Good morning, and welcome to the Dominion Energy Second Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Steven Ridge, Vice President, Investor Relations.

Good morning, and thank you for joining our 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-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 are – which we can calculate are contained in the earnings release kit. I encourage you to visit our Investor Relations website to review webcast slide as well as the earnings release kit. Joining today’s call are Tom Farrell, Chairman, President and Chief Executive Officer; Jim Chapman, Executive Vice President, Chief Financial Officer and Treasurer; as well as other members of the executive management team. I will now turn the call over to Jim.

Thank you, Steven and good morning. Our second quarter 2020 operating earnings were $0.82 per share, which included a $0.03 hurt from worse than normal weather in our utility service territories. Weather normalized results of $0.85 per share, we’re at the top of our guidance range and for the 18th consecutive quarter were at or above the quarterly guidance midpoint. We expect the full year financial impact of weather to be more balanced than during the first two quarters of the year. Preliminary data indicate that July was around $0.04 better than normal and early predictions for August suggest potential for additional weather helps. Note that our second quarter GAAP and operating earnings are not adjusted to account for discontinued operations, given the timing of our recent announcement, but will be reflected beginning with our third quarter disclosures. GAAP earnings for the quarter were negative $1.41 per share. This result was driven primarily by impairment related charges associated with the Atlantic Coast Pipeline and Supply Header project. We also had a positive impact attributable to the net gains on our nuclear decommissioning trust. As a reminder, we report such gains and losses on these funds as non-operating. A summary of adjustments between operating and reporting results is included in Schedule 2 of the earnings release kit. On Slide 4, we’re initiating third quarter 2020 operating earnings guidance with a range of $0.85 to $1.05 per share. As mentioned, this range reflects the impact of recasting operating earnings to exclude discontinued operations. We’re also affirming the 2020 annual guidance range provided on our July 6 Investor Call. As usual, these ranges assume normal weather variations from which to cause results to be toward the top or the bottom of these ranges. Typically, we provide year ago actual results alongside our guidelines.…

Thank you, Jim and good morning everyone. I would like to start by again, expressing our gratitude for the medical and other frontline healthcare professionals who are engaged in a courageous effort to assist those who have been impacted by the COVID-19 pandemic. We salute their efforts. Just as we salute the efforts of our employees who continue to perform a vital public service by literally keeping the lights on and critical energy flowing. We continue to evolve our COVID response to incorporate the most up to date guidance from the medical and public health community. Social distancing, proper PPE and where practical remote work have become the expectation for all employees. We’re also mindful of our customers and the difficult time this has been for them. We have worked closely with regulators to take steps, including the voluntary suspension of nonpayment service disconnections and the offering of flexible payment plans to assist our customers in addressing the financial challenges they may be facing. Turning to safety, which is our first core value on Slide 9. Our year-to-date results put us on track to make 2020, the safest year of operation in the company to use more than 100 year history. As an organization with nearly 20,000 employees and 7 million customers, our safety performance matters to thousands of families and communities, which is why it matters so much to us. The ability to impact lives on a broader scale is also why when we see an issue that deeply impacts our employees, customers, and communities, we get involved. Recent social unrest partly caused by the murder in Minneapolis has led us to question, what more we can do to assist them in the cause of social justice and racial equality. Early last month, we publicly committed $5 million to…

Thank you. [Operator Instructions] Now our first question will come from James Thalacker with BMO Capital Markets.

Good morning. Can everybody hear me?

Yes, we can. Good morning.

Well, thanks for taking my questions. And before we start now, congratulations to both you Tom, Bob and Diane for the announcements today.

Thank you.

Just two real quick questions. On Slide 8, you discussed an investor day style financial update, which will include a rolling forward of the capital plan and a rate base estimates. Would this include year-by-year and or a segment-by-segment program breakdown of the capital spend as well as the associated rate base by year in segment?

Yes, James. Good morning, it’s Jim. Yes, so we were in planning stages for that for the fourth quarter rollout of that analyst day, investor day style refresh. And we hope to do at least the kinds of things we did last time around last March, where we did provide by segment and mostly by year rate base and other growth data. So if we can improve on that little bit, we’re thinking through how to do that. We welcome feedback. Well, we do expect to provide kind of everything covered that you just mentioned on the fourth quarter call.

Okay. And I mean, and just staying in that vein, since you’ve already given sort of some of the financing through 2024. We’re going to be look on for a year. Will we probably rolled this out like 2021 through 2025. How are you thinking about that?

Yes. I think so, yes, that’s a possibility for sure. I don’t want to say, let me add to our existing disclosure. I mean, it’s not so updated. Last March, we still have $26 billion of growth capital spending from 2019 to 2023. We updated some of that on the first quarter call this year for three programs under the BCA in Virginia. Obviously, longer term, our gas transmission storage capital spend, which is about $3.5 billion comes out of that. But our existing guidance is still largely intact and relevant, but we will be providing that roll forward with some more granular updates on fourth quarter call.

And just last question on this part of it is, and really just of sticking to 2025 sort of timeframe. You’ve given a lot of line of sight on the financing through 2024, but your CapEx really, as you start to do the offshore wind starts to really build it up in 2023, 2024. Just wondering if you are looking to sort of move your CapEx forecast out a little bit farther to kind of talk about the financing plan as we move into 2024 to 2026 and the offshore wind starts coming online.

Yes. Fair enough. I mean, those numbers do get big, and there’s a lot of visibility around that offshore wind spend. But I would say that on an overall basis, the cadence of that $26 billion, the whole bill number, and they’ll just know it’s pretty much a run rate. So yes, there’s a slight increase there. So if we – as we provide additional detail or additional year of capital spend will also support that with information on our financing plan. But I wouldn’t expect a drastic departure from our kind of run rate numbers that we’ve talked about today.

[Technical Difficulty]

James, you’re cutting out there a little bit, but that kind of run rate, again, we’ll provide an update on the fourth quarter call. But it’s not going to be a drastic departure from that, if that was your question.

Yes. No, that’s perfect. And then the last question, I apologize. But clearly, there’s been a lot of press in the last week surrounding political spending practices and vehicles. On Slide 20, you briefly address your rankings in the CPA-Zicklin Index, which highlights the user trends that are under their methodology. But I was wondering if you could speak a little bit more past and current use of social welfare organizations like the 501(c)(4). And do you plan to modify your political strategies at all in light of the recent investigation?

Sure. Thanks for asking. First, we have fully disclosed 501(c)(4) contributions for many years. Zicklin center, you referenced is independent organization that works with the Wharton School of the University of Pennsylvania. Two, look it up, we’re huge, very wide variety of factors, and they rank all these companies on their disclosure practices. Our disclosure is ranked among the highest in the country, certainly, among the highest in utilities for its transparency. Now I like said, we’ve disclosed all of them. And over the last five years, I think our contributions have been under $500,000. 70% of which went to an organization that associated with American Petroleum Institute supporting pipeline projects. So we’re fully disclosed everything. It’s not – it’s a very small part of what we do under $500,000 over five years. And we have no intention of changing our practices because they are perfectly appropriate completely compliant with every state in federal law by wide margins. We have nothing to be concerned about with respect to any of our political giving or giving to these so-called 501(c)(4).

Great. Thanks for all the time. And sorry about the phone breaking up there in the middle. Have a better weekend.

That’s okay. We heard you.

Thank you. Our next question comes from Shahriar Pourreza with Guggenheim Partners.

Hey, good morning guys. Just on the equity guide, some people may be struggling with it. Buying back this year and starting to issue next year. Can you touch on this thought and why not decide to delever and further sort of improve the credit metrics versus buying back, which could be sort of multiple accretive in and of itself. So, and then just have a quick follow-up.

Yes, Shah. Let me start there. So look, our balance sheet is already in the right place and I’m going to take time to go through all of the history, but I think as you know, we’ve made a ton of progress in that area over the last several years and as even better pro forma for the sale of T&S business. So that sale almost $6 billion of the $10 billion transaction value is really from our perspective debt retirement. I think the agencies have recognized that also in their commentary, as I just talked about positive outlook from S&P, et cetera. So given that the status of our balance sheet and the related improvements for this transaction, we do a pretty good about our plan to provide the net proceeds back to our shareholders in this buyback, which we’re, as I mentioned, we’re targeting for completion by the end of the year. But that said, we do have a sizeable clean energy and related capital spend program, just talked about that with James. And it’s only increasing, as we go through the years slowly. So therefore, we do, even though we’re doing the buyback, it would give them the net proceeds back to our shareholders. We think it’s prudent with that strong balance sheet position we’re in. We do plan to recommence some equity issuance, even if it’s just in this form of DRIP in 2021 and beyond. But I think the perspective is important. I mean, for spending programs that decides what we’re doing to be starting out with DRIP less than 0.5 percentage point of our market cap a year and a pretty efficient program like DRIP. And later, just with other efficient programs, all in our ATM, we think it’s overall pretty modest and we make its best way to go.

Got it. And then just honing in on the buyback, what specifically again, driving upsizing, can I sort of quantify and then on the timing seems that 4Q purchases could be a little bit conservative on your viewpoint. Can you buyback sooner even if you don’t have the proceeds in the door and can you potentially close this transaction sooner than 4Q? So what’s driving the upsizing and can you start to buyback sooner than 4Q even if the proceeds on that? Thanks.

Yes. So we have a couple of things there. We have a board authority to commit our buybacks with immediate effect. We do not need to wait until the transaction closes. But we haven’t bought it yet. And we retain kind of full flexibility. We do that with open market purchases. We could do it with accelerated share repurchases, tender, Dutch auction, so more guidance to come on that through the fall as we go. We do expect still to complete that by the end of the year, even if we start sooner. We’re not guiding to any different closing time line than the kind of early fourth quarter, although that all remains on track. But then as it relates to the amount the quantum. Yes, we mentioned there’s upward bias. Where is that coming from, and we’ll provide more detail on that too as we go. But that comes from, first of all, just a conservative first cut on what tax – cash taxes would be on this sale. We indicated about $700 million. So there’s interplay there between the tax aspect of the sale and the tax aspect of the pipeline abandonment, an impairment of supply header and the interplay of our sizable tax credit position. So as we continue to do more work on that, we see probably if anything, downward bias in the taxes table from $700 million, and therefore upward bias in the size of the buyback. And it’s not huge, again, we’ll come to that guidance. It’s somewhere between $200 million out of that magnitude and we’ll provide more guidance. But again, conservative first cut, probably improving from there modestly, and we’ll provide more detail on all that as we go through the fall.

Got it. Thanks, Jim. And Tom, congrats on phase two of your career.

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

Hey, good morning. Thanks for taking my question and congratulations to you, Tom. So maybe just starting off, I actually have one question only – the other questions have been answered. Jim, so the credit rating agencies for the transaction obviously came out with a positive view. I didn’t see it, but is there a chance that your FFO to debt metrics get adjusted here going forward now that the business mix is very different?

Thanks, Durgesh. By that do you mean kind of the downgrade or upgrade thresholds from the agencies?

Exactly. Yes.

I can’t speak for the agencies there. On the downgrade side, there hasn’t been action yet. I would think that as we continue to execute on this plan and improve our business risk profile – de-risk our profile, that would be a logical thing to discuss. But we’re not guiding folks to expect that in the near-term. But I understand the question and we’ll see what happens.

Understood. Thanks guys. And great quarter, again. Thank you.

Thank you, Durgesh.

Thank you. Our next question will come from Michael Weinstein with Credit Suisse.

Hi. Good morning, guys.

Good morning.

Good morning. Congratulations, Tom, Bob and Diane, all three of you. I just want to ask about the – as we get closer to the triennial review, I think you should be filing it pretty soon. What should we’d be looking for there in terms of timeline and dates and hearings and things like that?

Michael, it’s Bob Blue. So obviously, we’re focused on that triennial. We will file it in March of next year and it will be litigated over the course of that year with the decision by the end of November. So that’s the cadence for that.

Okay, great. And in terms of the offshore wind project, it wasn’t really much mentioned in the presentation this time around. But I’m just wondering if you could give us an update on, I guess, the filing, which I think you’re planning – still planning at the end of the year, right, with BOEM?

Right. We expect to file the half with them at the end of this year. And it’s progressing well. The survey and geotechnical work and preparation that are going very well. So we’re pleased just as we were pleased with construction on the test terms.

Is that project included on that slide that shows the 15% – over 15% increase and the global generation over for 2035?

Yes.

Okay. And it was a relatively small part of it. It looks like solar is the vast majority of it.

That’s correct. It’s a large solar build. I don’t really think of their commercial product as small, however, it’s the largest in the Americas.

So I think it’s going to get to work by solar. Is that all ends in the state of Virginia and South Carolina, I suppose.

It’s within the PJM footprint. But we’re talking mostly in Virginia.

Great. All right, thank you very much, guys. And congratulations again, and have a good weekend.

Thank you.

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

Hi. Good morning.

Good morning.

Tom, congrats to you, been a long time and also congrats to Bob and to Diane, well-deserved.

Thank you.

In good hands. So I guess just – could you just remind us what you need to do to actually get the transaction closed in terms of approvals, just so we’re tracking that?

We just have an HSR and that’s progressing along just fine.

Okay, great. And then, there’s not going to be a lot of time to actually execute on the buybacks in Q4. It’s a decent amount of stock. So could you just talk about kind of how you’re thinking about doing it?

Yes, let me go there Steve. So again, we don’t have issued guidance on that yet. And we’ll provide more through the fall. I just mentioned all other kind of options we have in our disposal to get that done, but we don’t necessarily need to wait until the fourth quarter start and we probably won’t. So could it – it’s very well to be a mix of approaches market purchases and other approaches. In addition to, we’re going to place fourth quarter tender style event. I know that’s pretty broad, but we don’t need to compress that into just a month or two. And the fourth quarter we have to start now.

Okay. And then maybe just when you look at, I guess, I know you said you’re going to be doing a lot of continued marketing on the company story kind of the new clean energy further refocus there. Just maybe you can give a little color on what kind of feedback you’ve gotten so far. Because obviously there was big news with financial changes and then this refocus. What kind of investor feedback you’ve gotten so far?

Yes, let me start there. And that was just three weeks ago or so when we made this announcement. And we did get quite a bit of feedback from across the spectrum, different types of investors. And we took it all to heart. We sat around and considered a lot of it pretty carefully, including notably the feedback from retail investors who are very focused on the dividend and income funds investors. So we get that and took that to heart. But the feedback from, I guess, maybe longer-term investors, institutional investors. And those investors that I mentioned in my prepared remarks that are in North America or elsewhere, that increasingly are thinking about their investment decisions through the lens of ESG topic. That feedback was pretty positive on the long-term prospects of this transaction. We positioned the company in this way, strengthening the sheet, increasing the growth rate, highlighting all the already underway ESG spending programs, clean energy and related. So I think that’s been pretty good, but it is a change, a material change for Dominion. So we have been already and we highlighted here that we’re going to spend a lot of time in the next few months, just reconnecting with people, existing investors, prospective investors are walking through that story, making sure everyone gets it, not only what we’ve done, but exactly what we’re doing under the spending programs and decide and scale and cadence and the financing there’s a lot to talk about. And one thing that’s been consistent in all of our interactions with investors existing perspective in the last three weeks is everyone really wants to spend more time and make sure they get it and understanding all the dynamics. But overall it’s been pretty positive.

Okay, great. Thank you.

Thanks, Steve.

Thank you. And our last question will come from Jeremy Tonet with JPMorgan.

Hi. Good morning. Thanks for kicking me in here.

Good morning.

Good morning. Just a multipronged question on natural gas, I could hear. I’m just wondering how you think the need in your service territories have changed over time since you first announced ACP. And with the ACP cancellation, what are your expectations for gas distribution CapEx into the fourth quarter refresh here? Is there an upward bias especially without [indiscernible] competing for capital? And finally, if I could, just how do you think hydrogen could fit into the picture over time here?

Thank for the question. I’m going to answer the very first part of it and then turn it over to Diane. The lead for the Atlantic Coast Pipeline or service territory, because the service territory for us was Virginia and North Carolina and potentially South Carolina. The need is not changed at all. The result of it is that need will go unmet as a result of the cancellation of the Atlantic Coast Pipeline. Pipeline was over 90% subscribed for 15 years by utility companies that were going to use it to serve guests, distribution customers and convert coal plants to natural gas facilities over the years to come. That need will now go unmet. So with respect to that one project, no change. Balance of the question, I’ll turn it over to Diane.

Okay. Good morning. So with respect to the LDC capital spend and certainly we’ll give a refresh look in the Q4 call. But we really don’t see any change there. So we really have jurisdictions that are in very supportive States for our programs and they’re in high growth areas. So we have North Carolina, Utah, Ohio, West Virginia in the key jurisdictions. We have pipeline replacement programs in essentially all of those areas that are significant and our commissions recognize the long-term nature of those programs and the need to have that infrastructure replacement for safety, reliability and sustainability. So I really don’t see anything there as well as the continued growth projects to meet the increasing demand in these high growth areas. So really no change on the LDC side. With respect to hydrogen, we do see that there will be an increase in hydrogen utilization in the energy mix over the next several decades. And we’ve certainly spent a lot of time studying it. At the moment, at least our knowledge, no continental U.S. LDC is blending hydrogen into supply mix today. We committed a couple years ago to making sure our LDC system is ready to accept up to 5% hydrogen by 2030, so just in the next decade. And our initial pilot is in advanced planning stages in Utah. So high level, we think there’s going to be a lot of activity in this area. But for the most part, it’s still in that study and preparatory planning stage. But expected to be ramping up and then look forward to sharing updates.

That’s very helpful. Thanks. And back to the gas situation real quick. With MVP, do you think that there’s any role for that to play, I guess in meeting some of those needs or going to go unmet without ACP.

Nothing we can say.

Got it. And just one last one, if I could. With regard to the upcoming election here, just wondering if you had any preliminary thoughts on potential impacts at the federal or state level for Dominion overall.

I have no intention whatsoever of commenting on the upcoming elections in any respect. And I’ll leave it there. Thank you.

Thanks a lot.

Thank you. And this does concludes this morning’s conference call. You may disconnect your lines and enjoy your day.