Dominion Energy is a leading integrated energy company serving over 7 million customers across the Southeast and Mid-Atlantic regions. With a diverse portfolio of regulated electric and natural gas utilities, as well as a growing renewable energy platform, Dominion Energy has positioned itself as a key player in the transition towards a cleaner energy future.
Company History
The company's origins trace back to the Virginia Railway and Power Company, founded in 1909 to provide electric streetcar and lighting services in Richmond, Virginia. Over the decades, Dominion Energy has grown through strategic acquisitions and expansions, solidifying its presence across multiple states. In 1976, the company was renamed Virginia Electric and Power Company, or Virginia Power, and became one of the first utilities to build nuclear power plants, bringing the Surry and North Anna nuclear stations online in the 1970s. This established Virginia Power as a leader in nuclear generation.
The 1980s and 1990s brought significant challenges, including the cancellation of plans to build additional nuclear units at the North Anna site and the closure of its Yorktown coal-fired power plant due to environmental regulations. Despite these setbacks, Virginia Power remained a highly reliable electric utility serving its growing customer base. In 2000, the company changed its name to Dominion Resources, reflecting a broader strategy to diversify beyond its core electric utility business. This transformation continued with the purchase of Consolidated Natural Gas in 2000, further expanding its portfolio. In 2019, the company made another significant move with the acquisition of SCANA Corporation, further strengthening its foothold in South Carolina.
Business Segments
Today, Dominion Energy's operations are organized into three primary business segments: Dominion Energy Virginia, Dominion Energy South Carolina, and Contracted Energy. The Dominion Energy Virginia segment oversees the company's regulated electric utility operations in Virginia and North Carolina, while Dominion Energy South Carolina manages both electric and natural gas distribution in the Palmetto State. The Contracted Energy segment encompasses the company's non-regulated generation assets, including the Millstone nuclear power station in Connecticut.
Financials
Dominion Energy's financial performance has been relatively stable, with the company reporting annual revenues of $14.39 billion and net income of $1.99 billion as of the end of 2023. For the most recent quarter, Dominion Energy reported revenue of $3.941 billion, net income of $1.12 million, operating cash flow of $2.308 billion, and free cash flow of $5.748 billion. The company's balanced approach to capital allocation has allowed it to maintain a strong balance sheet, with a debt-to-capitalization ratio of 58% as of September 30, 2024.
The Dominion Energy Virginia segment delivered 72 million MWh of electricity in the first nine months of 2024, up 6% from the same period in 2023. This segment contributed $1.57 billion in net income for the first nine months of 2024, a 19.5% increase from the previous year, driven by higher rider equity returns, absence of amortization related to the 2021 Triennial Review, and increased sales to retail customers due to weather and customer growth.
The Dominion Energy South Carolina segment delivered 17 million MWh of electricity in the first nine months of 2024, a 1% increase from the same period in 2023. Gas distribution throughput was 45 bcf in sales for the first nine months of 2024, down 6% from the same period in 2023. This segment contributed $296 million in net income for the first nine months of 2024, a 2% decrease from the previous year, primarily due to the impact of the electric base rate case.
The Contracted Energy segment supplied 14 million MWh of electricity in the first nine months of 2024, a 21% increase from the same period in 2023. This segment contributed $305 million in net income for the first nine months of 2024, a significant 158.5% increase from the previous year, primarily driven by higher margins and lower outage costs at the Millstone nuclear power station.
Liquidity
Dominion Energy's liquidity position remains robust, with $1.78 billion in cash and cash equivalents and $2.36 billion in available capacity under its joint revolving credit facility as of September 30, 2024. The company has a $6 billion joint revolving credit facility that provides for a discount in the pricing of certain annual fees and amounts borrowed if Dominion Energy achieves certain annual renewable electric generation and diversity and inclusion objectives. The company's debt-to-equity ratio stands at 1.38, while its current ratio is 0.74 and quick ratio is 0.62.
Growth Drivers
One of Dominion Energy's key growth drivers has been the increasing demand for electricity and natural gas in its service territories. The company has reported strong customer growth, adding 1% to its electric customer base and 2% to its natural gas customer base over the past year. This growth has been driven in part by the region's thriving data center industry, with Dominion Energy connecting 14 new data centers in 2024 alone.
To meet this rising demand, Dominion Energy has embarked on an ambitious capital investment program, with plans to invest $10.2 billion in property, plant, and equipment during 2023. A significant portion of this investment is dedicated to the company's Coastal Virginia Offshore Wind (CVOW) project, a 2.6 GW offshore wind development that remains on schedule and on budget. As of the third quarter of 2024, Dominion Energy had invested approximately $5.3 billion in the CVOW project and expects to spend an additional $700 million by the end of the year.
Challenges
While Dominion Energy's growth initiatives have been largely successful, the company has also faced its share of challenges. In September 2024, the company's South Carolina service area was hit by Hurricane Helene, causing significant damage to its infrastructure and leading to extended power outages for nearly half of its customers in the state. Dominion Energy estimates that the restoration costs, including capital expenditures, will range between $100 million and $200 million, and the company plans to work with regulators to potentially securitize these deferred costs.
Future Outlook
Looking ahead, Dominion Energy remains focused on delivering reliable and affordable energy to its customers while also advancing its sustainability efforts. The company has set a goal of achieving net-zero carbon emissions by 2050 and is actively exploring new technologies, such as small modular reactors, to support this transition. In October 2024, Dominion Energy announced a memorandum of understanding with Amazon to further explore the feasibility of developing small modular reactor technology at its North Anna nuclear power station.
For the third quarter of 2024, Dominion Energy reported operating earnings of $0.98 per share, representing normal weather conditions in their utility service areas. The company narrowed its full-year 2024 guidance range to $2.68 to $2.83 per share, while maintaining the original midpoint guidance of $2.75 per share. Looking further ahead, Dominion Energy reaffirmed its guidance for 2025 to 2029, including 2025 operating earnings per share of $3.25 to $3.54, with a midpoint of $3.40. The company continues to forecast an operating earnings annual growth rate range of 5% to 7% through 2029, off a 2025 midpoint of $3.30 (excluding the impact of RNG 45Z credits).
Despite the occasional operational challenges, Dominion Energy's diversified business model, strong regulatory relationships, and focus on sustainable growth have positioned the company as a leader in the utility industry. As the Southeast and Mid-Atlantic regions continue to experience robust economic and population growth, Dominion Energy is well-equipped to capitalize on these opportunities and deliver long-term value for its shareholders. The company plans to provide a comprehensive capital investment forecast update through 2029 on their fourth quarter 2024 earnings call, which will offer further insights into their long-term growth strategy.