Detailed Narrative
Coastal Virginia Offshore Wind (CVOW) Project Update
The CVOW project is 50% complete and remains on schedule for completion in 2026, providing 2.6 GW of supply to Virginia's grid. The total project cost has been updated to $10.7 billion, an increase of $900 million from the original $9.8 billion, primarily due to higher PJM network upgrade costs. Of this increase, 80% ($700 million) is expected to be recovered via rider, and 50% of the non-recoverable portion will be borne by Stonepeak. Construction milestones include 116 monopiles delivered, 91 transition pieces completed, and the Charybdis vessel is 96% complete with sea trials underway for Q3 2025 delivery.
Unprecedented Data Center Demand in Virginia
Virginia continues to host the world's largest data center concentration, with approximately 450 data centers connected, representing nearly 9 GW of capacity and 26% of total sales for Dominion Energy Virginia (DEV). The PJM DOM zone's peak summer load forecast for 2034 has increased by nearly 60% to 41.5 GW (from 26.1 GW in 2022). Dominion Energy now has approximately 40 GW of data center demand in various stages of contracting as of December 2024, an 88% increase since July 2024, with 26 GW in the substation engineering LOA stage.
Expanded Capital Investment Plan and Financing Strategy
The 5-year capital forecast for 2025-2029 has been updated to $50 billion, a 16% increase from prior guidance. Approximately 80% of this increase is allocated to DEV for transmission, distribution, and nuclear subsequent license renewal spend, with 60% eligible for recovery under rider mechanisms. The company plans to modestly increase external financing across debt, hybrid, and equity issuance. For 2025, $600 million in equity has been sold via ATM, with an additional $200 million expected from DRIP programs and $300 million from ATM to satisfy the balance.
Balance Sheet Conservatism and Credit Targets
Dominion Energy remains committed to balance sheet conservatism, targeting parent leverage consistently below 30% and FFO to debt of approximately 15% through the 5-year plan. The company aims for mid-BBB range credit ratings for its parent company and single-A range ratings for its regulated operating companies. These targets are crucial for maintaining a low cost of capital for customers and reflect a consistent focus on financial stability.
Regulatory Environment and South Carolina Challenges
The company achieved positive regulatory outcomes in South Carolina and North Carolina base rate cases, as well as Virginia rider cases. However, management highlighted that the regulatory framework for DESC (Dominion Energy South Carolina) creates regulatory lag, making it challenging to earn its allowed return. This results in an estimated 100-200 basis points of under-earning during the rate case cycle, a point of focus in discussions with South Carolina stakeholders.
Millstone Nuclear Power Station Outlook
Millstone performed well in 2024 with a 92% capacity factor, providing over 90% of Connecticut's carbon-free electricity. While 55% of its output is under fixed-price contract through late 2029, the remaining output is derisked by hedging programs. The company is evaluating opportunities for incremental data center activity and engaging with parties in New England regarding legislative activity aimed at authorizing future nuclear power procurements, emphasizing collaboration with Connecticut stakeholders.