Dominion Energy Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 1, 2025

Key Takeaways

  • Dominion reported Q1 operating earnings of $0.93 per share, beat expectations and reaffirmed full-year 2025 guidance of $3.28–$3.52 per share (midpoint $3.40).
  • The Coastal Virginia Offshore Wind project is 55% complete, remains on schedule for first power in early 2026 with full completion by end-2026, and maintains a $222 million contingency with cost-sharing mechanisms to limit customer and shareholder exposure to tariff impacts.
  • Data center demand continues to be robust with ~40 GW of capacity in the pipeline (10 GW contracted), and no signs of slowing from hyperscalers or enterprise customers in Dominion’s service territory.
  • A fatality occurred on March 31 at Water East Station in South Carolina, underscoring ongoing safety challenges despite the company’s zero-injury goal.
  • Dominion filed for its first Virginia base rate increase since 1992, proposing a new rate class for large energy users with 14-year minimum demand contracts to protect other customers from under-recovery risks.
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Earnings Conference Call
Dominion Energy Q1 2025
00:00 / 00:00

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Operator

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.

David McFarland
David McFarland
VP of Investor Relations and Treasurer at Dominion Energy

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.

David McFarland
David McFarland
VP of Investor Relations and Treasurer at Dominion Energy

Joining today's call are Bob Blue, Chair, President and Chief Executive Officer, Steven 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 Steven.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

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.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

As shown on slide three, we're off to a strong start to the year with first quarter operating earnings of $0.93 per share, which includes $0.03 of better than normal weather, $0.02 of RNG 45Z income, $0.02 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 GAAP results were $0.75 per share. We are affirming all financial guidance provided on our fourth quarter earnings call, including 2025 operating earnings per share of $3.28-$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 GAAP results is included in Schedule 2 of the earnings release kit.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

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 four, we have 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.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

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.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Thank you, Steven. Turning to safety performance, our Dominion Energy family experienced tragedy on March 31 when Ryan Barwick, a material fuel handler at Wateree 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.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

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 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. Finally, it's supported by Virginia law and approved by the State Corporation Commission and federal agencies.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

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 six, 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 31. 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.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

The first offshore substation was installed on March 10, 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.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

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 as 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.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

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.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

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 Stonepeak. 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 cents a month over the life of the project. The updated project LCOE of $62 per megawatt hour, inclusive of RECs, continues to benchmark very favorably with new generation alternatives, including solar, battery, and gas-fired generation. Let me be clear. CVOW remains one of the most affordable sources of energy for our customers.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

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 cost. Protections include a 14-year contract commitment to pay for their requested power even if they use less than requested.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

This is consistent with the concerns and recommendations expressed in the JLARC 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 3, 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 1 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.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

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 Millstone, 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've continued to engage with multiple parties there to find the best value for Millstone.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

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 1. 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 has 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.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

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 Steven, 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 Steven 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 are 100% focused on execution. We remain committed to delivering reliable and affordable power for our customers. With that, we are ready to take your questions.

Operator

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 one key on your touchtone phone now. If at any time you would like to remove yourself from the question queue, please press star and two. Again, to ask a question at this time, please press star and one now. We'll take our first question from Nick Campanella with Barclays. Please go ahead. Your line is open.

Nicholas Campanella
Nicholas Campanella
Senior Equity Research Analyst at Barclays

Hey, morning. Thanks for taking my questions. Appreciate all the disclosures.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Morning, Nick.

Nicholas Campanella
Nicholas Campanella
Senior Equity Research Analyst at Barclays

Morning. Hey, I appreciate all the disclosure you kind of given on the CVOW project, especially as it kind of relates to tariffs.

Nicholas Campanella
Nicholas Campanella
Senior Equity Research Analyst at Barclays

As it relates to the turbines and your suppliers, is there anything that you can kind of shed light on in terms of your conversation with them that this tariff backdrop is not going to impact their ability to kind of deliver for you, whether it's in your own conversations or just the delivery dates? I know that you kind of highlighted that Siemens is making a lot of progress, but maybe you can kind of just expand on your overall confidence level there. Thanks.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Yeah, I'll offer a couple of thoughts. If Diane wants to add in, she should. She was over there just recently, and she promised she would actually answer all the questions today on our last earnings call. Our conversations with our suppliers are that they're all performing extremely well.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

The ones who are most recently started, the one who has most recently started is Siemens Gamesa, and they are hitting their marks. They started on time. They are producing at the pace that we expected. We feel very, very confident about our ability to get the materials, the components that we need. We have disclosed what the tariff impacts would be based on current tariff policy. There is really no change to anything in terms of delivery schedules or ability.

Diane Leopold
Diane Leopold
EVP and COO at Dominion Energy

The only thing that I would add, all of the raw materials are already purchased. Everything is in fabrication right now. As Bob talked about, the Siemens Gamesa, which is the most recent equipment that is entering into fabrication, is actually a little bit ahead of schedule. The team, including myself, were in all of those facilities, the nacelles, the blades, all of them two weeks ago.

Diane Leopold
Diane Leopold
EVP and COO at Dominion Energy

Everything is heading either on track or a little bit ahead of schedule. Deliveries are going to proceed in the coming weeks.

Nicholas Campanella
Nicholas Campanella
Senior Equity Research Analyst at Barclays

Okay, great. That is helpful. Just in terms of the monopiles, my understanding is that the season starts today. Just any update on whether you would be kind of kicking that off immediately and what type of run rate you would expect through the next few months here for monopile installations?

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Yes. Today is the beginning of monopile installation season, and we are starting today. Just to offer a little context, if you think about the last four months, we have installed 60 transition pieces, an offshore substation, and the jacket that supports it, deep water export cable. Restarting monopile installation today is simply a continuation of the steady offshore progress we have been making since the project began.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

In terms of run rate, I think we've talked before about the fact that we hit a pace once we sort of got the initial work done last monopile season. We hit a pace of about 25 a month. That's a pace we ought to be able to continue. Everything's weather-dependent, obviously, but that pace is quite achievable.

Nicholas Campanella
Nicholas Campanella
Senior Equity Research Analyst at Barclays

Okay, great. And Diane, congrats on your retirement. Thanks so much.

Diane Leopold
Diane Leopold
EVP and COO at Dominion Energy

Thanks. Appreciate that.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Thanks, Nick.

Operator

We'll take our next question from James Kennedy with Guggenheim Partners. Please go ahead. Your line is open.

James Kennedy
VP at Guggenheim Partners

Hey, guys. Good morning.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Hey, James.

James Kennedy
VP at Guggenheim Partners

Just kind of continuing with the CVOW, I just wanted to ask more specifically maybe on the permitting backdrop. I guess, have you had any conversations or interactions at the state or federal levels that give you a little bit more incremental comfort following the Empire Wind order?

James Kennedy
VP at Guggenheim Partners

Just any more color on the permitting side. Thank you.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Yeah. I mean, James, our interactions with the agencies have continued the same way they have been for months. With a project of this, we're fully permitted, as you know. But with a project of this size, we check in regularly with agencies. We've continued those conversations with them. For the reasons that we outline in our prepared remarks, we feel very comfortable that this project is going to continue moving forward.

James Kennedy
VP at Guggenheim Partners

Okay. If there were a stop work order, can you give us a general rule of thumb on a daily standby or demobilization cost?

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Yeah. I think that's a very important question. Appreciate you asking. We'd have to evaluate the specific facts and circumstances at the time. I can't speak to those because I don't know what they are.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

If it happened, we would be very transparent in addressing them. We do not think it is going to be paused for all the reasons I gave in the prepared remarks. It is the fastest way to get 2.6 gigawatts on the grid to serve tech companies, defense, and security installations, important American industries like shipbuilding. It is employing 2,000 people. Stopping it would cause energy inflation. It is specifically authorized by Virginia law. It has bipartisan support in Virginia, particularly the Hampton Roads congressional delegation. It really does not make sense to talk about numbers for a pause or delay. That said, these are prudently made investments. Utilities are entitled to recover prudently incurred costs. That is certainly true here, subject to the cost-sharing and the SEC order, obviously.

James Kennedy
VP at Guggenheim Partners

Okay. Perfect. Then just on the tariff scheme itself, the plan has some solar and storage spend as well. I guess just any kind of color as you're thinking about the tariff impacts there and spend profile, any changes. Thanks.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Yeah. I mean, as we think about tariffs across our business, the impacts we're seeing are manageable. We've worked on our supply chain for some time. We have most of our suppliers or the vast majority of the materials that we procure are directly from U.S. suppliers. That is certainly true with our solar procurement. We've had for some time an effort to diversify our supply chain and drive supply chain resilience. A chunk of that would have come out of COVID as we started thinking about that. We think about increasing inventory and ordering thresholds to address longer lead times, ensure that we have multiple sources of supply where it's appropriate.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

We have been placing some orders ahead of tariff-effective dates to mitigate cost increases where it's possible. Those actions have enabled us to avoid some of the impacts. Obviously, our first objective is to avoid impact and keep costs for customers low. We find tariff costs generally across the business to be manageable.

James Kennedy
VP at Guggenheim Partners

Excellent. Thanks, guys. Congrats to Diane as well.

James Kennedy
VP at Guggenheim Partners

We'll take our next question from Steve Fleishman with Wolfe Research. Please go ahead. Your line is open.

Steve Fleishman
Steve Fleishman
Managing Director and Senior Analyst at Wolfe Research

Yeah, sure. Thanks. I'll echo, congrats to Diane. Job really well done. Tom, sorry. No more sneaking junk food during the day.

Diane Leopold
Diane Leopold
EVP and COO at Dominion Energy

Thanks, Steve.

Steve Fleishman
Steve Fleishman
Managing Director and Senior Analyst at Wolfe Research

Just on the, I guess, first on the tariffs, just so we know in case they change, are you, is the contracts basically shifting most of the tariff basically to you?

Steve Fleishman
Steve Fleishman
Managing Director and Senior Analyst at Wolfe Research

If they go higher or they go lower, we can kind of try to gauge the impact. Is that kind of how generally the contracts work?

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Yeah, that's a fair characterization, Steve.

Steve Fleishman
Steve Fleishman
Managing Director and Senior Analyst at Wolfe Research

Okay. Maybe just also, I know it's kind of governor election year. Has any electric topics, kind of including CVOW, kind of been in the political spectrum at all from either side as part of that?

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

No. No, there has not been in the gubernatorial race thus far a discussion of CVOW or wind generally. I will say that the lieutenant governor, who is the Republican nominee, was at our event, I don't know, a year and a half, two years ago when the first monopile arrived in Tidewater at the port. The Democratic nominee, former Congresswoman Abigail Spanberger, who has been supportive of offshore wind as well.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

But it hasn't been a topic in the conversation.

Steve Fleishman
Steve Fleishman
Managing Director and Senior Analyst at Wolfe Research

Okay. I noticed on Chesterfield, the approval of the gas plant, that's $1.5 billion for a gigawatt plant, which is starting to look quite cheap right now. I just want to make sure that's a good number.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Yes, that's a good number.

Steve Fleishman
Steve Fleishman
Managing Director and Senior Analyst at Wolfe Research

Okay. All right. That's it for me. Thank you.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

Thanks, Steve.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Thanks, Steve.

Operator

We'll take our next question from David Arcaro with Morgan Stanley. Please go ahead. Your line is open.

David Arcaro
David Arcaro
Executive Director at Morgan Stanley

Hi. Thanks. Good morning.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

Good morning.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Hey, David.

David Arcaro
David Arcaro
Executive Director at Morgan Stanley

Wondering if you could just give maybe a little bit more color on what you're seeing in terms of data center demand. You mentioned that it has kind of continued from last quarter. Just what is the interest level from hyperscalers?

David Arcaro
David Arcaro
Executive Director at Morgan Stanley

Any sense of just the scale and how far out, I guess, are these customers planning and looking to locate in your service territory?

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Yeah, the demand remains very high, David. I would say that really no change from what we talked about on the last call. We've got a real focus in our service territory on sort of traditional cloud and inference demand from data centers, and there's no letup in their interest. I guess the way I would characterize the timing is, as has been the case really since we started working with data center customers over a decade ago, giving us the most experience with those customers of anybody in the industry, they want to go fast. They always want to go fast. That's their business. It's always been their business. We've been effective at serving them.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Thus far, don't see any reason why that's going to change in the future.

David Arcaro
David Arcaro
Executive Director at Morgan Stanley

Yep. Got it. And these are in their, I guess, planning out well into the 2030s at this point too, just in terms of the megawatts that they're planning and the expansions over time?

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Yeah, absolutely. I mean, if you look at just what they'd be ramping into from what they've already committed to, it takes you to that time frame.

David Arcaro
David Arcaro
Executive Director at Morgan Stanley

Yep. Absolutely. Then separately, just was curious, is there any progress or any further clarity around the Millstone and the potential contracting opportunities there?

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Yeah, no real news on Millstone, as we mentioned in the prepared remarks. Rhode Island, there's been legislative activity in Rhode Island. There is interest. We don't have an update on timing of when we might take some action with respect to Millstone.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

As you know, the current contract for 55% of the output goes through August of 2029. We'll continue to work through that, but no news to report today.

David Arcaro
David Arcaro
Executive Director at Morgan Stanley

Okay, great. Thanks so much.

Operator

We'll take our next question from Carly Davenport with Goldman Sachs. Please go ahead. Your line is open.

Carly Davenport
Carly Davenport
VP at Goldman Sachs

Hey, good morning. Thanks for taking the questions. Maybe just a quick one on the biennial filing you referenced before, the special rate structure proposed for high energy users. Can you just talk a little bit about that structure and just sort of based on your conversations with data center customers over time on the terms of an agreement, if you feel like that sort of reflects customer appetite in terms of the term length and some of the other specifics?

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Yeah. You're talking about the 14-year contract term?

Carly Davenport
Carly Davenport
VP at Goldman Sachs

Yep, exactly.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Yeah. Broadly, what the filing does is it creates a new rate class for customers with either measured or contracted demand of 25 megawatts or greater and either measured or expected load factor of at least 75%. That is about 139 customers, about 131 data centers within that. The focus of that class is on minimum demand charges. The higher of either contracted or actual usage, the minimum demand charge would be 80% for transmission distribution, 60% for generation. For new customers, that would be the 14-year contract period. It is a four-year ramp schedule into that. This is just to provide transparency and clarity around those customers, ensuring that addressing the thoughts around ensuring that they are paying their fair share and to reduce the risks of stranded assets.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

We've already had provisions in place for a lot of that, but this enhances them. We've talked with the data center customers. We talked with them in preparing this proposed new tariff. I'm sure there will be further conversations during the case. I think I can say confidently they understand what we're looking to accomplish here, and the conversations have been very constructive. Great. Appreciate that color. Maybe just a quick follow-up on the earlier question just on your conversations with data center customers. Are you seeing any change in tone or concern just around the broader economic uncertainty that we've seen and any sort of pause, perhaps, in some of the new projects that you're expecting to move forward? The short answer to that question is no. We're seeing continued appetite for additional data center capacity in our service territory.

Carly Davenport
Carly Davenport
VP at Goldman Sachs

Great. Thank you for the time.

Operator

We'll take our next question from Anthony Crowdell with Mizuho. Please go ahead. Your line is open.

Anthony Crowdell
Anthony Crowdell
Managing Director at Mizuho

Hey, good morning, team. Just two quick questions. One, I think slide 20, residential sales, look soft this first quarter. Just want to know if you could provide some clarity around that, and then I have a follow-up.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

Hey, Anthony. It's Steve. Yeah, overall, our LTM Q1 sales have been very good for us. It's trending slightly higher than our annual guidance, largely driven by really strong sales across the commercial segment, which includes data centers, but also other commercial customers. We don't think that the slight weakness in residential is going to continue for the rest of the year. We'll watch that pretty carefully. Overall, I think we're actually really happy with the direction sales are going. We'll provide additional information on that as we get through more quarters.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

Overall, I think the sales picture for our service territories continues to look really strong.

Anthony Crowdell
Anthony Crowdell
Managing Director at Mizuho

Great. If I could follow up on Carly's question on the biennial review, particularly with the request of the new tariff for the large load customers, you guys have clearly gone through multiple biennial reviews. Is this making approval this maybe more complicated by introducing a new tariff or from all your meetings prior to filing and talking to the parties that maybe even helping it out, getting the tariff approved?

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

I think it'd be hard to say it's either helping it out or making it more complicated. The focus on rate classes and cross-subsidies among rate classes is something that has happened since the beginning of rate cases. Not a surprise, I don't think, that it would be in this case.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

I would not say that it really affects the nature of the ability to resolve this case one way or the other.

Anthony Crowdell
Anthony Crowdell
Managing Director at Mizuho

Great. Thanks for taking my questions.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

Thanks, Anthony.

Operator

We will take our next question from Durgesh Chopra with Evercore ISI. Please go ahead. Your line is open.

Durgesh Chopra
Durgesh Chopra
Analyst at Evercore ISI

Hey, good morning, team. Thank you for giving me time. And my prayers also to Ryan's family. Very sad to hear about that incident. Just quickly, Steve, 2025 first quarter EPS came in materially above our expectations. You mentioned some commentary around enough conservatism in the guidance. Just kind of thinking through how the first quarter earnings tracked versus your own expectations for the rest of the year.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

Yeah. Yeah. That is a really good question. I would say very modestly above where we were expecting. Certainly, we did not have $0.03 of weather baked in.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

We also did not have $0.02 of better-than-expected sales baked in, which gets back a little bit to Anthony's question about overall trending for sales growth. I would point folks to schedule four where we give a quarter-over-quarter growth reconciliation. Let me spend just a second walking through sort of the key drivers. We were at $0.55 in Q1 2024. Obviously, that was before we had completed the entire business review, but a lot of it was clean. Since then, relative to that quarter, we had about $0.08 of weather help. I mentioned $0.03 of better than normal. We also significantly underperformed weather during the first quarter of 2024. That is on the schedule. I mentioned sales. We have done about $0.04 better on sales.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

We had about $0.05 of help this quarter from rate cases that occurred later in the year of 2024, so it would not have been captured in the first quarter. Net-net, we had about $0.08 of regulatory rider investment growth. The reason I say net-net is because it will show up as $0.16, but we sold half of that growth under the non-controlling interest on CVOW to Stone Peak. Net is $0.08 help there. We had about $0.08 of interest expense help. That is largely the impact of debt repayment, the full sort of force of the debt repayment from the majority of the business review asset sales. There is about $0.06 of tax help quarter over quarter. Two of that has to do with the production tax credit for our nuclear sales. That is just shaping.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

Two of it had to do with RNG 45Z, which we didn't have last year. Two of it had to do with a small South Carolina tax matter. There was a resolution in a court case that we ultimately hadn't budgeted. That was a little bit of an unanticipated help as well. You net all that, and there's about negative 1 cent of miscellaneous items in there. I'd say, again, weather sales, a little better than we expected. We've gotten some timing on tax and O&M that I think will normalize through the rest of the year. We're staking right now with our original guidance range, targeting that midpoint of $3.40. If we get to the point in the future where we feel like we should revise that, we'll go ahead and do that.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

For now, early in the year, off to a good start, we're very focused on hitting those numbers. To the extent we have an opportunity to de-risk future years as a result of strong 2025 performance, we would think about doing that as well. We'll have more information as we work through the year, but feeling really good about the plan.

Durgesh Chopra
Durgesh Chopra
Analyst at Evercore ISI

Thanks, Steve. That was very thorough. Sounds like modestly ahead of your expectations. All right. Diane, we'll miss you on the field trip, Diane. Good luck to you.

Diane Leopold
Diane Leopold
EVP and COO at Dominion Energy

Thanks. I'll miss it too.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

Thanks for the gas.

Operator

We'll take our next question from Jeremy Tonet with JPMorgan. Please go ahead. Your line is open.

Jeremy Tonet
Jeremy Tonet
Managing Director and Research Analyst at JPMorgan

Hi. Good morning.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

Morning, Jeremy.

Jeremy Tonet
Jeremy Tonet
Managing Director and Research Analyst at JPMorgan

And Diane, echo the comments before me. Wish you well in retirement here.

Diane Leopold
Diane Leopold
EVP and COO at Dominion Energy

Thanks, Jeremy.

Jeremy Tonet
Jeremy Tonet
Managing Director and Research Analyst at JPMorgan

Maybe just starting off, if you could provide any updates on the outlook for PJM finalizing network cost upgrades. Just wondering if there's any thoughts whether tariffs or general inflation might drive upward cost pressures here.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Yeah. On the PJM network upgrades, that specific you're asking? Yeah. I wouldn't expect to see that. We don't have additional information beyond what we provided on the last call. As we said then, we had better information than we did before, but not perfect. That continues to be true now. We'll get the final number in July, and we certainly don't expect it to be either up or down in the magnitude that the shift was the last time. We'll know more in July.

Jeremy Tonet
Jeremy Tonet
Managing Director and Research Analyst at JPMorgan

Got it. Thank you for that. Transferability has been a big focus in the market, whether it's repealed and has impact on plans.

Jeremy Tonet
Jeremy Tonet
Managing Director and Research Analyst at JPMorgan

Is there any thoughts that you could share there?

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

Yeah. Jeremy, at the risk of being too thorough in my response, let me give a little color there. Our plan has, on average, from 2025 through 2029, on average about $175 million of transferred tax credits each year. What really tips us into transferability are the PTCs generated by our share of the offshore wind project. I guess the silver lining with that is that to the extent there were a change in transferability, that makes tax equity a reasonably efficient way of replacing sort of the time value of those tax credits. We feel pretty good about where we're positioned on that. I feel like if there were a change, we'd have a pretty effective mitigant, but something we're watching pretty carefully too.

Jeremy Tonet
Jeremy Tonet
Managing Director and Research Analyst at JPMorgan

Got it. Thank you very much.

Jeremy Tonet
Jeremy Tonet
Managing Director and Research Analyst at JPMorgan

One last one, if I could, just with regards to thinking about the ATM with regards to de-risking 2026 equity needs possibly earlier in 2025.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

Yeah. We've been aggressive with our financing plan in 2025 to take capital raising off the table in a pretty significant way. You can see that from the financing plan. That was the philosophy behind the ATM, is getting in front of it at a pretty attractive price. Without giving sort of specific guidance, it's absolutely something we would continue to think about, is opportunistically finding ways to de-risk future financing. That could include getting into the market for ATM that would be settled at the end of 2026, for instance. Sooner rather than later, that's an option available to us. It's nice. Yeah, your point's well taken. We'll take those steps opportunistically as the market warrants.

Jeremy Tonet
Jeremy Tonet
Managing Director and Research Analyst at JPMorgan

Got it. Thank you for that. I'll leave it there.

Steven Ridge
Steven Ridge
EVP and CFO at Dominion Energy

Thanks.

Operator

This concludes our question-and-answer session. I will turn the call back to Bob Blue for closing remarks.

Bob Blue
Bob Blue
Chair, President, and CEO at Dominion Energy

Thanks, everybody, for taking the time to join the call today and enjoy the rest of your day.

Operator

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

Executives
    • Diane Leopold
      Diane Leopold
      EVP and COO
    • Steven Ridge
      Steven Ridge
      EVP and CFO
    • Bob Blue
      Bob Blue
      Chair, President, and CEO
    • David McFarland
      David McFarland
      VP of Investor Relations and Treasurer
Analysts
    • Anthony Crowdell
      Managing Director at Mizuho
    • James Kennedy
      VP at Guggenheim Partners
    • Steve Fleishman
      Managing Director and Senior Analyst at Wolfe Research
    • Nicholas Campanella
      Senior Equity Research Analyst at Barclays
    • David Arcaro
      Executive Director at Morgan Stanley
    • Durgesh Chopra
      Analyst at Evercore ISI
    • Jeremy Tonet
      Managing Director and Research Analyst at JPMorgan
    • Carly Davenport
      VP at Goldman Sachs
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