Dominion Energy Q4 2021 Earnings Call Transcript

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Provided by Quartr
February 11, 2022

There are 10 speakers on the call.

Operator

Welcome to

Speaker 1

the Dominion Energy 4th Quarter and Full Year 2021 Earnings Conference Call. I would now like to turn the call over to David Farland, Director, Investor Relations.

Speaker 2

Good morning, and thank you for joining today's call. Earnings materials, including today's prepared remarks, may contain forward looking statements and estimates that are subject to various risks and uncertainties. Please refer to our SEC filings, including our most recent annual reports on Form 10 ks 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.

Speaker 2

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 Jim Chapman, Executive Vice President, Chief Financial Officer and Treasurer and other members of the executive management team. I will now turn the call over to Bob.

Speaker 3

Thank you, David, and good morning, everyone. I'll start by outlining Dominion Energy's compelling shareholder return proposition. We expect to grow our earnings per share by 6.5% Per year through at least 2026, supported by our updated $37,000,000,000 5 year growth capital program, resulting in an approximately 10% total return. That's all underpinned by Dominion's industry leading ESG profile, which includes the largest regulated decarbonization investment opportunity in the country, which as you will hear in today's prepared remarks, is time, we are steadily transforming from opportunity to reality. Our strategy is anchored on a pure play state regulated utility operating profile that centers around 5 premier states, as shown on Slide 4, all share the philosophy that a common sense approach to energy policy and regulation Put some priority on safety, reliability, affordability and sustainability.

Speaker 3

Next, I want to highlight what a successful year 2021 was the continuing execution of our strategy. For example, we continue to provide safe, reliable service to our customers, Ensuring that safety remains our top priority when it comes to our employees, our customers and our communities. We reported our 24th consecutive quarterly financial result that normalized for weather meets or exceeds the midpoint of our guidance range, A reflection of our focus on continuing to provide consistent and predictable financial results. We successfully concluded substantial rate cases in Virginia, South Carolina and North Carolina, in each case demonstrating our ability to deliver constructive regulatory results for both our customers and our shareholders In these fast growing premier and business friendly states. And we significantly advanced our clean energy growth plans on a number of fronts.

Speaker 3

For instance, we received our notice of intent from BOEM for our regulated offshore wind project in July as planned and filed our rider application with the Virginia State Corporation Commission on schedule in November. And we proposed new solar and energy storage projects and our 2nd annual clean energy filing in Virginia, the largest such group ever proposed. Looking ahead, we've rolled forward our 5 year growth capital plan to capture the years 2022 through 2026. We now expect to invest $37,000,000,000 on behalf of our customers. The investment programs are highlighted on Slide 5, with over 85% focused on decarbonization.

Speaker 3

As meaningful as these near term plans are, consider on Slide 6 how they compare to the long term scope and duration We now project $73,000,000,000 of green investment opportunity through 2,035, nearly all of which With that, I'll turn it over to Jim to walk through our financial results and guidance before I provide further business updates on the execution of our plan.

Speaker 4

Thank you, Bob, and good morning. Our Q4 2021 operating earnings, as shown on Slide 7, were $0.90 per share, Which included a $0.03 hurt from worse than normal weather in our utility service territories for the quarter. Weather normalized results were again above the midpoint of our quarterly guidance range. Positive factors as compared to last year include growth From regulated investment across electric and gas utility programs, higher electric sales due to increased usage from commercial and industrial segments and higher margins at contracted assets. Other factors as compared to the prior year include a slight catch up in COVID deferred O and M and weather.

Speaker 4

As Bob mentioned, this is our 24th consecutive quarter, so 6 years now of delivering weather normal quarterly results this meet or exceed the midpoint of our guidance ranges, we believe this historic consistency across our results is worth highlighting And as a track record, we are proud of and one which we are absolutely focused on extending. Full year 2021 operating earnings per year, we're $3.86 above the midpoint of our guidance range even in the face of a $0.05 hurt from weather for the year. As is detailed in Schedule 2 of our earnings release kit, 2021 GAAP earnings of $3.98 per share were $0.12 higher than Operating earnings for the year. Turning now to guidance on Slide 9. As usual, we're providing an annual guidance range, which is designed primarily to account for variations from normal weather.

Speaker 4

We're initiating 2022 operating EPS guidance of $3.95 to $4.25 per share. The midpoint of this range is in line with prior annual EPS growth guidance of 6.5% in 2022 When measured midpoint to midpoint. As I think has been expected as part of our roll forward to a new 5 year forecast period, We are once again extending our long term growth rate by 1 more year. We now expect operating EPS to grow at 6.5% per year through at least 2026. Finally, we expect Q1 2022 operating earnings per share to be between $1.10 1.25 Positive drivers for the quarter as compared to last year are expected to be normal course regulated rider growth, continued modest strengthening of sales and return to normal weather.

Speaker 4

Other drivers as compared to last year are expected to be O and M and tax timing. We expect our 2022 full year dividend to be $2.67 reflecting our target payout ratio of approximately 65%. We're also extending the long term dividend per share growth rate of 6% per year through 2026. Slide 10 provides a breakdown of 5 year growth capital plan, which Bob introduced. For more detail on all of this, I would point to the very comprehensive appendix materials.

Speaker 4

But just a couple of items I'll note here. We continue to forecast a total 5 year rate base CAGR of 9%, Broken out here by segment and major driver and over 75% of this planned growth CapEx is eligible for rider recovery. Of course, capital investors and underwriters allows for timely recovery of prudently incurred investments and costs. Turning to Slide 11, we've updated our financing plan, which reflects a combination of internally generated cash flow and debt issuances to fund the majority of our growth and maintenance CapEx. Our plan assumes we issue programmatic equity 1% to 1.5% of our current market cap annually through our existing DRIP and ATM Equity Programs in line with prior guidance.

Speaker 4

No change to our 2022 equity issuance plans and no block or market equity is contemplated. We view this level of steady equity issuance under existing programs as prudent, EPS accretive And in the context of our sizable growth capital spending program appropriate to keep our consolidated credit metrics within the guidelines for our strong credit ratings category. To that point, as shown on Slide 12, our consolidated credit metrics have remained steady And our pension plans have increased their funded status. We're very proud of these results. We continue to target high BBB range credit ratings for our parent company and A range ratings for our regulated operating companies.

Speaker 4

Our long standing focus on achieving and maintaining these ratings is important for our ability to continue to secure low cost capital for our customers. As is the norm, our financing plan reflects our ongoing efforts to efficiently redeploy capital towards a robust regulated growth programs, as I've mentioned in the past, as part of our capital allocation process, we undertake constant analysis To find the most efficient sources of capital to fund our attractive utility growth programs in our key states, All while maintaining our operating EPS growth and credit profiles. Given that focus, As announced this morning, we've agreed to sell our West Virginia natural gas utility, Hope Gas to Yulico For gross proceeds of approximately $690,000,000 The transaction is expected to close late this year, Subject to customary closing conditions, including clearance under HSR and approval from the West Virginia Public Service Commission. Proceeds will be used to reduce current level debt. The transaction value achieved through a competitive sale process Represents approximately 26 times 2021 net income and 2 times rate base.

Speaker 4

As a reminder, Hope Gas operates only in West Virginia and serves about 110,000 customers. Bob will address this transaction a bit more in a moment. Turning now to electric sales trends. 4th quarter weather normalized sales increased 1.4% year over year in Virginia and 2.3% in South Carolina. In both states, consistent with the trends seen last quarter, We've observed increased usage from commercial and industrial segments overcoming declines among residential users As the state of home impact of COVID wanes, full year 2021 weather normalized sales increased 1.4% end of the year, we expect electric sales growth in our Virginia and South Carolina service territories to continue at a run rate of 1 no changes from our prior communications.

Speaker 4

Next, let me discuss what we're seeing around input prices. As discussed on prior calls, we're continuing to monitor raw material costs across a number of the right now, we're observing higher prices, although we've seen a moderate impact in the Q2. As it relates to our regulated offshore wind project, we remain confident in our ability to deliver the project in line with our budget As outlined in our filing to the SEC in November, also no changes here from prior communications. As was disclosed at that time in November, we've entered into 5 major fixed cost agreements, which collectively represent around $7,000,000,000 of the total capital budget. Within those contracts, only about $800,000,000 stage, we remain subject to commodity indexing, most of it steel.

Speaker 4

And this component of the budget already reflects commodity cost increases and our capital budget of course includes contingency. On the solar side, we're seeing what other people what others seem to be seeing. Supply is tight, prices for certain components are up, but our 2021 projects were completed. The end of the call, we are expecting, etcetera, but it's still early. Time, we're watching, but no material financial impact to share at this time.

Speaker 4

So to summarize, time, we reported 4th quarter and full year 2021 operating EPS, which time, on a weather normal basis, our outlook for 2019 full year operating EPS guidance end of the call, we reaffirmed the same 6.5% operating EPS growth end of the call, we introduced a $37,000,000,000 organization focused 5 year growth CapEx, 9% rate based growth. Time, we continue to expect the vast majority of our spending across our segments to be in rider form. And finally, our balance sheet

Operator

is time, we are very pleased to report that we are

Speaker 4

in very good health. And with that, I'll turn it back over to you, Bob.

Speaker 3

Thanks, Jim. Starting with safety, this time, we're going to be the 2nd best performance ever. Additionally, the company was the top performer in the 2021. We take pride in our relentless focus on safety, and it's the first of our company's core values. While our safety performance relative to industry is very good, our goal has been and continues to be hurt ever.

Speaker 3

Time, our customers' highest priority is reliability. They expect their power will come on when they need it, period. In the past year, our customers in our electric service areas in Virginia, South Carolina and North Carolina had power 99.9% of the time, time, we're ready to be ready so crews can swing into action. As we did for the 1st winter storm of end of the fiscal year of 2022 that dumped well in the Northern, Central and Western regions of Virginia, interrupting service conference call, over 400,000 customers. Over 87% of those customers had service restored after 2 days to safely restore service to our communities.

Speaker 3

Our gas distribution business knows that safe and reliable service is the priority, especially when exigent circumstances exist. When an emergency notification is received, we typically have a crew on-site time, we are pleased to

Operator

announce that we are in a very strong

Speaker 3

position to be able to deliver a strong performance in the industry. Last month, we had the highest ever flow of gas at our Utah system And the highest ever daily throughput across our Ohio system, higher even than the polar core vortex of 2019. And in both cases, our service never missed a beat And our customers would never have known we were setting all time records. I'm proud, though not surprised, at the way in which our Dominion Energy team members Now I'll turn to updates around the execution of our growth plan. In Virginia, the SEC approved the comprehensive settlement agreement For our first triennial review in November, we're very pleased to be extending our track record of constructive regulatory outcomes.

Speaker 3

On top of that, we are incredibly excited about what Dominion Energy is

Operator

working on in

Speaker 3

a few minutes, nearly all of which time,

Operator

we will

Speaker 3

grow earnings under regulated rider mechanisms. Since the Virginia rider investment programs are reviewed and trued up annually,

Operator

Investor Relations, we are pleased

Speaker 3

to report that we have a strong balance sheet. We are pleased to report that we have a strong balance sheet. We are pleased to report that we

Operator

have a strong balance sheet and we are pleased to report that we have a strong balance sheet.

Speaker 3

The Dominion Energy declines to about 13% by 2026, as expected to continue to decline as a percentage the country's only fully regulated offshore wind project is very much on track. As this time, we're currently in the discovery phase. And to date, this process very much conforms with what we typically expect time, we are now considering a rider proceeding of this type. Major project milestones are listed on Slide 15. We expect to receive a final order from the FCC in August this year.

Speaker 3

A few items to reiterate here. First, this project will provide a boost to Virginia's growing greening economy By creating 100 of jobs, 100 of 1,000,000 of dollars of economic output and 1,000,000 of dollars of tax revenue for the state and localities. It will also propel Virginia closer to achieving its goal to become a major hub for the burgeoning offshore wind value chain up and down the country's East Coast. 2nd, unlike any other such project in North America, this investment is 100% regulated and eligible for rider recovery in Virginia. Finally, the VCE April, which we are confident that we time, we have already met.

Speaker 3

Our Jones Act compliant wind turbine installation vessel is being constructed and is on track for delivery in this time, we will be in late 2023 as originally scheduled. The project is currently about 43% complete. We expect the vessel will be an essential resource to DEV as well as time to support the 2024 turbine installation season. Our other clean energy filings in Virginia are also progressing well. Last month, we were very pleased to see the SEC approve Phase 2 of our grid transformation plan for projects that we plan to deploy in 20222023.

Speaker 3

These projects will facilitate the expected increase in distributed Our clean energy and nuclear rider filings remain on track. Final orders are expected later this year as outlined on Page 18. Through 2020, we have successfully reduced our enterprise wide CO2 equivalent emissions by 42%. That's great progress, but it's not enough. By 2,035, we expect to improve that reduction to between 70% 80% versus baseline on our the future means reduced reliance on coal fired generation.

Speaker 3

Back in 2005, time, we expect to be more than 1%. We show our time line for transitioning out of coal on Slide 20. By the end of the decade, as part of our time, we expect to be coal free in South Carolina and have only 2 remaining facilities at Dominion Energy Virginia time, we look forward to continuing to work with stakeholders, including the commission to drive towards an increasingly level,

Operator

we are currently in

Speaker 3

a relatively low carbon future. From an investment base perspective, which is a rough approximation of earnings time, we are pleased to report that we are pleased with our financial performance, driven by facility retirements and non coal investment. We are mindful that this shift has the potential to be disruptive to employees and communities, and we are being purposeful in our efforts To ameliorate any such negative consequences, we believe in a just transition. We have and will continue to consider the needs of impacted communities and our entire workforce during this clean energy transition. You'll also note that 0 carbon generation grows significantly, Such that by 2026, over 65% of our investment base will consist of electric wires and 0 carbon generation.

Speaker 3

Moving on to South Carolina. As part of our ongoing resource planning, Dominion Energy South Carolina planning to replace several of our older generation peaking turbines with modern, more efficient units. These peaking units, which often operate seasonally during certain times of day when the demand for energy is at its highest, play an important role in our generation fleet with their ability to go from idle to producing energy quickly. Modernizing this equipment call, we will continue to deliver the full year 2020 1 earnings conference call. At this time, we will lower fuel cost to customers, improve environmental performance and provide reliability and efficiency benefits.

Speaker 3

These will become even more important as South Carolina approved a settlement allowing us to close those sites and will hold an RFP end of the call, we will be conducting a few key priorities for a third. Turning to gas distribution. In North Carolina, the commission operations with rates based time, we will be conducting

Operator

a few key items for the Q1 of 2019.

Speaker 3

As a reminder, the agreement included 3 new clean the pilot, a new option to allow our customers to purchase RNG attributes and new and expanded energy efficiency programs. This is a prime example of the role that supportive regulation can play in meeting our decarbonization objectives. Let me now address this morning's announcement regarding the sale of our West Virginia natural gas utility to Yulico. Hope Gas is a valuable business conference call,

Operator

we are pleased to report that we have a very strong financial performance with tremendous people.

Speaker 3

At the same time, compared to the other larger state related utilities across our 5 premier states, Hope Gas is relatively small stand alone operation. Our talented employees have consistently delivered safe, reliable and affordable energy to Hope's customers. We're pleased that these best in class employees Are now joining another excellent organization in the form of Yulico, who has agreed to provide significant protections for employees and honor existing union commitments. Yulico's operating expertise and financial resources continue to receive the high level of service to which they have grown accustomed. Slide 24 provides a summary of several important steps we took in 2021 that enhanced our industry leading ESG profile.

Speaker 3

Just a couple of comments, we published our updated climate report, which included disclosure of Scope 1, 2 and 3 emissions, call, an important step as it relates to the inclusion report, which concludes our progress towards building a more diverse and inclusive workforce. As part of this report, we also published our EEO-one data. This enhanced external reporting builds upon our time, we are pleased to announce our commitment to increase our total workforce diversity by 1% each and every year. These and other year, our performance exceeds the sector average. We've been recognized as part of the leadership band by CDP for our climate

Operator

time, we are pleased to report that we are making progress on our strategy and transparency.

Speaker 3

And most recently, MSCI CI increased our rating from A to AA, which designates us a leader in this. I'm pleased to announce an expansion call, in addition to our current commitment to achieve enterprise wide net 0 Scope 1 carbon and methane emissions by 2,050, time, we now aim to achieve net 2 emissions and for scope 3 emissions associated with 3 major sources: LD Upstream Fuel and Purchase this power, these new commitments formalize our continued focus on helping our customers and suppliers decarbonize. Reducing emissions as fast as possible And achieving net 0 emissions company wide requires immediate and direct action. That's why the company continues to take meaningful steps to address Scope 3 emissions. We formalized our support for federal methane regulation, and we're working towards procurement practices that encourage enhanced disclosures by upstream counter parties on their emissions and methane reduction programs.

Speaker 3

Further, we encourage suppliers to adopt a net zero commitment, time, we've started to receive quotes for responding with our reliability, service and cost criteria for natural gas supply. For downstream emissions, we expect to increase our annual spend on energy efficiency over the next 5 years at our LDCs by nearly 50% and to provide our customers with access to a carbon calculator and carbon offsets. For example, in both Utah and North Carolina, we offer Green Therm, a voluntary program that provides customers with access

Operator

to renewable time, we are working with our shareholders and shareholders to increase our

Speaker 3

overall performance and our shareholders. While initially being offered on a voluntary basis, We are working with policymakers and regulators to increase access to RNG for our customers. And finally, we continue to pursue innovative the Hydrogen use cases, including our blending pilot in Utah, which based on early assessment confirms the ability to blend at least 5% and potentially up to 10% without adverse impacts to appliance performance, leak survey, system safety or secondary emissions call, we are pleased to report our efforts to research and develop new Technologies through collaborations such as the Low Carbon Resource Initiative, of which time, we're a founding sponsor, and we will never lose sight of our fundamental responsibility to customers, providing safe, Reliable, affordable and sustainable energy. With that, let me summarize our remarks on Slide 27. Our safety performance was our 2nd best ever.

Speaker 3

We reported our 24th consecutive quarterly result time, we are pleased to announce that we are making progress in our execution to be the most sustainable regulated time, we're now ready to take your questions.

Speaker 1

Thank you, sir. At this time, we will open the floor for questions. Thank you. Our first question will come from is Jeremy Tonet with JPMorgan.

Speaker 5

Just wanted to start off Pierre, if you could walk us off from the prior planned CapEx to today's and the impact on targeted this equity included the expected LDC sale proceeds and just wondering are there any other non core assets in the portfolio you might look to sell an asset Such as millstone for EquitySource?

Speaker 3

Hey, Jeremy, it's Bob. I'll start and then I'll turn it over Jim to I'll take the second part, turn it over to Jim to walk through the first part. Our announcement related to hope, while we Think about as we mentioned in our remarks, Hope Gas, great company. But in terms of customers, it's a quarter of the size of it made sense to us

Operator

this time, I would like

Speaker 3

to think about divesting that great company. And I think the our colleagues who work there are also going to a great company. As to the sort of broader question, We like the mix of assets that we have, and we think they support our growth rate and allow us to continue to execute, which is what we're most focused on is executing on that Strategy regulated pure play. Now like every company, we obviously regularly evaluate assets to see what makes sense the credit, earnings, accretion, all those kinds of things. But we're very comfortable that the asset mix that we have today

Speaker 4

time, I

Operator

would like to turn the call over

Speaker 4

to Steve to discuss our prepared remarks. We provided a lot of detail on our growth end of the call, we're going to have to digested all that. Yes. But I would draw attention to Page 34, time, I'll take through some of the changes. The most material single change

Operator

time, we'll be making sure that we

Speaker 4

have some of our capital programs. For example, the budget we discussed in November on offshore

Operator

end of the quarter, we expect to

Speaker 4

see a significant increase in our 5 year capital spend plan By postponement for further evaluation as we talked about in November of further out in time outside the 5 year period. So that nets to 0. And then you'll see some other drivers there, Just true ups of our capital spending across gas distribution, RNG and And then Jeremy, you asked a lot of sub parts to that question. You also asked about equity. So let me say a few things about that.

Speaker 4

I observed that we're one of few companies, there's no change in our equity guidance for 2022. There's some very modest tweaks, $100,000,000 in some years, dollars 200,000,000 in others thereafter, keeping in mind that spending is up. So equity is up, cash flow is up, debt is up a little bit. So how could that change? If spending in our 5 year plan as we move forward goes up, which would be good, these equity amount Conversely, if it goes down, which we don't expect, they go down a little bit.

Speaker 4

But we think this level of constant equity through our existing programs, as I mentioned time, I mean, it's accretive, but it's modest and appropriate to keep us in the right spot from a credit rating metric perspective.

Speaker 5

Got it. That's all very helpful there. Thank you for that. And end of the year, we expect to see the net zero commitments, a big step forward there. What are the impacts, I guess, time, I'd like to turn the call back over to Eric.

Speaker 5

And specifically, can you provide an update on your RNG plans in light of these commitments?

Speaker 3

Yes, let me start and then I'll turn it over to Diane to talk a little bit more specifically about RNG. As we described in our opening remarks, Jeremy, scope 23 emissions reductions by 2,050 are going to require technology and supportive regulatory environment. So a lot of this that we would be thinking about are sort of longer term. It's hard for us to put as much definition around it as we can. The Virginia particularly Virginia Regulated Rider Investments and some of the others that you're seeing in that 15 year Obviously, nothing in the 5 year plan what we think would move the needle there.

Speaker 3

But lots of opportunities we believe and we think it's important. That's what our customers are looking for us to do. It's what our shareholders are looking for us to do. So we'll have opportunities to flush that out. There's as we mentioned, we've already got a fair amount going.

Speaker 3

And a big chunk of that right now is our investment in RNG, and I'll ask Diane to talk a little bit more detail about that. So

Speaker 6

our RNG program, our capital program has really Increased over this last year. So we now have 10 projects under construction and 1 in service, But 2 of those under construction, both dairy, will be in service in the coming days weeks. We expect 6 projects to come into service this year. So we're really kind of ramping up even though it's very small right now. But we see that pace continuing of new projects entering the construction stream and more coming online.

Speaker 6

And this time, we do see this, what we've said before is about $2,000,000,000 of capital investment through 2,035 Through our main platforms of align and Vanguard. So that's on the development side. On the LDC side, specifically as it relates to Scope 3, We really see that program eventually moving towards a long term strategy Of having RNG directly into our regulated gas customers. So we already have that on a voluntary basis in Utah and it's been very well received there and just got approval in North Carolina Looking to work with stakeholders to increase the amount of RNG blending into our local gas distribution company, so whether we build it or not, whether it's part of our program or not, we're really looking to see more RNG time, we'll be able to access for our customers in our LDC program.

Speaker 5

Got it. That's all very helpful. Thank you.

Speaker 1

Thank you. Our next question comes from Steve Fleishman with Wolfe Research.

Speaker 7

Hey, Steve. Just hey, so Bob, just there was a lot of focus late last year on the Virginia election, And maybe you could just talk a little bit about how things have been going with or not for the offshore wind projects?

Speaker 3

Yes, Steve. So things have been going well with the new administration and the general assembly. Obviously, the session in Virginia is less than little less than halfway over, but this Virginia session moves pretty quickly. It's really energy just has not been a big focus. As the focused on education and taxes, and that's what the General Assembly has been focused on, not Surprisingly, and so energy has not been a huge part of the equation.

Speaker 3

So we'll obviously, you make predictions The legislative process at your peril, but we're participating and finding that we continue to work well with There continues to be very strong support for offshore wind as we discussed on in our opening remarks. There is a great opportunity for Virginia with respect to new jobs and new industry And our project is recognized as one that can bring a lot of benefits to the state. So Still seeing great support for offshore wind.

Speaker 7

Okay. And then one other one of of the things they specifically pointed to was vessel costs for like non not the Jones Act vessels, but for other Things like the foundations and the like, just could you just talk to is that part of the mix of what you have locked up already?

Speaker 3

Yes. In fact, Diane and I met with the executive Demi, who are the We talk about these large packages there that transport and install. So they're doing the cable And installing the monopods. We just met with them earlier this week and things are very much on track. And as regards this time, we're going to be looking at our own vessel, the installation vessel, the steel for that, for example.

Speaker 3

So I think the premise where you started the questions that you may have heard about time, we entered into these contracts late last year with counterparties time, we have a couple of other things that we have here with counterparties who are very experienced. Every single one of them He's very experienced in this industry. So we still feel very good about that project, both in terms of schedule and budget.

Speaker 7

Great. And one quick follow-up on Hope Gas. Just curious this a good price here for it. Just could you give us some sense of the competitive dynamic Of that process and just what you're kind of what do you think it means for kind of thinking about the value of your remaining LDCs?

Speaker 3

We feel very be made related to scale as it pertains to our the DC Businesses, they are growing. They are in what we describe as premium states, very pro business states, strong customer bases, very supportive of natural gas and with customers who want natural gas time, we're going to be looking at our outlook for cooking and heating their homes. So this was not from our perspective a reflection on our thinking interest, obviously, this time, we feel very good about the price and equally important about the quality of the counterparty. So time, I think it was a good outcome and one that we think will be very well received, but we expect to continue operating.

Speaker 1

Thank you. Our next question will come from Ross time, I'd like to turn the call over to Steve

Operator

with UBS. Good morning, all. Hope you and the team are well. This

Speaker 8

time, I just wanted to walk through Slide 11 one more time to make sure I understand very clearly what you said. So we know that CapEx is up plan to plan Basically, as you're adding 26 and taking 21 away. And what you're saying is there's no change here to 'twenty two equity, a small increase to equity And that capacity turns around to be available for regulated CapEx.

Speaker 4

Did I frame that correctly? Is that what

Speaker 8

I heard you say on the call?

Speaker 4

That's exactly right. On the equity sources and uses or the overall sources and uses, I should say. So to simplify a little bit, What are we doing here with the proceeds from the small sale? After tax proceeds, we're paying down parent level debt. And then in coming years, we'll use that debt capacity, modest, as we invest in our spending programs across our key regulated states.

Speaker 8

That's perfect, Bob. Thank you. And then on your comments on solar on the call. So You noted that costs are up and prices are tight here, but that you've

Speaker 4

this time, we have a lot of

Speaker 8

'twenty two procurement already, so that stuff is on track. And on 'twenty three, you're on track, but you're How much of 2023 have you already procured and how much is maybe still out there that may be

Speaker 6

a So for 2023, as Bob talked about, we are seeing some shortages of panels and other time, we are actively in the stages now of working out The contracting for these projects, we are well along the way in that process and project by project getting access to the modules we need. So while I won't say it's simple and not without some additional cost, we'll say that we're well along the way.

Speaker 1

Thank you. Our next question comes from Durgesh Chopra with Evercore ISI.

Speaker 9

Hey, good morning team. Thank you for taking my question.

Speaker 3

Good morning.

Speaker 9

Good morning, Bob. Just Jim, A quick clarification, you mentioned $800,000,000 if I heard that correctly on the offshore CapEx that was indexed. Is that $800,000,000 part of the $7,000,000,000 locked or is that $800,000,000 out of the total roughly $10,000,000,000 projected project cost?

Speaker 4

Yes, good morning. That $800,000,000 is part of the $7,000,000,000 locked across those 5 project components that we announced in November. The remaining amount, as you recall, is the onshore transmission and contingency.

Speaker 9

Got it. Perfect. So $7,000,000,000 of the roughly $1,000,000,000 $800,000,000 is a component of that. Then just maybe just quickly, Jim, I just want to understand the rate base growth disclosures. And then on Slide 10 for Virginia, I would have expected the rate base CAGR to be higher given the higher spending versus the last year plan.

Speaker 9

Is that sort of a starting point issue? Because if I compare Q4 last year to Q4 this year, the rate base CAGR is actually lower with the end actually materially higher.

Speaker 4

Yes, Dukesh, we're happy to connect. We have, as I mentioned, a lot of detailed backup in the appendix. What you're mentioning there is just a timing issue from the starting point. There's not a material change to the programs or the overall pace. It's just timing quarter to quarter.

Speaker 9

Understood. Thank you. And really appreciate all the disclosure in the appendix.

Speaker 1

Thank you. This does conclude this morning's conference call. You may now disconnect your lines and enjoy your day.

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Dominion Energy Q4 2021
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