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 16, 2020, the latest practicable date for determination, Dominion Energy, Inc. had
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 |
93 |
Item 3. |
109 |
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Item 4. |
110 |
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Item 1. |
111 |
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Item 1A. |
111 |
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Item 2. |
112 |
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Item 5. |
112 |
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Item 6. |
114 |
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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 |
2016 Equity Units |
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Dominion Energy’s 2016 Series A Equity Units issued in August 2016, initially in the form of 2016 Series A Corporate Units, consisting of a stock purchase contract and a 1/40 interest in RSNs issued by Dominion Energy |
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 |
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. |
Altavista |
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Altavista biomass power station |
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 and constructed and operated by DETI |
BACT |
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Best available control technology |
bcf |
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Billion cubic feet |
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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Berkshire Hathaway Energy Company |
Blue Racer |
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Blue Racer Midstream, LLC, a joint venture between Caiman Energy II, LLC and FR BR Holdings, LLC |
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 |
CARES Act |
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Coronavirus Aid, Relief and Economic Security Act, enacted on March 27, 2020 |
CCR |
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Coal combustion residual |
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 |
CO2 |
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Carbon dioxide |
3
Colonial Trail West |
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A 142 MW utility-scale solar power station located in Surry County, Virginia |
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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Dominion Energy Cove Point LNG, LP |
Cove Point LNG Facility |
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An LNG import/export and storage facility, including the Liquefaction Facility, located on the Chesapeake Bay in Lusby, Maryland |
CPCN |
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Certificate of Public Convenience and Necessity |
CWA |
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Clean Water Act |
DCP |
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The legal entity, Dominion Cove Point, LLC, one or more of its consolidated subsidiaries (including Dominion Energy Midstream), or the entirety of Dominion Cove Point, LLC and its consolidated subsidiaries |
DECG |
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Dominion Energy Carolina Gas Transmission, LLC |
DECGS |
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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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Dominion Energy Transmission, Inc. |
DGI |
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Dominion Generation, Inc. |
DGP |
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Dominion Gathering and Processing, Inc. |
DMLPHCII |
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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, Dominion Energy Midstream Partners, LP, one or more of its consolidated subsidiaries (consisting effective November 2020 of DECG), or the entirety of Dominion Energy 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 Dominion Iroquois, Inc., one or more of its consolidated subsidiaries, or the entirety of Dominion Iroquois, Inc. and its consolidated subsidiaries, which holds 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 |
EPA |
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U.S. Environmental Protection Agency |
EPS |
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Earnings per common share |
FASB |
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Financial Accounting Standards Board |
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 GIP |
Fowler Ridge |
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Fowler I Holdings LLC, a wind-turbine facility joint venture through September 2020 with BP in Benton County, Indiana |
FTRs |
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Financial transmission rights |
GAAP |
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U.S. generally accepted accounting principles |
Gal |
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Gallon |
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 |
GIP |
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The legal entity, Global Infrastructure Partners, one or more of its consolidated subsidiaries, or the entirety of Global Infrastructure Partners and its consolidated subsidiaries |
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 GIP |
Grassfield Solar |
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A proposed 20 MW utility-scale solar power station located 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, Dominion Energy Field Services, Inc. and 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 |
Hopewell |
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Polyester biomass power station |
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 GIP |
Iroquois |
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Iroquois Gas Transmission System, L.P. |
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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 |
Jones Act |
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The Coastwise Merchandise Statute (commonly known as the Jones Act) 46 U.S.C. §55102 regulating U.S. maritime commerce |
June 2006 hybrids |
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Dominion Energy’s 2006 Series A Enhanced Junior Subordinated Notes due 2066 |
Kewaunee |
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Kewaunee nuclear power station |
kV |
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Kilovolt |
Liquefaction Facility |
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A natural gas export/liquefaction facility at the Cove Point LNG Facility |
LNG |
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Liquefied natural gas |
MATS |
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Utility Mercury and Air Toxics Standard Rule |
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 a 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 |
N2O |
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Nitrous oxide |
NAV |
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Net asset value |
NGL |
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Natural gas liquid |
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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A proposed 20 MW utility-scale solar power station located in James City County, Virginia |
North Carolina Commission |
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North Carolina Utilities Commission |
NRC |
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U.S. Nuclear Regulatory Commission |
NSPS |
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New Source Performance Standards |
NWP 12 |
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A nationwide permit from the Army Corps of Engineers authorizing activities required for the construction, maintenance, repair and removal of utility lines, including electric transmission, gas pipelines, water and communications conduit and associated facilities in waters of the U.S. |
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, L.L.C. |
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 |
6
Q-Pipe Transaction |
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The proposed sale by Dominion Energy to BHE of Dominion Energy Questar Pipeline, DEQPS and QPC Holding Company, LLC (including its subsidiary Questar Southern Trails Pipeline Company), pursuant to a purchase and sale agreement entered into on October 5, 2020 |
Questar Gas |
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Questar Gas Company, doing business as Dominion Energy Utah, Dominion Energy Wyoming and Dominion Energy Idaho |
RCC |
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Replacement Capital Covenant |
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 |
Rider BW |
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A rate adjustment clause associated with the recovery of costs related to Brunswick County |
Rider CE |
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A rate adjustment clause associated with the recovery of the costs related to certain renewable generation facilities in Virginia |
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 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 and C3A |
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Rate adjustment clauses associated with the recovery of cost related to certain DSM programs approved in DSM cases |
ROE |
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Return on equity |
RSN |
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Remarketable subordinated note |
RTO |
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Regional transmission organization |
Sadler Solar |
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An approximately 100 MW proposed 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 |
7
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 |
SEMI |
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SCANA Energy Marketing, LLC (formerly known as SCANA Energy Marketing, Inc.), a subsidiary of SCANA through December 2019, and effective December 2019, a subsidiary of Wrangler |
September 2006 hybrids |
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Dominion Energy’s 2006 Series B Enhanced Junior Subordinated Notes due 2066 |
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 |
SF6 |
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Sulfur hexafluoride |
South Carolina Commission |
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Public Service Commission of South Carolina |
Southampton |
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Southampton biomass power station |
Southern
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The legal entity, The Southern Company, one or more of its consolidated subsidiaries, or the entirety of The Southern Company and its consolidated subsidiaries |
Spring Grove 1 |
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An approximately 98 MW proposed 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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A proposed 42 MW utility-scale solar power station located in Pittsylvania County, Virginia |
Terra Nova Renewable Partners |
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A partnership comprised primarily of institutional investors advised by J.P. Morgan Asset Management-Global Real Assets |
Three Cedars |
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Granite Mountain and Iron Springs, collectively |
Utah Commission |
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Utah Public Service Commission |
VCEA |
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Virginia Clean Economy Act, passed by the Virginia General Assembly in March 2020 and enacted on April 11, 2020 |
VDEQ |
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Virginia Department of Environmental Quality |
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 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 |
VOC |
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Volatile organic compounds |
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 |
8
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 |
Woodland Solar |
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A 19 MW utility-scale solar power station in Isle of Wight County, Virginia |
Wrangler |
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Wrangler Retail Gas Holdings, LLC, a partnership between Dominion Energy and Interstate Gas Supply, Inc. |
Wyoming Commission |
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Wyoming Public Service Commission |
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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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2019 |
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(millions, except per share amounts) |
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Operating Revenue |
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$ |
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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 |
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Total operating expenses |
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Income from operations |
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Other income |
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Interest and related charges |
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Income from continuing operations including noncontrolling interest before income tax expense (benefit) |
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Income tax expense (benefit) |
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Net Income (Loss) From Continuing Operations Including Noncontrolling Interest |
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Net Income (Loss) From Discontinued Operations Including Noncontrolling Interest(1)(2) |
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Net Income (Loss) Including Noncontrolling Interest |
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Noncontrolling Interest |
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Net Income (Loss) Attributable to Dominion Energy |
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Amounts attributable to Dominion Energy |
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|
|
Net Income (Loss) from continuing operations |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
Net Income (Loss) from discontinued operations |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Net Income (Loss) attributable to Dominion Energy |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
EPS - Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) from continuing operations |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
Net Income (Loss) from discontinued operations |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Net Income (Loss) attributable to Dominion Energy |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
EPS - Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) from continuing operations |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
Net Income (Loss) from discontinued operations |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Net Income (Loss) attributable to Dominion Energy |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
(1) |
|
|
(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, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) including noncontrolling interest |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
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 loss |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Comprehensive income (loss) including noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
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, 2020 |
|
|
December 31, 2019(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 |
|
|
|
|
|
|
|
|
Prepayments |
|
|
|
|
|
|
|
|
Regulatory assets |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Current assets held for sale(2) |
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
Noncurrent assets held for sale |
|
|
— |
|
|
|
|
|
Total assets |
|
$ |
|
|
|
$ |
|
|
(1) |
Dominion Energy’s Consolidated Balance Sheet at December 31, 2019 has been derived from the audited Consolidated Balance Sheet at that date. |
(2) |
See Note 10 for amounts attributable to related parties. |
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, 2020 |
|
|
December 31, 2019(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 |
|
|
|
|
|
|
|
|
Regulatory liabilities |
|
|
|
|
|
|
|
|
Reserves for SCANA legal proceedings |
|
|
|
|
|
|
|
|
Derivative liabilities |
|
|
|
|
|
|
|
|
Other(2) |
|
|
|
|
|
|
|
|
Current liabilities held for sale |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
|
|
|
Long-Term Debt |
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
|
|
Junior subordinated notes |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total long-term debt |
|
|
|
|
|
|
|
|
Deferred Credits and Other Liabilities |
|
|
|
|
|
|
|
|
Deferred income taxes and investment tax credits |
|
|
|
|
|
|
|
|
Regulatory liabilities |
|
|
|
|
|
|
|
|
Derivative liabilities |
|
|
|
|
|
|
|
|
Other(2) |
|
|
|
|
|
|
|
|
Total deferred credits and other liabilities |
|
|
|
|
|
|
|
|
Noncurrent liabilities held for sale |
|
|
— |
|
|
|
|
|
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, 2019 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock awards (net of change in unearned compensation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Common stock dividends ($ share) and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
September 30, 2019 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Common stock dividends ($ share) and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
September 30, 2020 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) See Note 16 for further information.
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, 2018 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock purchase contract component of 2019 Equity Units(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Acquisition of SCANA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of public interest in Dominion Energy Midstream |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Stock awards (net of change in unearned compensation) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock dividends(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Common stock dividends ($ common share) and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
September 30, 2019 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Common stock dividends ($ share) and distributions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
September 30, 2020 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1)
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, |
|
2020 |
|
|
2019 |
|
||
(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 and rate credits to electric utility customers |
|
|
|
|
|
|
|
|
Impairment of assets and other charges |
|
|
|
|
|
|
|
|
Loss for equity method investee |
|
|
|
|
|
|
|
|
Charges related to a voluntary retirement program |
|
|
|
|
|
|
|
|
Net gains on nuclear decommissioning trust funds and other investments |
|
|
( |
) |
|
|
( |
) |
Revision to future ash pond and landfill closure costs |
|
|
|
|
|
|
( |
) |
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) |
|
|
( |
) |
|
|
( |
) |
Cash and restricted cash acquired in the SCANA Combination |
|
|
|
|
|
|
|
|
Acquisition of solar development projects |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of securities |
|
|
|
|
|
|
|
|
Purchases of securities |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of assets and equity method investments |
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
Repayment of credit facility borrowings |
|
|
|
|
|
|
( |
) |
Issuance of long-term debt |
|
|
|
|
|
|
|
|
Repayment of long-term debt, including redemption premiums |
|
|
( |
) |
|
|
( |
) |
Issuance of 2019 Equity Units |
|
|
|
|
|
|
|
|
Issuance of common stock |
|
|
|
|
|
|
|
|
Repurchase of common stock |
|
|
( |
) |
|
|
|
|
Common dividend payments |
|
|
( |
) |
|
|
( |
) |
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 |
|
$ |
|
|
|
$ |
|
|
Supplemental Cash Flow Information |
|
|
|
|
|
|
|
|
Significant noncash investing and financing activities:(1)(2) |
|
|
|
|
|
|
|
|
Accrued capital expenditures |
|
$ |
|
|
|
$ |
|
|
Leases(3) |
|
|
|
|
|
|
|
|
(1) |
|
(2) |
|
16
|
(3)
The accompanying notes are an integral part of Dominion Energy’s Consolidated Financial Statements.
17
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
(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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
18
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
(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.
19
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
September 30, 2020 |
|
|
December 31, 2019(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.
20
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED BALANCE SHEETS—(Continued)
(Unaudited)
|
|
September 30, 2020 |
|
|
December 31, 2019(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 |
|
|
|
|
|
|
|
|
Asset retirement obligations |
|
|
|
|
|
|
|
|
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, 2019 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.
21
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, 2019 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
September 30, 2019 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Other comprehensive income, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
September 30, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
YEAR-TO-DATE
|
|
Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Shares |
|
|
Amount |
|
|
Other Paid-In Capital |
|
|
Retained Earnings |
|
|
AOCI |
|
|
Total |
|
||||||
(millions, except for shares) |
|
(thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2018 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
September 30, 2019 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Other comprehensive loss, net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
September 30, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
22
VIRGINIA ELECTRIC AND POWER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30, |
|
2020 |
|
|
|
|
2019 |
|
||
(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 |
|
|
( |
) |
|
|
|
|
( |
) |
Revision to future ash pond and landfill closure costs |
|
|
|
|
|
|
|
|
( |
) |
Impairment of assets and other charges |
|
|
|
|
|
|
|
|
|
|
Charge related to a voluntary retirement program |
|
|
|
|
|
|
|
|
|
|
Other adjustments |
|
|
( |
) |
|
|
|
|
( |
) |
Changes in: |
|
|
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
( |
) |
|
|
|
|
( |
) |
Affiliated receivables and payables |
|
|
|
|
|
|
|
|
|
|
Inventories |
|
|
|
|
|
|
|
|
( |
) |
Prepayments |
|
|
|
|
|
|
|
|
( |
) |
Deferred fuel expenses, net |
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
( |
) |
|
|
|
|
( |
) |
Accrued interest, payroll and taxes |
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
Repayment of long-term debt |
|
|
( |
) |
|
|
|
|
( |
) |
Common dividend payments to parent |
|
|
( |
) |
|
|
|
|
( |
) |
Other |
|
|
( |
) |
|
|
|
|
( |
) |
Net cash provided by (used in) financing activities |
|
|
( |
) |
|
|
|
|
|
|
Increase (decrease) in cash, restricted cash and equivalents |
|
|
|
|
|
|
|
|
( |
) |
Cash, restricted cash and equivalents at beginning of period |
|
|
|
|
|
|
|
|
|
|
Cash, restricted cash and equivalents at end of period |
|
$ |
|
|
|
|
|
$ |
|
|
Supplemental Cash Flow Information |
|
|
|
|
|
|
|
|
|
|
Significant noncash investing and financing activities:(1) |
|
|
|
|
|
|
|
|
|
|
Accrued capital expenditures |
|
$ |
|
|
|
|
|
$ |
|
|
Financing leases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
See Note 16 for noncash financing activities related to derivative restructuring. |
The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.
23
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 transporters 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., regulated gas transportation and storage services in the Rocky Mountain region of the U.S., merchant electric generation and, following the completion of the GT&S Transaction in November 2020, a noncontrolling interest in Cove Point. Virginia Power is a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and northeastern North Carolina. 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 proposed Q-Pipe Transaction.
Beginning in September 2020, Dominion Energy manages its daily operations through
See Note 21 for further discussion of the Companies’ operating segments.
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, 2019.
In the Companies’ opinion, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly their financial position at September 30, 2020, their results of operations and changes in equity for the three and nine months ended September 30, 2020 and 2019 and their cash flows for the nine months ended September 30, 2020 and 2019. 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, 2020, 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.
24
Certain amounts in the Companies’ 2019 Consolidated Financial Statements and Notes have been reclassified to conform to the 2020 presentation for comparative purposes; however, such reclassifications did not affect the Companies’ net income, total assets, liabilities, equity or cash flows.
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, 2019, with the exception of the items described below.
Cash, Restricted Cash and Equivalents
|
|
Cash, Restricted Cash and Equivalents at End of Period |
|
|
Cash, Restricted Cash and Equivalents at Beginning of Period |
|
||||||||||
|
|
September 30, 2020 |
|
|
September 30, 2019 |
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
||||
(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) |
At September 30, 2020, September 30, 2019, December 31, 2019 and December 31, 2018, Dominion Energy had $ |
(3)
Property, Plant and Equipment
In January 2019, Virginia Power committed to a plan to retire certain automated metering reading infrastructure associated with its electric operations before the end of its estimated useful life and replace such equipment with more current AMI technology. As a result, Virginia Power recorded a charge of $
In March 2019, Virginia Power committed to retire certain electric generating units before the end of their useful lives and completed the retirement of certain units at
In May 2019, Virginia Power abandoned a coal rail project at its Mt. Storm generating facility. As a result, Virginia Power recorded a charge of $
In September 2019, the Companies abandoned certain property, plant and equipment before the end of its useful life. As a result, Dominion Energy recorded a charge of $
25
million after-tax), included in impairment of assets and other charges in their Consolidated Statements of Income for the three and nine months ended September 30, 2019.
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 $
In the first quarter of 2020, Virginia Power updated depreciation rates for its nuclear plants to reflect lower depreciation rates as a result of the expected approval of license extensions from the NRC. This adjustment resulted in a decrease in depreciation expense of $
In the second quarter of 2020, DESC completed a nuclear decommissioning cost study related to Summer. As a result of the study, Dominion Energy recorded an $
Credit Risk
Credit risk is the risk of financial loss if counterparties fail to perform their contractual obligations. In order to minimize overall credit risk, credit policies are maintained, including the evaluation of counterparty financial condition, collateral requirements and the use of standardized agreements that facilitate the netting of cash flows associated with a single counterparty. In addition, counterparties may make available collateral, including letters of credit or cash held as margin deposits, as a result of exceeding agreed-upon credit limits, or may be required to prepay the transaction.
Effective January 2020, expected credit losses are estimated and recorded based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets held at amortized cost as well as expected credit losses on commitments with respect to financial guarantees.
Investments
Debt and Equity Securities with Readily Determinable Fair Value
Dominion Energy accounts for and classifies investments in debt securities as trading or available-for-sale securities. Virginia Power classifies investments in debt securities as available-for-sale securities.
• Debt securities classified as trading securities include securities held by Dominion Energy in rabbi trusts associated with certain deferred compensation plans. These securities are reported in other investments in its Consolidated Balance Sheets at fair value with net realized and unrealized gains and losses included in other income in its Consolidated Statements of Income.
• Debt securities classified as available-for-sale securities include all other debt securities, primarily comprised of securities held in the nuclear decommissioning trusts. These investments are reported at fair value in nuclear decommissioning trust funds in the Consolidated Balance Sheets. Net realized and unrealized gains and losses (including any credit-related impairments) on investments held in Virginia Power’s nuclear decommissioning trusts are deferred to a regulatory asset or liability as applicable for certain jurisdictions subject to cost-based regulation. For all other available-for-sale debt securities, including those held in Dominion Energy’s merchant generation nuclear decommissioning trusts, net realized gains and losses (including any credit-related impairments) are included in other income and unrealized gains and losses are reported as a component of AOCI, after-tax.
26
In determining realized gains and losses for debt securities, the cost basis of the security is based on the specific identification method.
Equity securities with readily determinable fair values include securities held by Dominion Energy in rabbi trusts associated with certain deferred compensation plans and securities held by the Companies in the nuclear decommissioning trusts. The Companies record all equity securities with a readily determinable fair value, or for which they are permitted to estimate fair value using NAV (or its equivalent), at fair value in nuclear decommissioning trust funds and other investments in the Consolidated Balance Sheets. However, the Companies may elect a measurement alternative for equity securities without a readily determinable fair value. Under the measurement alternative, equity securities are reported at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Companies qualitatively assess equity securities reported using the measurement alternative to determine whether an investment is impaired on an ongoing basis. Net realized and unrealized gains and losses on equity securities held in Virginia Power’s nuclear decommissioning trusts are deferred to a regulatory asset or liability, as applicable, for certain jurisdictions subject to cost-based regulation. For all other equity securities, including those held in Dominion Energy’s merchant generation nuclear decommissioning trusts and rabbi trusts, net realized and unrealized gains and losses are included in other income in its Consolidated Statements of Income.
Equity Securities without Readily Determinable Fair Values
The Companies account for illiquid and privately held securities without readily determinable fair values under either the equity method or cost method. Equity securities without readily determinable fair values include:
• Equity method investments when the Companies have the ability to exercise significant influence, but not control, over the investee. Dominion Energy’s investments are included in investment in equity method affiliates in its Consolidated Balance Sheets, except for such investments which are classified as held for sale. Dominion Energy records equity method adjustments in other income in its Consolidated Statements of Income, except for such adjustments which are classified as discontinued operations, including its proportionate share of investee income or loss, gains or losses resulting from investee capital transactions, amortization of certain differences between the carrying value and the equity in the net assets of the investee at the date of investment and other adjustments required by the equity method.
• Cost method investments when the Companies do not have the ability to exercise significant influence over the investee. The Companies’ investments are included in other investments and nuclear decommissioning trust funds. Cost method investments are reported at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.
Other-Than-Temporary Impairment
The Companies periodically review their equity method investments to determine whether a decline in fair value should be considered other-than-temporary. If a decline in the fair value of any equity method investment is determined to be other-than-temporary, the investment is written down to its fair value at the end of the reporting period.
Credit Impairment
Effective January 2020, the Companies periodically review their available-for-sale debt securities to determine whether a decline in fair value should be considered credit related. If a decline in the fair value of any available-for-sale debt security is determined to be credit related, the credit-related impairment is recorded to an allowance included in nuclear decommissioning trust funds in the Companies’ Consolidated Balance Sheets at the end of the reporting period, with such allowance for credit losses subject to reversal in subsequent evaluations.
Using information obtained from their nuclear decommissioning trust fixed-income investment managers, the Companies record in earnings, or defer as applicable for certain jurisdictions subject to cost-based regulation, any unrealized loss for a debt security when the manager intends to sell the debt security or it is more-likely-than-not that the manager will have to sell the debt security before recovery of its fair value up to its cost basis. If that is not the case, but the debt security is deemed to have experienced a credit loss, the Companies record the credit loss in earnings with the remaining non-credit portion of the unrealized loss recorded in AOCI. Credit losses are evaluated primarily by considering the credit ratings of the issuer, prior instances of non-performance by the issuer and other factors.
New Accounting Standards
27
In August 2020, the FASB issued revised accounting guidance for debt with conversion options and contracts in an entity’s own equity. The revised guidance eliminates the ability to assert cash settlement and exclude potential shares from the diluted EPS calculation for a contract that may be settled in stock or cash. The effective date is for interim and annual reporting periods beginning January 1, 2022 and may be adopted through a modified retrospective or fully retrospective method of transition. Upon adoption, Dominion Energy will no longer exclude the Series A Preferred Stock from the effect of dilutive securities and will also exclude the fair value adjustment reflected within net income attributable to Dominion Energy for the calculation of diluted EPS.
Note 3. Acquisitions and Dispositions
Acquisition of SCANA
In January 2019, Dominion Energy issued
See Note 3 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019 for more information on the SCANA Combination, including merger approval and conditions, information on assets acquired and liabilities assumed and purchase price allocation. In addition, see Note 17 for a discussion of certain legal proceedings involving Dominion Energy, SCANA or DESC relating to events occurring before closing of the SCANA Combination.
In accordance with the SCANA Merger Approval Order, Dominion Energy incurred certain charges to its Consolidated Statements of Income for the following:
|
• |
In the first quarter of 2019, DESC recorded a reduction in operating revenue and a corresponding regulatory liability of $ |
|
• |
Dominion Energy committed to forgo recovery of $ |
|
• |
Dominion Energy committed to forgo recovery of $ |
Results of Operations and Unaudited Pro Forma Information
The impact of the SCANA Combination on Dominion Energy’s operating revenue was an increase of $
Dominion Energy incurred merger and integration-related costs of $
28
respectively. These costs consist of professional fees, charitable contribution commitments, employee-related expenses, certain financing costs and other miscellaneous costs.
The following unaudited pro forma financial information reflects the consolidated results of operations of Dominion Energy assuming the SCANA Combination had taken place on January 1, 2018. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of the combined company.
|
|
Three Months Ended September 30, 2019(1) |
|
|
Nine Months Ended September 30, 2019(1) |
|
||
(millions, except EPS) |
|
|
|
|
|
|
|
|
Operating Revenue |
|
$ |
|
|
|
$ |
|
|
Net income attributable to Dominion Energy |
|
|
|
|
|
|
|
|
Earnings Per Common Share – Basic |
|
$ |
|
|
|
$ |
|
|
Earnings Per Common Share – Diluted |
|
$ |
|
|
|
$ |
|
|
(1) |
|
Disposition of Gas Transmission & Storage Operations to BHE
In July 2020, Dominion Energy entered into an agreement with BHE with a total value of approximately $
In November 2020, Dominion Energy completed the GT&S Transaction and received cash proceeds of $
In connection with closing of the GT&S Transaction, Dominion Energy and BHE entered into a transition services agreement under which Dominion Energy will continue to provide specified administrative services to support the operations of the disposed business for up to 24 months. In addition, BHE will provide certain administrative services to Dominion Energy.
Also in November 2020, BHE provided a $
29
The operations included in both the GT&S Transaction and the Q-Pipe Transaction are presented in held-for-sale and discontinued operations effective July 2020. As a result, the previously reported amounts have been recast to reflect this presentation and depreciation and amortization ceased on the applicable assets. Dominion Energy retained a
The following table represents selected information regarding the results of operations of reported within discontinued operations in Dominion Energy’s Consolidated Statements of Income:
|
|
Three Months Ended September 30, 2020 |
|
|
Three Months Ended September 30, 2019 |
|
|
Nine Months Ended September 30, 2020 |
|
|
Nine Months Ended September 30, 2019 |
|
||||||||||||||||||||
|
|
GT&S Transaction |
|
|
Q-Pipe Transaction |
|
|
GT&S Transaction |
|
|
Q-Pipe Transaction |
|
|
GT&S Transaction |
|
|
Q-Pipe Transaction |
|
|
GT&S Transaction |
|
|
Q-Pipe Transaction |
|
||||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Operating Expense(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (loss) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and related charges(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) including noncontrolling interests |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interests |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
— |
|
Net income (loss) attributable to Dominion Energy |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
(1) |
GT&S Transaction includes a charge of $ |
|
(2) |
GT&S Transaction includes a loss of $ |
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, 2020(1) |
|
|
At December 31, 2019 |
|
||||||||||
|
|
GT&S Transaction |
|
|
Q-Pipe Transaction |
|
|
GT&S Transaction |
|
|
Q-Pipe Transaction |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets(2) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Equity method investments(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other deferred charges and other assets, including goodwill(5) and intangible assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other deferred credits and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
|
(2) |
|
|
(3) |
|
|
(4) |
|
|
(5) |
|
|
(6) |
|
30
Capital expenditures and significant noncash items relating to the disposal groups included the following:
|
|
Nine Months Ended September 30, 2020 |
|
|
Nine Months Ended September 30, 2019 |
|
||||||||||
|
|
GT&S Transaction |
|
|
Q-Pipe Transaction |
|
|
GT&S Transaction |
|
|
Q-Pipe Transaction |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Significant noncash items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of assets and other charges |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charge related to a voluntary retirement program |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued capital expenditures |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In October 2020, Dominion Energy settled various derivatives related to, but not included in, the GT&S Transaction for a payment of $
31
Note 4. Operating Revenue
The Companies’ operating revenue consists of the following:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
(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 - State |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other regulated revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other nonregulated revenues(1)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue from contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues(3)(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Industrial |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government and other retail |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other regulated revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other nonregulated revenues(1)(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue from contracts with customers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenues(2)(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
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 the Companies expect to recognize this revenue. These revenues relate to contracts containing fixed prices where the Companies will earn the associated revenue over time as they stand 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 the Companies elect to recognize revenue in the amount they have a right to invoice.
32
Revenue expected to be recognized on multi-year contracts in place at September 30, 2020 |
|
2020 |
|
|
2021 |
|
|
2022 |
|
|
2023 |
|
|
2024 |
|
|
Thereafter |
|
|
Total |
|
|||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2020 and December 31, 2019, 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, 2020 and 2019 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, |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
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 |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Write-off of regulatory assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2020, Dominion Energy’s effective tax rate reflects an income tax benefit of $
In March 2020, the CARES Act was enacted which includes several significant business tax provisions that modify or temporarily suspend certain provisions of the 2017 Tax Reform Act. The CARES Act provisions are intended to improve cash flow and liquidity by, among other things, providing a temporary five-year carryback for certain net operating losses, accelerating the refund of previously generated corporate alternative minimum tax credits and temporarily loosening the business interest limitation to 50% of adjusted taxable income for certain businesses. Dominion Energy utilized the income tax provisions of the CARES Act to accelerate the recognition of certain tax attributes, but they did not provide a material benefit.
33
In July 2020, the U.S. Department of Treasury issued final regulations providing guidance about the limitation on the deduction for business interest expenses and issued proposed regulations on the application of these rules to certain pass-through entities and partners in those entities under the 2017 Tax Reform Act as modified by the CARES Act. Dominion Energy is assessing the impact of these regulations, but expects interest expense to be deductible in 2020.
Dominion Energy’s 2019 effective tax rate is a function of the nominal year-to-date pre-tax income primarily driven by charges associated with the SCANA Combination, charges at Virginia Power for the early retirement of assets and charges associated with the voluntary retirement program. In connection with the SCANA Combination, Dominion Energy committed to forgo, or limit, the recovery of certain income tax-related regulatory assets associated with the NND Project. Dominion Energy’s 2019 effective tax rate reflects deferred income tax expense of $
As of September 30, 2020, 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, 2019, for a discussion of these unrecognized tax benefits.
Discontinued operations
Income tax expense (benefit) reflected 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, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Dominion Energy from continuing operations |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
Preferred stock dividends (see Note 16) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income (loss) attributable to Dominion Energy from continuing operations – Basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Dilutive effect of Series A Preferred Stock |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Net income (loss) 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 & Diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net effect of dilutive securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
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 |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
As a result of a net loss from continuing operations for the nine months ended September 30, 2019, any adjustments to earnings or shares would be considered antidilutive and are therefore excluded from the calculation of diluted EPS. The 2019 Equity Units and the two September 2020 accelerated share purchase agreements are potentially dilutive securities. See Note 16 for more information. The forward stock purchase contracts included within the 2019 Equity Units were excluded from the calculation of diluted EPS for the
34
three and nine months ended September 30, 2020 and the three months ended September 30, 2019, as the dilutive stock price threshold was not met. The forward stock purchase contracts included within the 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. The Series A Preferred Stock included within the 2019 Equity Units is excluded from the effect of dilutive securities within diluted EPS, but a fair value adjustment is reflected within net income from continuing operations attributable to Dominion Energy for the calculation of diluted EPS from continuing operations for the nine months ended September 30, 2020 and the three months ended September 30, 2019, based upon the expectation that the conversion will be settled in cash rather than through the issuance of Dominion Energy common stock. Such fair value adjustment is not included within net income from continuing operations attributable to Dominion Energy for the calculation of diluted EPS from continuing operations for the three months ended September 30, 2020 as the dilutive stock price threshold was not met. The 2016 Equity Units are potentially dilutive securities, but were excluded from the calculation of diluted EPS for the three months ended September 30, 2019 as the dilutive stock price threshold was not met.
Note 7. Accumulated Other Comprehensive Income
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, 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 |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Three Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Nine Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
35
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, 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 |
|
$ |
|
|
|
|
Three Months Ended September 30, 2019 |
|
|
|
|
|
|
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 |
|
$ |
|
|
|
|
36
Details about AOCI components |
|
Amounts reclassified from AOCI |
|
|
Affected line item in the Consolidated Statements of Income |
|
(millions) |
|
|
|
|
|
|
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 |
|
$ |
|
|
|
|
Nine Months Ended September 30, 2019 |
|
|
|
|
|
|
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 |
|
$ |
|
|
|
|
37
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, 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 |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
Three Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
Nine Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
38
The following table presents Virginia Power’s reclassifications out of AOCI by component:
Details about AOCI components |
|
Amounts reclassified from AOCI |
|
|
Affected line item in the Consolidated Statements of Income |
|
(millions) |
|
|
|
|
|
|
Three Months Ended September 30, 2020 |
|
|
|
|
|
|
(Gains) losses on cash flow hedges: |
|
|
|
|
|
|
Interest rate contracts |
|
$ |
|
|
|
Interest and related charges |
Total |
|
|
|
|
|
|
Tax |
|
|
|
|
|
Income tax expense |
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 |
Total, net of tax |
|
$ |
( |
) |
|
|
Nine Months Ended September 30, 2020 |
|
|
|
|
|
|
(Gains) losses on cash flow hedges: |
|
|
|
|
|
|
Interest rate contracts |
|
$ |
|
|
|
Interest and related charges |
Total |
|
|
|
|
|
|
Tax |
|
|
( |
) |
|
Income tax expense |
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 |
Total, net of tax |
|
$ |
( |
) |
|
|
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, 2019. 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.
39
The following table presents Dominion Energy’s quantitative information about Level 3 fair value measurements at September 30, 2020. 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) |
|
|
|
|
|
|
Physical options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas |
|
|
|
|
|
Option model |
|
Market price (per Dth) |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price volatility |
(4) |
|
|
|
|
|
% |
Total assets |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FTRs |
|
$ |
|
|
|
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) |
40
Nonrecurring Fair Value Measurements
Dominion Energy
See Notes 10 and 11 for information on nonrecurring fair value measurements associated with charges recorded related to Fowler Ridge and non-wholly-owned merchant 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, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
At December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
41
(1) |
|
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, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Total realized and unrealized gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Included in earnings: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchased gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric fuel and other energy-related purchases |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Included in regulatory assets/liabilities |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
( |
) |
Settlements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Transfers out of Level 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Ending balance |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets/liabilities still held at the reporting date: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Purchased gas |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Virginia Power
The following table presents Virginia Power’s quantitative information about Level 3 fair value measurements at September 30, 2020. 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) |
|
|
|
|
|
|
Physical options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural gas |
|
|
|
|
|
Option model |
|
Market price (per Dth) |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Price volatility |
(4) |
|
|
|
|
|
% |
Total assets |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. |
42
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) |
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, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
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, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
43
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, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
(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 |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
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, 2020 |
|
|
December 31, 2019 |
|
||||||||||
|
|
Carrying Amount |
|
|
Estimated Fair Value(1) |
|
|
Carrying Amount |
|
|
Estimated Fair Value(1) |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt(2)(3) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Supplemental |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Junior subordinated notes(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Virginia Power |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt(4) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
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, 2019. 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. Dominion Energy’s 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. Virginia Power’s derivative contracts include over-the-counter transactions. 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
44
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 security, none of which are subject to restrictions. Cash collateral is used in the table below to offset derivative assets and liabilities. Certain accounts receivable and accounts payable recognized on the Companies’ Consolidated Balance Sheets, as well as letters of credit and other forms of security, 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.
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, 2020 |
|
|
December 31, 2019 |
|
||||||||||||||||||||||||||
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives, subject to a master netting or similar arrangement |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
||||||||||||||||||||||||||
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives, subject to a master netting or similar arrangement |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
45
(1) |
|
Volumes
The following table presents the volume of Dominion Energy’s derivative activity at September 30, 2020. 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 |
|
|
|
|
|
|
|
|
Liquids (Gal)(2) |
|
|
|
|
|
|
|
|
Interest rate(3) |
|
$ |
|
|
|
$ |
|
|
Foreign currency(3) |
|
€ |
|
|
|
€ |
|
|
(1) |
|
(2) |
|
(3) |
|
AOCI
The following table presents selected information related to gains (losses) on cash flow hedges included in AOCI in Dominion Energy’s Consolidated Balance Sheet at September 30, 2020:
|
|
AOCI After-Tax |
|
|
Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax |
|
|
Maximum Term |
||
(millions) |
|
|
|
|
|
|
|
|
|
|
Commodities: |
|
|
|
|
|
|
|
|
|
|
Gas |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
Electricity |
|
|
|
|
|
|
|
|
|
|
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., anticipated sales) 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 market prices, interest rates and foreign currency exchange rates.
In connection with the agreement Dominion Energy entered in July 2020 for the disposition of substantially all of its gas transmission and storage operations, certain cash flow hedges of debt-related items became probable of not occurring. See Note 3 for further information.
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
46
The following table presents the amounts recorded on the balance sheet related to cumulative basis adjustments for fair value hedges:
|
|
Carrying Amount of the Hedged Asset (Liability)(1) |
|
|
Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of the Hedged Assets (Liabilities)(2) |
|
||||||||||
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
(1) |
|
(2) |
|
47
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, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
Total current derivative assets(1) |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative assets(2) |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
Total current derivative liabilities(3) |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total current derivative assets(1) |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative assets(2) |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency |
|
|
|
|
|
|
|
|
|
|
|
|
Total current derivative liabilities(3) |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative liabilities(4) |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
48
(1) |
|
(2) |
|
(3) |
|
(4) |
|
49
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, 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 (3) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Total |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Three Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
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 (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 (3) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Total |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Nine Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
|
|
|
|
$ |
|
|
|
|
|
|
Purchased gas |
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
|
|
|
|
|
|
Total commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest and related charges |
|
|
|
|
|
$ |
( |
) |
|
|
|
|
Discontinued operations |
|
|
|
|
|
|
( |
) |
|
|
|
|
50
Total interest rate |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Foreign currency (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, |
|
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
||||
(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, 2020 |
|
|
December 31, 2019 |
|
||||||||||||||||||||||||||
|
|
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 |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Interest rate contracts: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Over-the-counter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total derivatives, subject to a master netting or similar arrangement |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
51
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
||||||||||||||||||||||||||
|
|
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 |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
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, 2020. 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): |
|
|
|
|
|
|
|
|
FTRs |
|
|
|
|
|
|
|
|
Interest rate(2) |
|
$ |
|
|
|
$ |
|
|
(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, 2020:
|
|
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.
52
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, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Total current derivative assets(1) |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative assets(2) |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative assets |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Total current derivative liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Commodity |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate |
|
|
|
|
|
|
|
|
|
|
|
|
Total noncurrent derivative liabilities(3) |
|
|
|
|
|
|
|
|
|
|
|
|
Total derivative liabilities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
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) |
|
53
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, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate(3) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Total |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Three Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Nine Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
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, |
|
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative type and location of gains (losses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity(2) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
Total |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
(1) |
|
(2) |
|
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 $
54
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, 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) |
$ |
|
|
(5) |
$ |
|
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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) |
Includes pending purchases of securities of $ |
(4) |
The fair value of securities in an unrealized loss position was $ |
(5) |
|
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, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains recognized during the period |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Less: Net gains recognized during the period on securities sold during the period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unrealized gains recognized during the period on securities still held at September 30, 2020 and 2019(1) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
55
The fair value of Dominion Energy’s fixed income securities with readily determinable fair values held in nuclear decommissioning trust funds at September 30, 2020 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, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
(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, 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) |
$ |
|
|
(5) |
$ |
|
|
December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity securities:(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
|
|
|
|
$ |
|
|
Fixed income securities:(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate debt instruments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government securities |
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
Common/collective trust funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents and other |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
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. Effective January 2020, changes in allowance for credit losses are included in other income. |
56
(3) |
Includes pending sales of securities of $ |
(4) |
The fair value of securities in an unrealized loss position was $ |
(5) |
|
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, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gains (losses) recognized during the period |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Less: Net gains recognized during the period on securities sold during the period |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unrealized gains (losses) recognized during the period on securities still held at September 30, 2020 and 2019(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, 2020 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, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sales |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Realized gains(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized losses(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes realized gains and losses recorded to the nuclear decommissioning trust regulatory liability. |
57
Equity Method Investments
Dominion Energy
Dominion Energy recorded equity earnings on its investments of less than $
Atlantic Coast Pipeline
In September 2014, Dominion Energy, along with Duke Energy and Southern, announced the formation of Atlantic Coast Pipeline for the purpose of constructing an approximately
In March 2020, Dominion Energy completed the acquisition from Southern of its
Atlantic Coast Pipeline continues to be reflected as an equity method investment as the power to direct the activities most significant to Atlantic Coast Pipeline is shared with Duke Energy. As a result, Dominion Energy has the ability to exercise significant influence, but not control, over the investee.
The Atlantic Coast Pipeline Project had been the subject of challenges in federal courts including, among others, challenges of the Atlantic Coast Pipeline Project’s biological opinion and incidental take statement, permits providing right of way crossings of certain federal lands, the Army Corps of Engineers 404 permit, the air permit for a compressor station at Buckingham, Virginia, and the FERC order approving the CPCN. Each of these challenges alleged non-compliance on the part of federal and state permitting authorities and adverse ecological consequences if the Atlantic Coast Pipeline Project was permitted to proceed. Since December 2018, notable developments in these challenges included a stay in December 2018 issued by the U.S. Court of Appeals for the Fourth Circuit and the same court’s July 2019 vacatur of the biological opinion and incidental take statement (which stay and subsequent vacatur halted most project construction activity), the U.S. Court of Appeals for the Fourth Circuit decisions vacating the permits to cross certain federal forests and the air permit for a compressor station at Buckingham, Virginia, the U.S. Court of Appeals for the Fourth Circuit’s remand to the Army Corps of Engineers of Atlantic Coast Pipeline’s Huntington District 404 verification and the U.S. Court of Appeals for the Fourth Circuit’s remand to the National Park Service of Atlantic Coast Pipeline’s Blue Ridge Parkway right-of-way. In June 2019, the Solicitor General of the U.S. and Atlantic Coast Pipeline filed petitions requesting that the Supreme Court of the U.S. hear the case regarding the Appalachian Trail crossing and in June 2020, the Supreme Court of the U.S. ruled in favor of the Atlantic Coast Pipeline, reversing the lower court’s decision and remanding the case back to the U.S. Court of Appeals for the Fourth Circuit.
The project also faced new and serious challenges from uncertainty related to NWP 12, specifically, from the decision of the U.S. District Court for the District of Montana in April 2020 vacating an NWP 12 issued by the Army Corps of Engineers, including among other things gas pipelines, followed by a U.S. Court of Appeals for the Ninth Circuit ruling in May 2020 denying a stay of that decision. In July 2020, the Supreme Court of the U.S. issued an order allowing other new oil and gas pipeline projects to use the NWP 12 process pending appeal to the U.S. Court of Appeals for the Ninth Circuit; however, that did not decrease the uncertainty associated with an eventual ruling. The Montana district court decision was viewed as likely to prompt similar challenges in other federal circuit courts related to permits issued under NWP 12, including for the Atlantic Coast Pipeline Project.
In July 2020, as a result of the continued permitting delays, growing legal uncertainties and the need to incur significant capital expenditures to maintain project timing before such uncertainties could be resolved, Dominion Energy and Duke Energy announced the cancellation of the Atlantic Coast Pipeline Project.
As a result of the determination of the probable abandonment of the Atlantic Coast Pipeline Project in June 2020, Dominion Energy recorded equity method earnings (losses) of $(
58
three and nine months ended September 30, 2020 and $
In October 2017, Dominion Energy entered into a guarantee agreement to support a portion of Atlantic Coast Pipeline’s obligation under a $
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 $
Blue Racer
In the first quarter of 2019, Dominion Energy received $
Fowler Ridge
In September 2020, Dominion Energy sold its
The $
Note 11. Property, Plant and Equipment
Acquisitions of 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, 2019.
59
The following table presents acquisitions by Virginia Power of solar projects. Virginia Power expects to claim federal investment tax credits on the projects.
Date Agreement Entered |
|
Date Agreement Closed |
|
Project Location |
|
Project Name |
|
Project Cost (millions)(1) |
|
|
Date of Commercial Operations |
|
MW Capacity |
|
||
|
|
|
|
Virginia |
|
Grasshopper |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
Virginia |
|
Belcher |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Virginia |
|
Pumpkinseed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
Date Agreement Entered |
|
Date Agreement Closed |
|
Project Location |
|
Project Name |
|
Project Cost (millions)(1) |
|
|
Date of Commercial Operations |
|
MW Capacity |
|
||
|
|
|
|
Virginia |
|
Myrtle |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
South Carolina |
|
Blackville |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South Carolina |
|
Denmark |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South Carolina |
|
Yemassee |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
South Carolina |
|
Trask |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ohio |
|
Hardin I |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Virginia |
|
Madison |
|
|
|
|
|
|
|
|
|
|
|
|
Expected 2022 |
|
Ohio |
|
Hardin II |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 in 2020 or 2021. Through October 2020, Dominion Energy anticipates a total projected cost of approximately $
Acquisition of Gathering and Processing Assets
In March 2020, Wexpro closed on an agreement with a natural gas gathering systems operator to purchase existing natural gas gathering systems including pipelines, compressors and dehydration equipment for total consideration of $
Non-Wholly-Owned Merchant Solar Facilities
In the third quarter of 2020, Dominion Energy performed a strategic review of its long-term intentions for its contracted merchant 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 $
60
Note 12. Regulatory Assets and Liabilities
Regulatory assets and liabilities include the following:
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
||
(millions) |
|
|
|
|
|
|
|
|
Dominion Energy |
|
|
|
|
|
|
|
|
Regulatory assets: |
|
|
|
|
|
|
|
|
Deferred cost of fuel used in electric generation(1) |
|
$ |
|
|
|
$ |
|
|
Deferred project costs and DSM programs for gas utilities(2) |
|
|
|
|
|
|
|
|
Unrecovered gas costs(3) |
|
|
|
|
|
|
|
|
Deferred rate adjustment clause costs for Virginia electric utility(4)(5) |
|
|
|
|
|
|
|
|
Deferred nuclear refueling outage costs(6) |
|
|
|
|
|
|
|
|
NND Project costs(7) |
|
|
|
|
|
|
|
|
PJM transmission rates(8) |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Regulatory assets-current |
|
|
|
|
|
|
|
|
Pension and other postretirement benefit costs(9) |
|
|
|
|
|
|
|
|
Deferred rate adjustment clause costs for Virginia electric utility(4)(5)(10)(11) |
|
|
|
|
|
|
|
|
PJM transmission rates(8) |
|
|
|
|
|
|
|
|
Deferred project costs for gas utilities(2) |
|
|
|
|
|
|
|
|
Interest rate hedges(12) |
|
|
|
|
|
|
|
|
AROs and related funding(13) |
|
|
|
|
|
|
|
|
Cost of reacquired debt(14) |
|
|
|
|
|
|
|
|
NND Project costs(7) |
|
|
|
|
|
|
|
|
Ash pond and landfill closure costs(15) |
|
|
|
|
|
|
|
|
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(16) |
|
|
|
|
|
|
|
|
Reserve for refunds and rate credits to electric utility customers(17) |
|
|
|
|
|
|
|
|
Cost-of-service impact of 2017 Tax Reform Act(18) |
|
|
|
|
|
|
|
|
Income taxes refundable through future rates(19) |
|
|
|
|
|
|
|
|
Monetization of guarantee settlement(20) |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Regulatory liabilities-current |
|
|
|
|
|
|
|
|
Income taxes refundable through future rates(19) |
|
|
|
|
|
|
|
|
Provision for future cost of removal and AROs(16) |
|
|
|
|
|
|
|
|
Nuclear decommissioning trust(21) |
|
|
|
|
|
|
|
|
Monetization of guarantee settlement(20) |
|
|
|
|
|
|
|
|
Reserve for refunds and rate credits to electric utility customers(17) |
|
|
|
|
|
|
|
|
Reserve for future credits to Virginia electric customers(22) |
|
|
|
|
|
|
— |
|
Overrecovered other postretirement benefit costs(23) |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Regulatory liabilities-noncurrent |
|
|
|
|
|
|
|
|
Total regulatory liabilities |
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
61
(5) |
|
(6) |
|
(7) |
|
(8) |
|
(9) |
|
(10) |
|
(11) |
|
(12) |
|
(13) |
|
(14)
(15) |
|
(16) |
|
(17) |
|
(18) |
|
(19) |
|
(20) |
|
(21) |
|
(22) |
|
(23) |
|
62
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
||
(millions) |
|
|
|
|
|
|
|
|
Virginia Power |
|
|
|
|
|
|
|
|
Regulatory assets: |
|
|
|
|
|
|
|
|
Deferred cost of fuel used in electric generation(1) |
|
$ |
|
|
|
$ |
|
|
Deferred rate adjustment clause costs(2)(3) |
|
|
|
|
|
|
|
|
Deferred nuclear refueling outage costs(4) |
|
|
|
|
|
|
|
|
PJM transmission rates(5) |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Regulatory assets-current |
|
|
|
|
|
|
|
|
Deferred rate adjustment clause costs(2)(3)(6)(7) |
|
|
|
|
|
|
|
|
PJM transmission rates(5) |
|
|
|
|
|
|
|
|
Interest rate hedges(8) |
|
|
|
|
|
|
|
|
Ash pond and landfill closure costs(9) |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Regulatory assets-noncurrent |
|
|
|
|
|
|
|
|
Total regulatory assets |
|
$ |
|
|
|
$ |
|
|
Regulatory liabilities: |
|
|
|
|
|
|
|
|
Deferred cost of fuel used in electric generation(1) |
|
$ |
|
|
|
$ |
|
|
Provision for future cost of removal(10) |
|
|
|
|
|
|
|
|
Income taxes refundable through future rates(11) |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Regulatory liabilities-current |
|
|
|
|
|
|
|
|
Income taxes refundable through future rates(11) |
|
|
|
|
|
|
|
|
Nuclear decommissioning trust(12) |
|
|
|
|
|
|
|
|
Provision for future cost of removal(10) |
|
|
|
|
|
|
|
|
Reserve for future credits to Virginia electric customers(13) |
|
|
|
|
|
|
— |
|
Deferred cost of fuel used in electric generation(1) |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Regulatory liabilities-noncurrent |
|
|
|
|
|
|
|
|
Total regulatory liabilities |
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
As a result of actions from the Virginia Commission in the first quarter of 2019 regarding the ratemaking treatment of excess deferred taxes from the adoption of the 2017 Tax Reform Act for all existing rate adjustment clauses, Virginia Power recorded a $ |
(4) |
Legislation enacted in Virginia in April 2014 requires Virginia Power to defer operation and maintenance costs incurred in connection with the refueling of any nuclear-powered generating plant. These deferred costs will be amortized over the refueling cycle, not to exceed |
(5) |
|
(6) |
During the first quarter of 2019, Virginia Power recorded a charge of $ |
(7) |
|
(8) |
|
(9) |
|
(10) |
|
63
(11) |
|
(12)
(13) Represents a reserve for benefits expected to be provided to retail electric customers in Virginia in connection with the quadrennial review of Virginia Power’s base rates scheduled to occur in 2021. During the third quarter of 2020, Virginia Power recorded a reserve of $
At September 30, 2020, 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.
FERC – Gas
DETI
In July 2017, FERC audit staff communicated to DETI that it had substantially completed an audit of DETI’s compliance with the accounting and reporting requirements of FERC’s Uniform System of Accounts and provided a description of matters and preliminary recommendations. In November 2017, the FERC audit staff issued its audit report which could have the potential to result in adjustments which could have been material to Dominion Energy’s results of operations. In December 2017, DETI provided its response to the audit report. DETI reached resolution of certain matters with FERC in the fourth quarter of 2018. In November 2020, Dominion Energy completed the sale of DETI as part of the GT&S Transaction.
2017 Tax Reform Act
Other than the items discussed below, which are pending or have been resolved during the period, there have been no changes to the 2017 Tax Reform Act matters discussed in Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019.
In March 2019, Questar Gas filed with the Utah and Wyoming Commissions as to the impact of excess deferred income taxes resulting from the 2017 Tax Reform Act. Questar Gas proposed to return the 2018 amortization of excess deferred income taxes to customers and to incorporate the remaining excess deferred income tax impact in its next general rate cases in each jurisdiction. In March 2020, the Utah Commission issued an order approving Questar Gas’ proposal to refund the January 2019 through February 2020 amortization of excess deferred income taxes over 12 months beginning in June 2020. In April 2020, at the request of the Wyoming Commission, this matter was considered in conjunction with the base rate case that was filed in November 2019. In June 2020, the Wyoming Commission approved a proposal to share the benefits of deferred income taxes for the period January 2018 through August 2020 with customers over a one-year period beginning in September 2020. In addition, new base rates that went into effect in September 2020 include the prospective impacts of sharing excess deferred income taxes with customers.
64
In October 2018, the Ohio Commission issued an order requiring rate-regulated utilities to file an application reflecting the impact of the 2017 Tax Reform Act on current rates by January 1, 2019. In December 2018, East Ohio filed its application proposing an approach to establishing rates and charges by and through which to return tax reform benefits to its customers. In December 2019, the Ohio Commission issued an order approving customer credits of approximately $
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, 2019.
Virginia Regulation
Virginia 2020 Legislation
In April 2020, the Governor of Virginia signed into law the VCEA, which along with related legislation forms a comprehensive framework affecting Virginia Power’s operations. The VCEA replaces Virginia’s voluntary renewable energy portfolio standard for Virginia Power with a mandatory program setting annual renewable energy portfolio standard requirements based on the percentage of total electric energy sold by Virginia Power, excluding existing nuclear generation and certain new carbon-free resources, reaching
|
- |
Fossil Fuel Electric Generation: The legislation mandates Chesterfield Power Station Units 5 & 6 and Yorktown Power Station Unit 3 to be retired by the end of 2024, Altavista, Southampton and Hopewell to be retired by the end of 2028 and Virginia Power’s remaining fossil fuel units to be retired by the end of 2045, unless the retirement of such generating units will compromise grid reliability or security. The legislation also imposes a temporary moratorium on CPCNs for fossil fuel generation, unless the resources are needed for grid reliability. In addition, the Virginia Commission shall determine the amortization period for recovery of any appropriate costs due to the early retirement of any electric generation facilities, which could result in the reversal of previous retirement costs deemed recovered during the review period ending 2020. As discussed in Note 2, Virginia Power had recorded charges for early retirement of certain coal- and -oil fired generating units in the first quarters of 2020 and 2019. Virginia Power also revised the depreciable lives of Altavista, Southampton and Hopewell for the mandated retirement to the end of 2028, which will not have a material impact to Virginia Power’s results of operations or cash flows given the existing regulatory framework. |
|
- |
Renewable Generation: The legislation provides a detailed renewable energy portfolio standard to achieve 100% zero-carbon generation by the end of 2045, excluding existing nuclear generation and certain new carbon-free resources. Components include requirements to petition the Virginia Commission for approval to construct or acquire new generating capacity to reach |
|
- |
Energy Efficiency: The legislation includes an energy efficiency target of |
65
|
are found to have caused Virginia Power to earn more than 50 basis points below a fair rate of return on its rates for generation and distribution services. |
|
- |
Carbon trading program: The legislation directs Virginia Power to participate in a market-based carbon trading program consistent with RGGI through 2050. All costs of the carbon trading program are recoverable through an environmental rider. |
|
- |
Low-income customers: The legislation includes the establishment of a percentage of income payment program to be administered by the Virginia Department of Housing and Community Development and the Virginia Department of Social Services. To fund the program, Virginia Power will remit amounts collected from customers under a universal service fee established and set by the Virginia Commission. As such, this program will not affect Virginia Power’s results of operations, financial position or cash flows. |
Virginia Power expects to incur significant costs, including capital expenditures, to comply with the legislative requirements discussed above. The legislation allows for cost recovery under the existing or modified regulatory framework through rate adjustment clauses, rates for generation and distribution services or Virginia Power’s fuel factor, as approved by the Virginia Commission. Costs allocated to the North Carolina jurisdiction will be recovered, subject to approval by the North Carolina Commission, in accordance with the existing regulatory framework.
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 $
Grid Transformation and Security Act of 2018
In July 2018, Virginia Power filed a petition with the Virginia Commission for approval of the first three years of its ten-year plan for electric distribution grid transformation projects as authorized by the GTSA. During the first three years of the plan, Virginia Power proposed to focus on the following seven foundational components of the overall grid transformation plan: (i) smart meters; (ii) customer information platform; (iii) reliability and resilience; (iv) telecommunications infrastructure; (v) cyber and physical security; (vi) predictive analytics; and (vii) emerging technology. The total estimated capital investment during 2019-2021 was $
In September 2019, Virginia Power filed a revised plan which includes six components: (i) smart meters; (ii) customer information platform; (iii) grid improvement projects; (iv) telecommunications infrastructure; (v) cyber security; and (vi) a smart charging electric vehicle infrastructure pilot program (Phase IB). For Phase IB, the total proposed capital investment during 2019 – 2021 was $
Solar Facility Projects
In July 2019, Virginia Power filed an application with the Virginia Commission for a CPCN to construct Sadler Solar, which is estimated to cost approximately $
66
20 year performance guarantee of the facility at a
Virginia Fuel Expenses
In February 2020, Virginia Power filed its annual fuel factor with the Virginia Commission to recover an estimated $
Rate Adjustment Clauses
Below is a discussion of significant riders associated with various Virginia Power projects:
|
• |
The Virginia Commission previously approved Rider T1 concerning transmission rates. In |
|
• |
The Virginia Commission previously approved Riders C1A, C2A and C3A in connection with cost recovery for DSM programs. In December 2019, Virginia Power filed a petition to approve an additional |
|
• |
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 $ |
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 US-3 |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
Rider BW |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Rider US-2 |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Rider E |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Rider B |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Rider GV |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider R |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider S |
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
Rider W |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider US-3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider US-4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider BW |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rider US-2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric Transmission Projects
67
In December 2019, Virginia Power filed an application with the Virginia Commission for a CPCN to construct a new Evergreen Mills switching station and add approximately one mile of overhead
Additional Virginia Power electric transmission projects applied for and/or approved are as follows:
Description and Location of Project |
|
Application Date |
|
Approval Date |
|
Type of Line |
|
Miles of Lines |
|
Cost Estimate (millions) |
|
|
Rebuild and operate five segments between the Loudoun and Ox substations |
|
|
|
|
|
|
|
|
|
$ |
|
|
Build new Lockridge substation and line loop in Loudoun County, Virginia |
|
|
|
|
|
|
|
<1 |
|
|
|
|
Rebuild and operate two lines in Chesterfield County, Virginia |
|
|
|
|
|
|
|
|
|
|
|
|
Bristers-Ladysmith Rebuild Project in the counties of Fauquier, Stafford, Spotsylvania, and Caroline, Virginia |
|
|
|
|
|
|
|
|
|
|
|
|
Relocate and replace a transmission line underground between the Tysons substation and the future Spring Hill substation |
|
|
|
|
|
|
|
<1 |
|
|
|
|
Rebuild and install new line in the Counties of New Kent, King William, King and Queen, Essex and Richmond, Virginia |
|
|
|
|
|
|
|
|
|
|
|
|
North Carolina Regulation
North Carolina Base Rate Case
In March 2019, Virginia Power filed its base rate case and schedules with the North Carolina Commission. Virginia Power proposed a non-fuel, base rate increase of $
North Carolina Fuel Filing
In August 2020, Virginia Power submitted its annual filing to the North Carolina Commission to adjust the fuel component of its electric rates. Virginia Power proposed a total $
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 February 2020, the North Carolina Commission approved PSNC’s request to increase the integrity management annual revenue requirement to $
68
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 $
DSM Programs
DESC has approval for a DSM rider through which it recovers expenditures related to its DSM programs. In
Cost of Fuel
In
Electric Transmission Projects
In 2020, DESC began several electric transmission projects in connection with two new nuclear plants under development by Southern. These transmission projects are required to be in place prior to these plants beginning operations to maintain reliability. DESC anticipates the projects to go into service in phases, costing approximately $
Natural Gas Rates
In June 2020, DESC filed with the South Carolina Commission its monitoring report for the 12-month period ended March 31, 2020 with a total revenue requirement of $
Ohio Regulation
PIR Program
In 2008, East Ohio began PIR, aimed at replacing approximately
West Virginia Regulation
West Virginia Base Rate Case
69
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
Rural Expansion Project
In December 2019, Questar Gas filed an application with the Utah Commission for a CPCN to construct natural gas infrastructure to extend service to Eureka, Utah. The project is expected to include
Wyoming Regulation
Wyoming Base Rate Case
In November 2019, Questar Gas filed its base rate case and schedules with the Wyoming Commission. Questar Gas proposed a non-fuel, base rate increase of $
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, 2019.
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 is providing equity and has obtained financing commitments from debt investors, totaling $
The lease term will commence once construction is substantially complete and the facility is able to be occupied and will end in December 2027. At the end of the initial lease term, Dominion Energy can (i) extend the term of the lease for an additional
70
subject to the approval of the participants, at current market terms, (ii) purchase the property for an amount equal to the project costs or, (iii) subject to certain terms and conditions, sell the property on behalf of the lessor to a third party using commercially reasonable efforts to obtain the highest cash purchase price for the property. If the project is sold and the proceeds from the sale are insufficient to repay the investors for the project costs, Dominion Energy may be required to make a payment to the lessor, up to
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, 2019.
Dominion Energy
At both September 30, 2020 and December 31, 2019, Dominion Energy’s securities due within one year included $
Virginia Power
Virginia Power had a long-term power and capacity contract with
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
At September 30, 2020, Dominion Energy’s commercial paper and letters of credit outstanding, as well as its capacity available under the credit facility, were as follows:
|
|
Facility Limit |
|
|
Outstanding Commercial Paper |
|
|
Outstanding Letters of Credit |
|
|
Facility Capacity Available |
|
||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joint revolving credit facility(1)(2) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
(1) |
|
(2) |
|
71
In addition to the credit facility mentioned above, Dominion Energy also has a credit facility which had an original stated maturity date of
In March 2020, Dominion Energy entered into a $
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, 2020, the sub-limits for DESC and Questar Gas were $
In January 2020, DESC and GENCO applied to FERC for a two-year short-term borrowing authorization. In March 2020, FERC granted DESC authority through
In addition to the credit facilities mentioned above, SBL Holdco has $
In March 2020, Dominion Energy borrowed $
In April 2020, Dominion Energy borrowed $
In November 2017, Dominion Energy filed a SEC shelf registration statement for the sale of up to $
Virginia Power
Virginia Power’s short-term financing is supported through its access as co-borrower to the joint revolving credit facility. This credit facility can be used for working capital, as support for the combined commercial paper programs of the borrowers under the credit facility and for other general corporate purposes.
At September 30, 2020, Virginia Power’s share of commercial paper and letters of credit outstanding under the joint revolving credit facility was as follows:
|
|
Facility Limit(1) |
|
|
Outstanding Commercial Paper |
|
|
Outstanding Letters of Credit |
|
|||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Joint revolving credit facility(1)(2) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
72
|
(1) |
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 within the facility limit but can be changed at the option of the borrowers under the credit facility multiple times per year. At September 30, 2020, the sub-limit for Virginia Power was $ |
|
(2) |
In October 2020, the joint revolving credit facility was amended to remove Dominion Energy Gas as a co-borrower. |
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 February 2020, Dominion Energy redeemed the remaining principal outstanding of $
In March 2020, Dominion Energy issued $
In March 2020, PSNC issued, through private placement, $
In April 2020, Dominion Energy issued $
In April 2020, Dominion Energy purchased and canceled $
In June 2020, East Ohio issued, through private placement, $
In June 2020, Virginia Power remarketed
In September 2020, Virginia Power remarketed
In September 2020, Dominion Energy issued $
Derivative Restructuring
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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 $
Noncontrolling Interest in Dominion Energy Midstream
In January 2019, Dominion Energy and Dominion Energy Midstream closed on an agreement and plan of merger pursuant to which Dominion Energy acquired each outstanding common unit representing limited partner interests in Dominion Energy Midstream not already owned by Dominion Energy through the issuance of
2019 Corporate Units
In June 2019, Dominion Energy issued $
Each 2019 Series A Corporate Unit consists of a stock purchase contract and a 1/10, or
The stock purchase contracts obligate the holders to purchase shares of Dominion Energy common stock in June 2022. The purchase price to be paid under the stock purchase contracts is $
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Dominion Energy pays cumulative dividends on the Series A Preferred Stock and quarterly contract adjustment payments on the stock purchase contracts, at the rates described below. Dominion Energy may elect to pay such dividends and/or payments in cash, shares of Dominion Energy common stock or a combination of cash and shares of Dominion Energy common stock. Dominion Energy may defer the contract adjustment payments for one or more consecutive periods but generally not beyond the purchase contract settlement date. If payments are deferred, Dominion Energy may not make any distributions related to its capital stock, including dividends, redemptions, repurchases or liquidation payments. Also, during the deferral period, Dominion Energy may not make any payments on or redeem, repay or repurchase any debt securities that are equal in right of payment with, or subordinated to, the contract adjustment payments or make any payment on any guarantee of a security of a subsidiary if the guarantee ranks equal or junior to the contract adjustment payments. Unless all accumulated and unpaid dividends on the Series A Preferred Stock have been declared and paid, Dominion Energy may not make any distributions on any of its capital stock ranking equal or junior to the Series A Preferred Stock as to dividends or upon liquidation, as applicable, including dividends, redemptions, repurchases or liquidation payments. In such circumstances, Dominion Energy also may not make any contract adjustment payments or other similar types of payments, subject to certain exceptions.
Dominion Energy has recorded the present value of the stock purchase contract payments as a liability offset to common stock. Stock purchase contract payments are recorded against this liability. Accretion of the stock purchase contract liability is recorded as imputed interest expense. In calculating diluted EPS, Dominion Energy applies the treasury stock method to the stock purchase contracts and the if-converted method to the Series A Preferred Stock. Under the terms of the stock purchase contracts, assuming no anti-dilution or other adjustments, the maximum number of shares of common stock Dominion Energy will issue in June 2022 is
Selected information about Dominion Energy’s 2019 Equity Units is presented below:
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6/14/2019 |
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Series B Preferred Stock
In December 2019, Dominion Energy issued
Dominion Energy may, at its option, redeem the Series B Preferred Stock in whole or in part on December 15, 2024 or on any subsequent fifth anniversary of such date at a price equal to $
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Holders of the Series B Preferred Stock have no voting rights except in the limited circumstances provided for in the terms of the Series B Preferred Stock or as otherwise required by applicable law. The Series B Preferred Stock is not subject to any sinking fund or other obligation of Dominion Energy’s to redeem, repurchase or retire the Series B Preferred Stock. The preferred stock contains no conversion rights.
Issuance of Common Stock
See Note 3 to the Consolidated Financial Statements for information on the issuance of Dominion Energy common stock in January 2019 in connection with the SCANA Combination. Also in January 2019, Dominion Energy acquired all outstanding partnership interests of Dominion Energy Midstream not owned by Dominion Energy through the issuance of common stock as noted above.
Dominion Energy maintains Dominion Energy Direct® and a number of employee savings plans through which contributions may be invested in Dominion Energy’s common stock. These shares may either be newly issued or purchased on the open market with proceeds contributed to these plans. In August 2020, Dominion Energy began purchasing its common stock on the open market for these direct stock purchase plans.
In September 2020, Dominion Energy issued
At-the-Market Program
In June 2017, Dominion Energy filed an SEC shelf registration statement for the sale of debt and equity securities including the ability to sell common stock through an at-the-market program as discussed in Note 20 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019. In March 2020, Dominion Energy entered into four separate sales agency agreements to effect sales under a new at-the-market program and pursuant to which it had the ability to offer from time to time up to $
Repurchase of Common Stock
In July 2020, the Board of Directors authorized the repurchase of up to $
In September 2020, Dominion Energy entered into
In September 2020, Dominion Energy repurchased
In November 2020, the Board of Directors authorized the repurchase of up to $
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privately negotiated transactions or otherwise at the discretion of management subject to prevailing market conditions, applicable securities laws and other factors.
Dividend Restrictions
At September 30, 2020, DESC’s retained earnings exceed the balance established by the Federal Power Act as a reserve on earnings attributable to hydroelectric generation plants. As a result, DESC is permitted to pay dividends without additional regulatory approval provided that such amounts would not bring the retained earnings balance below the threshold. There have been no other significant changes to dividend restrictions affecting the Companies described in Note 21, to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019.
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.
Air
CAA
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 address all 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.
MATS
In February 2019, the EPA published a proposed rule to reverse its previous finding that it is appropriate and necessary to regulate hazardous air pollutant emissions from coal- and oil-fired electric generating units. In May 2020, the EPA’s final rule became effective. The final rule is consistent with the EPA’s February 2019 proposal, and determines that it is not appropriate and necessary to regulate mercury and hazardous air pollutant emissions from coal- and oil-fired electric generating units. The final rule also states that the MATS rule remains in place and the emissions standards for affected coal- and oil-fired electric generating units will not change. The Companies are complying with the applicable requirements of the rule and do not expect any impacts to their operations.
Ozone Standards
The EPA published final non-attainment designations for the October 2015 ozone standard in June 2018. States have until August 2021 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.
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Oil and Gas NSPS
In August 2012, the EPA issued an NSPS impacting new and modified facilities in the natural gas production and gathering sectors and made revisions to the NSPS for natural gas processing and transmission facilities. These rules establish equipment performance specifications and emissions standards for control of VOC emissions for natural gas production wells, tanks, pneumatic controllers and compressors in the upstream sector. In June 2016, the EPA issued another NSPS regulation, for the oil and natural gas sector, to regulate methane and VOC emissions from new and modified facilities in transmission and storage, gathering and boosting, production and processing facilities. All projects which commenced construction after September 2015 are required to comply with this regulation. In October 2018, the EPA published a proposed rule reconsidering and amending portions of the 2016 rule, including but not limited to, the fugitive emissions requirements at well sites and compressor stations. The amended portions of the 2016 rule were effective immediately upon publication. In August 2020, the EPA issued two final amendments related to the reconsideration of the NSPS for the oil and natural gas sector applicable to VOC and methane emissions. Together, the two amendments have the effect of rescinding both the methane portion of the NSPS for all segments of the oil and natural gas sector, rescinding all NSPS for the transmission and storage segment, and modifying some of the NSPS VOC requirements for facilities in the production and processing segments. The two amendments have been challenged in the U.S. Court of Appeals for the D.C. Circuit but remain in effect pending the outcome of the litigation. Dominion Energy is still evaluating whether potential impacts on results of operations, financial condition and/or cash flows related to this matter will be material.
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 applies to existing coal-fired power plants. The final rule includes unit-specific performance standards based on the degree of emission reduction levels achievable from unit efficiency improvements to be determined by the permitting agency. The ACE Rule requires states to develop plans by July 2022, to implement these performance standards. These state plans must be approved by the EPA by January 2024. While the impacts of this rule could be material to the Companies’ results of operations, financial condition and/or cash flows, the existing regulatory frameworks in South Carolina and Virginia provide rate recovery mechanisms that could substantially mitigate any such impacts for the regulated electric utilities.
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 to set a significant emissions rate at
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 the best operating practices.
State Regulations
In May 2019, VDEQ issued a final rule establishing a state carbon regulation program with a
The legislation discussed above is considered related legislation to the VCEA as discussed in Note 13. The VCEA institutes a mandatory renewable portfolio standard, enhances renewable generation and energy storage development, requires the retirement of certain generation facilities, establishes energy efficiency targets, expands net metering and directs Virginia’s participation in a market-based carbon trading program through 2050.
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.
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Regulation 316(b)
In October 2014, the final regulations under Section 316(b) of the CWA that govern existing facilities and new units at existing facilities that employ a cooling water intake structure and that have flow levels exceeding a minimum threshold became effective. The rule establishes a national standard for impingement based on seven compliance options, but forgoes the creation of a single technology standard for entrainment. Instead, the EPA has delegated entrainment technology decisions to state regulators. State regulators are to make case-by-case entrainment technology determinations after an examination of
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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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, 2020 and December 31, 2019 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). In September 2018, the court certified this case as a class action. The plaintiffs allege, 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. The plaintiffs sought a declaratory judgment that DESC may not charge its customers for any past or continuing costs of the NND Project, sought to have SCANA and DESC’s assets frozen and all monies recovered from Toshiba Corporation and other sources be placed in a constructive trust for the benefit of ratepayers and sought specific performance of the alleged implied contract to construct the NND Project.
In December 2018, the State Court of Common Pleas in Hampton County entered an order granting preliminary approval of a class action settlement and a stay of pre-trial proceedings in the DESC Ratepayer Case. The settlement agreement, contingent upon the closing of the SCANA Combination, provided that SCANA and DESC would establish an escrow account and proceeds from the escrow account would be distributed to the class members, 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 are substantially similar to those in the DESC Ratepayer Case. The plaintiffs seek a declaratory judgment that the defendants may not charge the purported class for reimbursement for past or future costs of the NND Project. In March 2018, the plaintiffs filed an amended complaint including as additional named defendants, including certain then current and former directors of Santee Cooper and SCANA. In June 2018, Santee Cooper filed a Notice of Petition for Original Jurisdiction with the Supreme Court of South Carolina. In December 2018, Santee Cooper filed its answer to the plaintiffs' fourth amended complaint and filed cross claims against DESC, which was denied. In October 2019, Santee Cooper voluntarily consented to stay its cross claims against DESC pending the outcome of the trial of the underlying case. In November 2019, DESC removed the case to the U.S. District Court for the District of South Carolina. In December 2019, the plaintiffs and
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Santee Cooper filed a motion to remand the case to state court. In January 2020, the case was remanded to state court. 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 provides that Dominion Energy and Santee Cooper will establish a fund for the benefit of class members in the amount of $
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 are 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 alleges, 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. The DESC Ratepayer Class Action settlement described previously contemplates dismissal of claims by DESC ratepayers in this case against DESC, SCANA and their officers. In August 2019, the individual defendants filed motions to dismiss. 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 allege, 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 June 2018, the defendants filed motions to dismiss. In March 2019, the U.S. District Court for the District of South Carolina granted in part and denied in part the defendants’ motions to dismiss. In December 2019, the parties executed a settlement agreement pursuant to which SCANA will 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. 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. This case is pending.
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
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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, Dominion Energy removed the case to the U.S. District Court for the District of South Carolina, and filed a Motion to Dismiss in March 2018. In June 2018, the case was remanded back to the State Court of Common Pleas in Lexington County. Dominion Energy appealed the decision to remand to the U.S. Court of Appeals for the Fourth Circuit, where the appeal was consolidated with a similar appeal in the Metzler Lawsuit discussed below. In June 2019, the U.S. Court of Appeals for the Fourth Circuit reversed the order remanding the case to state court.
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 February 2018, Dominion Energy removed the case to the U.S. District Court for the District of South Carolina, and filed a Motion to Dismiss in March 2018. In August 2018, the case was remanded back to the State Court of Common Pleas in Richland County. Dominion Energy appealed the decision to remand to the U.S. Court of Appeals for the Fourth Circuit, where the appeal was consolidated with the City of Warren Lawsuit. In June 2019, the U.S. Court of Appeals for the Fourth Circuit reversed the order remanding the case to state court.
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. 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 September 2020, SCANA filed a notice of appeal with the U.S. Court of Appeals for the Fourth Circuit. This case is pending.
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 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. This case is pending.
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 $
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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. These cases are 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. This case is pending.
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. The Staff of the SEC’s Division of Enforcement has not yet presented the proposed settlement to the SEC. The agreement in principle would, among other things, require 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. These matters are pending.
Other Litigation
In December 2018, arbitration proceedings commenced between DESC and Cameco Corporation related to a supply agreement signed in May 2008. This agreement provides the terms and conditions under which DESC agreed to purchase uranium hexafluoride from Cameco Corporation over a period from 2010 to 2020. Cameco Corporation alleges that DESC violated this agreement by failing to purchase the stated quantities of uranium hexafluoride for the 2017 and 2018 delivery years. DESC denies that it is in breach of the agreement and believes that it has reduced its purchase quantity within the terms of the agreement. This matter is pending.
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
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established budgets and construction schedules was affected by many variables, including unanticipated difficulties encountered in connection with project engineering and the construction of project components, constrained financial resources of the contractors, regulatory, legal, training and construction processes associated with securing approvals, permits and licenses and necessary amendments to them within projected time frames, the availability of labor and materials at estimated costs and the efficiency of project labor. There were also contractor and supplier performance issues, difficulties in timely meeting critical regulatory requirements, contract disputes, and changes in key contractors or subcontractors. These matters preceded the filing for bankruptcy protection by Westinghouse and WECTEC in March 2017, and were the subject of comprehensive analyses performed by SCANA and Santee Cooper.
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 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.
Nuclear Matters
In March 2011, a magnitude 9.0 earthquake and subsequent tsunami caused significant damage at the Fukushima Daiichi nuclear power station in northeast Japan. These events resulted in significant nuclear safety reviews by the NRC and industry groups such as the Institute of Nuclear Power Operations. Like other U.S. nuclear operators, Dominion Energy has gathered supporting data and participated in industry initiatives focused on the ability to respond to and mitigate the consequences of, design-basis and beyond-design-basis events at its stations.
In July 2011, an NRC task force provided initial recommendations based on its review of the Fukushima Daiichi accident and in October 2011 the NRC staff prioritized these recommendations into Tiers 1, 2 and 3. Tier 1 recommendations consisted of actions which the NRC staff determined should be started without unnecessary delay. Tier 2 and 3 items consisted of items which could not be
84
initiated in the near term because of resource restraints, the need for further technical assessment, or were dependent on activities related to the higher priority Tier 1 issues. In December 2011, the NRC Commissioners approved the agency staff’s prioritization and recommendations, and that same month an appropriations act directed the NRC to require reevaluation of external hazards (not limited to seismic and flooding hazards) as soon as possible.
Based on the prioritized recommendations, in March 2012, the NRC issued orders and information requests requiring specific reviews and actions to all operating reactor licensees, construction permit holders and combined license holders based on the lessons learned from the Fukushima Daiichi event. The orders applicable to Dominion Energy requiring implementation of safety enhancements related to mitigation strategies for responding to extreme natural events resulting in the loss of power at plants, and enhancing spent fuel pool instrumentation have been implemented. The information requests issued by the NRC requested each reactor licensee to reevaluate the seismic and external flooding hazards at their facility using present-day methods and information, conduct walkdowns of their facility to ensure protection against these hazards in their current design basis, and to reevaluate their emergency communications systems and staffing levels. The walkdowns of each unit have been completed, audited by the NRC and found to be adequate. Reevaluation of the emergency communications systems and staffing levels was completed as part of the effort to comply with the orders. Reevaluation of the seismic hazards is complete and final with NRC acceptance received for all Dominion Energy facilities. Reevaluation of the external flooding hazards is complete for all Dominion Energy facilities. The NRC approved the external flooding hazards for Surry in May 2020 and Millstone in August 2020. The Companies do not currently expect that compliance with the NRC’s information requests will materially impact their financial position, results of operations or cash flows during the implementation period. The NRC staff has resolved the Tier 2 and Tier 3 recommendations and no additional future actions on the part of Dominion Energy are anticipated with respect to these recommendations. Therefore, the Companies do not expect material financial impacts related to compliance with Tier 2 and Tier 3 recommendations.
Nuclear Operations
Nuclear Insurance
During the second quarter of 2020, the total liability protection per nuclear incident available to all participants in the Secondary Financial Protection Program decreased 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, 2019, 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
Dominion Energy’s guarantee agreement to support a portion of Atlantic Coast Pipeline’s obligation under a revolving credit facility is described in Note 10. In addition, at September 30, 2020, Dominion Energy had issued an additional $
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.
85
At September 30, 2020, Dominion Energy had issued the following subsidiary guarantees:
|
|
Maximum Exposure |
|
|
(millions) |
|
|
|
|
Commodity transactions(1) |
|
$ |
|
|
Nuclear obligations(2) |
|
|
|
|
Cove Point(3) |
|
|
|
|
Solar(4) |
|
|
|
|
Other(5) |
|
|
|
|
Total(6) |
|
$ |
|
|
(1) |
|
(2) |
|
(3) |
|
(4) |
|
(5) |
|
(6) |
|
Additionally, at September 30, 2020, 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, 2019
At September 30, 2020, Dominion Energy’s gross credit exposure related to energy marketing and price risk management activities totaled $
Credit-Related Contingent Provisions
The majority 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, 2020 and December 31, 2019, Dominion Energy would have been required to post $
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, 2020 and December 31, 2019, Virginia Power would have been required to post an additional $
86
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, 2020, 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, 2019. In August 2020, Virginia Power made a payment to Dominion Energy for $
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 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, |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
(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
87
Note 20. Employee Benefit Plans
Dominion Energy
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 |
|
||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
(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 and curtailments(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost (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 and curtailments(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic benefit cost (credit) |
|
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
(1)
In October 2020, Dominion Energy reached an agreement with a collective bargaining unit to merge a portion of a pension plan sponsored by Dominion Energy into the Dominion Energy Pension Plan. As a condition to this agreement, Dominion Energy will provide certain benefits to the retirees represented by the collective bargaining unit and expects to record a charge of $
Voluntary Retirement Program
In March 2019, the Companies announced a voluntary retirement program to employees that meet certain age and service requirements. In the second quarter of 2019, upon the determinations made concerning the number of employees that elected to participate in the program, Dominion Energy recorded a charge of $
Pension Remeasurement
In the third quarter of 2020, Dominion Energy remeasured certain pension plans due to a curtailment resulting from entering an agreement to sell substantially all of its gas transmission and storage operations to BHE. The remeasurement resulted in an increase in the pension benefit obligation of $
88
Employer Contributions
During the nine months ended September 30, 2020, Dominion Energy made
Note 21. Operating Segments
The Companies are organized primarily on the basis of products and services sold in the U.S.
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 |
|
Merchant electric generation fleet |
|
X |
|
|
|
|
Noncontrolling interest in Cove Point |
|
X |
|
|
(1) |
Includes Virginia Power’s nonjurisdictional generation operations. |
(2) Includes 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 held in discontinued operations, which are discussed in Note 3.
In the nine months ended September 30, 2020, Dominion Energy reported after-tax net expenses of $
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 $ |
89
The net expense for specific items attributable to Dominion Energy’s operating segments in 2019 primarily related to the impact of the following items:
• |
A $ |
• |
$ |
|
• |
Dominion Energy Virginia ($ |
|
• |
Gas Distribution ($ |
|
• |
Dominion Energy South Carolina ($ |
|
• |
Contracted Assets ($ |
• |
A $ |
• |
$ |
• |
A $ |
• |
A $ |
• |
A $ |
• |
A $ |
• |
A $ |
|
• |
Contracted Assets ($ |
|
• |
Dominion Energy Virginia ($ |
• |
A $ |
90
In September 2020, Dominion Energy updated its segments. The historical information presented herein has been recast to reflect the current segment presentation. 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, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue from external customers |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Net income (loss) from discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
Net income (loss) attributable to Dominion Energy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
Three Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue from external customers |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Net income from discontinued operations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
Net income 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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Nine Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue from external customers |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
Intersegment revenue |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Total operating revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
Net income 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. As discussed in Note 1 in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019, in December 2019, Virginia Power realigned its segments which resulted in the formation of one primary operating segment. The information for the nine months ended September 30, 2019 presented herein has been recast to reflect the current segment presentation.
In the nine months ended September 30, 2020, Virginia Power reported after-tax net expenses of $
The net expense for specific items attributable to Virginia Power’s operating segment in 2020 primarily related to a $
91
million after-tax) charge for the expected customer credit reinvestment offset to be provided to Virginia retail electric utility customers under the GTSA.
The net expenses for specific items in 2019 primarily related to the impact of the following items:
• |
A $ |
• |
A $ |
• |
A $ |
• |
A $ |
• |
A $ |
• |
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, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income (loss) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Three Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income (loss) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Nine Months Ended September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Net income (loss) |
|
|
|
|
|
|
( |
) |
|
|
|
|
Nine Months Ended September 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
Net income (loss) |
|
|
|
|
|
|
( |
) |
|
|
|
|
92
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; |
• |
Federal, state and local legislative and regulatory developments, including changes in 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; |
• |
Changes in future levels of domestic and international natural gas production, supply or consumption; |
93
• |
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; |
• |
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 merchant 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 completion of the Q-Pipe Transaction, 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; |
• |
Fluctuations in interest rates; |
• |
Changes in rating agency requirements or credit ratings and their effect on availability and cost of capital; |
• |
Global capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms; |
94
• |
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, 2019 and Part II. Item 1A. Risk Factors in the Companies’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
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, 2020, 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, 2019. The policies disclosed included the accounting for regulated operations, AROs, income taxes, derivative contracts and financial instruments at fair value, impairment testing of goodwill, long-lived assets and equity method investments and employee benefit plans.
Dominion Energy
Results of Operations
Presented below is a summary of Dominion Energy’s consolidated results:
|
|
2020 |
|
|
2019 |
|
|
$ Change |
|
|||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Dominion Energy |
|
$ |
356 |
|
|
$ |
975 |
|
|
$ |
(619 |
) |
Diluted EPS |
|
|
0.41 |
|
|
|
1.17 |
|
|
|
(0.76 |
) |
Year-To-Date |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Dominion Energy |
|
$ |
(1,083 |
) |
|
$ |
349 |
|
|
$ |
(1,432 |
) |
Diluted EPS |
|
|
(1.38 |
) |
|
|
0.42 |
|
|
|
(1.80 |
) |
Overview
Third Quarter 2020 vs. 2019
Net income attributable to Dominion Energy decreased 63%, primarily due to an impairment charge associated with interests in certain merchant solar generation facilities, a contract termination charge in connection with the sale of Fowler Ridge and a charge for benefits expected to be provided to retail electric customers in Virginia through the use of a customer credit reinvestment offset in accordance with the GTSA. These decreases were partially offset by an increase in net investment earnings on nuclear decommissioning trust funds.
Year-To-Date 2020 vs. 2019
Net income attributable to Dominion Energy decreased $1.4 billion, primarily due to charges presented in discontinued operations associated with the cancellation of the Atlantic Coast Pipeline Project and related portions of the Supply Header Project, a decrease in net investment earnings on nuclear decommissioning trust funds, an increase in charges associated with the planned early retirements of certain electric generation facilities in Virginia, an impairment charge associated with interests in certain merchant solar generation facilities, a contract termination charge in connection with the sale of Fowler Ridge and a charge for benefits expected to be provided to retail electric customers in Virginia through the use of a customer credit reinvestment offset in accordance with the GTSA. These increases in net loss were partially offset by the absence of charges for refunds of amounts previously collected from retail electric customers of DESC for the NND Project and for certain regulatory assets and property, plant and equipment acquired in the SCANA Combination for which Dominion Energy committed to forgo recovery, the planned early retirement of certain Virginia Power automated meter reading infrastructure and a voluntary retirement program and a decrease in charges associated with litigation acquired in the SCANA Combination.
95
Analysis of Consolidated Operations
Presented below are selected amounts related to Dominion Energy’s results of operations:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2020 |
|
|
2019 |
|
|
$ Change |
|
|
2020 |
|
|
2019 |
|
|
$ Change |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
3,607 |
|
|
$ |
3,782 |
|
|
$ |
(175 |
) |
|
$ |
10,651 |
|
|
$ |
10,506 |
|
|
$ |
145 |
|
Electric fuel and other energy-related purchases |
|
|
594 |
|
|
|
769 |
|
|
|
(175 |
) |
|
|
1,758 |
|
|
|
2,250 |
|
|
|
(492 |
) |
Purchased electric capacity |
|
|
23 |
|
|
|
11 |
|
|
|
12 |
|
|
|
36 |
|
|
|
74 |
|
|
|
(38 |
) |
Purchased gas |
|
|
37 |
|
|
|
158 |
|
|
|
(121 |
) |
|
|
561 |
|
|
|
1,120 |
|
|
|
(559 |
) |
Net revenue |
|
|
2,953 |
|
|
|
2,844 |
|
|
|
109 |
|
|
|
8,296 |
|
|
|
7,062 |
|
|
|
1,234 |
|
Other operations and maintenance |
|
|
977 |
|
|
|
867 |
|
|
|
110 |
|
|
|
2,720 |
|
|
|
2,824 |
|
|
|
(104 |
) |
Depreciation, depletion and amortization |
|
|
595 |
|
|
|
586 |
|
|
|
9 |
|
|
|
1,751 |
|
|
|
1,713 |
|
|
|
38 |
|
Other taxes |
|
|
203 |
|
|
|
202 |
|
|
|
1 |
|
|
|
663 |
|
|
|
698 |
|
|
|
(35 |
) |
Impairment of assets and other charges |
|
|
1,151 |
|
|
|
85 |
|
|
|
1,066 |
|
|
|
1,963 |
|
|
|
1,219 |
|
|
|
744 |
|
Other income |
|
|
281 |
|
|
|
129 |
|
|
|
152 |
|
|
|
327 |
|
|
|
526 |
|
|
|
(199 |
) |
Interest and related charges |
|
|
306 |
|
|
|
370 |
|
|
|
(64 |
) |
|
|
1,136 |
|
|
|
1,133 |
|
|
|
3 |
|
Income tax expense (benefit) |
|
|
(110 |
) |
|
|
(84 |
) |
|
|
(26 |
) |
|
|
(123 |
) |
|
|
161 |
|
|
|
(284 |
) |
Net income (loss) from discontinued operations including noncontrolling interests |
|
|
19 |
|
|
|
38 |
|
|
|
(19 |
) |
|
|
(1,753 |
) |
|
|
526 |
|
|
|
(2,279 |
) |
Noncontrolling interests |
|
|
(225 |
) |
|
|
10 |
|
|
|
(235 |
) |
|
|
(157 |
) |
|
|
17 |
|
|
|
(174 |
) |
An analysis of Dominion Energy’s results of operations follows:
Third Quarter 2020 vs. 2019
Net revenue increased 4%, primarily due to an increase from Virginia Power rate adjustment clauses ($133 million), partially offset by a decrease in sales to electric utility retail customers from a decrease in cooling degree days during the cooling season ($16 million) and a decrease as a result of the contribution of SEMI to Wrangler ($15 million).
Other operations and maintenance increased 13%, primarily due to an increase in certain Virginia Power expenditures, which are primarily recovered through state and FERC rates and do not impact net income ($65 million) and an increase in salaries, wages and benefits ($19 million).
Depreciation, depletion and amortization increased 2%, primarily due to various projects being placed into service ($34 million), partially offset by the absence of depreciation from certain electric generation facilities that have been committed to be retired early ($17 million).
Impairment of assets and other charges increased $1.1 billion, primarily due to a charge associated with certain merchant solar generation facilities ($665 million), a contract termination charge in connection with the sale of Fowler Ridge ($221 million), a charge for benefits expected to be provided to retail electric customers in Virginia through the use of a customer credit reinvestment offset in accordance with the GTSA ($200 million), partially offset by the absence of charges related to the abandonment of certain property, plant and equipment ($26 million) and disallowance of Virginia Power state-regulated plant ($21 million).
Other income increased $152 million, primarily due to an increase in net investment earnings on nuclear decommissioning trust funds ($163 million), partially offset by an increase in social justice commitments ($35 million).
Interest and related charges decreased 17%, primarily reflecting a decrease for unrealized gains associated with freestanding derivatives ($56 million), lower interest expense from early redemptions of certain securities in 2019 and 2020 ($11 million) and a reduction in commercial paper borrowings ($11 million), partially offset by increased borrowings in response to COVID-19 ($18 million).
Income tax expense decreased 31%, primarily due to a reduction in consolidated state deferred income taxes associated with gas transmission and storage operations ($45 million), an adjustment to finalize the effects of changes in tax status of certain subsidiaries in connection with the Dominion Energy Gas Restructuring ($24 million), partially offset by income tax expense primarily associated with the impairment of merchant solar generating assets held in partnerships attributable to the noncontrolling interest ($55 million).
96
Noncontrolling interests decreased $235 million, primarily due to impairments associated with certain merchant solar generation facilities ($267 million), partially offset by the sale of a 25% noncontrolling limited partnership interest in Cove Point to Brookfield in December 2019 ($32 million).
Year-To-Date 2020 vs. 2019
Net revenue increased 17%, primarily reflecting:
• |
The absence of a $1.0 billion charge for refunds of amounts previously collected from retail electric customers of DESC for the NND Project; |
• |
A $359 million increase from Virginia Power rate adjustment clauses; and |
• |
A $38 million decrease in Virginia Power electric capacity expense related to the annual PJM capacity performance market effective June 2019 ($51 million) and a contract termination with a non-utility generator ($13 million) partially offset by the expiration of various contracts ($18 million) and an increase in expense related to the annual PJM capacity performance market effective June 2020 ($8 million). |
These increases were partially offset by:
• |
A $99 million decrease in sales to electric utility retail customers from a decrease in cooling degree days during the cooling season ($76 million) and a net decrease in heating degree days during the heating season ($23 million); |
• |
A $60 million decrease due to unfavorable pricing at Millstone, including the effects of the Millstone 2019 power purchase agreements; |
• |
A $57 million decrease in sales to electric utility retail customers associated with usage factors impacted by COVID-19; and |
• |
A $37 million decrease as a result of the contribution of SEMI to Wrangler. |
Other operations and maintenance decreased 4%, primarily reflecting:
• |
A decrease in merger and integration-related costs associated with the SCANA Combination ($350 million), including the absence of a charge related to a voluntary retirement program ($251 million); |
• |
A $50 million decrease in salaries, wages and benefits; and |
• |
A $29 million decrease in outage costs; partially offset by |
• |
A $120 million increase in certain Virginia Power expenditures, which are primarily recovered through state and FERC rates and do not impact net income; |
• |
The absence of a benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019 ($113 million); and |
• |
A $30 million increase in allowance for credit risk on customer accounts related to the effects of COVID-19. |
Depreciation, depletion and amortization increased 2%, primarily due to various projects being placed into service ($93 million) partially offset by the absence of depreciation from certain electric generation facilities that were, or have been committed to be retired early ($42 million) and a decrease reflecting the expected approval of the nuclear plant life extensions from the NRC ($24 million).
Impairment of assets and other charges increased 61%, primarily due to:
• |
A $665 million charge associated with certain merchant solar generation facilities; |
• |
An increase in charges associated with the planned early retirements of certain electric generation facilities in Virginia ($379 million); |
• |
A $221 million contract termination charge in connection with the sale of Fowler Ridge; |
• |
A $200 million charge for benefits expected to be provided to retail electric customers in Virginia through the use of a customer credit reinvestment offset in accordance with the GTSA; and |
• |
An increase in dismantling costs associated with certain Virginia Power electric generation facilities ($30 million); partially offset by |
• |
A decrease in charges associated with litigation acquired in the SCANA Combination ($272 million); |
97
• |
The absence of a $160 million charge related to Virginia Power’s planned early retirement of certain automated meter reading infrastructure; |
• |
The absence of a $135 million charge related to Virginia Power’s contract termination with a non-utility generator; |
• |
A decrease in charges for property, plant and equipment acquired in the SCANA Combination for which Dominion Energy committed to forgo recovery ($103 million); |
• |
The absence of a $62 million charge related to the abandonment of a project at a Virginia Power electric generating facility; and |
• |
The absence of a $26 million charge for the abandonment of certain property, plant and equipment. |
Other income decreased 38%, primarily reflecting a decrease in net investment earnings on nuclear decommissioning trust funds ($320 million), an increase in social justice commitments ($40 million) and charges associated with litigation acquired in the SCANA Combination ($25 million), partially offset by the absence of a charge related to a voluntary retirement program ($111 million) and an increase in non-service components of pension and other postretirement employee benefit plan credits ($24 million).
Interest and related charges remained substantially unchanged, primarily reflecting increased borrowings in response to COVID-19 ($42 million), charges associated with the early redemption of certain securities in the first quarter of 2020 ($25 million) and increases for unrealized losses associated with freestanding derivatives ($21 million), substantially offset by interest expense from early redemptions of certain securities in 2019 and 2020 ($37 million), reductions in commercial paper borrowings ($26 million) and increases in AFUDC from increased construction projects ($22 million).
Income tax expense decreased $284 million, primarily due to a reduction in consolidated state deferred income taxes associated with gas transmission and storage operations ($45 million), an adjustment to finalize the effects of changes in tax status of certain subsidiaries in connection with the Dominion Energy Gas Restructuring ($24 million) and the absence of a charge for certain income tax-related regulatory assets acquired in the SCANA Combination for which Dominion Energy committed to forgo recovery ($198 million) partially offset by income tax expense primarily associated with the impairment of merchant solar generating assets held in partnerships attributable to the noncontrolling interest ($55 million).
Net income from discontinued operations including noncontrolling interests decreased $2.3 billion, primarily due to charges associated with the cancellation of the Atlantic Coast Pipeline Project and related portions of the Supply Header Project.
Noncontrolling interests decreased $174 million, primarily due to impairments associated with certain merchant solar generation facilities ($267 million), partially offset by the sale of a 25% noncontrolling limited partnership interest in Cove Point to Brookfield in December 2019 ($97 million).
98
Segment Results of Operations
Segment results include the impact of intersegment revenues and expenses, which may result in intersegment profit and loss. In September 2020, Dominion Energy updated its operating segments following the July 2020 agreement to sell its gas transmission and storage operations to BHE. The historical information presented herein has been recast to reflect the current segment presentation. 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 |
|
||||||||||||||||||
|
|
2020 |
|
|
2019 |
|
|
$ Change |
|
|
2020 |
|
|
2019 |
|
|
$ Change |
|
||||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy Virginia |
|
$ |
613 |
|
|
$ |
629 |
|
|
$ |
(16 |
) |
|
$ |
0.74 |
|
|
$ |
0.77 |
|
|
$ |
(0.03 |
) |
Gas Distribution |
|
|
64 |
|
|
|
43 |
|
|
|
21 |
|
|
|
0.08 |
|
|
|
0.05 |
|
|
|
0.03 |
|
Dominion Energy South Carolina |
|
|
157 |
|
|
|
166 |
|
|
|
(9 |
) |
|
|
0.19 |
|
|
|
0.20 |
|
|
|
(0.01 |
) |
Contracted Assets |
|
|
112 |
|
|
|
86 |
|
|
|
26 |
|
|
|
0.13 |
|
|
|
0.11 |
|
|
|
0.02 |
|
Corporate and Other |
|
|
(590 |
) |
|
|
51 |
|
|
|
(641 |
) |
|
|
(0.73 |
) |
|
|
0.04 |
|
|
|
(0.77 |
) |
Consolidated |
|
$ |
356 |
|
|
$ |
975 |
|
|
$ |
(619 |
) |
|
$ |
0.41 |
|
|
$ |
1.17 |
|
|
$ |
(0.76 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-To-Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dominion Energy Virginia |
|
$ |
1,479 |
|
|
$ |
1,383 |
|
|
$ |
96 |
|
|
$ |
1.77 |
|
|
$ |
1.72 |
|
|
$ |
0.05 |
|
Gas Distribution |
|
|
375 |
|
|
|
314 |
|
|
|
61 |
|
|
|
0.45 |
|
|
|
0.39 |
|
|
|
0.06 |
|
Dominion Energy South Carolina |
|
|
326 |
|
|
|
332 |
|
|
|
(6 |
) |
|
|
0.39 |
|
|
|
0.41 |
|
|
|
(0.02 |
) |
Contracted Assets |
|
|
295 |
|
|
|
296 |
|
|
|
(1 |
) |
|
|
0.35 |
|
|
|
0.37 |
|
|
|
(0.02 |
) |
Corporate and Other |
|
|
(3,558 |
) |
|
|
(1,976 |
) |
|
|
(1,582 |
) |
|
|
(4.34 |
) |
|
|
(2.47 |
) |
|
|
(1.87 |
) |
Consolidated |
|
$ |
(1,083 |
) |
|
$ |
349 |
|
|
$ |
(1,432 |
) |
|
$ |
(1.38 |
) |
|
$ |
0.42 |
|
|
$ |
(1.80 |
) |
Dominion Energy Virginia
Presented below are selected operating statistics related to Dominion Energy Virginia’s operations:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2020 |
|
|
2019 |
|
|
% Change |
|
|
2020 |
|
|
2019 |
|
|
% Change |
|
||||||
Electricity delivered (million MWh) |
|
|
23.8 |
|
|
|
24.4 |
|
|
|
(2 |
)% |
|
|
63.3 |
|
|
|
66.8 |
|
|
|
(5 |
)% |
Electricity supplied (million MWh): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility |
|
|
24.4 |
|
|
|
24.5 |
|
|
— |
|
|
|
66.9 |
|
|
|
67.3 |
|
|
|
(1 |
) |
|
Degree days (electric distribution and utility service area): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cooling |
|
|
1,256 |
|
|
|
1,299 |
|
|
|
(3 |
) |
|
|
1,708 |
|
|
|
1,948 |
|
|
|
(12 |
) |
Heating |
|
|
19 |
|
|
|
— |
|
|
|
100 |
|
|
|
1,908 |
|
|
|
2,042 |
|
|
|
(7 |
) |
Average electric distribution customer accounts (thousands) |
|
|
2,667 |
|
|
|
2,629 |
|
|
|
1 |
|
|
|
2,657 |
|
|
|
2,623 |
|
|
|
1 |
|
99
Presented below, on an after-tax basis, are the key factors impacting Dominion Energy Virginia’s net income contribution:
|
|
Third Quarter 2020 vs. 2019 Increase (Decrease) |
|
|
Year-To-Date 2020 vs. 2019 Increase (Decrease) |
|
||||||||||
|
|
Amount |
|
|
EPS |
|
|
Amount |
|
|
EPS |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weather |
|
$ |
(2 |
) |
|
$ |
— |
|
|
$ |
(50 |
) |
|
$ |
(0.06 |
) |
Other |
|
|
(7 |
) |
|
|
(0.01 |
) |
|
|
(18 |
) |
|
|
(0.02 |
) |
Rate adjustment clause equity return |
|
|
21 |
|
|
|
0.03 |
|
|
|
76 |
|
|
|
0.09 |
|
Electric capacity |
|
|
(6 |
) |
|
|
(0.01 |
) |
|
|
27 |
|
|
|
0.04 |
|
Outages |
|
|
— |
|
|
|
— |
|
|
|
22 |
|
|
|
0.03 |
|
Salaries, wages and benefits |
|
|
(1 |
) |
|
|
— |
|
|
|
25 |
|
|
|
0.03 |
|
Depreciation and amortization |
|
|
12 |
|
|
|
0.02 |
|
|
|
33 |
|
|
|
0.04 |
|
Renewable energy investment tax credits |
|
|
(29 |
) |
|
|
(0.04 |
) |
|
|
(10 |
) |
|
|
(0.01 |
) |
Other |
|
|
(4 |
) |
|
|
— |
|
|
|
(9 |
) |
|
|
(0.01 |
) |
Share dilution |
|
|
— |
|
|
|
(0.02 |
) |
|
|
— |
|
|
|
(0.08 |
) |
Change in net income contribution |
|
$ |
(16 |
) |
|
$ |
(0.03 |
) |
|
$ |
96 |
|
|
$ |
0.05 |
|
Gas Distribution
Presented below are selected operating statistics related to Gas Distribution’s operations:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2020 |
|
|
2019 |
|
|
% Change |
|
|
2020 |
|
|
2019 |
|
|
% Change |
|
||||||
Gas distribution throughput (bcf): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
14 |
|
|
|
14 |
|
|
— |
|
|
|
118 |
|
|
|
126 |
|
|
|
(6 |
%) |
|
Transportation |
|
|
188 |
|
|
|
185 |
|
|
|
2 |
|
|
|
628 |
|
|
|
586 |
|
|
|
7 |
|
Heating degree days (gas distribution service area): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North Carolina |
|
|
31 |
|
|
|
— |
|
|
|
100 |
|
|
|
1,679 |
|
|
|
1,811 |
|
|
|
(7 |
) |
Ohio and West Virginia |
|
|
90 |
|
|
|
5 |
|
|
|
1,700 |
|
|
|
3,336 |
|
|
|
3,446 |
|
|
|
(3 |
) |
Utah, Wyoming and Idaho |
|
|
54 |
|
|
|
86 |
|
|
|
(37 |
) |
|
|
2,933 |
|
|
|
3,290 |
|
|
|
(11 |
) |
Average gas distribution customer accounts (thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
1,896 |
|
|
|
1,851 |
|
|
|
2 |
|
|
|
1,887 |
|
|
|
1,850 |
|
|
|
2 |
|
Transportation |
|
|
1,125 |
|
|
|
1,104 |
|
|
|
2 |
|
|
|
1,123 |
|
|
|
1,110 |
|
|
|
1 |
|
Presented below, on an after-tax basis, are the key factors impacting Gas Distribution’s net income contribution:
|
|
Third Quarter 2020 vs. 2019 Increase (Decrease) |
|
|
Year-To-Date 2020 vs. 2019 Increase (Decrease) |
|
||||||||||
|
|
Amount |
|
|
EPS |
|
|
Amount |
|
|
EPS |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated gas sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weather |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(2 |
) |
|
$ |
— |
|
Other |
|
|
(2 |
) |
|
|
— |
|
|
|
10 |
|
|
|
0.01 |
|
Salaries, wages and benefits |
|
|
— |
|
|
|
— |
|
|
|
12 |
|
|
|
0.02 |
|
Interest expense, net |
|
|
14 |
|
|
|
0.02 |
|
|
|
25 |
|
|
|
0.03 |
|
Other |
|
|
9 |
|
|
|
0.01 |
|
|
|
16 |
|
|
|
0.02 |
|
Share dilution |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.02 |
) |
Change in net income contribution |
|
$ |
21 |
|
|
$ |
0.03 |
|
|
$ |
61 |
|
|
$ |
0.06 |
|
100
Dominion Energy South Carolina
Presented below are selected operating statistics related to Dominion Energy South Carolina’s operations:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2020 |
|
|
2019 |
|
|
% Change |
|
|
2020 |
|
|
2019 |
|
|
% Change |
|
||||||
Electricity delivered (million MWh) |
|
|
6.6 |
|
|
|
6.8 |
|
|
|
(3 |
%) |
|
|
16.9 |
|
|
|
17.7 |
|
|
|
(5 |
%) |
Electricity supplied (million MWh) |
|
|
6.9 |
|
|
|
7.2 |
|
|
|
(4 |
) |
|
|
17.6 |
|
|
|
18.6 |
|
|
|
(5 |
) |
Degree days (electric distribution service areas): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cooling |
|
|
597 |
|
|
|
645 |
|
|
|
(7 |
) |
|
|
773 |
|
|
|
913 |
|
|
|
(15 |
) |
Heating |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
610 |
|
|
|
698 |
|
|
|
(13 |
) |
|
Average electric distribution customer accounts (thousands) |
|
|
756 |
|
|
|
742 |
|
|
|
2 |
|
|
|
748 |
|
|
|
738 |
|
|
|
1 |
|
Gas distribution throughput (bcf): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
|
14 |
|
|
|
14 |
|
|
— |
|
|
|
47 |
|
|
|
47 |
|
|
|
— |
|
|
Average gas distribution customer accounts (thousands) |
|
|
401 |
|
|
|
386 |
|
|
|
4 |
|
|
|
397 |
|
|
|
384 |
|
|
|
3 |
|
Presented below, on an after-tax basis, are the key factors impacting Dominion Energy South Carolina’s net income contribution:
|
|
Third Quarter 2020 vs. 2019 Increase (Decrease) |
|
|
Year-To-Date 2020 vs. 2019 Increase (Decrease) |
|
||||||||||
|
|
Amount |
|
|
EPS |
|
|
Amount |
|
|
EPS |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated electric sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weather |
|
$ |
(9 |
) |
|
$ |
(0.01 |
) |
|
$ |
(23 |
) |
|
$ |
(0.03 |
) |
Other |
|
|
15 |
|
|
|
0.02 |
|
|
|
16 |
|
|
|
0.02 |
|
Regulated gas sales |
|
|
2 |
|
|
|
— |
|
|
|
8 |
|
|
|
0.01 |
|
Regulatory rider equity return |
|
|
(4 |
) |
|
|
— |
|
|
|
(8 |
) |
|
|
(0.01 |
) |
Interest expense, net |
|
|
11 |
|
|
|
0.01 |
|
|
|
21 |
|
|
|
0.03 |
|
Other |
|
|
(24 |
) |
|
|
(0.03 |
) |
|
|
(20 |
) |
|
|
(0.02 |
) |
Share dilution |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.02 |
) |
Change in net income contribution |
|
$ |
(9 |
) |
|
$ |
(0.01 |
) |
|
$ |
(6 |
) |
|
$ |
(0.02 |
) |
Contracted Assets
Presented below are selected operating statistics related to Contracted Asset’s operations:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2020 |
|
|
2019 |
|
|
% Change |
|
|
2020 |
|
|
2019 |
|
|
% Change |
|
||||||
Electricity supplied (million MWh) |
|
|
5.7 |
|
|
|
5.6 |
|
|
|
2 |
% |
|
|
15.5 |
|
|
|
15.2 |
|
|
|
2 |
% |
Presented below, on an after-tax basis, are the key factors impacting Contracted Asset’s net income contribution:
|
|
Third Quarter 2020 vs. 2019 Increase (Decrease) |
|
|
Year-To-Date 2020 vs. 2019 Increase (Decrease) |
|
||||||||||
|
|
Amount |
|
|
EPS |
|
|
Amount |
|
|
EPS |
|
||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin |
|
$ |
32 |
|
|
$ |
0.03 |
|
|
$ |
(11 |
) |
|
$ |
(0.02 |
) |
Planned outage costs |
|
|
(7 |
) |
|
|
(0.01 |
) |
|
|
1 |
|
|
|
— |
|
Renewable energy investment tax credits |
|
|
— |
|
|
|
— |
|
|
|
7 |
|
|
|
0.01 |
|
Interest expense, net |
|
|
3 |
|
|
|
— |
|
|
|
10 |
|
|
|
0.01 |
|
Other |
|
|
(2 |
) |
|
|
— |
|
|
|
(8 |
) |
|
|
(0.01 |
) |
Share dilution |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.01 |
) |
Change in net income contribution |
|
$ |
26 |
|
|
$ |
0.02 |
|
|
$ |
(1 |
) |
|
$ |
(0.02 |
) |
101
Corporate and Other
Presented below are the Corporate and Other segment’s after-tax results:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2020 |
|
|
2019 |
|
|
$ Change |
|
|
2020 |
|
|
2019 |
|
|
$ Change |
|
||||||
(millions, except EPS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specific items attributable to operating segments |
|
$ |
(556 |
) |
|
$ |
(30 |
) |
|
$ |
(526 |
) |
|
$ |
(1,334 |
) |
|
$ |
(1,820 |
) |
|
$ |
486 |
|
Specific items attributable to Corporate and Other segment |
|
|
(4 |
) |
|
|
59 |
|
|
|
(63 |
) |
|
|
(2,083 |
) |
|
|
146 |
|
|
|
(2,229 |
) |
Total specific items |
|
|
(560 |
) |
|
|
29 |
|
|
|
(589 |
) |
|
|
(3,417 |
) |
|
|
(1,674 |
) |
|
|
(1,743 |
) |
Other corporate operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(95 |
) |
|
|
(90 |
) |
|
|
(5 |
) |
|
|
(272 |
) |
|
|
(282 |
) |
|
|
10 |
|
Other |
|
|
65 |
|
|
|
112 |
|
|
|
(47 |
) |
|
|
131 |
|
|
|
(20 |
) |
|
|
151 |
|
Total other corporate operations |
|
|
(30 |
) |
|
|
22 |
|
|
|
(52 |
) |
|
|
(141 |
) |
|
|
(302 |
) |
|
|
161 |
|
Total net income (expense) |
|
$ |
(590 |
) |
|
$ |
51 |
|
|
$ |
(641 |
) |
|
$ |
(3,558 |
) |
|
$ |
(1,976 |
) |
|
$ |
(1,582 |
) |
EPS impact |
|
$ |
(0.73 |
) |
|
$ |
0.04 |
|
|
$ |
(0.77 |
) |
|
$ |
(4.34 |
) |
|
$ |
(2.47 |
) |
|
$ |
(1.87 |
) |
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, which includes all of the items presented as discontinued operations, including the gas transmission and storage operations under agreement to be sold to BHE as well as charges associated with the cancellation of the Atlantic Coast Pipeline Project.
Virginia Power
Results of Operations
Presented below is a summary of Virginia Power’s consolidated results:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2020 |
|
|
2019 |
|
|
$ Change |
|
|
2020 |
|
|
2019 |
|
|
$ Change |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
475 |
|
|
$ |
602 |
|
|
$ |
(127 |
) |
|
$ |
685 |
|
|
$ |
722 |
|
|
$ |
(37 |
) |
Overview
Third Quarter 2020 vs. 2019
Net income decreased $127 million, primarily due to a charge for benefits expected to be provided to retail electric customers in Virginia through the use of a customer credit reinvestment offset in accordance with the GTSA.
Year-To-Date 2020 vs. 2019
Net income decreased $37 million, primarily due to a charge for benefits expected to be provided to retail electric customers in Virginia through the use of a customer credit reinvestment offset in accordance with the GTSA, an increase in charges related to the planned early retirements of certain electric generation facilities and the absence of a benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019. These decreases were partially offset by the absence of charges related to the planned early retirement of certain automated meter reading infrastructure, a voluntary retirement program and a contract termination with a non-utility generator.
102
Analysis of Consolidated Operations
Presented below are selected amounts related to Virginia Power’s results of operations:
|
|
Third Quarter |
|
|
Year-To-Date |
|
||||||||||||||||||
|
|
2020 |
|
|
2019 |
|
|
$ Change |
|
|
2020 |
|
|
2019 |
|
|
$ Change |
|
||||||
(millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue |
|
$ |
2,248 |
|
|
$ |
2,264 |
|
|
$ |
(16 |
) |
|
$ |
5,983 |
|
|
$ |
6,167 |
|
|
$ |
(184 |
) |
Electric fuel and other energy-related purchases |
|
|
424 |
|
|
|
559 |
|
|
|
(135 |
) |
|
|
1,282 |
|
|
|
1,691 |
|
|
|
(409 |
) |
Purchased (excess) electric capacity |
|
|
3 |
|
|
|
(1 |
) |
|
|
4 |
|
|
|
(14 |
) |
|
|
45 |
|
|
|
(59 |
) |
Net revenue |
|
|
1,821 |
|
|
|
1,706 |
|
|
|
115 |
|
|
|
4,715 |
|
|
|
4,431 |
|
|
|
284 |
|
Other operations and maintenance |
|
|
525 |
|
|
|
453 |
|
|
|
72 |
|
|
|
1,319 |
|
|
|
1,297 |
|
|
|
22 |
|
Depreciation and amortization |
|
|
324 |
|
|
|
313 |
|
|
|
11 |
|
|
|
942 |
|
|
|
916 |
|
|
|
26 |
|
Other taxes |
|
|
85 |
|
|
|
82 |
|
|
|
3 |
|
|
|
257 |
|
|
|
257 |
|
|
|
— |
|
Impairment of assets and other charges |
|
|
200 |
|
|
|
38 |
|
|
|
162 |
|
|
|
1,008 |
|
|
|
781 |
|
|
|
227 |
|
Other income |
|
|
34 |
|
|
|
15 |
|
|
|
19 |
|
|
|
34 |
|
|
|
68 |
|
|
|
(34 |
) |
Interest and related charges |
|
|
135 |
|
|
|
138 |
|
|
|
(3 |
) |
|
|
398 |
|
|
|
408 |
|
|
|
(10 |
) |
Income tax expense |
|
|
111 |
|
|
|
95 |
|
|
|
16 |
|
|
|
140 |
|
|
|
118 |
|
|
|
22 |
|
An analysis of Virginia Power’s results of operations follows:
Third Quarter 2020 vs. 2019
Net revenue increased 7%, primarily due to an increase from rate adjustment clauses.
Other operations and maintenance increased 16%, primarily reflecting an increase in certain expenses which are primarily recovered through state and FERC rates and do not impact net income ($65 million).
Depreciation and amortization increased 4%, primarily due to various projects being placed into service ($34 million), partially offset by the absence of depreciation from certain electric generation facilities that have been committed to be retired early ($17 million) and a decrease reflecting the expected approval of the nuclear plant life extensions from the NRC ($8 million).
Impairment of assets and other charges increased $162 million, primarily due to a charge for benefits expected to be provided to retail electric customers in Virginia through the use of a customer credit reinvestment offset in accordance with the GTSA ($200 million), partially offset by the absence of charges for disallowance of state-regulated plant ($21 million) and the abandonment of certain property, plant and equipment ($17 million).
Other income increased $19 million, primarily reflecting an increase in net investment earnings on nuclear decommissioning trust funds.
Year-To-Date 2020 vs. 2019
Net revenue increased 6%, primarily reflecting:
• |
A $359 million increase from rate adjustment clauses; and |
• |
A $38 million decrease in electric capacity expense related to the annual PJM capacity performance market effective June 2019 ($51 million) and a contract termination with a non-utility generator ($13 million) partially offset by the expiration of various contracts ($18 million) and an increase in expense related to the annual PJM capacity performance market effective June 2020 ($8 million); partially offset by |
• |
A $68 million decrease in sales to retail customers from a decrease in cooling degree days during the cooling season ($33 million) and a decrease in heating degree days during the heating season ($35 million); and |
• |
A $28 million decrease in sales to electric retail customers associated with usage factors impacted by COVID-19. |
Other operations and maintenance increased 2%, primarily reflecting an increase in certain expenses which are primarily recovered through state and FERC rates and do not impact net income ($120 million), the absence of a benefit from the revision of future ash pond and landfill closure costs as a result of Virginia legislation enacted in March 2019 ($113 million) and an increase in allowance
103
for credit risk on customer accounts related to COVID-19 ($20 million). These increases were partially offset by the absence of a charge related to a voluntary retirement program ($190 million) and a decrease in salaries, wages and benefits ($39 million).
Depreciation and amortization increased 3%, primarily due to various projects being placed into service ($86 million), partially offset by the absence of depreciation from certain electric generation facilities that were, or have committed to be, retired early ($42 million) and a decrease reflecting the expected approval of the nuclear plant life extensions from the NRC ($24 million).
Impairment of assets and other charges increased 29%, primarily due to:
• |
An increase in charges associated with the planned early retirements of certain electric generation facilities ($379 million); |
• |
A $200 million charge for benefits expected to be provided to retail electric customers in Virginia through the use of a customer credit reinvestment offset in accordance with the GTSA; and |
• |
An increase in dismantling costs associated with certain electric generation facilities ($30 million); partially offset by |
• |
The absence of a charge related to the planned early retirement of certain automated meter reading infrastructure ($160 million); |
• |
The absence of a $135 million charge related to contract termination with a non-utility generator; |
• |
The absence of a $62 million charge related to the abandonment of a project at an electric generating facility; |
• |
The absence of a $21 million charge for disallowance of state-regulated plant; and |
• |
The absence of a $17 million charge related to the abandonment of certain property, plant and equipment. |
Other income decreased 50%, primarily reflecting a decrease in net investment earnings on nuclear decommissioning trust funds.
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, 2020, Dominion Energy had $3.8 billion of unused capacity under its joint revolving credit facility. In addition, Dominion Energy had $675 million available under a $900 million 364-Day Revolving Credit Agreement entered into in March 2020.
As part of its strategic response to COVID-19, Dominion Energy undertook certain measures in March and April 2020 to buttress its liquidity position. This includes entering the $900 million 364-Day Revolving Credit Agreement, which has the potential for an additional $300 million of capacity upon certain events. In addition, Dominion Energy borrowed $1.1 billion under two 364-Day Term Loan Credit Agreements and issued $2.3 billion of senior notes. In June 2020, Dominion Energy repaid the outstanding balance of $625 million associated with one of the 364-Day Term Loan Credit Agreements. See Note 16 to the Consolidated Financial Statements for more information.
A summary of Dominion Energy’s cash flows is presented below:
|
|
2020 |
|
|
2019 |
|
||
(millions) |
|
|
|
|
|
|
|
|
Cash, restricted cash and equivalents at January 1 |
|
$ |
269 |
|
|
$ |
391 |
|
Cash flows provided by (used in): |
|
|
|
|
|
|
|
|
Operating activities(1) |
|
|
4,810 |
|
|
|
3,709 |
|
Investing activities(2) |
|
|
(4,860 |
) |
|
|
(3,160 |
) |
Financing activities(3) |
|
|
339 |
|
|
|
(500 |
) |
Net increase in cash, restricted cash and equivalents |
|
|
289 |
|
|
|
49 |
|
Cash, restricted cash and equivalents at September 30 |
|
$ |
558 |
|
|
$ |
440 |
|
(1) |
Includes $1.6 billion and $887 million related to discontinued operations for 2020 and 2019, respectively. |
(2) |
Includes $(525) million and $(465) million related to discontinued operations for 2020 and 2019, respectively. |
(3) |
Includes $(174) million and $(3.1) billion related to discontinued operations for 2020 and 2019, respectively. |
104
Operating Cash Flows
Net cash provided by Dominion Energy’s operating activities increased $1.1 billion, including $675 million from discontinued operations. Net cash provided by continuing operations increased primarily due to higher net fuel recoveries, the absence of a contract termination payment to a non-utility generator, a decrease in salaries, wages and benefits and net changes in working capital items, partially offset by a contract termination charge in connection with the sale of Fowler Ridge.
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. In December 2019, Dominion Energy’s Board of Directors established an annual dividend rate for 2020 of $3.76 per share of common stock. In January 2020, Dominion Energy’s Board of Directors declared dividends payable in March 2020 of 94 cents per share of common stock, and in May 2020, Dominion Energy’s Board of Directors declared dividends payable in June 2020 of 94 cents per share of common stock. In July 2020, Dominion Energy’s Board of Directors declared dividends payable in September 2020 of 94 cents per share of common stock. Also in July 2020, Dominion Energy announced that it currently expects to make a fourth dividend payment in December 2020 of approximately 63 cents per share of common stock reflecting the expected timing of the closing of the proposed transaction with BHE. Dividends are subject to declaration by the Board of Directors.
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, 2019 and Part II. Item 1A. Risk Factors in the Companies’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.
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, 2020 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) |
|
$ |
103 |
|
|
$ |
— |
|
|
$ |
103 |
|
Non-investment grade(2) |
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
No external ratings: |
|
|
|
|
|
|
|
|
|
|
|
|
Internally rated—investment grade(3) |
|
|
47 |
|
|
|
— |
|
|
|
47 |
|
Internally rated—non-investment grade(4) |
|
|
9 |
|
|
|
— |
|
|
|
9 |
|
Total(5) |
|
$ |
160 |
|
|
$ |
— |
|
|
$ |
160 |
|
(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 48% 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 29% of the total net credit exposure. |
(4) |
The five largest counterparty exposures, combined, for this category represented approximately 2% 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 an increase in plant construction and other property additions, the absence of cash acquired in the SCANA Combination and 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, 2019, 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, communications and offering processes under the Securities Act of 1933, as amended. The rules provide for a streamlined shelf
105
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. In June 2020, Dominion Energy filed a SEC shelf registration statement for the sale of debt and equity securities which replaced the shelf registration statement filed by Dominion Energy in June 2017.
Net cash provided by Dominion Energy's financing activities was $339 million for the nine months ended September 30, 2020, compared to net cash used by financing activities of $500 million for the nine months ended September 30, 2019, primarily due to higher issuances and lower repayments of long-term debt, partially offset by lower net issuances of short-term debt, lower issuances of common stock, repurchases of common stock in 2020 and the absence of the issuance of the 2019 Equity Units.
In November 2017, Dominion Energy filed a SEC shelf registration statement for the sale of up to $3.0 billion of variable denomination floating rate demand notes, called Dominion Energy Reliability InvestmentSM. In October 2020, Dominion Energy filed a new SEC shelf registration statement associated with this program. 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. The balance as of September 30, 2020 was $215 million. The notes are short-term debt obligations on Dominion Energy’s Consolidated Balance Sheets. The proceeds will be used for general corporate purposes and to repay debt.
In July 2020, the Board of Directors authorized the repurchase of up to $3.0 billion of Dominion Energy’s common stock and rescinded the prior two authorizations from 2005 and 2007. The repurchase program does not include a specific timetable 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. As of September 30, 2020, Dominion Energy had repurchased $2.4 billion of its common stock under this program.
In November 2020, the Board of Directors authorized the repurchase of up to $1.0 billion of Dominion Energy’s common stock in addition to the repurchase program authorized in July 2020. The repurchase program does not include a specific timetable 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.
See Note 16 to the Consolidated Financial Statements in this report for further information regarding Dominion Energy’s credit facilities, liquidity and significant financing transactions.
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, 2019, 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, 2020, 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, 2019, there is a discussion on the various covenants present in the enabling agreements underlying Dominion Energy’s debt. In addition, see Note 16 to the Consolidated Financial Statements in this report for a description of certain financial covenants associated with term loan and revolving credit agreements entered into in the first quarter of 2020. As of September 30, 2020, there have been no material changes to debt covenants, nor any events of default under Dominion Energy’s debt covenants.
Future Cash Payments for Contractual Obligations and Planned Capital Expenditures
As of September 30, 2020, 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, 2019.
Use of Off-Balance Sheet Arrangements
As of September 30, 2020, 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, 2019, with the exception of the following matter.
106
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 is providing equity and has obtained financing commitments from debt investors, totaling $465 million, to fund the estimated project costs. If Dominion Energy ultimately proceeds with the project through completion, the project is expected to be completed by September 2024. Dominion Energy has been appointed to act as the construction agent for the lessor, during which time Dominion Energy will request cash draws from the lessor and debt investors to fund all project costs. If the project is terminated under certain events, Dominion Energy could be required to pay up to 100% of the then funded amount.
The lease term will commence once construction is substantially complete and the facility is able to be occupied and will end in December 2027. At the end of the initial lease term, Dominion Energy can (i) extend the term of the lease for an additional five years, subject to the approval of the participants, at current market terms, (ii) purchase the property for an amount equal to the project costs or, (iii) subject to certain terms and conditions, sell the property on behalf of the lessor to a third party using commercially reasonable efforts to obtain the highest cash purchase price for the property. If the project is sold and the proceeds from the sale are insufficient to repay the investors for the project costs, Dominion Energy may be required to make a payment to the lessor, up to 83% of project costs, for the difference between the project costs and sale proceeds. Dominion Energy is not considered the owner during construction for financial accounting purposes and, therefore, will not reflect the construction activity in its consolidated financial statements. Dominion Energy expects to recognize a right-of-use asset and a corresponding finance lease liability at the commencement of the lease term. Dominion Energy will be considered the owner of the leased property for tax purposes, and as a result, will be entitled to tax deductions for depreciation and interest expense.
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 December 31, 2019 Future Issues and Other Matters in MD&A in the Companies’ Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 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, 2019, Note 17 to the Consolidated Financial Statements in the Companies’ Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30, 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, 2019, Notes 13 and 17 to the Consolidated Financial Statements and Item 1. Legal Proceedings in the Companies’ Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30, 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, 2019, Note 13 to the Consolidated Financial Statements in the Companies’ Quarterly Report on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 and Note 13 to the Consolidated Financial Statements in this report for additional information on various regulatory matters.
Significant Contracted Assets Investment
In August 2020, Dominion Energy entered into an agreement for construction of a Jones Act compliant offshore wind installation vessel. This vessel is designed to handle current turbine technologies as well as next generation turbine sizes of 12 MW or larger and which upon delivery will be U.S. flagged with coastwise endorsement, and is expected to operate for several years under contracts
107
with multiple major U.S. offshore wind developers. The vessel is expected to enter service in 2023 with total estimated project costs of approximately $500 million, excluding financing costs.
Virginia Legislation
In October 2020, legislation was passed by the Virginia General Assembly, and is awaiting signature by the Governor of Virginia, relating to the moratorium on utility disconnections during the COVID-19 pandemic. Virginia Power would be required to forgive customer balances that are more than 30 days past due as of September 30, 2020, which totaled approximately $125 million. During Virginia Power’s 2021 quadrennial review, the forgiven balances would be excluded from Virginia Power’s cost of service for purposes of determining any test period earnings and determining any future rates. In determining any customer bill credits as part of the review of the 2017 through 2020 test period, the Virginia Commission would first offset any forgiven balance amounts if total earnings for the test period are determined to be above Virginia Power’s authorized earnings band. Such offset would be made prior to any offset to customer bill credits by customer credit reinvestment offsets. This legislation, if enacted, could have a material impact to Dominion Energy’s financial condition, results of operations and cash flows.
COVID-19
Dominion Energy continues to monitor the global outbreak of COVID-19 and has taken appropriate steps to mitigate the potential risks to Dominion Energy, its employees and its customers posed by the spread of the virus. Dominion Energy provides a critical service to its customers which means that it is paramount for the company to keep its employees who operate its businesses safe and informed. For example, Dominion Energy has taken precautions with regard to employee and facility hygiene, imposed travel limitations on employees, directed employees to work remotely whenever possible and expanded health and paid time off benefits for employees. Additional protocols have been implemented for required work within customer premises to protect Dominion Energy’s employees, such customers and the public. In addition, Dominion Energy has assessed and updated its existing business continuity plans for its business units in the context of this pandemic. Working with a medical advisor, Dominion Energy developed a COVID-19 training program, which has been rolled out to employees. Dominion Energy is providing all appropriate personal protection equipment to keep employees safe and has implemented additional protections such as temperature screenings, testing services, and mandatory face covering policies. Dominion Energy continues to work with suppliers to monitor the potential impacts to its supply chain; however, at this time, no material risks to Dominion Energy’s supply chain have been identified. This is a rapidly evolving situation, and Dominion Energy will continue to monitor developments affecting its workforce, suppliers and other aspects of its business, such as construction projects, and will take additional precautions as Dominion Energy believes are warranted. In addition, Dominion Energy continues to monitor both customer demand and its ability to collect customer receivables. While Dominion Energy currently does not expect a material impact to its results of operations from the impacts of the COVID-19 pandemic on its operations, the ultimate impacts on its results of operations, financial position and/or cash flows could be material based on the ultimate duration of the pandemic and the related economic recovery.
108
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% decrease in commodity prices would have resulted in a decrease in fair value of $22 million and $50 million of Dominion Energy’s commodity-based derivative instruments as of September 30, 2020 and December 31, 2019, respectively.
A hypothetical 10% decrease in commodity prices would have resulted in a decrease in fair value of $43 million and $54 million of Virginia Power’s commodity-based derivative instruments as of September 30, 2020 and December 31, 2019, 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, 2020 or December 31, 2019.
The Companies also use interest rate derivatives, including forward-starting swaps, as hedges of forecasted interest payments. As of September 30, 2020, Dominion Energy and Virginia Power had $8.5 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 $113 million and $62 million, respectively, in the fair value of Dominion Energy and Virginia Power interest rate derivatives at September 30, 2020. As of December 31, 2019, Dominion Energy and Virginia Power had $6.4 billion and $1.9 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 $135 million and $88 million, respectively, in the fair value of Dominion Energy and Virginia Power’s interest rate derivatives at December 31, 2019.
109
Prior to completing the GT&S Transaction, Dominion Energy held foreign currency swaps for the purpose of hedging the foreign currency exchange risk associated with Euro denominated debt. At both September 30, 2020 and December 31, 2019, Dominion Energy had €250 million in aggregate notional amounts of these foreign currency swaps outstanding. A hypothetical 10% decrease in market interest rates would not have resulted in a material decrease in the fair value of Dominion Energy’s foreign currency swaps at September 30, 2020 or December 31, 2019.
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 $130 million and $691 million for the nine months ended September 30, 2020 and 2019, respectively, and $1.0 billion for the year ended December 31, 2019. Net realized gains and losses include gains and losses from the sale of investments in both 2020 and 2019 as well as any other-than-temporary declines in fair value in 2019 only. Dominion Energy recorded in AOCI and regulatory liabilities, a net increase in unrealized gains on debt investments of $42 million and $73 million for the nine months ended September 30, 2020 and 2019, respectively, and $74 million for the year ended December 31, 2019.
Virginia Power recognized net investment gains (including investment income) on nuclear decommissioning and rabbi trust investments of $31 million and $335 million for the nine months ended September 30, 2020 and 2019, respectively, and $481 million for the year ended December 31, 2019. Net realized gains and losses include gains and losses from the sale of investments in both 2020 and 2019 as well as any other-than-temporary declines in fair value in 2019 only. Virginia Power recorded in AOCI and regulatory liabilities, a net increase in unrealized gains on debt investments of $22 million and $35 million for the nine months ended September 30, 2020 and 2019, respectively, and $30 million for the year ended December 31, 2019.
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.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Companies are alleged to be in violation or in default under orders, statutes, rules or regulations relating to the environment, compliance plans imposed upon or agreed to by the Companies, or permits issued by various local, state and/or federal agencies for the construction or operation of facilities. Administrative proceedings may also be pending on these matters. In addition, in the ordinary course of business, the Companies and their subsidiaries are involved in various legal proceedings.
In March 2018, Virginia Power received a proposed consent order from the VDEQ in connection with alleged CWA permit violations at the Chesterfield power station in 2017. Virginia Power began working cooperatively with both the VDEQ and the EPA to resolve those and certain other alleged violations collectively. In March 2020, Virginia Power finalized a consent decree with the VDEQ and the EPA that would require Virginia Power to pay a $1.4 million civil penalty in connection with various alleged CWA permit and other violations. In July 2020, the consent decree was entered by order of the U.S. District Court for the Eastern District of Virginia. In August 2020, Virginia Power paid the civil penalty.
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, 2019. |
• |
Notes 13 and 17 to the Consolidated Financial Statements in the Companies’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2020. |
• |
Notes 13 and 17 to the Consolidated Financial Statements in the Companies’ Quarterly Report on Form 10-Q for the quarter ended June 30, 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, 2019 and updated in the Companies’ Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, which should be taken into consideration when reviewing the information contained in this report. There have been no material changes with regard to the risk factors previously disclosed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019 and the Companies’ Quarterly Report on Form 10-Q for the quarter ended March 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.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Dominion Energy
Issuance of Unregistered Securities
On September 4, 2020, Dominion Energy issued 4,104,725 shares of common stock in satisfaction of its obligation under a court approved settlement agreement, executed by the parties in March 2020, to deliver $320 million in shares of common stock into a settlement fund benefiting class members in the Santee Cooper Ratepayer Case, with an additional $2 million in shares of common stock issued to satisfy accrued interest. The shares were issued pursuant to the exemption from registration available under Section 3(a)(10) of the Securities Act of 1933, as amended. These shares were immediately repurchased by Dominion Energy as disclosed below. For more information on the Santee Cooper Ratepayer Case, see Note 17 to the Consolidated Financial Statements in this report.
Purchases of Equity Securities
Period |
|
Total Number of Shares (or Units) Purchased |
|
|
Average Price Paid per Share (or Unit)(3) |
|
|
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(5) |
|||
7/1/20-7/31/20 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ 3.00 billion |
8/1/20-8/31/20 |
|
|
3,674,090 |
|
(1) |
|
78.46 |
|
|
|
3,673,314 |
|
|
2.71 billion |
9/1/20-9/30/20 |
|
|
24,829,124 |
|
(2) |
|
78.40 |
|
(4) |
|
24,829,124 |
|
|
0.62 billion |
Total |
|
|
28,503,214 |
|
|
$ |
78.41 |
|
|
|
28,502,438 |
|
|
$ 0.62 billion |
(1) |
Includes (i) 776 shares of common stock that were tendered by employees to satisfy tax withholding obligations on vested restricted stock and (ii) 3,673,314 shares of common stock purchased in open market transactions for an aggregate of approximately $288 million. |
(2) |
Includes (i) 3,513,793 shares of common stock purchased in open market transactions for an aggregate of approximately $274 million, (ii) 4,104,725 shares of common stock purchased from the settlement fund described above in a privately negotiated transaction for an aggregate of approximately $323 million and (iii) 17,210,606 shares of common stock initially delivered to Dominion Energy under an accelerated share repurchase program. Dominion Energy entered into two prepaid accelerated share repurchase agreements with separate financial institutions in September 2020 to purchase $1.5 billion in shares of common stock. Pursuant to the terms of these agreements, the total final number of shares delivered and average purchase price per share under the agreements will be determined at the end of the purchase periods, which are scheduled to occur by December 2020. |
(3) |
Represents the weighted-average price paid per share. |
(4) |
The final per share purchase price for shares purchased under each accelerated share repurchase agreement will be determined at the end of the applicable purchase period, which is scheduled to occur by December 2020, but may occur earlier in certain circumstances. |
(5) |
In July 2020, the Dominion Energy Board of Directors authorized the repurchase of up to $3.0 billion in shares of common stock and rescinded its prior repurchase authorization approved in February 2005 and modified in June 2007. The 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. In November 2020, the Dominion Energy Board of Directors authorized the repurchase of up to $1.0 billion of shares of common stock in addition to the repurchase program authorized in July 2020. This additional authorization is not reflected in the table above. |
ITEM 5. OTHER INFORMATION
The following disclosure would have otherwise been filed on a Current Report on Form 8-K under Item 8.01 Other Events:
GHG Emissions
This section should be read in conjunction with information disclosed under the heading Environmental Strategy in Item 1. Business of the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019.
Dominion Energy’s integrated environmental strategy supports a reduction in GHG emissions. As of December 2019, Dominion Energy has cut carbon emissions from its electric generating units (based on ownership percentage) by 57% since 2005 and reduced methane emissions from its natural gas infrastructure operations by 25% since 2010. Dominion Energy has committed to achieve net zero carbon and methane emissions from its electric generation and natural gas infrastructure operations by 2050.
Dominion Energy has been reporting greenhouse gas emissions, including carbon, methane, N2O and SF6, from its natural gas infrastructure, electric generation and power delivery operations to the EPA since 2011 under the EPA mandatory GHG Reporting
112
Program. Because the EPA mandatory GHG Reporting Program sets boundaries for reporting, Dominion Energy is not required to report carbon and methane emissions from a number of its smaller electric generation, natural gas compressor stations and other sources. However, Dominion Energy voluntarily includes carbon and methane emission estimates from these smaller sources in its Corporate GHG Inventory.
Dominion Energy conducted a comprehensive review of its methane emissions tracking and reporting processes to find opportunities for improvement and to ensure that its methane corporate inventory is as complete as possible. Based on these activities, Dominion Energy identified over a dozen areas of improvement for its Corporate GHG Methane Inventory, which resulted in an increase of approximately 15% in reported methane emissions compared to the EPA-methodology inventory.
Emissions for calendar year 2019 herein, include the assets from DESC’s electric generation operations and DESC and PSNC’s natural gas operations, which were not included in Dominion Energy’s 2018 Corporate GHG Methane and Carbon Inventories. In addition, reported CO2 equivalent emissions include carbon, methane, N2O, and SF6 emissions from Dominion Energy’s electric generating units, natural gas operations, power delivery transmission and distribution operations, and associated equipment.
For Dominion Energy’s electric generation operations, total CO2 equivalent emissions (based on ownership percentage) were approximately 31.9 million metric tons in 2019, including 9.9 million metric tons from DESC and 22.0 million metric tons from Virginia Power.
For Dominion Energy’s power delivery operations, which includes regulated electric transmission and distribution, direct CO2 equivalent emissions for 2019 were 48,604 metric tons.
Total CO2 equivalent emissions reported for Dominion Energy’s natural gas infrastructure operations, as estimated in Dominion Energy’s Corporate GHG Methane Inventory, were 4.95 million metric tons in 2019. This estimate includes emissions reported under the EPA mandatory GHG Reporting Program, as well as other emissions not required to be reported. Dominion Energy’s 2019 and 2018 methane emissions from its gas infrastructure as reported under Subpart W of the EPA mandatory GHG Reporting Program are as follows:
|
|
Subpart W Total CH4 Emissions (mcf CH4) |
|
|||||
Subpart W Segment |
|
2019 |
|
|
2018 |
|
||
Distribution |
|
|
1,809,104 |
|
|
|
1,839,577 |
|
Production |
|
|
831,331 |
|
|
|
736,188 |
|
Transmission pipelines |
|
|
238,401 |
|
|
|
403,164 |
|
Transmission compressor stations |
|
|
131,401 |
|
|
|
219,011 |
|
Gathering and boosting |
|
|
161,140 |
|
|
|
219,056 |
|
Storage |
|
|
80,322 |
|
|
|
88,973 |
|
LNG import/export |
|
|
5,794 |
|
|
|
4,331 |
|
Processing |
|
|
3,711 |
|
|
|
1,880 |
|
113
ITEM 6. EXHIBITS
114
Exhibit Number |
|
Description |
|
Dominion Energy |
|
Virginia Power |
|
|
|
|
|
|
|
10.1 |
|
|
X |
|
X |
|
|
|
|
|
|
|
|
10.2 |
|
Restricted Stock Award Agreement for Diane Leopold, dated October 1, 2020 (filed herewith). |
|
X |
|
X |
|
|
|
|
|
|
|
31.a |
|
|
X |
|
|
|
|
|
|
|
|
|
|
31.b |
|
|
X |
|
|
|
|
|
|
|
|
|
|
31.c |
|
|
|
|
X |
|
|
|
|
|
|
|
|
31.d |
|
|
|
|
X |
|
|
|
|
|
|
|
|
32.a |
|
|
X |
|
|
|
|
|
|
|
|
|
|
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, 2020, filed on November 6, 2020, 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, 2020, filed on November 6, 2020, 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 |
115
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 6, 2020 |
/s/ Michele L. Cardiff |
|
|
Michele L. Cardiff Senior Vice President, Controller and Chief Accounting Officer |
|
|
|
|
|
VIRGINIA ELECTRIC AND POWER COMPANY Registrant |
|
|
|
|
November 6, 2020 |
/s/ Michele L. Cardiff |
|
|
Michele L. Cardiff Senior Vice President, Controller and Chief Accounting Officer |
|
|
|
116