Dominion Energy Inc (D)

• Dominion Energy is actively engaging with Amazon and other large technology companies to develop Small Modular Reactors (SMRs), which could significantly address the growing energy demand and carbon-free generation goals. The company's strategic positioning in Virginia, with strong bipartisan support for nuclear initiatives, positions it favorably in advancing SMR technology. -
• The company is making significant progress on their Coastal Virginia Offshore Wind (CVOW) project, which is proceeding on time and on budget. Additionally, the Levelized Cost of Energy (LCOE) for CVOW has improved due to higher expected Renewable Energy Credit (REC) pricing, enhancing the project's value proposition for customers. -
• Dominion Energy is focused on achieving consistently high-quality, predictable, low-risk earnings growth. Management is committed to delivering on their financial plan and is open to evaluating opportunities to enhance rate base and earnings growth, while preserving a strong financial profile. -

• Dominion Energy faces potential additional costs of $100 million to $200 million due to Hurricane Helene's damage in South Carolina, which may impact financials if not properly recovered. -
• The company's Integrated Resource Plan (IRP) includes new gas-fired generation without accounting for potential costs of carbon capture and storage (CCS) technology, posing regulatory and financial risks if EPA regulations require CCS implementation. -
• The favorable Levelized Cost of Energy (LCOE) for the Coastal Virginia Offshore Wind (CVOW) project relies on higher Renewable Energy Certificate (REC) prices, which are uncertain and may negatively impact project economics if REC prices decline. -

1. Amazon Partnership and SMRs
   Q: Can you provide more details on the Amazon deal and SMRs?
   A: Dominion Energy is engaging with Amazon and other large customers regarding Small Modular Reactors (SMRs). They see SMRs as a vital part of meeting significant demand growth, providing around-the-clock carbon-free generation, and ensuring national security. They are exploring partnerships where customers like Amazon might participate in funding, potentially through structures like build-own-transfer, while ensuring that cost and development risks are mitigated for customers and investors. ( - )

2. Integrated Resource Plan and Capacity Additions
   Q: Why not add more generation to the IRP given the capacity shortfall?
   A: Dominion Energy's IRP already includes substantial additions across all generation types, including potentially doubling offshore wind capacity, adding more natural gas, solar, and large amounts of battery storage. They believe it's an aggressive plan that adequately addresses the significant load growth forecasted. ( - )

3. Millstone Nuclear Plant Opportunities
   Q: Are there options to expand capacity at the Millstone plant?
   A: The company is studying the possibility of uprates at Millstone, particularly Unit 2. There are potential options for contracted procurement in New England and exploring data center locations, but discussions are in early stages. ( - )

4. South Carolina Regulatory Developments
   Q: What's the outlook on legislation and regulatory lag in South Carolina?
   A: Dominion Energy is working with policymakers as the Senate Select Energy Committee continues to discuss authorization for partnering on a combined cycle plant, permitting reform, and addressing regulatory lag, which is a priority for the company and legislators in the upcoming session. ( - )

5. Storm Recovery Costs and Impact
   Q: How will storm recovery costs be finalized and recovered?
   A: In South Carolina, storm-related costs are deferred to the balance sheet, with a bias towards capital rather than O&M expenses. The company will pursue constructive recovery outcomes, potentially through securitization for costs exceeding $100 million, as agreed in the recent electric settlement. ( - , - )

6. MOU with Amazon and Capital Structures
   Q: Can non-utilities invest capital in projects like SMRs under current rate structures?
   A: While specific details are limited, Dominion acknowledges opportunities for special contract rates or tariffs with customers like Amazon. Any structure needs to address first-of-a-kind risks, cost overruns, and protect the company's balance sheet. ( - )

7. REC Value and CVOW's LCOE Revision
   Q: What factors are driving the revision of CVOW's LCOE due to REC values?
   A: The higher expected REC pricing is the main driver for the substantial move in CVOW's LCOE. The REC value reflects increased demand due to the Renewable Portfolio Standard requirements, including higher percentages of load to be met with RECs and procurement from Virginia-based resources, which enhances the project's value for customers. ( - )

8. Transmission Projects with AEP and FirstEnergy
   Q: Can you expand on the transmission opportunities with AEP and FirstEnergy in PJM?
   A: Dominion has submitted proposals in PJM's latest open window process, collaborating with AEP and FirstEnergy to develop innovative, cost-effective transmission solutions to support growing demand. These projects are under review, with selection anticipated in the first quarter of next year, potentially adding CapEx beyond the current plan. ( - )

9. Impact of Load Growth on Fossil Retirements
   Q: How does load growth affect coal plant retirement timelines and EPA regulations on gas plants?
   A: Due to significant load growth, the IRP shows no fossil retirements within the next 15 years. The company has modeled scenarios with and without new EPA regulations, finding minimal changes in their building plans. They do not currently plan to fit new plants with CCS technology but account for capacity factor limits within the regulations. ( - , - )

10. Financial Plan and Earnings Growth
    Q: How do you evaluate potential revisions to your financial plan and growth targets?
    A: Dominion is committed to delivering consistent, high-quality, predictable, low-risk earnings. While they acknowledge potential tailwinds and opportunities to improve rate base or earnings growth, any changes will be considered carefully to ensure they maintain their ability to deliver on their financial trajectory. ( - )

11. SMR Commercialization Timing
    Q: What is the expected timeline for SMR commercialization?
    A: The IRP reflects Dominion's view on SMR timing, targeting a potential start in 2034. They intend to adhere to their outlined principles as they explore this technology. ( - )

Annual guidance for FY 2024:

• Operating Earnings Per Share: $2.68–$2.83 - (no change from $2.62–$2.87 - )

Annual guidance for FY 2025:

• Operating Earnings Per Share: $3.25–$3.54 - (no change from $3.25–$3.54 - )
• Operating Earnings Annual Growth Rate: 5%–7% - (no change from 5%–7% - )