Bob Blue
Chairman, President, and Chief Executive Officer at Dominion Energy
Thank you, David. And good, morning, everyone. We delivered strong third-quarter results and are well-positioned to meet our expectations for the year. We also have been steadily executing on our investment programs focused on decarbonization. This successful execution is already benefiting our customers, communities, the environment and our investors. I'll begin with safety. Through September our OSHA recordable rate was 0.53, which remains low relative to our historical levels and substantially below industry averages. We take pride in our relentless focus on safety, and it is the first of our company's core values.
Next, I'd like to provide some context to our announcement this morning of our initiation of our top-to-bottom business review with the goal of ensuring that Dominion Energy is best-positioned to create significant long-term value for our shareholders. In recent years, we've taken a series of strategic steps, both through M&A and through the capital allocation decisions to materially increase the state-regulated profile of our business. Our strategy remains anchored on this pure-play, state-regulated utility operating profile that centers around premier states that share the philosophy that a common sense approach to energy policy and regulation, prioritizes safety, reliability, affordability and increasingly sustainability. These states also strive to create environments that promote sensible economic growth, which, like the rising tide, lifts all boats.
Our state-regulated utility model offers investors long-term earnings visibility and is enhanced by our concentration in these fast-growing constructive and business-friendly states. To state the obvious, we're monitoring what's going on in the broader economy. Like everyone, we're seeing inflation, supply-chain limitations and higher fuel prices, all having an impact on customer rates and our balance sheet strength.
We are keenly aware of the economic pressures that are affecting our customers and taking seriously our core mission to deliver reliable, affordable and clean-energy to our customers while creating value for our shareholders.
So far, our company has navigated this new environment well. Our safety and reliability metrics have remained strong. As we steadily execute on our industry-leading decarbonization investment programs, we must provide energy that is affordable. We are therefore proud that residential rates at our electric utilities remain well below state and national averages. We've also found creative approaches to provide customer relief. I'll recap a few recent examples.
First, we supported legislation in Virginia, which gave customers a fresh-start by forgiving $200 million of customer arrears in the depths of the COVID crisis. We also agreed to more than $11 million of forgiveness in South Carolina. Second, we elected to recover $200 million through base rates currently in effect in connection with the suspension of Rider Reggie as Virginia works towards its exit from that program. Lastly, we voluntarily agreed in Virginia to spread the recovery of the under recovered fuel balance over a three-year period to reduce the effect on customer bills.
And we've done all of these things, while moving forward with our growth plan and delivering results that met our financial guidance, just as we did again this quarter. As you can tell, I'm very proud of these accomplishments and thank all my Dominion Energy colleagues who contributed to these successes, but our work is far from done. There are two drivers behind today's announcement of our review. One, enhancing shareholder value. And two, ensuring the sustainability of the long-term scope and duration of our regulated decarbonization investment opportunity.
First, enhancing shareholder value. We've been delivering industry-leading safety and reliability performance, executing on our sizable investment programs, achieving regulatory outcomes that are constructive, and delivering results that have met our financial guidance. Yet our relative share price performance has not met our expectations, including over the past several years, as we've been successfully executing our plan. While I am confident in our state-regulated utility strategy, and I would add that feedback I get from our investors almost unanimously supports our strategic direction, I believe now is the right time to initiate this review.
And second, our company has sizable investment opportunities focused on decarbonization and reliability that extend well beyond our five-year plan. In fact, well into the next decade. These customer beneficial programs are part of our diverse energy generation and methane reduction strategies to deliver clean-energy, while simultaneously meeting the need for affordable and reliable energy grids and gas distribution networks.
However, we need to ensure that near-term economic and customer bill pressures don't preclude the full realization of that energy transition in related long-term capital investment. These two drivers led me to initiate this review of potential value-maximizing strategic actions of alternatives to our current business mix and capital allocation. And if any regulatory options, which may assist customers to manage costs and provide greater predictability to our long-term state-regulated utility value proposition.
A few guiding principles for this review. We're committed to our state-regulated utility profile with an industry-leading investment opportunity focused on decarbonization. We're committed to our current credit profile and to our dividends. And we're committed to shareholder value enhancement and to transparency. Of course, we're constantly evaluating our business mix to make sure we're maximizing shareholder value. However, as we carefully weighed our continued relative share price performance for the past several years, as well as the implications of the current macroeconomic environment, we determined that this more formal and thorough review, is the right step at the right time.
So let me address what I expect may be natural questions relating to this review. One, the scope. Two, timing of milestones. And three, the impact to our financial plan.
First, what is the scope of this review? I've cast our team with reviewing each of our businesses to examine opportunities that would improve long-term shareholder value relative to the status quo. This includes a review of where we have capital invested in businesses which may be considered nonstrategic, which simply may be worth more to others than they are within our current regulated business profile. We'll also take a hard look at all options to help our customers manage costs and then provide greater predictability to our long-term state-regulated utility value proposition. We remain focused on the customer impact and advocate for energy policy that provides an affordable clean-energy transition and long-term predictability for our state-regulated utilities.
Next, what do we expect in terms of timing of milestones? Our team is already getting to work. We expect to share updates on our fourth-quarter earnings call in early 2023 and plan to hold an Investor Day later in the year to update stakeholders more fully on our plan and the key value drivers of each of our business segments.
Finally, what's the impact to our financial planning guidance? We are affirming our 2022 financial guidance. No changes from prior communications, other than a narrowing of our annual EPS guidance range, given where we are in the calendar year. For 2023, we see a path to achieving our existing targets, as we expect we could overcome the macroeconomic challenges with increased unregulated investment activities and other initiatives.
However, these non-regulated earnings drivers, among other parts of our business, are subject to the review we announced this morning. So I would caution that outcomes consistent with our existing guidance are only achievable in the status quo results to our review. While we are therefore not changing our guidance today, we are indicating that the results of this review may very well lead to different outcomes, qualitatively and quantitatively of our long-term earnings growth. Again, other than in that status quo result to our review. What is not likely to result, however, is a change to the core earnings growth driver of this company, the continued execution of what we view as an industry-leading, highly visible, regulated decarbonization growth capital investment opportunity. And to reiterate, we are not reviewing options, which would negatively affect our current dividend.
A little more color on the way we think about potential outcomes of this review and overcoming the headwinds I've noted. We of course expect to consider all potential levers we have, which could mitigate any impacts to our financial plan, First, we would look to O&M management where we've created material value for our customers and shareholders, and as Jim will talk about more in a minute. So there is some potential in that area but not likely a game-changer, given what we've already been doing.
Next, we will also continue our efforts to efficiently review capital allocation, given our robust regulated growth programs, while also carefully considering the customer rate impacts of doing so. As part of this more formal review, however, we will undertake analysis used to find the most efficient sources of capital to fund our most attractive utility growth programs, all while considering many factors in the best interests of our EPS growth and credit profile.
In summary, our team has continued to deliver in the key areas of safety and reliability, our long-term scope and duration of our regulated decarbonization investment opportunity is very much intact, and we're on-track to deliver against our goals for 2022. We offer an attractive state-regulated decarbonization investment profile with operations and growth opportunities focused within Premier states with constructive regulatory regimes. However, given our continued relative share price performance and the macroeconomic challenges, we think that this top-to-bottom review is the right approach at the right time to ensure we are best-positioned to maximize long-term value for our shareholders. Now I'll turn to other business updates.
Turning to slide six. Let me start with Dominion Energy, Virginia. Last week, we announced a settlement agreement in our petition to the FCC to reconsider the performance guarantee included in its August order in conjunction with the Office of the Attorney General and other parties. The agreement provides a balanced and reasonable approach that allows the project to continue moving forward to meet the Commonwealth's public policy and economic development priorities and the needs of our customers. If approved, significant customer benefits include protection from unforeseen increases in construction costs above the project's budget and enhanced SEC review of performance in lieu of a performance guarantee. We look-forward to a decision from the SEC later this year.
Let me now turn to execution of that project where we have further mitigated some of the project's development risks that strengthen our confidence of remaining on-time and on-budget. We have continued to work closely with Bureau of Ocean Energy Management and other stakeholders to support the project timeline, as we continue to expect to receive a draft environmental impact statement by the end-of-the year. Advanced engineering and design and preparation of immediate-release of major equipment for fabrication. Advanced procurement in other pre-construction activities for the onshore scope of work. And completed independent project review and construction readiness assessment, along with a comprehensive assessment of schedule and cost. Development of the project has continued uninterrupted to maintain the project schedule and we expect over 90% of the project costs, excluding contingency, to be fixed by the end of the first-quarter 2023, at the latest, as compared to about 75% today, further derisking the project and its budget.
As I've mentioned before, offshore winds, economic development and job benefits are transformative for Eastern Virginia and the rest of the Commonwealth, including its diverse communities. Steve out [Phonetic] can create over 2000 direct and indirect jobs during construction and operations, while attracting companies to make investments in Virginia making it a hub for offshore wind. For example, upgrades have recently commenced at the Portsmouth Marine terminal where we've leased 72 acres for staging and pre-assembly of foundations, transition pieces and wind turbines. Lastly, our Jones Act compliant turbine installation vessel is currently over 60% complete. We continue to expect it to be in-service ahead of the 2024 turbine installation season.
Turning to other notable DEV updates on slide nine. We made our third clean-energy rider submission. The filing included 10 solar and energy storage projects and represented around $1.3 billion of utility-owned and rider eligible investment, further derisking our growth capital plan. We expect to receive an order from the SEC in the second-quarter of 2023.
On datacenters, as I mentioned on our second-quarter earnings call, we're actively working on a variety of solutions to serve as much of the increased demand as possible while we work to accelerate transmission solutions to ensure a safe and reliable grid. Last week, we filed for a new 500 kV transmission line with the SEC with an expected in-service date of late 2025. The submission included around $700 million of capital investment.
Turning to other business updates on slide 10. At Dominion Energy South Carolina, our crews worked around-the-clock in response to Hurricane Ian, more than 110,000 Dominion Energy customers in South Carolina lost power at the peak of the hurricane after it made landfall with up to 85 miles per hour wind and dumped heavy rain across the low country and other parts of our service area. In fewer than 18 hours, the company had significantly reduced that number to approximately 15,000. The efficient restoration process was possible because of year round preparation through a proactive vegetation management program, which includes safeguarding overhead electric lines from hazardous trees and vegetation. I'm proud of the way our team members responded on behalf of our customers.
And on the regulatory front, last month, we filed our 2022 IRP update. Our preferred plan is indicative of the potential for accelerated decarbonization and assumes all coal-only units are retired by the end of the decade. We look forward to engaging with all stakeholders on this planning process. At Dominion Energy Utah, we will complete the testimony and hearings phases in our rate case in the next few weeks. We expect an order from the commission by the end-of-the year and new rates to be effective in January of next year.
And as it relates to our already industry-leading agricultural based renewable natural gas platform, we're pleased to update our expanding project backlog. Of the four projects currently producing negative carbon renewable natural gas, one is in-service and three are in the commissioning phase. We also have 11 projects in various stages of construction and expect to start construction on five new projects by year end. Looking ahead, we now have visibility on $1 billion of potential growth capital investments in this area from 2023 through 2026. Obviously, we're very much on our way toward our goal of investing up to $2 billion by 2035, and we see the potential for additional increases to the long-term backlog.
Before I summarize my prepared remarks and turn it over to Jim, I'd like to make a few comments about the organizational change we announced this morning. Steve Ridge, who currently leads our Western Natural Gas distribution operations will be promoted to Senior Vice-President and Chief Financial Officer, succeeding Jim. After nearly a decade in energy investment banking, Steve, who is here in the room with us today, joined Dominion Energy and has spent the last eight years in leadership roles in mergers and acquisitions, corporate strategy, financial management and Investor Relations.
During much of that time, he worked closely with Jim and me, along with the rest of our senior leadership team. For the last year, he has successfully been leading our Western Gas operations, which serve nearly 1.2 million customers. He has a wealth of experience in finance, is well-known to many of our investors, and is a strong capable leader. We're very fortunate to have him in this new role.
Jim will be leaving the company to be Vice-President and Treasurer at ExxonMobil. Jim is an exceptional leader and has been an extraordinary partner of mine. Jim played an instrumental role in our rapid transition to an asset mix largely defined by state-regulated utility operations and a capital plan aimed at decarbonization and supportive public policy goals and our commitment to our customers, communities, the environment and our investors. We're very sorry to see him go but we wish him good fortunate in the next chapter of his career.
In the interim, Jim will be helping make a seamless transition, including joining us at the upcoming EEI Financial Conference. Steve will be there as well, obviously. Steve will play a critical role in advancing our strategy of delivering value to our customers and shareholders. The depth of leadership at this company is impressive. Steve is a great example of that bench strength.
And with that, I'll hand it over to Jim.
