UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2018
OR
☐ | 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 |
Exact name of registrants as specified in their charters | I.R.S. Employer Identification Number | ||
001-08489 | DOMINION ENERGY, INC. | 54-1229715 | ||
000-55337 | VIRGINIA ELECTRIC AND POWER COMPANY | 54-0418825 | ||
001-37591 | DOMINION ENERGY GAS HOLDINGS, LLC | 46-3639580 | ||
VIRGINIA (State or other jurisdiction of incorporation or organization) |
||||
120 TREDEGAR STREET RICHMOND, VIRGINIA (Address of principal executive offices) |
23219 (Zip Code) | |||
(804) 819-2000 (Registrants telephone number) |
Securities registered pursuant to Section 12(b) of the Act:
Registrant |
Title of Each Class |
Name of Each Exchange on Which Registered | ||
DOMINION ENERGY, INC. | Common Stock, no par value | New York Stock Exchange | ||
2016 Series A 6.75% Corporate Units | New York Stock Exchange | |||
2016 Series A 5.25% Enhanced Junior Subordinated Notes | New York Stock Exchange | |||
DOMINION ENERGY GAS HOLDINGS, LLC |
2014 Series C 4.6% Senior Notes | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act:
VIRGINIA ELECTRIC AND POWER COMPANY
Common Stock, no par value
DOMINION ENERGY GAS HOLDINGS, LLC
Limited Liability Company Membership Interests
Indicate by check mark whether the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act.
Dominion Energy, Inc. Yes ☒ No ☐ Virginia Electric and Power Company Yes ☒ No ☐ Dominion Energy Gas Holdings, LLC Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Dominion Energy, Inc. Yes ☐ No ☒ Virginia Electric and Power Company Yes ☐ No ☒ Dominion Energy Gas Holdings, LLC Yes ☐ No ☒
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. Yes ☒ No ☐ Virginia Electric and Power Company Yes ☒ No ☐ Dominion Energy Gas Holdings, LLC Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Dominion Energy, Inc. Yes ☒ No ☐ Virginia Electric and Power Company Yes ☒ No ☐ Dominion Energy Gas Holdings, LLC Yes ☒ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Dominion Energy, Inc. ☒ Virginia Electric and Power Company ☒ Dominion Energy Gas Holdings, LLC ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule 12b-2 of the Exchange Act.
Dominion Energy, Inc.
Large accelerated filer ☒ | Accelerated filer ☐ | Non-accelerated filer ☐ | Smaller reporting company ☐ | |||
Emerging growth company ☐ |
Virginia Electric and Power Company
Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ | Smaller reporting company ☐ | |||
Emerging growth company ☐ |
Dominion Energy Gas Holdings, LLC
Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ | Smaller reporting company ☐ | |||
Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Act).
Dominion Energy, Inc. Yes ☐ No ☒ Virginia Electric and Power Company Yes ☐ No ☒ Dominion Energy Gas Holdings, LLC Yes ☐ No ☒
The aggregate market value of Dominion Energy, Inc. common stock held by non-affiliates of Dominion Energy was approximately $44.4 billion based on the closing price of Dominion Energys common stock as reported on the New York Stock Exchange as of the last day of Dominion Energys most recently completed second fiscal quarter. Dominion Energy is the sole holder of Virginia Electric and Power Company common stock. At February 15, 2019, Dominion Energy had 799,314,079 shares of common stock outstanding and Virginia Power had 274,723 shares of common stock outstanding. Dominion Energy, Inc. holds all of the membership interests of Dominion Energy Gas Holdings, LLC.
DOCUMENT INCORPORATED BY REFERENCE.
Portions of Dominion Energys 2019 Proxy Statement are incorporated by reference in Part III.
This combined Form 10-K represents separate filings by Dominion Energy, Inc., Virginia Electric and Power Company and Dominion Energy Gas Holdings, LLC. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Virginia Electric and Power Company and Dominion Energy Gas Holdings, LLC make no representations as to the information relating to Dominion Energy, Inc.s other operations.
VIRGINIA ELECTRIC AND POWER COMPANY AND DOMINION ENERGY GAS HOLDINGS, LLC MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION I(1)(a) AND (b) OF FORM 10-K AND ARE FILING THIS FORM 10-K UNDER THE REDUCED DISCLOSURE FORMAT.
Dominion Energy, Inc., Virginia Electric and
Power Company and Dominion Energy Gas Holdings, LLC
Item Number |
|
Page Number |
| |||
3 | ||||||
Part I |
||||||
1. |
8 | |||||
1A. |
29 | |||||
1B. |
37 | |||||
2. |
38 | |||||
3. |
43 | |||||
4. |
43 | |||||
44 | ||||||
Part II |
||||||
5. |
45 | |||||
6. |
46 | |||||
7. |
Managements Discussion and Analysis of Financial Condition and Results of Operations |
47 | ||||
7A. |
66 | |||||
8. |
69 | |||||
9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
192 | ||||
9A. |
192 | |||||
9B. |
195 | |||||
Part III |
||||||
10. |
196 | |||||
11. |
196 | |||||
12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
196 | ||||
13. |
Certain Relationships and Related Transactions, and Director Independence |
196 | ||||
14. |
197 | |||||
Part IV |
||||||
15. |
198 | |||||
16. |
205 |
2 |
The following abbreviations or acronyms used in this Form 10-K are defined below:
Abbreviation or Acronym | Definition | |
2013 Equity Units |
Dominion Energys 2013 Series A Equity Units and 2013 Series B Equity Units issued in June 2013 | |
2014 Equity Units |
Dominion Energys 2014 Series A Equity Units issued in July 2014 | |
2016 Equity Units |
Dominion Energys 2016 Series A Equity Units issued in August 2016 | |
2017 Tax Reform Act |
An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (previously known as The Tax Cuts and Jobs Act) enacted on December 22, 2017 | |
2019 Proxy Statement |
Dominion Energy 2019 Proxy Statement, File No. 001-08489 | |
ABO |
Accumulated benefit obligation | |
AFUDC |
Allowance for funds used during construction | |
Align RNG |
Align RNG, LLC, a joint venture between Dominion Energy and Smithfield Foods, Inc. | |
AMI |
Advanced Metering Infrastructure | |
AMR |
Automated meter reading program deployed by East Ohio | |
AOCI |
Accumulated other comprehensive income (loss) | |
ARO |
Asset retirement obligation | |
Atlantic Coast Pipeline |
Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion Energy, Duke and Southern Company Gas | |
Atlantic Coast Pipeline Project |
The approximately 600-mile natural gas pipeline running from West Virginia through Virginia to North Carolina which will be owned by Dominion Energy, Duke and Southern Company Gas and constructed and operated by DETI | |
BACT |
Best available control technology | |
Bankruptcy Court |
U.S. Bankruptcy Court for the Southern District of New York | |
bcf |
Billion cubic feet | |
bcfe |
Billion cubic feet equivalent | |
Bear Garden |
A 590 MW combined-cycle, natural gas-fired power station in Buckingham County, Virginia | |
BGEPA Blue Racer |
Bald and Golden Eagle Protection Act Blue Racer Midstream, LLC, a joint venture between Caiman and FR BR Holdings, LLC effective December 2018 | |
BP |
BP Wind Energy North America Inc. | |
Brunswick County |
A 1,376 MW combined-cycle, natural gas-fired power station in Brunswick County, Virginia | |
CAA |
Clean Air Act | |
Caiman |
Caiman Energy II, LLC | |
CAISO |
California ISO | |
CAO |
Chief Accounting Officer | |
CCR |
Coal combustion residual | |
CEA |
Commodity Exchange Act | |
CEO |
Chief Executive Officer | |
CERCLA |
Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as Superfund | |
CFO |
Chief Financial Officer | |
CGN Committee |
Compensation, Governance and Nominating Committee of Dominion Energys Board of Directors | |
Clean Power Plan |
Regulations issued by the EPA in August 2015 for states to follow in developing plans to reduce CO2 emissions from existing fossil fuel-fired electric generating units, stayed by the U.S. Supreme Court in February 2016 pending resolution of court challenges by certain states | |
CNG |
Consolidated Natural Gas Company | |
CO2 |
Carbon dioxide | |
Colonial Trail West |
An approximately 142 MW proposed utility-scale solar power station located in Surry County, Virginia | |
Companies |
Dominion Energy, Virginia Power and Dominion Energy Gas, collectively | |
Cooling degree days |
Units measuring the extent to which the average daily temperature is greater than 65 degrees Fahrenheit, calculated as the difference between 65 degrees and the average temperature for that day | |
Corporate Unit |
A stock purchase contract and 1/20 or 1/40 interest in a RSN issued by Dominion Energy | |
Cove Point |
Dominion Energy Cove Point LNG, LP | |
Cove Point Holdings |
Cove Point GP Holding Company, LLC | |
Cove Point LNG Facility |
An LNG terminalling and storage facility located on the Chesapeake Bay in Lusby, Maryland owned by Cove Point | |
Cove Point Pipeline |
A 136-mile natural gas pipeline owned by Cove Point that connects the Cove Point LNG Facility to interstate natural gas pipelines | |
CPCN |
Certificate of Public Convenience and Necessity | |
CWA |
Clean Water Act | |
DECG |
Dominion Energy Carolina Gas Transmission, LLC | |
DES |
Dominion Energy Services, Inc. | |
DETI |
Dominion Energy Transmission, Inc. | |
DGI |
Dominion Generation, Inc. |
3 |
Abbreviation or Acronym | Definition | |
DGP |
Dominion Gathering and Processing, Inc. | |
Dodd-Frank Act |
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 | |
DOE |
U.S. Department of Energy | |
Dominion Energy |
The legal entity, Dominion Energy, Inc., one or more of its consolidated subsidiaries (other than Virginia Power and Dominion Energy Gas) or operating segments, or the entirety of Dominion Energy, Inc. and its consolidated subsidiaries | |
Dominion Energy Direct® |
A dividend reinvestment and open enrollment direct stock purchase plan | |
Dominion Energy Gas |
The legal entity, Dominion Energy Gas Holdings, LLC, one or more of its consolidated subsidiaries or operating segment, or the entirety of Dominion Energy Gas Holdings, LLC and its consolidated subsidiaries | |
Dominion Energy Midstream |
The legal entity, Dominion Energy Midstream Partners, LP, one or more of its consolidated subsidiaries, Cove Point Holdings, Iroquois GP Holding Company, LLC, DECG and Dominion Energy Questar Pipeline (beginning December 1, 2016), or the entirety of Dominion Energy Midstream Partners, LP and its consolidated subsidiaries | |
Dominion Energy Questar |
The legal entity, Dominion Energy Questar Corporation, one or more of its consolidated subsidiaries, or the entirety of Dominion Energy Questar Corporation and its consolidated subsidiaries | |
Dominion Energy Questar Combination |
Dominion Energys acquisition of Dominion Energy Questar completed on September 16, 2016 pursuant to the terms of the agreement and plan of merger entered on January 31, 2016 | |
Dominion Energy Questar Pipeline |
Dominion Energy Questar Pipeline, LLC, one or more of its consolidated subsidiaries, or the entirety of Dominion Energy Questar Pipeline, LLC and its consolidated subsidiaries | |
Dominion Iroquois |
Dominion Iroquois, Inc., which, effective May 2016, holds a 24.07% noncontrolling partnership interest in Iroquois | |
DSM |
Demand-side management | |
Dth |
Dekatherm | |
Duke |
The legal entity, Duke Energy Corporation, one or more of its consolidated subsidiaries or operating segments, or the entirety of Duke Energy Corporation and its consolidated subsidiaries | |
Eagle Solar |
Eagle Solar, LLC, a wholly-owned subsidiary of DGI | |
East Ohio |
The East Ohio Gas Company, doing business as Dominion Energy Ohio | |
Eastern Market Access Project |
Project to provide 294,000 Dths/day of transportation service to help meet demand for natural gas for Washington Gas Light Company, a local gas utility serving customers in D.C., Virginia and Maryland, and Mattawoman Energy, LLC for its new electric power generation facility to be built in Maryland | |
Energy Choice |
Program authorized by the Ohio Commission which provides energy customers with the ability to shop for energy options from a group of suppliers certified by the Ohio Commission | |
EPA |
U.S. Environmental Protection Agency | |
EPACT |
Energy Policy Act of 2005 | |
EPS |
Earnings per share | |
ERISA |
Employee Retirement Income Security Act of 1974 | |
ERO |
Electric Reliability Organization | |
ESA Excess Tax Benefits |
Endangered Species Act Benefits of tax deductions in excess of the compensation cost recognized for stock-based compensation | |
Fairless |
Fairless power station | |
FASB |
Financial Accounting Standards Board | |
FERC |
Federal Energy Regulatory Commission | |
FILOT |
Fee in lieu of taxes | |
Fitch |
Fitch Ratings Ltd. | |
Four Brothers |
Four Brothers Solar, LLC, a limited liability company owned by Dominion Energy and Four Brothers Holdings, LLC, a subsidiary of GIP effective August 2018 | |
Fowler Ridge |
Fowler I Holdings LLC, a wind-turbine facility joint venture with BP in Benton County, Indiana | |
FTRs |
Financial transmission rights | |
GAAP |
U.S. generally accepted accounting principles | |
Gal |
Gallon | |
Gas Infrastructure |
Gas Infrastructure Group operating segment | |
GENCO |
South Carolina Generating Company, Inc. | |
GHG |
Greenhouse gas | |
GIP |
The legal entity, Global Infrastructure Partners, one or more of its consolidated subsidiaries (including, effective August 2018, Four Brothers Holdings, LLC, Granite Mountain Renewables, LLC, and Iron Springs Renewables, LLC) or operating segments, or the entirety of Global Infrastructure Partners and its consolidated subsidiaries | |
Granite Mountain |
Granite Mountain Holdings, LLC, a limited liability company owned by Dominion Energy and Granite Mountain Renewables, LLC, a subsidiary of GIP effective August 2018 | |
Green Mountain |
Green Mountain Power Corporation | |
GreenHat |
GreenHat Energy, LLC |
4 |
Abbreviation or Acronym | Definition | |
Greensville County |
A 1,588 MW combined-cycle, natural gas-fired power station in Greensville County, Virginia | |
GTSA |
Virginia Grid Transformation and Security Act of 2018 | |
Hastings |
A natural gas processing and fractionation facility located near Pine Grove, West Virginia | |
Heating degree days |
Units measuring the extent to which the average daily temperature is less than 65 degrees Fahrenheit, calculated as the difference between 65 degrees and the average temperature for that day | |
Hope |
Hope Gas, Inc., doing business as Dominion Energy West Virginia | |
Idaho Commission |
Idaho Public Utilities Commission | |
IRCA |
Intercompany revolving credit agreement | |
Iron Springs |
Iron Springs Holdings, LLC, a limited liability company owned by Dominion Energy and Iron Springs Renewables, LLC, a subsidiary of GIP effective August 2018 | |
Iroquois |
Iroquois Gas Transmission System, L.P. | |
IRS |
Internal Revenue Service | |
ISO |
Independent system operator | |
ISO-NE |
ISO New England | |
July 2016 hybrids |
Dominion Energys 2016 Series A Enhanced Junior Subordinated Notes due 2076 | |
June 2006 hybrids |
Dominion Energys 2006 Series A Enhanced Junior Subordinated Notes due 2066 | |
Kewaunee |
Kewaunee nuclear power station | |
kV |
Kilovolt | |
Liability Management Exercise |
Dominion Energy exercise in 2014 to redeem certain debt and preferred securities | |
LIBOR |
London Interbank Offered Rate | |
LIFO |
Last-in-first-out inventory method | |
Liquefaction Project |
A natural gas export/liquefaction facility at Cove Point | |
LNG |
Liquefied natural gas | |
Local 50 |
International Brotherhood of Electrical Workers Local 50 | |
Local 69 |
Local 69, Utility Workers Union of America, United Gas Workers | |
LTIP |
Long-term incentive program | |
Manchester |
Manchester power station | |
Massachusetts Municipal |
Massachusetts Municipal Wholesale Electric Company | |
MATS |
Utility Mercury and Air Toxics Standard Rule | |
MBTA mcf |
Migratory Bird Treaty Act of 1918 Thousand cubic feet | |
mcfe |
Thousand cubic feet equivalent | |
MD&A |
Managements Discussion and Analysis of Financial Condition and Results of Operations | |
MGD |
Million gallons a day | |
Millstone |
Millstone nuclear power station | |
Moodys |
Moodys Investors Service | |
Mtpa |
Million metric tons per annum | |
MW |
Megawatt | |
MWh |
Megawatt hour | |
Natural Gas Rate Stabilization Act |
Legislation effective February 16, 2005 designed to improve and maintain natural gas service infrastructure to meet the needs of customers in South Carolina | |
NAV |
Net asset value | |
NedPower |
NedPower Mount Storm LLC, a wind-turbine facility joint venture between Dominion Energy and Shell in Grant County, West Virginia | |
NEIL |
Nuclear Electric Insurance Limited | |
NERC |
North American Electric Reliability Corporation | |
NG |
Collectively, North East Transmission Co., Inc. and National Grid IGTS Corp. | |
NGL |
Natural gas liquid | |
NJNR |
NJNR Pipeline Company | |
NND Project |
V.C. Summer units 2 and 3 new nuclear development project under which SCANA and Santee Cooper undertook to construct two Westinghouse AP1000 Advanced Passive Safety nuclear units in Jenkinsville, South Carolina | |
North Anna |
North Anna nuclear power station | |
North Carolina Commission |
North Carolina Utilities Commission | |
Northern System |
Collection of 131 miles of various diameter natural gas pipelines in Ohio | |
NOX |
Nitrogen oxide | |
NRC |
U.S. Nuclear Regulatory Commission | |
NRG |
The legal entity, NRG Energy, Inc., one or more of its consolidated subsidiaries (including, effective November 2016 through August 2018, Four Brothers Holdings, LLC, Granite Mountain Renewables, LLC and Iron Springs Renewables, LLC) or operating segments, or the entirety of NRG Energy, Inc. and its consolidated subsidiaries |
5 |
Abbreviation or Acronym | Definition | |
NSPS |
New Source Performance Standards | |
NYSE |
New York Stock Exchange | |
October 2014 hybrids |
Dominion Energys 2014 Series A Enhanced Junior Subordinated Notes due 2054 | |
ODEC |
Old Dominion Electric Cooperative | |
Ohio Commission |
Public Utilities Commission of Ohio | |
Order 1000 |
Order issued by FERC adopting new requirements for electric transmission planning, cost allocation and development | |
Philadelphia Utility Index |
Philadelphia Stock Exchange Utility Index | |
PHMSA |
Pipeline and Hazardous Materials Safety Administration | |
PIPP |
Percentage of Income Payment Plan deployed by East Ohio | |
PIR |
Pipeline Infrastructure Replacement program deployed by East Ohio | |
PJM |
PJM Interconnection, L.L.C. | |
Power Delivery |
Power Delivery Group operating segment | |
Power Generation |
Power Generation Group operating segment | |
ppb |
Parts-per-billion | |
PREP |
Pipeline Replacement and Expansion Program, a program of replacing, upgrading and expanding natural gas utility infrastructure deployed by Hope | |
PSD |
Prevention of significant deterioration | |
PSNC |
Public Service Company of North Carolina, Incorporated | |
Questar Gas |
Questar Gas Company, doing business as Dominion Energy Utah, Dominion Energy Wyoming and Dominion Energy Idaho | |
RCC |
Replacement Capital Covenant | |
Regulation Act |
Legislation effective July 1, 2007, that amended the Virginia Electric Utility Restructuring Act and fuel factor statute, which legislation is also known as the Virginia Electric Utility Regulation Act, as amended in 2015 and 2018 | |
RGGI |
Regional Greenhouse Gas Initiative | |
RICO |
Racketeer Influenced and Corrupt Organizations Act | |
Rider B |
A rate adjustment clause associated with the recovery of costs related to the conversion of three of Virginia Powers coal-fired power stations to biomass | |
Rider BW |
A rate adjustment clause associated with the recovery of costs related to Brunswick County | |
Rider E |
A rate adjustment clause associated with the recovery of costs related to certain capital projects at Virginia Powers electric generating stations to comply with federal and state environmental laws and regulations | |
Rider GV |
A rate adjustment clause associated with the recovery of costs related to Greensville County | |
Rider R |
A rate adjustment clause associated with the recovery of costs related to Bear Garden | |
Rider S |
A rate adjustment clause associated with the recovery of costs related to the Virginia City Hybrid Energy Center | |
Rider T1 |
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 |
A rate adjustment clause associated with the recovery of costs of new underground distribution facilities | |
Rider US-2 |
A rate adjustment clause associated with the recovery of costs related to Woodland, Scott Solar and Whitehouse | |
Rider US-3 |
A rate adjustment clause associated with the recovery of costs related to Colonial Trail West and Spring Grove 1 | |
Rider W |
A rate adjustment clause associated with the recovery of costs related to Warren County | |
Riders C1A and C2A |
Rate adjustment clauses associated with the recovery of costs related to certain DSM programs approved in DSM cases | |
ROE |
Return on equity | |
ROIC |
Return on invested capital | |
RSN |
Remarketable subordinated note | |
RTEP |
Regional transmission expansion plan | |
RTO |
Regional transmission organization | |
SAFSTOR |
A method of nuclear decommissioning, as defined by the NRC, in which a nuclear facility is placed and maintained in a condition that allows the facility to be safely stored and subsequently decontaminated to levels that permit release for unrestricted use | |
SAIDI |
System Average Interruption Duration Index, metric used to measure electric service reliability | |
SBL Holdco |
SBL Holdco, LLC, a wholly-owned subsidiary of DGI | |
Santee Cooper |
South Carolina Public Service Authority | |
SCANA |
The legal entity, SCANA Corporation, one or more of its consolidated subsidiaries or operating segments, or the entirety of SCANA Corporation and its consolidated subsidiaries |
6 |
Abbreviation or Acronym | Definition | |
SCANA Combination |
Dominion Energys acquisition of SCANA completed on January 1, 2019 pursuant to the terms of the SCANA Merger Agreement | |
SCANA Merger Agreement |
Agreement and plan of merger entered on January 2, 2018 between Dominion Energy and SCANA | |
SCANA Merger Approval Order |
Final order issued by the South Carolina Commission on December 21, 2018 setting forth its approval of the SCANA Combination | |
SCDHEC |
South Carolina Department of Health and Environmental Control | |
SCDOR |
South Carolina Department of Revenue | |
SCE&G |
The legal entity, South Carolina Electric & Gas Company, its consolidated subsidiaries or operating segments, or the entirety of South Carolina Electric & Gas Company and its consolidated subsidiaries | |
Scott Solar |
A 17 MW utility-scale solar power station in Powhatan County, VA | |
SEC |
U.S. Securities and Exchange Commission | |
SEMI |
SCANA Energy Marketing, Inc. | |
September 2006 hybrids |
Dominion Energys 2006 Series B Enhanced Junior Subordinated Notes due 2066 | |
SERC |
Southeast Electric Reliability Council | |
Shell |
Shell WindEnergy, Inc. | |
SO2 |
Sulfur dioxide | |
Southeast Energy |
Southeast Energy Group operating segment | |
South Carolina Commission |
South Carolina Public Service Commission | |
Spring Grove 1 |
An approximately 98 MW proposed utility-scale solar power station located in Surry County, Virginia | |
Standard & Poors |
Standard & Poors Ratings Services, a division of the McGraw-Hill Companies, Inc. | |
Summer |
V.C. Summer nuclear power station | |
SunEdison |
The legal entity, SunEdison, Inc., one or more of its consolidated subsidiaries (including, through November 2016, Four Brothers Holdings, LLC, Granite Mountain Renewables, LLC and Iron Springs Renewables, LLC) or operating segments, or the entirety of SunEdison, Inc. and its consolidated subsidiaries | |
Surry |
Surry nuclear power station | |
Terra Nova Renewable Partners |
A partnership comprised primarily of institutional investors advised by J.P. Morgan Asset ManagementGlobal Real Assets | |
Three Cedars |
Granite Mountain and Iron Springs, collectively | |
TransCanada |
The legal entity, TransCanada Corporation, one or more of its consolidated subsidiaries or operating segments, or the entirety of TransCanada Corporation and its consolidated subsidiaries | |
Transco |
Transcontinental Gas Pipe Line Company, LLC | |
TSR |
Total shareholder return | |
UEX Rider |
Uncollectible Expense Rider deployed by East Ohio | |
Utah Commission |
Public Service Commission of Utah | |
VDEQ |
Virginia Department of Environmental Quality | |
VEBA |
Voluntary Employees Beneficiary Association | |
VIE |
Variable interest entity | |
Virginia City Hybrid Energy Center |
A 610 MW baseload carbon-capture compatible, clean coal powered electric generation facility in Wise County, Virginia | |
Virginia Commission |
Virginia State Corporation Commission | |
Virginia Power |
The legal entity, Virginia Electric and Power Company, one or more of its consolidated subsidiaries or operating segments, or the entirety of Virginia Electric and Power Company and its consolidated subsidiaries | |
VOC |
Volatile organic compounds | |
Warren County |
A 1,350 MW combined-cycle, natural gas-fired power station in Warren County, Virginia | |
WECTEC |
WECTEC Global Project Services, Inc. (formerly known as Stone & Webster, Inc.), a wholly-owned subsidiary of Westinghouse | |
West Virginia Commission |
Public Service Commission of West Virginia | |
Western System |
Collection of 212 miles of various diameter natural gas pipelines and three compressor stations in Ohio | |
Westinghouse |
Westinghouse Electric Company LLC | |
Wexpro |
The legal entity, Wexpro Company, one or more of its consolidated subsidiaries, or the entirety of Wexpro Company and its consolidated subsidiaries | |
Wexpro Agreement |
An agreement effective August 1981, which sets forth the rights of Questar Gas to receive certain benefits from Wexpros operations, including cost-of-service gas | |
Wexpro II Agreement |
An agreement with the states of Utah and Wyoming modeled after the Wexpro Agreement that allows for the addition of properties under the cost-of-service methodology for the benefit of Questar Gas customers | |
Whitehouse |
A 20 MW utility-scale solar power station in Louisa County, VA | |
White River Hub |
White River Hub, LLC | |
Woodland |
A 19 MW utility-scale solar power station in Isle of Wight County, VA | |
Wyoming Commission |
Wyoming Public Service Commission |
7 |
Part I
8 |
9 |
10 |
11 |
12 |
13 |
14 |
15 |
16 |
17 |
18 |
19 |
20 |
21 |
22 |
23 |
24 |
25 |
26 |
27 |
28 |
29 |
30 |
31 |
32 |
33 |
34 |
35 |
36 |
37 |
38 |
VIRGINIA POWER UTILITY GENERATION
Plant | Location | Net Summer Capability (MW) |
Percentage Net Summer Capability |
|||||||||
Gas |
||||||||||||
Greensville County (CC) |
Greensville County, VA | 1,588 | ||||||||||
Brunswick County (CC) |
Brunswick County, VA | 1,376 | ||||||||||
Warren County (CC) |
Warren County, VA | 1,370 | ||||||||||
Ladysmith (CT) |
Ladysmith, VA | 783 | ||||||||||
Bear Garden (CC) |
Buckingham County, VA | 622 | ||||||||||
Remington (CT) |
Remington, VA | 622 | ||||||||||
Possum Point (CC) |
Dumfries, VA | 573 | ||||||||||
Chesterfield (CC) |
Chester, VA | 397 | ||||||||||
Elizabeth River (CT) |
Chesapeake, VA | 330 | ||||||||||
Possum Point(1) |
Dumfries, VA | 316 | ||||||||||
Bellemeade (CC)(1) |
Richmond, VA | 267 | ||||||||||
Bremo(1) |
Bremo Bluff, VA | 227 | ||||||||||
Gordonsville Energy (CC) |
Gordonsville, VA | 218 | ||||||||||
Gravel Neck (CT) |
Surry, VA | 170 | ||||||||||
Darbytown (CT) |
Richmond, VA | 168 | ||||||||||
Rosemary (CC) |
Roanoke Rapids, NC | 160 | ||||||||||
Total Gas |
9,187 | 41 | % | |||||||||
Coal |
||||||||||||
Mt. Storm |
Mt. Storm, WV | 1,621 | ||||||||||
Chesterfield(1) |
Chester, VA | 1,275 | ||||||||||
Virginia City Hybrid Energy Center |
Wise County, VA | 610 | ||||||||||
Clover |
Clover, VA | 439 | (3) | |||||||||
Yorktown(2) |
Yorktown, VA | 323 | ||||||||||
Mecklenburg(1) |
Clarksville, VA | 138 | ||||||||||
Total Coal |
4,406 | 20 | ||||||||||
Nuclear |
||||||||||||
Surry |
Surry, VA | 1,676 | ||||||||||
North Anna |
Mineral, VA | 1,672 | (4) | |||||||||
Total Nuclear |
3,348 | 15 | ||||||||||
Oil |
||||||||||||
Yorktown |
Yorktown, VA | 790 | ||||||||||
Possum Point |
Dumfries, VA | 770 | ||||||||||
Gravel Neck (CT) |
Surry, VA | 198 | ||||||||||
Darbytown (CT) |
Richmond, VA | 168 | ||||||||||
Possum Point (CT) |
Dumfries, VA | 72 | ||||||||||
Chesapeake (CT) |
Chesapeake, VA | 51 | ||||||||||
Low Moor (CT) |
Covington, VA | 48 | ||||||||||
Northern Neck (CT) |
Lively, VA | 47 | ||||||||||
Total Oil |
2,144 | 10 | ||||||||||
Hydro |
||||||||||||
Bath County |
Warm Springs, VA | 1,808 | (5) | |||||||||
Gaston |
Roanoke Rapids, NC | 220 | ||||||||||
Roanoke Rapids |
Roanoke Rapids, NC | 95 | ||||||||||
Other |
1 | |||||||||||
Total Hydro |
2,124 | 9 | ||||||||||
Biomass |
||||||||||||
Pittsylvania(1) |
Hurt, VA | 83 | ||||||||||
Altavista |
Altavista, VA | 51 | ||||||||||
Polyester |
Hopewell, VA | 51 | ||||||||||
Southampton |
Southampton, VA | 51 | ||||||||||
Total Biomass |
236 | 1 | ||||||||||
Solar |
||||||||||||
Whitehouse Solar |
Louisa County, VA | 20 | ||||||||||
Woodland Solar |
Isle of Wight County, VA | 19 | ||||||||||
Scott Solar |
Powhatan County, VA | 17 | ||||||||||
Total Solar |
56 | | ||||||||||
Various |
||||||||||||
Mt. Storm (CT) |
Mt. Storm, WV | 11 | | |||||||||
21,512 | ||||||||||||
Power Purchase Agreements |
930 | 4 | ||||||||||
Total Utility Generation |
22,442 | 100 | % |
Note: (CT) denotes combustion turbine and (CC) denotes combined cycle.
(1) | Virginia Power has placed certain units at this facility in cold storage. |
(2) | Coal-fired units are expected to be retired at Yorktown power station as early as 2019 as a result of the issuance of MATS. |
(3) | Excludes 50% undivided interest owned by ODEC. |
(4) | Excludes 11.6% undivided interest owned by ODEC. |
(5) | Excludes 40% undivided interest owned by Allegheny Generating Company, a subsidiary of FirstEnergy Corp. |
39 |
VIRGINIA POWER NON-JURISDICTIONAL GENERATION
Plant | Location | Net Summer Capability (MW) |
||||
Solar(1) |
||||||
Pecan |
Pleasant Hill, NC | 75 | ||||
Montross |
Montross, VA | 20 | ||||
Morgans Corner |
Pasquotank County, NC | 20 | ||||
Remington |
Remington, VA | 20 | ||||
Oceana |
Virginia Beach, VA | 18 | ||||
Hollyfield |
Manquin, VA | 17 | ||||
Puller |
Topping, VA | 15 | ||||
Total Solar |
185 |
(1) | All solar facilities are alternating current. |
DOMINION ENERGY MERCHANT GENERATION
Plant | Location | Net Summer Capability (MW) |
Percentage Net Summer Capability |
|||||||||
Nuclear |
||||||||||||
Millstone |
Waterford, CT | 2,001 | (1) | |||||||||
Total Nuclear |
2,001 | 59 | % | |||||||||
Solar(2) |
||||||||||||
Escalante I, II and III |
Beaver County, UT | 120 | (3) | |||||||||
Amazon Solar Farm VirginiaSouthampton |
Newsoms, VA | 100 | (5) | |||||||||
Amazon Solar Farm VirginiaAccomack |
Oak Hall, VA | 80 | (5) | |||||||||
Innovative Solar 37 |
Morven, NC | 79 | (5) | |||||||||
Moffett Solar 1 |
Ridgeland, SC | 71 | (5) | |||||||||
Granite Mountain East and West |
Iron County, UT | 65 | (3) | |||||||||
Summit Farms Solar |
Moyock, NC | 60 | (5) | |||||||||
Enterprise |
Iron County, UT | 40 | (3) | |||||||||
Iron Springs |
Iron County, UT | 40 | (3) | |||||||||
Pavant Solar |
Holden, UT | 34 | (4) | |||||||||
Camelot Solar |
Mojave, CA | 30 | (4) | |||||||||
Midway II |
Calipatria, CA | 30 | (5) | |||||||||
Indy I, II and III |
Indianapolis, IN | 20 | (4) | |||||||||
Amazon Solar Farm VirginiaBuckingham |
Cumberland, VA | 20 | (5) | |||||||||
Amazon Solar Farm VirginiaCorrectional |
Barhamsville, VA | 20 | (5) | |||||||||
Hecate Cherrydale |
Cape Charles, VA | 20 | (5) | |||||||||
Amazon Solar Farm VirginiaSappony |
Stoney Creek, VA | 20 | (5) | |||||||||
Amazon Solar Farm VirginiaScott II |
Powhatan, VA | 20 | (5) | |||||||||
Cottonwood Solar |
Kings and Kern counties, CA | 16 | (4) | |||||||||
Alamo Solar |
San Bernardino, CA | 13 | (4) | |||||||||
Maricopa West Solar |
Kern County, CA | 13 | (4) | |||||||||
Imperial Valley Solar |
Imperial, CA | 13 | (4) | |||||||||
Richland Solar |
Jeffersonville, GA | 13 | (4) | |||||||||
CID Solar |
Corcoran, CA | 13 | (4) | |||||||||
Kansas Solar |
Lenmore, CA | 13 | (4) | |||||||||
Kent South Solar |
Lenmore, CA | 13 | (4) | |||||||||
Old River One Solar |
Bakersfield, CA | 13 | (4) | |||||||||
West Antelope Solar |
Lancaster, CA | 13 | (4) | |||||||||
Adams East Solar |
Tranquility, CA | 13 | (4) | |||||||||
Catalina 2 Solar |
Kern County, CA | 12 | (4) | |||||||||
Mulberry Solar |
Selmer, TN | 11 | (4) | |||||||||
Selmer Solar |
Selmer, TN | 11 | (4) | |||||||||
Columbia 2 Solar |
Mojave, CA | 10 | (4) | |||||||||
Hecate Energy Clarke County |
White Post, VA | 10 | (5) | |||||||||
Ridgeland Solar Farm I |
Ridgeland, SC | 10 | (5) | |||||||||
Other |
Various | 43 | (4)(5) | |||||||||
Total Solar |
1,122 | 33 | ||||||||||
Wind |
||||||||||||
Fowler Ridge(6) |
Benton County, IN | 150 | (7) | |||||||||
NedPower(6) |
Grant County, WV | 132 | (8) | |||||||||
Total Wind |
282 | 8 | ||||||||||
Fuel Cell |
||||||||||||
Bridgeport Fuel Cell |
Bridgeport, CT | 15 | ||||||||||
Total Fuel Cell |
15 | | ||||||||||
Total Merchant Generation |
3,420 | 100 | % |
40 |
41 |
PSNC have contracted for approximately 6 bcf of natural gas storage capacity on the systems of Southern Natural Gas Company and Transco.
Dominion Energy acquired through the SCANA Combination total utility generating capacity of approximately 6,000 MW, as detailed in the following table:
Plant | Location | Net Summer Capability (MW) |
Percentage Net Summer Capability |
|||||||
Gas |
||||||||||
Jasper (CC) |
Hardeeville, SC | 852 | (1) | |||||||
Columbia Energy Center (CC) |
Gaston, SC | 504 | (1) | |||||||
Urquhart (CC) |
Beech Island, SC | 458 | (1) | |||||||
McMeekin |
Irmo, SC | 250 | ||||||||
Hagood (CT) |
Charleston, SC | 126 | (1) | |||||||
Urquhart Unit 3 |
Beech Island, SC | 95 | ||||||||
Urquhart (CT) |
Beech Island, SC | 87 | ||||||||
Parr (CT) |
Jenkinsville, SC | 60 | (1) | |||||||
Williams (CT) |
Goose Creek, SC | 40 | (1) | |||||||
Coit (CT) |
Columbia, SC | 26 | (1) | |||||||
Hardeeville (CT) |
Hardeeville, SC | 9 | ||||||||
Total Gas |
2,507 | 42 | % | |||||||
Coal |
||||||||||
Wateree |
Eastover, SC | 684 | ||||||||
Williams |
Goose Creek, SC | 605 | ||||||||
Cope |
Cope, SC | 415 | (2) | |||||||
Total Coal |
1,704 | 28 | ||||||||
Hydro |
||||||||||
Fairfield |
Jenkinsville, SC | 576 | ||||||||
Saluda |
Irmo, SC | 198 | ||||||||
Other |
Various | 18 | ||||||||
Total Hydro |
792 | 13 | ||||||||
Nuclear |
||||||||||
Summer(1) |
Jenkinsville, SC | 647 | (3) | |||||||
Total Nuclear |
647 | 11 | ||||||||
Power Purchase Agreements |
335 | 6 | ||||||||
Total Utility Generation |
5,985 | 100 | % |
Note: (CT) denotes combustion turbine and (CC) denotes combined cycle.
(1) Capable of burning fuel oil as a secondary source.
(2) Capable of burning natural gas as a secondary source.
(3) | Excludes 33.3% undivided interest owned by Santee Cooper. |
42 |
43 |
Executive Officers of Dominion Energy
Information concerning the executive officers of Dominion Energy, each of whom is elected annually, is as follows:
Name and Age | Business Experience Past Five Years(1) | |
Thomas F. Farrell, II (64) |
Chairman of the Board of Directors, President and CEO of Dominion Energy from April 2007 to date. | |
Robert M. Blue (51) |
Executive Vice President and President & CEOPower Delivery from May 2017 to date; Senior Vice President and President & CEOPower Delivery from January 2017 to May 2017; Senior Vice PresidentLaw, Regulation & Policy from February 2016 to December 2016; Senior Vice PresidentRegulation, Law, Energy Solutions and Policy from May 2015 to January 2016; President of Virginia Power from January 2014 to May 2015. | |
James R. Chapman (49) |
Executive Vice President, Chief Financial Officer and Treasurer from January 2019 to date; Senior Vice President, Chief Financial Officer and Treasurer from November 2018 to December 2018; Senior Vice PresidentMergers & Acquisitions and Treasurer from February 2016 to October 2018; Vice PresidentCorporate Finance and Mergers & Acquisitions and Assistant Treasurer from May 2015 to January 2016; Vice PresidentCorporate Finance and Mergers & Acquisitions from January 2015 to May 2015; Assistant Treasurer from October 2013 to December 2014. | |
Paul D. Koonce (59) |
Executive Vice President and President & CEOPower Generation from January 2017 to date; Executive Vice President and CEOPower Generation from January 2016 to December 2016; Executive Vice President and CEOGas Infrastructure from February 2013 to December 2015. | |
Diane Leopold (52) |
Executive Vice President and President & CEOGas Infrastructure from May 2017 to date; Senior Vice President and President & CEOGas Infrastructure from January 2017 to May 2017; President of DETI, East Ohio and Dominion Cove Point, Inc. from January 2014 to date. | |
P. Rodney Blevins (54) |
President & Chief Executive OfficerSoutheast Energy from January 2019 to date; Senior Vice President and Chief Information Officer from January 2014 to December 2018. | |
Carlos M. Brown (44) |
Senior Vice President and General Counsel from January 2019 to date; Vice President and General Counsel from January 2017 to December 2018; Deputy General CounselLitigation, Labor, and Employment of DES from July 2016 to December 2016; DirectorPower Generation Station II of DES from July 2015 to June 2016; DirectorAlternative Energy Solutions Business Development & Commercialization of DES from January 2013 to June 2015. | |
William L. Murray (51) |
Senior Vice PresidentCorporate Affairs & Communications from February 2019 to date; Vice PresidentState & Electric Public Policy of DES from May 2017 to January 2019; Senior Policy DirectorPublic Policy of DES from April 2016 to May 2017; Managing DirectorCorporate Public Policy of DES from June 2007 to March 2016. | |
Michele L. Cardiff (51) |
Vice President, Controller and CAO from April 2014 to date; Vice PresidentAccounting of DES from January 2014 to March 2014. |
(1) | All positions held at Dominion Energy, unless otherwise noted. Any service listed for Virginia Power, DETI, East Ohio, Dominion Cove Point, Inc., and DES reflects service at a subsidiary of Dominion Energy. |
44 |
Part II
Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Dominion Energy
Dominion Energys common stock is listed on the NYSE under the ticker symbol D. At February 15, 2019, there were approximately 137,000 record holders of Dominion Energys common stock. The number of record holders is comprised of individual shareholder accounts maintained on Dominion Energys transfer agent records and includes accounts with shares held in (1) certificate form, (2) book-entry in the Direct Registration System and (3) book-entry under Dominion Energy Direct®. Discussions of expected dividend payments required by this Item are contained in Liquidity and Capital Resources in Item 7. MD&A.
The following table presents certain information with respect to Dominion Energys common stock repurchases during the fourth quarter of 2018:
DOMINION ENERGY PURCHASES OF EQUITY SECURITIES | ||||||||||||||
Period | Total Number of Shares (or Units) Purchased(1) |
Average Price Paid (or Unit)(2) |
Total Number of Shares (or Units) Purchased as Part of Publicly Announced |
Maximum Number (or Approximate Dollar Value) Yet Be Purchased under the | ||||||||||
10/1/18-10/31/18 |
27,800 | $ | 70.10 | | 19,629,059 shares/$1.18 billion | |||||||||
11/1/18-11/30/18 |
3,630 | 70.33 | | 19,629,059 shares/$1.18 billion | ||||||||||
12/1/18-12/31/18 |
1,494 | 74.58 | | 19,629,059 shares/$1.18 billion | ||||||||||
Total |
32,924 | $ | 70.33 | | 19,629,059 shares/$1.18 billion |
(1) | 27,800, 3,630 and 1,494 shares were tendered by employees to satisfy tax withholding obligations on vested restricted stock in October, November and December 2018, respectively. |
(2) | Represents the weighted-average price paid per share. |
(3) | The remaining repurchase authorization is pursuant to repurchase authority granted by the Dominion Energy Board of Directors in February 2005, as modified in June 2007. The aggregate authorization granted by the Dominion Energy Board of Directors was 86 million shares (as adjusted to reflect a two-for-one stock split distributed in November 2007) not to exceed $4 billion. |
Virginia Power
There is no established public trading market for Virginia Powers common stock, all of which is owned by Dominion Energy. Virginia Power intends to pay quarterly cash dividends in 2019 but is neither required to nor restricted, except as described in Note 20 to the Consolidated Financial Statements, from making such payments.
Dominion Energy Gas
All of Dominion Energy Gas membership interests are owned by Dominion Energy. Dominion Energy Gas intends to pay quarterly cash dividends in 2019 but is neither required to nor restricted, except as described in Note 20 to the Consolidated Financial Statements, from making such payments.
45 |
Item 6. Selected Financial Data
The following table should be read in conjunction with the Consolidated Financial Statements included in Item 8. Financial Statements and Supplementary Data.
Beginning in 2019, Dominion Energys result of operations will include the results of operations of SCANA. Additionally, in connection with the SCANA Combination, SCE&G will provide refunds and restitution of $2.0 billion over 20 years with capital support from Dominion Energy as well as exclude from rate recovery $2.4 billion of costs related to the NND Project and $180 million of costs associated with the purchase of the Columbia Energy Center power station. See Note 3 to the Consolidated Financial Statements for further information including charges expected to be recognized in the first quarter of 2019.
DOMINION ENERGY
Year Ended December 31, | 2018(1) | 2017(2) | 2016(3) | 2015 | 2014(4) | |||||||||||||||
(millions, except per share amounts) | ||||||||||||||||||||
Operating revenue |
$ | 13,366 | $ | 12,586 | $ | 11,737 | $ | 11,683 | $ | 12,436 | ||||||||||
Net income attributable to Dominion Energy |
2,447 | 2,999 | 2,123 | 1,899 | 1,310 | |||||||||||||||
Net income attributable to Dominion Energy per common share-basic |
3.74 | 4.72 | 3.44 | 3.21 | 2.25 | |||||||||||||||
Net income attributable to Dominion Energy per common share-diluted |
3.74 | 4.72 | 3.44 | 3.20 | 2.24 | |||||||||||||||
Dividends declared per common share |
3.340 | 3.035 | 2.80 | 2.59 | 2.40 | |||||||||||||||
Total assets |
77,914 | 76,585 | 71,610 | 58,648 | 54,186 | |||||||||||||||
Long-term debt(5) |
31,144 | 30,948 | 30,231 | 23,468 | 21,665 |
(1) | Includes $568 million after-tax gains on sales of certain merchant generation facilities and equity method investments partially offset by $164 million after-tax charge related to the impairment of certain gathering and processing assets and a $160 million after-tax charge associated with Virginia legislation enacted in March 2018 that required one-time rate credits of certain amounts to utility customers. |
(2) | Includes $851 million of tax benefits resulting from the remeasurement of deferred income taxes to the new corporate income tax rate, partially offset by $96 million of after-tax charges associated with equity method investments in wind-powered generation facilities. |
(3) | Includes a $122 million after-tax charge related to future ash pond and landfill closure costs at certain utility generation facilities. |
(4) | Includes $248 million of after-tax charges associated with Virginia legislation enacted in April 2014 relating to the development of a third nuclear unit located at North Anna and offshore wind facilities, a $193 million after-tax charge related to Dominion Energys restructuring of its producer services business and a $174 million after-tax charge associated with the Liability Management Exercise. |
(5) | Includes capital leases. |
46 |
Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued
48 |
49 |
Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued
50 |
51 |
Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued
52 |
53 |
Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued
54 |
55 |
Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued
56 |
57 |
Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued
58 |
59 |
Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued
60 |
61 |
Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued
62 |
63 |
Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued
64 |
65 |
Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued
66 |
67 |
Managements Discussion and Analysis of Financial Condition and Results of Operations, Continued
68 |
Item 8. Financial Statements and Supplementary Data
69 |
[THIS PAGE INTENTIONALLY LEFT BLANK]
70 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of
Dominion Energy, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Dominion Energy, Inc. and subsidiaries (Dominion Energy) at December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2018, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Dominion Energy at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), Dominion Energys internal control over financial reporting at December 31, 2018, based on criteria established in Internal ControlIntegrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2019, expressed an unqualified opinion on Dominion Energys internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of Dominion Energys management. Our responsibility is to express an opinion on Dominion Energys consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to Dominion Energy in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Richmond, Virginia
February 28, 2019
We have served as Dominion Energys auditor since 1988.
71 |
Consolidated Statements of Income
Year Ended December 31, | 2018 | 2017 | 2016 | |||||||||
(millions, except per share amounts) | ||||||||||||
Operating Revenue(1) |
$ | 13,366 | $ | 12,586 | $ | 11,737 | ||||||
Operating Expenses |
||||||||||||
Electric fuel and other energy-related purchases |
2,814 | 2,301 | 2,333 | |||||||||
Purchased electric capacity |
122 | 6 | 99 | |||||||||
Purchased gas |
645 | 701 | 459 | |||||||||
Other operations and maintenance |
3,458 | 3,200 | 3,279 | |||||||||
Depreciation, depletion and amortization |
2,000 | 1,905 | 1,559 | |||||||||
Other taxes |
703 | 668 | 596 | |||||||||
Impairment of assets and related charges |
403 | 15 | 4 | |||||||||
Gains on sales of assets |
(380 | ) | (147 | ) | (40 | ) | ||||||
Total operating expenses |
9,765 | 8,649 | 8,289 | |||||||||
Income from operations |
3,601 | 3,937 | 3,448 | |||||||||
Other income(1) |
1,021 | 358 | 429 | |||||||||
Interest and related charges |
1,493 | 1,205 | 1,010 | |||||||||
Income from operations including noncontrolling interests before income tax expense (benefit) |
3,129 | 3,090 | 2,867 | |||||||||
Income tax expense (benefit) |
580 | (30 | ) | 655 | ||||||||
Net Income Including Noncontrolling Interests |
2,549 | 3,120 | 2,212 | |||||||||
Noncontrolling Interests |
102 | 121 | 89 | |||||||||
Net Income Attributable to Dominion Energy |
$ | 2,447 | $ | 2,999 | $ | 2,123 | ||||||
Earnings Per Common Share |
||||||||||||
Net income attributable to Dominion EnergyBasic |
$ | 3.74 | $ | 4.72 | $ | 3.44 | ||||||
Net income attributable to Dominion EnergyDiluted |
$ | 3.74 | $ | 4.72 | $ | 3.44 |
(1) | See Note 9 for amounts attributable to related parties. |
The accompanying notes are an integral part of Dominion Energys Consolidated Financial Statements.
72 |
Consolidated Statements of Comprehensive Income
Year Ended December 31, | 2018 | 2017 | 2016 | |||||||||
(millions) | ||||||||||||
Net Income Including Noncontrolling Interests |
$ | 2,549 | $ | 3,120 | $ | 2,212 | ||||||
Other comprehensive income (loss), net of taxes: |
||||||||||||
Net deferred gains (losses) on derivatives-hedging activities, net of $(10), $(3) and $(37) tax |
30 | 8 | 55 | |||||||||
Changes in unrealized net gains (losses) on investment securities, net of $5, $(121) and $(53) tax |
(18 | ) | 215 | 93 | ||||||||
Changes in net unrecognized pension and other postretirement benefit costs, net of $75, $32 and $189 tax |
(215 | ) | (69 | ) | (319 | ) | ||||||
Amounts reclassified to net income: |
||||||||||||
Net derivative (gains) losses-hedging activities, net of $(35), $18 and $100 tax |
102 | (29 | ) | (159 | ) | |||||||
Net realized (gains) losses on investment securities, net of $(2), $21 and $15 tax |
5 | (37 | ) | (28 | ) | |||||||
Net pension and other postretirement benefit costs, net of $(21), $(32) and $(22) tax |
78 | 50 | 34 | |||||||||
Changes in other comprehensive gains (losses) from equity method investees, net of $(1), $(2) and $ tax |
1 | 3 | (1 | ) | ||||||||
Total other comprehensive income (loss) |
(17 | ) | 141 | (325 | ) | |||||||
Comprehensive income including noncontrolling interests |
2,532 | 3,261 | 1,887 | |||||||||
Comprehensive income attributable to noncontrolling interests |
103 | 122 | 89 | |||||||||
Comprehensive income attributable to Dominion Energy |
$ | 2,429 | $ | 3,139 | $ | 1,798 |
The accompanying notes are an integral part of Dominion Energys Consolidated Financial Statements.
73 |
Consolidated Balance Sheets
At December 31, | 2018 | 2017 | ||||||
(millions) | ||||||||
ASSETS | ||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 268 | $ | 120 | ||||
Customer receivables (less allowance for doubtful accounts of $14 and $17) |
1,749 | 1,660 | ||||||
Other receivables (less allowance for doubtful accounts of $4 and $2)(1) |
331 | 126 | ||||||
Inventories: |
||||||||
Materials and supplies |
1,039 | 1,049 | ||||||
Fossil fuel |
287 | 328 | ||||||
Gas stored |
92 | 100 | ||||||
Prepayments |
265 | 260 | ||||||
Regulatory assets |
496 | 294 | ||||||
Other |
634 | 397 | ||||||
Total current assets |
5,161 | 4,334 | ||||||
Investments |
||||||||
Nuclear decommissioning trust funds |
4,938 | 5,093 | ||||||
Investment in equity method affiliates |
1,278 | 1,544 | ||||||
Other |
344 | 327 | ||||||
Total investments |
6,560 | 6,964 | ||||||
Property, Plant and Equipment |
||||||||
Property, plant and equipment |
76,578 | 74,823 | ||||||
Accumulated depreciation, depletion and amortization |
(22,018 | ) | (21,065 | ) | ||||
Total property, plant and equipment, net |
54,560 | 53,758 | ||||||
Deferred Charges and Other Assets |
||||||||
Goodwill |
6,410 | 6,405 | ||||||
Pension and other postretirement benefit assets |
1,279 | 1,378 | ||||||
Intangible assets, net |
670 | 685 | ||||||
Regulatory assets |
2,676 | 2,480 | ||||||
Other |
598 | 581 | ||||||
Total deferred charges and other assets |
11,633 | 11,529 | ||||||
Total assets |
$ | 77,914 | $ | 76,585 |
(1) | See Note 9 for amounts attributable to related parties. |
74 |
At December 31, | 2018 | 2017 | ||||||
(millions) | ||||||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities |
||||||||
Securities due within one year |
$ | 3,624 | $ | 3,078 | ||||
Credit facility borrowings |
73 | | ||||||
Short-term debt |
334 | 3,298 | ||||||
Accounts payable |
914 | 875 | ||||||
Accrued interest, payroll and taxes |
836 | 848 | ||||||
Other |
1,866 | 1,537 | ||||||
Total current liabilities |
7,647 | 9,636 | ||||||
Long-Term Debt |
||||||||
Long-term debt |
26,328 | 25,588 | ||||||
Junior subordinated notes |
3,430 | 3,981 | ||||||
Remarketable subordinated notes |
1,386 | 1,379 | ||||||
Total long-term debt |
31,144 | 30,948 | ||||||
Deferred Credits and Other Liabilities |
||||||||
Deferred income taxes and investment tax credits |
5,116 | 4,523 | ||||||
Regulatory liabilities |
6,840 | 6,916 | ||||||
Asset retirement obligations |
2,250 | 2,169 | ||||||
Pension and other postretirement benefit liability |
2,328 | 2,160 | ||||||
Other(1) |
541 | 863 | ||||||
Total deferred credits and other liabilities |
17,075 | 16,631 | ||||||
Total liabilities |
55,866 | 57,215 | ||||||
Commitments and Contingencies (see Note 22) |
||||||||
Equity |
||||||||
Common stock no par(2) |
12,588 | 9,865 | ||||||
Retained earnings |
9,219 | 7,936 | ||||||
Accumulated other comprehensive loss |
(1,700 | ) | (659 | ) | ||||
Total common shareholders equity |
20,107 | 17,142 | ||||||
Noncontrolling interests |
1,941 | 2,228 | ||||||
Total equity |
22,048 | 19,370 | ||||||
Total liabilities and equity |
$ | 77,914 | $ | 76,585 |
(1) | See Note 9 for amounts attributable to related parties. |
(2) | 1 billion shares authorized; 681 million shares and 645 million shares outstanding at December 31, 2018 and 2017, respectively. |
The accompanying notes are an integral part of Dominion Energys Consolidated Financial Statements.
75 |
Consolidated Statements of Equity
Common Stock | Dominion Energy Shareholders |
|||||||||||||||||||||||||||
Shares | Amount | Retained Earnings |
Accumulated Other Comprehensive Income (Loss) |
Total Common Shareholders Equity |
Noncontrolling Interests |
Total Equity |
||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||
December 31, 2015 |
596 | $ | 6,680 | $ | 6,458 | $(474) | $12,664 | $938 | $ | 13,602 | ||||||||||||||||||
Net income including noncontrolling interests |
2,123 | 2,123 | 89 | 2,212 | ||||||||||||||||||||||||
Contributions from SunEdison to Four Brothers and Three Cedars |
| 189 | 189 | |||||||||||||||||||||||||
Sale of interest in merchant solar projects |
22 | 22 | 117 | 139 | ||||||||||||||||||||||||
Sale of Dominion Energy Midstream common unitsnet of offering costs |
| 482 | 482 | |||||||||||||||||||||||||
Sale of Dominion Energy Midstream convertible preferred unitsnet of offering costs |
| 490 | 490 | |||||||||||||||||||||||||
Purchase of Dominion Energy Midstream common units |
(3 | ) | (3 | ) | (14 | ) | (17 | ) | ||||||||||||||||||||
Issuance of common stock |
32 | 2,152 | 2,152 | 2,152 | ||||||||||||||||||||||||
Stock awards (net of change in unearned compensation) |
14 | 14 | 14 | |||||||||||||||||||||||||
Present value of stock purchase contract payments related to RSNs(1) |
(191 | ) | (191 | ) | (191 | ) | ||||||||||||||||||||||
Tax effect of Dominion Energy Questar Pipeline contribution to Dominion Energy Midstream |
(116 | ) | (116 | ) | (116 | ) | ||||||||||||||||||||||
Dividends ($2.80 per common share) and distributions |
(1,727 | ) | (1,727 | ) | (62 | ) | (1,789 | ) | ||||||||||||||||||||
Other comprehensive loss, net of tax |
(325 | ) | (325 | ) | (325 | ) | ||||||||||||||||||||||
Other |
(8 | ) | (8 | ) | 6 | (2 | ) | |||||||||||||||||||||
December 31, 2016 |
628 | $ | 8,550 | $ | 6,854 | $ | (799 | ) | $ | 14,605 | $ | 2,235 | $ | 16,840 | ||||||||||||||
Net income including noncontrolling interests |
2,999 | 2,999 | 121 | 3,120 | ||||||||||||||||||||||||
Contributions from NRG to Four Brothers and Three Cedars |
| 9 | 9 | |||||||||||||||||||||||||
Issuance of common stock |
17 | 1,302 | 1,302 | 1,302 | ||||||||||||||||||||||||
Sale of Dominion Energy Midstream common unitsnet of offering costs |
| 18 | 18 | |||||||||||||||||||||||||
Stock awards (net of change in unearned compensation) |
22 | 22 | 22 | |||||||||||||||||||||||||
Dividends ($3.035 per common share) and distributions |
(1,931 | ) | (1,931 | ) | (156 | ) | (2,087 | ) | ||||||||||||||||||||
Other comprehensive income, net of tax |
140 | 140 | 1 | 141 | ||||||||||||||||||||||||
Other |
(9 | ) | 14 | 5 | 5 | |||||||||||||||||||||||
December 31, 2017 |
645 | $ | 9,865 | $ | 7,936 | $ | (659 | ) | $ | 17,142 | $ | 2,228 | $ | 19,370 | ||||||||||||||
Cumulative-effect of changes in accounting principles |
(127 | ) | 1,029 | (1,023 | ) | (121 | ) | 127 | 6 | |||||||||||||||||||
Net income including noncontrolling interests |
2,447 | 2,447 | 102 | 2,549 | ||||||||||||||||||||||||
Issuance of common stock |
36 | 2,461 | 2,461 | 2,461 | ||||||||||||||||||||||||
Sale of Dominion Energy Midstream common unitsnet of offering costs |
| 4 | 4 | |||||||||||||||||||||||||
Remeasurement of noncontrolling interest in Dominion Energy Midstream |
375 | 375 | (375 | ) | | |||||||||||||||||||||||
Stock awards (net of change in unearned compensation) |
22 | 22 | 22 | |||||||||||||||||||||||||
Dividends ($3.34 per common share) and distributions |
(2,185 | ) | (2,185 | ) | (146 | ) | (2,331 | ) | ||||||||||||||||||||
Other comprehensive income (loss), net of tax |
(18 | ) | (18 | ) | 1 | (17 | ) | |||||||||||||||||||||
Other |
(8 | ) | (8 | ) | (16 | ) | (16 | ) | ||||||||||||||||||||
December 31, 2018 |
681 | $ | 12,588 | $ | 9,219 | $ | (1,700 | ) | $ | 20,107 | $ | 1,941 | $ | 22,048 |
(1) | See Note 17 for further information. |
The accompanying notes are an integral part of Dominion Energys Consolidated Financial Statements
76 |
Consolidated Statements of Cash Flows
Year Ended December 31, | 2018 | 2017 | 2016 | |||||||||
(millions) | ||||||||||||
Operating Activities |
||||||||||||
Net income including noncontrolling interests |
$ | 2,549 | $ | 3,120 | $ | 2,212 | ||||||
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities: |
||||||||||||
Depreciation, depletion and amortization (including nuclear fuel) |
2,280 | 2,202 | 1,849 | |||||||||
Deferred income taxes and investment tax credits |
517 | (3 | ) | 725 | ||||||||
Current income tax for Dominion Energy Questar Pipeline contribution to Dominion Energy Midstream |
| | (212 | ) | ||||||||
Proceeds from assignment of tower rental portfolio |
| 91 | | |||||||||
Contribution to pension plan |
| (75 | ) | | ||||||||
Gains on sales of assets and equity method investments |
(1,006 | ) | (148 | ) | (50 | ) | ||||||
Provision for rate credits to electric utility customers |
77 | | | |||||||||
Charges associated with equity method investments |
| 158 | | |||||||||
Charges associated with future ash pond and landfill closure costs |
81 | | 197 | |||||||||
Impairment of assets and related charges |
395 | 15 | 4 | |||||||||
Net (gains) losses on nuclear decommissioning trusts funds and other investments |
102 | (117 | ) | (96 | ) | |||||||
Other adjustments |
19 | 33 | 8 | |||||||||
Changes in: |
||||||||||||
Accounts receivable |
(110 | ) | (103 | ) | (286 | ) | ||||||
Inventories |
(29 | ) | 15 | 1 | ||||||||
Deferred fuel and purchased gas costs, net |
(247 | ) | (71 | ) | 54 | |||||||
Prepayments |
(51 | ) | (62 | ) | 21 | |||||||
Accounts payable |
67 | (89 | ) | 97 | ||||||||
Accrued interest, payroll and taxes |
(12 | ) | 64 | 203 | ||||||||
Margin deposit assets and liabilities |
| (10 | ) | (66 | ) | |||||||
Net realized and unrealized changes related to derivative activities |
181 | 44 | (335 | ) | ||||||||
Asset retirement obligations |
(35 | ) | (94 | ) | (61 | ) | ||||||
Pension and other postretirement benefits |
(114 | ) | (177 | ) | (152 | ) | ||||||
Other operating assets and liabilities |
109 | (291 | ) | 38 | ||||||||
Net cash provided by operating activities |
4,773 | 4,502 | 4,151 | |||||||||
Investing Activities |
||||||||||||
Plant construction and other property additions (including nuclear fuel) |
(4,254 | ) | (5,504 | ) | (6,085 | ) | ||||||
Acquisition of Dominion Energy Questar, net of cash acquired |
| | (4,381 | ) | ||||||||
Acquisition of solar development projects |
(151 | ) | (405 | ) | (40 | ) | ||||||
Proceeds from sales of securities |
1,804 | 1,831 | 1,422 | |||||||||
Purchases of securities |
(1,894 | ) | (1,940 | ) | (1,504 | ) | ||||||
Proceeds from the sale of certain retail energy marketing assets |
54 | 68 | | |||||||||
Proceeds from sales of assets and equity method investments |
2,379 | | | |||||||||
Proceeds from assignment of shale development rights |
109 | 70 | 10 | |||||||||
Contributions to equity method affiliates |
(428 | ) | (370 | ) | (198 | ) | ||||||
Distributions from equity method affiliates |
36 | 275 | 2 | |||||||||
Other |
(13 | ) | 33 | 83 | ||||||||
Net cash used in investing activities |
(2,358 | ) | (5,942 | ) | (10,691 | ) | ||||||
Financing Activities |
||||||||||||
Issuance (repayment) of short-term debt, net |
(2,964 | ) | 143 | (654 | ) | |||||||
Issuance of short-term notes |
1,450 | | 1,200 | |||||||||
Repayment and repurchase of short-term notes |
(1,450 | ) | (250 | ) | (1,800 | ) | ||||||
Issuance and remarketing of long-term debt |
6,362 | 3,880 | 7,722 | |||||||||
Repayment and repurchase of long-term debt (including redemption premiums) |
(5,682 | ) | (1,572 | ) | (1,610 | ) | ||||||
Credit facility borrowings |
73 | | | |||||||||
Net proceeds from issuance of Dominion Energy Midstream common units |
4 | 18 | 482 | |||||||||
Net proceeds from issuance of Dominion Energy Midstream preferred units |
| | 490 | |||||||||
Proceeds from sale of interest in merchant solar projects |
| | 117 | |||||||||
Contributions from NRG and SunEdison to Four Brothers and Three Cedars |
| 9 | 189 | |||||||||
Issuance of common stock |
2,461 | 1,302 | 2,152 | |||||||||
Common dividend payments |
(2,185 | ) | (1,931 | ) | (1,727 | ) | ||||||
Other |
(278 | ) | (296 | ) | (331 | ) | ||||||
Net cash provided by (used in) financing activities |
(2,209 | ) | 1,303 | 6,230 | ||||||||
Increase (decrease) in cash, restricted cash and equivalents |
206 | (137 | ) | (310 | ) | |||||||
Cash, restricted cash and equivalents at beginning of year |
185 | 322 | 632 | |||||||||
Cash, restricted cash and equivalents at end of year |
$ | 391 | $ | 185 | $ | 322 | ||||||
Supplemental Cash Flow Information |
||||||||||||
Cash paid during the year for: |
||||||||||||
Interest and related charges, excluding capitalized amounts |
$ | 1,362 | $ | 1,083 | $ | 905 | ||||||
Income taxes |
89 | 9 | 145 | |||||||||
Significant noncash investing and financing activities:(1)(2) |
||||||||||||
Accrued capital expenditures |
307 | 343 | 427 | |||||||||
Receivables from sales of assets and equity method investments |
159 | | | |||||||||
Guarantee provided by equity method affiliate |
| 30 | |
(1) | See Note 9 for noncash activities related to equity method investments. |
(2) | See Note 19 for noncash activities related to the remeasurement of Dominion Energys noncontrolling interest in Dominion Energy Midstream. |
The accompanying notes are an integral part of Dominion Energys Consolidated Financial Statements.
77 |
[THIS PAGE INTENTIONALLY LEFT BLANK]
78 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholder of
Virginia Electric and Power Company
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Virginia Electric and Power Company (a wholly-owned subsidiary of Dominion Energy, Inc.) and subsidiaries (Virginia Power) at December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income, common shareholders equity, and cash flows, for each of the three years in the period ended December 31, 2018, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Virginia Power at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of Virginia Powers management. Our responsibility is to express an opinion on Virginia Powers consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Virginia Power in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Virginia Power is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of Virginia Powers internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Richmond, Virginia
February 28, 2019
We have served as Virginia Powers auditor since 1988.
79 |
Virginia Electric and Power Company
Consolidated Statements of Income
Year Ended December 31, | 2018 | 2017 | 2016 | |||||||||
(millions) | ||||||||||||
Operating Revenue(1) |
$ | 7,619 | $ | 7,556 | $ | 7,588 | ||||||
Operating Expenses |
||||||||||||
Electric fuel and other energy-related purchases(1) |
2,318 | 1,909 | 1,973 | |||||||||
Purchased electric capacity |
122 | 6 | 99 | |||||||||
Other operations and maintenance: |
||||||||||||
Affiliated suppliers |
305 | 309 | 310 | |||||||||
Other |
1,371 | 1,169 | 1,547 | |||||||||
Depreciation and amortization |
1,132 | 1,141 | 1,025 | |||||||||
Other taxes |
300 | 290 | 284 | |||||||||
Total operating expenses |
5,548 | 4,824 | 5,238 | |||||||||
Income from operations |
2,071 | 2,732 | 2,350 | |||||||||
Other income |
22 | 76 | 56 | |||||||||
Interest and related charges(1) |
511 | 494 | 461 | |||||||||
Income from operations before income tax expense |
1,582 | 2,314 | 1,945 | |||||||||
Income tax expense |
300 | 774 | 727 | |||||||||
Net Income |
$ | 1,282 | $ | 1,540 | $ | 1,218 |
(1) | See Note 24 for amounts attributable to affiliates. |
The accompanying notes are an integral part of Virginia Powers Consolidated Financial Statements.
80 |
Virginia Electric and Power Company
Consolidated Statements of Comprehensive Income
Year Ended December 31, | 2018 | 2017 | 2016 | |||||||||
(millions) | ||||||||||||
Net Income |
$ | 1,282 | $ | 1,540 | $ | 1,218 | ||||||
Other comprehensive income (loss), net of taxes: |
||||||||||||
Net deferred gains (losses) on derivatives-hedging activities, net of $(1), $3 and $1 tax |
1 | (5 | ) | (2 | ) | |||||||
Changes in unrealized net gains (losses) on nuclear decommissioning trust funds, net of $, $(16) and $(7) tax |
| 24 | 11 | |||||||||
Amounts reclassified to net income: |
||||||||||||
Net derivative (gains) losses-hedging activities, net of $, $ and $ tax |
1 | 1 | 1 | |||||||||
Net realized (gains) losses on nuclear decommissioning trust funds, net of $, $3 and $2 tax |
| (4 | ) | (4 | ) | |||||||
Other comprehensive income |
2 | 16 | 6 | |||||||||
Comprehensive income |
$ | 1,284 | $ | 1,556 | $ | 1,224 |
The accompanying notes are an integral part of Virginia Powers Consolidated Financial Statements.
81 |
Virginia Electric and Power Company
Consolidated Balance Sheets
At December 31, | 2018 | 2017 | ||||||
(millions) | ||||||||
ASSETS | ||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 29 | $ | 14 | ||||
Customer receivables (less allowance for doubtful accounts of $9 and $10) |
999 | 951 | ||||||
Other receivables (less allowance for doubtful accounts of $3 and $1) |
76 | 64 | ||||||
Affiliated receivables |
101 | 3 | ||||||
Inventories (average cost method): |
||||||||
Materials and supplies |
550 | 531 | ||||||
Fossil fuel |
287 | 319 | ||||||
Prepayments |
28 | 27 | ||||||
Regulatory assets |
424 | 205 | ||||||
Other(1) |
77 | 110 | ||||||
Total current assets |
2,571 | 2,224 | ||||||
Investments |
||||||||
Nuclear decommissioning trust funds |
2,369 | 2,399 | ||||||
Other |
3 | 3 | ||||||
Total investments |
2,372 | 2,402 | ||||||
Property, Plant and Equipment |
||||||||
Property, plant and equipment |
44,524 | 42,329 | ||||||
Accumulated depreciation and amortization |
(14,003 | ) | (13,277 | ) | ||||
Total property, plant and equipment, net |
30,521 | 29,052 | ||||||
Deferred Charges and Other Assets |
||||||||
Pension and other postretirement benefit assets(1) |
254 | 199 | ||||||
Intangible assets |
250 | 233 | ||||||
Regulatory assets |
737 | 810 | ||||||
Other(1) |
175 | 219 | ||||||
Total deferred charges and other assets |
1,416 | 1,461 | ||||||
Total assets |
$ | 36,880 | $ | 35,139 |
(1) | See Note 24 for amounts attributable to affiliates. |
82 |
At December 31, | 2018 | 2017 | ||||||
(millions) | ||||||||
LIABILITIES AND COMMON SHAREHOLDERS EQUITY | ||||||||
Current Liabilities |
||||||||
Securities due within one year |
$ | 350 | $ | 850 | ||||
Short-term debt |
314 | 542 | ||||||
Accounts payable |
339 | 361 | ||||||
Payables to affiliates |
209 | 125 | ||||||
Affiliated current borrowings |
224 | 33 | ||||||
Accrued interest, payroll and taxes |
248 | 256 | ||||||
Asset retirement obligations |
245 | 216 | ||||||
Regulatory liabilities |
299 | 127 | ||||||
Other(1) |
587 | 410 | ||||||
Total current liabilities |
2,815 | 2,920 | ||||||
Long-Term Debt |
11,321 | 10,496 | ||||||
Deferred Credits and Other Liabilities |
||||||||
Deferred income taxes and investment tax credits |
3,017 | 2,728 | ||||||
Asset retirement obligations |
1,200 | 1,149 | ||||||
Regulatory liabilities |
4,647 | 4,760 | ||||||
Pension and other postretirement benefit liability(1) |
632 | 505 | ||||||
Other |
201 | 357 | ||||||
Total deferred credits and other liabilities |
9,697 | 9,499 | ||||||
Total liabilities |
23,833 | 22,915 | ||||||
Commitments and Contingencies (see Note 22) |
||||||||
Common Shareholders Equity |
||||||||
Common stock no par(2) |
5,738 | 5,738 | ||||||
Other paid-in capital |
1,113 | 1,113 | ||||||
Retained earnings |
6,208 | 5,311 | ||||||
Accumulated other comprehensive income (loss) |
(12 | ) | 62 | |||||
Total common shareholders equity |
13,047 | 12,224 | ||||||
Total liabilities and shareholders equity |
$ | 36,880 | $ | 35,139 |
(1) | See Note 24 for amounts attributable to affiliates. |
(2) | 500,000 shares authorized; 274,723 shares outstanding at December 31, 2018 and 2017. |
The accompanying notes are an integral part of Virginia Powers Consolidated Financial Statements.
83 |
Virginia Electric and Power Company
Consolidated Statements of Common Shareholders Equity
Common Stock |
Other |
Retained |
Accumulated Other Comprehensive Income (Loss) |
Total |
||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
(millions, except for shares) | (thousands) | |||||||||||||||||||||||
December 31, 2015 |
275 | $ | 5,738 | $ | 1,113 | $ | 3,750 | $ | 40 | $ | 10,641 | |||||||||||||
Net income |
1,218 | 1,218 | ||||||||||||||||||||||
Other comprehensive income, net of tax |
6 | 6 | ||||||||||||||||||||||
December 31, 2016 |
275 | 5,738 | 1,113 | 4,968 | 46 | 11,865 | ||||||||||||||||||
Net income |
1,540 | 1,540 | ||||||||||||||||||||||
Dividends |
(1,199 | ) | (1,199 | ) | ||||||||||||||||||||
Other comprehensive income, net of tax |
16 | 16 | ||||||||||||||||||||||
Other |
2 | 2 | ||||||||||||||||||||||
December 31, 2017 |
275 | 5,738 | 1,113 | 5,311 | 62 | 12,224 | ||||||||||||||||||
Cumulative-effect of changes in accounting principles |
79 | (76 | ) | 3 | ||||||||||||||||||||
Net income |
1,282 | 1,282 | ||||||||||||||||||||||
Dividends |
(464 | ) | (464 | ) | ||||||||||||||||||||
Other comprehensive income, net of tax |
2 | 2 | ||||||||||||||||||||||
December 31, 2018 |
275 | $ | 5,738 | $ | 1,113 | $ | 6,208 | $ | (12 | ) | $ | 13,047 |
The accompanying notes are an integral part of Virginia Powers Consolidated Financial Statements.
84 |
Virginia Electric and Power Company
Consolidated Statements of Cash Flows
Year Ended December 31, | 2018 | 2017 | 2016 | |||||||||
(millions) | ||||||||||||
Operating Activities |
||||||||||||
Net income |
$ | 1,282 | $ | 1,540 | $ | 1,218 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
Depreciation and amortization (including nuclear fuel) |
1,309 | 1,333 | 1,210 | |||||||||
Deferred income taxes and investment tax credits |
224 | 269 | 469 | |||||||||
Proceeds from assignment of rental portfolio |
| 91 | | |||||||||
Charges associated with future ash pond and landfill closure costs |
81 | | 197 | |||||||||
Provision for rate credits to customers |
77 | | | |||||||||
Other adjustments |
(21 | ) | (36 | ) | (16 | ) | ||||||
Changes in: |
||||||||||||
Accounts receivable |
(60 | ) | (27 | ) | (65 | ) | ||||||
Affiliated receivables and payables |
(14 | ) | 125 | 220 | ||||||||
Inventories |
13 | 3 | 20 | |||||||||
Prepayments |
(1 | ) | 3 | 8 | ||||||||
Deferred fuel expenses, net |
(269 | ) | (59 | ) | 69 | |||||||
Accounts payable |
(26 | ) | (42 | ) | 25 | |||||||
Accrued interest, payroll and taxes |
(8 | ) | 17 | 49 | ||||||||
Net realized and unrealized changes related to derivative activities |
119 | 13 | (153 | ) | ||||||||
Asset retirement obligations |
(54 | ) | (88 | ) | (59 | ) | ||||||
Other operating assets and liabilities |
188 | (181 | ) | 77 | ||||||||
Net cash provided by operating activities |
2,840 | 2,961 | 3,269 | |||||||||
Investing Activities |
||||||||||||
Plant construction and other property additions |
(2,228 | ) | (2,496 | ) | (2,489 | ) | ||||||
Purchases of nuclear fuel |
(173 | ) | (192 | ) | (153 | ) | ||||||
Acquisition of solar development projects |
(141 | ) | (41 | ) | (7 | ) | ||||||
Purchases of securities |
(925 | ) | (884 | ) | (775 | ) | ||||||
Proceeds from sales of securities |
887 | 849 | 733 | |||||||||
Other |
(63 | ) | (41 | ) | (33 | ) | ||||||
Net cash used in investing activities |
(2,643 | ) | (2,805 | ) | (2,724 | ) | ||||||
Financing Activities |
||||||||||||
Issuance (repayment) of short-term debt, net |
(228 | ) | 477 | (1,591 | ) | |||||||
Issuance (repayment) of affiliated current borrowings, net |
191 | (229 | ) | (114 | ) | |||||||
Issuance and remarketing of long-term debt |
1,300 | 1,500 | 1,688 | |||||||||
Repayment and repurchase of long-term debt |
(964 | ) | (681 | ) | (517 | ) | ||||||
Common dividend payments to parent |
(464 | ) | (1,199 | ) | | |||||||
Other |
(18 | ) | (11 | ) | (18 | ) | ||||||
Net cash used in financing activities |
(183 | ) | (143 | ) | (552 | ) | ||||||
Increase (decrease) in cash, restricted cash and equivalents |
14 | 13 | (7 | ) | ||||||||
Cash, restricted cash and equivalents at beginning of year |
24 | 11 | 18 | |||||||||
Cash, restricted cash and equivalents at end of year |
$ | 38 | $ | 24 | $ | 11 | ||||||
Supplemental Cash Flow Information |
||||||||||||
Cash paid during the year for: |
||||||||||||
Interest and related charges, excluding capitalized amounts |
$ | 498 | $ | 458 | $ | 435 | ||||||
Income taxes |
128 | 362 | 79 | |||||||||
Significant noncash investing activities: |
||||||||||||
Accrued capital expenditures |
204 | 169 | 256 |
The accompanying notes are an integral part of Virginia Powers Consolidated Financial Statements.
85 |
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86 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
Dominion Energy Gas Holdings, LLC
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Dominion Energy Gas Holdings, LLC (a wholly-owned subsidiary of Dominion Energy, Inc.) and subsidiaries (Dominion Energy Gas) at December 31, 2018 and 2017, the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2018, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Dominion Energy Gas at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of Dominion Energy Gas management. Our responsibility is to express an opinion on Dominion Energy Gas consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to Dominion Energy Gas in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Dominion Energy Gas is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of Dominion Energy Gas internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Deloitte & Touche LLP
Richmond, Virginia
February 28, 2019
We have served as Dominion Energy Gas auditor since 2012.
87 |
Dominion Energy Gas Holdings, LLC
Consolidated Statements of Income
Year Ended December 31, | 2018 | 2017 | 2016 | |||||||||
(millions) | ||||||||||||
Operating Revenue(1) |
$ | 1,940 | $ | 1,814 | $ | 1,638 | ||||||
Operating Expenses |
||||||||||||
Purchased gas(1) |
40 | 132 | 109 | |||||||||
Other energy-related purchases |
135 | 21 | 12 | |||||||||
Other operations and maintenance: |
||||||||||||
Affiliated suppliers |
94 | 87 | 81 | |||||||||
Other(1) |
665 | 578 | 514 | |||||||||
Depreciation and amortization |
244 | 227 | 204 | |||||||||
Other taxes |
200 | 185 | 170 | |||||||||
Impairment of assets and related charges |
346 | 16 | | |||||||||
Gains on sales of assets |
(119 | ) | (70 | ) | (45 | ) | ||||||
Total operating expenses |
1,605 | 1,176 | 1,045 | |||||||||
Income from operations |
335 | 638 | 593 | |||||||||
Earnings from equity method investee |
24 | 21 | 21 | |||||||||
Other income |
133 | 104 | 87 | |||||||||
Interest and related charges(1) |
105 | 97 | 94 | |||||||||
Income from operations before income tax expense |
387 | 666 | 607 | |||||||||
Income tax expense |
86 | 51 | 215 | |||||||||
Net Income |
$ | 301 | $ | 615 | $ | 392 |
(1) | See Note 24 for amounts attributable to related parties. |
The accompanying notes are an integral part of Dominion Energy Gas Consolidated Financial Statements.
88 |
Dominion Energy Gas Holdings, LLC
Consolidated Statements of Comprehensive Income
Year Ended December 31, | 2018 | 2017 | 2016 | |||||||||
(millions) | ||||||||||||
Net Income |
$ | 301 | $ | 615 | $ | 392 | ||||||
Other comprehensive income (loss), net of taxes: |
||||||||||||
Net deferred gains (losses) on derivatives-hedging activities, net of $6, $(3) and $10 tax |
(17 | ) | 5 | (16 | ) | |||||||
Changes in net unrecognized pension benefit (costs) , net of $20, $(8) and $14 tax |
(52 | ) | 20 | (20 | ) | |||||||
Amounts reclassified to net income: |
||||||||||||
Net derivative (gains) losses-hedging activities, net of $(7), $3 and $(6) tax |
20 | (4 | ) | 9 | ||||||||
Net pension and other postretirement benefit costs, net of $(2), $(2) and $(2) tax |
4 | 4 | 3 | |||||||||
Other comprehensive income (loss) |
(45 | ) | 25 | (24 | ) | |||||||
Comprehensive income |
$ | 256 | $ | 640 | $ | 368 |
The accompanying notes are an integral part of Dominion Energy Gas Consolidated Financial Statements.
89 |
Dominion Energy Gas Holdings, LLC
Consolidated Balance Sheets
At December 31, | 2018 | 2017 | ||||||
(millions) | ||||||||
ASSETS | ||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 10 | $ | 4 | ||||
Customer receivables (less allowance for doubtful accounts of less than $1 and $1)(1) |
309 | 297 | ||||||
Other receivables (less allowance for doubtful accounts of $2 and $1)(1) |
17 | 15 | ||||||
Affiliated receivables |
10 | 10 | ||||||
Inventories: |
||||||||
Materials and supplies |
53 | 55 | ||||||
Gas stored |
12 | 9 | ||||||
Prepayments |
116 | 112 | ||||||
Gas imbalances(1) |
162 | 46 | ||||||
Other(1) |
58 | 52 | ||||||
Total current assets |
747 | 600 | ||||||
Investments |
93 | 97 | ||||||
Property, Plant and Equipment |
||||||||
Property, plant and equipment |
11,238 | 11,173 | ||||||
Accumulated depreciation and amortization |
(2,971 | ) | (3,018 | ) | ||||
Total property, plant and equipment, net |
8,267 | 8,155 | ||||||
Deferred Charges and Other Assets |
||||||||
Goodwill |
547 | 542 | ||||||
Intangible assets, net |
109 | 109 | ||||||
Pension and other postretirement benefit assets(1) |
1,775 | 1,828 | ||||||
Regulatory assets |
727 | 511 | ||||||
Other(1) |
86 | 98 | ||||||
Total deferred charges and other assets |
3,244 | 3,088 | ||||||
Total assets |
$ | 12,351 | $ | 11,940 |
(1) | See Note 24 for amounts attributable to related parties. |
90 |
At December 31, | 2018 | 2017 | ||||||
(millions) | ||||||||
LIABILITIES AND EQUITY | ||||||||
Current Liabilities |
||||||||
Securities due within one year |
$ | 449 | $ | | ||||
Short-term debt |
10 | 629 | ||||||
Accounts payable |
196 | 193 | ||||||
Payables to affiliates |
65 | 62 | ||||||
Affiliated current borrowings |
218 | 18 | ||||||
Accrued interest, payroll and taxes |
265 | 250 | ||||||
Other(1) |
198 | 189 | ||||||
Total current liabilities |
1,401 | 1,341 | ||||||
Long-Term Debt |
3,609 | 3,570 | ||||||
Deferred Credits and Other Liabilities |
||||||||
Deferred income taxes and investment tax credits |
1,465 | 1,454 | ||||||
Regulatory liabilities |
1,285 | 1,227 | ||||||
Other(1) |
194 | 185 | ||||||
Total deferred credits and other liabilities |
2,944 | 2,866 | ||||||
Total liabilities |
7,954 | 7,777 | ||||||
Commitments and Contingencies (see Note 22) |
||||||||
Equity |
||||||||
Membership interests |
4,566 | 4,261 | ||||||
Accumulated other comprehensive loss |
(169 | ) | (98 | ) | ||||
Total equity |
4,397 | 4,163 | ||||||
Total liabilities and equity |
$ | 12,351 | $ | 11,940 |
(1) | See Note 24 for amounts attributable to related parties. |
The accompanying notes are an integral part of Dominion Energy Gas Consolidated Financial Statements.
91 |
Dominion Energy Gas Holdings, LLC
Consolidated Statements of Equity
Membership
|
Accumulated
|
Total
|
||||||||||
(millions) | ||||||||||||
December 31, 2015 |
$ | 3,417 | $ | (99 | ) | $ | 3,318 | |||||
Net income |
392 | 392 | ||||||||||
Distributions |
(150 | ) | (150 | ) | ||||||||
Other comprehensive loss, net of tax |
(24 | ) | (24 | ) | ||||||||
December 31, 2016 |
3,659 | (123 | ) | 3,536 | ||||||||
Net income |
615 | 615 | ||||||||||
Distributions |
(15 | ) | (15 | ) | ||||||||
Other comprehensive income, net of tax |
25 | 25 | ||||||||||
Other |
2 | 2 | ||||||||||
December 31, 2017 |
4,261 | (98 | ) | 4,163 | ||||||||
Cumulative-effect of changes in accounting principles |
29 | (26 | ) | 3 | ||||||||
Net income |
301 | 301 | ||||||||||
Distributions |
(25 | ) | (25 | ) | ||||||||
Other comprehensive loss, net of tax |
(45 | ) | (45 | ) | ||||||||
December 31, 2018 |
$ | 4,566 | $ | (169 | ) | $ | 4,397 |
The accompanying notes are an integral part of Dominion Energy Gas Consolidated Financial Statements.
92 |
Dominion Energy Gas Holdings, LLC
Consolidated Statements of Cash Flows
Year Ended December 31, | 2018 | 2017 | 2016 | |||||||||
(millions) | ||||||||||||
Operating Activities |
||||||||||||
Net income |
$ | 301 | $ | 615 | $ | 392 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||||
Depreciation and amortization |
244 | 227 | 204 | |||||||||
Deferred income taxes and investment tax credits |
33 | 27 | 238 | |||||||||
Gains on sales of assets |
(109 | ) | (70 | ) | (50 | ) | ||||||
Impairment of assets and related charges |
348 | 15 | | |||||||||
Other adjustments |
(7 | ) | (7 | ) | (6 | ) | ||||||
Changes in: |
||||||||||||
Accounts receivable |
(14 | ) | (17 | ) | (68 | ) | ||||||
Affiliated receivables and payables |
3 | 40 | 88 | |||||||||
Inventories |
(1 | ) | 6 | 8 | ||||||||
Prepayments |
(4 | ) | (18 | ) | (6 | ) | ||||||
Accounts payable |
(5 | ) | (17 | ) | 15 | |||||||
Accrued interest, payroll and taxes |
15 | 24 | 42 | |||||||||
Pension and other postretirement benefits |
(155 | ) | (143 | ) | (141 | ) | ||||||
Other operating assets and liabilities |
(17 | ) | (16 | ) | (68 | ) | ||||||
Net cash provided by operating activities |
632 | 666 | 648 | |||||||||
Investing Activities |
||||||||||||
Plant construction and other property additions |
(772 | ) | (778 | ) | (854 | ) | ||||||
Proceeds from sale of equity method investment in Iroquois |
| | 7 | |||||||||
Proceeds from assignments of shale development rights |
109 | 70 | 10 | |||||||||
Other |
(16 | ) | (19 | ) | (12 | ) | ||||||
Net cash used in investing activities |
(679 | ) | (727 | ) | (849 | ) | ||||||
Financing Activities |
||||||||||||
Issuance (repayment) of short-term debt, net |
(619 | ) | 169 | 69 | ||||||||
Issuance (repayment) of affiliated current borrowings, net |
200 | (100 | ) | 23 | ||||||||
Issuance of long-term debt |
500 | | 680 | |||||||||
Repayment of long-term debt |
| | (400 | ) | ||||||||
Distribution payments to parent |
(25 | ) | (15 | ) | (150 | ) | ||||||
Other |
(5 | ) | (6 | ) | (5 | ) | ||||||
Net cash provided by financing activities |
51 | 48 | 217 | |||||||||
Increase (decrease) in cash, restricted cash and equivalents |
4 | (13 | ) | 16 | ||||||||
Cash, restricted cash and equivalents at beginning of year |
30 | 43 | 27 | |||||||||
Cash, restricted cash and equivalents at end of year |
$ | 34 | $ | 30 | $ | 43 | ||||||
Supplemental Cash Flow Information |
||||||||||||
Cash paid (received) during the year for: |
||||||||||||
Interest and related charges, excluding capitalized amounts |
$ | 95 | $ | 89 | $ | 81 | ||||||
Income taxes |
79 | 9 | (92 | ) | ||||||||
Significant noncash investing activities: |
||||||||||||
Accrued capital expenditures |
38 | 38 | 59 |
The accompanying notes are an integral part of Dominion Energy Gas Consolidated Financial Statements.
93 |
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94 |
Combined Notes to Consolidated Financial Statements, Continued
96 |
97 |
Combined Notes to Consolidated Financial Statements, Continued
98 |
99 |
Combined Notes to Consolidated Financial Statements, Continued
100 |
101 |
Combined Notes to Consolidated Financial Statements, Continued
102 |
103 |
Combined Notes to Consolidated Financial Statements, Continued
104 |
105 |
Combined Notes to Consolidated Financial Statements, Continued
106 |
107 |
Combined Notes to Consolidated Financial Statements, Continued
108 |
109 |
Combined Notes to Consolidated Financial Statements, Continued
110 |
111 |
Combined Notes to Consolidated Financial Statements, Continued
112 |
113 |
Combined Notes to Consolidated Financial Statements, Continued
114 |
Wholly-Owned Merchant Solar Projects
ACQUISITIONS
The following table presents significant completed acquisitions of wholly-owned merchant solar projects by Dominion Energy.
Completed Acquisition Date |
Seller | Number of Projects |
Project Location | Project Name(s) | Initial Acquisition (millions)(1) |
Project Cost (millions)(2) |
Date of Commercial Operations |
MW Capacity |
||||||||||||||||
February 2017 |
Community Energy Solar, LLC | 1 | Virginia | Amazon Solar Farm VirginiaSouthhampton |
$ | 29 | $ | 205 | December 2017 | 100 | ||||||||||||||
March 2017 |
Solar Frontier Americas Holding LLC |
1 | (3) | California | Midway II | 77 | 78 | June 2017 | 30 | |||||||||||||||
May 2017 |
Cypress Creek Renewables, LLC |
1 | North Carolina | IS37 | 154 | 160 | June 2017 | 79 | ||||||||||||||||
June 2017 |
Hecate Energy Virginia C&C LLC |
1 | Virginia | Clarke County | 16 | 16 | August 2017 | 10 | ||||||||||||||||
June 2017 |
Strata Solar Development, LLC/Moorings Farm 2 Holdco, LLC |
2 | North Carolina | Fremont, Moorings 2 | 20 | 20 | November 2017 | 10 | ||||||||||||||||
September 2017 |
Hecate Energy Virginia C&C LLC |
1 | Virginia | Cherrydale | 40 | 41 | November 2017 | 20 | ||||||||||||||||
October 2017 |
Strata Solar Development, LLC |
2 | North Carolina | Clipperton, Pikeville | 20 | 21 | November 2017 | 10 |
(1) | The purchase price was primarily allocated to Property, Plant and Equipment. |
(2) | Includes acquisition cost. |
(3) | In April 2017, Dominion Energy discontinued efforts on the acquisition of the additional 20 MW solar project from Solar Frontier Americas Holding LLC. |
In addition during 2016, Dominion Energy acquired 100% of the equity interests of seven solar projects in Virginia, North Carolina and South Carolina for an aggregate purchase price of $32 million, all of which was allocated to property, plant and equipment. The projects cost $421 million in total, including initial acquisition costs, and generate 221 MW combined. One of the projects commenced commercial operations in 2016 and the remaining projects commenced commercial operations in 2017.
Long-term power purchase, interconnection and operation and maintenance agreements have been executed for all of the projects described above. These projects are included in the Power Generation operating segment. Dominion Energy has claimed federal investment tax credits on these solar projects.
SALE OF INTEREST IN MERCHANT SOLAR PROJECTS
In September 2015, Dominion Energy signed an agreement to sell a noncontrolling interest (consisting of 33% of the equity interests) in all of its then-currently wholly-owned merchant solar projects, 24 solar projects totaling 425 MW, to SunEdison. In December 2015, the sale of interest in 15 of the solar projects closed for $184 million with the sale of interest in the remaining projects completed in January 2016 for $117 million. Upon closing, SunEdison sold its interest in these projects to Terra Nova Renewable Partners.
115 |
Combined Notes to Consolidated Financial Statements, Continued
NOTE 4. OPERATING REVENUE
The Companies operating revenue, subsequent to the adoption of revised guidance for revenue recognition from contracts with customers, consists of the following:
Year Ended December 31, | 2018 | |||
(millions) | ||||
Dominion Energy |
||||
Regulated electric sales: |
||||
Residential |
$ | 3,413 | ||
Commercial |
2,503 | |||
Industrial |
490 | |||
Government and other retail |
854 | |||
Wholesale |
137 | |||
Nonregulated electric sales |
1,294 | |||
Regulated gas sales: |
||||
Residential |
818 | |||
Commercial |
221 | |||
Other |
36 | |||
Nonregulated gas sales |
214 | |||
Regulated gas transportation and storage: |
||||
FERC-regulated |
1,091 | |||
State-regulated |
640 | |||
Nonregulated gas transportation and storage |
442 | |||
Other regulated revenues |
179 | |||
Other nonregulated revenues(1)(2) |
563 | |||
Total operating revenue from contracts with customers |
12,895 | |||
Other revenues(2)(3) |
471 | |||
Total operating revenue |
$ | 13,366 | ||
Virginia Power |
||||
Regulated electric sales: |
||||
Residential |
$ | 3,413 | ||
Commercial |
2,503 | |||
Industrial |
490 | |||
Government and other retail |
854 | |||
Wholesale |
137 | |||
Other regulated revenues |
132 | |||
Other nonregulated revenues(1)(2) |
55 | |||
Total operating revenue from contracts with customers |
7,584 | |||
Other revenues(1)(3) |
35 | |||
Total operating revenue |
$ | 7,619 | ||
Dominion Energy Gas |
||||
Regulated gas sales: |
||||
Residential |
$ | 81 | ||
Other |
27 | |||
Nonregulated gas sales(1) |
13 | |||
Regulated gas transportation and storage: |
||||
FERC-regulated(1) |
763 | |||
State-regulated(1) |
605 | |||
NGL revenue(1)(2) |
223 | |||
Management service revenue(1) |
205 | |||
Other regulated revenues(1) |
22 | |||
Other nonregulated revenues(1) |
10 | |||
Total operating revenue from contracts with customers |
1,949 | |||
Other revenues |
(9 | ) | ||
Total operating revenue |
$ | 1,940 |
116 |
(1) | See Notes 9 and 24 for amounts attributable to related parties and affiliates. |
(2) | Amounts above include $241 million and $206 million for the year ended December 31, 2018 primarily consisting of NGL sales at Dominion Energy and Dominion Energy Gas, respectively, which are considered to be goods transferred at a point in time. In addition, the amounts include $17 million and $11 million of sales of renewable energy credits at both Dominion Energy and Virginia Power for the year ended December 31, 2018, respectively, which are considered to be goods transferred at a point in time. |
(3) | Amounts above include $15 million of alternative revenue at Dominion Energy and Virginia Power for the year ended December 31, 2018. |
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.
Revenue expected to be recognized on multi-year contracts in place at December 31, 2018 |
2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | |||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||
Dominion Energy |
$ | 1,643 | $ | 1,563 | $ | 1,448 | $ | 1,319 | $ | 1,154 | $ | 13,693 | $ | 20,820 | ||||||||||||||
Virginia Power |
21 | 3 | 1 | | | | 25 | |||||||||||||||||||||
Dominion Energy Gas |
600 | 560 | 475 | 384 | 268 | 1,612 | 3,899 |
117 |
Combined Notes to Consolidated Financial Statements, Continued
Continuing Operations
Details of income tax expense for continuing operations including noncontrolling interests were as follows:
Dominion Energy | Virginia Power | Dominion Energy Gas | ||||||||||||||||||||||||||||||||||
Year Ended December 31, | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||||||||||
Current: |
||||||||||||||||||||||||||||||||||||
Federal |
$ | (45 | ) | $ | (1 | ) | $ | (155 | ) | $ | 36 | $ | 432 | $ | 168 | $ | 23 | $ | 16 | $ | (27 | ) | ||||||||||||||
State |
108 | (26 | ) | 85 | 40 | 73 | 90 | 30 | 8 | 4 | ||||||||||||||||||||||||||
Total current expense (benefit) |
63 | (27 | ) | (70 | ) | 76 | 505 | 258 | 53 | 24 | (23 | ) | ||||||||||||||||||||||||
Deferred: |
||||||||||||||||||||||||||||||||||||
Federal |
||||||||||||||||||||||||||||||||||||
2017 Tax Reform Act impact |
46 | (851 | ) | | 21 | (93 | ) | | (11 | ) | (197 | ) | | |||||||||||||||||||||||
Taxes before operating loss carryforwards and investment tax credits |
436 | 739 | 1,050 | 199 | 319 | 435 | 48 | 199 | 239 | |||||||||||||||||||||||||||
Tax utilization expense (benefit) of operating loss carryforwards |
92 | 174 | (161 | ) | | 4 | (2 | ) | | 5 | (2 | ) | ||||||||||||||||||||||||
Investment tax credits |
(56 | ) | (200 | ) | (248 | ) | (51 | ) | (23 | ) | (25 | ) | | | | |||||||||||||||||||||
State |
(1 | ) | 132 | 50 | 55 | 59 | 27 | (4 | ) | 20 | 1 | |||||||||||||||||||||||||
Total deferred expense (benefit) |
517 | (6 | ) | 691 | 224 | 266 | 435 | 33 | 27 | 238 | ||||||||||||||||||||||||||
Investment tax credit-gross deferral |
2 | 5 | 35 | 2 | 5 | 35 | | | | |||||||||||||||||||||||||||
Investment tax credit-amortization |
(2 | ) | (2 | ) | (1 | ) | (2 | ) | (2 | ) | (1 | ) | | | | |||||||||||||||||||||
Total income tax expense (benefit) |
$ | 580 | $ | (30 | ) | $ | 655 | $ | 300 | $ | 774 | $ | 727 | $ | 86 | $ | 51 | $ | 215 |
The 2017 Tax Reform Act reduced the statutory federal income tax rate to 21% beginning in January 2018. Accordingly, current income taxes, and deferred income taxes that originate in 2018, are recorded at the new 21% rate. Dominion Energy had less than $1 million of state deferred income tax expense as a result of the reversal of deferred taxes upon the sale of its interest in Blue Racer and Fairless and Manchester. Dominion Energys current federal income taxes primarily include the recognition of a $47 million benefit related to a carryback claim for specified liability losses involving prior tax years.
The accounting for the reduction in the corporate income tax rate decreased deferred income tax expense by $851 million at Dominion Energy, $93 million at Virginia Power, and $197 million for Dominion Energy Gas for the year ending December 31, 2017. The decrease in deferred income taxes at Dominion Energy primarily relates to the remeasurement of deferred taxes on merchant operations and includes the effects at Virginia Power and Dominion Energy Gas. Virginia Power and Dominion Energy Gas have certain regulatory assets and liabilities that have not yet been charged or returned to customers through rates, or on which they do not earn a return, including unrecognized pension and other postretirement benefits. The remeasurement of the deferred taxes on these regulatory balances was charged to continuing operations in 2017. For ratemaking purposes, Dominion Energy Gas subsidiary DETI follows the cash method on pension contributions. Deferred taxes recorded on pension balances as required by GAAP are not included as a component of rates and therefore the remeasurement of these deferred taxes were charged to continuing operations in 2017.
In 2016, Dominion Energy realized a taxable gain resulting from the contribution of Dominion Energy Questar Pipeline to Dominion Energy Midstream. The contribution and related transactions resulted in increases in the tax basis of Dominion Energy Questar Pipelines assets and the number of Dominion Energy Midstreams common and convertible preferred units held by noncontrolling interests. The direct tax effects of the transactions included a provision for current income taxes ($212 million) and an offsetting benefit for deferred income taxes ($96 million) and were charged to common shareholders equity. The federal tax liability was reduced by $129 million of tax
118 |
credits generated in 2016 that otherwise would have resulted in additional credit carryforwards and a $17 million benefit provided by the domestic production activities deduction. These benefits, as indirect effects of the contribution transaction, were reflected in Dominion Energys 2016 current federal income tax expense.
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 | Dominion Energy Gas | ||||||||||||||||||||||||||||||||||
Year Ended December 31, | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | |||||||||||||||||||||||||||
U.S. statutory rate |
21.0 | % | 35.0 | % | 35.0 | % | 21.0 | % | 35.0 | % | 35.0 | % | 21.0 | % | 35.0 | % | 35.0 | % | ||||||||||||||||||
Increases (reductions) resulting from: |
||||||||||||||||||||||||||||||||||||
State taxes, net of federal benefit |
3.0 | 2.0 | 2.4 | 4.7 | 3.7 | 3.8 | 3.2 | 2.4 | 0.5 | |||||||||||||||||||||||||||
Investment tax credits |
(1.9 | ) | (6.3 | ) | (11.7 | ) | (3.5 | ) | (0.8 | ) | | | | | ||||||||||||||||||||||
Production tax credits |
(0.7 | ) | (0.7 | ) | (0.8 | ) | (0.7 | ) | (0.4 | ) | (0.5 | ) | | | | |||||||||||||||||||||
Valuation allowances |
0.3 | 0.2 | 1.2 | | | 0.1 | 1.8 | 0.3 | | |||||||||||||||||||||||||||
Reversal of excess deferred income taxes |
(2.0 | ) | | | (3.2 | ) | | | (1.7 | ) | | | ||||||||||||||||||||||||
Federal legislative change |
1.5 | (27.5 | ) | | 1.3 | (4.0 | ) | | (2.8 | ) | (29.5 | ) | | |||||||||||||||||||||||
State legislative change |
(0.6 | ) | | (0.6 | ) | | | | 0.2 | | | |||||||||||||||||||||||||
AFUDCequity |
(0.8 | ) | (1.4 | ) | (0.6 | ) | (0.5 | ) | (0.6 | ) | (0.6 | ) | (0.6 | ) | (0.9 | ) | (0.2 | ) | ||||||||||||||||||
Employee stock ownership plan deduction |
(0.4 | ) | (0.6 | ) | (0.6 | ) | | | | | | | ||||||||||||||||||||||||
Other, net |
(0.9 | ) | (1.7 | ) | (1.4 | ) | (0.1 | ) | 0.6 | (0.4 | ) | 1.2 | 0.4 | 0.1 | ||||||||||||||||||||||
Effective tax rate |
18.5 | % | (1.0 | )% | 22.9 | % | 19.0 | % | 33.5 | % | 37.4 | % | 22.3 | % | 7.7 | % | 35.4 | % |
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 35%. The Companies have recorded an estimate of the portion of excess deferred income tax amortization in 2018, and changes in estimates of amounts probable of collection from or return to customers. The reversal of these excess deferred income taxes will impact the effective tax rate, and may ultimately impact rates charged to customers. As described in Note 13 to the Consolidated Financial Statements, the Companies decreased revenue and increased regulatory liabilities to offset these deferred tax impacts in accordance with applicable regulatory commission orders or formula rate mechanisms.
In 2018, the Companies applied the provisions of recently proposed regulations addressing the availability of federal bonus depreciation for the period beginning after September 27, 2017 through December 31, 2017. The application of these changes increased Dominion Energys 2017 net operating loss carryforward, the benefit of which will be recognized at the 21% rate. As a result, Dominion Energys effective tax rate reflects a $23 million increase to deferred income tax expense associated with the remeasurement of this deferred tax asset. The application of these proposed regulations at Dominion Energy Gas had no impact on income tax expense as the changes in, and remeasurement of, deferred tax liabilities increased regulatory liabilities by $35 million. The effects of these changes at Virginia Power were immaterial. These amounts and adjustments represent the Companies best estimate based on available information, and could be subject to change based on additional guidance in yet to be finalized regulations. In addition, changes in estimates of amounts probable of return to or collection from customers increased deferred income tax expense at Virginia Power by $23 million and increased regulatory liabilities by $31 million. At Dominion Energy Gas similar changes in estimates decreased income tax expense by $11 million and regulatory liabilities by $16 million. These changes also impacted Dominion Energy. In addition, Dominion Energy and Dominion Energy Gas effective tax rates reflect the impacts of a state legislative change enacted in the second quarter of 2018 that was retroactive to January 1, 2018.
In 2017, the Companies effective tax rates reflect the net benefit of remeasurement of deferred taxes resulting from the lower corporate income tax rate promulgated by the 2017 Tax Reform Act, and the completion of audits by state tax authorities that resulted in the recognition of previously unrecognized tax benefits. At December 31, 2016, Virginia Powers unrecognized tax benefits included state refund claims for open tax years through 2011. Management believed settlement of the claims, including interest thereon, within the next twelve months was remote. In June 2017, Virginia Power received and accepted a cash offer to settle the refund claims. As a result of the settlement, Virginia Power decreased its unrecognized tax benefits by $8 million, and recognized a $2 million tax benefit, which impacted its effective tax rate. Also in connection with this settlement, Virginia Power realized interest income of $11 million, which is reflected in other income in the Consolidated Statements of Income.
In 2016, Dominion Energys effective tax rate reflects a valuation allowance on a state credit not expected to be utilized by a Dominion Energy subsidiary which files a separate state return.
119 |
Combined Notes to Consolidated Financial Statements, Continued
120 |
121 |
Combined Notes to Consolidated Financial Statements, Continued
122 |
The following table presents Dominion Energys quantitative information about Level 3 fair value measurements at December 31, 2018. 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 and futures: |
||||||||||||||||||||
Natural gas(2) |
$42 | Discounted cash flow | Market price (per Dth)(3) | (2) - 8 | (1 | ) | ||||||||||||||
FTRs |
15 | Discounted cash flow | Market price (per MWh)(3) | (2) - 7 | 1 | |||||||||||||||
Physical options: |
||||||||||||||||||||
Natural gas |
2 | Option model | Market price (per Dth)(3) | 1 - 8 | 3 | |||||||||||||||
Price volatility (4) | 18% - 73% | 30 | % | |||||||||||||||||
Electricity |
11 | Option model | Market price (per MWh)(3) | 34 - 50 | 42 | |||||||||||||||
Price volatility (4) | 39% - 60% | 49 | % | |||||||||||||||||
Total assets |
$70 | |||||||||||||||||||
Liabilities |
||||||||||||||||||||
Financial forwards: |
||||||||||||||||||||
FTRs |
$ 6 | Discounted cash flow | Market price (per MWh)(3) | (2) - 6 | | |||||||||||||||
Total liabilities |
$ 6 |
(1) | Averages weighted by volume. |
(2) | Includes basis. |
(3) | Represents market prices beyond defined terms for Levels 1 and 2. |
(4) | Represents volatilities unrepresented in published markets. |
123 |
Combined Notes to Consolidated Financial Statements, Continued
124 |
125 |
Combined Notes to Consolidated Financial Statements, Continued
VIRGINIA POWER
The following table presents Virginia Powers quantitative information about Level 3 fair value measurements at December 31, 2018. 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 and futures: |
||||||||||||||||||||
Natural gas(2) |
$38 | Discounted cash flow | Market price (per Dth)(3) | (2)-8 | (1 | ) | ||||||||||||||
FTRs |
15 | Discounted cash flow | Market price (per MWh)(3) | (2)-7 | 1 | |||||||||||||||
Physical options: |
||||||||||||||||||||
Natural gas |
2 | Option model | Market price (per Dth)(3) | 1-8 | 3 | |||||||||||||||
Price volatility (4) | 18%-73% | 30 | % | |||||||||||||||||
Electricity |
11 | Option model | Market price (per MWh)(3) | 34-50 | 42 | |||||||||||||||
Price volatility (4) | 39%-60% | 49 | % | |||||||||||||||||
Total assets |
$66 | |||||||||||||||||||
Liabilities |
||||||||||||||||||||
Financial forwards: |
||||||||||||||||||||
FTRs |
$ 6 | Discounted cash flow | Market price (per MWh)(3) | (2)-6 | | |||||||||||||||
Total liabilities |
$ 6 |
(1) | Averages weighted by volume. |
(2) | Includes basis. |
(3) | Represents market prices beyond defined terms for Levels 1 and 2. |
(4) | Represents volatilities unrepresented in published markets. |
126 |
127 |
Combined Notes to Consolidated Financial Statements, Continued
128 |
DOMINION ENERGY
Balance Sheet Presentation
The tables below present Dominion Energys 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:
December 31, 2018 |
December 31, 2017 | |||||||||||||||||||||||||||||||
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 |
$ | 175 | $ | 12 | $ | | $ | 163 | $ | 174 | $ | 9 | $ | | $ | 165 | ||||||||||||||||
Exchange |
68 | 68 | | | 80 | 80 | | | ||||||||||||||||||||||||
Interest rate contracts: |
||||||||||||||||||||||||||||||||
Over-the-counter |
18 | 1 | | 17 | 17 | 8 | | 9 | ||||||||||||||||||||||||
Foreign currency contracts: |
||||||||||||||||||||||||||||||||
Over-the-counter |
26 | 2 | | 24 | 32 | 2 | | 30 | ||||||||||||||||||||||||
Total derivatives, subject to a master netting or similar arrangement |
$ | 287 | $ | 83 | $ | | $ | 204 | $ | 303 | $ | 99 | $ | | $ | 204 |
(1) | Excludes $7 million and $4 million of derivative assets at December 31, 2018 and 2017, respectively, which are not subject to master netting or similar arrangements. |
December 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||||
Gross Amounts Not Balance Sheet |
Gross Amounts Not 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 |
$ | 19 | $ | 12 | $ | | $ | 7 | $ | 76 | $ | 9 | $ | 6 | $ | 61 | ||||||||||||||||
Exchange |
115 | 68 | 47 | | 120 | 80 | 40 | | ||||||||||||||||||||||||
Interest rate contracts: |
||||||||||||||||||||||||||||||||
Over-the-counter |
142 | 1 | | 141 | 85 | 8 | | 77 | ||||||||||||||||||||||||
Foreign currency contracts: |
||||||||||||||||||||||||||||||||
Over-the-counter |
2 | 2 | | | 2 | 2 | | | ||||||||||||||||||||||||
Total derivatives, subject to a master netting or similar arrangement |
$ | 278 | $ | 83 | $ | 47 | $ | 148 | $ | 283 | $ | 99 | $ | 46 | $ | 138 |
(1) | Excludes $1 million of derivative liabilities at December 31, 2018 and 2017, which are not subject to master netting or similar arrangements. |
129 |
Combined Notes to Consolidated Financial Statements, Continued
130 |
131 |
Combined Notes to Consolidated Financial Statements, Continued
Derivatives not designated as hedging instruments | Amount of Gain (Loss) Recognized in Income on Derivatives(1) |
|||||||||||
Year Ended December 31, | 2018 | 2017 | 2016 | |||||||||
(millions) | ||||||||||||
Derivative type and location of gains (losses): |
||||||||||||
Commodity: |
||||||||||||
Operating revenue |
$(28 | ) | $ 18 | $ 2 | ||||||||
Purchased gas |
11 | (3 | ) | 4 | ||||||||
Electric fuel and other energy-related purchases |
(9 | ) | (59 | ) | (70 | ) | ||||||
Other operations & maintenance |
| (1 | ) | 1 | ||||||||
Total |
$(26 | ) | $(45 | ) | $(63 | ) |
(1) | Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Dominion Energys Consolidated Statements of Income. |
VIRGINIA POWER
Balance Sheet Presentation
The tables below present Virginia Powers 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:
December 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||||
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 |
$64 | $ 6 | $ | $58 | $155 | $ 4 | $ | $151 | ||||||||||||||||||||||||
Interest rate contracts: |
||||||||||||||||||||||||||||||||
Over-the-counter |
3 | | | 3 | | | | | ||||||||||||||||||||||||
Total derivatives, subject to a master netting or similar arrangement |
$67 | $ 6 | $ | $61 | $155 | $ 4 | $ | $151 |
(1) | Excludes $26 million and $11 million of derivative assets at December 31, 2018 and 2017, respectively, which are not subject to master netting or similar arrangements. |
December 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||||
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 |
$ 6 | $ 6 | $ | $ | $ 4 | $ 4 | $ | $ | ||||||||||||||||||||||||
Interest rate contracts: |
||||||||||||||||||||||||||||||||
Over-the-counter |
88 | | | 88 | 57 | | | 57 | ||||||||||||||||||||||||
Total derivatives, subject to a master netting or similar arrangement |
$94 | $ 6 | $ | $88 | $61 | $ 4 | $ | $57 |
(1) | Excludes $9 million and $5 million of derivative liabilities at December 31, 2018 and 2017, respectively, which are not subject to master netting or similar arrangements. |
132 |
133 |
Combined Notes to Consolidated Financial Statements, Continued
134 |
DOMINION ENERGY GAS
Balance Sheet Presentation
The tables below present Dominion Energy Gas 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:
December 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||||
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 |
Financial Instruments |
Cash Collateral Received |
Net Amounts |
Gross Assets Presented in the Consolidated Balance Sheet |
Financial Instruments |
Cash Collateral Received |
Net Amounts |
|||||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||||||
Commodity contracts: |
||||||||||||||||||||||||||||||||
Over-the-counter |
$ | 3 | $ | | $ | | $ | 3 | $ | | $ | | $ | | $ | | ||||||||||||||||
Foreign currency contracts: |
||||||||||||||||||||||||||||||||
Over-the-counter |
26 | 2 | | 24 | 32 | 2 | | 30 | ||||||||||||||||||||||||
Total derivatives, subject to a master netting or similar arrangement |
$ | 29 | $ | 2 | $ | | $ | 27 | $ | 32 | $ | 2 | $ | | $ | 30 |
December 31, 2018 | December 31, 2017 | |||||||||||||||||||||||||||||||
Gross Amounts Not Offset in the Consolidated Balance Sheet |
Gross Amounts Not Off set in the Consolidated Balance Sheet |
|||||||||||||||||||||||||||||||
Gross Liabilities Presented in the Consolidated Balance Sheet |
Financial Instruments |
Cash Collateral Paid |
Net Amounts |
Gross Liabilities Presented in the Consolidated Balance Sheet |
Financial Instruments |
Cash Collateral Paid |
Net Amounts |
|||||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||||||
Commodity contracts |
||||||||||||||||||||||||||||||||
Over-the-counter |
$ | | $ | | $ | | $ | | $ | 6 | $ | | $ | | $ | 6 | ||||||||||||||||
Interest rate contracts: |
||||||||||||||||||||||||||||||||
Over-the-counter |
17 | | | 17 | | | | | ||||||||||||||||||||||||
Foreign currency contracts: |
||||||||||||||||||||||||||||||||
Over-the-counter |
2 | 2 | | | 2 | 2 | | | ||||||||||||||||||||||||
Total derivatives, subject to a master netting or similar arrangement |
$ | 19 | $ | 2 | $ | | $ | 17 | $ | 8 | $ | 2 | $ | | $ | 6 |
135 |
Combined Notes to Consolidated Financial Statements, Continued
136 |
137 |
Combined Notes to Consolidated Financial Statements, Continued
NOTE 9. INVESTMENTS
DOMINION ENERGY
Equity and Debt Securities
RABBI TRUST SECURITIES
Equity and debt securities and cash equivalents in Dominion Energys rabbi trusts and classified as trading totaled $111 million and $112 million at December 31, 2018 and 2017, respectively.
DECOMMISSIONING TRUST SECURITIES
Dominion Energy holds equity and debt securities, cash equivalents and cost method investments in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Dominion Energys decommissioning trust funds are summarized below:
Amortized Cost |
Total Unrealized Gains |
Total Unrealized Losses |
Fair Value |
|||||||||||||
(millions) | ||||||||||||||||
December 31, 2018 |
||||||||||||||||
Equity securities:(1) |
||||||||||||||||
U.S. |
$1,741 | $1,640 | $(51) | $3,330 | ||||||||||||
Fixed income securities:(2) |
||||||||||||||||
Corporate debt instruments |
435 | 5 | (9) | 431 | ||||||||||||
Government securities |
1,092 | 17 | (12) | 1,097 | ||||||||||||
Common/collective trust funds |
76 | | | 76 | ||||||||||||
Cash equivalents and other(3) |
4 | | | 4 | ||||||||||||
Total |
$3,348 | $1,662 | $(72) | (4) | $4,938 | |||||||||||
December 31, 2017 |
||||||||||||||||
Equity securities:(2) |
||||||||||||||||
U.S. |
$1,569 | $1,857 | $ | $3,426 | ||||||||||||
Fixed income securities:(2) |
||||||||||||||||
Corporate debt instruments |
430 | 15 | (1) | 444 | ||||||||||||
Government securities |
1,039 | 27 | (5) | 1,061 | ||||||||||||
Common/collective trust funds |
60 | | | 60 | ||||||||||||
Cost method investments |
68 | | | 68 | ||||||||||||
Cash equivalents and other(3) |
34 | | | 34 | ||||||||||||
Total |
$3,200 | $1,899 | $ (6) | (4) | $5,093 |
(1) | Effective January 2018, unrealized gains and losses on equity securities, including those previously classified as cost method investments, are included in other income and the nuclear decommissioning trust regulatory liability as discussed in Note 2. |
(2) | Unrealized gains and losses on equity securities (for 2017) and fixed income securities are included in AOCI and the nuclear decommissioning trust regulatory liability as discussed in Note 2. |
(3) | Includes pending sales of securities of $5 million at December 31, 2017. |
(4) | The fair value of securities in an unrealized loss position was $833 million and $565 million at December 31, 2018 and 2017, respectively. |
138 |
139 |
Combined Notes to Consolidated Financial Statements, Continued
140 |
141 |
Combined Notes to Consolidated Financial Statements, Continued
142 |
143 |
Combined Notes to Consolidated Financial Statements, Continued
144 |
145 |
Combined Notes to Consolidated Financial Statements, Continued
146 |
147 |
Combined Notes to Consolidated Financial Statements, Continued
148 |
149 |
Combined Notes to Consolidated Financial Statements, Continued
150 |
total estimated cost of the project is approximately $180 million. In April 2017, the Virginia Commission issued an interim order instructing Virginia Power to construct and operate the project along an approved route if Virginia Power could obtain all necessary rights-of-way. Otherwise, the Virginia Commission ruled that Virginia Power can construct and operate the project along an approved alternative route. In June 2017, the Virginia Commission issued a final order approving the alternative route for the project, and granted the necessary CPCN. In July 2017, the Virginia Commission retained jurisdiction over the case to evaluate two requests to reconsider its decisions. Also in July 2017, Virginia Power requested that the Virginia Commission stay the proceeding while Virginia Power discusses the proposed route with leaders of Prince William County. In December 2017, the Virginia Commission granted in part the two motions for reconsideration, retained jurisdiction for further proceedings in the case and stayed the effectiveness of its final order. In March 2018, Virginia Power and the two parties seeking reconsideration entered into a stipulation settlement filed with the Virginia Commission agreeing that the project should be placed into an underground pilot program created by the GTSA. In July 2018, Virginia Power filed a request with the Virginia Commission to allow the project to participate in the underground pilot program. Subsequently, in July 2018, the Virginia Commission issued a final order granting the CPCN for the project and allowing the project to participate in the underground pilot program.
In June 2018, Virginia Power filed an application with the Virginia Commission for a CPCN to rebuild and operate in King and Queen, King William, and New Kent Counties, Virginia four separate segments of 230 kV transmission line between Lanexa and the Northern Neck in Virginia. In February 2019, Virginia Power withdrew two of the segments from the application. As a result, the total estimated cost of the project is approximately $30 million. This matter is pending.
Additional significant Virginia Power electric transmission projects approved and applied for in 2018 are as follows:
Description and Location of Project |
Application Date |
Approval Date |
Type of Line |
Miles Lines |
Cost (millions) |
|||||||||||
Rebuild and operate existing 115 kV transmission lines between the Possum Point Switching Station and Northern Virginia Electric Cooperatives Smoketown delivery point |
June 2017 | February 2018 | 230 kV | 9 | $ | 20 | ||||||||||
Rebuild and operate between the Dooms substation and the Valley substation, along with associated substation work |
September 2017 | September 2018 | 500 kV | 18 | 65 | |||||||||||
Build and operate between the Idylwood and Tysons substations, along with associated substation work |
November 2017 | September 2018 | 230 kV | 4 | 125 | |||||||||||
Rebuild and operate between the Chesterfield and Hopewell substations, along with associated substation work |
May 2018 | November 2018 | 230 kV | 8 | 30 | |||||||||||
Rebuild and operate between the Chesterfield and Lakeside substations, along with associated substation work |
May 2018 | December 2018 | 230 kV | 21 | 35 | |||||||||||
Rebuild and operate between the Landstown and Thrasher substations, along with associated substation work |
June 2018 | December 2018 | 230 kV | 8.5 | 20 | |||||||||||
Partial rebuild of overhead transmission lines in Alleghany County, Virginia and Covington, Virginia |
August 2018 | Pending | 138 kV | 5 | 15 | |||||||||||
Build a new substation and connect three existing transmission lines thereto in Fluvanna County, Virginia |
October 2018 | Pending | 230 kV | <1 | 30 |
151 |
Combined Notes to Consolidated Financial Statements, Continued
152 |
153 |
Combined Notes to Consolidated Financial Statements, Continued
154 |
155 |
Combined Notes to Consolidated Financial Statements, Continued
156 |
NOTE 17. LONG-TERM DEBT
At December 31, | 2018 Weighted- average Coupon(1) |
2018 | 2017 | |||||||||
(millions, except percentages) | ||||||||||||
Dominion Energy Gas Holdings, LLC: |
||||||||||||
Unsecured Senior Notes: |
||||||||||||
Variable rate, due 2021 |
3.39 | % | $ | 500 | $ | | ||||||
2.5% to 3.55%, due 2019 to 2023 |
2.90 | % | 1,800 | 1,800 | ||||||||
3.317% to 4.8%, due 2024 to 2044(2) |
4.12 | % | 1,787 | 1,800 | ||||||||
Dominion Energy Gas Holdings, LLC total principal |
$ | 4,087 | $ | 3,600 | ||||||||
Securities due within one year |
2.50 | % | (449 | ) | | |||||||
Unamortized discount and debt issuance costs |
(29 | ) | (30 | ) | ||||||||
Dominion Energy Gas Holdings, LLC total long-term debt |
$ | 3,609 | $ | 3,570 | ||||||||
Virginia Electric and Power Company: |
||||||||||||
Unsecured Senior Notes: |
||||||||||||
1.2% to 5.4%, due 2018 to 2023 |
3.35 | % | $ | 1,800 | $ | 2,650 | ||||||
2.95% to 8.875%, due 2024 to 2048 |
4.61 | % | 9,290 | 7,990 | ||||||||
Tax-Exempt Financings(3): |
||||||||||||
Variable rates, due 2024 to 2027 |
| 100 | ||||||||||
1.75% to 5.6%, due 2023 to 2041 |
2.18 | % | 664 | 678 | ||||||||
Virginia Electric and Power Company total principal |
$ | 11,754 | $ | 11,418 | ||||||||
Securities due within one year |
5.00 | % | (350 | ) | (850 | ) | ||||||
Unamortized discount, premium and debt issuances costs, net |
(83 | ) | (72 | ) | ||||||||
Virginia Electric and Power Company total long-term debt |
$ | 11,321 | $ | 10,496 | ||||||||
Dominion Energy, Inc.: |
||||||||||||
Unsecured Senior Notes(4): |
||||||||||||
Variable rates, due 2019 and 2020 |
3.23 | % | $ | 800 | $ | 800 | ||||||
1.5% to 6.4%, due 2018 to 2022 |
2.75 | % | 2,550 | 5,800 | ||||||||
2.85% to 7.0%, due 2024 to 2044 |
4.81 | % | 4,849 | 5,049 | ||||||||
Unsecured Junior Subordinated Notes: |
||||||||||||
2.579% to 4.104%, due 2019 to 2021 |
3.08 | % | 2,100 | 2,100 | ||||||||
Payable to Affiliated Trust, 8.4%, due 2031 |
8.40 | % | 10 | 10 | ||||||||
Enhanced Junior Subordinated Notes: |
||||||||||||
5.25% and 5.75%, due 2054 and 2076 |
5.48 | % | 1,485 | 1,485 | ||||||||
Variable rates, due 2066 |
5.26 | % | 422 | 422 | ||||||||
Remarketable Subordinated Notes, 2.0%, due 2021 and 2024 |
2.00 | % | 1,400 | 1,400 | ||||||||
Unsecured Debentures and Senior Notes(5): |
||||||||||||
6.8% and 6.875%, due 2026 and 2027 |
6.81 | % | 89 | 89 | ||||||||
Unsecured Senior and Medium-Term Notes(6): |
||||||||||||
5.31% and 6.3%, due 2018 |
| 120 | ||||||||||
2.98% to 7.20%, due 2024 to 2051 |
4.25 | % | 750 | 600 | ||||||||
Secured Senior Notes, 4.82%, due 2042(7) |
4.82 | % | 362 | | ||||||||
Term Loans, variable rates, due 2023 and 2024(8) |
4.85 | % | 582 | 638 | ||||||||
Tax-Exempt Financing, 1.55%, due 2033(9) |
1.55 | % | 27 | 27 | ||||||||
Capital leases, 4.14% to 6.04%, due 2019 to 2029 |
5.99 | % | 39 | | ||||||||
Dominion Energy Midstream Partners, LP: |
||||||||||||
Term Loans, variable rates, due 2019 and 2021(10)(11) |
4.13 | % | 3,300 | 300 | ||||||||
Revolving Credit Agreement, variable rates, due 2021(11) |
3.55 | % | 73 | | ||||||||
Unsecured Senior and Medium-Term Notes, 5.83% and 6.48%, due 2018(12) |
| 255 | ||||||||||
Unsecured Senior Notes, 3.53% to 4.875%, due 2028 to 2041(12) |
4.23 | % | 430 | 180 | ||||||||
Dominion Energy Gas Holdings, LLC total principal (from above) |
4,087 | 3,600 | ||||||||||
Virginia Electric and Power Company total principal (from above) |
11,754 | 11,418 | ||||||||||
Dominion Energy, Inc. total principal |
$ | 35,109 | $ | 34,293 | ||||||||
Fair value hedge valuation(13) |
(20 | ) | (22 | ) | ||||||||
Securities due within one year(14)(15) |
3.23 | % | (3,624 | ) | (3,078 | ) | ||||||
Credit facility borrowings(11) |
3.55 | % | (73 | ) | | |||||||
Unamortized discount, premium and debt issuance costs, net |
(248 | ) | (245 | ) | ||||||||
Dominion Energy, Inc. total long-term debt |
$ | 31,144 | $ | 30,948 |
(1) | Represents weighted-average coupon rates for debt outstanding as of December 31, 2018. |
157 |
Combined Notes to Consolidated Financial Statements, Continued
(2) | Amount includes foreign currency remeasurement adjustments. |
(3) | These financings relate to certain pollution control equipment at Virginia Powers generating facilities. In March 2018, Virginia Power redeemed certain variable rate tax-exempt financings supported by its $100 million credit facility and terminated the facility. In December 2018, Virginia Power redeemed its $14 million Economic Development Authority of the County of Chesterfield Solid Waste and Sewage Disposal Revenue Bonds due in 2031. |
(4) | In November and December 2018, Dominion Energy redeemed certain senior notes prior to their stated maturity. See below for a discussion of the senior note redemptions. |
(5) | Represents debt assumed by Dominion Energy from the merger of its former CNG subsidiary. |
(6) | Represents debt obligations of Questar Gas. See Note 3 for more information. |
(7) | Represents debt obligations of Eagle Solar. The debt is nonrecourse to Dominion Energy and is secured by Eagle Solars interest in certain merchant solar facilities. |
(8) | Represents debt associated with SBL Holdco and Dominion Solar Projects III, Inc. The debt is nonrecourse to Dominion Energy and is secured by SBL Holdco and Dominion Solar Projects III, Inc.s interest in certain merchant solar facilities. |
(9) | Represents debt obligations of a DGI subsidiary. |
(10) | Includes debt obligations of Cove Point that are secured by Dominion Energys common equity interest in Cove Point. |
(11) | In February 2019, Dominion Energy Midstream repaid its $300 million variable rate term loan due in December 2019 and terminated the credit facility due in March 2021 subsequent to repaying the $73 million outstanding balance. As such, credit facility borrowings are presented within current liabilities in Dominion Energys Consolidated Balance Sheets at December 31, 2018. |
(12) | Represents debt obligations of Dominion Energy Questar Pipeline. See Note 3 for more information. |
(13) | Represents the valuation of certain fair value hedges associated with Dominion Energys fixed rate debt. |
(14) | 2017 excludes $250 million of Dominion Energy Questar Pipelines senior notes that matured in February 2018 using proceeds from the January 2018 issuance, through private placements, of $100 million and $150 million of senior notes that mature in 2028 and 2038, respectively. |
(15) | Includes $20 million of estimated mandatory prepayments due within one year based on estimated cash flows in excess of debt service at SBL Holdco and Dominion Solar Projects III, Inc. |
Based on stated maturity dates rather than early redemption dates that could be elected by instrument holders, the scheduled principal payments of long-term debt at December 31, 2018, were as follows:
2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | ||||||||||||||||||||||
(millions, except percentages) | ||||||||||||||||||||||||||||
Dominion Energy Gas |
$ | 450 | $ | 700 | $ | 500 | $ | | $ | 650 | $ | 1,787 | $ | 4,087 | ||||||||||||||
Weighted-average Coupon |
2.50 | % | 2.80 | % | 3.39 | % | 3.29 | % | 4.12 | % | ||||||||||||||||||
Virginia Power |
||||||||||||||||||||||||||||
Unsecured Senior Notes |
$ | 350 | $ | | $ | | $ | 750 | $ | 700 | $ | 9,290 | $ | 11,090 | ||||||||||||||
Tax-Exempt Financings |
| | | | 40 | 624 | 664 | |||||||||||||||||||||
Total |
$ | 350 | $ | | $ | | $ | 750 | $ | 740 | $ | 9,914 | $ | 11,754 | ||||||||||||||
Weighted-average Coupon |
5.00 | % | 3.15 | % | 2.87 | % | 4.45 | % | ||||||||||||||||||||
Dominion Energy |
||||||||||||||||||||||||||||
Term Loans(1)(2) |
$ | 336 | $ | 35 | $ | 3,035 | $ | 34 | $ | 273 | $ | 169 | $ | 3,882 | ||||||||||||||
Credit Facility Borrowings(2) |
| | 73 | | | | 73 | |||||||||||||||||||||
Unsecured Senior Notes |
2,700 | 1,000 | 900 | 1,500 | 1,350 | 17,195 | 24,645 | |||||||||||||||||||||
Secured Senior Notes |
17 | 15 | 17 | 19 | 16 | 278 | 362 | |||||||||||||||||||||
Tax-Exempt Financings |
| | | | 40 | 651 | 691 | |||||||||||||||||||||
Unsecured Junior Subordinated Notes Payable to Affiliated Trusts |
| | | | | 10 | 10 | |||||||||||||||||||||
Unsecured Junior Subordinated Notes |
550 | 1,000 | 550 | | | | 2,100 | |||||||||||||||||||||
Enhanced Junior Subordinated Notes |
| | | | | 1,907 | 1,907 | |||||||||||||||||||||
Remarketable Subordinated Notes |
| | 700 | | | 700 | 1,400 | |||||||||||||||||||||
Capital leases |
4 | 4 | 4 | 3 | 3 | 21 | 39 | |||||||||||||||||||||
Total |
$ | 3,607 | $ | 2,054 | $ | 5,279 | $ | 1,556 | $ | 1,682 | $ | 20,931 | $ | 35,109 | ||||||||||||||
Weighted-average Coupon |
3.23 | % | 2.80 | % | 3.64 | % | 3.02 | % | 3.41 | % | 4.51 | % |
(1) | Excludes mandatory prepayments associated with SBL Holdco and Dominion Solar Projects III, Inc. based on cash flows in excess of debt service. At December 31, 2018, $20 million of estimated mandatory prepayments due within one year were included in securities due within one year in Dominion Energys Consolidated Balance Sheets. |
(2) | In February 2019, Dominion Energy Midstream repaid its $300 million variable rate term loan due in December 2019 and terminated the credit facility due in March 2021 subsequent to repaying the $73 million outstanding balance. As such, credit facility borrowings are presented within current liabilities in Dominion Energys Consolidated Balance Sheets at December 31, 2018. |
158 |
159 |
Combined Notes to Consolidated Financial Statements, Continued
Selected information about Dominion Energys equity units is presented below:
Issuance Date | Units Issued |
Total Net Proceeds |
Total Long-term Debt |
RSN Annual Interest Rate |
Stock Purchase Contract Annual Rate |
Stock Purchase Contract Liability(1) |
Stock Purchase Settlement Date |
|||||||||||||||||||||
(millions, except interest rates) | ||||||||||||||||||||||||||||
8/15/2016(2) |
28 | $ | 1,374.8 | $1,400.0 | 2.000 | %(3) | 4.750 | % | $190.6 | 8/15/2019 |
(1) | Payments of $64 million and $101 million were made in 2018 and 2017, respectively, including payments for the remarketed 2014 Series A notes. The stock purchase contract liability was $47 million and $111 million at December 31, 2018 and 2017, respectively. |
(2) | The maturity dates of the $700 million Series A-1 RSNs and $700 million Series A-2 RSNs are August 15, 2021 and August 15, 2024, respectively. |
(3) | Annual interest rate applies to each of the Series A-1 RSNs and Series A-2 RSNs. |
160 |
161 |
Combined Notes to Consolidated Financial Statements, Continued
162 |
163 |
Combined Notes to Consolidated Financial Statements, Continued
164 |
165 |
Combined Notes to Consolidated Financial Statements, Continued
166 |
167 |
Combined Notes to Consolidated Financial Statements, Continued
FUNDED STATUS
The following table summarizes the changes in pension plan and other postretirement benefit plan obligations and plan assets and includes a statement of the plans funded status for Dominion Energy and Dominion Energy Gas (for employees represented by collective bargaining units):
Pension Benefits | Other Postretirement Benefits | |||||||||||||||
Year Ended December 31, | 2018 | 2017 | 2018 | 2017 | ||||||||||||
(millions, except percentages) | ||||||||||||||||
Dominion Energy |
||||||||||||||||
Changes in benefit obligation: |
||||||||||||||||
Benefit obligation at beginning of year |
$ | 9,052 | $ | 8,132 | $ | 1,529 | $ | 1,478 | ||||||||
Service cost |
157 | 138 | 27 | 26 | ||||||||||||
Interest cost |
337 | 345 | 56 | 60 | ||||||||||||
Benefits paid |
(358 | ) | (323 | ) | (87 | ) | (83 | ) | ||||||||
Actuarial (gains) losses during the year |
(688 | ) | 830 | (158 | ) | 119 | ||||||||||
Plan amendments(1) |
| 5 | (4 | ) | (73 | ) | ||||||||||
Settlements and curtailments(2) |
| (75 | ) | | 2 | |||||||||||
Benefit obligation at end of year |
$ | 8,500 | $ | 9,052 | $ | 1,363 | $ | 1,529 | ||||||||
Changes in fair value of plan assets: |
||||||||||||||||
Fair value of plan assets at beginning of year |
$ | 8,062 | $ | 7,016 | $ | 1,729 | $ | 1,512 | ||||||||
Actual return (loss) on plan assets |
(513 | ) | 1,327 | (92 | ) | 236 | ||||||||||
Employer contributions |
6 | 118 | 12 | 13 | ||||||||||||
Benefits paid |
(358 | ) | (323 | ) | (68 | ) | (32 | ) | ||||||||
Settlements(2) |
| (76 | ) | | | |||||||||||
Fair value of plan assets at end of year |
$ | 7,197 | $ | 8,062 | $ | 1,581 | $ | 1,729 | ||||||||
Funded status at end of year |
$ | (1,303 | ) | $ | (990 | ) | $ | 218 | $ | 200 | ||||||
Amounts recognized in the Consolidated Balance Sheets at December 31: |
||||||||||||||||
Noncurrent pension and other postretirement benefit assets |
$ | 1,003 | $ | 1,117 | $ | 276 | $ | 261 | ||||||||
Other current liabilities |
(34 | ) | (8 | ) | (2 | ) | | |||||||||
Noncurrent pension and other postretirement benefit liabilities |
(2,272 | ) | (2,099 | ) | (56 | ) | (61 | ) | ||||||||
Net amount recognized |
$ | (1,303 | ) | $ | (990 | ) | $ | 218 | $ | 200 | ||||||
Significant assumptions used to determine benefit obligations as of December 31: |
||||||||||||||||
Discount rate |
4.42%4.43% | 3.80%3.81% | 4.37%4.38% | 3.76% | ||||||||||||
Weighted average rate of increase for compensation |
4.32% | 4.09% | 4.30%-4.55% | 3.95%-4.11% | ||||||||||||
Dominion Energy Gas |
||||||||||||||||
Changes in benefit obligation: |
||||||||||||||||
Benefit obligation at beginning of year |
$ | 773 | $ | 683 | $ | 290 | $ | 320 | ||||||||
Service cost |
18 | 15 | 4 | 4 | ||||||||||||
Interest cost |
29 | 30 | 11 | 12 | ||||||||||||
Benefits paid |
(34 | ) | (33 | ) | (18 | ) | (19 | ) | ||||||||
Actuarial (gains) losses during the year |
(56 | ) | 78 | (27 | ) | 34 | ||||||||||
Plan amendments(1) |
| | (4 | ) | (61 | ) | ||||||||||
Benefit obligation at end of year |
$ | 730 | $ | 773 | $ | 256 | $ | 290 | ||||||||
Changes in fair value of plan assets: |
||||||||||||||||
Fair value of plan assets at beginning of year |
$ | 1,803 | $ | 1,542 | $ | 333 | $ | 299 | ||||||||
Actual return (loss) on plan assets |
(113 | ) | 294 | (16 | ) | 41 | ||||||||||
Employer contributions |
| | 12 | 12 | ||||||||||||
Benefits paid |
(34 | ) | (33 | ) | (18 | ) | (19 | ) | ||||||||
Fair value of plan assets at end of year |
$ | 1,656 | $ | 1,803 | $ | 311 | $ | 333 | ||||||||
Funded status at end of year |
$ | 926 | $ | 1,030 | $ | 55 | $ | 43 | ||||||||
Amounts recognized in the Consolidated Balance Sheets at December 31: |
||||||||||||||||
Noncurrent pension and other postretirement benefit assets |
$ | 926 | $ | 1,030 | $ | 63 | $ | 57 | ||||||||
Noncurrent pension and other postretirement benefit liabilities(3) |
| | (8 | ) | (14 | ) | ||||||||||
Net amount recognized |
$ | 926 | $ | 1,030 | $ | 55 | $ | 43 | ||||||||
Significant assumptions used to determine benefit obligations as of December 31: |
||||||||||||||||
Discount rate |
4.42 | % | 3.81 | % | 4.37 | % | 3.76 | % | ||||||||
Weighted average rate of increase for compensation |
4.55 | % | 4.11 | % | n/a | n/a |
(1) | 2017 amounts relate primarily to a plan amendment that changed post-65 retiree medical coverage for certain current and future Local 69 retirees effective July 1, 2017. |
(2) | 2017 amount relates primarily to settlement and curtailment as a result of the voluntary and involuntary separation programs at Dominion Energy Questar. |
(3) | Reflected in other deferred credits and other liabilities in Dominion Energy Gas Consolidated Balance Sheets. |
168 |
169 |
Combined Notes to Consolidated Financial Statements, Continued
The fair values of Dominion Energy and Dominion Energy Gas (for employees represented by collective bargaining units) pension plan assets by asset category are as follows:
At December 31, | 2018 | 2017 | ||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||||||
Dominion Energy |
||||||||||||||||||||||||||||||||
Cash and cash equivalents |
$ | 17 | $ | 1 | $ | $ | 18 | $ | 18 | $ | | $ | $ | 18 | ||||||||||||||||||
Common and preferred stocks: |
||||||||||||||||||||||||||||||||
U.S. |
1,645 | | | 1,645 | 1,902 | | | 1,902 | ||||||||||||||||||||||||
International |
1,061 | | | 1,061 | 1,151 | | | 1,151 | ||||||||||||||||||||||||
Insurance contracts |
| 318 | | 318 | | 352 | | 352 | ||||||||||||||||||||||||
Corporate debt instruments |
23 | 729 | | 752 | 41 | 729 | | 770 | ||||||||||||||||||||||||
Government securities |
25 | 605 | | 630 | 9 | 676 | | 685 | ||||||||||||||||||||||||
Total recorded at fair value |
$ | 2,771 | $ | 1,653 | $ | $ | 4,424 | $ | 3,121 | $ | 1,757 | $ | $ | 4,878 | ||||||||||||||||||
Assets recorded at NAV(1): |
||||||||||||||||||||||||||||||||
Common/collective trust funds |
1,849 | 2,272 | ||||||||||||||||||||||||||||||
Alternative investments: |
||||||||||||||||||||||||||||||||
Real estate funds |
108 | 111 | ||||||||||||||||||||||||||||||
Private equity funds |
633 | 606 | ||||||||||||||||||||||||||||||
Debt funds |
155 | 161 | ||||||||||||||||||||||||||||||
Hedge funds |
17 | 19 | ||||||||||||||||||||||||||||||
Total recorded at NAV |
$ | 2,762 | $ | 3,169 | ||||||||||||||||||||||||||||
Total investments(2) |
$ | 7,186 | $ | 8,047 | ||||||||||||||||||||||||||||
Dominion Energy Gas |
||||||||||||||||||||||||||||||||
Cash and cash equivalents |
$ | 4 | $ | | $ | $ | 4 | $ | 4 | $ | | $ | $ | 4 | ||||||||||||||||||
Common and preferred stocks: |
||||||||||||||||||||||||||||||||
U.S. |
378 | | | 378 | 425 | | | 425 | ||||||||||||||||||||||||
International |
244 | | | 244 | 257 | | | 257 | ||||||||||||||||||||||||
Insurance contracts |
| 73 | | 73 | | 79 | | 79 | ||||||||||||||||||||||||
Corporate debt instruments |
5 | 168 | | 173 | 9 | 163 | | 172 | ||||||||||||||||||||||||
Government securities |
6 | 139 | | 145 | 2 | 151 | | 153 | ||||||||||||||||||||||||
Total recorded at fair value |
$ | 637 | $ | 380 | $ | $ | 1,017 | $ | 697 | $ | 393 | $ | $ | 1,090 | ||||||||||||||||||
Assets recorded at NAV(1): |
||||||||||||||||||||||||||||||||
Common/collective trust funds |
425 | 509 | ||||||||||||||||||||||||||||||
Alternative investments: |
||||||||||||||||||||||||||||||||
Real estate funds |
25 | 25 | ||||||||||||||||||||||||||||||
Private equity funds |
146 | 135 | ||||||||||||||||||||||||||||||
Debt funds |
36 | 36 | ||||||||||||||||||||||||||||||
Hedge funds |
4 | 4 | ||||||||||||||||||||||||||||||
Total recorded at NAV |
$ | 636 | $ | 709 | ||||||||||||||||||||||||||||
Total investments(3) |
$ | 1,653 | $ | 1,799 |
(1) | These investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient which are not required to be categorized in the fair value hierarchy. |
(2) | Excludes net assets related to pending sales of securities of $12 million, net accrued income of $21 million, and includes net assets related to pending purchases of securities of $22 million at December 31, 2018. Excludes net assets related to pending sales of securities of $11 million, net accrued income of $19 million, and includes net assets related to pending purchases of securities of $15 million at December 31, 2017. |
(3) | Excludes net assets related to pending sales of securities of $3 million, net accrued income of $5 million, and includes net assets related to pending purchases of securities of $5 million at December 31, 2018. Excludes net assets related to pending sales of securities of $3 million, net accrued income of $4 million, and includes net assets related to pending purchases of securities of $3 million at December 31, 2017. |
170 |
The fair values of Dominion Energy and Dominion Energy Gas (for employees represented by collective bargaining units) other postretirement plan assets by asset category are as follows:
At December 31, | 2018 | 2017 | ||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
(millions) | ||||||||||||||||||||||||||||||||
Dominion Energy |
||||||||||||||||||||||||||||||||
Cash and cash equivalents |
$1 | $1 | $ | $ | 2 | $1 | $2 | $ | $3 | |||||||||||||||||||||||
Common and preferred stocks: |
||||||||||||||||||||||||||||||||
U.S. |
554 | | | 554 | 636 | | | 636 | ||||||||||||||||||||||||
International |
170 | | | 170 | 196 | | | 196 | ||||||||||||||||||||||||
Insurance contracts |
| 19 | | 19 | | 21 | | 21 | ||||||||||||||||||||||||
Corporate debt instruments |
1 | 44 | | 45 | 2 | 44 | | 46 | ||||||||||||||||||||||||
Government securities |
2 | 37 | | 39 | 1 | 41 | | 42 | ||||||||||||||||||||||||
Total recorded at fair value |
$728 | $101 | $ | $ | 829 | $836 | $108 | $ | $944 | |||||||||||||||||||||||
Assets recorded at NAV(1): |
||||||||||||||||||||||||||||||||
Common/collective trust funds |
650 | 689 | ||||||||||||||||||||||||||||||
Alternative investments: |
||||||||||||||||||||||||||||||||
Real estate funds |
10 | 9 | ||||||||||||||||||||||||||||||
Private equity funds |
80 | 73 | ||||||||||||||||||||||||||||||
Debt funds |
10 | 11 | ||||||||||||||||||||||||||||||
Hedge funds |
1 | 1 | ||||||||||||||||||||||||||||||
Total recorded at NAV |
$ | 751 | $783 | |||||||||||||||||||||||||||||
Total investments(2) |
$ | 1,580 | $1,727 | |||||||||||||||||||||||||||||
Dominion Energy Gas |
||||||||||||||||||||||||||||||||
Common and preferred stocks: |
||||||||||||||||||||||||||||||||
U.S. |
$113 | $ | $ | $ | 113 | $130 | $ | $ | $130 | |||||||||||||||||||||||
International |
30 | | | 30 | 33 | | | 33 | ||||||||||||||||||||||||
Total recorded at fair value |
$143 | $ | $ | $ | 143 | $163 | $ | $ | $163 | |||||||||||||||||||||||
Assets recorded at NAV(1): |
||||||||||||||||||||||||||||||||
Common/collective trust funds |
148 | 154 | ||||||||||||||||||||||||||||||
Alternative investments: |
||||||||||||||||||||||||||||||||
Real estate funds |
2 | 1 | ||||||||||||||||||||||||||||||
Private equity funds |
18 | 15 | ||||||||||||||||||||||||||||||
Debt funds |
| | ||||||||||||||||||||||||||||||
Total recorded at NAV |
$ | 168 | $170 | |||||||||||||||||||||||||||||
Total investments |
$ | 311 | $333 |
(1) | These investments that are measured at fair value using the NAV per share (or its equivalent) as a practical expedient which are not required to be categorized in the fair value hierarchy. |
(2) | Excludes net assets related to pending sales of securities of $1 million, net accrued income of $2 million, and includes net assets related to pending purchases of securities of $2 million at December 31, 2018. Excludes net assets related to pending sales of securities of $1 million, net accrued income of $2 million, and includes net assets related to pending purchases of securities of $1 million at December 31, 2017. |
171 |
Combined Notes to Consolidated Financial Statements, Continued
The Plans investments are determined based on the fair values of the investments and the underlying investments, which have been determined as follows:
| Cash and Cash EquivalentsInvestments are held primarily in short-term notes and treasury bills, which are valued at cost plus accrued interest. |
| Common and Preferred StocksInvestments are valued at the closing price reported on the active market on which the individual securities are traded. |
| Insurance ContractsInvestments in Group Annuity Contracts with John Hancock were entered into after 1992 and are stated at fair value based on the fair value of the underlying securities as provided by the managers and include investments in U.S. government securities, corporate debt instruments, state and municipal debt securities. |
| Corporate Debt InstrumentsInvestments are valued using pricing models maximizing the use of observable inputs for similar securities. This includes basing value on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar instruments, the instrument is valued under a discounted cash flows approach that maximizes observable inputs, such as current yields of similar instruments, but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks or a broker quote, if available. |
| Government SecuritiesInvestments are valued using pricing models maximizing the use of observable inputs for similar securities. |
| Common/Collective Trust FundsCommon/collective trust funds invest in debt and equity securities and other instruments with characteristics similar to those of the funds benchmarks. The primary objectives of the funds are to seek investment returns that approximate the overall performance of their benchmark indexes. These benchmarks are major equity indices, fixed income indices, and money market indices that focus on growth, income, and liquidity strategies, as applicable. Investments in common/collective trust funds are stated at the NAV as determined by the issuer of the common/collective trust funds and are based on the fair value of the underlying investments held by the fund less its liabilities. The NAV is used as a practical expedient to estimate fair value. The common/collective trust funds do not have any unfunded commitments, and do not have any applicable liquidation periods or defined terms/periods to be held. The majority of the common/collective trust funds have limited withdrawal or redemption rights during the term of the investment. |
| Alternative InvestmentsInvestments in real estate funds, private equity funds, debt funds and hedge funds are stated at fair value based on the NAV of the Plans proportionate share of the partnership, joint venture or other alternative investments fair value as determined by reference to audited financial statements or NAV statements provided by the investment manager. The NAV is used as a practical expedient to estimate fair value. |
172 |
NET PERIODIC BENEFIT (CREDIT) COST
The service cost component and non-service cost components of net periodic benefit (credit) cost are reflected in other operations and maintenance expense and other income, respectively, in the Consolidated Statements of Income. The components of the provision for net periodic benefit (credit) cost and amounts recognized in other comprehensive income and regulatory assets and liabilities for Dominion Energy and Dominion Energy Gas (for employees represented by collective bargaining units) plans are as follows:
Pension Benefits | Other Postretirement Benefits | |||||||||||||||||||||||
Year Ended December 31, | 2018 | 2017 | 2016 | 2018 | 2017 | 2016 | ||||||||||||||||||
(millions, except percentages) | ||||||||||||||||||||||||
Dominion Energy |
||||||||||||||||||||||||
Service cost |
$ | 157 | $ | 138 | $ | 118 | $ | 27 | $ | 26 | $ | 31 | ||||||||||||
Interest cost |
337 | 345 | 317 | 56 | 60 | 65 | ||||||||||||||||||
Expected return on plan assets |
(663 | ) | (639 | ) | (573 | ) | (143 | ) | (128 | ) | (118 | ) | ||||||||||||
Amortization of prior service (credit) cost |
1 | 1 | 1 | (52 | ) | (51 | ) | (35 | ) | |||||||||||||||
Amortization of net actuarial loss |
193 | 162 | 111 | 11 | 13 | 8 | ||||||||||||||||||
Settlements and curtailments |
| | 1 | | | | ||||||||||||||||||
Net periodic benefit (credit) cost |
$ | 25 | $ | 7 | $ | (25 | ) | $ | (101 | ) | $ | (80 | ) | $ | (49 | ) | ||||||||
Changes in plan assets and benefit obligations recognized in other comprehensive income and regulatory assets and liabilities: |
||||||||||||||||||||||||
Current year net actuarial (gain) loss |
$ | 490 | $ | 142 | $ | 931 | $ | 78 | $ | 12 | $ | 178 | ||||||||||||
Prior service (credit) cost |
| 5 | | (4 | ) | (73 | ) | (216 | ) | |||||||||||||||
Settlements and curtailments |
| 1 | (1 | ) | | 2 | | |||||||||||||||||
Less amounts included in net periodic benefit cost: |
||||||||||||||||||||||||
Amortization of net actuarial loss |
(193 | ) | (162 | ) | (111 | ) | (11 | ) | (13 | ) | (8 | ) | ||||||||||||
Amortization of prior service credit (cost) |
(1 | ) | (1 | ) | (1 | ) | 52 | 51 | 35 | |||||||||||||||
Total recognized in other comprehensive income and regulatory assets and liabilities |
$ | 296 | $ | (15 | ) | $ | 818 | $ | 115 | $ | (21 | ) | $ | (11 | ) | |||||||||
Significant assumptions used to determine periodic cost: |
||||||||||||||||||||||||
Discount rate |
3.80%-3.8 | 1% | 3.31%-4.5 | 0% | 2.87%-4.9 | 9% | 3.76% | 3.92%-4.4 | 7% | 3.56%-4.9 | 4% | |||||||||||||
Expected long-term rate of return on plan assets |
8.75 | % | 8.75 | % | 8.75 | % | 8.50 | % | 8.50 | % | 8.50 | % | ||||||||||||
Weighted average rate of increase for compensation |
4.09 | % | 4.09 | % | 4.22 | % | 3.95%-4.1 | 1% | 3.29 | % | 4.22 | % | ||||||||||||
Healthcare cost trend rate(1) |
7.00 | % | 7.00 | % | 7.00 | % | ||||||||||||||||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)(1) |
5.00 | % | 5.00 | % | 5.00 | % | ||||||||||||||||||
Year that the rate reaches the ultimate trend rate(1)(2) |
2022 | 2021 | 2020 | |||||||||||||||||||||
Dominion Energy Gas |
||||||||||||||||||||||||
Service cost |
$ | 18 | $ | 15 | $ | 13 | $ | 4 | $ | 4 | $ | 5 | ||||||||||||
Interest cost |
29 | 30 | 30 | 11 | 12 | 14 | ||||||||||||||||||
Expected return on plan assets |
(150 | ) | (141 | ) | (134 | ) | (28 | ) | (24 | ) | (23 | ) | ||||||||||||
Amortization of prior service (credit) cost |
| | | (4 | ) | (3 | ) | 1 | ||||||||||||||||
Amortization of net actuarial loss |
19 | 16 | 13 | 3 | 2 | 1 | ||||||||||||||||||
Net periodic benefit (credit) cost |
$ | (84 | ) | $ | (80 | ) | $ | (78 | ) | $ | (14 | ) | $ | (9 | ) | $ | (2 | ) | ||||||
Changes in plan assets and benefit obligations recognized in other comprehensive income and regulatory assets and liabilities: |
||||||||||||||||||||||||
Current year net actuarial (gain) loss |
$ | 207 | $ | (75 | ) | $ | 91 | $ | 16 | $ | 18 | $ | 28 | |||||||||||
Prior service cost |
| | | (4 | ) | (61 | ) | | ||||||||||||||||
Less amounts included in net periodic benefit cost: |
||||||||||||||||||||||||
Amortization of net actuarial loss |
(19 | ) | (16 | ) | (13 | ) | (3 | ) | (2 | ) | (1 | ) | ||||||||||||
Amortization of prior service credit (cost) |
| | | 4 | 3 | (1 | ) | |||||||||||||||||
Total recognized in other comprehensive income and regulatory assets and liabilities |
$ | 188 | $ | (91 | ) | $ | 78 | $ | 13 | $ | (42 | ) | $ | 26 | ||||||||||
Significant assumptions used to determine periodic cost: |
||||||||||||||||||||||||
Discount rate |
3.81 | % | 4.50 | % | 4.99 | % | 3.81 | % | 4.47 | % | 4.93 | % | ||||||||||||
Expected long-term rate of return on plan assets |
8.75 | % | 8.75 | % | 8.75 | % | 8.50 | % | 8.50 | % | 8.50 | % | ||||||||||||
Weighted average rate of increase for compensation |
4.11 | % | 4.11 | % | 3.93 | % | 4.55 | % | 4.11 | % | 3.93 | % | ||||||||||||
Healthcare cost trend rate(1) |
7.00 | % | 7.00 | % | 7.00 | % | ||||||||||||||||||
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)(1) |
5.00 | % | 5.00 | % | 5.00 | % | ||||||||||||||||||
Year that the rate reaches the ultimate trend rate(1) |
2022 | 2021 | 2020 |
(1) | Assumptions used to determine net periodic cost for the following year. |
(2) | The Society of Actuaries model used to determine healthcare cost trend rates was updated in 2014. The new model converges to the ultimate trend rate much more quickly than previous models. |
173 |
Combined Notes to Consolidated Financial Statements, Continued
174 |
175 |
Combined Notes to Consolidated Financial Statements, Continued
176 |
177 |
Combined Notes to Consolidated Financial Statements, Continued
178 |
179 |
Combined Notes to Consolidated Financial Statements, Continued
180 |
181 |
Combined Notes to Consolidated Financial Statements, Continued
182 |
183 |
Combined Notes to Consolidated Financial Statements, Continued
184 |
185 |
Combined Notes to Consolidated Financial Statements, Continued
186 |
The following table presents segment information pertaining to Dominion Energys operations:
Year Ended December 31, | Power Delivery |
Power Generation |
Gas Infrastructure |
Corporate and Other |
Adjustments & Eliminations |
Consolidated Total |
||||||||||||||||||
(millions) | ||||||||||||||||||||||||
2018 |
||||||||||||||||||||||||
Total revenue from external customers |
$ | 2,206 | $ | 7,104 | $ | 4,221 | $ | (208 | ) | $ | 43 | $ | 13,366 | |||||||||||
Intersegment revenue |
23 | 11 | 27 | 674 | (735 | ) | | |||||||||||||||||
Total operating revenue |
2,229 | 7,115 | 4,248 | 466 | (692 | ) | 13,366 | |||||||||||||||||
Depreciation, depletion and amortization |
625 | 746 | 615 | 14 | | 2,000 | ||||||||||||||||||
Impairment of assets and related charges |
| 1 | 8 | 394 | | 403 | ||||||||||||||||||
Gains on sales of assets |
| 6 | (186 | ) | (200 | ) | | (380 | ) | |||||||||||||||
Equity in earnings of equity method investees |
| 18 | 178 | 1 | | 197 | ||||||||||||||||||
Interest income |
| 90 | 64 | 126 | (196 | ) | 84 | |||||||||||||||||
Interest and related charges |
265 | 374 | 268 | 782 | (196 | ) | 1,493 | |||||||||||||||||
Income tax expense (benefit) |
160 | 294 | 330 | (204 | ) | | 580 | |||||||||||||||||
Net income (loss) attributable to Dominion Energy |
587 | 1,254 | 1,214 | (608 | ) | | 2,447 | |||||||||||||||||
Investment in equity method investees |
| 82 | 1,159 | 37 | | 1,278 | ||||||||||||||||||
Capital expenditures |
1,564 | 1,321 | 1,415 | 105 | | 4,405 | ||||||||||||||||||
Total assets (billions) |
17.8 | 28.2 | 31.5 | 11.2 | (10.8 | ) | 77.9 | |||||||||||||||||
2017 |
||||||||||||||||||||||||
Total revenue from external customers |
$ | 2,206 | $ | 6,676 | $ | 2,832 | $ | 16 | $ | 856 | $ | 12,586 | ||||||||||||
Intersegment revenue |
22 | 10 | 834 | 610 | (1,476 | ) | | |||||||||||||||||
Total operating revenue |
2,228 | 6,686 | 3,666 | 626 | (620 | ) | 12,586 | |||||||||||||||||
Depreciation, depletion and amortization |
593 | 747 | 522 | 43 | | 1,905 | ||||||||||||||||||
Impairment of assets and related charges |
| | | 15 | | 15 | ||||||||||||||||||
Gains on sales of assets |
| | (147 | ) | | | (147 | ) | ||||||||||||||||
Equity in earnings of equity method investees |
| (181 | ) | 159 | 4 | | (18 | ) | ||||||||||||||||
Interest income |
4 | 92 | 45 | 96 | (155 | ) | 82 | |||||||||||||||||
Interest and related charges |
265 | 342 | 109 | 644 | (155 | ) | 1,205 | |||||||||||||||||
Income tax expense (benefit) |
334 | 373 | 487 | (1,224 | ) | | (30 | ) | ||||||||||||||||
Net income (loss) attributable to Dominion Energy |
531 | 1,181 | 898 | 389 | | 2,999 | ||||||||||||||||||
Investment in equity method investees |
| 81 | 1,422 | 41 | | 1,544 | ||||||||||||||||||
Capital expenditures |
1,433 | 2,275 | 2,149 | 52 | | 5,909 | ||||||||||||||||||
Total assets (billions) |
16.7 | 29.0 | 28.0 | 12.0 | (9.1 | ) | 76.6 | |||||||||||||||||
2016 |
||||||||||||||||||||||||
Total revenue from external customers |
$ | 2,210 | $ | 6,747 | $ | 2,069 | $ | (7 | ) | $ | 718 | $ | 11,737 | |||||||||||
Intersegment revenue |
23 | 10 | 697 | 609 | (1,339 | ) | | |||||||||||||||||
Total operating revenue |
2,233 | 6,757 | 2,766 | 602 | (621 | ) | 11,737 | |||||||||||||||||
Depreciation, depletion and amortization |
537 | 662 | 330 | 30 | | 1,559 | ||||||||||||||||||
Impairment of assets and related charges |
| | | 4 | | 4 | ||||||||||||||||||
Gains on sales of assets |
| 4 | (44 | ) | | | (40 | ) | ||||||||||||||||
Equity in earnings of equity method investees |
| (16 | ) | 105 | 22 | | 111 | |||||||||||||||||
Interest income |
| 74 | 34 | 36 | (78 | ) | 66 | |||||||||||||||||
Interest and related charges |
244 | 290 | 38 | 516 | (78 | ) | 1,010 | |||||||||||||||||
Income tax expense (benefit) |
308 | 279 | 431 | (363 | ) | | 655 | |||||||||||||||||
Net income (loss) attributable to Dominion Energy |
484 | 1,397 | 726 | (484 | ) | | 2,123 | |||||||||||||||||
Capital expenditures |
1,320 | 2,440 | 2,322 | 43 | | 6,125 |
187 |
Combined Notes to Consolidated Financial Statements, Continued
188 |
The following table presents segment information pertaining to Virginia Powers operations:
Year Ended December 31, | Power Delivery |
Power Generation |
Corporate and Other |
Adjustments & Eliminations |
Consolidated Total |
|||||||||||||||
(millions) | ||||||||||||||||||||
2018 |
||||||||||||||||||||
Operating revenue |
$ | 2,204 | $ | 5,630 | $ | (215 | ) | $ | | $ | 7,619 | |||||||||
Depreciation and amortization |
624 | 533 | (25 | ) | | 1,132 | ||||||||||||||
Interest income |
| 9 | 5 | (4 | ) | 10 | ||||||||||||||
Interest and related charges |
265 | 250 | | (4 | ) | 511 | ||||||||||||||
Income tax expense (benefit) |
158 | 220 | (78 | ) | | 300 | ||||||||||||||
Net income (loss) |
586 | 1,008 | (312 | ) | | 1,282 | ||||||||||||||
Capital expenditures |
1,539 | 1,003 | | | 2,542 | |||||||||||||||
Total assets (billions) |
17.6 | 19.4 | | (0.1 | ) | 36.9 | ||||||||||||||
2017 |
||||||||||||||||||||
Operating revenue |
$ | 2,212 | $ | 5,344 | $ | | $ | | $ | 7,556 | ||||||||||
Depreciation and amortization |
594 | 547 | | | 1,141 | |||||||||||||||
Interest income |
4 | 15 | 3 | (3 | ) | 19 | ||||||||||||||
Interest and related charges |
265 | 232 | | (3 | ) | 494 | ||||||||||||||
Income tax expense (benefit) |
334 | 534 | (94 | ) | | 774 | ||||||||||||||
Net income |
527 | 939 | 74 | | 1,540 | |||||||||||||||
Capital expenditures |
1,439 | 1,290 | | | 2,729 | |||||||||||||||
Total assets (billions) |
16.6 | 18.6 | | (0.1 | ) | 35.1 | ||||||||||||||
2016 |
||||||||||||||||||||
Operating revenue |
$ | 2,217 | $ | 5,390 | $ | (19 | ) | $ | | $ | 7,588 | |||||||||
Depreciation and amortization |
537 | 488 | | | 1,025 | |||||||||||||||
Interest income |
| | | | | |||||||||||||||
Interest and related charges |
244 | 219 | | (2 | ) | 461 | ||||||||||||||
Income tax expense (benefit) |
307 | 524 | (104 | ) | | 727 | ||||||||||||||
Net income (loss) |
482 | 909 | (173 | ) | | 1,218 | ||||||||||||||
Capital expenditures |
1,313 | 1,336 | | | 2,649 |
189 |
Combined Notes to Consolidated Financial Statements, Continued
The following table presents segment information pertaining to Dominion Energy Gas operations:
Year Ended December 31, | Gas Infrastructure |
Corporate and Other |
Consolidated Total |
|||||||||
(millions) | ||||||||||||
2018 |
||||||||||||
Operating revenue |
$ | 1,940 | $ | | $ | 1,940 | ||||||
Depreciation and amortization |
244 | | 244 | |||||||||
Impairment of assets and related charges |
5 | 341 | 346 | |||||||||
Gains on sales of assets |
(119 | ) | | (119 | ) | |||||||
Equity in earnings of equity method investees |
24 | | 24 | |||||||||
Interest income |
2 | | 2 | |||||||||
Interest and related charges |
104 | 1 | 105 | |||||||||
Income tax expense (benefit) |
188 | (102 | ) | 86 | ||||||||
Net income (loss) |
552 | (251 | ) | 301 | ||||||||
Investment in equity method investees |
91 | | 91 | |||||||||
Capital expenditures |
772 | | 772 | |||||||||
Total assets (billions) |
11.8 | 0.6 | 12.4 | |||||||||
2017 |
||||||||||||
Operating revenue |
$ | 1,814 | $ | | $ | 1,814 | ||||||
Depreciation and amortization |
227 | | 227 | |||||||||
Impairment of assets and related charges |
15 | 1 | 16 | |||||||||
Gains on sales of assets |
(70 | ) | | (70 | ) | |||||||
Equity in earnings of equity method investees |
21 | | 21 | |||||||||
Interest income |
2 | | 2 | |||||||||
Interest and related charges |
97 | | 97 | |||||||||
Income tax expense (benefit) |
256 | (205 | ) | 51 | ||||||||
Net income |
436 | 179 | 615 | |||||||||
Investment in equity method investees |
95 | | 95 | |||||||||
Capital expenditures |
778 | | 778 | |||||||||
Total assets (billions) |
11.3 | 0.6 | 11.9 | |||||||||
2016 |
||||||||||||
Operating revenue |
$ | 1,638 | $ | | $ | 1,638 | ||||||
Depreciation and amortization |
214 | (10 | ) | 204 | ||||||||
Gains on sales of assets |
(45 | ) | | (45 | ) | |||||||
Equity in earnings of equity method investees |
21 | | 21 | |||||||||
Interest income |
1 | | 1 | |||||||||
Interest and related charges |
92 | 2 | 94 | |||||||||
Income tax expense (benefit) |
237 | (22 | ) | 215 | ||||||||
Net income (loss) |
395 | (3 | ) | 392 | ||||||||
Capital expenditures |
854 | | 854 |
190 |
191 |
192 |
193 |
194 |
There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control may vary over time.
Management evaluated Dominion Energy Gas internal control over financial reporting as of December 31, 2018. This assessment was based on criteria for effective internal control over financial reporting described in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that Dominion Energy Gas maintained effective internal control over financial reporting as of December 31, 2018.
This annual report does not include an attestation report of Dominion Energy Gas registered public accounting firm regarding internal control over financial reporting. Managements report is not subject to attestation by Dominion Energy Gas independent registered public accounting firm pursuant to a permanent exemption under the Dodd-Frank Act.
February 28, 2019
None.
195 |
Part III
Item 10. Directors, Executive Officers and Corporate Governance
DOMINION ENERGY
The following information for Dominion Energy is incorporated by reference from the Dominion Energy 2019 Proxy Statement, which will be filed on or around March 22, 2019:
| Information regarding the directors required by this item is found under the heading Election of Directors. |
| Information regarding compliance with Section 16 of the Securities Exchange Act of 1934, as amended, required by this item is found under the heading Section 16(a) Beneficial Ownership Reporting Compliance. |
| Information regarding the Dominion Energy Audit Committee Financial expert(s) required by this item is found under the heading The Committees of the BoardAudit Committee. |
| Information regarding the Dominion Energy Audit Committee required by this item is found under the headings The Committees of the BoardAudit Committee and Audit Committee Report. |
| Information regarding Dominion Energys Code of Ethics and Business Conduct required by this item is found under the heading Other InformationCode of Ethics and Business Conduct. |
The information concerning the executive officers of Dominion Energy required by this item is included in Part I of this Form 10-K under the caption Executive Officers of Dominion Energy. Each executive officer of Dominion Energy is elected annually.
196 |
197 |
Part IV
Item 15. Exhibits and Financial Statement Schedules
(a) Certain documents are filed as part of this Form 10-K and are incorporated by reference and found on the pages noted.
1. Financial Statements
See Index on page 69.
2. All schedules are omitted because they are not applicable, or the required information is either not material or is shown in the financial statements or the related notes.
3. Exhibits (incorporated by reference unless otherwise noted)
198 |
199 |
200 |
201 |
202 |
203 |
204 |
* | Indicates management contract or compensatory plan or arrangement. |
None.
205 |
Signatures
Dominion Energy
Pursuant to the requirements of Section 13 or 15(d) 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. | ||||
By: | /s/ Thomas F. Farrell, II | |||
(Thomas F. Farrell, II, Chairman, President and Chief Executive Officer) |
Date: February 28, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 28th day of February, 2019.
Signature | Title | |
/s/ Thomas F. Farrell, II Thomas F. Farrell, II |
Chairman of the Board of Directors, President and Chief Executive Officer | |
/s/ James A. Bennett James A. Bennett |
Director | |
/s/ Helen E. Dragas Helen E. Dragas |
Director | |
/s/ James O. Ellis, Jr. James O. Ellis, Jr. |
Director | |
/s/ D. Maybank Hagood D. Maybank Hagood |
Director | |
/s/ John W. Harris John W. Harris |
Director | |
/s/ Ronald W. Jibson Ronald W. Jibson |
Director | |
/s/ Mark J. Kington Mark J. Kington |
Director | |
/s/ Joseph M. Rigby Joseph M. Rigby |
Director | |
/s/ Pamela J. Royal Pamela J. Royal |
Director | |
/s/ Robert H. Spilman, Jr. Robert H. Spilman, Jr. |
Director | |
/s/ Susan N. Story Susan N. Story |
Director | |
/s/ Michael E. Szymanczyk Michael E. Szymanczyk |
Director | |
/s/ James R. Chapman James R. Chapman |
Executive Vice President, Chief Financial Officer and Treasurer | |
/s/ Michele L. Cardiff Michele L. Cardiff |
Vice President, Controller and Chief Accounting Officer |
206 |
Virginia Power
Pursuant to the requirements of Section 13 or 15(d) 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.
VIRGINIA ELECTRIC AND POWER COMPANY | ||||
By: | /s/ Thomas F. Farrell, II | |||
(Thomas F. Farrell, II, Chairman of the Board of Directors and Chief Executive Officer) |
Date: February 28, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 28th day of February, 2019.
Signature | Title | |
/s/ Thomas F. Farrell, II Thomas F. Farrell, II |
Chairman of the Board of Directors and Chief Executive Officer | |
/s/ Robert M. Blue Robert M. Blue |
Director | |
/s/ Carlos M. Brown Carlos M. Brown |
Director | |
/s/ James R. Chapman James R. Chapman |
Executive Vice President, Chief Financial Officer and Treasurer | |
/s/ Michele L. Cardiff Michele L. Cardiff |
Vice President, Controller and Chief Accounting Officer |
207 |
Dominion Energy Gas
Pursuant to the requirements of Section 13 or 15(d) 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 GAS HOLDINGS, LLC | ||||
By: | /s/ Thomas F. Farrell, II | |||
(Thomas F. Farrell, II, Chairman of the Board of Directors and Chief Executive Officer) |
Date: February 28, 2019
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on the 28th day of February, 2019.
Signature | Title | |
/s/ Thomas F. Farrell, II Thomas F. Farrell, II |
Chairman of the Board of Directors and Chief Executive Officer | |
/s/ Carlos M. Brown Carlos M. Brown |
Director | |
/s/ James R. Chapman James R. Chapman |
Director, Executive Vice President, Chief Financial Officer and Treasurer | |
/s/ Michele L. Cardiff Michele L. Cardiff |
Vice President, Controller and Chief Accounting Officer |
208 |