Dominion Energy, Inc.

Welcome to the Dominion Energy first quarter 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 call over to David McFarland, Vice President, Investor Relations.

Good morning, and thank you for joining today's call. Earnings materials, including today's prepared remarks, 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 will discuss some measures of our company's performance that differ from those recognized by GAP. 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, Chair, President and Chief Executive Officer, Stephen Ridge, Senior Vice President, Chief Financial Officer, and Diane Leopold, Executive Vice President and Chief Operating Officer. I will now turn the call over to Bob.

Thank you, David. Good morning, everyone. During the first quarter, we delivered financial results consistent with our guidance range and made meaningful progress on regulated investment programs that decarbonize and add resiliency to our systems. We'll cover those topics in more detail, but let me begin with safety performance and then address the status of the business review. Our employee OSHA injury recordable rate for the first quarter was 0.21, a significant improvement relative to historical performance, including record-setting results in 2020 and 2021. We have several months left in 2023 to demonstrate our ability to drive injuries toward the only acceptable outcome, which is zero. I thank my colleagues for this remarkably strong start to the year. Now I'd like to address the business review. Our guiding commitments and priorities are unchanged. and replicated identically on slide three. We continue to receive valuable feedback from investors, which has affirmed our focus on these principles. We'll continue to be deliberate in making ourselves available for input from the company's current and prospective capital providers. The review timeline shown on slide four is also unchanged. We plan to host an investor day in the third quarter, during which we'll provide an updated strategic and financial outlook based on the results of the business review, which is still underway. We're working expeditiously but conscientiously in recognition of the vital importance of achieving an optimal result. I'm pleased with the progress we're making towards delivering a compelling repositioning of our company to create maximum long-term value for shareholders, employees, customers, and other stakeholders. We have great people and great assets, and I'm as excited as ever for the future of our company. Turning now to several noteworthy developments in Virginia, our largest service area. In November, I discussed the need to ensure that near-term economic and customer bill pressures didn't preclude the full realization of the benefits of the long-term resiliency and decarbonization capital investment opportunity before us. And in February, I discussed the need for a durable regulatory construct that provides for a competitive and fair return on utility investments to attract low-cost capital and support of our customer-focused programs. New Virginia law enacted in April and effective July 1st comprehensively addresses both of those needs. It provides significant bill relief for our customers and supports the long-term stability of our utility. With nearly unanimous bipartisan support, the legislation provides the certainty we need to fund and execute critical energy investments in support of the Commonwealth's robust electric demand growth, long-term energy security and reliability, leading decarbonization goals, and impressive economic growth. Highlights of the law are shown on slide five. First, it provides meaningful rate relief for customers. Beginning July 1, it reduces the monthly bill for a typical residential customer by nearly $7 through the combination of certain existing riders that represent approximately $350 million of annual revenue. And it allows for the Commission to approve the securitization of deferred fuel costs, which could provide up to $7 a month in additional near-term savings. If approved, fuel securitization would reduce the standalone fuel charge on customers' monthly bills by allowing the company to spread fuel costs over a multi-year period. Taken together, these savings, if approved, would equate to a 10% reduction to the current typical residential customer bill and position us to be around 21% below the national average. Second, the law simplifies the rate-making process around our base business, which now represents about a third of DEV's total rate base. Specifically, the law reinstates base rate reviews on a biennial schedule as compared to the current triennial cadence, improving the timeliness of operating expense and investment recovery. It's worth noting here, no change to the use of a forward-looking mechanism for purposes of establishing base rate revenues as part of the now biennial reviews. And it retains a modified customer sharing mechanism for base rate earnings that allows both customers and shareholders to benefit from positive financial drivers like improved cost efficiency. Finally, the law prescribes certain regulatory parameters for use in rate setting for the next few years. It establishes an authorized ROE of 9.7%, up from 9.35% currently, for purposes of the 2023 biennial review, which will determine base rates and rider returns through the next biennial period. It directs DEV to undertake reasonable efforts to maintain a common equity ratio of 52.1% through 2024, and it preserves the use of the rider recovery construct. As a reminder, riders are filed and trued up annually in single-issue proceedings that utilize forward-looking test periods and allow for timely recovery of construction work in progress. The law complements precedent energy legislation, including the Virginia Clean Economy Act of 2020, the Grid Transformation and Security Act of 2018, and the Reregulation Act of 2007, to create a regulated utility framework that has delivered exemplary reliability and resiliency, as well as exceptional customer value, as evidenced by customer rates that are significantly below national and regional averages, as shown on slide 6. I believe this broadly supported bipartisan legislation strikes an appropriate balance between customer benefit, regulatory oversight, and the critical need to position the company to compete for capital to support the significant investment required in Virginia for decades to come. In the words of the state's House of Delegates leadership, this resolution gives Dominion Energy Virginia the certainty and stability to make investments needed to ensure stable, reliable service long into the future. That stability and certainty is especially critical now as we ramp into the very substantial and growing multi-decade utility investment required to address resiliency and decarbonization public policy goals, plus recently updated independent electric load projections that reflect the very robust demand growth we're observing in real time across our system. I'm referring to PJM's 2023 forecasts. That, as shown on slide 7, projects peak summer load growth in the DOM zone of approximately 5% per year for the next 10 years. To put that into perspective, the resulting peak load projected for 2033 has increased from 25.8 gigawatts as of the 2022 PJM estimate to 35.8 gigawatts as of this year's estimate, an increase of nearly 40%. DED weather normal sales growth over the last 12 months was 6.1%. For full year 2023, we expect the growth rate to moderate somewhat to around 5%. So this isn't a hypothetical growth. It's demand we're seeing and investing to serve every day. On Monday, we filed an updated integrated resource plan with the Virginia Commission that outlines a variety of paths to satisfy these growing service obligations. The plan calls for an acceleration of and long-term increase in our distribution, transmission, and generation investment. We look forward to engaging with all stakeholders in the planning process, and we'll provide a refreshed long-term capital investment plan as part of our third quarter investor day. This unique intersection of industry leading demand growth and strong policy support for resiliency, decarbonization, affordability, and economic growth, combined with the durability of the Virginia regulatory construct, represents an unprecedented opportunity for our company, our customers, and our shareholders. It will drive growth for many years to come, require prudent capital allocation, and rely on a healthy financial foundation, which is one of the reasons we've repeatedly highlighted balance sheet improvement as a key priority of the business review. With that, I'll turn it over to Stephen to address the financial matters before I provide additional business updates.