XML 31 R15.htm IDEA: XBRL DOCUMENT
v3.20.2

Acquisitions and Dispositions | 9 Months Ended
--- | ---
Sep. 30, 2020
Text Block [Abstract] |
Acquisitions and Dispositions | Note 3. Acquisitions and Dispositions Acquisition of SCANA In January 2019, Dominion Energy issued 95.6 million shares of Dominion Energy common stock, valued at $6.8 billion, representing 0.6690 of a share of Dominion Energy common stock for each share of SCANA common stock, in connection with the completion of the SCANA Combination. SCANA, through its regulated subsidiaries, is primarily engaged in the generation, transmission and distribution of electricity in the central, southern and southwestern portions of South Carolina and in the distribution of natural gas in North Carolina and South Carolina. In addition, at the closing of the SCANA Combination, SCANA marketed natural gas to retail customers in the southeast U.S. Following completion of the SCANA Combination, SCANA operates as a wholly-owned subsidiary of Dominion Energy. In addition, SCANA’s debt totaled $6.9 billion at closing. The SCANA Combination expanded Dominion Energy’s portfolio of regulated electric generation, transmission and distribution and regulated natural gas distribution infrastructure operations. See Note 3 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2019 for more information on the SCANA Combination, including merger approval and conditions, information on assets acquired and liabilities assumed and purchase price allocation. In addition, see Note 17 for a discussion of certain legal proceedings involving Dominion Energy, SCANA or DESC relating to events occurring before closing of the SCANA Combination. In accordance with the SCANA Merger Approval Order, Dominion Energy incurred certain charges to its Consolidated Statements of Income for the following:
| • | In the first quarter of 2019, DESC recorded a reduction in operating revenue and a corresponding regulatory liability of $1.0 billion representing a refund of amounts previously collected from retail electric customers of DESC for the NND Project to be credited over an estimated 11-year period, effective January 2019. As a result, Dominion Energy’s Consolidated Statement of Income for the nine months ended September 30, 2019 includes a $756 million after-tax charge.
| • | Dominion Energy committed to forgo recovery of $105 million of certain property, plant and equipment associated with the NND Project. As a result, Dominion Energy’s Consolidated Statement of Income for the nine months ended September 30, 2019 includes a charge of $105 million ($79 million after-tax), included in impairment of assets and other charges.
| • | Dominion Energy committed to forgo recovery of $264 million of certain income tax-related regulatory assets associated with the NND Project. As a result, Dominion Energy’s Consolidated Statement of Income for the nine months ended September 30, 2019 includes a charge of $198 million included in income tax expense.
Results of Operations and Unaudited Pro Forma Information The impact of the SCANA Combination on Dominion Energy’s operating revenue was an increase of $809 million and $979 million for the three months ended September 30, 2020 and 2019, respectively, and an increase of $2.4 billion and $2.1 billion for the nine months ended September 30, 2020 and 2019, respectively, in the Consolidated Statements of Income. The impact of the SCANA Combination on net income attributable to Dominion Energy was an increase of $85 million and $97 million for the three months ended September 30, 2020 and 2019, respectively, and an increase of $197 million and a decrease of $1.1 billion for the nine months ended September 30, 2020 and 2019, respectively, in the Consolidated Statements of Income. Dominion Energy incurred merger and integration-related costs of $22 million and $64 million for the three and nine months ended September 30, 2020, respectively, of which $22 million and $61 million are recorded in other operations and maintenance expense in the Consolidated Statements of Income. Dominion Energy incurred merger and integration-related costs of $29 million and $596 million in the Consolidated Statements of Income for the three and nine months ended September 30, 2019, respectively. These amounts for the three and nine months ended September 30, 2019 include $4 million and $427 million, respectively, for a charge related to a voluntary retirement program. See Note 20 for additional information. Of the remaining merger and integration-related costs, $25 million and $169 million was recorded in other operations and maintenance expense in the Consolidated Statements of Income for the three and nine months ended September 30, 2019, respectively, and less than $1 million and $9 million was recorded in interest and related charges in the Consolidated Statement of Income for the three and nine months ended September 30, 2019, respectively. These costs consist of professional fees, charitable contribution commitments, employee-related expenses, certain financing costs and other miscellaneous costs. The following unaudited pro forma financial information reflects the consolidated results of operations of Dominion Energy assuming the SCANA Combination had taken place on January 1, 2018. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of the combined company.
|  | Three Months Ended September 30, 2019(1) |  |  | Nine Months Ended September 30, 2019(1) |
(millions, except EPS) |  |  |  |  |  |  |  |
Operating Revenue |  | $ | 3,782 |  |  | $ | 11,513 |
Net income attributable to Dominion Energy |  |  | 1,029 |  |  |  | 1,991 |
Earnings Per Common Share – Basic |  | $ | 1.28 |  |  | $ | 2.47 |
Earnings Per Common Share – Diluted |  | $ | 1.26 |  |  | $ | 2.44 |
(1) | Amounts include adjustments for non-recurring costs directly related to the SCANA Combination.
Disposition of Gas Transmission & Storage Operations to BHE In July 2020, Dominion Energy entered into an agreement with BHE with a total value of approximately $10 billion, comprised of approximately $4.0 billion of cash consideration (subject to customary closing adjustments) plus the assumption of long-term debt, to sell substantially all of its gas transmission and storage operations, including processing assets, as well as noncontrolling partnership interests in Iroquois, JAX LNG and White River Hub and a controlling interest in Cove Point (consisting of 100% of the general partner interest and 25% of the total limited partner interests). The agreement provides that Dominion Energy retains the assets and obligations of the pension and other postretirement employee benefit plans associated with the operations included in the transaction and relating to services provided through closing. In October 2020, pursuant to a provision in the agreement with BHE, Dominion Energy elected to exclude Dominion Energy Questar Pipeline and certain other affiliated entities from the transaction as approval under the Hart-Scott-Rodino Act had not been obtained by mid-September 2020. Concurrently in October 2020, Dominion Energy and BHE entered into a separate agreement under which Dominion Energy will sell Dominion Energy Questar Pipeline and certain other affiliated entities for cash consideration of $1.3 billion and the assumption of related long-term debt. In November 2020, Dominion Energy completed the GT&S Transaction and received cash proceeds of $2.7 billion. This transaction is structured as an asset sale for tax purposes. Based on the recorded balances at September 30, 2020, Dominion Energy expects to recognize a pre-tax gain of approximately $200 million in the fourth quarter of 2020, including the write-off of $1.4 billion of goodwill and reflecting closing adjustments of approximately $200 million to be paid to BHE. Closing adjustments, including any required payment of cash, are expected to be finalized by early 2021. In connection with closing of the GT&S Transaction, Dominion Energy and BHE entered into a transition services agreement under which Dominion Energy will continue to provide specified administrative services to support the operations of the disposed business for up to 24 months. In addition, BHE will provide certain administrative services to Dominion Energy. Also in November 2020, BHE provided a $1.3 billion deposit to Dominion Energy on the Q-Pipe Transaction. Dominion Energy will be required to repay all or substantially all of this deposit, or issue to BHE an equivalent value in shares of Dominion Energy common stock at Dominion Energy’s option, if the Q-Pipe Transaction does not close by December 30, 2021. Dominion Energy may not solicit or accept offers from alternative buyers for all or a material portion of the Q-Pipe Transaction until after March 31, 2021 and either party may terminate the Q-Pipe Transaction if closing has not occurred on or before June 30, 2021. If the Hart-Scott-Rodino Act approval has not been obtained by June 30, 2021, upon BHE’s request, Dominion Energy will seek an alternative buyer for all or a material portion of the Q-Pipe Transaction. The Q-Pipe Transaction is structured as an asset sale for tax purposes and is expected to close in early 2021, contingent on clearance or approval under the Hart-Scott-Rodino Act, and other customary closing and regulatory conditions. Based on the recorded balances at September 30, 2020, Dominion Energy expects to recognize a pre-tax gain of approximately $500 million upon closing, including the write-off of $191 million of goodwill, but excluding the effects of any closing adjustments. The operations included in both the GT&S Transaction and the Q-Pipe Transaction are presented in held-for-sale and discontinued operations effective July 2020. As a result, the previously reported amounts have been recast to reflect this presentation and depreciation and amortization ceased on the applicable assets. Dominion Energy retained a 50% noncontrolling interest in Cove Point that is accounted for as an equity method investment upon closing of the GT&S Transaction as Dominion Energy has the ability to exercise significant influence, but not control, over Cove Point. As Cove Point had previously been consolidated within Dominion Energy’s financial statements, balances associated with Cove Point prior to the closing of the GT&S Transaction are presented within held-for-sale and discontinued operations. The following table represents selected information regarding the results of operations of reported within discontinued operations in Dominion Energy’s Consolidated Statements of Income:
|  | Three Months Ended September 30, 2020 |  |  | Three Months Ended September 30, 2019 |  |  | Nine Months Ended September 30, 2020 |  |  | Nine Months Ended September 30, 2019 |
|  | GT&S Transaction |  |  | Q-Pipe Transaction |  |  | GT&S Transaction |  |  | Q-Pipe Transaction |  |  | GT&S Transaction |  |  | Q-Pipe Transaction |  |  | GT&S Transaction |  |  | Q-Pipe Transaction |
(millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating revenue |  | $ | 511 |  |  | $ | 59 |  |  | $ | 497 |  |  | $ | 60 |  |  | $ | 1,554 |  |  | $ | 182 |  |  | $ | 1,627 |  |  | $ | 185 |
Operating Expense(1) |  |  | 208 |  |  |  | 16 |  |  |  | 317 |  |  |  | 31 |  |  |  | 1,311 |  |  |  | 78 |  |  |  | 1,029 |  |  |  | 100 |
Other income (loss) |  |  | (5 | ) |  |  | 1 |  |  |  | 13 |  |  |  | 1 |  |  |  | 27 |  |  |  | 3 |  |  |  | 42 |  |  |  | 3 |
Interest and related charges(2) |  |  | 267 |  |  |  | 5 |  |  |  | 76 |  |  |  | 5 |  |  |  | 366 |  |  |  | 15 |  |  |  | 224 |  |  |  | 15 |
Income (loss) before income taxes |  |  | 31 |  |  |  | 39 |  |  |  | 117 |  |  |  | 25 |  |  |  | (96 | ) |  |  | 92 |  |  |  | 416 |  |  |  | 73 |
Income tax expense (benefit) |  |  | (14 | ) |  |  | 5 |  |  |  | 117 |  |  |  | 19 |  |  |  | (65 | ) |  |  | 19 |  |  |  | 42 |  |  |  | 6 |
Net income (loss) including noncontrolling interests |  |  | 45 |  |  |  | 34 |  |  |  | — |  |  |  | 6 |  |  |  | (31 | ) |  |  | 73 |  |  |  | 374 |  |  |  | 67 |
Noncontrolling interests |  |  | 32 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 97 |  |  |  | — |  |  |  | 6 |  |  |  | — |
Net income (loss) attributable to Dominion Energy |  | $ | 13 |  |  | $ | 34 |  |  | $ | — |  |  | $ | 6 |  |  | $ | (128 | ) |  | $ | 73 |  |  | $ | 368 |  |  | $ | 67 |
| (1) | GT&S Transaction includes a charge of $482 million ($359 million after-tax) recorded in the second quarter of 2020 associated with the probable abandonment of a significant portion of the Supply Header Project as well as the establishment of a $75 million ARO as a result of the cancellation of the Atlantic Coast Pipeline Project.
| (2) | GT&S Transaction includes a loss of $237 million recorded in the third quarter of 2020 associated with cash flow hedges of debt-related items that were determined to be probable of not occurring.
The carrying amounts of major classes of assets and liabilities relating to the disposal groups, which are reported as held for sale in Dominion Energy’s Consolidated Balance Sheets were as follows:
|  | At September 30, 2020(1) |  |  | At December 31, 2019 |
|  | GT&S Transaction |  |  | Q-Pipe Transaction |  |  | GT&S Transaction |  |  | Q-Pipe Transaction |
(millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current assets(2) |  | $ | 398 |  |  | $ | 57 |  |  | $ | 445 |  |  | $ | 49 |
Equity method investments(3) |  |  | 316 |  |  |  | 35 |  |  |  | 276 |  |  |  | 36 |
Property, plant and equipment, net(4) |  |  | 10,449 |  |  |  | 1,109 |  |  |  | 10,764 |  |  |  | 1,103 |
Other deferred charges and other assets, including goodwill(5) and intangible assets |  |  | 1,544 |  |  |  | 224 |  |  |  | 1,553 |  |  |  | 225 |
Current liabilities(6) |  |  | 1,536 |  |  |  | 38 |  |  |  | 1,002 |  |  |  | 37 |
Long-term debt |  |  | 3,916 |  |  |  | 425 |  |  |  | 4,401 |  |  |  | 425 |
Other deferred credits and liabilities |  |  | 810 |  |  |  | 155 |  |  |  | 773 |  |  |  | 155 |
| (1) | All amounts at September 30, 2020 are classified as current in Dominion Energy’s Consolidated Balance Sheet.
| (2) | Includes cash and cash equivalents of $24 million and $20 million as of September 30, 2020 and December 31, 2019, respectively, within the GT&S Transaction and $25 million and $11 million as of September 30, 2020 and December 31, 2019, respectively within the Q-Pipe Transaction.
| (3) | Comprised of equity method investments in Iroquois and JAX LNG within the GT&S Transaction and White River Hub within the Q-Pipe Transaction.
| (4) | GT&S Transaction includes $40 million recorded at September 30, 2020 for a potential modified Supply Header Project.
| (5) | Includes goodwill of $1.4 billion and $191 million at both September 30, 2020 and December 31, 2019 within the GT&S Transaction and the Q-Pipe Transaction, respectively.
| (6) | Includes $47 million ARO recorded at September 30, 2020 related to the Supply Header Project and current portions of long-term debt of $1.2 billion and $699 million as of September 30, 2020 and December 31, 2020, respectively, within the GT&S Transaction.
Capital expenditures and significant noncash items relating to the disposal groups included the following:
|  | Nine Months Ended September 30, 2020 |  |  | Nine Months Ended September 30, 2019 |
|  | GT&S Transaction |  |  | Q-Pipe Transaction |  |  | GT&S Transaction |  |  | Q-Pipe Transaction |
(millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital expenditures |  | $ | 240 |  |  | $ | 27 |  |  | $ | 265 |  |  | $ | 32 |
Significant noncash items |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Impairment of assets and other charges |  |  | 463 |  |  |  | — |  |  |  | 13 |  |  |  | — |
Charge related to a voluntary retirement program |  |  | — |  |  |  | — |  |  |  | 22 |  |  |  | 4 |
Depreciation, depletion and amortization |  |  | 173 |  |  |  | 25 |  |  |  | 240 |  |  |  | 38 |
Accrued capital expenditures |  |  | 43 |  |  |  | 2 |  |  |  | 42 |  |  |  | 3 |
In October 2020, Dominion Energy settled various derivatives related to, but not included in, the GT&S Transaction for a payment of $165 million.

X
- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_MergersAcquisitionsAndDispositionsDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_TextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration