Welcome to the Dominion Energy Third Quarter Earnings Conference Call. [Operator instructions] I would now like to turn the call over to David McFarland, Vice President, Investor Relations. Please go ahead.

Good morning and thank you for joining today's call. Earnings materials, including today's prepared remarks 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 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; Steven Ridge, Senior Vice President, Chief Financial Officer; and Diane Leopold, Executive Vice President and Chief Operating Officer. I will now turn the call over to Bob.

Thank you, David. Good morning, everyone. I'll begin my remarks by highlighting our safety performance. As shown on Slide 3, our OSHA injury recordable rate for the first nine months of the year was 0.43, a significant improvement relative to already strong historical performance. I commend my colleagues for their consistent focus on employee safety, which is our first core value. Moving now to the business review; it's been a year since we announced the review. These last 12 months have been a challenging environment for utility investors generally and even more so for Dominion Energy shareholders. As stewards of investor capital, we take that very seriously. That said, my conviction around the decision to launch and execute the review has not wavered. It is the right course of action for Dominion Energy, and we are seeing it through to its successful completion with urgency and with care. Let me take a step back and share some of the most common themes I heard from our investors in the months leading up to the announcement of the review. Dissatisfaction with our track record of inconsistent earnings growth and an earnings mix, which too often had what some investors considered to be lower quality earnings, questions about the complexity and durability of the Virginia regulatory model and concerns around the balance sheet, which included never fully addressing the impact of the failure of our master limited partnership financing model, as well as leaning on our balance sheet to remedy short term earnings pressures at the potential cost of longer term credit quality, both of which contributed to our living below our downgrade thresholds even in a low interest rate environment, all of which led to inquiries around whether a new approach was needed to deliver results that were consistent with shareholder…

Thank you, Bob, and good morning. Our third quarter 2023 operating earnings as shown on Slide 13 were $0.77 per share, which included $0.02 of help from better-than-normal weather in our utility service territories. Results with and without this weather help were above our updated guidance range midpoint of $0.74. A summary of all drivers for earnings relative to the prior year periods is included in Schedule 4 of this morning's earnings release kit. Third quarter GAAP net income was $0.17 per share, and a summary of all adjustments between operating and reported results is included in Schedule 2 of the earnings release kit. The sale of Cove Point, which closed in September, and the announcement of the sale of the gas utilities also in September, require changes to our financial reporting structure and recasting of our financial results in accordance with accounting rules. First, for GAAP purposes, Cove and the gas utilities have been reclassified as discontinued operations on the income statement and held for sale on the balance sheet and are reported in the corp and other segment. As a result, earnings from these assets have been removed from operating earnings. We have recast year-to-date results and their comparative periods to reflect these changes. As I'll explain in a moment, the full impact of expected interest savings from parent-level debt repayment as a result of these transactions is not included in 2023 results, even though the full-year earnings contributions from those businesses are now excluded from operating earnings. Due to the dissolution of the gas distribution reporting segment, our renewable natural gas business is now reported with our contracted energy segment, formerly known as contracted assets, which consists of millstone, existing long-term contracted solar, and the offshore wind installation vessel Charybdis. Again, this change is applied retroactively to…

[Operator instructions] And we have our first question from Shar Pourreza with Guggenheim Partners.

Just a little bit to unpack here. I guess, can you just maybe drill down a bit further on 14 and 15 slides and kind of the messaging around breaking ahead? You're clearly trying to tell investors to not put a growth rate on 290 to get to '25. It seems to be that you're pointing to more tailwinds than risks. Can you just maybe elaborate a bit more on the drivers, like some of the balance sheet moving pieces as it relates to the hedge portfolio, transferability, and even potential free cash flow growth at Millstone, right? And a follow-up, should we assume the pending growth rate, guide will be off that much higher base in 2025? Thanks.

Shar, I'll take that one. So on the second question, again, we view 2025 as the foundational year for our post-review earnings growth. So when we do our investor meeting, we'll provide our forecast for 2025 and a growth rate off of that 2025 number, a multiyear growth rate off of that 2025 number. And with regard to slides 14 and 15, look, we felt it was important, given the uncertainty that's been created as a result of the review, to try and be clear about what we think is an accurate assessment of what 2023 earnings are, not because it's going to be the foundational year, but because it's important that investors feel confident about our ability to deliver good results. And the language we've provided on Slide 15 is simply an indication that given a host of very important input variables, which are not public at this time, we would simply caution against taking a simplified approach of applying a growth rate to the $2.90.

Got it. Okay. We'll wait for more details there. And Steven, the deck is so detailed around the option for win sale process, and it's clearly implying that nothing else is for sale like Scana, which is good. There is sort of a big concern for investors. I have to ask, I apologize for asking, but would Dominion be willing to accept a portion of their partner's construction in the sale, or will the risk sharing have to be basically 100% symmetric in order for the sale process to proceed? So basically asking how comfortable would you be absorbing your partner's downside cost risk, especially as we're thinking about balancing that risk for rate payers and shareholders? Thanks.

Yeah, Shar. Let's take a step back for a moment in this process. When we announced the top to bottom business review last fall, we didn't even have legislative authorization to take an equity partner in offshore win. Now we do, thanks to our proposal and our work with the legislature earlier this year. We didn't have an EIS, a record of decision, for the project. Now we do on the schedule that we expected. We hadn't started manufacturing equipment. Now our first shipment of monopiles has arrived on time. When we started, we had about 75% of project costs fixed. Now we're at 92%. So I could go on with how well the project is going. So we feel very good about what we've done so far. We've got multiple parties who are engaged with us, and our objective is a true equity partner with pro rata sharing of project costs. That's what we're after.

Okay, thank you. Just answered my question, Bob. That's very helpful. Thank you, guys. We'll see you in a couple of weeks -- in a week. Thanks.

And our next question comes from Nick Campanella with Barclays.

I just wanted to ask, I know there's a lot of scenarios on the sell-down out there, but even up to like a 50% sell-down on the offshore wind, would you still kind of expect common equity needs to fund growth going forward? You're just calling out some items here, contracted energy cash flow, tax credit transferability. Could you just help us kind of think about what the pro forma entity financing needs were if you were to sell down? Thank you.

Yeah, we're not giving that guidance, Nick. The language we continue to use is that we're very specific on what we're attempting to achieve for credit, and we're also very specific on what we're attempting to achieve with regard to evaluating efficient sources of capital, seeking to minimize any amount of external financing need. When we have our investor meeting, we will provide a full outlook on what our financing plan is and so, we're just not in a position to give that guidance because the review is not complete yet.

Understood. And then, Steve, I think in your remarks, you said, the capital budget will be significantly higher than any in your history and I went back to your slides. I think you had like a $37 billion capital plan before you announced this strategic review. So, should we take your comment to say that you should be higher than that number, or is that even net of LDC sales and the offshore wind fell down? How should we think about that?

Yeah, Nick, let me provide a little guidance on that. So, from 2018 through 2022, our company had a capital budget on average of about $6 billion per year. When we last provided our long-term growth guidance which was the fourth quarter of 2021, net gas distribution so taking gas distribution capital out and you can go back and look at our Q4 2021 earnings debt for this, we averaged in '23, '24 and '25 at the time about $9 billion of capital investment each year over '23, '24, '25. We haven't at this time given any update to that, but we've talked a lot about some of the drivers potentially increase those numbers. Another anecdotal piece of information is that year-to-date through 2023, our CapEx has been $7.2 billion, a year ago through nine thirty, it was $5.2 billion and for the full year 2022, it was $7.6 billion. So you can see even in the result year-to-date how significantly increased our capital budget is an it I want to be clear about what's driving that. What's driving that is demand growth, policy directives and reliability investment many of which are already underway under writer programs at DEV as well as growth at our South Carolina utility. So more to come on that Nick, but we have a very strong demand growth driving on a very robust amount of capital investment in a regulated businesses.

Hey I appreciate that, thank you.

And our next question comes from Steve Fleishman with Wolfe Research.

Yeah hey, good morning, thanks. So first just to repeat Shar's question a little bit the offshore wind cell and Bob I think you said your objective is to find a partner that will have pro-rata risk sharing and do you -- if you get the print that the people looking at it willing to do that?

Yes Steve, we're going to look at total picture on any deal. So I'm not going to tell you what any specific pieces of it may be while we sit here today. We're going to judge any deal against the commitment and priorities that we set out at the beginning of the process to help improve our credit metrics because it to solidify our credit profile, does it enhance shareholder value, does it reduce the company's concentration in this one project, is it consistent with our goal of reliable performance? Those are things we're going to look at and again our objective is to get a true equity partner with pro-rata sharing a project cost. I can't tell you today what the specific pieces of any deal maybe because it's not done yet. That's what we're after.

Okay. And just another question on the offshore wind the 92% fixed cost that's great and you've made a lot of progress. I think one of the things if you look at issues with big projects over time is the suppliers end up having issues and can't meet the obligation they came to either financially or they're just delayed or whatever. So could you just talk to that issue since that's often been an issue with big projects that have been problems to suppliers end up not coming through?

Yes. We communicate regularly with them, with our suppliers and if you look at the deck that we posted on the website on offshore wind, we walk through each one of them and the status of the contract with each of them and you can see they're all performing and they're all performing on time. Now I know that Siemens in particular is one that's been in the news recently and there are turban provider. I communicate regularly with the CEO Siemens Gamesa Renewable Energy and I most recently heard from him after that news on some of the challenges that they're facing mostly with their onshore business and sort of project potential that they have but they need to be able to put guarantees on those. So they are growth opportunities but that's causing them some challenges that have been in the news. So he assured me they're committed to their contractual obligations and he said nothing will change the close and successful partnership we have from their side. So we're very focused on this. We communicate regularly with all of those providers and as we outlined earlier and as you can see in the deck, those projects are going very well. They're all performing. They're all on time.

Okay. One last quick one for Steve, just the simple one. The slide that talked about the 290 for '23 and don't just use a normal utility growth rate to '25 and you go through those factors. Looks like pretty much almost all of them are positive factors. So, my interpretation of that is it should be better than that. I just want to make sure that that's correct.

Well, we're not giving guidance. So, I'll start with that. I think we provided this list to try and be comprehensive and holistic, so that we're not suspected of trying to cherry pick or give half guidance. We talked a lot internally in advance of this call about staying true to what we've done thus far, which has been disciplined about not providing partial guidance until the review is complete and this is in the spirit of that. Now, I would just say on individual items, some of these are certainly tailwinds. Higher rates, of course, I probably wouldn't describe that as a tailwind, but we talk about the in-the-money portfolio of rates. So, I don't want to get into a box given that we're not giving guidance on any of these particular items, except we felt it was important to highlight the various inputs that we have not disclosed that we think will be important to analyzing accurately what our 2025 earnings will be.

Great. Thank you very much. Appreciate it.

And we have our next question from Jeremy Tonet with JPMorgan.

Appreciate the commentary just laid out there with regards to how you're talking about the review, but just wanted to go to the dividend, if I could, and just wanted to see if the dividend policy remains intact, even if for some reason you keep all of wind. Is there any scenario where, keeping the dividend at these levels just wouldn't make sense?

We're committed to the dividend, Jeremy. As we said, we're 100% committed to the dividend. Trying to talk about scenarios that people could imagine, I don't think is terribly productive. We've been committed to the dividend since the beginning. We haven't wavered in that. We're not wavering on it today.

Got it. That's very helpful. I'm going to leave it there. Thank you very much.

And we have our next question from Carly Davenport with Goldman Sachs.

Hey, good morning. Thanks for taking the questions and for all the color thus far. Maybe just one quick one on the business review. I guess, can you just help us frame the risk around the timeline here? Are there any factors in particular that you're watching that could potentially push that beyond the, late '23 to early 2024 timeline that you've lined out?

No. We, I think, laid it out pretty clearly. We're in the last stage here on evaluating an offshore wind equity partner. But no, there's nothing else out there.

Great. Thanks for that. And then, appreciate the disclosure on the interest rate exposure. Just on the $8 billion in the interest rate derivatives that you highlighted, is there anything you can provide in terms of the tenor on those contracts, just as we think about the moving pieces on financing costs in the coming years relative to that? I think it was the sub 3% average coupon that you highlighted.

Yeah. So we've got derivatives at both VEPCO as well as at the holding company and more at the holding company than at Vepco. Vepco is, because we use hedge accounting, we're a little more restricted on when we utilize those hedges. So those are '24-'25 style hedges at DEI. We're able to use any time in advance of a future settlement date. So we've got some flexibility in timing of use of that, anywhere between now and 2028, based on the current notional. So we've got some flexibility there and as part of the investor day, we'll of course provide some incremental disclosure around how we intend to utilize that portfolio.

Great. That's very helpful. Thank you.

And we have reached our allotted time for our question-and-answer session. This does conclude this morning's conference call. You may disconnect your lines and enjoy your day.