Dominion Energy, Inc.

Welcome to the Dominion Energy first quarter 2025 earnings conference call. At this time, each of your lines are 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 at that time. I would now like to turn the call over to David McFarland, Vice President, Investor Relations and Treasurer.

Good morning, and thank you for joining Dominion Energy's first quarter 2025 earnings 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 report 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 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, Chair, President and Chief Executive Officer, Stephen Ridge, Executive Vice President and Chief Financial Officer, and Diane Leopold, Executive Vice President and Chief Operating Officer. I will now turn the call over to Stephen. Thank you, David, and good morning, everyone. Since the conclusion of the business review, we've communicated three priorities. One, consistently achieving our financial commitments. Two, continued on-time achievement of major construction milestones for the Coastal Virginia Offshore Wind Project. And three, achieving constructive regulatory outcomes that demonstrate our ability to work cooperatively with regulators and stakeholders to deliver results that benefit both customers and shareholders. By fulfilling these goals, we empower our employees to deliver on our critical mission to provide the reliable, affordable, and increasingly clean energy that powers our customers every day. On today's call, we'll address each of these areas, starting with achieving our financial commitments. As shown on slide three, we're off to a strong start to the year with first quarter operating earnings of 93 cents per share, which includes three cents of better than normal weather, two cents of RNG 45Z income, two cents of better than expected sales, strong rider investment growth, and a combination of O&M and tax timing helps that we expect to normalize through the rest of the year. First quarter gap results were 75 cents per share. We are affirming all financial guidance provided on our fourth quarter earnings call, including 2025 operating earnings per share of $3.28 to $3.52 per share, inclusive of RNG 45Z income with a midpoint of $3.40. As a reminder, a summary of all adjustments between operating and gap results is included in Schedule 2 of the earnings release kit. Additionally, a summary of all drivers for earnings relative to the prior year period is included in Schedule 4 of the earnings release kit. Turning to our financing plan as shown on slide 4, we've sold approximately $1 billion of forward-settled common equity under our existing ATM program at a weighted average price of approximately $57 and expect to complete $200 million of DRIP-related equity issuance by year-end. This is consistent with our 2025 Common Equity Guidance. We view this level of steady equity issuance under existing programs in the context of our sizable growth capital spending program as appropriate to keep our consolidated credit metrics within the guidelines for our strong credit ratings category. We remain focused on balance sheet conservatism, and there is no change to our previously communicated credit-related targets. Turning briefly to data centers, as a reminder from our fourth quarter update, we have approximately 40 gigawatts of data center capacity in various stages of contracting, including what is now approximately 10 gigawatts of capacity contracted under electric service agreements. Since our last call, we have not observed any evidence of slowing demand from data center customers across our service area. In conclusion, I'll reiterate that I'm highly confident in our ability to deliver on our financial plan. The financial guidance has been built to be appropriately but also not unreasonably conservative to weather unforeseen challenges that may come our way. With that, I'll turn the call over to Bob.

Thank you, Stephen. Turning to safety performance. Our Dominion Energy family experienced tragedy on March 31st when Ryan Barwick, a material fuel handler at Water East Station in Eastover, South Carolina, died after being severely injured while unloading a rail car. We are deeply saddened by the loss of our dedicated colleague, and our thoughts and prayers continue to be with his family, friends, coworkers, and community. Safety is our first core value. It's at the heart of our corporate culture, and we will continue to improve until we achieve the only acceptable safety statistic, zero injuries. Next on our Coastal Virginia Offshore Wind Project, I'd like to start with a few project highlights on slide five. The project is 55% complete, months away from first delivery of electricity to customers in early 2026 and on schedule for full completion at the end of next year. It represents the fastest and most economical way to deliver almost three gigawatts of electricity to Virginia's grid to support America's AI and cyber preeminence and the largest data center market in the world to support U.S. shipbuilding at customers like Huntington Ingalls, the largest military shipbuilding company in the United States and one of our largest customers, and support some of the country's largest and most important military and defense installations. It has robust bipartisan support from Virginia government and congressional leaders, local communities, military and defense interests, the commercial marine industry, as well as civic, educational, environmental, labor, and community partners. It's created approximately 2,000 direct and indirect American jobs and generated $2 billion in American economic activity. And finally, it's supported by Virginia law and approved by the State Corporation Commission and federal agencies. In summary, this project is consistent with the goal of securing American energy dominance and is part of our comprehensive all of the above energy strategy to affordably meet growing energy needs. Since our last update, work has continued to pace. As shown on slide 6, 100% of the project's 176 transition pieces have been rolled, 86% have been successfully steel welded, and 50% are now complete, including the 59 that we have successfully installed since we began that work on December 31st. We expect the final transition piece to be completed in October. More than 80% of the project's 176 monopiles have been completed and successfully delivered to Virginia, including the 78 that were installed during the last installation season. We expect deliveries of the final 32 monopiles to continue steadily in the coming weeks. The first offshore substation was installed on March 10th, with the remaining two offshore substations on track to be delivered this summer and installed in the fall. Siemens Gamesa is making excellent and on-time progress in the fabrication of the project's 176 wind turbines. The sections for 28 full towers have been completed, with 45 additional towers currently in production. In addition, 36 nacelles are complete or awaiting final testing, and 28 blades have been fully cast. Finally, as shown on slide 10, Charybdis, our Made in America Jones Act compliant installation vessel, is expected to enter service and begin making its way to Virginia in the next four to eight weeks, on schedule to support turbine installation this summer as planned. Before I turn to tariff exposure, I'd like to highlight that the costs for project components, excluding tariff impacts, have remained in line with the prior update. The project's current unused contingency is unchanged from our last update at $222 million, which now represents about 6% of remaining project costs. Now let me address tariff exposure. It's difficult to fully assess the impact tariffs may have to the project's final cost if actual costs incurred are dependent upon the tariff requirements and rates, if any, at the time of delivery of the specific component. As a result of this ongoing uncertainty, we've provided potential tariff exposure across discrete tariff categories and illustrative durations on slide 11. First, through the end of the first quarter, the project had incurred actual tariff costs of $4 million. Second, if current tariff policy were to continue through the end of the second quarter, that number would increase to about $120 million. Finally, if current tariff policy were to continue through the end of 2026, when the project is expected to fully enter service, cumulative tariff impact would be expected to be approximately $500 million. For the avoidance of doubt, the corresponding amount borne by Dominion Energy would be about $130 million. Of course, changes to future tariff policy could affect these estimates. We made our quarterly offshore wind construction update filing with the Virginia State Corporation Commission today, in which we increased total project costs by about $120 million, which aligns with our estimate of actual incurred plus projected tariff costs through the end of the second quarter, as you see in the table in today's materials. As a result, we recorded a modest charge this quarter for costs not expected to be recovered from customers in accordance with the cost sharing settlement with Virginia regulators and our 50% cost sharing partnership agreement with Stone Peak. The cost sharing and risk sharing continues to work as intended to protect customers and shareholders. As a result of the cost sharing settlement approved by Virginia regulators, the updated project cost of $10.8 billion is expected to increase residential customer bills by an average of $0.04 a month over the life of the project and the updated project lcoe of 62 dollars per megawatt hour inclusive of rex continues to benchmark very favorably with new generation alternatives including solar battery and gas fire generation let me be clear cvow remains one of the most affordable sources of energy for our customers turning to the regulatory landscape let me provide a brief update on our virginia biennial review filing which we submitted at the end of march The filing highlights Dominion Energy Virginia's reliable and affordable service. If approved, this would be the company's first base rate increase since 1992. Additionally, over the past decade, the company's residential rates have increased at a rate approximately 40% lower than the rate of inflation. Our filing also reflects a new proposed rate class for high energy users, including data centers, as well as new customer protections to ensure those customers continue to pay their full cost of service and that other customer classes are protected from stranded costs. Protections include a 14-year contract commitment to pay for their requested power, even if they use less than requested. This is consistent with the concerns and recommendations expressed in the JLOC report last year and in line with proposals in other jurisdictions nationwide. The Commission's procedural schedule is shown on slide 13. Separately, On March 3rd, Dominion Energy Virginia filed with the State Corporation Commission for a certificate of public convenience and necessity to construct and operate the Chesterfield Energy Reliability Center, a gas-fired electric generating facility as part of our all-of-the-above approach to energy supply. The roughly one gigawatt project, if approved, is expected to cost approximately $1.5 billion and be placed into service in 2029. The capital for this project was included in our most recent capital update. Turning to South Carolina, where policymakers in the House and Senate continue to evaluate potential energy legislation that addresses future generation needs of the state, permitting reform, and regulated investment recovery. We're appreciative of the significant time spent to date by the legislature on this important topic. We see these efforts as supportive of our stated aim to contribute to the success of South Carolina's robust and growing economy. Overall, we continue to achieve constructive outcomes in all of our regulated service areas. Next on Milstone, the facility continues to perform well and provide over 90% of Connecticut's carbon-free electricity and 55% of its output is under a fixed price contract through late 2029. The remaining output continues to be significantly de-risked by our hedging program. As many of you are aware, there's been recent legislative activity in New England, Rhode Island specifically, aimed at authorizing future additional procurements of nuclear power. We continue to engage with multiple parties there to find the best value for Millstone. In addition to state-sponsored procurement, we continue to evaluate the prospect of supporting incremental data center activity as well. We feel strongly that any data center options need to be pursued in a collaborative fashion with stakeholders in Connecticut. We will provide updates as things develop. Before I conclude my remarks, I'd like to take a moment to recognize Diane Leopold. As she announced late last year, Diane is retiring on June 1st. Today will be her last earnings call. Diane is one of the brightest, most dedicated, and most capable people in our company and in our industry. Over her 36 years in the utility business, she's demonstrated best-in-class performance in virtually all areas of operations, business development, financial planning, and corporate strategy, as well as the construction of several multi-billion-dollar energy infrastructure projects. Fortunately, Diane has trained a deep and talented bench to follow in her footsteps. It's been my honor and privilege to work with her for the last 20 years, and I know I speak for Stephen, David, and the entire Dominion Energy team in thanking her and wishing her well in retirement. With that, let me summarize our remarks on slide 15 by reiterating where Stephen began the call with a focus on our three priorities. Consistently achieving our financial commitments, continued on-time achievement of major construction milestones for the Coastal Virginia Offshore Wind Project, and achieving constructive regulatory outcomes that demonstrate our ability to work cooperatively with regulators and stakeholders to deliver results that benefit both customers and shareholders. We're 100% focused on execution. We remain committed to delivering reliable and affordable power for our customers. And with that, we're ready to take your questions.