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Significant Accounting Policies | 12 Months Ended
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Dec. 31, 2024
Accounting Policies [Abstract] |
Significant Accounting Policies | NOTE 2. SIGNIFICANT ACCOUNTING POLICIES General The Companies make certain estimates and assumptions in preparing their Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses and cash flows for the periods presented. Actual results may differ from those estimates. The Companies’ Consolidated Financial Statements include, after eliminating intercompany transactions and balances, their accounts, those of their respective majority-owned subsidiaries and non-wholly-owned entities in which they have a controlling financial interest. For certain partnership structures, income is allocated based on the liquidation value of the underlying contractual arrangements. Stonepeak’s 50% ownership interest in OSWP is reflected as noncontrolling interest in the Companies’ Consolidated Financial Statements. The Companies report certain contracts, instruments and investments at fair value. See below and Note 6 for further information on fair value measurements. The Companies consider acquisitions or dispositions in which substantially all of the fair value of the gross assets acquired or disposed of is concentrated into a single identifiable asset or group of similar identifiable assets to be an acquisition or a disposition of an asset, rather than a business. See Notes 3 and 10 for further information on such transactions. Dominion Energy maintains pension and other postretirement benefit plans and Virginia Power participates in certain of these plans. See Note 22 for further information on these plans. Certain amounts in the Companies’ 2023 and 2022 Consolidated Financial Statements have been reclassified to conform to the 2024 presentation for comparative purposes; however, such reclassifications did not affect the Companies’ net income, total assets, liabilities, equity or cash flows. Effective in the fourth quarter of 2024, Dominion Energy changed its method of accounting for the recognition of actuarial gains and losses on its defined benefit pension and other postretirement benefit plans into earnings from an amortization approach to immediate recognition. All prior period information was conformed to this presentation as described below under the heading Change in Accounting Policy. Amounts disclosed for Dominion Energy are inclusive of Virginia Power, where applicable. Change in Accounting Policy During the fourth quarter of 2024, Dominion Energy changed its method of accounting for the recognition of actuarial gains and losses on its defined benefit pension and other postretirement benefit plans into earnings from an amortization approach to immediate recognition. Previously, Dominion Energy recognized the net actuarial gains and losses as a component of AOCI and amortized such amounts into earnings to the extent such gains and losses were outside a corridor of the greater of 10% of the market-related value of plan assets or 10% of the plans' projected benefit obligation. As a result of the change in policy, Dominion Energy immediately recognizes the change in the fair value of plan assets and liabilities and net actuarial gains and losses annually in the fourth quarter of each fiscal year as well as whenever a triggering event occurs that is determined to require remeasurement. This change in accounting policy does not impact the recognition of the other components of net periodic benefit cost associated with Dominion Energy’s defined benefit pension and other postretirement benefit plans. Actuarial losses attributable to Dominion Energy’s rate regulated operations are deferred to regulatory assets when it is probable that regulators will permit them to be recovered from customers in future rates. Likewise, actuarial gains attributable to Dominion Energy’s rate regulated operations are deferred to regulatory liabilities when it is probable that regulators will require customer refunds or other benefits through future rates. Although the amortization of actuarial gains and losses is considered acceptable, Dominion Energy believes the immediate recognition of actuarial gains and losses is preferable as it eliminates the delay in recognizing gains and losses to earnings. Dominion Energy applied this change in accounting policy retrospectively to all prior periods presented. The following table details the increase (decrease) to each affected line item in Dominion Energy’s Consolidated Statements of Income for the periods presented:
|  | Dominion Energy |
Year ended December 31, |  | 2024 |  |  | 2023 |  |  | 2022 |
(millions, except per share amounts) |  |  |  |  |  |  |  |  |
Employee Benefit Plan Market-Related Impacts(1) |  |  |  |  |  |  |
Other income (expense) |  | $ | (359 | ) |  | $ | (8 | ) |  | $ | (226 | )
Income tax expense |  |  | (93 | ) |  |  | (7 | ) |  |  | (57 | )
Net income from continuing operations(2) |  |  | (266 | ) |  |  | (1 | ) |  |  | (169 | )
Net income (loss) from discontinued operations |  |  | — |  |  |  | — |  |  |  | 28 |
Earnings per share(2) |  |  | (0.32 | ) |  |  | — |  |  |  | (0.17 | )
(1) Excludes the impacts associated with the impairment of goodwill associated with the Questar Transaction previously recorded in 2023 and gain on sale of Hope in 2022. Such amounts are an $18 million and $38 million increase in net income from discontinued operations with a corresponding $0.02 and $0.04 increase in earnings per share, for the years ended December 31, 2024 and 2023, respectively, and a $14 decrease in loss on sales of assets, a $3 million increase in income tax expense and an $11 million increase in net income from continuing operations, resulting in a $0.01 increase in earnings per share for the year ended December 31, 2022. Such amounts include the impact on deferred income taxes of $10 million in 2023 related to an increase in the deferred taxes on the outside basis of Questar Gas, Wexpro and related affiliates’ stock, which reversed in 2024 upon closing of the Questar Gas Transaction. The impact to Dominion Energy's net income (loss) from discontinued operations includes an increase (decrease) of $4 million ($— per share), $16 million ($0.02 per share), $(2) million ($— per share) and $— million ($— per share) for the first, second, third and fourth quarters of 2024, respectively. (2) The impact to Dominion Energy's net income from continuing operations includes an increase (decrease) of $(237) million ($(0.28) per share), $(8) million ($(0.01) per share), $6 million ($0.01 per share) and $(27) million ($(0.03) per share) for the first, second, third and fourth quarters of 2024, respectively. The employee benefit plan market-related impacts on Dominion Energy’s Consolidated Statements of Comprehensive Income for the years ended 2024, 2023 and 2022 was an increase (decrease) to changes in net unrecognized pension and other postretirement benefit costs (credits) of $278 million (net of tax of $(98) million), $(27) million (net of tax of $9 million) and $218 million (net of tax of $(75) million), respectively, and an increase (decrease) to amounts reclassified to net income (loss) related to net pension and other postretirement benefits costs (credits) of $(68) million (net of tax of $24 million), $28 million (net of tax of $(15) million) and $(88) million (net of tax of $32 million), respectively. The employee benefit plan market-related impacts on Dominion Energy’s Consolidated Balance Sheets at December 31, 2024 and 2023 was a reclassification between AOCI and retained earnings. In addition, Dominion Energy’s Consolidated Balance Sheet at December 31, 2023 had an increase of $48 million in assets held for sale related to a decreased impairment of goodwill associated with the Questar Gas Transaction. Dominion Energy recorded a cumulative decrease of $1.2 billion to retained earnings as of January 1, 2022. Operating Revenue Operating revenue is recorded on the basis of services rendered, commodities delivered or contracts settled and includes amounts yet to be billed to customers. The Companies collect sales, consumption and consumer utility taxes; however, these amounts are excluded from revenue. Dominion Energy’s customer receivables at December 31, 2024 and 2023 included $797 million and $1.0 billion, respectively, of accrued unbilled revenue based on estimated amounts of electricity and natural gas delivered but not yet billed to its utility customers. The balances presented within assets held for sale were $284 million at December 31, 2023. Virginia Power’s customer receivables at December 31, 2024 and 2023 included $611 million and $550 million, respectively, of accrued unbilled revenue based on estimated amounts of electricity delivered but not yet billed to its customers. See Note 25 for amounts attributable to related parties. The primary types of sales and service activities reported as operating revenue for Dominion Energy are as follows: Revenue from Contracts with Customers • Regulated electric sales consist primarily of state-regulated retail electric sales, and federally-regulated wholesale electric sales and electric transmission services; • Nonregulated electric sales consist primarily of sales of electricity at market-based rates and contracted fixed rates and associated hedging activity as well as sales to Virginia Power customers from non-jurisdictional solar generation facilities; • Regulated gas sales consist primarily of state-regulated natural gas sales and related distribution services; • Regulated gas transportation and storage sales consist of state-regulated sales of gathering services (through August 2022) and sales of transportation services to off-system customers; • Other regulated revenue consists primarily of miscellaneous service revenue from electric and gas distribution operations and sales of excess electric capacity and other commodities; and • Other nonregulated revenue consists primarily of sales of other miscellaneous products. Other nonregulated revenue also includes service concession arrangements (through December 2022) and revenue associated with services provided to entities presented in discontinued operations under transition services agreements. Other Revenue • Other revenue consists primarily of alternative revenue programs, gains and losses from derivative instruments not subject to hedge accounting and lease revenues. The primary types of sales and service activities reported as operating revenue for Virginia Power are as follows: Revenue from Contracts with Customers • Regulated electric sales consist primarily of state-regulated retail electric sales and federally-regulated wholesale electric sales and electric transmission services; • Nonregulated electric sales consists of sales to customers from non-jurisdictional solar generation facilities; • Other regulated revenue consists primarily of sales of excess capacity and other commodities and miscellaneous service revenue from electric distribution operations; and • Other nonregulated revenue consists primarily of revenue from renting space on certain electric transmission poles and distribution towers and service concession arrangements (through October 2022). Other Revenue • Other revenue consists primarily of alternative revenue programs, gains and losses from derivative instruments not subject to hedge accounting and lease revenues. The Companies record refunds to customers as required by state commissions as a reduction to regulated electric sales or regulated gas sales, as applicable. The Companies’ revenue accounted for under the alternative revenue program guidance primarily consists of the equity return for under-recovery of certain riders. Alternative revenue programs compensate the Companies for certain projects and initiatives. Revenues arising from these programs are presented separately from revenue arising from contracts with customers in the categories above. Revenues from electric and gas sales are recognized over time, as the customers of the Companies consume gas and electricity as it is delivered. Fixed fees are recognized ratably over the life of the contract as the stand-ready performance obligation is satisfied, while variable usage fees are recognized when Dominion Energy has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the performance obligation completed to date. Sales of products and services typically transfer control and are recognized as revenue upon delivery of the product or service. The customer is able to direct the use of, and obtain substantially all of the benefits from, the product at the time the product is delivered. The contract with the customer states the final terms of the sale, including the description, quantity and price of each product or service purchased. Payment for most sales and services varies by contract type but is typically due within a month of billing. Revenue included in Discontinued Operations Operating revenue for the gas distribution operations sold to Enbridge as part of the East Ohio, PSNC and Questar Gas Transactions primarily consists of state-regulated natural gas sales to residential, commercial and industrial customers and related distribution services, state regulated gas distribution charges to retail distribution service customers opting for alternate suppliers and sales of commodities related to nonregulated extraction activities. Transportation and storage contracts associated with the operations sold to Enbridge as part of the East Ohio, PSNC and Questar Gas Transactions are primarily stand-ready service contracts that include fixed reservation and variable usage fees. Substantially all of the revenue associated with these local gas distribution companies is derived from performance obligations satisfied over time and month-to-month billings according to their respective tariffs. Credit Risk Credit risk is the risk of financial loss if counterparties fail to perform their contractual obligations. In order to minimize overall credit risk, credit policies are maintained, including the evaluation of counterparty financial condition, collateral requirements and the use of standardized agreements that facilitate the netting of cash flows associated with a single counterparty. In addition, counterparties may make available collateral, including letters of credit or cash held as margin deposits, as a result of exceeding agreed-upon credit limits, or may be required to prepay the transaction. The Companies maintain a provision for credit losses based on factors surrounding the credit risk of their customers, historical trends and other information. Expected credit losses are estimated and recorded based on historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets held at amortized cost as well as expected credit losses on commitments with respect to financial guarantees. Electric Fuel, Purchased Energy and Purchased Gas-Deferred Costs Where permitted by regulatory authorities, the differences between the Companies’ actual electric fuel and purchased energy expenses and Dominion Energy’s purchased gas expenses and the related levels of recovery for these expenses in current rates are deferred and matched against recoveries in future periods. The deferral of costs in excess of current period fuel rate recovery is recognized as a regulatory asset, while rate recovery in excess of current period fuel expenses is recognized as a regulatory liability. Of the cost of fuel used in electric generation and energy purchases to serve Virginia utility customers, at December 31, 2024, approximately 87% is subject to Virginia Power’s deferred fuel accounting, while substantially all of the remaining amount is subject to recovery through similar mechanisms. Additionally in 2024, Virginia Power securitized $1.3 billion of under-recovered deferred fuel expenses through the issuance of bonds by VPFS. Of the cost of fuel used in electric generation and energy purchases to serve South Carolina utility customers, at December 31, 2024, substantially all is subject to DESC’s deferred fuel accounting. Virtually all of DESC’s natural gas purchases are either subject to deferral accounting or are recovered from the customer in the same accounting period as the sale. Through the respective closing dates of the East Ohio, Questar Gas and PSNC Transactions, these companies’ natural gas purchases were also either subject to deferral accounting or were recovered from the customer in the same accounting period as the sale. Dominion Energy earned certain cost saving sharing incentives under the Wexpro Agreements to the extent that the cost of gas supplied to Questar Gas was a certain amount lower than third-party market rates. In 2023 and 2022, Dominion Energy recorded $4 million and $27 million, respectively, for such incentives, reflected in discontinued operations in Dominion Energy’s Consolidated Statements of Income, with no such incentives recorded in 2024. Income Taxes A consolidated federal income tax return is filed for Dominion Energy and its subsidiaries, including Virginia Power. In addition, where applicable, combined income tax returns for Dominion Energy and its subsidiaries are filed in various states; otherwise, separate state income tax returns are filed. Virginia Power participates in intercompany tax sharing agreements with Dominion Energy and its subsidiaries. Current income taxes are based on taxable income or loss and credits determined on a separate company basis. Under the agreements, if a subsidiary incurs a tax loss or earns a credit, recognition of current income tax benefits is limited to refunds of prior year taxes obtained by the carryback of the net operating loss or credit or to the extent the tax loss or credit is absorbed by the taxable income of other Dominion Energy consolidated group members. Otherwise, the net operating loss or credit is carried forward and is recognized as a deferred tax asset until realized. Accounting for income taxes involves an asset and liability approach. Deferred income tax assets and liabilities are provided, representing future effects on income taxes for temporary differences between the bases of assets and liabilities for financial reporting and tax purposes. Accordingly, deferred taxes are recognized for the future consequences of different treatments used for the reporting of transactions in financial accounting and income tax returns. The Companies establish a valuation allowance when it is more-likely-than-not that all, or a portion, of a deferred tax asset will not be realized. Where the treatment of temporary differences is different for rate regulated operations, a regulatory asset is recognized if it is probable that future revenues will be provided for the payment of deferred tax liabilities. The Companies recognize positions taken, or expected to be taken, in income tax returns that are more-likely-than-not to be realized, assuming that the position will be examined by tax authorities with full knowledge of all relevant information. If it is not more-likely-than-not that a tax position, or some portion thereof, will be sustained, the related tax benefits are not recognized in the financial statements. Unrecognized tax benefits may result in an increase in income taxes payable, a reduction of income tax refunds receivable or changes in deferred taxes. Also, when uncertainty about the deductibility of an amount is limited to the timing of such deductibility, the increase in income taxes payable (or reduction in tax refunds receivable) is accompanied by a decrease in deferred tax liabilities. Except when such amounts are presented net with amounts receivable from or amounts prepaid to tax authorities, noncurrent income taxes payable related to unrecognized tax benefits are classified in other deferred credits and other liabilities on the Consolidated Balance Sheets and current payables are included in accrued interest, payroll, and taxes on the Consolidated Balance Sheets. The Companies recognize interest on underpayments and overpayments of income taxes in interest expense and other income, respectively. Penalties are also recognized in other income. At December 31, 2024, Virginia Power had an income tax-related affiliated receivable of $26 million, comprised of $21 million of federal income taxes and $5 million of state income taxes receivable from Dominion Energy. Virginia Power’s net affiliated balances are expected to be received from Dominion Energy in 2025. At December 31, 2023, Virginia Power had an income tax-related affiliated receivable of $40 million, comprised of $45 million of federal income taxes receivable from, and $5 million of state income taxes payable to, Dominion Energy. Virginia Power’s net affiliated balances were received from Dominion Energy in 2024. Investment tax credits for both regulated and nonregulated operations are deferred and amortized to income tax expense over the service lives of the properties giving rise to the credits beginning in the year qualifying property is placed in service. The Companies recognize the tax benefit related to initial book and tax basis differences as a reduction of income tax expense in the year in which the qualifying property is placed into service, except where cost-of-service rate regulation applies. Production tax credits are recognized as energy is generated and sold. The IRA allows the election of either the investment tax credit or production tax credit for certain technologies including solar and wind. Such election is made on a project-by-project basis and the choice of credit may vary based on a combination of factors including, but not limited to, capital expenditures and net capacity factors. Cash, Restricted Cash and Equivalents Cash, restricted cash and equivalents include cash on hand, cash in banks and temporary investments purchased with an original maturity of three months or less. Current banking arrangements generally do not require checks to be funded until they are presented for payment. The following table illustrates the checks outstanding but not yet presented for payment and recorded in accounts payable for the Companies:
At December 31, |  | 2024 |  |  | 2023 |
(millions) |  |  |  |  |  |
Dominion Energy(1) |  | $ | 52 |  |  | $ | 54 |
Virginia Power |  |  | 23 |  |  |  | 44 |
(1) In addition, at December 31, 2023, Dominion Energy had $19 million of checks outstanding but not yet presented for payment included in liabilities held for sale. Restricted Cash and Equivalents The Companies hold restricted cash and equivalent balances that primarily consist of amounts held for litigation settlements, customer deposits, federal assistance funds and future debt payments on DECP Holdings’ term loan agreement (through September 2023), on Eagle Solar’s senior note agreement (through February 2024) and on the securitization bonds. The following table provides a reconciliation of the total cash, restricted cash and equivalents reported within the Companies’ Consolidated Balance Sheets to the corresponding amounts reported within the Companies’ Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022:
|  | Cash, Restricted Cash and Equivalents at End/Beginning of Year |
|  | December 31, 2024 |  |  | December 31, 2023 |  |  | December 31, 2022 |  |  | December 31, 2021 |
(millions) |  |  |  |  |  |  |  |  |  |  |  |
Dominion Energy |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents(1) |  | $ | 310 |  |  | $ | 217 |  |  | $ | 153 |  |  | $ | 283 |
Restricted cash and equivalents(2)(3) |  |  | 55 |  |  |  | 84 |  |  |  | 188 |  |  |  | 125 |
Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows |  | $ | 365 |  |  | $ | 301 |  |  | $ | 341 |  |  | $ | 408 |
Virginia Power |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 160 |  |  | $ | 90 |  |  | $ | 22 |  |  | $ | 26 |
Restricted cash and equivalents(3)(4) |  |  | 46 |  |  |  | — |  |  |  | 2 |  |  |  | — |
Cash, restricted cash and equivalents shown in the Consolidated Statements of Cash Flows |  | $ | 206 |  |  | $ | 90 |  |  | $ | 24 |  |  | $ | 26 |
(1) At December 31, 2023, 2022 and 2021, Dominion Energy had $33 million, $34 million and $49 million, respectively, of cash and cash equivalents included in assets held for sale. (2) At December 31, 2023, 2022 and 2021, Dominion Energy had $4 million, $2 million and $3 million, respectively, of restricted cash and equivalents included in assets held for sale with the remaining balances presented within other current assets in Dominion Energy’s Consolidated Balance Sheets. (3) Includes $41 million at VPFS attributable to VIEs at December 31, 2024. (4) Restricted cash and equivalents balances are presented within other current assets in Virginia Power’s Consolidated Balance Sheets. Supplemental Cash Flow Information The following table provides supplemental disclosure of cash flow information related to Dominion Energy:
Year Ended December 31, |  | 2024 |  |  | 2023 |  |  | 2022 |
(millions) |  |  |  |  |  |  |  |  |
Cash paid during the year for: |  |  |  |  |  |  |  |  |
Interest and related charges, excluding capitalized amounts |  | $ | 1,900 |  |  | $ | 1,991 |  |  | $ | 1,408 |
Income taxes |  |  | 840 |  |  |  | 286 |  |  |  | 139 |
Significant noncash investing and financing activities:(1)(2) |  |  |  |  |  |  |  |  |
Accrued capital expenditures |  |  | 1,268 |  |  |  | 1,085 |  |  |  | 979 |
Leases(3) |  |  | 233 |  |  |  | 255 |  |  |  | 144 |
(1) See Note 9 for noncash investing activities related to the acquisition of a noncontrolling interest in Dominion Privatization. (2) See Notes 3, 10, 19, 20 and 23 for noncash financing activities related to debt assumed with closing of the East Ohio, Questar Gas and PSNC Transactions, the sale of noncontrolling interest in the CVOW Commercial Project, remarketing of the Series A Preferred Stock and the issuance of common stock and transfer of property associated with the settlement of litigation. (3) Includes $93 million of finance leases and $140 million of operating leases entered in 2024, $44 million of finance leases and $211 million of operating leases entered in 2023 and $34 million of finance leases and $110 million of operating leases entered in 2022. The following table provides supplemental disclosure of cash flow information related to Virginia Power:
Year Ended December 31, |  | 2024 |  |  | 2023 |  |  | 2022 |
(millions) |  |  |  |  |  |  |  |  |
Cash paid (received) during the year for: |  |  |  |  |  |  |  |  |
Interest and related charges, excluding capitalized amounts |  | $ | 786 |  |  | $ | 709 |  |  | $ | 599 |
Income taxes |  |  | 25 |  |  |  | (47 | ) |  |  | (54 | )
Significant noncash investing activities(1): |  |  |  |  |  |  |  |  |
Accrued capital expenditures |  |  | 992 |  |  |  | 807 |  |  |  | 665 |
Leases(2) |  |  | 201 |  |  |  | 203 |  |  |  | 116 |
(1) See Note 10 for noncash financing activities related to the sale of noncontrolling interest in the CVOW Commercial Project. (2) Includes $77 million of finance leases and $124 million of operating leases entered in 2024, $30 million of finance leases and $173 million of operating leases entered in 2023 and $26 million of finance leases and $90 million of operating leases entered in 2022. Distributions from Equity Method Investees Dominion Energy holds investments that are accounted for under the equity method of accounting and classifies distributions from equity method investees as either cash flows from operating activities or cash flows from investing activities in the Consolidated Statements of Cash Flows according to the nature of the distribution. Distributions received are classified on the basis of the nature of the activity of the investee that generated the distribution as either a return on investment (classified as cash flows from operating activities) or a return of an investment (classified as cash flows from investing activities) when such information is available to Dominion Energy. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. However, the use of a mid-market pricing convention (the mid-point between bid and ask prices) is permitted. Fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. This includes not only the credit standing of counterparties involved and the impact of credit enhancements but also the impact of the Companies’ own nonperformance risk on their liabilities. Fair value measurements assume that the transaction occurs in the principal market for the asset or liability (the market with the most volume and activity for the asset or liability from the perspective of the reporting entity), or in the absence of a principal market, the most advantageous market for the asset or liability (the market in which the reporting entity would be able to maximize the amount received or minimize the amount paid). Dominion Energy applies fair value measurements to certain assets and liabilities including commodity, interest rate and/or foreign currency exchange rate derivative instruments and other investments including those held in nuclear decommissioning, rabbi and pension and other postretirement benefit plan trusts, in accordance with the requirements discussed above. Virginia Power applies fair value measurements to certain assets and liabilities including commodity, interest rate and/or foreign currency exchange rate derivative instruments and other investments including those held in the nuclear decommissioning trust, in accordance with the requirements discussed above. The Companies apply credit adjustments to their derivative fair values in accordance with the requirements described above. Inputs and Assumptions Fair value is based on actively-quoted market prices, if available. In the absence of actively-quoted market prices, price information is sought from external sources, including industry publications, and to a lesser extent, broker quotes. When evaluating pricing information provided by Designated Contract Market settlement pricing, other pricing services or brokers, the Companies consider the ability to transact at the quoted price, i.e. if the quotes are based on an active market or an inactive market and to the extent which pricing models are used, if pricing is not readily available. If pricing information from external sources is not available, or if the Companies believe that observable pricing is not indicative of fair value, judgment is required to develop the estimates of fair value. In those cases the unobservable inputs are developed and substantiated using historical information, available market data, third-party data and statistical analysis. Periodically, inputs to valuation models are reviewed and revised as needed, based on historical information, updated market data, market liquidity and relationships and changes in third-party sources. For options and contracts with option-like characteristics where observable pricing information is not available from external sources, the Companies generally use a model that considers time value, the volatility of the underlying commodities and other relevant assumptions when estimating fair value. For contracts with unique characteristics, the Companies may estimate fair value using a discounted cash flow approach deemed appropriate in the circumstances and applied consistently from period to period. For individual contracts, the use of different valuation models or assumptions could have a significant effect on the contract’s estimated fair value. The inputs and assumptions used in measuring fair value include the following:
|  | Derivative Contracts |  |
Inputs and assumptions |  | Commodity |  | Interest Rate |  | Foreign Currency Exchange Rate |  | Investments
Forward commodity prices |  | X |  |  |  |  |  |
Transaction prices |  | X |  |  |  |  |  |
Price volatility |  | X |  |  |  |  |  |
Price correlation |  | X |  |  |  |  |  |
Volumes |  | X |  |  |  |  |  |
Commodity location |  | X |  |  |  |  |  |
Interest rate curves |  |  |  | X |  |  |  |
Foreign currency forward exchange rates |  |  |  |  |  | X |  |
Quoted securities prices and indices |  |  |  |  |  |  |  | X
Securities trading information including volume and restrictions |  |  |  |  |  |  |  | X
Maturity |  |  |  |  |  |  |  | X
Interest rates |  | X |  |  |  | X |  | X
Credit quality of counterparties and the Companies |  | X |  | X |  | X |  | X
Credit enhancements |  | X |  | X |  |  |  |
Notional value |  |  |  | X |  | X |  |
Time value |  | X |  | X |  | X |  |
Levels The Companies also utilize the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels: • Level 1—Quoted prices (unadjusted) in active markets for identical assets and liabilities that they have the ability to access at the measurement date. Instruments categorized in Level 1 primarily consist of financial instruments such as certain exchange-traded derivatives and exchange-listed equities, U.S. and international equity securities, mutual funds and certain treasury securities and cash and cash equivalents held in nuclear decommissioning trust funds for the Companies and benefit plan trust funds and rabbi trust funds for Dominion Energy. • Level 2—Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 primarily include commodity forwards and swaps, interest rate swaps, foreign currency exchange rate instruments and certain cash and cash equivalents, corporate debt instruments, government securities and other fixed income investments held in nuclear decommissioning trust funds for the Companies and benefit plan trust funds and rabbi trust funds for Dominion Energy. • Level 3—Unobservable inputs for the asset or liability, including situations where there is little, if any, market activity for the asset or liability. Instruments categorized in Level 3 for the Companies consist of long-dated commodity derivatives, FTRs, certain natural gas options and other modeled commodity derivatives. The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. In these cases, the lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability. Alternative investments, consisting of investments in partnerships, joint ventures and other alternative investments held in nuclear decommissioning and benefit plan trust funds, are generally valued using NAV based on the proportionate share of the fair value as determined by reference to the most recent audited fair value financial statements or fair value statements provided by the investment manager adjusted for any significant events occurring between the investment manager’s and the Companies’ measurement date. Alternative investments recorded at NAV are not classified in the fair value hierarchy. Transfers out of Level 3 represent assets and liabilities that were previously classified as Level 3 for which the inputs became observable for classification in either Level 1 or Level 2. Because the activity and liquidity of commodity markets vary substantially between regions and time periods, the availability of observable inputs for substantially the full term and value of the Companies’ over-the-counter derivative contracts is subject to change. Derivative Instruments The Companies are exposed to the impact of market fluctuations in the price of electricity, natural gas and other energy-related products they market and purchase, as well as interest rate and foreign currency exchange rate risks in their business operations. The Companies use derivative instruments such as physical and financial forwards, futures, swaps, options, foreign currency transactions and FTRs to manage the commodity, interest rate and/or foreign currency exchange rate risks of their business operations. Derivative assets and liabilities are presented gross on the Companies’ Consolidated Balance Sheets. Derivative contracts representing unrealized gain positions and purchased options are reported as derivative assets. Derivative contracts representing unrealized losses and options sold are reported as derivative liabilities. All derivatives, except those for which an exception applies, are required to be reported at fair value. One of the exceptions to fair value accounting, normal purchases and normal sales, may be elected when the contract satisfies certain criteria, including a requirement that physical delivery of the underlying commodity is probable. Expenses and revenues resulting from deliveries under normal purchase contracts and normal sales contracts, respectively, are included in earnings at the time of contract performance. See Fair Value Measurements above for additional information about fair value measurements and associated valuation methods for derivatives. The Companies’ derivative contracts include both over-the-counter transactions and those that are executed on an exchange or other trading platform (exchange contracts) and centrally cleared. Over-the-counter contracts are bilateral contracts that are transacted directly with a third party. Exchange contracts utilize a financial intermediary, exchange or clearinghouse to enter, execute or clear the transactions. Certain over-the-counter and exchange contracts contain contractual rights of offset through master netting arrangements, derivative clearing agreements and contract default provisions. In addition, the contracts are subject to conditional rights of offset through counterparty nonperformance, insolvency or other conditions. In general, most over-the-counter transactions and all exchange contracts are subject to collateral requirements. Types of collateral for over-the-counter and exchange contracts include cash, letters of credit, and in some cases, other forms of security, none of which are subject to restrictions. The Companies do not offset amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral against amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement. Dominion Energy had margin assets of $104 million and $38 million associated with cash collateral at December 31, 2024 and 2023, respectively. Dominion Energy had margin liabilities of $3 million and $15 million associated with cash collateral at December 31, 2024 and 2023, respectively. Virginia Power had margin assets of $1 million and $35 million associated with cash collateral at December 31, 2024 and 2023, respectively. Virginia Power had no margin liabilities associated with cash collateral at December 31, 2024 or 2023. See Note 7 for further information about derivatives. To manage price and interest rate risk, the Companies hold derivative instruments that are not designated as hedges for accounting purposes. However, to the extent the Companies do not hold offsetting positions for such derivatives, they believe these instruments represent economic hedges that mitigate their exposure to fluctuations in commodity prices or interest rates. All income statement activity, including amounts realized upon settlement, is presented in operating revenue, operating expenses, interest and related charges or discontinued operations based on the nature of the underlying risk. Changes in the fair value of derivative instruments result in the recognition of regulatory assets or regulatory liabilities for jurisdictions subject to cost-based rate regulation. Realized gains or losses on the derivative instruments are generally recognized when the related transactions impact earnings. Derivative Instruments Designated as Hedging Instruments In accordance with accounting guidance pertaining to derivatives and hedge accounting, the Companies designate a portion of their derivative instruments as cash flow hedges for accounting purposes. For derivative instruments that are accounted for as cash flow hedges, the cash flows from the derivatives and from the related hedged items are classified in operating cash flows. Cash Flow Hedges The Companies’ derivatives designated into cash flow hedges primarily consist of interest rate swaps to hedge the Companies’ exposure to variations in interest rates on long-term debt. For transactions in which the Companies are hedging the variability of cash flows, changes in the fair value of the derivatives are reported in AOCI, to the extent they are effective at offsetting changes in the hedged item, or as appropriate to regulatory assets or regulatory liabilities. Any derivative gains or losses reported in AOCI are reclassified to earnings when the forecasted item is included in earnings, or earlier, if it becomes probable that the forecasted transaction will not occur. For cash flow hedge transactions, hedge accounting is discontinued if the occurrence of the forecasted transaction is no longer probable. Property, Plant and Equipment Property, plant and equipment is recorded at lower of original cost or fair value, if impaired. Capitalized costs include labor, materials and other direct and indirect costs such as asset retirement costs, capitalized interest and, for certain operations subject to cost-of-service rate regulation, AFUDC and overhead costs. The cost of repairs and maintenance, including minor additions and replacements, is generally charged to expense as it is incurred. Amounts capitalized to property, plant and equipment for capitalized interest costs and AFUDC for the Companies are as follows:
|  | Dominion Energy |  |  | Virginia Power |
Year ended December 31, |  | 2024 |  |  | 2023 |  |  | 2022 |  |  | 2024 |  |  | 2023 |  |  | 2022 |
(millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capitalized interest costs and AFUDC debt |  | $ | 152 |  |  | $ | 109 |  |  | $ | 43 |  |  | $ | 46 |  |  | $ | 47 |  |  | $ | 27 |
AFUDC equity(1) |  |  | 109 |  |  |  | 50 |  |  |  | 41 |  |  |  | 96 |  |  |  | 39 |  |  |  | 39 |
(1) The Companies include AFUDC equity in other adjustments within operating activities in their Consolidated Statements of Cash Flows. Under Virginia law, certain Virginia jurisdictional projects qualify for current recovery of AFUDC through rate adjustment clauses. AFUDC on these projects is calculated and recorded as a regulatory asset and is not capitalized to property, plant and equipment. In 2024, 2023 and 2022, Virginia Power recorded $3 million, less than $1 million and $34 million of AFUDC related to these projects, respectively. For property subject to cost-of-service rate regulation, the undepreciated cost of such property, less salvage value, is generally charged to accumulated depreciation at retirement. Cost of removal collections from utility customers are recorded as regulatory liabilities. For property subject to cost-of-service rate regulation that will be abandoned significantly before the end of its useful life, the net carrying value is reclassified from plant-in-service when it becomes probable it will be abandoned and recorded as a regulatory asset for amounts expected to be collected through future rates. In 2024, 2023 and 2022, Virginia Power had the following charges, recorded in impairment of assets and other charges in its Consolidated Statements of Income (reflected in the Corporate and Other segment), related to early retirements and abandonments: • In 2024, Virginia Power recorded charges of $40 million ($30 million after-tax) associated with dismantling of certain electric generation facilities. In addition, Virginia Power recorded a $25 million ($18 million after-tax) charge in 2024 related to the write-off of early-stage development costs associated with a hydroelectric pumped storage facility that it is no longer considering constructing. • In 2023, Virginia Power recorded a charge of $25 million ($19 million after-tax) as a result of the abandonment of long-lived assets associated with certain rooftop solar and other projects before the end of their useful lives. • In 2022, Virginia Power recorded charges of $167 million ($124 million after-tax) associated with dismantling of certain electric generation facilities. For property that is not subject to cost-of-service rate regulation, including nonutility property, cost of removal not associated with AROs is charged to expense as incurred. The Companies also record gains and losses upon retirement based upon the difference between the proceeds received, if any, and the property’s net book value at the retirement date. Depreciation of property, plant and equipment is computed on the straight-line method based on projected service lives. The Companies’ average composite depreciation rates on utility property, plant and equipment are as follows:
Year Ended December 31, |  | 2024 |  |  | 2023 |  |  | 2022 |
(percent) |  |  |  |  |  |  |  |  |
Dominion Energy(1) |  |  |  |  |  |  |  |  |
Generation |  |  | 2.59 |  |  |  | 2.65 |  |  |  | 2.71 |
Transmission |  |  | 2.32 |  |  |  | 2.32 |  |  |  | 2.32 |
Distribution |  |  | 2.73 |  |  |  | 2.72 |  |  |  | 2.80 |
General and other |  |  | 3.97 |  |  |  | 4.20 |  |  |  | 4.31 |
Virginia Power |  |  |  |  |  |  |  |  |
Generation |  |  | 2.66 |  |  |  | 2.75 |  |  |  | 2.84 |
Transmission |  |  | 2.29 |  |  |  | 2.29 |  |  |  | 2.29 |
Distribution |  |  | 2.77 |  |  |  | 2.78 |  |  |  | 2.76 |
General and other |  |  | 4.29 |  |  |  | 4.60 |  |  |  | 4.78 |
(1) Excludes rates for depreciation reported as discontinued operations. In January 2022, Dominion Energy revised the estimated useful life of its non-jurisdictional and certain nonregulated solar generation facilities to 35 years. This revision resulted in an annual decrease of depreciation expense of $16 million ($12 million after-tax), including $6 million ($4 million after-tax) at Virginia Power, and increased Dominion Energy’s EPS by approximately $0.02. In the first quarter of 2022, Virginia Power revised the depreciation rates for its assets to reflect the results of a new depreciation study. The change resulted in a decrease in depreciation expense in Virginia Power’s Consolidated Statements of Income of $60 million ($45 million after-tax) and increased Dominion Energy’s EPS by $0.05. In December 2023, Dominion Energy revised the estimated useful lives for Millstone Units 2 and 3 to reflect lower depreciation rates as a result of its expectation that a 20-year license extension is approved for these facilities. This revision resulted in a 2024 annual decrease of depreciation expense of $35 million ($26 million after-tax) and increased Dominion Energy’s 2024 EPS by $0.03. For the year ended December 31, 2023, this revision resulted in an inconsequential impact. In January 2024, Virginia Power revised the depreciation rates for Bath County as a result of its expectation that a license extension of at least 40 years will be approved for this facility. This revision resulted in an annual decrease of depreciation expense of $17 million ($13 million after-tax) and increased Dominion Energy's EPS by $0.02. Virginia Power’s non-jurisdictional solar generation property, plant and equipment is depreciated using the straight-line method over an estimated useful life of 35 years. Capitalized costs of development wells and leaseholds were amortized on a field-by-field basis using the unit-of-production method and the estimated proved developed or total proved gas and oil reserves, at a rate of $1.83, $1.73 and $1.67 per mcfe in 2024, 2023 and 2022, respectively. Depletion associated with Wexpro's operations is reflected within discontinued operations through May 2024. See Note 3 for additional information. Dominion Energy’s nonutility property, plant and equipment is depreciated using the straight-line method over the following estimated useful lives:
Asset |  | Estimated Useful Lives(1)
Nonregulated generation-nuclear |  | 54-64 years
Nonregulated generation-other |  | 30-35 years
General and other |  | 5-50 years
(1) The estimated useful life for a generation station is made on a unit basis if the facility has multiple generating units and represents the period the unit was placed in service or acquired until the end of its license or estimated service period. Nuclear fuel used in electric generation is amortized over its estimated service life on a units-of-production basis. The Companies report the amortization of nuclear fuel in electric fuel and other energy-related purchases expense in their Consolidated Statements of Income and in depreciation and amortization in their Consolidated Statements of Cash Flows. Long-Lived and Intangible Assets The Companies perform an evaluation for impairment whenever events or changes in circumstances indicate that the carrying amount of long-lived assets or intangible assets with finite lives may not be recoverable. A long-lived or intangible asset is written down to fair value if the sum of its expected future undiscounted cash flows is less than its carrying amount. Intangible assets with finite lives are amortized over their estimated useful lives. See Note 6 for further discussion on the impairment of long-lived assets. Accounting for Regulated Operations The accounting for the Companies’ regulated electric and gas operations differs from the accounting for nonregulated operations in that the Companies are required to reflect the effect of rate regulation in their Consolidated Financial Statements. For regulated businesses subject to federal or state cost-of-service rate regulation, regulatory practices that assign costs to accounting periods may differ from accounting methods generally applied by nonregulated companies. When it is probable that regulators will permit the recovery of current costs through future rates charged to customers, these costs that otherwise would be expensed by nonregulated companies are deferred as regulatory assets. Likewise, regulatory liabilities are recognized when it is probable that regulators will require customer refunds or other benefits through future rates or when revenue is collected from customers for expenditures that have yet to be incurred. In addition, a loss is recognized if it becomes probable that capital expenditures will be disallowed for ratemaking purposes and if a reasonable estimate of the amount of the disallowance can be made. In the fourth quarter of 2024, the Companies recorded a net $103 million ($77 million after-tax) charge for Virginia Power’s share of costs not expected to be recovered from customers on the CVOW Commercial Project as a result of a revised total project cost estimate of approximately $10.7 billion, excluding financing costs, that reflects a revised estimate of network upgrade costs assigned by PJM to the CVOW Commercial Project and cost sharing mechanism included in the Virginia Commission’s December 2022 order. The expected total project cost reflects increases driven primarily by projections for onshore electrical interconnection costs and network upgrade costs assigned to the project by PJM, specifically incorporating consideration of PJM’s December 2024 publication of potential transmission network upgrades required for certain generation projects and related cost allocations, including those attributable to the CVOW Commercial Project. Relative to Virginia Power’s November 2024 Rider OSW filing, the updated estimated total project cost reflects an approximately $0.6 billion increase for such onshore and network upgrade costs and an approximately $0.3 billion increase for increased contingency for remaining construction activities, completion of the removal of unexploded ordnance, undersea cable protection system design enhancements, commodity prices for transportation fuel, updates for sea fastener fabrication and installation and other construction and equipment supplier costs. The estimated total project cost reflects the Companies’ best estimate of the remaining construction costs, including contingency of approximately 5% on such remaining amounts. Such estimate could potentially change for items, certain of which are beyond the Companies’ control, including but not limited to actual network upgrade costs allocated by PJM, fuel for transportation and installation, the impact of applicable tariffs, if any, costs to maintain necessary permits, approvals and authorizations, ability of key suppliers and contractors to timely satisfy their obligations under existing contracts, marine wildlife and/or any severe weather events. Any additional increase in such costs in excess of the contingency included in the estimated total project cost would be subject to the cost sharing mechanisms described above and could have a material impact on the Companies’ future financial condition, results of operations and/or cash flows. See Note 10 for additional information. The Companies evaluate whether or not recovery of their regulatory assets through future rates is probable as well as whether a regulatory liability due to customers is probable and make various assumptions in their analyses. These analyses are generally based on: • Orders issued by regulatory commissions, legislation and judicial actions; • Past experience; • Discussions with applicable regulatory authorities and legal counsel; • Estimated construction costs; • Forecasted earnings; and • Considerations around the likelihood of impacts from events such as unusual weather conditions, extreme weather events and other natural disasters and unplanned outages of facilities. Generally, regulatory assets and liabilities are amortized into income over the period authorized by the regulator. If recovery of a regulatory asset is determined to be less than probable, it will be written off in the period such assessment is made. A regulatory liability, if considered probable, will be recorded in the period such assessment is made or reversed into earnings if no longer probable. In connection with the future 2025 Biennial Review, the Companies concluded that it was not probable that Virginia Power would have earnings in excess of an expected authorized ROE of 9.70% for the period January 1, 2023 through December 31, 2024. As a result, no regulatory liability for Virginia Power ratepayer credits to customers has been recorded at December 31, 2024. See Note 13 for additional information. Leases The Companies lease certain assets including vehicles, real estate, office equipment and other operational assets under both operating and finance leases. For the Companies’ operating leases, rent expense is recognized on a straight-line basis over the term of the lease agreement, subject to regulatory framework. Rent expense associated with operating leases, short-term leases and variable leases is primarily recorded in other operations and maintenance expense in the Companies’ Consolidated Statements of Income. Rent expense associated with finance leases results in the separate presentation of interest expense on the lease liability and amortization expense of the related right-of-use asset in the Companies’ Consolidated Statements of Income or, subject to regulatory framework, is deferred within regulatory assets in the Consolidated Balance Sheets and amortized into the Consolidated Statements of Income. Certain of the Companies’ leases include one or more options to renew, with renewal terms that can extend the lease from one to 70 years. The exercise of renewal options is solely at the Companies’ discretion and is included in the lease term if the option is reasonably certain to be exercised. A right-of-use asset and corresponding lease liability for leases with original lease terms of one year or less are not included in the Consolidated Balance Sheets, unless such leases contain renewal options that the Companies are reasonably certain will be exercised. Additionally, certain of the Companies’ leases contain escalation clauses whereby payments are adjusted for consumer price or other indices or contain fixed dollar or percentage increases. The Companies also have leases with variable payments based upon usage of, or revenues associated with, the leased assets. The determination of the discount rate utilized has a significant impact on the calculation of the present value of the lease liability included in the Companies’ Consolidated Balance Sheets. For the Companies’ fleet of leased vehicles, the discount rate is equal to the prevailing borrowing rate earned by the lessor. For the Companies’ remaining leased assets, the discount rate implicit in the lease is generally unable to be determined from a lessee perspective. As such, the Companies use internally-developed incremental borrowing rates as a discount rate in the calculation of the present value of the lease liability. The incremental borrowing rates are determined based on an analysis of the Companies’ publicly available unsecured borrowing rates, adjusted for a collateral discount, over various lengths of time that most closely correspond to the Companies’ lease maturities. In addition, Dominion Energy acts as lessor under certain power purchase agreements in which the counterparty or counterparties purchase substantially all of the output of certain solar facilities. These leases are considered operating in nature. For such leasing arrangements, rental revenue and an associated accounts receivable are recorded when the monthly output of the solar facility is determined. Depreciation on these solar facilities is computed on a straight-line basis primarily over an estimated useful life of 35 years. Asset Retirement Obligations The Companies recognize AROs at fair value as incurred or when sufficient information becomes available to determine a reasonable estimate of the fair value of future retirement activities to be performed, for which a legal obligation exists. These amounts are generally capitalized as costs of the related tangible long-lived assets. Since relevant market information is not available, fair value is estimated using discounted cash flow analyses. Quarterly, the Companies assess their AROs to determine if circumstances indicate that estimates of the amounts or timing of future cash flows associated with retirement activities have changed. AROs are adjusted when significant changes in the amounts or timing of future cash flows are identified. Dominion Energy reports accretion of AROs and depreciation on asset retirement costs associated with its natural gas pipelines of its distribution business as an adjustment to the related regulatory assets or liabilities when revenue is recoverable from customers for AROs. The Companies report accretion of AROs and depreciation on asset retirement costs associated with decommissioning its nuclear power stations as an adjustment to the regulatory asset or liability for certain jurisdictions. Additionally, the Companies report accretion of AROs and depreciation on asset retirement costs associated with certain rider and prospective rider projects and other electric generation and distribution facilities as an adjustment to the regulatory asset for certain jurisdictions. Accretion of all other AROs and depreciation of all other asset retirement costs are reported in other operations and maintenance expense and depreciation expense, respectively, in the Consolidated Statements of Income. Debt Issuance Cost s The Companies defer and amortize debt issuance costs and debt premiums or discounts over the expected lives of the respective debt issues, considering maturity dates and, if applicable, redemption rights held by others. Deferred debt issuance costs are recorded as a reduction in long-term debt in the Consolidated Balance Sheets. Amortization of the issuance costs is reported as interest expense. Unamortized costs associated with redemptions of debt securities prior to stated maturity dates are generally recognized and recorded in interest expense immediately. As permitted by regulatory authorities, gains or losses resulting from the refinancing or redemption of debt allocable to utility operations subject to cost-based rate regulation are deferred and amortized. Investments Debt Securities Dominion Energy accounts for and classifies investments in debt securities as trading or available-for-sale securities. Virginia Power classifies investments in debt securities as available-for-sale securities. • Debt securities classified as trading securities include securities held by Dominion Energy in rabbi trusts associated with certain deferred compensation plans. These securities are reported in other investments in the Consolidated Balance Sheets at fair value with net realized and unrealized gains and losses included in other income in the Consolidated Statements of Income. • Debt securities classified as available-for-sale securities include all other debt securities, primarily comprised of securities held in the nuclear decommissioning trusts. These investments are reported at fair value in nuclear decommissioning trust funds in the Consolidated Balance Sheets. Net realized and unrealized gains and losses (including any credit-related impairments) on investments held in nuclear decommissioning trusts are deferred to a regulatory asset or liability, as applicable, for certain jurisdictions subject to cost-based regulation. For all other available-for-sale debt securities, including those held in Dominion Energy’s nonregulated generation nuclear decommissioning trusts, net realized gains and losses (including any credit-related impairments) are included in other income and unrealized gains and losses are reported as a component of AOCI, after-tax. In determining realized gains and losses for debt securities, the cost basis of the security is based on the specific identification method. Credit Impairment The Companies periodically review their available-for-sale debt securities to determine whether a decline in fair value should be considered credit related. If a decline in the fair value of any available-for-sale debt security is determined to be credit related, the credit-related impairment is recorded to an allowance included in nuclear decommissioning trust funds in the Companies’ Consolidated Balance Sheets at the end of the reporting period, with such allowance for credit losses subject to reversal in subsequent evaluations. Using information obtained from their nuclear decommissioning trust fixed-income investment managers, the Companies record in earnings, or defer as applicable for certain jurisdictions subject to cost-based regulation, any unrealized loss for a debt security when the manager intends to sell the debt security or it is more-likely-than-not that the manager will have to sell the debt security before recovery of its fair value up to its cost basis. If that is not the case, but the debt security is deemed to have experienced a credit loss, the Companies record the credit loss in earnings or defer as applicable for certain jurisdictions subject to cost-based regulation, with the remaining non-credit portion of the unrealized loss recorded in AOCI. Credit losses are evaluated primarily by considering the credit ratings of the issuer, prior instances of non-performance by the issuer and other factors. Equity Securities with Readily Determinable Fair Values Equity securities with readily determinable fair values include securities held by Dominion Energy in rabbi trusts associated with certain deferred compensation plans and securities held by the Companies in the nuclear decommissioning trusts. The Companies record all equity securities with a readily determinable fair value, or for which they are permitted to estimate fair value using NAV (or its equivalent), at fair value in nuclear decommissioning trust funds and other investments in the Consolidated Balance Sheets. Net realized and unrealized gains and losses on equity securities held in the nuclear decommissioning trusts are deferred to a regulatory asset or liability, as applicable, for certain jurisdictions subject to cost-based regulation. For all other equity securities, including those held in Dominion Energy’s nonregulated generation nuclear decommissioning trusts and rabbi trusts, net realized and unrealized gains and losses are included in other income in the Consolidated Statements of Income. Equity Securities without Readily Determinable Fair Values The Companies account for illiquid and privately held securities without readily determinable fair values under either the equity method or cost method. Equity securities without readily determinable fair values include: • Equity method investments when the Companies have the ability to exercise significant influence, but not control, over the investee. Dominion Energy’s investments are included in investments in equity method affiliates in its Consolidated Balance Sheets, except for the liability to Atlantic Coast Pipeline or where such investments are classified as held for sale. Dominion Energy records equity method adjustments in other income in its Consolidated Statements of Income, including its proportionate share of investee income or loss, gains or losses resulting from investee capital transactions, amortization of certain differences between the carrying value and the equity in the net assets of the investee at the date of investment and other adjustments required by the equity method. • Cost method investments when the Companies do not have the ability to exercise significant influence over the investee. The Companies’ investments are included in other investments and nuclear decommissioning trust funds. Cost method investments are reported at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. Other-Than-Temporary Impairment The Companies periodically review their equity method investments to determine whether a decline in fair value should be considered other-than-temporary. If a decline in the fair value of any security is determined to be other-than-temporary, the investment is written down to its fair value at the end of the reporting period. Inventories Materials and supplies and fossil fuel inventories are valued primarily using the weighted-average cost method. Stored gas inventory is valued using the weighted-average cost method, except for East Ohio’s gas distribution operations, which were valued using the LIFO method and reflected in assets held for sale in Dominion Energy’s Consolidated Balance Sheet as of December 31, 2023. Under the LIFO method, current stored gas inventory was valued at $18 million at December 31, 2023. Based on the average price of gas purchased during 2023, the cost of replacing the current portion of stored gas inventory exceeded the amount stated on a LIFO basis by $42 million. In 2024, Dominion Energy wrote off certain inventory balances in connection with the electric base rate case in South Carolina as discussed in Note 13. In 2022, Dominion Energy wrote off certain inventory balances associated with certain nonrenewable electric generation facilities resulting in a $40 million charge ($30 million after-tax) recorded in impairment of assets and other charges (reflected in the Corporate and Other segment) in its Consolidated Statements of Income, including $19 million ($14 million after-tax) at Virginia Power, for inventory not utilized at such facilities prior to their retirement in the first half of 2023. Goodwill Dominion Energy evaluates goodwill for impairment annually as of April 1 and whenever an event occurs or circumstances change in the interim that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. In the fourth quarter of 2023 and first quarter of 2024, Dominion Energy's current period calculations of the expected gain or loss on the Questar Gas and East Ohio Transactions resulted in an impairment of the related goodwill. There were no other impairments recorded in 2024. See Note 3 for additional information. New Accounting Standards Segment Disclosures In November 2023, the FASB issued revised accounting guidance for reportable segments. The revised guidance requires disclosure of significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currently required annually. Additionally, it requires disclosure of the title and position of the CODM. The revised guidance does not change how an entity identifies its operating segments, aggregates them or applies the quantitative thresholds to determine its reportable segments. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted and requires retrospective application to all prior periods presented. This revised guidance only impacted the Companies’ disclosures with no impacts to their results of operations, cash flows or financial condition. Income Tax Disclosures In December 2023, the FASB issued revised accounting guidance for income taxes. The revised guidance requires disclosure of disaggregated information about an entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The new standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted and allows either prospective or retrospective application. The Companies expect this revised guidance to only impact their disclosures with no impacts to their results of operations, cash flows or financial condition. Climate-Related Disclosures In March 2024, the SEC issued guidance for climate-related disclosures. The guidance requires disclosure of the financial statement impacts of severe weather events and other natural conditions, including amounts capitalized or expensed as well as any associated recoveries. In addition, the guidance requires disclosure of amounts related to renewable energy credits or carbon offsets if utilized as a material component of plans to achieve climate-related targets or goals. This guidance is currently subject to a stay issued by the SEC. Should this guidance become effective, the Companies expect it to only impact their disclosures with no impacts to their results of operations, cash flows or financial condition. Expense Disaggregation Disclosures In November 2024, the FASB issued revised accounting guidance for income statement expense disaggregation disclosures. The revised guidance requires disclosure of disaggregated information about specific expense categories in commonly presented income statement expense captions. The new standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted and allows either prospective or retrospective application. The Companies expect this revised guidance to only impact their disclosures with no impacts to their results of operations, cash flows or financial condition.

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