Welcome to the Dominion Energy Second Quarter 2021 Earnings Conference Call At this time, your line is in a listen-only mode. At the conclusion of today’s presentation, we will open the floor for questions. Instructions will be given for the procedure to follow if you would like to ask a question. I would now like to turn the call over to Steven Ridge, Vice President, Investor Relations.

Thank you, and good morning to everyone. Thanks 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-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'll 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. 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'll turn the call over to Jim.

Thank you, Steven, and good morning, everyone. I know there's some competition for utility investor’s attention this morning, a couple of competing calls in this time slot. So thank you for joining our call and we promise to keep our call today somewhat brief. Before I report on our strong quarterly financial results, I'm going to start with a recap of our compelling investment proposition and highlight our focus on the consistent execution of our repositioned strategy. We expect to grow our earnings per share 6.5% per year through at least 2025, supported by a $32 billion five-year growth capital plan. As outlined on our fourth quarter call in February, over 80% of that capital investment is emissions reduction enabling and over 70% is rider recovery eligible. We offer a nearly 3.5% yield and expect dividends per share to grow 6% per year based on a target payout ratio of 65%. Taken together, Dominion Energy offers an approximately 10% total return, premised on a pure-play state-regulated utility profile, operating in premier regions of the country. More on that lasting in a minute. Our industry-leading ESG positioning includes the largest regulated decarbonization investment opportunity in the nation, which as you'll hear in today's prepared remarks, is steadily transforming from opportunity to reality. Turning now to earnings. Our second quarter 2021 operating earnings, as shown on Slide 4, were $0.76 per share, which included a one pending hurt from worse than normal weather in our utility service territories. Both actual results and weather normalized results of $0.77 were above the midpoint of our quarterly guidance range. So this is our 22nd consecutive quarter, so 5.5 years now of delivering weather normal quarterly results that meet or exceed the midpoint of our quarterly guidance range. Note that our second quarter and year-to-date GAAP…

Thanks, Jim. Good morning everyone. I'll begin my prepared remarks by commenting on our safety performance. As shown on Slide 7, I'm very pleased that our results over the first two quarters of this year surpassed even our record-setting results from last year. Our safety performance matters immensely to our more than 17,000 employees to their families and to the communities we serve which is why it matters so much to us and why it's our first core value. Turning to Slide 8. I often describe our pure-play state-regulated strategy as centering around five premier states all of which share the philosophy that a common sense approach to energy policy and regulation puts a priority on safety, reliability, affordability and increasingly sustainability. We were pleased that CNBC's list of America's top states for business ranked Virginia, North Carolina and Utah as one, two and three respectively a podium sweep for three of our five primary jurisdictions with a fourth major service territory Ohio also ranking in the top 10. This is the second consecutive number one ranking for Virginia. Obviously, an assessment of this variety is just one of several possible ways to evaluate state-specific business environments, but we're pleased with the independent confirmation of what we observe every day working on the ground in all of our regions. We've strategically repositioned our business around the state-regulated utility model in order to offer investors increased stability, which is further enhanced by our concentration in these fast-growing constructive and business-friendly states. Next, I'd like to highlight the outstanding work done across our operating segments by the women and men of Dominion Energy who exemplify our core values of safety, ethics, excellence, embracing change and One Dominion Energy. At gas distribution, our colleagues have collaborated across our national footprint to share best…

Thank you. At this time, we will open the floor to questions. [Operator Instructions] Thank you. Our first question comes from Paul Zembardo [ph] with Bank of America.

Hi, good morning.

Paul, morning.

Congratulations Steve and David on the new role, well deserved.

Thank you.

Just going to ask, can you provide a little more of an update on the conversations you're having around Questar pipe sales process such as what parties you're talking to and balancing the considerations there? Any additional color you're willing to provide will be appreciated. Thank you.

Yes. Sure, Paul. Thanks for joining. Good question. You'll probably appreciate that we need to exercise a little bit of discretion as we're in the middle of process. So more information will come over time. But really high level, we of course, laid the groundwork for this process with a bunch of preparation prior to the termination of the prior deal. So we're in a pretty good spot. We are -- as I mentioned in the prepared remarks, we're in the relatively advanced stage of that process of an auction process. We have, for example, received first round bids. I can say that the participation and the interest level is certainly robust. We have a really good number of highly credible, strategic and financial participants there. And beyond that, I'm sorry to say more information will come. We'll provide updates when we can. But it's very much on track. We're satisfied with the progress. And we, as mentioned, expect that transaction to close late this year. But again, no impact one way or the other on our financial guidance of operating earnings for the year.

Okay. Thank you for that. Also I wanted to check, given the relatively unique geographic footprint you have being in Virginia, could you discuss some potential opportunities you're focused on from the draft infrastructure bill, threats around some of the support for advanced clean technologies, renewables procurement, things like that? Thank you.

Yes. Thanks, Paul. I think it would come as no surprise, we're philosophically very much aligned with the intent of the package. We are focused on rural broadband, EV charging, grid reliability and resiliency. These are all items that are in that package that we're – we think make a lot of sense. So we'll obviously be watching as it makes its way through the process, pay attention to how the details get work out - worked out for appropriations, if the bill passes. A couple of specifics. We're very much in favor of support for R&D on clean technologies like hydrogen, small modular reactors. Those are things that we're focused on. And to the extent that, there's broad-based support that allow a commercialization in a way that can be quick and customer beneficial, we think that's very important and certainly something that we support. And obviously, clean energy manufacturing tax credits, which can help enable U.S. renewable supply, particularly offshore wind and solar, we think are really valuable. So we're very much engaged in Washington and participating in the process. We like the direction that it's going. Details yet to come, but we think there are some real possibilities there.

Great. Thanks, again.

Hey, Paul, I wasn't fast enough on the draw there when we started. I failed to mention – congratulations to you too on your new role at BAML, also well deserved. We look forward to working with you in this new context.

Great. Thank you very much. And we really appreciate you not reporting yesterday with everyone else.

Thanks.

Thank you. Our next question comes from David Peters with Wolfe Research.

Yeah. Hey, good morning, everyone.

Good morning.

Good morning, Dave.

First question I just have is on the triennial review in Virginia. I know, you have intervener and staff testimony due next month. But can you maybe just better frame out some expectations heading into that? And also understanding that, downside risk is limited in this case just by law, but could you also touch on or remind us some of the tools for the T2 review?

Yeah, sure. Thanks, David. So on triennial one, look, it's a rate proceeding. And we would expect, as in any rate proceeding, that there's going to be a wide variety of approaches and positions taken by the parties. We'll obviously know more as you said in the question early September, we'll hear from interveners. And then a couple of weeks later, we'll hear from the staff. So we'll get a sense then, but it's a rate case covering a four-year period and then setting rates going forward with the guardrail you mentioned. So I wouldn't be surprised, if we see a pretty wide variety of opinions expressed by the parties. But if you take a step back and just think about the bigger picture here in that case, we have rates below national regional averages. Our performance of our utility is outstanding on the generation and the wire side. And we're reducing our emissions and improving – reducing our impact on the environment. And so that's a pretty good place to be in a rate case. So we feel very good about that. As to T2, that's obviously – we're only a few months into the period that is going to be reviewed for T2. So a lot of details yet to go on the second triennial. But the tools that are in the toolbox like the customer credit reinvestment offset will be available to us in triennial 2. And then, as we pointed out in our prepared remarks and as we've noted for some time, as we move forward in this plan, the portion of our earnings that come from Virginia base as opposed to the rest of the business and in Virginia, in particular, the riders, decreases as a percentage of the overall amount. So, I think those are important considerations to keep in mind. Obviously, a long ways to go between now and triennial 2, but we've got tools in the toolbox and the percentage of our earnings affected by triennial 2 as compared to the rest of the company will continue to decrease.

Great. And then, maybe just one more. I know you have another filing pending before the Corporation Commission for capital related to the great transformation plan. I think last time in your Phase 1 plan, there were some disallowances for some of the grid-mod related spend. But just could you give us a sense of how you're feeling about your proposal this time around? And has kind of anything changed?

So, we're feeling very good about our proposal this time around. So last time, bear in mind, I think, about $200 million of capital got approved in the filing last time, but some things have changed since that last filing. The most significant one is that the Virginia Clean Economy Act has passed, and we now have an obligation to seek approval for a substantial amount of renewables over the course of the next 1.5 decades shore -- offshore wind storage all of that. And we're going to need to modify the grid in order to make sure that we keep operating in that environment. And that's what we told the commission in that filing. Things like Distributed Energy Resource management system will be incredibly important in this new world that we're moving into. So the Clean Economy Act is different. That didn't exist when we filed last time. Obviously, we also have the benefit of what we heard from the commission and the order on the last filing, and we can target and we have targeted what we're doing with this most recent filing based on precisely what they told us last time. And then, some of this filing is continuation of programs that they did approve last time. As I mentioned, they approved $200 million of capital in the last filing. So, all of those factors lead us to believe that we should have a lot of confidence in that filing. We'll hear, as I said in the opening, around the end of this year, but it's a strong filing. It's important for us as we integrate additional renewables to make sure that we operate the system well.

Great. Thank you for the color.

Thank you. Your next question comes from Jeremy Tonet with JPMorgan.

Hi. Good morning.

Good morning, Jeremy.

Just wanted to start off with RNG. I know you guys touched on that a bit in the slides here, but I just wanted to see if you can outline the expanded Vanguard alliance a bit more and the factors that went behind this expansion. How does this fit within your overall R&D strategy, I guess going forward?

Okay. Sure. Good morning, Jeremy. Diane Leopold, here. So, as Bob outlined in his prepared remarks, we really see RNG as a great way to intersect the essential gas service that we provide in reliable and affordable means to our customers in all of our states with our local gas distribution companies and enhanced sustainability. So, while this is a very early phase of development with renewable natural gas that we have been on the path on for the last several years, we decided in our investments to focus on agricultural RNG, so our swine and our dairy partnerships. And the reason we did that is because we believe that was the most carbon-negative, carbon-beneficial means to capture methane and repurpose that waste stream for a more environmentally friendly use. So, when it comes to the actual investment side of it, we now already have between both partnerships one project in service, which happens to be a swine project; and five projects under construction; and several more under construction by year-end. So as we were looking at our Vanguard partnership, we were really moving forward with development of a lot of prospects at a good rate and we saw enough interest in the demand for this renewable natural gas, multiyear contracts with customers that are interested in ensuring a source of supply for their sustainability targets. So we're really looking to develop these projects in the short to medium term for these customers. It could be the transportation market. It could be other local distribution companies. It could be thermal industrial users. And then long term, look to our regulated gas customers to help them lower their carbon footprint. So, we're working with stakeholders and regulators and policymakers towards that goal. And the green therm programs in Utah and we've already asked for in North Carolina is just one step in that path to try to move the renewable natural gas towards our regulated customers.

Got it. That's helpful. Thanks for that. And maybe, I just want to come back to Questar for a moment if I could. I know, you can't comment too much on the sales process here, but just wanted to hear your thoughts the overall environment to sell an asset now. I think oil was approaching negative 37 when you were first marketing it. Now, it's about 70. Just wondering any thoughts you could share about the environment to sell a midstream asset now.

All right, Jeremy. I'm taking notes during your question. I'm going to distribute that to our bidder universe like where we're going. Well, look, the environment is pretty strong. As you know in the last year, equities are up midstream phase, commodities way up as you mentioned, equities are up in part because, for true midstream companies, growth is up, so all good, means the macro environment is good. I would mention just to moderate that a little bit that, Questar pipeline this asset as you know, it's awesome. It's an awesome asset. It is though a utility like. That's the way we always operated it what it is now. It earns money through long-term contracts for its capacity. So, it's not really as much as a rocket ship up or down, as maybe the overall midstream true midstream market. That said though, we're pretty happy with where we're going, robust interest as mentioned and we'll come back and give updates as soon as we can.

Got it. That makes sense. I’ll leave it there. Thank you.

Thank you.

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