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Fair Value Measurements
 9 Months Ended
Sep. 30, 2024
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, 2023. 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 inputs into the option 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, 2024. 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)

$

8

 

(2)-4

(1)

 

$

8

 

(2)-3

(1)

FTRs

Discounted
   cash flow

Market price
   (per MWh)

(3)

 

72

 

(4)-11

4

 

 

72

 

(4)-11

4

Electricity

Discounted
   cash flow

Market price
   (per MWh)

(3)

 

186

 

27-118

48

 

 

 

 

 

Physical options:

 

 

 

 

 

 

 

 

 

 

 

Natural gas(2)

Option model

Market price
   (per Dth)

(3)

 

16

 

1-5

3

 

 

13

 

1-5

3

 

Price volatility

(4)

 

 

10%-71%

46%

 

 

 

14%-71%

52%

Total assets

 

 

 

$

282

 

 

 

 

$

93

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Physical and financial forwards:

 

 

 

 

 

 

 

 

 

 

 

FTRs

Discounted
   cash flow

Market price
   (per MWh)

(3)

 

1

 

(6)-7

1

 

 

1

 

(6)-7

1

Electricity

Discounted
   cash flow

Market price
   (per MWh)

(3)

 

11

 

35-118

62

 

 

 

 

 

Physical options:

 

 

 

 

 

 

 

 

 

 

 

 

Natural gas(2)

Option model

Market price (per Dth)

(3)

 

1

 

1-3

2

 

 

1

 

1-3

2

 

 

Price volatility

(4)

 

 

44%-54%

50%

 

 

 

44%-54%

50%

Total liabilities

 

 

 

$

13

 

 

 

 

$

2

 

 

 
(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 11 for information regarding impairment charges recorded by Dominion Energy associated with corporate office buildings and nonregulated renewable natural gas facilities.

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 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2023, 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, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

168

 

 

$

282

 

 

$

450

 

 

$

—

 

 

$

53

 

 

$

93

 

 

$

146

 

Interest rate

 

 

—

 

 

 

702

 

 

 

—

 

 

 

702

 

 

 

—

 

 

 

45

 

 

 

—

 

 

 

45

 

Foreign currency exchange rate

 

 

—

 

 

 

8

 

 

 

—

 

 

 

8

 

 

 

—

 

 

 

8

 

 

 

—

 

 

 

8

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

5,473

 

 

 

—

 

 

 

—

 

 

 

5,473

 

 

 

2,818

 

 

 

—

 

 

 

—

 

 

 

2,818

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

—

 

 

 

578

 

 

 

—

 

 

 

578

 

 

 

—

 

 

 

351

 

 

 

—

 

 

 

351

 

Government securities

 

 

—

 

 

 

1,605

 

 

 

—

 

 

 

1,605

 

 

 

—

 

 

 

912

 

 

 

—

 

 

 

912

 

Other

 

 

141

 

 

 

—

 

 

 

—

 

 

 

141

 

 

 

96

 

 

 

—

 

 

 

—

 

 

 

96

 

Cash equivalents and other

 

 

—

 

 

 

2

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

2

 

 

 

—

 

 

 

2

 

Total assets

 

$

5,614

 

 

$

3,063

 

 

$

282

 

 

$

8,959

 

 

$

2,914

 

 

$

1,371

 

 

$

93

 

 

$

4,378

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

96

 

 

$

13

 

 

$

109

 

 

$

—

 

 

$

58

 

 

$

2

 

 

$

60

 

Interest rate

 

 

—

 

 

 

20

 

 

 

—

 

 

 

20

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Foreign currency exchange rate

 

 

—

 

 

 

52

 

 

 

—

 

 

 

52

 

 

 

—

 

 

 

52

 

 

 

—

 

 

 

52

 

Total liabilities

 

$

—

 

 

$

168

 

 

$

13

 

 

$

181

 

 

$

—

 

 

$

110

 

 

$

2

 

 

$

112

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

325

 

 

$

225

 

 

$

550

 

 

$

—

 

 

$

96

 

 

$

21

 

 

$

117

 

Interest rate

 

 

—

 

 

 

800

 

 

 

—

 

 

 

800

 

 

 

—

 

 

 

181

 

 

 

—

 

 

 

181

 

Investments(1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

4,527

 

 

 

—

 

 

 

—

 

 

 

4,527

 

 

 

2,362

 

 

 

—

 

 

 

—

 

 

 

2,362

 

Fixed income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate debt instruments

 

 

—

 

 

 

500

 

 

 

—

 

 

 

500

 

 

 

—

 

 

 

274

 

 

 

—

 

 

 

274

 

Government securities

 

 

219

 

 

 

1,238

 

 

 

—

 

 

 

1,457

 

 

 

129

 

 

 

687

 

 

 

—

 

 

 

816

 

Cash equivalents and other

 

 

31

 

 

 

—

 

 

 

—

 

 

 

31

 

 

 

20

 

 

 

—

 

 

 

—

 

 

 

20

 

Total assets

 

$

4,777

 

 

$

2,863

 

 

$

225

 

 

$

7,865

 

 

$

2,511

 

 

$

1,238

 

 

$

21

 

 

$

3,770

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commodity

 

$

—

 

 

$

160

 

 

$

139

 

 

$

299

 

 

$

—

 

 

$

95

 

 

$

137

 

 

$

232

 

Interest rate

 

 

—

 

 

 

359

 

 

 

—

 

 

 

359

 

 

 

—

 

 

 

45

 

 

 

—

 

 

 

45

 

Foreign currency exchange rate

 

 

—

 

 

 

39

 

 

 

—

 

 

 

39

 

 

 

—

 

 

 

39

 

 

 

—

 

 

 

39

 

Total liabilities

 

$

—

 

 

$

558

 

 

$

139

 

 

$

697

 

 

$

—

 

 

$

179

 

 

$

137

 

 

$

316

 
(1)
Includes investments held in the nuclear decommissioning trusts and rabbi trusts. Excludes $211 million and $457 million of assets at Dominion Energy, inclusive of $77 million and $217 million at Virginia Power, at September 30, 2024 and December 31, 2023, 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,

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

(millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

360

 

 

$

134

 

 

$

86

 

 

$

422

 

 

$

105

 

 

$

(3

)

 

$

(116

)

 

$

221

 

Total realized and unrealized gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in earnings:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating revenue

 

 

13

 

 

 

(10

)

 

 

7

 

 

 

(8

)

 

 

 

 

 

 

 

 

 

 

 

 

Electric fuel and other energy-
related purchases

 

 

14

 

 

 

(103

)

 

 

(134

)

 

 

(191

)

 

 

10

 

 

 

(107

)

 

 

(136

)

 

 

(195

)

Discontinued operations

 

 

(3

)

 

 

1

 

 

 

(4

)

 

 

1

 

 

 

 

 

 

 

 

 

 

 

 

 

Included in regulatory assets/
    liabilities

 

 

(77

)

 

 

(174

)

 

 

230

 

 

 

(463

)

 

 

(7

)

 

 

(176

)

 

 

219

 

 

 

(400

)

Settlements

 

 

(40

)

 

 

103

 

 

 

54

 

 

 

174

 

 

 

(17

)

 

 

107

 

 

 

103

 

 

 

179

 

Purchases

 

 

2

 

 

 

—

 

 

 

30

 

 

 

16

 

 

 

—

 

 

 

—

 

 

 

21

 

 

 

16

 

Ending balance

 

$

269

 

 

$

(49

)

 

$

269

 

 

$

(49

)

 

$

91

 

 

$

(179

)

 

$

91

 

 

$

(179

)

Dominion Energy had $12 million and $7 million of unrealized gains 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, 2024, respectively, and $(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. Virginia Power had no unrealized gains or losses for the three and nine months ended September 30, 2024 and 2023.

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, 2024

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt(2)

 

$

34,555

 

 

$

33,818

 

 

$

19,221

 

 

$

18,571

 

Supplemental credit facility borrowings

 

 

—

 

 

 

—

 

 

 

 

 

 

 

Securitization bonds(3)

 

 

1,282

 

 

 

1,315

 

 

 

1,282

 

 

 

1,315

 

Junior subordinated notes(2)

 

 

2,666

 

 

 

2,853

 

 

 

 

 

 

 

December 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt(2)

 

$

42,526

 

 

$

40,539

 

 

$

17,392

 

 

$

16,418

 

Supplemental credit facility borrowings

 

 

450

 

 

 

450

 

 

 

 

 

 

 

Junior subordinated notes(2)

 

 

1,388

 

 

 

1,374

 

 

 

 

 

 

 

 

(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 included in securities due within one year and amounts which represent the unamortized debt issuance costs and discount or premium. There were no fair value hedges associated with fixed-rate debt at September 30, 2024 and December 31, 2023. Additionally, Dominion Energy carrying amounts include portions classified as current liabilities held for sale at December 31, 2023.
(3)
Carrying amount includes current portions included in securities due within one year.