Executive Summary / Key Takeaways

• Strategic Repositioning and Regulated Growth: Dominion Energy has successfully pivoted to a pure-play regulated utility model, shedding non-core assets to focus on high-growth regions like Virginia and South Carolina. This strategy underpins a reaffirmed 5% to 7% annual operating EPS growth target through 2029, excluding RNG 45Z income.
• Unprecedented Data Center Demand: Virginia's emergence as a global data center hub is a primary growth engine, with approximately 47 gigawatts of demand in various contracting stages. This necessitates substantial, rider-eligible capital investments in transmission, distribution, and generation infrastructure, driving a 16% increase in the 2025-2029 capital forecast to $50 billion.
• Coastal Virginia Offshore Wind (CVOW) Progress: The 2.6 GW CVOW Commercial Project is 2/3 complete and on track for first power in late Q1 2026, with full completion by end-2026. Despite cost adjustments due to tariffs and delays with the specialized vessel Charybdis, robust cost-sharing mechanisms protect shareholders and customers, and the project's Levelized Cost of Energy (LCOE) remains competitive.
• Financial Discipline and Balance Sheet Strength: The company maintains a strong focus on balance sheet conservatism, targeting parent leverage consistently below 30% and FFO to debt around 15%. Strategic equity issuances and robust operating cash flows support its ambitious capital program and dividend security.
• Competitive Edge in Infrastructure and Execution: Dominion Energy's extensive infrastructure, operational expertise in complex projects like offshore wind, and proactive engagement with regulatory bodies provide a significant competitive moat, particularly in serving the burgeoning data center market and advancing clean energy goals.

The Reshaped Horizon: Dominion Energy's Strategic Evolution

Dominion Energy, Inc., a utility giant with roots tracing back to 1909, has undergone a profound strategic transformation, refocusing its formidable capabilities on regulated electricity and natural gas services across Virginia, North Carolina, and South Carolina. This pivot, solidified by a comprehensive business review concluded in early 2024, has streamlined the company's operations, divesting non-core assets like East Ohio, Questar Gas, and PSNC, to concentrate on high-growth, regulated opportunities. The company's core strategy is now anchored in consistent financial execution, balance sheet conservatism, and delivering an exceptional customer experience, all while navigating the complex energy transition.

Dominion Energy operates primarily through three segments: Dominion Energy Virginia, Dominion Energy South Carolina, and Contracted Energy. Dominion Energy Virginia, its largest segment, is a regulated public utility providing electric distribution, transmission, and generation services. Dominion Energy South Carolina offers regulated electric and gas services. The Contracted Energy segment includes nonregulated electric generation, notably the Millstone nuclear power station, and renewable natural gas operations. This diversified yet focused portfolio allows Dominion to leverage its strengths in different regulatory and market environments.

In the competitive landscape, Dominion Energy stands alongside other large, integrated utilities such as Duke Energy (DUK), Southern Company (SO), NextEra Energy (NEE), and American Electric Power (AEP). Dominion's extensive infrastructure network, particularly its transmission lines, offers a qualitative advantage in reliability and efficient energy delivery, crucial for serving high-demand industrial customers. While competitors like NextEra Energy may lead in renewable-focused expansion and innovation speed, Dominion's balanced approach across regulated and contracted assets provides a unique value proposition. Its deep experience in complex energy infrastructure projects, including offshore wind and advanced grid modernization, serves as a significant technological differentiator.

Technological Prowess: Building the Future Grid

Dominion Energy's technological differentiation is not rooted in a single proprietary product, but rather in its advanced capabilities and operational excellence in executing large-scale, complex energy infrastructure projects and integrating modern grid solutions. This prowess is most evident in its flagship Coastal Virginia Offshore Wind (CVOW) Commercial Project and its sophisticated approach to grid modernization for data centers.

The CVOW Commercial Project, a 2.6 gigawatt (GW) offshore wind facility, exemplifies Dominion's commitment to large-scale clean energy technology. The project's Levelized Cost of Energy (LCOE) has been updated to $84 per MWh, which, despite an increase from last quarter due to lower forecasted renewable energy credit (REC) prices, "compares favorably to other generation resources and is well below the statutory amount." This competitive LCOE underscores the economic viability of its chosen technology. The project's specialized Jones Act-compliant wind turbine installation vessel, Charybdis, is a critical technological asset. Purpose-built for offshore wind installation, Charybdis is designed to enhance schedule certainty and reduce installation risks, a tangible benefit in a nascent U.S. offshore wind industry. Its advanced jacking system and 2,200-ton capacity crane are tailored for current and next-generation turbines, providing a distinct operational advantage.

For data centers, Dominion's technological edge lies in its ability to rapidly deploy and integrate advanced distribution and transmission infrastructure. This includes building new 500 kV transmission lines and expanding substation capacity, utilizing smart grid technologies to manage unprecedented load growth. The company's experience in connecting over 450 data centers, representing nearly 9 GW of capacity, demonstrates a proven capability in designing and operating a resilient, high-capacity grid tailored for the digital economy.

In terms of future innovation, Dominion is actively exploring Small Modular Reactors (SMRs). Amazon (AMZN) has expressed interest in co-financing an SMR at North Anna 3, highlighting the potential for advanced nuclear technology to meet growing, carbon-free energy demand. While the timeline for new nuclear has been extended in recent Integrated Resource Plans, management acknowledges the "incredibly valuable" role of backstops on catastrophic and cost overrun risks for such first-of-a-kind projects. This strategic exploration positions Dominion at the forefront of diverse clean energy solutions.

For investors, these technological capabilities translate into a robust competitive moat. The ability to execute complex, large-scale projects efficiently, coupled with a proactive approach to grid modernization and emerging energy solutions, enhances Dominion's market positioning. This leadership in infrastructure and operational technology directly contributes to stable financial performance, supports its regulated growth strategy, and ensures long-term relevance in an evolving energy landscape.

Financial Performance and Operational Excellence

Dominion Energy's strategic repositioning is yielding tangible financial results, demonstrating consistent execution against its commitments. For the three months ended September 30, 2025, net income attributable to Dominion Energy increased by $72 million to $1.006 billion, up from $934 million in the prior year period. This growth was primarily fueled by higher rider equity returns from capital investments at Virginia Power and increased net investment earnings from nuclear decommissioning trust funds. Over the nine months ended September 30, 2025, net income attributable to Dominion Energy surged by $531 million to $2.431 billion, compared to $1.900 billion in the same period of 2024. This significant improvement reflects the absence of prior-year market-related impacts on pension plans, higher rider equity returns, and increased non-fuel base rates in South Carolina.

Operating revenue for the third quarter of 2025 climbed by $586 million to $4.527 billion, driven by a $311 million net increase in fuel-related revenue due to higher commodity costs and a $237 million increase from Virginia Power non-fuel riders. Sales to electric utility retail customers also contributed positively, increasing by $48 million due to economic and usage factors, and by $21 million from customer growth. These gains were partially offset by a $91 million net decrease from market prices affecting Millstone and a $68 million decrease in sales due to fewer cooling degree days.

The company's operational efficiency is reflected in its profitability metrics. For the trailing twelve months (TTM), Dominion Energy reported a Gross Profit Margin of 50.57%, an Operating Profit Margin of 25.61%, and a Net Profit Margin of 14.77%. The EBITDA Margin stood at 51.38%, indicating strong operational leverage. These figures compare favorably to its utility peers, demonstrating effective cost management within its regulated framework.

Liquidity and capital resources remain robust, supporting Dominion's ambitious growth agenda. Net cash provided by operating activities from continuing operations increased by $534 million for the nine months ended September 30, 2025, driven by higher electric utility operating cash flows and interest rate swap settlements. This strong operational cash flow is critical for funding its significant capital expenditures. Net cash from investing activities decreased by $9.80 billion, primarily due to the absence of large asset sale proceeds from 2024. However, net cash from financing activities increased by $8.90 billion, bolstered by increased long-term debt issuances and $1.10 billion in capital contributions from Stonepeak for the CVOW project.

Dominion Energy has actively managed its debt profile, issuing $1.50 billion in junior subordinated notes in August 2025 and an additional $1.30 billion in October 2025, demonstrating access to diverse capital markets. The company's credit facilities were also enhanced, with the joint revolving credit facility limit increasing from $6 billion to $7 billion and its maturity extended to April 2030. These actions underscore a commitment to maintaining a strong balance sheet and efficient access to capital, crucial for its substantial capital program.

Outlook and Strategic Trajectory

Dominion Energy's forward outlook is characterized by a clear strategic roadmap focused on regulated growth, driven by the burgeoning data center market and the clean energy transition. The company narrowed its full-year 2025 operating EPS guidance to $3.33 to $3.48 per share, inclusive of RNG 45Z credits, maintaining its original midpoint of $3.40. Management expresses confidence in achieving results at or above the midpoint, assuming normal weather for the remainder of the year, supported by continued strength in commercial and residential sales. The long-term operating earnings growth guidance of 5% to 7% through 2029 (excluding RNG 45Z income) remains firm, reflecting the stability of its regulated asset base.

A cornerstone of this growth is the updated 5-year capital forecast (2025-2029) of $50 billion, a 16% increase from prior guidance. This substantial investment is primarily directed towards Dominion Energy Virginia, focusing on transmission, distribution, and nuclear subsequent license renewal. Crucially, 60% of this capital is eligible for recovery under rider mechanisms, de-risking the investment profile. The company anticipates further incremental capital opportunities, particularly towards the end of the decade, which will be evaluated against criteria of customer affordability, system reliability, and balance sheet conservatism.

The CVOW Commercial Project is a key driver of this capital plan. The project is 2/3 complete, with 100% of monopiles installed ahead of schedule and turbine installation expected to commence in Q4 2025. First power delivery is anticipated in late Q1 2026, with full project completion by the end of 2026. While minor delays with the Charybdis vessel could push a few final turbines into early 2027, this is not expected to impact the first power timeline or have a meaningful financial impact. The project's updated cost of $11.2 billion, including tariff impacts, is managed by robust cost-sharing mechanisms with Stonepeak, protecting both customers and shareholders. The forecasted revenue requirement for the 2026 rate year is $665 million, which, if approved, is expected to result in a residential customer bill decline as the project begins generating electricity.

The demand from data centers in Virginia continues to be a powerful growth catalyst. As of September 2025, approximately 47 GW of data center demand is in various stages of contracting, a 17% increase since December 2024. This includes nearly 10 GW under electric service agreements, indicating firm commitments. The PJM DOM zone is projected to see peak summer load growth of 6.3% annually over the next decade, with the 2034 peak load forecast increasing by nearly 60% to 41.5 GW. Dominion is proactively investing in transmission and distribution infrastructure, including new 500 kV lines, to meet this demand while safeguarding all customers from disproportionate costs.

Regulatory proceedings, such as Virginia Power's 2025 Biennial Review and filings for new solar, storage, and natural gas generation (e.g., Chesterfield Energy Reliability Center), are progressing as expected, with management anticipating constructive outcomes that support its investment plans. In South Carolina, recent legislation authorizing new gas resource development and permitting reform further supports the company's growth initiatives.

Risks and Competitive Positioning

Despite a clear growth trajectory, Dominion Energy faces several pertinent risks. The CVOW Commercial Project, while progressing well, is subject to potential cost increases from tariffs, PJM network upgrade costs, and unforeseen construction challenges, including marine wildlife and severe weather events. While a 7% contingency is built into the remaining costs, and cost-sharing mechanisms are in place, any significant escalation beyond these provisions could impact financial performance. The delays with the Charybdis vessel, though not expected to impact first power, highlight the inherent complexities and risks associated with pioneering large-scale infrastructure projects.

The rapid growth of data center demand, while a significant opportunity, also presents challenges related to infrastructure build-out and ensuring equitable cost recovery across customer classes. Regulatory scrutiny on these issues, as seen in Virginia Power's proposed new rate class for high-energy users, is a continuous factor. Environmental regulations, particularly evolving ozone standards and effluent limitations guidelines, could necessitate additional capital expenditures for compliance, though existing regulatory frameworks are expected to mitigate material financial impacts. Legal proceedings and environmental remediation costs, such as those for former manufactured gas plant sites, also represent ongoing, albeit often unquantifiable, financial exposures.

In the competitive landscape, Dominion Energy's market positioning is strong in its core regulated territories. Its residential electric rates in Virginia and South Carolina are 9% and 11% below the U.S. average, respectively, enhancing customer affordability and retention. This, combined with its extensive infrastructure and operational expertise, provides a robust competitive advantage against rivals like Duke Energy and Southern Company in securing new infrastructure projects and serving growing load. While NextEra Energy may have a lead in pure-play renewable development, Dominion's integrated approach and deep regulatory relationships offer a more stable, predictable growth profile. The company's proactive engagement with policymakers and stakeholders, particularly in Virginia, is a critical strategic response to competitive pressures and regulatory complexities, ensuring a supportive environment for its capital investments.

Conclusion

Dominion Energy is executing a compelling investment thesis centered on regulated growth, driven by the dual forces of unprecedented data center demand and a robust clean energy transition. The company's strategic repositioning has created a more focused and resilient utility, capable of delivering consistent financial performance and a secure dividend. Key projects like the Coastal Virginia Offshore Wind facility are advancing rapidly, showcasing Dominion's technological capabilities in large-scale infrastructure, while its proactive investments in grid modernization are essential for powering the digital economy.

Despite the inherent complexities of large-scale projects and evolving regulatory landscapes, Dominion Energy's commitment to financial discipline, strong balance sheet management, and effective risk mitigation strategies positions it favorably. The company's ability to leverage its extensive infrastructure and operational expertise to meet critical energy needs, particularly in high-growth regions, underpins its long-term value proposition. For discerning investors, Dominion Energy offers a compelling opportunity to participate in the essential, regulated growth of the U.S. energy sector, backed by a clear strategy and a track record of execution.