.S. Attorney’s Office and the South Carolina Attorney General’s Office in June 2020 and entered a guilty plea with the U.S. District Court for the District of South Carolina in July 2020. Another former executive officer of SCANA entered a plea agreement with the U.S. Attorney's Office and the South Carolina Attorney General's Office in November 2020 and entered guilty pleas in the U.S. District Court for the District of South Carolina and in South Carolina state court in February 2021. As a result of the pleas, Dominion Energy has terminated indemnity for these former executive officers related to these two cases.
Abandoned NND Project
DESC, for itself and as agent for Santee Cooper, entered into an engineering, construction and procurement contract with Westinghouse and WECTEC in 2008 for the design and construction of the NND Project, of which DESC’s ownership share is
Based on the results of SCANA’s analysis, and in light of Santee Cooper's decision to suspend construction on the NND Project, in July 2017, SCANA determined to stop the construction of the units and to pursue recovery of costs incurred in connection with the construction under the abandonment provisions of the Base Load Review Act or through other means. This decision by SCANA became the focus of numerous legislative, regulatory and legal proceedings. Some of these proceedings remain unresolved and are described above.
In September 2017, DESC, for itself and as agent for Santee Cooper, filed with the U.S. Bankruptcy Court for the Southern District of New York Proofs of Claim for unliquidated damages against each of Westinghouse and WECTEC. These Proofs of Claim were based upon the anticipatory repudiation and material breach by Westinghouse and WECTEC of the contract, and assert against Westinghouse and WECTEC any and all claims that are based thereon or that may be related thereto.
Westinghouse’s reorganization plan was confirmed by the U.S. Bankruptcy Court for the Southern District of New York and became effective in August 2018. In connection with the effectiveness of the reorganization plan, the contract associated with the NND Project was deemed rejected. DESC is contesting approximately $
Westinghouse has indicated that some unsecured creditors have sought or may seek amounts beyond what Westinghouse allocated when it submitted its reorganization plan to the U.S. Bankruptcy Court for the Southern District of New York. If any unsecured creditor is successful in its attempt to include its claim as part of the class of general unsecured creditors beyond the amounts in the bankruptcy reorganization plan allocated by Westinghouse, it is possible that the reorganization plan will not provide for payment in full or nearly in full to its pre-petition trade creditors. The shortfall could be significant.
DESC and Santee Cooper were responsible for amounts owed to Westinghouse for valid work performed by Westinghouse subcontractors on the NND Project after the Westinghouse bankruptcy filing until termination of the interim assessment agreement. In
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December 2019, DESC and Santee Cooper entered into a confidential settlement agreement with W Wind Down Co LLC resolving claims relating to the interim assessment agreement.
Further, some Westinghouse subcontractors who have made claims against Westinghouse in the bankruptcy proceeding also filed against DESC and Santee Cooper in South Carolina state court for damages. Many of these claimants have also asserted construction liens against the NND Project site. DESC also intends to oppose these claims and liens. With respect to claims of Westinghouse subcontractors, DESC believes there were sufficient amounts previously funded during the interim assessment agreement period to pay such validly asserted claims. With respect to the Westinghouse subcontractor claims which relate to other periods, DESC understands that such claims will be paid pursuant to Westinghouse’s confirmed bankruptcy reorganization plan. DESC further understands that the amounts paid under the plan may satisfy such claims in full. Therefore, DESC believes that the Westinghouse subcontractors may be paid substantially (and potentially in full) by Westinghouse. While Dominion Energy cannot be assured that it will not have any exposure on account of unpaid Westinghouse subcontractor claims, which DESC is presently disputing, Dominion Energy believes it is unlikely that it will be required to make payments on account of such claims that would exceed the portion of the Toshiba Settlement allocated for such balances within the SCANA Merger Approval Order recorded in regulatory liabilities on Dominion Energy’s Consolidated Balance Sheets.
Nuclear Operations
Nuclear Insurance
Other than the items discussed below, there have been no significant changes regarding the Companies’ nuclear insurance as described in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020.
In March 2021, the total liability protection per nuclear incident available to all participants in the Secondary Financial Protection Program decreased from $
Effective June 2021, Dominion Energy reduced the levels of nuclear property insurance coverage for each of the reactor sites at Millstone, North Anna and Surry from $
Spent Nuclear Fuel
As discussed in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, the Companies entered into contracts with the DOE for the disposal of spent nuclear fuel under provisions of the Nuclear Waste Policy Act of 1982.
In June 2018, a lawsuit for Kewaunee was filed in the U.S. Court of Federal Claims for recovery of spent nuclear fuel storage costs incurred after 2013. In March 2019, Dominion Energy amended its filing for recovery of spent nuclear fuel storage to include costs incurred for the year ended December 31, 2018. This matter is pending.
Guarantees, Surety Bonds and Letters of Credit
Upon the closing of the GT&S Transaction, Dominion Energy retained its
In addition, at September 30, 2021, Dominion Energy had issued an additional $
75
Dominion Energy also enters into guarantee arrangements on behalf of its consolidated subsidiaries, primarily to facilitate their commercial transactions with third parties. If any of these subsidiaries fail to perform or pay under the contracts and the counterparties seek performance or payment, Dominion Energy would be obligated to satisfy such obligation. To the extent that a liability subject to a guarantee has been incurred by one of Dominion Energy’s consolidated subsidiaries, that liability is included in the Consolidated Financial Statements. Dominion Energy is not required to recognize liabilities for guarantees issued on behalf of its subsidiaries unless it becomes probable that it will have to perform under the guarantees. Terms of the guarantees typically end once obligations have been paid. Dominion Energy currently believes it is unlikely that it would be required to perform or otherwise incur any losses associated with guarantees of its subsidiaries’ obligations.
At September 30, 2021, Dominion Energy had issued the following subsidiary guarantees:
|
|
Maximum Exposure |
|
|
(millions) |
|
|
|
|
Commodity transactions(1) |
|
$ |
|
|
Nuclear obligations(2) |
|
|
|
|
Solar(3) |
|
|
|
|
Other(4) |
|
|
|
|
Total(5) |
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
(5) |
|
Additionally, at September 30, 2021, Dominion Energy had purchased $
Note 18. Credit Risk
The Companies’ accounting policies for credit risk are discussed in Note 24 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020
At September 30, 2021, Dominion Energy’s credit exposure totaled $
76
Credit-Related Contingent Provisions
Certain of Dominion Energy’s derivative instruments contain credit-related contingent provisions. These provisions require Dominion Energy to provide collateral upon the occurrence of specific events, primarily a credit rating downgrade. If the credit-related contingent features underlying these instruments that are in a liability position and not fully collateralized with cash were fully triggered as of September 30, 2021 and December 31, 2020, Dominion Energy would have been required to post $
Certain of Virginia Power’s derivative instruments contain credit-related contingent provisions. These provisions require Virginia Power to provide collateral upon the occurrence of specific events, primarily a credit rate downgrade. If the credit-related contingent features underlying these instruments that are in a liability position and not fully collateralized with cash were fully triggered as of September 30, 2021 and December 31, 2020, Virginia Power would have been required to post an additional $
See Note 9 for further information about derivative instruments.
Note 19. Related-Party Transactions
Virginia Power engages in related-party transactions primarily with other Dominion Energy subsidiaries (affiliates). Virginia Power’s receivable and payable balances with affiliates are settled based on contractual terms or on a monthly basis, depending on the nature of the underlying transactions. Virginia Power is included in Dominion Energy's consolidated federal income tax return and, where applicable, combined income tax returns for Dominion Energy are filed in various states. Dominion Energy’s transactions with equity method investments are described in Note 10. A discussion of significant related-party transactions follows.
Virginia Power
Transactions with Affiliates
Virginia Power transacts with affiliates for certain quantities of natural gas and other commodities in the ordinary course of business. Virginia Power also enters into certain commodity derivative contracts with affiliates. Virginia Power uses these contracts, which are principally comprised of forward commodity purchases, to manage commodity price risks associated with purchases of natural gas. At September 30, 2021, Virginia Power’s derivative assets and liabilities with affiliates were $
Virginia Power participates in certain Dominion Energy benefit plans described in Note 22 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020. At September 30, 2021 and December 31, 2020, amounts due to Dominion Energy associated with the Dominion Energy Pension Plan and included in other deferred credits and other liabilities in the Consolidated Balance Sheets were $
DES and other affiliates provide accounting, legal, finance and certain administrative and technical services to Virginia Power. In addition, Virginia Power provides certain services to affiliates, including charges for facilities and equipment usage.
The financial statements for all years presented include costs for certain general, administrative and corporate expenses assigned by DES to Virginia Power on the basis of direct and allocated methods in accordance with Virginia Power’s services agreements with
77
DES. Where costs incurred cannot be determined by specific identification, the costs are allocated based on the proportional level of effort devoted by DES resources that is attributable to the entity, determined by reference to number of employees, salaries and wages and other similar measures for the relevant DES service. Management believes the assumptions and methodologies underlying the allocation of general corporate overhead expenses are reasonable.
Presented below are Virginia Power’s significant transactions with DES and other affiliates:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity purchases from affiliates |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Services provided by affiliates(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services provided to affiliates |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Virginia Power has borrowed funds from Dominion Energy under short-term borrowing arrangements. There were $
There were
Note 20. Employee Benefit Plans
Net Periodic Benefit (Credit) Cost
The service cost component of net periodic benefit (credit) cost is reflected in other operations and maintenance expense in Dominion Energy’s Consolidated Statements of Income, except for $
|
|
Pension Benefits |
|
|
Other Postretirement Benefits |
|
||||||||||
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of prior service cost (credit) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of net actuarial loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlements (1) |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
Net periodic benefit credit |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service cost |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest cost |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected return on plan assets |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Amortization of prior service cost (credit) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Amortization of net actuarial loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlements (1) |
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
Net periodic benefit credit |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
(1) |
2021 amounts relate primarily to the Dominion Energy executive nonqualified pension plan. 2020 amounts related primarily to Dominion Energy’s sale of substantially all of its gas transmission and storage operations to BHE. |
78
Employer Contributions
During the three and nine months ended September 30, 2021, Dominion Energy made
Note 21. Operating Segments
The Companies are organized primarily on the basis of products and services sold in the U.S. A description of the operations included in the Companies’ primary operating segments is as follows:
Primary Operating Segment |
|
Description of Operations |
|
Dominion Energy |
|
Virginia Power |
Dominion Energy Virginia |
|
Regulated electric distribution |
|
X |
|
X |
|
|
Regulated electric transmission |
|
X |
|
X |
|
|
Regulated electric generation fleet(1) |
|
X |
|
X |
Gas Distribution |
|
Regulated gas distribution and storage(2) |
|
X |
|
|
Dominion Energy South Carolina |
|
Regulated electric distribution |
|
X |
|
|
|
|
Regulated electric transmission |
|
X |
|
|
|
|
Regulated electric generation fleet |
|
X |
|
|
|
|
Regulated gas distribution and storage |
|
X |
|
|
Contracted Assets |
|
Nonregulated electric generation fleet |
|
X |
|
|
|
|
Noncontrolling interest in Cove Point |
|
X |
|
|
(1) |
Includes Virginia Power’s nonjurisdictional generation operations. |
(2) |
Includes renewable natural gas operations as well as Wexpro’s gas development and production operations. |
In addition to the operating segments above, the Companies also report a Corporate and Other segment.
Dominion Energy
The Corporate and Other Segment of Dominion Energy includes its corporate, service company and other functions (including unallocated debt) as well as nonregulated retail energy marketing operations, including Dominion Energy’s noncontrolling interest in Wrangler. In addition, Corporate and Other includes specific items attributable to Dominion Energy’s operating segments that are not included in profit measures evaluated by executive management in assessing the segments’ performance or in allocating resources as well as the net impact of the gas transmission and storage operations presented in discontinued operations, which are discussed in Note 3.
In the nine months ended September 30, 2021, Dominion Energy reported after-tax net expenses of $
79
The net expenses for specific items attributable to Dominion Energy’s operating segments in 2021 primarily related to the impact of the following items:
• |
A $ |
• |
$ |
• |
A $ |
• |
A $ |
• |
A $ |
• |
A $ |
• |
A $ |
• |
A $ |
• |
A $ |
|
• |
Contracted Assets ($ |
|
• |
Dominion Energy Virginia ($ |
• |
A $ |
The net expense for specific items attributable to Dominion Energy’s operating segments in 2020 primarily related to the impact of the following items:
• |
A $ |
• |
A $ |
• |
A $ |
• |
A $ |
80
The following table presents segment information pertaining to Dominion Energy’s operations:
|
|
Dominion Energy Virginia |
|
|
Gas Distribution |
|
|
Dominion Energy South Carolina |
|
|
Contracted Assets |
|
|
Corporate and Other |
|
|
Adjustments & Eliminations |
|
|
Consolidated Total |
|
|||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue from external customers |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Net income from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue from external customers |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Net income (loss) from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
Net income (loss) attributable to Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue from external customers |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Net income from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue from external customers |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Net income (loss) from discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Net income (loss) attributable to Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Intersegment sales and transfers for Dominion Energy are based on contractual arrangements and may result in intersegment profit or loss that is eliminated in consolidation, including amounts related to entities presented within discontinued operations.
Virginia Power
The Corporate and Other Segment of Virginia Power primarily includes specific items attributable to its operating segment that are not included in profit measures evaluated by executive management in assessing the segment’s performance or in allocating resources.
81
In the nine months ended September 30, 2021, Virginia Power reported after-tax net expenses of $
The net expenses for specific items attributable to Virginia Power’s operating segment in 2021 primarily related to the impact of the following items:
• |
A $ |
• |
A $ |
• |
A $ |
• |
A $ |
• |
A $ |
The net expense for specific items attributable to Virginia Power’s operating segment in 2020 primarily related to a $
The following table presents segment information pertaining to Virginia Power’s operations:
|
|
Dominion Energy Virginia |
|
|
Corporate and Other |
|
|
Consolidated Total |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Net income (loss) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Three Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income (loss) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Nine Months Ended September 30, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Net income (loss) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Nine Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income (loss) |
|
|
|
|
|
|
( |
) |
|
|
|
|
82
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MD&A discusses Dominion Energy’s results of operations and general financial condition and Virginia Power’s results of operations. MD&A should be read in conjunction with the Companies’ Consolidated Financial Statements. Virginia Power 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 |
• |
Accounting Matters – Dominion Energy |
• |
Dominion Energy |
|
• |
Results of Operations |
|
• |
Segment Results of Operations |
• |
Virginia Power |
|
• |
Results of Operations |
• |
Liquidity and Capital Resources – Dominion Energy |
• |
Future Issues and Other Matters – Dominion Energy |
Forward-Looking Statements
This report contains statements concerning the Companies’ 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 “anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,” “could,” “plan,” “may,” “continue,” “target” or other similar words.
The Companies make 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, 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 current pandemic health event resulting from COVID-19, and their collateral consequences, including extended disruption of economic activity in our markets and global supply chains; |
• |
Federal, state and local legislative and regulatory developments, including changes in or interpretations of federal and state tax laws and regulations; |
• |
Risks of operating businesses in regulated industries that are subject to changing regulatory structures; |
• |
Changes to regulated electric rates collected by the Companies and regulated gas distribution, transportation and storage rates collected by Dominion Energy; |
• |
Changes in rules for RTOs and ISOs in which the Companies join and/or participate, including changes in rate designs, changes in FERC’s interpretation of market rules and new and evolving capacity models; |
• |
Risks associated with Virginia Power’s membership and participation in PJM, including risks related to obligations created by the default of other participants; |
• |
Risks associated with entities in which Dominion Energy shares ownership with third parties, including risks that result from lack of sole decision making authority, disputes that may arise between Dominion Energy and third party participants and difficulties in exiting these arrangements; |
83
• |
Changes in future levels of domestic and international natural gas production, supply or consumption; |
• |
Impacts to Dominion Energy’s noncontrolling interest in Cove Point from fluctuations in future volumes of LNG imports or exports from the U.S. and other countries worldwide or demand for, purchases of, and prices related to natural gas or LNG; |
• |
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; |
• |
Risks and uncertainties that may impact the Companies’ ability to develop and construct the CVOW Commercial Project within the currently proposed timeline, or at all, and consistent with current cost estimates along with the ability to recover such costs from customers; |
• |
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 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; |
• |
Unplanned outages at facilities in which the Companies have an ownership interest; |
• |
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; |
• |
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; |
• |
Domestic terrorism and other threats to the Companies’ physical and intangible assets, as well as threats to cybersecurity; |
• |
Additional competition in industries in which the Companies operate, including in electric markets in which Dominion Energy’s nonregulated generation facilities operate and potential competition from the development and deployment of alternative energy sources, such as self-generation and distributed generation technologies, and availability of market alternatives to large commercial and industrial customers; |
• |
Competition in the development, construction and ownership of certain electric transmission facilities in the Companies’ service territory 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 the Companies’ services, including industrial, commercial and residential growth or decline in the Companies’ service areas, changes in supplies of natural gas delivered to Dominion Energy’s pipeline system, failure to maintain or replace customer contracts on favorable terms, 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; |
• |
Receipt of approvals for, and timing of, closing dates for acquisitions and divestitures; |
• |
Impacts of acquisitions, divestitures, transfers of assets to joint ventures and retirements of assets based on asset portfolio reviews; |
• |
The expected timing and likelihood of completing the sales of the Q-Pipe Group and Kewaunee, including the ability to obtain the requisite regulatory approvals and the terms and conditions of such regulatory approvals; |
• |
Adverse outcomes in litigation matters or regulatory proceedings, including matters acquired in the SCANA Combination; |
• |
Counterparty credit and performance risk; |
• |
Fluctuations in the value of investments held in nuclear decommissioning trusts by the Companies and in benefit plan trusts by Dominion Energy; |
• |
Fluctuations in energy-related commodity prices and the effect these could have on Dominion Energy’s earnings and the Companies’ liquidity position and the underlying value of their assets; |
84
• |
Fluctuations in interest rates; |
• |
Fluctuations in currency exchange rates of the Euro or Danish Krone associated with the CVOW Commercial Project; |
• |
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 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 the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 and in Part II. Item 1A. Risk Factors in this report.
The Companies’ forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. The Companies caution the reader not to place undue reliance on their forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. The Companies undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.
Accounting Matters
Critical Accounting Policies and Estimates
As of September 30, 2021, there have been no significant changes with regard to the critical accounting policies and estimates disclosed in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 and in the Companies’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2021. The policies disclosed included the accounting for regulated operations, AROs, income taxes, accounting for derivative contracts and financial instruments at fair value, use of estimates in goodwill impairment testing, use of estimates in long-lived asset and equity method investment impairment testing, employee benefit plans and held for sale classification.
Dominion Energy
Results of Operations
Presented below is a summary of Dominion Energy’s consolidated results:
|
|
2021 |
|
|
2020 |
|
|
$ Change |
|
|||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Dominion Energy |
|
$ |
654 |
|
|
$ |
356 |
|
|
$ |
298 |
|
Diluted EPS |
|
|
0.79 |
|
|
|
0.41 |
|
|
|
0.38 |
|
Year-To-Date |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Dominion Energy |
|
$ |
1,947 |
|
|
$ |
(1,083 |
) |
|
$ |
3,030 |
|
Diluted EPS |
|
|
2.35 |
|
|
|
(1.38 |
) |
|
|
3.73 |
|
Overview
Third Quarter 2021 vs. 2020
Net income attributable to Dominion Energy increased 84%, primarily due to the absence of charges associated with an impairment of interests in certain nonregulated solar generation facilities and the termination of a contract in connection with the sale of Fowler Ridge. In addition, there was a decrease in charges associated with Virginia Power’s 2021 Triennial Review. These increases were partially offset by a decrease in net investment earnings on nuclear decommissioning trust funds and increased unrealized losses on economic hedging activities.
Year-To-Date 2021 vs. 2020
Net income attributable to Dominion Energy increased $3.0 billion, primarily due to the absence of charges associated with the cancellation of the Atlantic Coast Pipeline Project and related portions of the Supply Header Project which are presented in discontinued operations, the planned early retirements of certain electric generation facilities in Virginia, an impairment of interests in certain nonregulated solar generation facilities and the termination of a contract in connection with the sale of Fowler Ridge. In addition, there was an increase in net investment earnings on nuclear decommissioning trust funds and a decrease in charges
85
associated with Virginia Power’s 2021 Triennial Review. These increases were partially offset by charges associated with the settlement of the South Carolina electric base rate case and increased unrealized losses on economic hedging activities.
Analysis of Consolidated Operations
Presented below are selected amounts related to Dominion Energy’s results of operations:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
$ Change |
|
|
2021 |
|
|
2020 |
|
|
$ Change |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
3,176 |
|
|
$ |
3,607 |
|
|
$ |
(431 |
) |
|
$ |
10,084 |
|
|
$ |
10,651 |
|
|
$ |
(567 |
) |
Electric fuel and other energy-related purchases |
|
|
703 |
|
|
|
594 |
|
|
|
109 |
|
|
|
1,740 |
|
|
|
1,758 |
|
|
|
(18 |
) |
Purchased electric capacity |
|
|
26 |
|
|
|
23 |
|
|
|
3 |
|
|
|
62 |
|
|
|
36 |
|
|
|
26 |
|
Purchased gas |
|
|
60 |
|
|
|
37 |
|
|
|
23 |
|
|
|
665 |
|
|
|
561 |
|
|
|
104 |
|
Other operations and maintenance |
|
|
924 |
|
|
|
977 |
|
|
|
(53 |
) |
|
|
2,806 |
|
|
|
2,720 |
|
|
|
86 |
|
Depreciation, depletion and amortization |
|
|
621 |
|
|
|
595 |
|
|
|
26 |
|
|
|
1,833 |
|
|
|
1,751 |
|
|
|
82 |
|
Other taxes |
|
|
223 |
|
|
|
203 |
|
|
|
20 |
|
|
|
702 |
|
|
|
663 |
|
|
|
39 |
|
Impairment of assets and other charges (benefits) |
|
|
(222 |
) |
|
|
1,151 |
|
|
|
(1,373 |
) |
|
|
194 |
|
|
|
1,963 |
|
|
|
(1,769 |
) |
Earnings (loss) from equity method investees |
|
|
69 |
|
|
|
(5 |
) |
|
|
74 |
|
|
|
214 |
|
|
|
— |
|
|
|
214 |
|
Other income |
|
|
133 |
|
|
|
286 |
|
|
|
(153 |
) |
|
|
732 |
|
|
|
327 |
|
|
|
405 |
|
Interest and related charges |
|
|
407 |
|
|
|
306 |
|
|
|
101 |
|
|
|
978 |
|
|
|
1,136 |
|
|
|
(158 |
) |
Income tax expense (benefit) |
|
|
35 |
|
|
|
(110 |
) |
|
|
145 |
|
|
|
200 |
|
|
|
(123 |
) |
|
|
323 |
|
Net income (loss) from discontinued operations including noncontrolling interests |
|
|
65 |
|
|
|
19 |
|
|
|
46 |
|
|
|
119 |
|
|
|
(1,753 |
) |
|
|
1,872 |
|
Noncontrolling interests |
|
|
12 |
|
|
|
(225 |
) |
|
|
237 |
|
|
|
22 |
|
|
|
(157 |
) |
|
|
179 |
|
An analysis of Dominion Energy’s results of operations follows:
Third Quarter 2021 vs. 2020
Operating revenue decreased 12%, primarily reflecting:
• |
A $350 million decrease for refunds to be provided to retail electric customers in Virginia associated with the proposed settlement of the 2021 Triennial Review; |
• |
A $261 million decrease associated with market prices affecting Millstone, including economic hedging impacts of net realized and unrealized losses on freestanding derivatives ($295 million); |
• |
A $44 million decrease in sales to electric utility retail customers, primarily due to a decrease in cooling degree days; |
• |
A $19 million decrease associated with settlements of economic hedges of certain Virginia Power regulated electric sales; and |
• |
A $19 million decrease from Virginia Power riders. |
These decreases were partially offset by:
• |
A $131 million increase in the fuel cost components included in utility rates as a result of an increase in commodity costs associated with sales to electric utility retail customers ($104 million) and gas utility customers ($27 million); |
• |
A $47 million increase in sales to electric utility customers associated with economic and other usage factors; |
• |
A $27 million increase from gas utility capital cost riders; and |
• |
A $23 million increase in sales to electric utility retail customers associated with growth. |
Electric fuel and other energy-related purchases increased 18%, primarily due to higher commodity costs for electric utilities, which are offset in operating revenue and do not impact net income.
Purchased gas increased 62%, primarily due to an increase in commodity costs for gas utilities, which are offset in operating revenue and do not impact net income.
Other operations and maintenance decreased 5%, primarily due to a decrease in certain Virginia Power expenditures which are primarily recovered through state- and FERC-regulated rates and do not impact net income ($35 million), a decrease in storm damage
86
and restoration costs in Virginia Power’s service territory ($22 million) and a decrease in merger and integration-related costs associated with the SCANA Combination ($16 million).
Other taxes increased 10%, primarily due to increased property taxes related to growth projects placed into service.
Impairment of assets and other charges (benefits) decreased $1.4 billion, primarily due to the absence of charges associated with certain nonregulated solar generation facilities ($665 million), the termination of a contract in connection with the sale of Fowler Ridge ($221 million) and litigation acquired in the SCANA Combination ($44 million). In addition, there was a decrease for a benefit from the establishment of a regulatory asset associated with the early retirements of certain coal- and oil-fired generating units associated with the proposed settlement of the 2021 Triennial Review ($549 million). These decreases were partially offset by increased charges for CCRO benefits provided to retail electric customers in Virginia associated with Virginia Power’s 2021 Triennial Review ($118 million).
Earnings from equity method investees increased $74 million, primarily due to an increase in equity method earnings from Cove Point following closing of the GT&S Transaction.
Other income decreased 53%, primarily due to a decrease in net investment gains on nuclear decommissioning trust funds ($204 million) partially offset by the absence of a charge for social justice commitments ($35 million) and an increase in non-service components of pension and other postretirement employee benefit plan credits ($33 million).
Interest and related charges increased 33%, primarily due to unrealized losses in 2021 as compared to unrealized gains in 2020 associated with freestanding derivatives ($83 million) and charges associated with the early redemption of certain securities in the third quarter of 2021 ($23 million), partially offset by the absence of borrowings in response to COVID-19 in 2020 ($18 million).
Income tax expense increased $145 million, primarily due to higher pre-tax income ($147 million) and the absence of prior year benefits including reductions in consolidated state deferred income taxes associated with gas transmission and storage operations ($45 million) and adjustments finalizing the effects of changes in tax status of certain subsidiaries in connection with the Dominion Energy Gas Restructuring ($24 million). These increases are partially offset by the absence of prior year income tax expense primarily associated with the impairment of nonregulated solar generating assets held in partnerships attributable to the noncontrolling interest ($55 million).
Net income from discontinued operations including noncontrolling interests increased $46 million, primarily due to the absence of charges associated with the Atlantic Coast Pipeline Project.
Noncontrolling interests increased $237 million, primarily due to the absence of impairments associated with certain nonregulated solar generation facilities ($267 million) partially offset by the closing of the GT&S Transaction in November 2020 ($32 million).
Year-To-Date 2021 vs. 2020
Operating revenue decreased 5%, primarily reflecting:
• |
A $459 million decrease associated with market prices affecting Millstone, including economic hedging impacts of net realized and unrealized losses on freestanding derivatives ($515 million); |
• |
A $350 million decrease for refunds to be provided to retail electric customers in Virginia associated with the proposed settlement of the 2021 Triennial Review; |
• |
A $151 million decrease from an unbilled revenue reduction at Virginia Power; |
• |
A $49 million decrease as a result of the contribution of certain nonregulated natural gas retail energy contracts to Wrangler; |
• |
A $47 million decrease in PJM off-system sales; |
• |
A $29 million decrease in sales to electric utility customers associated with economic and other usage factors; and |
• |
A $24 million decrease associated with settlements of economic hedges of certain Virginia Power regulated electric sales. |
These decreases were partially offset by:
• |
A $164 million increase in the fuel cost component included in utility rates as a result of an increase in commodity costs associated with sales to gas utility customers ($130 million) and electric utility retail customers ($34 million); |
• |
A $90 million increase from gas utility capital cost riders; |
87
• |
A $65 million increase in sales to electric utility retail customers from an increase in heating degree days during the heating season ($85 million) partially offset by a decrease in cooling degree days during the cooling season ($20 million); |
• |
A $61 million increase in sales to electric utility retail customers associated with growth; |
• |
A $30 million increase from Virginia Power riders; and |
• |
A $30 million increase from the absence of planned outages at Millstone. |
Electric fuel and other energy-related purchases decreased 1%, primarily due to a decrease in PJM off-system sales ($47 million), partially offset by higher commodity costs for electric utilities ($34 million), which are offset in operating revenue and do not impact net income.
Purchased electric capacity increased 72%, primarily due to an increase in expense related to the annual PJM capacity performance market effective June 2020 ($17 million) and an increase in expense related to the annual PJM capacity performance market effective June 2021 ($13 million).
Purchased gas increased 19%, primarily due to an increase in commodity costs for gas utilities, which are offset in operating revenue and do not impact net income.
Other operations and maintenance increased 3%, primarily reflecting:
• |
A $45 million increase in costs of employer-provided healthcare; |
• |
A $44 million charge related to a revision in estimated recovery of spent nuclear fuel costs associated with the decommissioning of Kewaunee; |
• |
A $40 million increase in storm damage and restoration costs in Virginia Power’s service territory; and |
• |
A $40 million increase in outside services; partially offset by |
• |
A $39 million decrease in merger and integration-related costs associated with the SCANA Combination; |
• |
The absence of a $30 million charge associated with credit risk on customer accounts related to COVID-19; and |
• |
A $20 million decrease in outage costs. |
Impairment of assets and other charges (benefits) decreased 90%, primarily reflecting:
• |
The absence of a charge associated with the planned early retirements of certain electric generation facilities in Virginia ($747 million); |
• |
The absence of a charge associated with certain nonregulated solar generation facilities ($665 million); |
• |
A benefit from the establishment of a regulatory asset associated with the early retirements of certain coal- and oil-fired generating units associated with the proposed settlement of the 2021 Triennial Review ($549 million); |
• |
The absence of a contract termination charge in connection with the sale of Fowler Ridge ($221 million); |
• |
The absence of dismantling costs associated with certain Virginia Power electric generation facilities ($30 million); and |
• |
A decrease in charges for CCRO benefits provided to retail electric customers in Virginia associated with Virginia Power’s 2021 Triennial Review ($12 million); partially offset by |
• |
Charges associated with the settlement of the South Carolina electric base rate case ($249 million); |
• |
A charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to Virginia’s 2021 budget process ($77 million); |
• |
A charge for corporate office lease termination ($62 million); |
• |
An increase in charges associated with litigation acquired in the SCANA Combination ($56 million); and |
• |
A charge for the write-off of nonregulated retail software development assets ($20 million). |
88
Earnings from equity method investees increased $214 million, primarily due to an increase in equity method earnings from Cove Point following closing of the GT&S Transaction.
Other income increased $405 million, primarily due to an increase in net investment gains on nuclear decommissioning trust funds ($267 million), an increase in non-service components of pension and other postretirement employee benefit plan credits ($97 million), the absence of a charge for social justice commitments ($40 million), the absence of charges associated with litigation acquired in the SCANA Combination ($25 million) and an increase in AFUDC associated with rate-regulated projects ($22 million), partially offset by charges associated with the settlement of the South Carolina electric base rate case ($18 million).
Interest and related charges decreased 14%, primarily due to unrealized gains in 2021 compared to unrealized losses in 2020 associated with freestanding derivatives ($150 million), the absence of borrowings in response to COVID-19 in 2020 ($42 million) and the absence of charges associated with the early redemption of certain securities in the first quarter of 2020 ($31 million), partially offset by charges associated with the early redemption of certain securities in the third quarter of 2021 ($23 million).
Income tax expense increased $323 million, primarily due to higher pre-tax income ($345 million) and the absence of prior year benefits including reductions in consolidated state deferred income taxes associated with gas transmission and storage operations ($45 million) and adjustments finalizing the effects of changes in tax status of certain subsidiaries in connection with the Dominion Energy Gas Restructuring ($24 million). These increases are partially offset by the benefit of a state legislative change ($21 million) and
the absence of prior year expense primarily associated with the impairment of nonregulated solar generating assets held in partnerships attributable to the noncontrolling interest ($55 million).
Net income from discontinued operations including noncontrolling interests increased $1.9 billion, primarily due to a decrease in charges associated with the Atlantic Coast Pipeline Project and related portions of the Supply Header Project ($2.1 billion) partially offset by the absence of operations sold in the GT&S Transaction ($231 million).
Noncontrolling interests increased $179 million, primarily due to the absence of impairments associated with certain nonregulated solar generation facilities ($267 million) partially offset by the closing of the GT&S Transaction in November 2020 ($97 million).
Segment Results of Operations
Segment results include the impact of intersegment revenues and expenses, which may result in intersegment profit and loss. Presented below is a summary of contributions by Dominion Energy’s operating segments to net income (loss) attributable to Dominion Energy:
|
|
Net Income (Loss) Attributable to Dominion Energy |
|
|
Diluted EPS |
|
||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
$ Change |
|
|
2021 |
|
|
2020 |
|
|
$ Change |
|
||||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy Virginia |
|
$ |
599 |
|
|
$ |
613 |
|
|
$ |
(14 |
) |
|
$ |
0.74 |
|
|
$ |
0.74 |
|
|
$ |
— |
|
Gas Distribution |
|
|
69 |
|
|
|
64 |
|
|
|
5 |
|
|
|
0.08 |
|
|
|
0.08 |
|
|
|
— |
|
Dominion Energy South Carolina |
|
|
151 |
|
|
|
157 |
|
|
|
(6 |
) |
|
|
0.19 |
|
|
|
0.19 |
|
|
|
— |
|
Contracted Assets |
|
|
119 |
|
|
|
112 |
|
|
|
7 |
|
|
|
0.15 |
|
|
|
0.13 |
|
|
|
0.02 |
|
Corporate and Other |
|
|
(284 |
) |
|
|
(590 |
) |
|
|
306 |
|
|
|
(0.37 |
) |
|
|
(0.73 |
) |
|
|
0.36 |
|
Consolidated |
|
$ |
654 |
|
|
$ |
356 |
|
|
$ |
298 |
|
|
$ |
0.79 |
|
|
$ |
0.41 |
|
|
$ |
0.38 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-To-Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy Virginia |
|
$ |
1,464 |
|
|
$ |
1,479 |
|
|
$ |
(15 |
) |
|
$ |
1.81 |
|
|
$ |
1.77 |
|
|
$ |
0.04 |
|
Gas Distribution |
|
|
415 |
|
|
|
375 |
|
|
|
40 |
|
|
|
0.52 |
|
|
|
0.45 |
|
|
|
0.07 |
|
Dominion Energy South Carolina |
|
|
337 |
|
|
|
326 |
|
|
|
11 |
|
|
|
0.42 |
|
|
|
0.39 |
|
|
|
0.03 |
|
Contracted Assets |
|
|
373 |
|
|
|
295 |
|
|
|
78 |
|
|
|
0.46 |
|
|
|
0.35 |
|
|
|
0.11 |
|
Corporate and Other |
|
|
(642 |
) |
|
|
(3,558 |
) |
|
|
2,916 |
|
|
|
(0.86 |
) |
|
|
(4.34 |
) |
|
|
3.48 |
|
Consolidated |
|
$ |
1,947 |
|
|
$ |
(1,083 |
) |
|
$ |
3,030 |
|
|
$ |
2.35 |
|
|
$ |
(1.38 |
) |
|
$ |
3.73 |
|
89
Dominion Energy Virginia
Presented below are selected operating statistics related to Dominion Energy Virginia’s operations:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
||||||
Electricity delivered (million MWh) |
|
|
24.0 |
|
|
|
23.8 |
|
|
|
1 |
% |
|
|
65.0 |
|
|
|
63.3 |
|
|
|
3 |
% |
Electricity supplied (million MWh): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility |
|
|
24.1 |
|
|
|
24.2 |
|
|
|
— |
|
|
|
65.5 |
|
|
|
66.4 |
|
|
|
(1 |
) |
Non-Jurisdictional |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
50 |
|
|
|
0.8 |
|
|
|
0.5 |
|
|
|
60 |
|
Degree days (electric distribution and utility service area): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cooling |
|
|
1,176 |
|
|
|
1,256 |
|
|
|
(6 |
) |
|
|
1,696 |
|
|
|
1,708 |
|
|
|
(1 |
) |
Heating |
|
|
— |
|
|
|
19 |
|
|
|
(100 |
) |
|
|
2,174 |
|
|
|
1,908 |
|
|
|
14 |
|
Average electric distribution customer accounts (thousands) |
|
|
2,702 |
|
|
|
2,667 |
|
|
|
1 |
|
|
|
2,693 |
|
|
|
2,657 |
|
|
|
1 |
|
Presented below, on an after-tax basis, are the key factors impacting Dominion Energy Virginia’s net income contribution:
|
|
Third Quarter 2021 vs. 2020 Increase (Decrease) |
|
|
Year-To-Date 2021 vs. 2020 Increase (Decrease) |
|
||||||||||
|
|
Amount |
|
|
EPS |
|
|
Amount |
|
|
EPS |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weather |
|
$ |
(19 |
) |
|
$ |
(0.02 |
) |
|
$ |
46 |
|
|
$ |
0.05 |
|
Other |
|
|
22 |
|
|
|
0.03 |
|
|
|
(18 |
) |
|
|
(0.02 |
) |
Rider equity return |
|
|
16 |
|
|
|
0.02 |
|
|
|
26 |
|
|
|
0.03 |
|
Electric capacity |
|
|
(8 |
) |
|
|
(0.01 |
) |
|
|
(21 |
) |
|
|
(0.03 |
) |
Planned outage costs |
|
|
1 |
|
|
|
— |
|
|
|
(13 |
) |
|
|
(0.02 |
) |
Depreciation and amortization |
|
|
(12 |
) |
|
|
(0.01 |
) |
|
|
(23 |
) |
|
|
(0.03 |
) |
Renewable energy investment tax credits |
|
|
(5 |
) |
|
|
(0.01 |
) |
|
|
(1 |
) |
|
|
— |
|
Other |
|
|
(9 |
) |
|
|
(0.02 |
) |
|
|
(11 |
) |
|
|
(0.01 |
) |
Share accretion |
|
|
— |
|
|
|
0.02 |
|
|
|
— |
|
|
|
0.07 |
|
Change in net income contribution |
|
$ |
(14 |
) |
|
$ |
— |
|
|
$ |
(15 |
) |
|
$ |
0.04 |
|
Gas Distribution
Presented below are selected operating statistics related to Gas Distribution’s operations:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
||||||
Gas distribution throughput (bcf): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
14 |
|
|
|
14 |
|
|
|
— |
% |
|
|
124 |
|
|
|
118 |
|
|
|
5 |
% |
Transportation |
|
|
216 |
|
|
|
188 |
|
|
|
15 |
|
|
|
705 |
|
|
|
628 |
|
|
|
12 |
|
Heating degree days (gas distribution service area): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North Carolina |
|
|
6 |
|
|
|
31 |
|
|
|
(81 |
) |
|
|
1,979 |
|
|
|
1,679 |
|
|
|
18 |
|
Ohio and West Virginia |
|
|
40 |
|
|
|
90 |
|
|
|
(56 |
) |
|
|
3,489 |
|
|
|
3,336 |
|
|
|
5 |
|
Utah, Wyoming and Idaho |
|
|
49 |
|
|
|
54 |
|
|
|
(9 |
) |
|
|
2,982 |
|
|
|
2,933 |
|
|
|
2 |
|
Average gas distribution customer accounts (thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
1,936 |
|
|
|
1,896 |
|
|
|
2 |
|
|
|
1,929 |
|
|
|
1,887 |
|
|
|
2 |
|
Transportation |
|
|
1,126 |
|
|
|
1,125 |
|
|
|
— |
|
|
|
1,133 |
|
|
|
1,123 |
|
|
|
1 |
|
90
Presented below, on an after-tax basis, are the key factors impacting Gas Distribution’s net income contribution:
|
|
Third Quarter 2021 vs. 2020 Increase (Decrease) |
|
|
Year-To-Date 2021 vs. 2020 Increase (Decrease) |
|
||||||||||
|
|
Amount |
|
|
EPS |
|
|
Amount |
|
|
EPS |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated gas sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weather |
|
$ |
(1 |
) |
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
— |
|
Other |
|
|
8 |
|
|
|
0.01 |
|
|
|
15 |
|
|
|
0.02 |
|
Rider equity return |
|
|
8 |
|
|
|
0.01 |
|
|
|
29 |
|
|
|
0.03 |
|
Interest expense, net |
|
|
(2 |
) |
|
|
— |
|
|
|
14 |
|
|
|
0.02 |
|
Other |
|
|
(8 |
) |
|
|
(0.02 |
) |
|
|
(20 |
) |
|
|
(0.02 |
) |
Share accretion |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
Change in net income contribution |
|
$ |
5 |
|
|
$ |
— |
|
|
$ |
40 |
|
|
$ |
0.07 |
|
Dominion Energy South Carolina
Presented below are selected operating statistics related to Dominion Energy South Carolina’s operations:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
||||||
Electricity delivered (million MWh) |
|
|
6.6 |
|
|
|
6.6 |
|
|
|
— |
% |
|
|
17.3 |
|
|
|
16.9 |
|
|
|
2 |
% |
Electricity supplied (million MWh) |
|
|
6.8 |
|
|
|
6.9 |
|
|
|
(1 |
) |
|
|
18.1 |
|
|
|
17.6 |
|
|
|
3 |
|
Degree days (electric distribution service areas): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cooling |
|
|
448 |
|
|
|
597 |
|
|
|
(25 |
) |
|
|
620 |
|
|
|
773 |
|
|
|
(20 |
) |
Heating |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
839 |
|
|
|
610 |
|
|
|
38 |
|
Average electric distribution customer accounts (thousands) |
|
|
769 |
|
|
|
756 |
|
|
|
2 |
|
|
|
765 |
|
|
|
748 |
|
|
|
2 |
|
Gas distribution throughput (bcf): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
16 |
|
|
|
14 |
|
|
|
14 |
|
|
|
51 |
|
|
|
47 |
|
|
|
9 |
|
Average gas distribution customer accounts (thousands) |
|
|
414 |
|
|
|
401 |
|
|
|
3 |
|
|
|
411 |
|
|
|
397 |
|
|
|
4 |
|
Presented below, on an after-tax basis, are the key factors impacting Dominion Energy South Carolina’s net income contribution:
|
|
Third Quarter 2021 vs. 2020 Increase (Decrease) |
|
|
Year-To-Date 2021 vs. 2020 Increase (Decrease) |
|
||||||||||
|
|
Amount |
|
|
EPS |
|
|
Amount |
|
|
EPS |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weather |
|
$ |
(13 |
) |
|
$ |
(0.02 |
) |
|
$ |
2 |
|
|
$ |
— |
|
Other |
|
|
19 |
|
|
|
0.02 |
|
|
|
31 |
|
|
|
0.04 |
|
Capital cost rider |
|
|
(2 |
) |
|
|
— |
|
|
|
(5 |
) |
|
|
(0.01 |
) |
Regulated gas sales |
|
|
1 |
|
|
|
— |
|
|
|
6 |
|
|
|
0.01 |
|
Interest expense, net |
|
|
1 |
|
|
|
— |
|
|
|
7 |
|
|
|
0.01 |
|
Other |
|
|
(12 |
) |
|
|
(0.01 |
) |
|
|
(30 |
) |
|
|
(0.03 |
) |
Share accretion |
|
|
— |
|
|
|
0.01 |
|
|
|
— |
|
|
|
0.01 |
|
Change in net income contribution |
|
$ |
(6 |
) |
|
$ |
— |
|
|
$ |
11 |
|
|
$ |
0.03 |
|
Contracted Assets
Presented below are selected operating statistics related to Contracted Asset’s operations:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
|
2021 |
|
|
2020 |
|
|
% Change |
|
||||||
Electricity supplied (million MWh) |
|
|
5.7 |
|
|
|
5.7 |
|
|
|
— |
% |
|
|
16.4 |
|
|
|
15.5 |
|
|
|
6 |
% |
91
Presented below, on an after-tax basis, are the key factors impacting Contracted Asset’s net income contribution:
|
|
Third Quarter 2021 vs. 2020 Increase (Decrease) |
|
|
Year-To-Date 2021 vs. 2020 Increase (Decrease) |
|
||||||||||
|
|
Amount |
|
|
EPS |
|
|
Amount |
|
|
EPS |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin(1) |
|
$ |
(2 |
) |
|
$ |
— |
|
|
$ |
19 |
|
|
$ |
0.02 |
|
Planned outage costs |
|
|
3 |
|
|
|
— |
|
|
|
28 |
|
|
|
0.03 |
|
Renewable energy investment tax credits |
|
|
— |
|
|
|
— |
|
|
|
23 |
|
|
|
0.03 |
|
Absence of contract associated with Fowler Ridge |
|
|
3 |
|
|
|
— |
|
|
|
14 |
|
|
|
0.02 |
|
Other |
|
|
3 |
|
|
|
0.02 |
|
|
|
(6 |
) |
|
|
(0.01 |
) |
Share accretion |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
Change in net income contribution |
|
$ |
7 |
|
|
$ |
0.02 |
|
|
$ |
78 |
|
|
$ |
0.11 |
|
(1) |
Includes earnings associated with a 50% noncontrolling interest in Cove Point. |
Corporate and Other
Presented below are the Corporate and Other segment’s after-tax results:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
$ Change |
|
|
2021 |
|
|
2020 |
|
|
$ Change |
|
||||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specific items attributable to operating segments |
|
$ |
(303 |
) |
|
$ |
(556 |
) |
|
$ |
253 |
|
|
$ |
(617 |
) |
|
$ |
(1,334 |
) |
|
$ |
717 |
|
Specific items attributable to Corporate and Other segment |
|
|
39 |
|
|
|
(4 |
) |
|
|
43 |
|
|
|
125 |
|
|
|
(2,083 |
) |
|
|
2,208 |
|
Total specific items |
|
|
(264 |
) |
|
|
(560 |
) |
|
|
296 |
|
|
|
(492 |
) |
|
|
(3,417 |
) |
|
|
2,925 |
|
Other corporate operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(100 |
) |
|
|
(95 |
) |
|
|
(5 |
) |
|
|
(317 |
) |
|
|
(272 |
) |
|
|
(45 |
) |
Other |
|
|
80 |
|
|
|
65 |
|
|
|
15 |
|
|
|
167 |
|
|
|
131 |
|
|
|
36 |
|
Total other corporate operations |
|
|
(20 |
) |
|
|
(30 |
) |
|
|
10 |
|
|
|
(150 |
) |
|
|
(141 |
) |
|
|
(9 |
) |
Total net expense |
|
$ |
(284 |
) |
|
$ |
(590 |
) |
|
$ |
306 |
|
|
$ |
(642 |
) |
|
$ |
(3,558 |
) |
|
$ |
2,916 |
|
EPS impact |
|
$ |
(0.37 |
) |
|
$ |
(0.73 |
) |
|
$ |
0.36 |
|
|
$ |
(0.86 |
) |
|
$ |
(4.34 |
) |
|
$ |
3.48 |
|
Total Specific Items
Corporate and Other includes specific items attributable to Dominion Energy’s primary operating segments that are not included in profit measures evaluated by executive management in assessing the segments' performance or in allocating resources. See Note 21 to the Consolidated Financial Statements in this report for discussion of these items in more detail. Corporate and Other also includes items attributable to the Corporate and Other segment. For the three months ended September 30, 2021, this primarily included $65 million net income of discontinued operations, primarily associated with the Q-Pipe Group, $17 million of after-tax charges associated with the early redemption of certain debt securities and an $11 million after-tax loss for derivative mark-to-market changes. For the nine months ended September 30, 2021, this primarily included $119 million net income of discontinued operations, primarily associated with the Q-Pipe Group, a $105 million after-tax benefit for derivative mark-to-market changes, $61 million of after-tax charges for workplace realignment, primarily related to a corporate office lease termination, $31 million of after-tax charges for merger and integration-related costs associated with the SCANA Combination and $17 million of after-tax charges associated with the early redemption of certain debt securities.
For the three months ended September 30, 2020, this primarily included $30 million of after-tax charges for social justice commitments, $11 million of after-tax charges for merger and integration-related costs associated with the SCANA Combination and $10 million of after-tax charges related to the effects of COVID-19, partially offset by $47 million after-tax income for derivative mark-to-market changes. For the nine months ended September 30, 2020, this primarily included $1.9 billion net loss of discontinued operations, including the results of operations of the entities included in the GT&S Transaction and Q-Pipe Group as well as charges associated with the cancellation of the Atlantic Coast Pipeline Project, $70 million of after-tax charges for merger and integration-related costs associated with the SCANA Combination, $30 million of after-tax charges for social justice commitments, $23 million of after-tax charges related to the effects of COVID-19 and $23 million of after-tax charges associated with the early redemption of certain debt securities.
92
Virginia Power
Results of Operations
Presented below is a summary of Virginia Power’s consolidated results:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
$ Change |
|
|
2021 |
|
|
2020 |
|
|
$ Change |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
556 |
|
|
$ |
475 |
|
|
$ |
81 |
|
|
$ |
1,344 |
|
|
$ |
685 |
|
|
$ |
659 |
|
Overview
Third Quarter 2021 vs. 2020
Net income increased 17%, primarily due to a decrease in charges associated with the 2021 Triennial Review.
Year-To-Date 2021 vs. 2020
Net income increased 96%, primarily due to the absence of charges related to the planned early retirements of certain electric generation facilities and a decrease in charges associated with the 2021 Triennial Review.
Analysis of Consolidated Operations
Presented below are selected amounts related to Virginia Power’s results of operations:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2021 |
|
|
2020 |
|
|
$ Change |
|
|
2021 |
|
|
2020 |
|
|
$ Change |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
1,976 |
|
|
$ |
2,248 |
|
|
$ |
(272 |
) |
|
$ |
5,547 |
|
|
$ |
5,983 |
|
|
$ |
(436 |
) |
Electric fuel and other energy-related purchases |
|
|
515 |
|
|
|
424 |
|
|
|
91 |
|
|
|
1,270 |
|
|
|
1,282 |
|
|
|
(12 |
) |
Purchased (excess) electric capacity |
|
|
15 |
|
|
|
3 |
|
|
|
12 |
|
|
|
16 |
|
|
|
(14 |
) |
|
|
30 |
|
Other operations and maintenance |
|
|
470 |
|
|
|
525 |
|
|
|
(55 |
) |
|
|
1,382 |
|
|
|
1,319 |
|
|
|
63 |
|
Depreciation and amortization |
|
|
343 |
|
|
|
324 |
|
|
|
19 |
|
|
|
990 |
|
|
|
942 |
|
|
|
48 |
|
Other taxes |
|
|
86 |
|
|
|
85 |
|
|
|
1 |
|
|
|
262 |
|
|
|
257 |
|
|
|
5 |
|
Impairment of assets and other charges (benefits) |
|
|
(230 |
) |
|
|
200 |
|
|
|
(430 |
) |
|
|
(269 |
) |
|
|
1,008 |
|
|
|
(1,277 |
) |
Other income |
|
|
21 |
|
|
|
34 |
|
|
|
(13 |
) |
|
|
93 |
|
|
|
34 |
|
|
|
59 |
|
Interest and related charges |
|
|
136 |
|
|
|
135 |
|
|
|
1 |
|
|
|
400 |
|
|
|
398 |
|
|
|
2 |
|
Income tax expense |
|
|
106 |
|
|
|
111 |
|
|
|
(5 |
) |
|
|
245 |
|
|
|
140 |
|
|
|
105 |
|
An analysis of Virginia Power’s results of operations follows:
Third Quarter 2021 vs. 2020
Operating revenue decreased 12%, primarily reflecting:
• |
A $350 million decrease for refunds to be provided to retail electric customers in Virginia associated with the proposed settlement of the 2021 Triennial Review; |
• |
A $26 million decrease in sales to retail customers, primarily due to a decrease in cooling degree days; |
• |
A $19 million decrease associated with settlements of economic hedges of certain regulated electric sales; |
• |
A $19 million decrease from riders; and |
• |
A $12 million decrease in PJM off-system sales. |
These decreases were partially offset by:
• |
A $92 million increase in the fuel cost component included in utility rates as a result of a net increase in commodity costs associated with sales to electric utility retail customers; |
• |
A $32 million increase in sales to electric utility retail customers associated with economic and other usage factors; |
93
• |
A $16 million increase in sales to electric utility retail customers associated with growth; and |
• |
An $11 million increase in sales to customers from non-jurisdictional solar generation facilities. |
Electric fuel and other energy-related purchases increased 21%, primarily due to higher commodity costs for electric utilities ($92 million), which are offset in operating revenue and do not impact net income, partially offset by a decrease in PJM off-system sales ($12 million).
Purchased electric capacity increased $12 million, primarily due to an increase in expense related to the annual PJM capacity performance market effective June 2021.
Other operations and maintenance decreased 10%, primarily reflecting:
• |
A $35 million decrease in certain expenses which are primarily recovered through state- and FERC-regulated rates and do not impact net income; and |
• |
A $22 million decrease in storm damage and service restoration costs; partially offset by |
• |
A $12 million increase in outside services. |
Impairment of assets and other charges (benefits) decreased $430 million, due to a benefit from the establishment of a regulatory asset associated with the early retirements of certain coal- and oil-fired generating units associated with the proposed settlement of the 2021 Triennial Review ($549 million), partially offset by increased charges for CCRO benefits provided to retail electric customers in Virginia associated with the 2021 Triennial Review ($118 million).
Other income decreased 38%, primarily due to a decrease in net investment gains on nuclear decommissioning trust funds.
Income tax expense decreased 5%, primarily due to increased investment tax credits ($20 million) partially offset by higher pre-tax income ($14 million).
Year-To-Date 2021 vs. 2020
Operating revenue decreased 7%, primarily reflecting:
• |
A $350 million decrease for refunds to be provided to retail electric customers in Virginia associated with the proposed settlement of the 2021 Triennial Review; |
• |
A $151 million decrease from an unbilled revenue reduction; |
• |
A $47 million decrease in PJM off-system sales; |
• |
A $45 million decrease in sales to electric utility retail customers associated with economic and other usage factors; and |
• |
A $24 million decrease associated with settlements of economic hedges of certain regulated electric sales. |
These decreases were partially offset by:
• |
A $62 million increase in sales to retail customers from an increase in heating degree days during the heating season ($68 million) partially offset by a decrease in cooling degree days during the cooling season ($6 million); |
• |
A $40 million increase in sales to electric utility retail customers associated with growth; |
• |
A $30 million increase from riders; |
• |
A $23 million increase in the fuel cost component included in utility rates as a result of a net increase in commodity costs associated with sales to electric utility retail customers; and |
• |
A $19 million increase in sales to customers from non-jurisdictional solar generation facilities. |
Electric fuel and other energy-related purchases decreased 1%, primarily due to a decrease in PJM off-system sales ($47 million), partially offset by higher commodity costs for electric utilities ($23 million), which are offset in operating revenue and do not impact net income.
94
Purchased electric capacity increased $30 million, primarily due to an increase in expense related to the annual PJM capacity performance market effective June 2020 ($17 million) and an increase in expense related to the annual PJM capacity performance market effective June 2021 ($13 million).
Other operations and maintenance increased 5%, primarily reflecting:
• |
A $40 million increase in storm damage and service restoration costs; |
• |
A $34 million increase in outside services; |
• |
A $21 million increase in salaries, wages and benefits; |
• |
A $18 million increase in planned outage costs; and |
• |
A $12 million increase in certain expenses which are primarily recovered through state- and FERC-regulated rates and do not impact net income; partially offset by |
• |
The absence of a $20 million charge associated with credit risk on customer accounts related to COVID-19; and |
• |
A $10 million reduction in bad debt expense due to the forgiveness of Virginia retail electric customer accounts in arrears pursuant to Virginia’s 2021 budget process. |
Impairment of assets and other charges (benefits) decreased $1.3 billion, primarily reflecting:
• |
The absence of charges associated with the planned early retirements of certain electric generation facilities ($747 million); |
• |
A benefit from the establishment of a regulatory asset associated with the early retirements of certain coal- and oil-fired generating units associated with the proposed settlement of the 2021 Triennial Review ($549 million); |
• |
The absence of charges for dismantling costs associated with certain electric generation facilities ($30 million); and |
• |
A decrease in charges for CCRO benefits provided to retail electric customers in Virginia associated with the 2021 Triennial Review ($12 million); partially offset by |
• |
A charge for the forgiveness of Virginia retail electric customer accounts in arrears pursuant to Virginia’s 2021 budget process ($77 million). |
Other income increased $59 million, primarily due to an increase in net investment gains on nuclear decommissioning trust funds ($40 million) and an increase in AFUDC associated with rate-regulated projects ($19 million).
Income tax expense increased 75%, primarily due to higher pre-tax income ($171 million) partially offset by increased investment tax credits ($47 million) and the benefit of a state legislative change ($16 million).
Liquidity and Capital Resources
Dominion Energy depends on both internal and external sources of liquidity to provide working capital and as a bridge to long-term debt financings. Short-term cash requirements not met by cash provided by operations are generally satisfied with proceeds from short-term borrowings. Long-term cash needs are met through issuances of debt and/or equity securities.
At September 30, 2021, Dominion Energy had $2.4 billion of unused capacity under its joint revolving credit facility.
A summary of Dominion Energy’s cash flows is presented below:
|
|
2021 |
|
|
2020 |
|
||
(millions) |
|
|
|
|
|
|
|
|
Cash, restricted cash and equivalents at January 1 |
|
$ |
247 |
|
|
$ |
269 |
|
Cash flows provided by (used in): |
|
|
|
|
|
|
|
|
Operating activities(1) |
|
|
3,535 |
|
|
|
4,810 |
|
Investing activities(2) |
|
|
(6,607 |
) |
|
|
(4,860 |
) |
Financing activities(3) |
|
|
3,092 |
|
|
|
339 |
|
Net increase in cash, restricted cash and equivalents |
|
|
20 |
|
|
|
289 |
|
Cash, restricted cash and equivalents at September 30 |
|
$ |
267 |
|
|
$ |
558 |
|
95
(1) |
Includes $172 million and $1.6 billion related to discontinued operations for 2021 and 2020, respectively. |
(2) |
Includes $(997) million and $(525) million related to discontinued operations for 2021 and 2020, respectively. |
(3) |
Includes $(174) million related to discontinued operations for 2020 and no amounts for 2021. |
Operating Cash Flows
Net cash provided by Dominion Energy’s operating activities decreased $1.3 billion, including approximately $1.4 billion from discontinued operations. Net cash provided by continuing operations increased primarily due to distributions from Cove Point, the absence of a contract termination payment in connection with the sale of Fowler Ridge, decreases in severance payments primarily related to a voluntary retirement program and other changes in working capital items, partially offset by lower deferred fuel cost recoveries and increased margin deposits.
Dominion Energy believes that its operations provide a stable source of cash flow to contribute to planned levels of capital expenditures and maintain or grow the dividend on common shares.
Dominion Energy’s operations are subject to risks and uncertainties that may negatively impact the timing or amounts of operating cash flows, which are discussed in Part I. Item 1A. Risk Factors in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 and in Part II. Item 1A. Risk Factors in this report.
Credit Risk
Dominion Energy’s exposure to potential concentrations of credit risk results primarily from its energy marketing and price risk management activities. Presented below is a summary of Dominion Energy’s credit exposure as of September 30, 2021 for these activities. Gross credit exposure for each counterparty is calculated prior to the application of collateral and represents outstanding receivables plus any unrealized on- or off-balance sheet exposure, taking into account contractual netting rights.
|
|
Gross Credit Exposure |
|
|
Credit Collateral |
|
|
Net Credit Exposure |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Investment grade(1) |
|
$ |
83 |
|
|
$ |
— |
|
|
$ |
83 |
|
Non-investment grade(2) |
|
|
2 |
|
|
|
5 |
|
|
|
1 |
|
No external ratings: |
|
|
|
|
|
|
|
|
|
|
|
|
Internally rated—investment grade(3) |
|
|
80 |
|
|
|
2 |
|
|
|
78 |
|
Internally rated—non-investment grade(4) |
|
|
15 |
|
|
|
26 |
|
|
|
15 |
|
Total(5) |
|
$ |
180 |
|
|
$ |
33 |
|
|
$ |
177 |
|
(1) |
Designations as investment grade are based upon minimum credit ratings assigned by Moody’s Investors Service and Standard & Poor’s. The five largest counterparty exposures, combined, for this category represented approximately 43% of the total net credit exposure. |
(2) |
The five largest counterparty exposures, combined, for this category represented less than 1% of the total net credit exposure. |
(3) |
The five largest counterparty exposures, combined, for this category represented approximately 41% of the total net credit exposure. |
(4) |
The five largest counterparty exposures, combined, for this category represented approximately 5% of the total net credit exposure. |
(5) Excludes the Millstone 2019 power purchase agreements.
Investing Cash Flows
Net cash used in Dominion Energy’s investing activities increased $1.7 billion, primarily due to the repayment of the Q-Pipe Transaction deposit and an increase in contributions to equity method affiliates including Atlantic Coast Pipeline, partially offset by a decrease in plant construction and other property additions and the absence of the acquisitions of Pivotal LNG, Inc. and an additional interest in Atlantic Coast Pipeline.
Financing Cash Flows and Liquidity
Dominion Energy relies on capital markets as significant sources of funding for capital requirements not satisfied by cash provided by its operations. As discussed further in Credit Ratings and Debt Covenants in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, the ability to borrow funds or issue securities and the return demanded by investors are affected by credit ratings. In addition, the raising of external capital is subject to certain regulatory requirements, including registration with the SEC for certain issuances.
Dominion Energy currently meets the definition of a well-known seasoned issuer under SEC rules governing the registration, communication and offering processes under the Securities Act of 1933, as amended. The rules provide for a streamlined shelf registration process to provide registrants with timely access to capital. This allows Dominion Energy to use automatic shelf registration statements to register any offering of securities, other than those for exchange offers or business combination transactions.
96
Net cash provided by Dominion Energy's financing activities increased $2.8 billion primarily due to the absence of common stock repurchases and lower common stock dividend payments, partially offset by lower net issuances of debt.
Dominion Energy has an effective shelf registration statement with the SEC for the sale of up to $3.0 billion of variable denomination floating rate demand notes, called Dominion Energy Reliability InvestmentSM. The registration limits the principal amount that may be outstanding at any one time to $1.0 billion. The notes are offered on a continuous basis and bear interest at a floating rate per annum determined by the Dominion Energy Reliability Investment Committee, or its designee, on a weekly basis. The notes have no stated maturity date, are non-transferable and may be redeemed in whole or in part by Dominion Energy or at the investor’s option at any time. At September 30, 2021, Dominion Energy’s Consolidated Balance Sheets include $391 million with respect to such notes presented within short-term debt. The proceeds are used for general corporate purposes and to repay debt.
See Note 16 to the Consolidated Financial Statements for further information regarding Dominion Energy’s credit facilities, liquidity and significant financing transactions, including a $900 million Sustainability Revolving Credit Agreement entered into in June 2021, a $1.3 billion term loan credit agreement entered into in July 2021, the issuance of $1.0 billion of 2.25% senior notes in August 2021 and the redemption of the remaining principal outstanding of $800 million of its July 2016 hybrids in August 2021.
In November 2021, Dominion Energy received commitments from lenders for its subsidiary holding its noncontrolling interest in Cove Point to issue approximately $2.5 billion in long-term debt secured by its noncontrolling interest in Cove Point. The proceeds are expected to be utilized to repay portions of Dominion Energy’s long-term debt.
Credit Ratings
Credit ratings are intended to provide banks and capital market participants with a framework for comparing the credit quality of securities and are not a recommendation to buy, sell or hold securities. In the Credit Ratings section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, there is a discussion on the use of capital markets by Dominion Energy as well as the impact of credit ratings on the accessibility and costs of using these markets. As of September 30, 2021, there have been no changes in Dominion Energy’s credit ratings.
Debt Covenants
In the Debt Covenants section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, there is a discussion on the various covenants present in the enabling agreements underlying Dominion Energy’s debt. As of September 30, 2021, there have been no material changes to debt covenants, nor any events of default under Dominion Energy’s debt covenants.
Subsidiary Dividend Restrictions
As of September 30, 2021, there have been no material changes to the subsidiary dividend restrictions disclosed in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020.
Future Cash Payments for Contractual Obligations and Planned Capital Expenditures
As of September 30, 2021, there have been no material changes outside the ordinary course of business to Dominion Energy’s contractual obligations nor any material changes to planned capital expenditures as disclosed in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020.
Use of Off-Balance Sheet Arrangements
As of September 30, 2021, there have been no material changes to the off-balance sheet arrangements disclosed in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, with the exception of the matter disclosed in the Use of Off-Balance Sheet Arrangements section in MD&A in the Companies’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.
Future Issues and Other Matters
The following discussion of future issues and other information includes current developments of previously disclosed matters and new issues arising during the period covered by, and subsequent to, the dates of Dominion Energy’s Consolidated Financial Statements that may impact future results of operations, financial condition and/or cash flows. This section should be read in conjunction with Item 1. Business and Future Issues and Other Matters in MD&A in the Companies’ Annual Report on Form 10-K for the year ended
97
December 31, 2020, Future Issues and Other Matters in MD&A in the Companies’ Quarterly Report on Form 10-Q for the quarters ended March 31, 2021 and June 30, 2021 and Note 17 to the Consolidated Financial Statements in this report.
Environmental Matters
Dominion Energy 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. See Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 and Note 17 to the Consolidated Financial Statements in this report for additional information on various environmental matters.
Legal Matters
See Notes 13 and 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 and Notes 13 and 17 to the Consolidated Financial Statements and Item 1. Legal Proceedings in this report for additional information on various legal matters.
Regulatory Matters
See Notes 3 and 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020 and Note 13 to the Consolidated Financial Statements in this report for additional information on various regulatory matters.
CVOW Commercial Project
In September 2019, Virginia Power filed applications with PJM for the CVOW Commercial Project and for certain approvals and rider recovery from the Virginia Commission in November 2021. The total cost of the project is estimated to be approximately $10 billion, excluding financing costs. Virginia Power’s estimate for the 2.6 GW project’s projected levelized cost of energy is approximately $80-90/MWh. Following a competitive procurement process, Virginia Power has entered into or is in the final stages of negotiating fixed price contracts for the major offshore construction and equipment components. The contracts include services denominated in currencies other than the U.S. dollar for approximately €2.9 billion and 3.9 billion kr., which have been included within the cost estimate above based on a spot price from the third quarter of 2021. In addition, certain of the fixed price contracts, approximately €0.7 billion, contain commodity indexing provisions linked to steel. As a result, any changes in applicable exchange rates or commodity indices could result in a change to the ultimate cost of the project. Virginia Power is evaluating hedging strategies, subject to approval by the Virginia Commission, to mitigate such risk. In addition, the offshore construction scope is expected to include an approximately 20-month lease contract with an affiliated entity, pending approval by the Virginia Commission, for the use of a Jones Act compliant offshore wind installation vessel currently under development. Virginia Power has completed the conceptual design phase for the project’s onshore electric transmission facilities and selected a recommended route with consideration given for resiliency and minimizing environmental impacts. Any changes to the onshore route necessitated during the receipt of various permitting approvals could result in upward pressure on the estimated cost of the project. Upon receiving approvals from the Virginia Commission and other permitting entities, Virginia Power anticipates commencing major construction activities in 2023 and the project is expected to be placed in service by the end of 2026. Virginia Power expects to incur approximately 80% of the project costs from 2023 through 2025. Through September 30, 2021, Virginia Power had incurred approximately $170 million of project costs. Virginia Power anticipates funding the project consistent with its approved debt to equity capitalization structure. The project is vital for Virginia Power to meet the renewable energy portfolio standard established in the VCEA and is consistent with the criteria within the VCEA for the construction of an offshore wind facility deemed to be in the public interest as well as the guidelines facilitating cost recovery. See additional discussion of the VCEA provisions concerning renewable generation projects in Note 13 to the Companies’ Annual Report on Form 10-K for year ended December 31, 2020.
Southeast Energy Exchange Market
In February 2021, DESC and the other members of the Southeast Energy Exchange Market submitted the Southeast Energy Exchange Market Agreement to FERC for authorization. This agreement sets forth the framework and rules for establishing and maintaining a new electronic trading platform designed to enhance the existing bilateral market in the Southeast utilizing zero-charge transmission service. That transmission service, in turn, will be voluntarily provided by participating transmission service providers, including DESC. In October 2021, the Southeast Energy Exchange Market Agreement became effective by operation of law as a result of a split FERC vote. The members expect the Southeast Energy Exchange Market platform to be operational in 2022.
98
ITEM 3.
QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
The matters discussed in this Item may contain “forward-looking statements” as described in the introductory paragraphs under Part I., Item 2. MD&A in this report. The reader’s attention is directed to those paragraphs for discussion of various risks and uncertainties that may impact the Companies.
Market Risk Sensitive Instruments and Risk Management
The Companies’ financial instruments, commodity contracts and related financial derivative instruments are exposed to potential losses due to adverse changes in commodity prices, interest rates and equity security prices as described below. Commodity price risk is present in the Companies’ electric operations and Dominion Energy’s natural gas procurement and marketing operations due to the exposure to market shifts in prices received and paid for electricity, natural gas and other commodities. The Companies use commodity derivative contracts to manage price risk exposures for these operations. Interest rate risk is generally related to their outstanding debt and future issuances of debt. In addition, the Companies are exposed to investment price risk through various portfolios of equity and debt securities.
The following sensitivity analysis estimates the potential loss of future earnings or fair value from market risk sensitive instruments over a selected time period due to a 10% change in commodity prices or interest rates.
Commodity Price Risk
To manage price risk, the Companies hold commodity-based derivative instruments held for non-trading purposes associated with purchases and sales of electricity, natural gas and other energy-related products.
The derivatives used to manage commodity price risk are executed within established policies and procedures and may include instruments such as futures, forwards, swaps, options and FTRs that are sensitive to changes in the related commodity prices. For sensitivity analysis purposes, the hypothetical change in market prices of commodity-based derivative instruments is determined based on models that consider the market prices of commodities in future periods, the volatility of the market prices in each period, as well as the time value factors of the derivative instruments. Prices and volatility are principally determined based on observable market prices.
A hypothetical 10% increase in commodity prices would have resulted in a decrease of $24 million in the fair value of Dominion Energy’s commodity-based derivative instruments as of September 30, 2021. A hypothetical 10% decrease in commodity prices would have resulted in a decrease of $2 million in the fair value of Dominion Energy’s commodity-based derivative instruments as of December 31, 2020.
A hypothetical 10% decrease in commodity prices would have resulted in a decrease in fair value of $2 million and $35 million of Virginia Power’s commodity-based derivative instruments as of September 30, 2021 and December 31, 2020, respectively.
The impact of a change in energy commodity prices on the Companies' commodity-based derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net losses from commodity-based financial derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction, such as revenue from physical sales of the commodity.
Interest Rate Risk
The Companies manage their interest rate risk exposure predominantly by maintaining a balance of fixed and variable rate debt. They also enter into interest rate sensitive derivatives, including interest rate swaps and interest rate lock agreements. For variable rate debt outstanding for Dominion Energy and Virginia Power, a hypothetical 10% increase in market interest rates would not have resulted in a material change in earnings at September 30, 2021 or December 31, 2020.
The Companies also use interest rate derivatives, including forward-starting swaps, interest rate swaps and interest rate block agreements to manage interest rate risk. As of September 30, 2021, Dominion Energy and Virginia Power had $8.3 billion and $2.8 billion, respectively, in aggregate notional amounts of these interest rate derivatives outstanding. A hypothetical 10% decrease in market interest rates would have resulted in a decrease of $143 million and $115 million, respectively, in the fair value of Dominion Energy and Virginia Power’s interest rate derivatives at September 30, 2021. As of December 31, 2020, Dominion Energy and Virginia Power had $6.9 billion and $2.1 billion, respectively, in aggregate notional amounts of these interest rate derivatives outstanding. A hypothetical 10% decrease in market interest rates would have resulted in a decrease of $124 million and $75 million, respectively, in the fair value of Dominion Energy and Virginia Power’s interest rate derivatives at December 31, 2020.
99
The impact of a change in interest rates on the Companies’ interest rate-based financial derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net gains and/or losses from interest rate derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction.
Investment Price Risk
The Companies are subject to investment price risk due to securities held as investments in nuclear decommissioning and rabbi trust funds that are managed by third-party investment managers. These trust funds primarily hold marketable securities that are reported in the Companies’ Consolidated Balance Sheets at fair value.
Dominion Energy recognized net investment gains (including investment income) on nuclear decommissioning and rabbi trust investments of $678 million, $130 million and $662 million for the nine months ended September 30, 2021 and 2020, and the year ended December 31, 2020, respectively. Net realized gains and losses include gains and losses from the sale of investments. Dominion Energy recorded in AOCI and regulatory liabilities, a net decrease in unrealized gains on debt investments of $50 million for the nine months ended September 30, 2021, and a net increase in unrealized gains on debt investments of $42 million and $57 million for the nine months ended September 30, 2020 and the year ended December 31, 2020, respectively.
Virginia Power recognized net investment gains (including investment income) on nuclear decommissioning trust investments of $335 million, $31 million and $287 million for the nine months ended September 30, 2021 and 2020, and the year ended December 31, 2020, respectively. Net realized gains and losses include gains and losses from the sale of investments. Virginia Power recorded in AOCI and regulatory liabilities, a net decrease in unrealized gains on debt investments of $24 million for the nine months ended September 30, 2021, and a net increase in unrealized gains on debt investments of $22 million and $29 million for the nine months ended September 30, 2020 and the year ended December 31, 2020, respectively.
Dominion Energy sponsors pension and other postretirement employee benefit plans that hold investments in trusts to fund employee benefit payments. Virginia Power employees participate in these plans. Differences between actual and expected returns on plan assets are accumulated and amortized during future periods. As such, any investment-related declines in these trusts will result in future increases in the net periodic cost recognized for employee benefit plans and will be included in the determination of the amount of cash to be contributed to the employee benefit plans.
ITEM 4. CONTROLS AND PROCEDURES
Senior management of both Dominion Energy and Virginia Power, including Dominion Energy and Virginia Power’s CEO and CFO, evaluated the effectiveness of each company’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation process, each of Dominion Energy and Virginia Power’s CEO and CFO have concluded that each company’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, Dominion Energy or Virginia Power’s internal control over financial reporting.
100
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Companies are parties 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 the Companies reasonably believe will exceed a specified threshold. Pursuant to the SEC regulations, the Companies use a threshold of $1 million for such proceedings.
See the following for discussions on various legal, environmental and other regulatory proceedings to which the Companies are a party, which information is incorporated herein by reference:
• |
Notes 13 and 23 to the Consolidated Financial Statements and Future Issues and Other Matters in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020. |
• |
Notes 13 and 17 to the Consolidated Financial Statements in this report. |
ITEM 1A. RISK FACTORS
The Companies’ businesses are influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond the Companies’ control. A number of these risk factors have been identified in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020, which should be taken into consideration when reviewing the information contained in this report. Other than the risk factor discussed below, there have been no material changes with regard to the risk factors previously disclosed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2020. 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.
The development and construction of the CVOW Commercial Project involves significant risks.
The CVOW Commercial Project is a large-scale, complex project that will take several years to complete. Significant delays or cost increases, or an inability to recover certain project costs, could have an adverse effect on the Companies’ financial condition, cash flows and results of operations. If the Companies are unable to complete the development and construction of the CVOW Commercial Project or decide in the future to delay or cancel the project, the Companies may not be able to recover all or a portion of their investment in the project and may incur substantial cancellation payments under existing contracts or other substantial costs associated with any such delay or cancellation. The Companies’ ability to complete the CVOW Commercial Project within the currently proposed timeline, or at all, and consistent with current cost estimates is subject to various risks and uncertainties, certain of which are beyond the Companies’ control.
The development and construction of the CVOW Commercial Project is dependent on the Companies’ ability to obtain and maintain various local, state and federal permits and other regulatory approvals, including Virginia Commission approval for rider recovery of project costs. In addition, the design and route of the project’s onshore electric transmission and other facilities remain subject to regulatory review and approval. Changes in the design and route of these onshore facilities, including an increase in amount of undergrounding, would likely increase project costs. Also, the CVOW Commercial Project may become the subject of litigation or other forms of intervention by third parties, including stakeholders or advocacy groups, that may impact the timing and receipt of permits or other regulatory approvals or otherwise delay or increase the cost of the project.
The Companies’ ability to invest the significant financial resources necessary for the CVOW Commercial Project is dependent on the Companies’ access to the financial markets in a timely and cost-effective manner. A decline in the Companies’ credit worthiness, an unfavorable market reputation of either the Companies or their industry or general market disruptions could adversely impact financing costs and increase the overall cost of the project.
The development and construction of the CVOW Commercial Project is also dependent on the ability of certain key suppliers and contractors to timely satisfy their obligations under contracts entered into or expected to be entered into. Given the unique equipment and expertise required for this project, the Companies may not be able to remedy in a timely and cost-effective manner, if at all, any failure by one or more of these suppliers or contractors to timely satisfy their contractual obligations. Certain of the fixed price contracts for major offshore construction and equipment components are denominated in Euros and Danish kroner, including those which contain commodity indexing provisions linked to steel. Accordingly, to the extent the Companies are unable to, including from the inability to receive approval from the Virginia Commission, or elect not to, hedge their exposure to these currencies, adverse fluctuations in the applicable exchange rates would likely adversely affect the cost of the CVOW Commercial Project. Similarly, adverse fluctuations in the price of certain raw materials, including steel, would likely, to the extent not hedged by the Companies, adversely affect the overall costs incurred to develop and construct the project.
101
The development and construction of the CVOW Commercial Project involves the use of new turbine technology and will take place in a marine environment, which presents unique challenges and will require the use of a specialized workforce and specialized equipment. In addition, the timely installation of the turbines is dependent on the completion and availability of a Jones Act compliant vessel currently under construction, and regulatory approval for Virginia Power to use an affiliate’s vessel.
The timeline for development and construction of the CVOW Commercial Project may also be negatively impacted by severe weather events or marine wildlife, including migration patterns of endangered and protected species, both of which are outside of the control of the Companies and its contractors. Any significant delays in the project timeline, including from any of the factors discussed above, resulting in both the delay of commencement of construction to 2024 or later combined with a delay to the in-service date to 2028 or later may impact the ability of the Companies to recover the costs of the CVOW Commercial Project.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Dominion Energy
Purchases of Equity Securities
Period |
|
Total Number of Shares (or Units) Purchased(1) |
|
|
Average Price Paid per Share (or Unit)(2) |
|
|
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs |
|
|
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased under the Plans or Programs(3) |
|||
7/1/21 - 7/31/21 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ 0.92 billion |
8/1/21 - 8/31/21 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
0.92 billion |
9/1/21 - 9/30/21 |
|
|
321 |
|
|
|
74.58 |
|
|
|
— |
|
|
0.92 billion |
Total |
|
|
321 |
|
|
|
74.58 |
|
|
|
— |
|
|
$ 0.92 billion |
(1) |
Represents shares of common stock that were tendered by employees to satisfy tax withholding obligations on vested restricted stock. |
(2) |
Represents the weighted-average price paid per share. |
(3) |
In November 2020, the Dominion Energy Board of Directors authorized the repurchase of up to $1.0 billion of shares of common stock. This repurchase program has no expiration date or price or volume targets and may be modified, suspended or terminated at any time. Shares may be purchased through open market or privately negotiated transactions or otherwise at the discretion of management subject to prevailing market conditions, applicable securities laws and other factors. |
ITEM 5. OTHER INFORMATION
Effective November 3, 2021, Dominion Energy amended Section IIIA(9)(d)(i) of its Articles of Incorporation to provide that, in connection with the conversion of any share of Series A Preferred Stock, Dominion Energy will (i) select as the “settlement method” either “cash settlement” or “combination settlement” and (ii) in the event it selects “combination settlement,” specify a “specified dollar amount” of not less than $1,000. Under the terms of the Articles of Incorporation, the amendment did not require shareholder approval. The foregoing description is qualified in its entirety by reference to the full text of the Articles of Incorporation, as amended, which are filed as Exhibit 3.1.a hereto and incorporated herein by reference.
102
ITEM 6. EXHIBITS
103
Exhibit Number |
|
Description |
|
Dominion Energy |
|
Virginia Power |
||||
|
|
|
|
|
|
|
||||
32.b |
|
|
|
|
X |
|||||
|
|
|
|
|
|
|
||||
99 |
|
Condensed consolidated earnings statements (filed herewith). |
|
X |
|
X |
||||
|
|
|
|
|
|
|
||||
101 |
|
The following financial statements from Dominion Energy, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, filed on November 5, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Equity, (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. The following financial statements from Virginia Electric and Power Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, filed on November 5, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Common Shareholder’s Equity (v) Consolidated Statements of Cash Flows, and (vi) the Notes to Consolidated Financial Statements. |
|
X |
|
X |
||||
|
|
|
|
|
|
|
||||
104 |
|
Cover Page Interactive Data File formatted in iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101. |
|
X |
|
X |
||||
|
|
|
|
|
|
|
104
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, INC. Registrant |
|
|
|
|
November 5, 2021 |
/s/ Michele L. Cardiff |
|
|
Michele L. Cardiff Senior Vice President, Controller and Chief Accounting Officer |
|
|
|
|
|
VIRGINIA ELECTRIC AND POWER COMPANY Registrant |
|
|
|
|
November 5, 2021 |
/s/ Michele L. Cardiff |
|
|
Michele L. Cardiff Senior Vice President, Controller and Chief Accounting Officer |
|
|
|
105