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Leases | 12 Months Ended
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Dec. 31, 2022
Leases [Abstract] |
Leases | NOTE 15. LEASES At December 31, 2022 and 2021, the Companies had the following lease assets and liabilities recorded in the Consolidated Balance Sheets:
| Dominion Energy |  |  | Virginia Power |
At December 31, | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
(millions) |  |  |  |  |  |  |  |  |  |  |
Lease assets: |  |  |  |  |  |  |  |  |  |  |
Operating lease assets(1) | $ | 415 |  |  | $ | 506 |  |  | $ | 294 |  |  | $ | 256 |
Finance lease assets(2) |  | 144 |  |  |  | 144 |  |  |  | 82 |  |  |  | 71 |
Total lease assets | $ | 559 |  |  | $ | 650 |  |  | $ | 376 |  |  | $ | 327 |
Lease liabilities: |  |  |  |  |  |  |  |  |  |  |
Operating lease liabilities(3) | $ | 39 |  |  | $ | 44 |  |  | $ | 21 |  |  | $ | 25 |
Finance lease liabilities(4) |  | 46 |  |  |  | 36 |  |  |  | 17 |  |  |  | 13 |
Total lease liabilities - current |  | 85 |  |  |  | 80 |  |  |  | 38 |  |  |  | 38 |
Operating lease liabilities (5) |  | 514 |  |  |  | 464 |  |  |  | 273 |  |  |  | 227 |
Finance lease liabilities(6) |  | 104 |  |  |  | 112 |  |  |  | 65 |  |  |  | 57 |
Total lease liabilities - noncurrent |  | 618 |  |  |  | 576 |  |  |  | 338 |  |  |  | 284 |
Total lease liabilities | $ | 703 |  |  | $ | 656 |  |  | $ | 376 |  |  | $ | 322 |
(1) Included in other deferred charges and other assets in the Companies’ Consolidated Balance Sheets. (2) Included in property, plant and equipment in the Companies’ Consolidated Balance Sheets, net of $114 million and $33 million of accumulated amortization at Dominion Energy and Virginia Power, respectively, at December 31, 2022 and net of $81 million and $18 million of accumulated amortization at Dominion Energy and Virginia Power, respectively, at December 31, 2021. (3) Included in other current liabilities in the Companies’ Consolidated Balance Sheets. (4) Included in securities due within one year in the Companies’ Consolidated Balance Sheets. (5) Included in other deferred credits and other liabilities in the Companies’ Consolidated Balance Sheets. (6) Included in other long-term debt in the Companies’ Consolidated Balance Sheets. In addition to the amounts disclosed above, Dominion Energy’s Consolidated Balance Sheets at December 31, 2022 and 2021 include property, plant and equipment of $183 million and $1.2 billion, respectively, related to facilities subject to power purchase agreements under which Dominion Energy is the lessor. Accumulated depreciation related to these facilities was $106 million at December 31, 2021. There was no accumulated depreciation related to these facilities recorded in Dominion Energy’s Consolidated Balance Sheets at December 31, 2022. For the years ended December 31, 2022, 2021 and 2020, total lease cost associated with the Companies’ leasing arrangements consisted of the following:
| Dominion Energy |  |  | Virginia Power |
Year ended December 31, | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2022 |  |  | 2021 |  |  | 2020 |
(millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finance lease cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization | $ | 41 |  |  | $ | 40 |  |  | $ | 33 |  |  | $ | 15 |  |  | $ | 12 |  |  | $ | 7 |
Interest |  | 3 |  |  |  | (3 | ) |  |  | — |  |  |  | 3 |  |  |  | 1 |  |  |  | 1 |
Operating lease cost |  | 53 |  |  |  | 66 |  |  |  | 68 |  |  |  | 32 |  |  | $ | 30 |  |  | $ | 36 |
Short-term lease cost |  | 31 |  |  |  | 32 |  |  |  | 20 |  |  |  | 21 |  |  |  | 19 |  |  |  | 12 |
Variable lease cost |  | 4 |  |  |  | 5 |  |  |  | 8 |  |  |  | 1 |  |  |  | 1 |  |  |  | 4 |
Total lease cost | $ | 132 |  |  | $ | 140 |  |  | $ | 129 |  |  | $ | 72 |  |  | $ | 63 |  |  | $ | 60 |
For the years ended December 31, 2022, 2021 and 2020, cash paid for amounts included in the measurement of the lease liabilities consisted of the following amounts, included in the Companies’ Consolidated Statements of Cash Flows:
| Dominion Energy |  |  | Virginia Power |
Year ended December 31, | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2022 |  |  | 2021 |  |  | 2020 |
(millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating cash flows for finance leases | $ | 3 |  |  | $ | (3 | ) |  | $ | — |  |  | $ | 3 |  |  | $ | 1 |  |  | $ | 1 |
Operating cash flows for operating leases |  | 82 |  |  |  | 103 |  |  |  | 96 |  |  |  | 50 |  |  |  | 53 |  |  |  | 52 |
Financing cash flows for finance leases |  | 32 |  |  |  | 40 |  |  |  | 33 |  |  |  | 12 |  |  |  | 12 |  |  |  | 7 |
In addition to the amounts disclosed above, Dominion Energy’s Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020, include $16 million, $168 million and $175 million, respectively, of rental revenue, included in operating revenue and $34 million, $110 million and $102 million, respectively, of depreciation expense, included in depreciation, depletion and amortization, related to facilities subject to power purchase agreements under which Dominion Energy is the lessor. At December 31, 2022 and 2021, the weighted average remaining lease term and weighted discount rate for the Companies’ finance and operating leases were as follows:
| Dominion Energy |  |  | Virginia Power |
December 31, | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Dominion Energy |  |  |  |  |  |  |  |  |  |  |
Weighted average remaining lease term - finance leases | 4 years |  |  | 5 years |  |  | 6 years |  |  | 6 years |
Weighted average remaining lease term - operating leases | 29 years |  |  | 27 years |  |  | 30 years |  |  | 25 years |
Weighted average discount rate - finance leases |  | 5.77 | % |  |  | 2.77 | % |  |  | 6.12 | % |  |  | 2.27 | %
Weighted average discount rate - operating leases |  | 3.91 | % |  |  | 3.96 | % |  |  | 3.90 | % |  |  | 4.00 | %
The Companies’ lease liabilities have the following maturities:
Maturity of Lease Liabilities |  | Dominion Energy |  |  | Virginia Power |
(millions) |  | Operating |  |  | Finance |  |  | Operating |  |  | Finance |
2023 |  | $ | 44 |  |  | $ | 52 |  |  | $ | 23 |  |  | $ | 21 |
2024 |  |  | 36 |  |  |  | 45 |  |  |  | 19 |  |  |  | 20 |
2025 |  |  | 30 |  |  |  | 25 |  |  |  | 15 |  |  |  | 17 |
2026 |  |  | 27 |  |  |  | 20 |  |  |  | 12 |  |  |  | 14 |
2027 |  |  | 25 |  |  |  | 14 |  |  |  | 10 |  |  |  | 11 |
After 2027 |  |  | 642 |  |  |  | 15 |  |  |  | 314 |  |  |  | 13 |
Total undiscounted lease payments |  |  | 804 |  |  |  | 171 |  |  |  | 393 |  |  |  | 96 |
Present value adjustment |  |  | (251 | ) |  |  | (21 | ) |  |  | (99 | ) |  |  | (14 | )
Present value of lease liabilities |  | $ | 553 |  |  | $ | 150 |  |  | $ | 294 |  |  | $ | 82 |
Corporate Office Leasing Arrangement In December 2019, Dominion Energy signed an agreement with a lessor, as amended in May 2020, to construct and lease a new corporate office property in Richmond, Virginia. The lessor provided equity and had obtained financing commitments from debt investors, totaling $465 million, to fund the estimated project costs. In March 2021, Dominion Energy notified the lessor of its intention to terminate the leasing arrangement effective April 2021. As a result, Dominion Energy recorded a charge of $62 million ($46 million after-tax) in 2021, included in impairment of assets and other charges (reflected in the Corporate and Other segment) in its Consolidated Statements of Income, primarily for amounts required to be repaid to the lessor. Offshore Wind Vessel Leasing Arrangement In December 2020, Dominion Energy signed an agreement (subsequently amended in December 2022) with a lessor to complete construction of and lease a Jones Act compliant offshore wind installation vessel. This vessel is designed to handle current turbine technologies as well as next generation turbines. The lessor is providing equity and has obtained financing commitments from debt investors, totaling $550 million, to fund the estimated project costs. The project is expected to be ready for the 2024 offshore wind turbine installation season. Dominion Energy has been appointed to act as the construction agent for the lessor, during which time Dominion Energy will request cash draws from the lessor and debt investors to fund all project costs, which totaled $334 million as of December 31, 2022. If the project is terminated under certain events of default, Dominion Energy could be required to pay up to 100% of the then funded amount. The initial lease term will commence once construction is substantially complete and the vessel is delivered and will mature in November 2027. At the end of the initial lease term, Dominion Energy can (i) extend the term of the lease for an additional term, subject to the approval of the participants, at current market terms, (ii) purchase the property for an amount equal to the outstanding project costs or, (iii) subject to certain terms and conditions, sell the property on behalf of the lessor to a third party using commercially reasonable efforts to obtain the highest cash purchase price for the property. If the project is sold and the proceeds from the sale are insufficient to repay the investors for the outstanding project costs, Dominion Energy may be required to make a payment to the lessor for the difference between the outstanding project costs and sale proceeds. Dominion Energy is not considered the owner during construction for financial accounting purposes and, therefore, will not reflect the construction activity in its consolidated financial statements. Dominion Energy expects to recognize a right-of-use asset and a corresponding finance lease liability at the commencement of the lease term. Dominion Energy will be considered the owner of the leased property for tax purposes, and as a result, will be entitled to tax deductions for depreciation and interest expense.

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