Q2 2025 Dominion Energy Inc Earnings Call

Welcome to the Dominion Energy second quarter 2025 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 of investor relations and treasurer

Good morning, and thank you for joining Dominion. Energy's second quarter 2025 earnings, call earnings materials, including today's prepared, remarks contained, forward-looking statements, and estimates that, our subject to various risks and uncertainties.

Please refer to our SEC filings, including our most recent annual report on form 10K. In our quarterly reports on form 10q 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 those 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 Robert Blue, Chair, President and Chief Executive Officer; Steven Ridge, Executive Vice President and Chief Financial Officer; and other members of the Senior Management.

I will now turn the call over to Steven.

Thank you, David and good morning, everyone.

Since the conclusion of the Business Review last year, we've focused on three principal priorities.

First consistent achievement of our financial commitments.

Second continued on time achievement of major construction, milestones for the coastal, Virginia offshore wind project and third constructed achievement of regulatory outcomes that demonstrate our ability to work cooperatively with regulators and stakeholders to deliver results that benefit both customers and shareholders.

As we successfully execute against these priorities, we both empower our employees to provide the reliable, affordable, and increasingly clean energy that powers our customers every day, and we position ourselves to deliver on the commitments we made to our investors at the conclusion of the business review.

We believe that consistent execution against these commitments will deliver compelling value for our shareholders.

We had another strong quarter of execution across each of these priorities. I'll begin with our financial results and then Bob will address cvow and Regulatory progress.

As shown on slide 3, second quarter operating earnings were 75 cents per share, which includes 2 cents of RNG, 45z credits, and 1 cent of better than normal weather.

Relative to second quarter 2024. Positive factors for the quarter included. 7 cents from regulated investment growth.

7 cents from increased sales and 5 cents from our deescalate settlement in 2024.

from the regular Cadence refueling outage at Millstone Unit 3.

Second quarter, Gap, results were 88 cents per share.

A summary of all adjustments between operating and GAAP results is included in Schedule 2 of the earnings release kit, and a summary of all drivers for earnings relative to the prior year period is included in Schedule 4 of the earnings release kit.

We're reaffirming existing financial guidance, including 2025 operating earnings per share of between $3.28 and $3.52. This includes RNG 45z income, with a midpoint of $3.40.

Turning to financing on slide 4. As highlighted on our last call, we've completed our 2025 ATM equity and we've taken steps this quarter to also de-risk our 2026 ATM program.

Turning briefly to sales, we're continuing to see strong sales in our service areas, driven by continued data center expansion and economic growth.

Notably 9 of our top 10 all-time peak days in Virginia, have occurred this year, including 6 in the last 6 weeks and our all-time peak in South Carolina was set just a few days ago.

With regard to Data Center activity, we will refresh our standard detailed disclosures later this year, which will highlight our growing contract backlog. But, in the meantime, I'll just say that data center interest is as robust as we have ever seen it.

We look forward to continuing to meet this demand as we always have in a timely and responsive way that allows us to reliably and affordably serve all of our customers.

Inclusion. I'll reiterate that I am highly confident in our ability to deliver on our financial plan, including our 2025 operating EPs, and credit targets.

We've built our financial plan 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.

Before we move into business specific updates, I just want to take a moment to acknowledge the outstanding work of our colleagues who have carried out our mission thus far this summer.

In addition to operating the system reliably to meet the new peaks that Steven just mentioned, they have worked around the clock and in consistently trying weather conditions to serve our customers and communities. I'm incredibly proud of our team members for their commitment and dedication to providing reliable, affordable, and increasingly clean energy that powers our customers every day.

With that, I'll turn to slide 5 and address our safety performance. Our employee OSHA injury recordable rate for the first half of the year was 0.28, reflecting the continued positive trend from the last several years. This is a good start.

But as we were reminded in March, when we lost our colleague Ryan Barwick in a rail car unloading accident, safety is much, much more than just a statistic.

Safety is our first core value, and we're redoubling our efforts to drive to zero workplace injuries.

Turning now to the coastal, Virginia offshore wind project we've made consistent and noteworthy progress across all aspects of the project since our last call.

Summarize on slide 6, the project is now 60% complete just months away from first delivery of electricity to customers in early 2026 and still on schedule for full completion. At the end of 2026, it represents the fastest and most economical way to deliver almost 3, gigawatts of electricity to Virginia's grid, to support, America's Ai and cyber preeminence in the largest Data Center Market. In the world, support us ship building including Huntington angles, the largest naval ship building company in the United States and 1 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 about 2,000, direct and indirect American jobs and generated 2 billion dollars in American economic activity.

And finally, it's supported by Virginia law approved by the Virginia, state Corporation Commission and fully permitted by federal agencies.

676 monopile as well as 100% of the projects 12 pin. Piles today's totals reflect the installation of 56, monopile, and 8 Pin. Piles over the first half of the current installation season in July. We set a new project record by successfully installing 26, monopods in a month.

Consider that performance relative to the fact that we have 42 monopile installations remaining and 3 full months of installation season left.

Note that fabrication of the final monopile is now complete, and over 90% of the project’s monopiles have now been successfully delivered to Virginia. This effectively means we have just two barge loads left to deliver to Portsmouth, with regard to transition pieces—148, or approximately 84% of the project. Transition pieces have now been fabricated, including the 59 that we have already successfully installed.

We continue to expect the final transition piece to be completed and delivered to Portsmouth in the fourth quarter.

Commissioning the first offshore substation which was installed on March. 10th is now complete the remaining 2 offshore substations are 99% and 70% complete respectively and on track to be delivered. This fall with installation to be completed by q1 2026 as planned.

With regard to turbines, Siemens Gamesa continues to make excellent and on-time progress in the fabrication of the project's turbines. The sections for 58 full towers have been completed, with an additional 12 delivered. 97 nacelles are 55% complete, and 42 blades have been fully cast. On slide 8, you can see the start of turbine tower stacking on shore.

All 9 Deepwater export cables have now been installed and enter a ray cabling and onshore work continues on track.

Now with regard to carrabis are made in America, Jones, act compliant, installation vessel.

Slide 9 has a great picture of the vessel with the full complement of CF fasteners now installed. If you'll turn to Slide 10, I'll provide some additional detail regarding vessel status and next steps. We've completed testing of all major systems, including the crane jacking system, normal and emergency generators, and all seven thrusters. In addition, we've successfully performed the blackout test, which confirms safe integrated operations of all electrical and drive systems during emergency conditions.

The remaining tests are commissioning, specifically the final fire zone circuits and testing of the emergency lighting, which will confidently position us to conclude the commissioning. Next week, we will begin sea trials immediately thereafter. The scheduled duration for sea trials is 8 days, but we’re providing ourselves a little cushion by allowing a range of up to 14 days during sea trials. The vessel will recertify many of the tests that were already successfully completed during commissioning.

Upon successful completion of sea trials. The Vessel will officially enter service and commence the charter with cval, it then takes about 10 days to travel to Virginia.

We will install our first turbine in September, which is in line with our original schedule.

We'd expected The Vessel to complete sea trials last month, which would have enabled us to begin turbine installation ahead of schedule. However, the electric cable terminations that connect much of the ship's internal communication technology simply took longer to complete than expected. That work is now been complete for several days. I'm disappointed that carrabis will be arriving later than expected. We don't take lightly missing our timing guidance, on any project of this importance, but being this close to completion of the vessel is exciting. And an important step toward project de-risking.

The broader and more important takeaway is the critical value of having the right equipment for this regulated project. I'll provide a specific example by securing access to the Orion, our monopile installation vessel, and installing monopiles prior to scour protection. We eliminated the need to transfer monopiles from a barge to the installation vessel. This resulted in a significantly lower risk installation process, which has now translated into a meaningfully positive impact on our monopile installation schedule. In fact, we're well ahead of plan, installing monopiles at a pace that exceeds any other U.S. offshore wind project to date.

That underscores why I'm so enthusiastic about carrabis despite a slight delay in delivery. Its purpose, built for this work in eliminates, the need for barges, which will be instrumental in helping us stay on track with turbine installation.

Final note on Carrabis: there's no change to the project cost of $715 million.

Now, to Total cval project costs, the Project's current unused contingency of 222 million is unchanged from our last update and now represents a proximately 7% of remaining project costs.

Excluding tariff impacts cost for the project components have remained in line with the prior update.

On slide 11, we provide an update to our potential tariff exposure across discrete tariff categories and illustrative durations. Let me touch on just two key takeaways.

We're adjusting for recent public, commentary around potential EU and Mexico. Tariff increases we estimate that the total impact of tariffs as they exist today through project completion at the end of 2026 would be 506 million. This is slightly lower relative to our disclosure last quarter. Despite a doubling of the steel tariff due to both working with vendors to identify cost mitigation strategies as well as completing our analysis of the final trade regulations and appendices.

Second, while the details remain to be confirmed if the EU and Mexico country tariffs are increased by 5% each, as reported, we expect an incremental impact to the overall project of 134 million. Please note that this estimate is illustrative as we don't have final details of a trade framework with either trading partner, and in the case of Mexico, don't know if tariffs rates will increase at all. Please also note that changes to tariff policy could impact these estimates

This morning, we made our quarterly offshore wind construction update filing with the Virginia State Corporation Commission, in which we increased the total project budget to $10.9 billion, a quarter-over-quarter increase of about $70 million. This is consistent with our estimate of actual incurred tariff costs, plus projected costs through the end of the third quarter. As you see in the table on slide 11.

As a result, we recorded modest charges of about $20 million after tax included on Schedule 2 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.

These cost and risk sharing Arrangements, continue to work as intended to protect customers and shareholders.

The updated project cost of $10.9 billion is expected to increase residential customer bills by an average of 3 cents a month over the entire life of the project. The updated project LCOE of $63 per megawatt-hour, inclusive of RECs, continues to benchmark very favorably with new generation alternatives, including solar battery and gas-fired generation.

Finally, let me address the transmission network. Upgrade costs, which we expected to receive from PJM in July, were indicated by PJM last week to be finalized by late September at the earliest. We continue to await the finalization of those costs by PJM. But importantly, we still do not expect any change in the assigned costs of the magnitude of the update we received in February. We will provide further updates once available.

In summary, this project remains consistent with the goal of securing American Energy dominance and as part of our comprehensive, all of the above strategy to affordably meet growing energy, needs the project fabrication and installation are going very well and see vow continues to be 1 of the most affordable sources of energy for our customers.

Turning now to the regulatory landscape on slide 13, you see meaningful progress across a variety of fronts. Let me provide updates on just a couple of those efforts. We continue to work through the regulatory approval process to construct and operate the Chesterfield Energy Reliability Center, a 1-gigawatt natural gas-fired electric generating facility. The Attorney General's office has filed testimony supporting the project. Commission staff testimony is due on August 19th, with a hearing scheduled for September 23rd.

The Virginia, buying a review proceeding remains on track.

We're currently in the testimony phase with respondent testimony filed on July 16th and commissioned staff testimony submitted on July 30th. We're actively reviewing intervener testimony, including submissions from the Attorney General's office, and most recently. The commission staff, which proposed a 9.8% allowed return on Equity. That's 10 basis points higher than our currently allowed Roe to date the positions, present presented, aligned, with expectations for a standard regulatory preceding. There's 1 Nu, I want to be sure everyone is aware of as they compare company and intervener positions about 200 million dollars of the headline difference between the company and the parties proposed to your Revenue requirement is related to capacity expense and is really not a difference at all. We filed our case before. The so-called Shapiro settlement was approved and therefore reflected a higher capacity expense for both years.

Both Ag and staff filed revenue requirements that reasonably use the Shapiro cap implied capacity expense adjustment that 1) we supplied and agreed with and 2) is profit neutral. That adjustment alone accounts for about 40% of the, as I mentioned, headline differences between the company and staff's position.

We look forward to continued engagement with all parties and anticipate a final order in November.

Ization mechanism similar to what already exists for Gas Utilities in the state.

We're appreciative of the significant time spent by the legislature on this important bill. We see these efforts as supportive of our stated aim to contribute to the success of South Carolina's robust and growing economy.

Additionally on June 30th, the nuclear Regulatory Commission approved Dominion Energy. South Carolina's application to extend. The operating license for the VC. Summer Nuclear Station for an additional 20 years through 2062. Ensuring supply of reliable carbon-free power for decades in South Carolina.

Overall, we continue to achieve constructive outcomes in all of our regulated service areas.

Lastly on the topic of governance consistent with corporate best practice. We've maintained a regular Cadence of board refreshment effective, June 25th, Paul dabbar stepped off our board upon his confirmation as the US. Deputy secretary of Commerce. Paul was an exemplary board member with deep insights across many relevant topics, for our company industry and Country. We thank Paul for his service and we wish him. Well in his new role. Also effective June 25th, our board elected, Jeff lash to serve as a new independent director.

As former president and CEO of the Tennessee Valley Authority. Jeff brings more than 4 Decades of experience in utility operations, power operations and generation construction, and public policy and Regulatory matters, particularly in nuclear energy to the board of directors. We welcome Jeff to our board and look forward to working with him.

With that. Let me summarize our remarks on slide 14 with a focus. On our 3, Priority, consistently achieving our financial commitments. We're off to a strong start in 2025 continued to 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.

I was highly confident in the plan. We announced early last year, and I'm even more confident today as we continue to see opportunities for additional investments supporting customer growth in the value chain. We'll include those opportunities, which buy toward the back end of our plan and future updates.

We're committed to delivering reliable, affordable, and increasingly clean energy to our customers. And as I've said repeatedly, we remain laser-focused on consistent execution. With that, we're ready to take your questions.

At this time, we will open the floor for questions.

If you would like to ask a question, please press the star key followed by the 1 on your touchtone phone now.

If at any time you would like to remove yourself from the question queue. Please press star 2 again to ask a question at this time. Please press star 1 now.

We'll take our first question from Nicholas Kampela with Barclays. Your line is open.

Hey, good morning everyone. Thanks for taking my questions.

Morning. Um, so I just morning morning. So you went through a lot of detail in the offshore wind. Um, but I just wanted to kind of confirm uh, September Cod for the ship. Now, monopile are going better than planned. Can you just maybe talk about and expand on um where you have um slack in the timeline I guess if the ship does see, further, hiccups just, how comfortable are you that you can make up that in the schedule and to our understanding, there's no recorded periods around turbine installation so that can be done 24/7. Uh, is that correct? And um, just overall confidence level there? Thanks.

Yeah, confidence level is very high. Nick. Let me, let me just, uh, 1 Modesto. We expect it in, uh, August. Um, we'll uh, start, um, sea trials next week. Uh, those take 8 to 14 days and then once the ship is done, sea trials, uh, then it moves to the Sea valve.

Project uh, immediately. Uh, there will be a Transit period about 10 days to get up to Virginia.

Already have a supply waiting uh Siemens is mobilized their uh so we're in a very strong position uh to get uh installation on schedule and remain on a track.

Okay, thank you for that. Um appreciate that and then just I guess on the financial execution you know you you've had a strong start so far year to date just where you kind of stand within the fiscal 25 range. And then um you know, are you trending at or above the midpoint at this point? And um I also just want to ask about your view longer term. Uh, just since the business review, if you kind of take stock of, uh, what's happened, um, outside of uh, offshore wind between Carolina's legislation, um, you know, New England prices. Uh, you know, I got, I know the RNG was extended as well. Just, what's the offset that kind of keeps you more towards the midpoint of your long-term EPS range at this point. Thank you.

Good morning, Nick.

We've had a strong start to the year, as you mentioned. Uh, We've benefited from some Tailwind

Uh, both weather and sales.

You know, typically if you look at our cadence, we'll use the third quarter call to narrow our guidance range or bias our guidance range towards, uh, a top half, for instance. I think we're going to stick with that because Q3 is our biggest quarter from a sales perspective.

Uh, I would just say that if we continue to benefit from those same Tailwind, uh we are biased to the top half of the range for the year.

But we need to continue to see execution uh on sales and presumably Persistence of the the weather we've accrued year to date.

Uh, so we feel really, really good about the year, but don't want to get ahead of ourselves just yet. We want to make sure we get one more quarter of...

Strong results under our belt. And then we'll be in a position on the third quarter called to give more definitive guidance on that with regard to the longer term. I'm going to let Bob uh, take that, and I'll jump in with any other comments. Yeah. Uh, Nick great question. And you did mention some, uh, Tailwind that. We find a valuable. But if you think about where, uh, we've been, uh, we announced a plan, the new plan in March of last year and we said then, and we said again just a few minutes ago, uh, that we believe it's really important to demonstrate consistent execution against our uh, Financial targets. Uh, our investors tell us and we believe, uh, ourselves, uh, that that kind of consistent performance over time is what is most important. So, we're going to continue to assess our plan. And if we think there are opportunities, um, to improve, uh, when we're confident, uh, when those opportunities meet our criteria of appropriately conservative assumptions, uh, then we'll incorporate them. But

But our Focus. Um and you know I say it uh uh often uh I said it on the prepared remarks, I'll say it again. Now is consistent execution on the plan we presented and we are highly confident in our ability to do that. And Nick you mentioned the extension of the 45z credit which is of course positive

I think we're likely to, to the words. The approach we've taken thus far. We think investors have valued the transparency, we've provided by putting it outside of our base, operating earnings. Um, and that gives them an opportunity to independently value that, uh, without us lumping it together. So I think most likely you'll continue to see us. Take that approach. We haven't made a final decision on that, but I think that's where we're

we're biasing at this point.

Hey, that all makes a lot of sense. I appreciate those comments and, uh, have a great weekend. Thanks.

Thanks Nick.

Our next question.

Is open.

Hey good morning thanks so much for taking my question. Um maybe just to start on on CV out just any color on on the reason for the pjm delay in terms of the cost update for any network upgrades. And then I think the language on the slides was at the earliest September. Just is there any deadlines that we should be thinking about in terms of when uh when they have to provide that update to you? Thanks.

Yeah, thanks, uh, Carly. Um, look, I don't think it's, uh, news to anyone listening in that PJM's got a lot going on these days. Um, so, uh, I wouldn't read anything more into it than that. As we said in our prepared remarks, uh, we don't expect any change, uh, that would be anywhere near the magnitude of what we experienced in February.

Uh, and there's no sort of regulatory or statutory deadline for PJM. They just need to get through the work and do the modeling, and that's what they're doing right now.

Shifting to the biennial, I guess, any views, um, on staff recommendation, and any indication of what the issues um will, which issues will be in focus for Dominion as we kind of head into company rebuttals in a couple weeks here.

Yeah. Well, um, as we noted in the prepared remarks, you know, the biggest um, sort of headline, number isn't a dispute. Uh, so that won't take very long to resolve that's the, uh, capacity expense that, um, you know, that changed after we filed the case. So we presented, uh, the impacts of, uh, what happens with the Shapiro settlement, which was then approved. So, uh, that that's not going to be an issue, but the rest is the sort of, normal course, kind of things that you would expect. In a regulatory preceding, what's the appropriate Roe? Uh, our um, certain onm costs appropriate or not. We have, um, certainty on some of the capital spend, um, which we do so I, you know it. It's um, I I said before we filed the case, uh that I didn't think there was going to be anything exotic. Uh, there isn't anything exotic? Um, so we'll have the hearing starting next month after we file our

Rebuttal testimony later this month? Uh, we’ll move through those issues, but uh, nothing unusual.

Great. Very clear. Thanks so much.

Our next question comes from Jeremy Tonin with JP Morgan. Your line is open.

Hey, good morning. This is actually Diana on for Jeremy.

Yeah, I was thinking he didn't sound exactly like Jeremy. So how are you not quite doing well? Thanks, um, hope you are too.

so it was wondering how you think about impacts from the obb across Dominion, um, and then I'll have to follow up maybe

I'll take that 1. Um,

we're we're quite pleased with where what we've come to refer to as ob3, which is a little bit of a Star Wars sounding name. Uh, we're quite pleased with how it will be 3 land. And if you think about when you think about legislators rewriting the tax code, there's a lot of things that could potentially move against you and, uh, on the whole, I think it's been quite positive. Um, the area that we and I think others are very focused on, of course, is eligibility for tax credits. And we're confident, we can preserve all of the credits that we've provided in our forecast to investors, either through safe harboring or under long-standing rules. I think of some of our peers of described or because they're simply not impacted. So, for instance, the coastal Virginia offshore wind project,

It is not impacted many of our clean energy solar filings, or effectively not impacted. When you look at the total tax credits that we've provided in the Q4 disclosures.

There's really only about 20 to 25% that sort of require some active mitigation. And as I mentioned, we expect to be able to achieve that and have plans to do that. And just keep in mind, these are regulated projects. So we actually have a requirement under Virginia state law to build those projects. We're we're so very focused on customer affordability. We're going to leave no stone unturned, to make sure that we take advantage of everything, we possibly can to make sure that that that benefit passes through to our customers.

Got it. Thank you. Um and like as a regards to those those plans to Safe Harbor. Um, would you pull forward any projects to potentially do that?

We wouldn't, we wouldn't likely pull forward the inservice dates, but as normal course, goes with safe harboring. We're generally actively involved and working and spending capital on many of the projects that are through our Pro, our projections of 2029.

so it doesn't much of our mitigation doesn't require anything particularly out of the ordinary for us and it wouldn't necessarily include bringing uh CDs up

Okay, great. Thank you very much.

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We'll pause for just a moment to allow questions to queue.

Well, uh, it doesn't appear. We have other questions in the queue, so this, um, thanks everyone for taking the time to join our call today. Enjoy the rest of your day.

The conference has now concluded, thank you for attending today's presentation. You may now disconnect