Q4 2024 Earnings Summary
- Unprecedented Data Center Demand Driving Significant Growth: Dominion Energy is experiencing unprecedented load growth due to a significant increase in data center demand in Virginia. The company's data center contracted capacity has grown from around 21 gigawatts in July 2024 to approximately 40 gigawatts in December 2024, an 88% increase. This surge is leading to increased capital investments in transmission and distribution to support the growth, positioning Dominion Energy for substantial regulated growth opportunities. , , ,
- Strong Progress and Confidence in the Coastal Virginia Offshore Wind (CVOW) Project: The CVOW project is 50% complete and remains on schedule for completion in 2026. Dominion Energy has robust cost-sharing mechanisms in place to protect customers and shareholders. Recent construction milestones include the successful installation of monopiles and transition pieces. The company is confident in delivering the project within the updated cost estimates and believes CVOW will provide much-needed generation capacity to meet growing energy demands, particularly from data centers. ,
- Increased Capital Investment and Reaffirmed Growth Guidance: Dominion Energy has updated its five-year capital forecast from 2025 through 2029 to $50 billion, an increase of 16% from prior guidance. The company reaffirms its annual operating earnings growth guidance of 5% to 7% through 2029. The increased capital investment is driven by higher transmission, distribution, and nuclear spending to ensure reliability amid continuing growing demand, positioning the company for continued growth and value creation for shareholders. ,
- Regulatory lag in South Carolina is causing under-earning of 100 to 200 basis points compared to allowed returns during the rate case cycle, which could negatively impact earnings.
- The Coastal Virginia Offshore Wind (CVOW) project faces potential cost overruns due to uncertainties in tariffs on steel and aluminum imports and network upgrade costs, which could increase the project budget beyond the current contingency plans.
- The surge in data center demand, with requests totaling 40 gigawatts, might require substantial additional capital investment, potentially straining Dominion's financial resources and impacting credit metrics. Furthermore, there is uncertainty whether all of this demand will materialize. ,
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | Drop of $541 million (down from $3,941M to $3,400M) | Total Revenue fell by approximately 13.7% in Q4 2024 compared to Q3 2024, suggesting a tightening top‐line performance likely driven by lower sales volumes or less favorable pricing conditions relative to the previous quarter. |
Operating Income (EBIT) | Decline of $827 million (from $1,218M to $391M; 68% drop) | The Operating Income experienced a dramatic reduction, indicating significant margin compression. This decline implies that not only did operating revenues drop, but operating expenses (or other cost drivers) did not adjust favorably compared to Q3 2024, reflecting deteriorated core operational profitability. |
Net Income | Decrease of $809 million (from $954M to $145M; ~85% drop) | Net Income fell extremely sharply, consistent with the drastic drop in operating income and potential additional non-operating or extraordinary charges, resulting in a major contraction in overall profitability relative to Q3 2024. |
Basic EPS | From $1.12 in Q3 2024 to -$0.11 in Q4 2024 | The Basic EPS turning negative underscores the severe deterioration in per-share performance, reflecting not only the dramatic drop in net income but also potential dilution and other adjustments that worsened earnings compared to Q3 2024. |
Cash Flow Profile | Net change in cash down to $22M | The cash flow profile in Q4 2024 indicates constrained liquidity, with a net cash change of only $22 million. This modest movement suggests that despite the significant earnings declines, the company managed limited cash improvement, which contrasts with more robust periods in Q3 2024, pointing to tightened operating conditions and possibly more aggressive financing or investment activity. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Operating EPS Guidance | FY 2025 | $3.25–$3.54, midpoint $3.40 | $3.28–$3.52, midpoint $3.40 | no change |
Annual Operating Earnings Growth | FY 2025 | 5%–7% | 5%–7% | no change |
Dividend Guidance | FY 2025 | no prior guidance | $2.67 per share annually | no prior guidance |
Capital Investment Forecast | FY 2025 | no prior guidance | $50 billion (16% increase from prior guidance) | no prior guidance |
Credit Ratings Guidance | FY 2025 | no prior guidance | Target: Mid BBB range for the parent; Single A range for regulated companies | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Earnings Per Share (EPS) | FY 2024 | $2.68 to $2.83 | $2.70 (calculated from Q1 2024: 0.78, Q2 2024: 0.65, Q3 2024: 1.12, Q4 2024: 0.15) | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Data Center Demand | Discussed robust and accelerating demand across Q1–Q3, with multiple new data center connections and growing contracted capacity. | Significant growth projected at 6.3% annual load; about 40 GW in contracting pipeline and infrastructure expansions. | Expanding, sentiment remains strongly positive. |
CVOW Project | Progress updates in Q1–Q3: project on schedule, cost estimates increased (from $9.8B to $10.7B), with strong emphasis on risk mitigation. | 50% complete, on track for 2026 completion; cost update remains at $10.7B with continued focus on schedule and risk management. | Consistent priority, cost and timeline reaffirmed. |
Regulatory Environment (South Carolina) | Q1 and Q3 calls noted regulatory lag and challenges earning allowed returns, plus a rate case settlement and legislative activity. | Described regulatory lag as a continuing issue, with comparisons to other jurisdictions; engagement with stakeholders ongoing. | Still challenging, seeking constructive outcomes. |
Capital Investment & Earnings | Across Q1–Q3, reiterated 2024–2025 EPS guidance, significant utility investments for reliability and growth; signaled potential incremental capex. | Increased 5-year capital forecast to $50B, reaffirmed 5%–7% EPS growth through 2029; $3.28–$3.52 EPS guidance for 2025. | Rising capex, guidance remains positive. |
SMRs | Q1–Q3 mentioned feasibility studies and legislative support in Virginia; potential 2034 commercialization date. | No mention in Q4. | Not discussed this quarter. |
Millstone Nuclear Asset | Discussed Q1–Q3: valuable carbon-free asset, 55% output under fixed-price contract through 2029, exploring new partnerships and data center options. | Emphasized ongoing legislative talks, 90% of Connecticut’s carbon-free electricity; potential for additional contracts; continuing stakeholder engagement. | Continued focus, exploring future opportunities. |
Caritas Offshore Vessel Costs | Q1–Q3 showed cost rising from $625M to $715M, driven by engineering modifications and financing. | No further cost changes; remains at $715M. | Costs stable, no new updates. |
Hurricane Helene | Q3: Historic devastation, major restoration efforts in South Carolina, estimated $100M–$200M in storm costs. | Noted a remarkable storm restoration as one of the year’s major achievements, but no new cost figures. | Impact recognized, recovery praised. |
Carbon Capture (CCS) | Q3: Skepticism regarding EPA’s CCS requirement, not included in the IRP, viewed as not adequately demonstrated. | No mention in Q4. | No further updates. |
Data Center Self-Generation | Q1: Acknowledged some behind-the-meter possibilities but emphasized network reliability and affordability. | No mention in Q4. | Topic not revisited. |
EPS Capacity Headwinds | Q1–Q3 references to capacity cost pressures in 2025, short generation position, and potential $0.04 EPS impact. | Q4 reported $2.77 EPS (top half of guidance), reaffirmed 2025 outlook; no explicit capacity headwind discussion. | No updated discussion on capacity headwinds. |
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CVOW Project Risks and Tariffs
Q: What are the remaining risks for the CVOW project, and how might tariffs impact it?
A: Management stated that the CVOW project is in a very good position, with all permits in hand and materials purchased. They have fixed-price contracts for major equipment, and fabrication and installation are on track, with the project 50% complete. While potential tariffs on steel and aluminum are too early to assess, they believe these tariffs are generally not intended to apply to most finished products like their components. There is a $200 million contingency within the current project budget of $10.7 billion up to $11.3 billion. -
Data Center Demand Growth
Q: How is the growth in data center demand affecting the company?
A: Data center demand in Virginia continues to be significant, especially in Northern Virginia and Loudon County. This demand is not fully reflected in PJM's forecasts. The company is planning and allocating capital to meet this growth, confident that these data centers will come online. The expansion is also spreading to the Richmond Metro area , which is expected to drive investments across the value chain in a low-risk regulated environment. -
Virginia Regulatory Environment
Q: What are the expectations for the upcoming Virginia rate case?
A: Management plans to file a straightforward rate case in Virginia, emphasizing their strong reliability and affordability, with rates below regional and national averages. They view the regulatory environment as constructive, with the State Corporation Commission's new judges expected to make decisions ensuring continued data center growth while working for all customers. A result is anticipated by the end of November. -
Earnings Lag and Returns
Q: Are you projecting any earnings lag, particularly in Virginia and South Carolina?
A: In Virginia, the company sees a good ability to achieve allowed returns, with 2023 earnings on the base side close to allowed levels. In South Carolina, they could be 80 to 90 basis points under-earning immediately when new rates go into effect due to the backward-looking rate case process, averaging 100 to 200 basis points of under-earning during the rate case cycle. Efforts are underway to address this with stakeholders. -
Millstone Power Plant Opportunities
Q: Are there prospects for new contracts or customers for Millstone?
A: Management is in discussions with potential large customers, including data center co-locators and states like Massachusetts and Connecticut. Additionality is not essential for these customers, and they are focusing on considering stakeholders' interests in Connecticut. -
Impact of Executive Orders on CVOW
Q: How might recent executive orders affect the CVOW project?
A: The company believes there will be no impact on CVOW from recent executive orders. CVOW has all necessary permits, aligns with administration energy objectives, and is crucial for delivering 2.6 gigawatts to the grid. It's specifically authorized by Virginia law and has robust bipartisan support. -
Data Center Connection Timelines
Q: How long does it take for data center projects to progress through your pipeline?
A: The time from starting the process to delivering power has been extended by 12 to 36 months, resulting in a speed to market of 4 to 7 years. While there is significant demand, timelines vary based on specific project location and existing infrastructure. -
Capital Expenditure Plans
Q: Does the new capital plan include any spend on V.C. Summer?
A: No, the updated capital plan does not include any expenditures related to V.C. Summer. -
Stakeholder Reactions to Data Center Growth
Q: How are stakeholders reacting to the increased data center load?
A: Policymakers in Virginia support data center expansion due to economic benefits, such as lower property tax bills from increased tax revenue. The growth helps spread total costs over a larger customer base, potentially aiding customer bill headroom. The company is confident that regulatory processes will ensure data center growth continues in a way that works for all customers. -
Future Offshore Wind Projects
Q: Are there plans for additional offshore wind projects beyond CVOW?
A: Currently, the company is focused on completing CVOW and bringing it in on schedule and budget. While they have other leases, there is no capital allocated in the plan for those projects, and they will assess future opportunities as they arise.