Dominion Energy, Inc.

Ladies and gentlemen, welcome to the Dominion Energy first quarter 2021 earnings conference call. At this time, each of your lines is in a listen-only mode. At the conclusion of today's presentation, we will open the floor for questions. Instructions will be given for the procedure to follow if you would like to ask a question. I would now like to turn the conference over to Mr. Stephen Ridge, Vice President, Investor Relations.

Thank you, David, and thanks to everyone for joining today's call. Earnings materials including today's prepared remarks may contain forward-looking statements and estimates that are subject to various risks and uncertainties. Please refer to our SEC filings including our most recent annual reports on Form 10-K, and our quarterly reports on Form 10-Q for a discussion of factors that may cause results to differ from management's estimates and expectations. This morning, we'll discuss some measures of our company's performance that differ from those recognized by GAAP. Reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measures, which we can calculate, are contained in the earnings release kit. I encourage you to visit our investor relations website to review webcast slides as well as the earnings release kit. Joining today's call are Bob Blue, Chairman, President, and Chief Executive Officer, Jim Chapman, Executive Vice President, Chief Financial Officer and Treasurer, and other members of the Executive Management Team. I'll turn the call over to Bob.

Thank you, Stephen. Before we provide our business update, I'd like to take a moment to remember our friend Tom Farrell. Tom's passing on April 2nd was heartbreaking to those of us who loved, admired, and respected him. We've heard from so many people, including many of you, about Tom's impact on the industry and the people who work in and around it. It's quite clear that while Tom's list of professional accomplishments was long, the list of people whose lives he touched was much, much longer. He can be gruff occasionally. Many of us participating on this call may have experienced that from time to time. But much more often, We experienced his generosity, his loyalty, his dry sense of humor, and his focus on improving our company, our community, and our industry. We should all seek to emulate his example, a consistent commitment to ethics and integrity, to excellence, and perhaps most of all, to the safety of our colleagues. He cherished his friends and family most of all. I can't think of a better example of a leader, and we will miss him dearly. With that, I'll turn it over to Jeff.

Good morning. Thank you for those words, Bob. I'd also like to express my thanks for the messages of condolence that we've received from across the country and from around the world. Thank you all. As Bob said, we will very much miss Tom. Let me now turn to our business update. Following the in-depth review and roll forward of our capital spending outlook we provided last quarter, our prepared remarks today will be relatively brief. We are very focused on overall execution, including extending our track record of meeting or exceeding our quarterly guidance midpoints as we did again this quarter. I'll start my review on slide four with a reminder of Dominion Energy's compelling total shareholder return proposition. We expect to grow our earnings per share by 6.5% per year through at least 2025, supported by our updated $32 billion five-year growth capital plan. Keep in mind that over 80% of that capital investment is emissions reduction enabling, and that over 70% is rider eligible. We offer an attractive dividend yield of approximately 3.2%, reflecting a target payout ratio of 65%. and an expected long-term dividend per share growth rate of 6%. This resulting approximately 10% total shareholder return proposition is combined with an attractive pure play state regulated utility profile characterized by industry leading ESG credentials and the largest regulated decarbonization investment opportunity in the country as shown on the next slide. Our 15-year opportunity is estimated to be over $70 billion, with multiple programs that extend well beyond our five-year plan and skew meaningfully towards rider-style regulated cost of service recovery. We believe we offer the largest, the broadest in scope, the longest in duration, and the most visible regulated decarbonization opportunity among U.S. utilities. The successful execution of this plan will benefit our customers, communities, employees, and the environment. Turning now to earnings. Our first quarter 2021 operating earnings, as shown on slide six, were $1.09 per share, which included a one penny hurt from worse than normal weather in our utility service territories. This represents our 21st consecutive quarter, so over five years now, of delivering weather normal quarterly results that meet or exceed the midpoint of our quarterly guidance range. GAAP earnings for the quarter were $1.23 per share. The difference between GAAP and operating earnings for the three months ended March 31 was primarily attributable to a net benefit associated with nuclear decommissioning trusts and economic hedging activities, partially offset by other charges. A summary of such adjustments between operating and reported results is, as usual, included in schedule two of the earnings release kit. Turning on the guidance on slide seven. As usual, we're providing a quarterly guidance range, which is designed primarily to account for variations from normal weather. For the second quarter of 2021, we expect operating earnings to be between 70 and 80 cents per share. We are affirming our existing full-year and long-term operating earnings and dividend guidance as well. No changes here from prior guidance. Turning to slide eight and briefly on financing, since January, we've issued $1.3 billion of long-term debt consistent with our 2021 financing plan guidance at a weighted average cost of 2.4%. Thanks to all who participated in these important offerings and as a reminder, We'll have additional fixed income issuance at Dominion Energy Virginia, at Gas Distribution, at Dominion Energy South Carolina, and our parent company during the remainder of the year. For avoidance of doubt, there's no change to our prior common equity issuance guidance. Wrapping up my remarks, let me touch briefly on potential changes to the federal tax code. Obviously, it's still early days with a lot of unknowns, but at a high level, We see an increase in the corporate tax rate as being close to neutral on operating earnings, based on, as is the case for all regulated entities, the assumed pass-through for cost-of-service operations, an increase in parent-level interest tax shield, and the extension and expansion of clean or green tax credits, all of which would be offset by higher taxes on our contracted assets segment earnings. We also expect modest improvement in credit metrics. We're monitoring the contemplated minimum tax rules closely and would note the administration's support for renewable development suggests the ability to use renewable credits to offset any such minimum tax rule. More to come over time on that front. With that, I'll turn the call back over to Bob.

Thank you, Jim. I'll begin with safety. As shown on slide nine, through the first three months of 2021, we're tracking closely to the record setting OSHA rate that we achieved in 2020. In addition, we're seeing record low levels of lost time and restricted duty cases, which measure more severe incidents. Of course, the only acceptable number of safety incidents is zero, and we will continue to work toward that critical goal. Let me provide a few updates around our execution across the strategy. We're pleased that the 2.6 gigawatt coastal Virginia offshore wind project has been declared a covered project under Title 41 of the Fixing America's Surface Transportation Act program, also known as FAST-41. The federal permitting targets now published under that program are consistent with the project schedule that we shared on the fourth quarter call in February. Key schedule milestones are shown side by side on slide 10. We continue to be encouraged by the current administration's efforts to provide a pathway to timely processing of offshore wind projects. In the meantime, we're advancing the project as follows. We're processing competitive solicitations for equipment and services to achieve the best possible value for customers and in accordance with the prudency requirements of the VCEA. Interest in those RFPs has been robust. We're analyzing performance data from our test turbines, which have been operational for several months now and are, to date, generating capacity factors that are higher than our initial expectations. Recall we had assumed a lifetime capacity factor of around 41% for the full-scale deployment. Further evaluation of turbine design and wind resource, in addition to the data we're gathering in real time, suggests that our original assumption is too low. higher generation would result in lower energy costs for customers we're monitoring raw material costs and it seems to be the case across a number of industries right now we're observing higher prices in the case of steel for example the return of pandemic idled steel making capacity hasn't yet caught up to global demand we'll continue to monitor raw material costs trends as we move towards procurement later in the project timeline We're moving into the detailed design phase for onshore transmission. As we observed within the industry recently, utility systems are only as good as they are resilient, which is one of the reasons that we made the decision in 2019 to go the extra distance to connect to our 500 kV transmission system to ensure that the project's power will be available when our customers need it most. We believe that decisions we're making around onshore engineering configurations will ultimately result in the best value for customers. and finally our jones act compliant wind turbine installation vessel is being constructed and is on track for delivery in late 2023 we expect the vessel will be an invaluable resource to dev as well as to the u.s offshore wind industry we expect to announce further details on non-affiliate vessel charters in the near term in summary lots of very exciting progress which will continue through the summer including our expected notice of intent from boehm in june As is typical for a project of this size at this phase of development, there will be some puts and takes as work continues. Taken as a whole, there's no change to our confidence around the project's expected LCOE range of $80 to $90 per megawatt hour. Near the end of the year, we'll file our CPCN and rider applications with the Virginia State Corporation Commission, and we'll be in a position at that time to provide additional details around contractor selection and terms, project components, transmission routing, project costs, capacity factors, and permitting. Turning to updates around other select emissions reduction programs. On solar, on Friday, the Virginia State Corporation Commission approved our most recent clean energy filing, which included 500 megawatts of solar capacity across nine projects, including over 80 megawatts of utility-owned solar, the fourth consecutive such approval. We also recently issued an RFP for an additional 1,000 megawatts of solar and onshore wind, as well as 100 megawatts of energy storage and 100 megawatts of small-scale solar projects, and 8 megawatts of solar to support our community solar program. Our next clean energy filing, which we expect to include solar and battery storage projects, will take place later this year. Since our last call, we've continued to de-risk our plan to meet the VCEA solar milestone by putting another 30,000 acres of land under option, bringing the total to nearly 100,000 acres of optioned or exclusive land agreements, which is enough to support the approximately 10 gigawatts of utility-owned solar as called for by the Virginia Clean Economy Act. A nuclear life extension. Just this morning, the NRC authorized 20-year life extensions for our two Surrey units in Virginia. The Surrey station provides around 15% of the state's total electricity and around 45% of the state's zero carbon generation. This authorization is a critical step in ensuring the plant will continue to provide significant environmental and economic benefits for many years to come. We expect to file with the FCC for rider recovery of relicensing spend late this year for both Surrey and North Anna stations. Our gas distribution business, as we've discussed in the past, our gas utility operations are enhancing sustainability and working to reduce scope one and three emissions with focused efforts around energy efficiency, renewable natural gas and hydrogen blending, operational modifications, and potential changes around procurement practices. For example, as part of our recently filed natural gas rate case in North Carolina, we asked the North Carolina Utilities Commission to approve five new sustainability-oriented programs. Hydrogen blending pilot, it's part of our goal to be able to blend hydrogen across our entire gas utility footprint by 2030. A new option to allow our customers to purchase RNG attributes and three new energy efficiency programs. Finally, in South Carolina, The South Carolina Office of Regulatory Staff recently filed a report finding that our revised IRP met the requirements of the law and the Public Service Commission's order requiring the modified filing. As a reminder, the preferred plan in the revised filing called for the retirement of all coal-fired generation in our South Carolina system by the end of the decade, which helps to drive a projected carbon reduction of nearly 60% by 2030 as compared to 2005. While the IRP is an informational filing, it does not provide approval or disapproval for any specific capital project. We look forward to continuing to talk with stakeholders, including the Commission, about an increasingly low-carbon future. An order is expected from the Public Service Commission by June 18th. Turning to the regulatory landscape, let me provide a brief update on our Virginia triennial review filing, which we submitted at the end of March. As shown on slide 12, the filing highlights Dominion Energy Virginia's exceptionally reliable and affordable service. The state's careful and thoughtful approach to utility regulation has resulted in a model that prioritizes long-term planning that protects customers from service disruptions and bill shocks. Consider these facts. 99.9% average reliability delivered at rates that are between 8% and 35% lower than comparable peer groups. We're proud of our record and the work we do to serve customers every single day. Our filing also reflects over $200 million of customer arrears forgiveness as directed by the General Assembly, relief that is helping our most vulnerable customers address the financial impacts of COVID-19. The filing also identifies nearly $5 billion of investment and rate base on behalf of our customers over the four-year review period, including $300 million of capital investment in renewable energy and grid transformation projects that we believe meet the eligibility criteria for reinvestment credits for customers. The Commission's procedural schedule is shown here. We've included additional details regarding the case as filed in the appendix for your review and look forward to engaging with stakeholders in coming months. It's clear to us that the existing regulatory model is working exceptionally well for customers, communities, and the environment in Virginia. We're delivering increasingly clean energy while protecting reliability and safeguarding affordability. In South Carolina, we continue to engage in settlement discussions with the other parties as highlighted in our monthly filings before the Commission. We aren't able to discuss specifics of that process, but can report that all parties appear committed to working toward a mutually agreeable resolution. Finally, let me highlight noteworthy developments in the legislative landscape for our company. In Virginia, during the now adjourned session, the Virginia General Assembly passed House Bill 1965, which adopts low and zero emissions vehicle programs that mirror vehicle emission standards in California. The law, which has been signed by the governor, ensures that more electric vehicles are manufactured and sold in Virginia. It will likely take a few years before we see the significant and inevitable ramp-up in electric vehicle adoption in our service territory, but we're taking steps today to be prepared for the incremental electric demand and associated infrastructure. That includes regional coordination with other utilities to ensure highway corridors that ensure seamless charging networks, support for in-territory EV charging infrastructure, which includes a significant investment in a variety of grid transformation projects, as well as the role out of time of use programs. At the federal level, we're encouraged by the support we're seeing for our offshore wind project. We applaud efforts to increase funding for the research and development of technologies that will allow the utility industry to drive further carbon emissions reductions. We're philosophically aligned with the current administration in wanting to accelerate decarbonization across the utility value chain, while also recognizing that the energy we deliver must remain reliable and affordable. It's still early, but we're engaging in the process of policy formation and monitoring developments closely and continue to believe we are well positioned to succeed in an increasingly decarbonized world. I'll conclude the call with the summary on slide 13. Our safety performance year-to-date is tracking closely to our record-setting achievement from last year. We reported our 21st consecutive quarterly result that normalized for weather meets or exceeds the midpoint of our guidance range. We affirmed our existing long-term earnings and dividend guidance. We're focused on executing across the largest regulated decarbonization investment opportunity in the nation to the benefit of our customers. And we're aggressively pursuing our vision to be the most sustainable energy company in America. With that, we're ready to take your questions.

Thank you. Ladies and gentlemen, at this time, the floor is open for your questions. If you would like to ask a question, please press the star key followed by the one key on your touchtone phone now. If at any time you would like to remove yourself from the question queue, please press star two. Again, to ask a question, please press star one now. Our first question comes from Char Porreza with Guggenheim Partners.

Hey, good morning, guys.

Morning, Char.

Just a couple of quick questions here. You know, first, we've seen other revised estimates on URI. Any update on how kind of URI impacted your customers and fuel costs? Are you still okay there? And how are you sort of thinking about maybe resiliency spend for renewables based on maybe some of what you've observed as a result of URI? Any incremental spend associated with that that we should be thinking about there?

Shar, it's Bob. I'll let Jim take the first part of that question, and then I'll answer the second.

Good morning, Shar. Good morning, Jim. Good question. We're hearing a lot about this topic across the industry this quarter, of course. For us, let me walk through it. There's no impact for us at all on our electric operations, of course, given our geographic location. On the gas side, very minimal cost impacts in Ohio, West Virginia, North Carolina. Those businesses kind of leveraged their storage assets to minimize purchasing during that week. In Utah, it's interesting, though. We did see increased gas purchases. We saw price spikes in the Rockies region for gas during that week, of course. And we had increased gas purchases of our own during that period in the range of about $60 million, 6-0. Now, as a reminder, those costs are covered by customers, but we think it's modest cost to customers, so no financial impact to the company from that. But what's interesting is the strength of the operational and the regulatory design there really saved customers very significant costs during that period, and those are twofold. One is Wexpro, the regulated fuel supply arm, So during that week, customers got the benefit of that cost of service supply, so insulated from price spikes. And then second, contracting. Questar Gas is, I think, the largest contractor for storage capacity for Clay Basin there in the Rockies region. So without those features, that $60 million would have been multiples to many multiples higher. So pretty positive reflection of the operational and regulatory profile there. But overall, big picture, pretty manageable in scale for us. Bob?

Yes, sir. I'm sorry. We're looking forward. I think it's important to remember that the regulatory models in the states where we do business, and particularly our electric states in Virginia and South Carolina, are very well suited to operate a reliable system for our customers. And that is absolutely the number one priority for our customers is keeping the lights on. And so on the generation side, that means things like having diverse fuel mix, making sure the design basis for equipment is right for the circumstances under which it's going to operate, considerations for fuel security, firm transportation for natural gas. And on the T&D side, it would be advanced simulations of the effect of events on the grid, innovative equipment and engineering, new voltage control devices, for example. And it means a robust communications infrastructure. And in Virginia, all of those types of investments that I was just describing are contemplated in both the Clean Economy Act and the Grid Transformation and Security Act from 2018, things like grid mod, strategic underground and storage. So we feel very good about that now, but we're reviewing to see whether any of our resiliency efforts need to be expanded or we need to add new resiliency programs. And we do that all the time, by the way. We learn from experiences on our own system and other systems. So I just sum up by saying nothing changes on the clean energy capital investment front. We're confident that we will continue that investment and operate reliably. And the scope of any additional reliability investments and resiliency investments remains to be seen. But we're studying what is best for our customers right now, as we've been doing for decades.

Got it. And then just two very super quick ones on South Carolina. First, you know, obviously Santee next year pulled their offer. You know, the Senate passed a bill that's more focused on, you know, internal restructuring. Do you, does Dominion have any stance remaining here, including maybe an MSA opportunity or is that sort of behind us?

Yeah, our position on that hasn't changed. It's the same. We've offered. We've worked cooperatively with Santee. We continue to work cooperatively with Santee, and we look forward to other opportunities to work cooperatively with Santee Cooper. So no change there, Char. We want to do what is best for South Carolina.

Perfect. And just the GRC, I appreciate the comments that you made, but is there any sort of sense of timing, maybe just some of the pushes and takes? Is there kind of a point of no return we should be thinking about as we think about maybe a breakdown of settlement talks? Just maybe a little bit more visibility, and then that concludes. Thank you.

Yeah, so the pause was for six months from January, so it comes to an end on the 12th of July, I believe. And so the case would resume on July 12th, so a little more than two months from now. But as we said in our prepared remarks, everyone appears to be approaching this looking for a constructive outcome, and that's what we're focused on.

Terrific. Thank you, guys. And I echo your comments around Tom. He's going to be greatly missed, and he was a true gentleman. So I appreciate your comments. Thanks, guys.

Thank you, Sean.

Thank you. Our next question comes from Jeremy Tonea with J.P. Morgan.

Hi. Good morning.

Good morning.

So, you know, just want to start with the caveat. Granted, we're very early innings here and things will change. But are there any thoughts you could share on how the current version of the Biden infrastructure plan might impact the such as the tax credit front? Could this potentially impact wider spread deployment of storage in Virginia?

Yeah, your preface to the question was exactly right. It is indeed early days, so we don't know what's going to come out in the final analysis. So I think the best way to think about it is we're just very well positioned. We think the approach to decarbonize as quickly as we can reliably and affordably makes all the sense in the world. We're very well positioned to do that. This is not something that's new for us. And we see to the extent we see opportunities with the Biden plan, we'll take advantage of them. But at this point, we don't exactly know. We just know the atmosphere is really good. We think it's smart for customers. We're excited about it.

Got it. That makes sense. And then also, I guess, under the new administration, you kind of touched on this a bit, but maybe you could just comment a bit more on your interaction with Boom here and how you kind of feel about things progressing, moving forward, you know, through the process now versus before.

Sure. We've had the opportunity to be involved in a couple of different industry conversations with BOEM leadership and other leadership in the administration. I think it's very clear that they see the advantages to offshore wind development. And I think the best evidence when it comes to us is, as we mentioned earlier, the schedule for the notice of intent and for the record of decision line up exactly with what we talked about on our fourth quarter call. So we have a very good sense that the professionals at BOEM, as they always have, are going to move forward efficiently. The leadership of the administration clearly thinks offshore wind is good economically and to meet carbon goals. And we're looking forward to sort of taking advantage of the experience that we have with the only wind farm operating in federal waters off the coast of the United States today as we expand that to something much bigger.

Got it. And just one last one, if I could, and I think you've touched on this a bit, but just wondering what you're learning from initial hydrogen efforts here. How does this inform the relative opportunity between hydrogen and RNG for your gas distribution system, you know, going into the future?

Hi, good morning. This is Diane Leopold. So just as a reminder on our hydrogen pilot, we're in our very early stages, as in days. Our gas distribution business is implementing some blending programs at a training facility starting in Utah. And we just commissioned it, and it started testing just a couple of weeks ago. So we're really moving forward with that. We're looking to expand that if it's successful to a small customer use application. and then follow the pilots in our other service territories. In fact, we requested a similar pilot at a training facility as part of our North Carolina rate case. So we're starting small, very important on hydrogen blending. So we see a combination of moving forward with continued pilots and testings of hydrogen blending throughout our LDC system including putting it into the LDC production and even methanation in the future, as well as an increased percentage of RNG into the system, which is really, you know, one for one offset with methane. So increased RNG, increased hydrogen blending, possibly towards methanation as we move to continue to decarbonize the LDC system.

Got it. That makes sense. Thank you. Tom will be missed. Thank you very much.

Thanks. Thank you. Our next question comes from Steve Fleishman with Wolf Research.

Yay. Good morning and best to Tom's family and all of you. Thank you, Steve. You bet. While we heard from Diane there, just you have been kind of early investor in RNG projects. And I think I'd just be curious kind of where that stands and do you see a lot more coming over the next few years?

Hi, good morning, Steve. Diane again. So, yes, we have been an early investor. We announced our intention to spend about $650 million on two main partnerships. We've been focusing on the agricultural RNG, so the hog farms with Smithfield and the dairy farms with Vanguard Renewables. We have one project that's in service as of the second half of last year. We have three projects under construction now and expect to have about five more under construction later this year. So we're really ramping up on actually bringing forward the projects. On the demand side, we really see a significant strong demand right now from a variety of customers. You can see the people like the refiners that have LCFS obligations to make, and we see more states looking to implement LCFS standards. We see utilities both on the power generation side and direct customer use side. And then we see a lot of colleges and universities and other corporations that are kind of carbon-conscious fires that are looking to offset their fossil usage. So we really see a lot of demand starting to pick up for multi-year contract terms at attractive prices. So long term, we're still looking at these projects as critical supply sources for our LDCs as an important tool for customers to achieve net zero. And so starting to access through our green therm tariff that we already have in Utah now and have requested in North Carolina and will continue to do so. But we're really continuing to see strong demand and our projects are ramping up.

Hey, Steve, it's Bob. I will mention that I had the opportunity last week to actually visit our operating site in Utah. It's quite something with the scale of the farming operation. It's also interesting that it happens to be not too far from one of our solar farms, as well as there's a wind farm there, too. So it's become a center of renewable energy. And we just think that In the scope of what we're doing in our decarbonization investment, there are a lot of opportunities, as Diane described, in RNG that will serve us well for the long term.

Okay. And then just one quick question. Just sales trends in Virginia, South Carolina. Any quick thoughts there?

Jim Berscheidt Hey, people. Good morning. It's Jim. Sales trends are occurring kind of like we expected. I'll share a few stats. In Virginia, year-to-date, still pretty resilient, like we saw most of last year. So year-to-date, up a little over 2%. Residential is still strong, up almost 4%. CNI also up almost 5%. So pretty good. Keep in mind that one underlying trend, we mentioned this a lot, is the continuation of data center growth. That number is up like 25%. Of course, it's small but growing. It's a third of our commercial segment is data centers. We expect to connect another 20 or so data centers in our service to Georgia this year. We connected 19 last year. That trend is very supportive of overall sales and continues to be strong.

Great. Thank you very much.

Thank you. Our next question comes from Julian DeMoulin-Smith with Bank of America.

Hey, good morning, team. Thanks for the opportunity.

Good morning, Julian. Hey. Hey.

Excellent. Perhaps if I can pivot off that last question on sales, perhaps can we talk about the next Penny Energy filing later this year? So we'd be expecting more of the same in terms of, you know, on resources versus PPAs, but also how are you thinking about that filing against, you know, sales trends and also against some of these other headlines from independent IPPs just looking at accelerating their procurement efforts in and around your service territory? maybe via, shall we say, corporate procurements of various flavors and sorts. If you can speak to sort of the overall backdrop, if you might.

Yeah, thanks, Julian. So I think the answer, should it look similar to the filing that we just got approved? The answer to that is no, in that this next filing will be larger in scale. And I think you particularly asked the split between PPA and utility-owned, and that will be different going forward. That's what the Clean Economy Act is. It's quite specific on this point that... For the new solar build, 65% is to be utility-owned and 35% is to be third-party or PPA. And sort of the total amount of that is on the order of 1,000 megawatts a year for the next 15. So that's what you should be thinking about really long-term for us is we will match the VCEA proportions and the magnitude going forward. The sort of second part of your question, our focus, our growth is in regulated renewables to the extent that we, and if I'm understanding correctly, to the extent we have customers, important customers who are looking for contracted approaches. We expect to do some of that, but our focus on growing our solar portfolio is on the regulated side.

All right. Fair enough. And then with respect to South Carolina here, I know that you're coming up on the July timeframe. At least we're broadly approaching it. I know we've got some updates here in the interim. But I feel confident that perhaps by that point in time we can reach some sort of resolution, if you will. Is that fair as far as it goes?

Julian, I used to be a lawyer, and as a profession, we seem to be procrastinators. So I wouldn't read too much into the fact that there's two months left. You can get a lot of work done in two months. And as we said in the script, everyone is approaching this constructively. So, yeah, we think we can get it done.

Got it. And if I could squeeze in one last one, just at LMG, I know you guys have obviously sold out a chunk here, but You've seen some pretty elevated evaluations here in the space of late. Any comments, reactions to that? Just wanted to throw that in there quickly.

Thank you, Jim. Yeah, I'll repeat what I think we've said many times before. We very much like our new look and our asset mix. The dynamics you're speaking to, we're not blind to that, that someday that could be an opportunity to raise capital and replace what we have in our plan for modest continued equity issuance, but no current focus on that topic. We're aware, following, but we're focusing on executing our plan with our current asset mix.

Excellent. All right. All the best. And I echo your sentiments with respect to that.

Thanks, Julian. Thank you. Our next question comes from Dheerjesh Chopra with Evercore ISI.

Hey, good morning, team. Thank you for taking my question. Just a quick clarification, Jim, on 2021 guidance. What are we assuming in terms of the timing on the South Carolina rate case, if you could just clarify that, please?

Yeah, good morning. So on the South Carolina rate case, we've been, again, here consistently saying a couple things. One is that given the size of that business in relation to Dominion, of course, that's just the electric part of DESC. We're talking about base rates on the electric side. Any reasonable outcome is going to be within our guidance range, so no material impact. And then as far as the impact of a delay... We've seen some folks suggesting that a delay of a year would be kind of in the five-cent range, so take half of that for six months. You're talking about a couple pennies. That's probably in the ballpark, but still not material and within our guidance.

Got it. Okay. So basically, regardless of the timing of a final decision there, you sort of the guidance, 21 guidance is intact.

Any reasonable outcome should lead to that. That's right.

Okay, perfect. Then just a quick one on the nuclear plant extensions. Does that change or give you an opportunity to deploy more CapEx, or kind of this is in line with your thinking when you sort of developed the CapEx plan four or five years out?

It's in line with our thinking when we developed the CapEx plan.

Yeah, there's $1.3 billion of spend related to the nuclear license in our five-year plan that we went through on the fourth quarter.

Understood. Thanks, guys. And it's really a loss losing Tom, so to my best for Tom and his family.

Thanks for your thought. Thank you, Drogash.

Thank you. Our next question comes from Michael Weinstein with Credit Suisse.

Hey, guys. Good morning. Good morning. Hey, on the triennial filing, The revenue deficiency that you guys have identified, is that mostly related to rate base and service, or is it, you know, a new investment, or is it more operationally related?

So I think you're asking about the 22 test year and our measurement versus a 10-8 ROE. And the answer is just with the way the law works, we project forward sort of known and knowables for the year 22. And we calculate what the return is. And in this case, that return is slightly below the 10-8 that we believe is the appropriate authorized ROE. So I don't know that I can identify any one specific thing. There's a number of sort of components that go into that. But you do that analysis, compare it against what we believe is an appropriate ROE, and that's how we end up with that slight increase.

um revenue deficiency in the regulatory speak gotcha it's a combination of everything um diane on rng just one other question on that on that subject do you anticipate a time when blending rng and maybe even hydrogen two into the system would enable a utility and your utilities specifically to say that they are you know greenhouse gas neutral or greenhouse gas zero or even negative. And when do you think that'll happen and how many years do you think in the future would you have to wait for that?

Well, absolutely. In fact, it was part of our thinking when we committed to net zero by 2050 across both our gas and electric businesses was blending renewable natural gas and hydrogen into the system as part of a component of that. So it certainly already worked into the plans, I believe, of numerous utilities. in their net zero plans, especially RNG and the agricultural RNG, which is why we're trying to attract so much of it into our LDC systems and working with regulators and investing in it to get it in the networks is because it's so much more carbon negative than a lot of other forms. So instead of just being carbon neutral, you just get a lot of bang for the buck out of smaller quantities of it to help to meet those net-zero goals. David Chambers.

Gotcha. One last question. On the solar business, are you seeing any impact from ship, you know, as a result of supply, global supply-demand tightness in that segment and also, you know, shipping, like, shipping logistics issues, chip shortages? You know, we're hearing in the solar industry that, that the supply is tight and prices are up. I'm just wondering if that's affecting you at all.

Yeah, Michael, Jim, we're seeing the same. Not in a material way. And the shipping and logistics issue, we're not seeing as much. It's just some upward price pressure on poly, on glass, on steel. But it's something we're watching, but it's not, you know, for our business, it's not a material issue. But certainly there is upward pressure on costs right now.

Okay. Thanks a lot, guys.

Thank you. Thank you. Ladies and gentlemen, this does conclude this morning's conference call. You may disconnect your lines and enjoy your day.