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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2023
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Note 8. Fair Value Measurements The Companies’ fair value measurements are made in accordance with the policies discussed in Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2022. See Note 9 in this report for additional information about the Companies’ derivatives and hedge accounting activities. The Companies enter into certain physical and financial forwards, futures and options, which are considered Level 3 as they have one or more inputs that are not observable and are significant to the valuation. The discounted cash flow method is used to value Level 3 physical and financial forwards and futures contracts. An option model is used to value Level 3 physical options. The discounted cash flow model for forwards and futures calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return and credit spreads. The option model calculates mark-to-market valuations using variations of the Black-Scholes option model. The inputs into the models are the forward market prices, implied price volatilities, risk-free rate of return, the option expiration dates, the option strike prices, the original sales prices and volumes. For Level 3 fair value measurements, certain forward market prices and implied price volatilities are considered unobservable. The following table presents the Companies' quantitative information about Level 3 fair value measurements at September 30, 2023. The range and weighted average are presented in dollars for market price inputs and percentages for price volatility.
|  |  |  | Dominion Energy |  | Virginia Power
| Valuation Techniques | Unobservable Input |  | Fair Value (millions) |  | Range | Weighted Average(1) |  | Fair Value (millions) |  | Range | Weighted Average(1)
Assets |  |  |  |  |  |  |  |  |  |  |  |
Physical and financial forwards: |  |  |  |  |  |  |  |  |  |  |
Natural gas(2) | Discounted cash flow | Market price (per Dth) | (3) | $ | 1 |  | (2)-3 | (1) |  | $ | 1 |  | (2)-3 | (1)
FTRs | Discounted cash flow | Market price (per MWh) | (3) |  | 5 |  | (1)-11 | 2 |  |  | 5 |  | (1)-11 | 2
Electricity | Discounted cash flow | Market price (per MWh) | (3) |  | 143 |  | 25-136 | 48 |  |  |  |  |
Physical options: |  |  |  |  |  |  |  |  |  |  |
Natural gas(2) | Option model | Market price (per Dth) | (3) |  | 11 |  | 1-8 | 4 |  |  | 10 |  | 1-8 | 4
|  | Price volatility | (4) |  |  | 13%-72% | 52% |  |  |  | 13%-72% | 54%
Total assets |  |  |  | $ | 160 |  |  |  |  | $ | 16 |  |  |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Physical and financial forwards: |  |  |  |  |  |  |  |  |  |  |
Natural gas(2) | Discounted cash flow | Market price (per Dth) | (3) | $ | 14 |  | (2)-0 | (1) |  | $ | 14 |  | (2)-0 | (1)
FTRs | Discounted cash flow | Market price (per MWh) | (3) |  | 181 |  | (2)-11 | 3 |  |  | 181 |  | (2)-11 | 3
Electricity | Discounted cash flow | Market price (per MWh) | (3) |  | 14 |  | 34-149 | 69 |  |  |  |  |
Total liabilities |  |  |  | $ | 209 |  |  |  |  | $ | 195 |  |  |
(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. Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:
Significant Unobservable Inputs |  | Position |  | Change to Input |  | Impact on Fair Value Measurement
Market price |  | Buy |  | Increase (decrease) |  | Gain (loss)
Market price |  | Sell |  | Increase (decrease) |  | Loss (gain)
Price volatility |  | Buy |  | Increase (decrease) |  | Gain (loss)
Price volatility |  | Sell |  | Increase (decrease) |  | Loss (gain)
Nonrecurring Fair Value Measurements See Note 10 for information regarding nonrecurring fair value measurements associated with Dominion Energy’s noncontrolling ownership interest in Dominion Privatization. In the first quarter of 2023, Dominion Energy recorded a charge of $91 million ($68 million after-tax) in impairment of assets and other charges in its Consolidated Statements of Income to adjust a corporate office building down to its estimated fair value, using a market approach, of $35 million. The valuation is considered a Level 3 fair value measurement as it is based on unobservable inputs due to limited comparable market activity. The corporate office building is reflected in the Corporate and Other segment and presented as held for sale in Dominion Energy’s Consolidated Balance Sheets at September 30, 2023. In the second quarter of 2023, Dominion Energy recorded a charge of $15 million ($11 million after-tax) presented within discontinued operations in its Consolidated Statements of Income to adjust certain nonregulated solar assets down to their estimated fair value, using a market approach, of $22 million. The valuation is considered a Level 2 fair value measurement given that it is based on bids received. As discussed in Note 3, these assets were sold in August 2023. Recurring Fair Value Measurements The following table presents the Companies' assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:
|  | Dominion Energy |  |  | Virginia Power |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |  |  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
(millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity |  | $ | — |  |  | $ | 176 |  |  | $ | 160 |  |  | $ | 336 |  |  | $ | — |  |  | $ | 60 |  |  | $ | 16 |  |  | $ | 76 |
Interest rate |  |  | — |  |  |  | 1,301 |  |  |  | — |  |  |  | 1,301 |  |  |  | — |  |  |  | 389 |  |  |  | — |  |  |  | 389 |
Foreign currency exchange rate |  |  | — |  |  |  | 9 |  |  |  | — |  |  |  | 9 |  |  |  | — |  |  |  | 9 |  |  |  | — |  |  |  | 9 |
Investments(1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  |  | 4,218 |  |  |  | — |  |  |  | — |  |  |  | 4,218 |  |  |  | 2,238 |  |  |  | — |  |  |  | — |  |  |  | 2,238 |
Fixed income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate debt instruments |  |  | — |  |  |  | 501 |  |  |  | — |  |  |  | 501 |  |  |  | — |  |  |  | 285 |  |  |  | — |  |  |  | 285 |
Government securities |  |  | 166 |  |  |  | 1,109 |  |  |  | — |  |  |  | 1,275 |  |  |  | 88 |  |  |  | 600 |  |  |  | — |  |  |  | 688 |
Cash equivalents and other |  |  | 43 |  |  |  | — |  |  |  | — |  |  |  | 43 |  |  |  | 23 |  |  |  | — |  |  |  | — |  |  |  | 23 |
Total assets |  | $ | 4,427 |  |  | $ | 3,096 |  |  | $ | 160 |  |  | $ | 7,683 |  |  | $ | 2,349 |  |  | $ | 1,343 |  |  | $ | 16 |  |  | $ | 3,708 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity |  | $ | — |  |  | $ | 279 |  |  | $ | 209 |  |  | $ | 488 |  |  | $ | — |  |  | $ | 113 |  |  | $ | 195 |  |  | $ | 308 |
Interest rate |  |  | — |  |  |  | 428 |  |  |  | — |  |  |  | 428 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Foreign currency exchange rate |  |  | — |  |  |  | 162 |  |  |  | — |  |  |  | 162 |  |  |  | — |  |  |  | 162 |  |  |  | — |  |  |  | 162 |
Total liabilities |  | $ | — |  |  | $ | 869 |  |  | $ | 209 |  |  | $ | 1,078 |  |  | $ | — |  |  | $ | 275 |  |  | $ | 195 |  |  | $ | 470 |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity |  | $ | — |  |  | $ | 332 |  |  | $ | 437 |  |  | $ | 769 |  |  | $ | — |  |  | $ | 32 |  |  | $ | 236 |  |  | $ | 268 |
Interest rate |  |  | — |  |  |  | 1,407 |  |  |  | — |  |  |  | 1,407 |  |  |  | — |  |  |  | 614 |  |  |  | — |  |  |  | 614 |
Investments(1): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. |  |  | 3,810 |  |  |  | — |  |  |  | — |  |  |  | 3,810 |  |  |  | 2,028 |  |  |  | — |  |  |  | — |  |  |  | 2,028 |
Fixed income: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Corporate debt instruments |  |  | — |  |  |  | 576 |  |  |  | — |  |  |  | 576 |  |  |  | — |  |  |  | 360 |  |  |  | — |  |  |  | 360 |
Government securities |  |  | 161 |  |  |  | 1,059 |  |  |  | — |  |  |  | 1,220 |  |  |  | 90 |  |  |  | 542 |  |  |  | — |  |  |  | 632 |
Total assets |  | $ | 3,971 |  |  | $ | 3,374 |  |  | $ | 437 |  |  | $ | 7,782 |  |  | $ | 2,118 |  |  | $ | 1,548 |  |  | $ | 236 |  |  | $ | 3,902 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commodity |  | $ | — |  |  | $ | 911 |  |  | $ | 15 |  |  | $ | 926 |  |  | $ | — |  |  | $ | 333 |  |  | $ | 15 |  |  | $ | 348 |
Interest rate |  |  | — |  |  |  | 377 |  |  |  | — |  |  |  | 377 |  |  |  | — |  |  |  | 7 |  |  |  | — |  |  |  | 7 |
Foreign currency exchange rate |  |  | — |  |  |  | 101 |  |  |  | — |  |  |  | 101 |  |  |  | — |  |  |  | 101 |  |  |  | — |  |  |  | 101 |
Total liabilities |  | $ | — |  |  | $ | 1,389 |  |  | $ | 15 |  |  | $ | 1,404 |  |  | $ | — |  |  | $ | 441 |  |  | $ | 15 |  |  | $ | 456 |
(1) Includes investments held in the nuclear decommissioning trusts and rabbi trusts. Excludes $370 million and $404 million of assets at Dominion Energy, inclusive of $147 million and $161 million at Virginia Power, at September 30, 2023 and December 31, 2022, respectively, measured at fair value using NAV (or its equivalent) as a practical expedient which are not required to be categorized in the fair value hierarchy. The following table presents the net change in the Companies' assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:
|  | Dominion Energy |  |  | Virginia Power |
|  | Quarter-to-Date |  |  | Year-to-Date |  |  | Quarter-to-Date |  |  | Year-to-Date |
Period Ended September 30, |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
(millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | $ | 134 |  |  | $ | 480 |  |  | $ | 422 |  |  | $ | 222 |  |  | $ | (3 | ) |  | $ | 245 |  |  | $ | 221 |  |  | $ | 102 |
Total realized and unrealized gains (losses): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Included in earnings: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating revenue |  |  | (10 | ) |  |  | — |  |  |  | (8 | ) |  |  | — |  |  |  |  |  |  |  |  |  |  |  |  |
Electric fuel and other energy- related purchases |  |  | (103 | ) |  |  | 181 |  |  |  | (191 | ) |  |  | 346 |  |  |  | (107 | ) |  |  | 142 |  |  |  | (195 | ) |  |  | 293 |
Discontinued operations |  |  | 1 |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  |  |  |  |  |  |  |  |  |  |
Included in regulatory assets/ liabilities |  |  | (174 | ) |  |  | 2 |  |  |  | (463 | ) |  |  | 243 |  |  |  | (176 | ) |  |  | 26 |  |  |  | (400 | ) |  |  | 152 |
Settlements |  |  | 103 |  |  |  | (181 | ) |  |  | 174 |  |  |  | (346 | ) |  |  | 107 |  |  |  | (142 | ) |  |  | 179 |  |  |  | (293 | )
Purchases |  |  | — |  |  |  | — |  |  |  | 16 |  |  |  | 17 |  |  |  | — |  |  |  | — |  |  |  | 16 |  |  |  | 17 |
Ending balance |  | $ | (49 | ) |  | $ | 482 |  |  | $ | (49 | ) |  | $ | 482 |  |  | $ | (179 | ) |  | $ | 271 |  |  | $ | (179 | ) |  | $ | 271 |
Dominion Energy had $(10) million and $(8) million of unrealized losses included in earnings in the Level 3 fair value category related to assets/liabilities still held at the reporting date for the three and nine months ended September 30, 2023, respectively, and no unrealized gains or losses for the three and nine months ended September 30, 2022. Virginia Power had no unrealized gains or losses for the three and nine months ended September 30, 2023 and 2022. Fair Value of Financial Instruments Substantially all of the Companies’ financial instruments are recorded at fair value, with the exception of the instruments described below, which are reported at historical cost. Estimated fair values have been determined using available market information and valuation methodologies considered appropriate by management. The carrying amount of cash, restricted cash and equivalents, customer and other receivables, affiliated receivables, short-term debt, affiliated current borrowings, payables to affiliates and accounts payable are representative of fair value because of the short-term nature of these instruments. For the Companies' financial instruments that are not recorded at fair value, the carrying amounts and estimated fair values are as follows:
|  | Dominion Energy |  |  | Virginia Power |
|  | Carrying Amount |  |  | Estimated Fair Value(1) |  |  | Carrying Amount |  |  | Estimated Fair Value(1) |
(millions) |  |  |  |  |  |  |  |  |  |  |  |
September 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt(2) |  | $ | 39,854 |  |  | $ | 35,171 |  |  | $ | 17,390 |  |  | $ | 15,084 |
Supplemental credit facility borrowings |  |  | 900 |  |  |  | 900 |  |  |  |  |  |  |
Junior subordinated notes(2) |  |  | 1,388 |  |  |  | 1,361 |  |  |  |  |  |  |
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |
Long-term debt(2) |  | $ | 39,680 |  |  | $ | 36,426 |  |  | $ | 15,616 |  |  | $ | 14,067 |
Supplemental credit facility borrowings |  |  | 450 |  |  |  | 450 |  |  |  |  |  |  |
Junior subordinated notes(2) |  |  | 1,387 |  |  |  | 1,340 |  |  |  |  |  |  |
(1) Fair value is estimated using market prices, where available, and interest rates currently available for issuance of debt with similar terms and remaining maturities. All fair value measurements are classified as Level 2. The carrying amount of debt issuances with short-term maturities and variable rates refinanced at current market rates is a reasonable estimate of their fair value. (2) Carrying amount includes current portions presented in securities due within one year and amounts which represent the unamortized debt issuance costs and discount or premium. Additionally, the Dominion Energy carrying amount includes portions classified as held for sale presented in current liabilities held for sale at September 30, 2023 and presented in current liabilities held for sale and noncurrent liabilities held for sale at December 31, 2022.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482106/820-10-50-2 + Details
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