Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dominion Energy Inc (D, Financial) reaffirmed its financial guidance for 2024 and beyond, indicating stability and confidence in its financial outlook.
- The offshore wind project is progressing on time and on budget, with significant milestones achieved, including the installation of 42 monopiles.
- The company has made substantial progress in its debt reduction initiatives, achieving 72% of its target with the completion of several asset sales.
- Dominion Energy Inc (D) reported strong safety performance, with a continued positive trend in reducing employee injury rates.
- The company is experiencing robust demand growth, particularly from data centers, and is making necessary investments in transmission and generation infrastructure to support this growth.
Negative Points
- Dominion Energy Inc (D) faces headwinds from higher than budgeted short-term interest rates and backloaded O&M expenses in the second half of the year.
- The company has a temporary financial impact due to a short position in capacity, resulting in a $0.04 headwind in 2025.
- There is an increase in the estimated costs for the Corrib project, with the current estimated cost rising to $715 million from $625 million last quarter.
- The company is navigating regulatory and stakeholder challenges, particularly in relation to its offshore wind and data center projects.
- Dominion Energy Inc (D) has to manage the impact of higher capacity prices on customer bills, although it expects to mitigate this through various measures.
Q & A Highlights
Q: Can you exceed the top end of the 70 to 100 target range for offshore pile driving this year?
A: Diane Leopold, Chief Operating Officer: We are confident in the 70 to 100 range. The second vessel will keep us in production mode longer, but weather changes may affect our ability to consistently hit two piles per day. We also need to install enough pin piles for an offshore substation.
Q: How are your capacity plans evolving, especially with the recent Dominion zone breakout?
A: Steven Ridge, Chief Financial Officer: We update our capital plan annually and will file our IRP in the fall. Demand growth is significant, and we may see opportunities for increased CapEx towards the back end of our plan. We need both renewable and dispatchable generation to meet demand.
Q: What is the impact of the recent auction on your generation for next year and beyond?
A: David McFarland, Vice President, Investor Relations: We have a natural hedge as our generation bids into the capacity market. We have a small short position, leading to a temporary $0.04 impact in the second half of 2025. This will be recovered in future rates.
Q: Can you explain the recent cost increase for the Corrib vessel?
A: Diane Leopold, Chief Operating Officer: The cost increase is due to modifications for final turbine design loadings, including deck stiffening and hull reinforcement. These are normal adjustments and not a scope change. The vessel remains on track for delivery.
Q: What are your thoughts on the possibility of data center co-location at Millstone?
A: Robert Blue, Chief Executive Officer: Millstone is a valuable asset, and we are open to co-location options. We are actively exploring this and other opportunities to maximize Millstone's value.
Q: Any thoughts on the upcoming FERC decision?
A: Robert Blue, Chief Executive Officer: We are not a party to that proceeding, so we will leave it to the involved parties to decide.
Q: What could net capacity expenses look like after the recent auction?
A: Steven Ridge, Chief Financial Officer: Net capacity expenses will remain a small part of customer bills. We focus on a holistic approach to customer bills, considering all factors to ensure affordability.
Q: How are you addressing the growing demand from data centers?
A: Robert Blue, Chief Executive Officer: We are accelerating plans for new transmission lines and infrastructure. We connected nine new data centers year-to-date and expect to connect 15 in 2024. We are committed to supporting this growth with necessary investments.
Q: Can you provide an update on your debt reduction initiatives?
A: Steven Ridge, Chief Financial Officer: We have achieved 72% of our debt reduction target with recent sales and securitizations. We expect to close remaining transactions, including the sale of Public Service Company of North Carolina and the Coastal Virginia offshore wind project financing, by the end of the year.
Q: What is the status of your offshore wind project?
A: Robert Blue, Chief Executive Officer: The project is on time and on budget. We have made significant progress on monopile installation and received all federal permits. We expect to begin installing the export cable later this quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
