Dominion Energy, Inc. (D) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Offshore Wind Progress: Dominion Energy has made significant progress on its offshore wind project, with 42 monopiles installed and the project proceeding on time and on budget. The company expects to install 70 to 100 monopiles during the first installation season.

• Financial Guidance Reaffirmed: The company reaffirmed its financial guidance for 2024 and beyond, expecting operating earnings per share to be between $2.62 and $2.87 for 2024, with a midpoint of $2.75. For 2025 through 2029, they anticipate an operating earnings annual growth rate range of 5% to 7%.

• Debt Reduction Initiatives: Approximately 72% of the targeted $21 billion debt reduction has been achieved through various transactions, including asset sales and completion of the DEV fuel securitization.

• Safety Performance: Dominion Energy highlighted its strong safety performance, with an employee OSHA injury recordable rate of 0.38 for the first half of the year, reflecting a continued positive trend.

• Data Center Growth: The company has connected nine new data centers year-to-date and expects to connect 15 in 2024, indicating accelerating growth in this sector.

Pessimistic Highlights

• Increased Costs for Charybdis: The estimated costs for the Charybdis offshore wind installation vessel have increased to $715 million, up from $625 million, due to modifications to accommodate project-specific turbine loads and additional financing costs.

• Short Generation Position: Dominion Energy has a short generation position for 2025, which is expected to result in a $0.04 headwind in 2025 due to higher capacity prices. However, this impact is anticipated to be temporary.

Company Outlook

• Continued Investment in Infrastructure: Dominion Energy is focused on making necessary investments in distribution, transmission, and generation infrastructure to support reliable, affordable, and increasingly clean energy for its customers. The company is exploring options for incremental regulated capital investment to meet growing demand.

• Offshore Wind and Data Center Expansion: The company is committed to the successful execution of its offshore wind project and supporting the growth of the data center industry in Virginia, which includes assessing dispatchable generation needs and on-site backup fuel storage.

Q & A Highlights

• Q: Can Dominion exceed the top end of the 70 to 100 target range for monopile installations this year? (Constantine Lednev, Guggenheim Partners)

  A: Diane Leopold mentioned that while hitting two monopiles per day is a strong progress, the company is confident in the 70 to 100 range and aims to install enough pin piles for one of the offshore substations. Weather changes may affect the installation rate.

• Q: How are capacity plans evolving in light of the Dominion zone breakout in capacity prices? (Constantine Lednev, Guggenheim Partners)

  A: Robert Blue explained that the company's plans include updating the capital plan and IRP annually, focusing on meeting demand with both renewable and dispatchable generation in Virginia.

• Q: What is the impact of being short generation for next year and the mechanism behind it? (Nicholas Campanella, Barclays)

  A: Steven Ridge clarified that the short position results in a $0.04 impact for 2025 due to higher capacity prices, but this is expected to be temporary as the company has a natural hedge through its owned generation and load serving obligations.

• Q: What's driving the cost increase for the Charybdis vessel? (Nicholas Campanella, Barclays)

  A: Diane Leopold explained that modifications to accommodate specific turbine loads and additional financing costs are behind the increase, with the total estimated cost now at $715 million.

• Q: Could you provide insights on Millstone's outlook and the possibility for data center colocation? (Jeremy Tonet, JPMorgan)

  A: Robert Blue stated that Millstone remains a valuable asset, and the company is open to exploring colocation options that make sense for all parties involved.

• Q: What are your thoughts on the ISA protest in front of FERC? (Jeremy Tonet, JPMorgan)

  A: Robert Blue mentioned that Dominion Energy is not a party to the proceeding and deferred to FERC and others involved for decisions.

• Q: What could be the customer bill impact of the recent auction results? (Jeremy Tonet, JPMorgan)

  A: Steven Ridge indicated that while net capacity expenses were previously only about 1% of customer bills, the company focuses on a holistic approach to assessing customer bill impacts, suggesting any increase would remain small.