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Regulatory Matters | 9 Months Ended
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Sep. 30, 2024
Regulated Operations [Abstract] |
Regulatory Matters | Note 13. Regulatory Matters Regulatory Matters Involving Potential Loss Contingencies As a result of issues generated in the ordinary course of business, the Companies are involved in various regulatory matters. Certain regulatory matters may ultimately result in a loss; however, as such matters are in an initial procedural phase, involve uncertainty as to the outcome of pending reviews or orders, and/or involve significant factual issues that need to be resolved, it is not possible for the Companies to estimate a range of possible loss. For regulatory matters that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the regulatory process such that the Companies are able to estimate a range of possible loss. For regulatory matters that the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any estimated range is based on currently available information, involves elements of judgment and significant uncertainties and may not represent the Companies’ maximum possible loss exposure. The circumstances of such regulatory matters will change from time to time and actual results may vary significantly from the current estimate. For current matters not specifically reported below, management does not anticipate that the outcome from such matters would have a material effect on the Companies’ financial position, liquidity or results of operations. Other Regulatory Matters Other than the following matters, there have been no significant developments regarding the pending regulatory matters disclosed in Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2023. Virginia Regulation - Recent Developments 2023 Biennial Review In July 2023, Virginia Power filed its base rate case and accompanying schedules in support of the 2023 Biennial Review in accordance with legislation enacted in Virginia in April 2023. Virginia Power’s earnings test analysis, as filed, demonstrated it earned a combined ROE of 9.04% on its generation and distribution services for the test period, within 70 basis points of its authorized ROE of 9.35% established in the 2021 Triennial Review. Virginia Power did not request an increase in base rates for generation and distribution services and proposed that base rates remain at their existing level utilizing an ROE of 9.70% for the prospective test periods and a common equity capitalization to total capitalization ratio of 52.10%. Virginia Power noted that while its prospective test periods would result in a revenue deficiency, it did not request an increase to base rates given that the combination of certain riders with an aggregate annual revenue requirement of at least $350 million into base rates effective July 2023 cannot serve as the basis for an increase in base rates as part of the 2023 Biennial Review. In November 2023, Virginia Power, the Virginia Commission staff and other parties filed a comprehensive settlement agreement with the Virginia Commission for approval. The comprehensive settlement agreement indicates that Virginia Power demonstrated it earned a combined ROE of 9.05% on its generation and distribution services for the test period, requires previously unrecovered severe weather event costs of $45 million to be recovered through base rates during the 2023-2024 biennial period, with carrying costs, and provides for $15 million in one-time credits to customers by September 2024. In February 2024, the Virginia Commission approved the comprehensive settlement agreement and issued its order in this matter. In doing so, the Virginia Commission determined that Virginia Power’s earnings for the test period, considered as a whole, were within 70 basis points above or below its authorized ROE of 9.35%. The Virginia Commission also authorized an ROE of 9.70%, as directed by legislation enacted in Virginia in April 2023, for Virginia Power that will be applied to Virginia Power’s riders prospectively and that will also be utilized to measure base rate earnings for the 2025 Biennial Review. In connection with the order, Virginia Power recorded a net benefit of $17 million ($12 million after-tax) in the first quarter of 2024 within impairment of assets and other charges in its Consolidated Statements of Income for a regulatory asset for previously unrecovered severe weather event costs, which will be amortized by the end of 2024. Virginia Fuel Expenses In May 2023, Virginia Power filed its annual fuel factor filing with the Virginia Commission to recover an estimated $2.3 billion in Virginia jurisdictional projected fuel expense for the rate year beginning July 1, 2023 and a projected $1.3 billion under-recovered balance as of June 30, 2023. As discussed in Note 13 to the Companies’ Annual Report on Form 10-K for the year ended December 31, 2023, Virginia Power proposed two alternatives to recover these under-collected fuel costs, including an option based on an anticipated securitization of up to $1.3 billion under-recovered balance as of June 30, 2023 as permitted under legislation enacted in Virginia in April 2023, with such securitization approved by the Virginia Commission in November 2023 and completed by Virginia Power in February 2024. In March 2024, the Virginia Commission approved Virginia Power’s annual fuel factor based on the securitization option, which results in a net decrease in Virginia Power’s fuel revenues for the rate year of approximately $541 million. In addition, the Virginia Commission approved Virginia Power’s proposal to alter the order in which revenue from certain customers who elect to pay market-based rates would be allocated between base rates and fuel, which results in a reduction to fuel revenue of $13 million. In May 2024, Virginia Power filed its annual fuel factor with the Virginia Commission to recover an estimated $2.2 billion in Virginia jurisdictional projected fuel expenses for the rate year beginning July 1, 2024 and to return an estimated $266 million net over-recovered balance through June 30, 2024. Virginia Power’s proposed fuel rate represents a fuel revenue decrease of $636 million when applied to projected kilowatt-hour sales for the rate year beginning July 1, 2024. In May 2024, the Virginia Commission ordered that Virginia Power’s proposed total fuel factor rate be placed into effect on an interim basis for usage on and after July 1, 2024. This matter is pending. PJM Capacity Expense Deferral In October 2024, Virginia Power filed a request with the Virginia Commission for approval to defer up to $145 million of capacity expenses expected to be incurred with PJM for 2025 for jurisdictional customers and have such expenses considered as part of the 2027 Biennial Review. This matter is pending. Renewable Generation Projects In October 2023, Virginia Power filed a petition with the Virginia Commission for CPCNs to construct or acquire and operate four utility-scale projects totaling approximately 329 MW of solar generation as part of its efforts to meet the renewable generation development targets under the VCEA. The projects, as of October 2023, are expected to cost approximately $850 million in the aggregate, excluding financing costs, and be placed into service between 2024 and 2026. In March 2024, the Virginia Commission approved the petition. In October 2024, Virginia Power filed a petition with the Virginia Commission for CPCNs to construct or acquire and operate two utility-scale projects totaling approximately 208 MW of solar generation as part of its efforts to meet the renewable generation development targets under the VCEA. The projects, as of October 2024, are expected to cost approximately $605 million in the aggregate, excluding financing costs, and be placed into service between 2026 and 2028. This matter is pending. Virginia LNG Storage Facility In June 2024, Virginia Power filed a petition with the Virginia Commission to amend the CPCNs for Brunswick County and Greensville County to construct and operate an LNG production, storage and regasification facility and related transmission facilities adjacent to Greensville County. When complete, the facility will store the liquefied equivalent of approximately 2.0 bcf and would be able to regasify approximately 25% of its storage capacity per day and liquefy from the pipeline less than 1% of its equivalent storage capacity per day. The facility will serve as a backup fuel source for Brunswick County and Greensville County to support operations and improve system reliability. The facility is expected to cost approximately $550 million, excluding financing costs, and be placed into service by the end of 2027. This matter is pending. Riders Other than the following matters, there have been no significant developments regarding the significant riders associated with various Virginia Power projects disclosed in Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2023.
Rider Name |  | Application Date |  | Approval Date |  | Rate Year Beginning |  | Total Revenue Requirement (millions)(1) |  |  | Increase (Decrease) from Previous (millions) |
Rider CCR |  | March 2024 |  | Pending |  | December 2024 |  | $ | 103 |  |  | $ | (91 | )
Rider CE(2) |  | October 2023 |  | March 2024 |  | May 2024 |  |  | 133 |  |  |  | 44 |
Rider CE(3) |  | October 2024 |  | Pending |  | May 2025 |  |  | 182 |  |  |  | 49 |
Rider DIST(4) |  | August 2024 |  | Pending |  | June 2025 |  |  | 269 |  |  | N/A |
Rider E |  | January 2024 |  | September 2024 |  | November 2024 |  |  | 72 |  |  |  | (37 | )
Rider GEN(5) |  | June 2024 |  | Pending |  | April 2025 |  |  | 438 |  |  | N/A |
Rider GEN |  | June 2024 |  | Pending |  | April 2026 |  |  | 311 |  |  |  | (127 | )
Rider GT |  | August 2023 |  | May 2024 |  | June 2024 |  |  | 145 |  |  |  | 131 |
Rider OSW |  | November 2023 |  | July 2024 |  | September 2024 |  |  | 486 |  |  |  | 215 |
Rider OSW(6) |  | November 2024 |  | Pending |  | September 2025 |  |  | 640 |  |  |  | 154 |
Rider RPS |  | December 2023(11) |  | August 2024 |  | September 2024 |  |  | 358 |  |  |  | 262 |
Rider SNA |  | October 2023 |  | July 2024 |  | September 2024 |  |  | 69 |  |  |  | 19 |
Rider SNA(7) |  | October 2024 |  | Pending |  | September 2025 |  |  | 207 |  |  |  | 138 |
Rider T1(8) |  | May 2024 |  | July 2024 |  | September 2024 |  |  | 1,170 |  |  |  | 291 |
Rider U(9) |  | October 2023 |  | July 2024 |  | August 2024 |  |  | 150 |  |  |  | 76 |
DSM Riders(10) |  | December 2023 |  | July 2024 |  | September 2024 |  |  | 86 |  |  |  | (21 | )
(1) In addition, Virginia Power has a rider associated with another project with a total annual revenue requirement of $18 million as of September 30, 2024. There is a pending application associated with this rider, which if approved, would result in a net annual revenue requirement increase of $7 million. (2) The Virginia Commission approved four solar generation projects and 13 power purchase agreements in addition to previously approved Rider CE projects. In addition, the approved total revenue requirement includes amounts which had previously been collected under a separate rider. (3) Associated with two solar generation projects, two small-scale solar projects and 24 purchased power agreements in addition to previously approved Rider CE projects. (4) Consists of $103 million in total revenue requirement for certain previously approved electric distribution grid transformation projects and $166 million for previously approved phases and proposed phase eight of certain new underground distribution facilities. If approved, would result in the consolidation of Riders GT and U and cease the separate collection of rates under these riders effective June 1, 2025. (5) Includes $348 million in total revenue requirement related to the consolidation of Riders BW, GV and four other riders associated with generation facilities, ceasing the separate collection of rates under these riders effective April 1, 2025 and the extension of existing rates for Rider BW through March 2025. In addition, Virginia Power also requests approval to recover costs associated with the Virginia LNG Storage Facility described above. (6) Includes a proposal for Virginia Power to establish a decommissioning trust fund associated with the CVOW Commercial Project. If approved, the applicable amount included within the total revenue requirement would be allocated for such purposes. (7) Virginia Power also requested approval of cost recovery of approximately $1.7 billion through Rider SNA for the second phase of nuclear life extension program which includes investments for calendar years 2025 through 2027. (8) Consists of $532 million for the transmission component of Virginia Power’s base rates and $638 million for Rider T1. (9) Consists of $72 million for previously approved phases and $78 million for phase seven costs for Rider U. In addition, the Virginia Commission approved Virginia Power’s request to extend existing rates for Rider U through July 2024. (10) Associated with an additional three new energy efficiency programs and one new demand response program with a $102 million cost cap, with the ability to exceed the cost cap by no more than 15%. (11) Virginia Power amended its application in February 2024. In June 2024, the Virginia Commission approved Virginia Power’s request, filed in May 2024, to cease Rider RGGI effective July 2024. Electric Transmission Projects Other than the following matters, there have been no significant developments regarding the significant Virginia Power electric transmission projects disclosed in Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2023.
Description and Location of Project |  | Application Date |  | Approval Date |  | Type of Line |  | Miles of Lines |  | Cost Estimate (millions)(1) |
Construct new Germanna substation, transmission line and related projects in Culpeper County, Virginia |  | November 2023 |  | August 2024 |  | 230 kV |  | 2 |  | $ | 55 |
Construct Daves Store transmission line extension in Prince William County, Virginia |  | February 2024 |  | October 2024 |  | 230 kV |  | 3 |  |  | 70 |
Construct new Aspen and Golden substations, transmission lines and related projects in Loudoun County, Virginia |  | March 2024 |  | Pending |  | 500- 230 kV |  | 10 |  |  | 690 |
Partial rebuild Fredericksburg-Aquia Harbour transmission lines and related projects in Stafford County and the City of Fredericksburg, Virginia |  | March 2024 |  | Pending |  | 230- 115 kV |  | 24 |  |  | 135 |
Construct new Apollo-Twin Creeks transmission lines, new substations and related projects in Loudoun County, Virginia |  | March 2024 |  | Pending |  | 230 kV |  | 2 |  |  | 285 |
Rebuild Dooms-Harrisonburg transmission lines and related projects in the Counties of Augusta and Rockingham and the Town of Grottoes, Virginia |  | April 2024 |  | Pending |  | 230 kV |  | 22 |  |  | 60 |
Rebuild and construct new Fentress-Yadkin transmission lines and related projects in the City of Chesapeake, Virginia |  | June 2024 |  | Pending |  | 500 kV |  | 14 |  |  | 205 |
Partial rebuild, reconductor and construct new Network Takeoff transmission lines and related projects in the Counties of Fairfax and Loudoun, Virginia |  | July 2024 |  | Pending |  | 230 kV |  | 6 |  |  | 170 |
Rebuild Aquia Harbour-Possum Point transmission lines and related projects in the Counties of Stafford and Prince William and the City of Fredericksburg, Virginia |  | August 2024 |  | Pending |  | 500- 230 kV |  | 32 |  |  | 210 |
Partial rebuild, reconductor and construct new New Post transmission lines and related projects in the Counties of Caroline and Spotsylvania, Virginia |  | August 2024 |  | Pending |  | 230 kV |  | 38 |  |  | 120 |
Construct new Centreport transmission line, substation and related projects in Stafford County, Virginia |  | September 2024 |  | Pending |  | 230 kV |  | 3 |  |  | 55 |
Partial rebuild and construct new Meadowville transmission lines, substations and related projects in Chesterfield County, Virginia |  | October 2024 |  | Pending |  | 230 kV |  | 11 |  |  | 190 |
(1) Represents the cost estimate included in the application except as updated in the approval if applicable. In addition, Virginia Power had various other transmission projects approved or applied for and currently pending approval with aggregate cost estimates of approximately $145 million and $55 million, respectively. North Carolina Regulation Virginia Power Base Rate Case In March 2024, Virginia Power filed its base rate case and schedules with the North Carolina Commission. Virginia Power proposed a non-fuel, base rate increase of $57 million effective November 1, 2024 on an interim basis subject to refund, with any permanent rates ordered by the North Carolina Commission effective February 1, 2025. The base rate increase was proposed to recover the significant investments in generation, transmission and distribution infrastructure for the benefit of North Carolina customers. Virginia Power presented an earned return of 5.01% based upon a fully-adjusted test period, compared to its authorized 9.75% return, and proposed a 10.60% ROE. In October 2024, Virginia Power, the North Carolina public staff and other parties of record filed a settlement agreement with the North Carolina Commission for approval. The settlement agreement provides for a non-fuel, base rate increase of $37 million effective November 1, 2024 on an interim basis subject to refund, with any permanent rates ordered by the North Carolina Commission effective February 1, 2025, and an authorized ROE of 9.95%. In addition, the settlement agreement provides that Virginia Power may file with the North Carolina Commission an application for an annual rider to seek recovery of incurred North Carolina jurisdictional CCR expenses, with the first such rider, if approved by the North Carolina Commission, taking effect February 1, 2025 and covering costs for the period July 1, 2024 through December 31, 2024. This matter is pending. Virginia Power Fuel Filing In August 2024, Virginia Power submitted its annual filing to the North Carolina Commission to adjust the fuel component of its electric rates. As subsequently updated in October 2024, Virginia Power proposed a total $107 million decrease to the fuel component of its electric rates for the rate year beginning February 1, 2025. In addition, Virginia Power proposed the implementation of a three-month decrement rider effective November 1, 2024 to reduce the over-recovery of the fuel component of its electric rates during the current rate year. These matters are pending. PSNC Customer Usage Tracker PSNC utilizes a customer usage tracker, a decoupling mechanism, which allows it to adjust its base rates semi-annually for residential and commercial customers based on average per customer consumption. In March 2024, PSNC submitted a filing with the North Carolina Commission for a $31 million decrease relating to the customer usage tracker. The North Carolina Commission approved the filing in March 2024 with rates effective April 2024. South Carolina Regulation Electric Base Rate Case In March 2024, DESC filed its retail electric base rate case and schedules with the South Carolina Commission. DESC proposed a non-fuel, base rate increase of $295 million, partially offset by a net decrease in storm damage and DSM components of $4 million. If approved, the overall proposed rate increase of $291 million, or 12.59%, would be effective on and after the first billing cycle of September 2024. The base rate increase was proposed to recover the significant investment in assets and operating resources required to serve an expanding customer base, maintain the safety, reliability and efficiency of DESC’s system and meet increasingly stringent reliability, security and environmental requirements for the benefit of South Carolina customers. DESC presented an earned ROE of 4.32% based upon a fully-adjusted test period. The proposed rates would provide for an earned ROE of 10.60% compared to the currently authorized ROE of 9.50%. In July 2024, DESC, the South Carolina Office of Regulatory Staff and other parties of record filed a comprehensive settlement agreement with the South Carolina Commission for approval. The comprehensive settlement agreement provides for a non-fuel, base rate increase of $219 million prior to the effect of South Carolina Commission-ordered DSM reductions commencing with service rendered on September 1, 2024 and an authorized ROE of 9.94%. In addition, the comprehensive settlement agreement includes that DESC would provide a one-time bill credit in 2024 of approximately $7 million primarily to residential customers. In August 2024, the South Carolina Commission voted to approve the settlement agreement. In connection with this matter, in the third quarter of 2024 Dominion Energy recorded a charge of $58 million ($44 million after tax) (reflected within the Corporate and Other segment), including $50 million to write down certain materials and supplies inventory presented within impairment of assets and other charges. Cost of Fuel DESC’s retail electric rates include a cost of fuel component approved by the South Carolina Commission which may be adjusted periodically to reflect changes in the price of fuel purchased by DESC. In February 2024, DESC filed with the South Carolina Commission a proposal to decrease the total fuel cost component of retail electric rates. DESC’s proposed adjustment is designed to recover DESC’s current base fuel costs, including its existing under-collected balance, over the 12-month period beginning with the first billing cycle of May 2024. In addition, DESC proposed an increase to its variable environmental and avoided capacity cost component. The net effect is a proposed annual decrease of $315 million. In March 2024, DESC, the South Carolina Office of Regulatory Staff and another party of record filed a settlement agreement with the South Carolina Commission for approval to make certain adjustments to the February 2024 filing that would result in a net annual decrease of $316 million. In April 2024, the South Carolina Commission voted to approve the settlement agreement, with rates effective May 2024. DSM Programs DESC has approval for a DSM rider through which it recovers expenditures related to its DSM programs. In January 2024, DESC filed an application with the South Carolina Commission seeking approval to recover $47 million of costs and net lost revenues associated with these programs, along with an incentive to invest in such programs. DESC requested that rates be effective with the first billing cycle of May 2024. In April 2024, the South Carolina Commission approved the request, effective with the first billing cycle of May 2024. Electric - Transmission Project In March 2024, DESC filed an application with the South Carolina Commission requesting approval of a CPCN to construct and operate the Church Creek - Charleston Transmission Line, comprised of a 7-mile 230 kV transmission line and associated facilities in Charleston County, South Carolina with an estimated total project cost of $40 million. In July 2024, the South Carolina Commission approved the application.

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