Welcome to the Dominion Energy Fourth Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to David McFarland, Vice President, Investor Relations and Treasurer.

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, Executive Vice President and 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. As always, let me begin with safety, as shown on Slide 3. In 2023, our employee OSHA recordable incident rate was 0.45, a significant improvement to already strong historical performance. We also achieved a record low lost time restricted duty injury rate. We're pleased but not satisfied with these results. I strongly believe that exemplary safety performance unlocks our ability to execute optimally across the 3 pillars of our mission, as shown on Slide 4. We maintained outstanding reliability in 2023 as our electric customers in Virginia and South Carolina had power 99.9% of the time, excluding major storms. Our residential rates continue to be well below the national and regional averages. From 2005 through 2022, we've reduced Scope 1 carbon emissions from our electric operations by nearly 50%, even as annual energy generated over that period has increased 9%. Going forward, you'll continue to hear how we're executing against our mission because an exceptional customer experience positions our company to deliver the best results for our shareholders. I'm very pleased to share several important updates with you this morning as it relates to our business review in the Coastal Virginia Offshore Wind Project. Let me begin by reiterating my previous commentary regarding the review. Our guiding priorities and commitments are unchanged, as is my conviction around both the decision to undertake the review and the quality of the result I expect us to deliver. The review will comprehensively and finally address foundational concerns that have eroded investor confidence in our company over the last several years. We will not pursue a series of partial solutions that leave key elements and risks unaddressed. Instead, we'll deliver a comprehensive result that will provide a durable and high-quality strategic and financial profile that optimally positions Dominion…

Thank you, Bob and good morning. Our fourth quarter 2023 operating earnings were $0.29 per share. Full year 2023 operating earnings were $1.99 per share. Full year GAAP net income was $2.29 per share. A summary of all adjustments between operating and reported results is included in Schedule 2 of the earnings release kit. As shown on Slide 16, we've provided a reconciliation of actual operating earnings relative to the guidance we provided on the last earnings call. There were 3 key drivers for the variance to guidance. First, during the fourth quarter, we experienced $0.02 of worse-than-normal weather in our utility service territories. Second, we incurred $0.03 of hurt related to certain outages at Millstone. Third, as part of the business review and after we had given earnings guidance in November, we elected to change our accounting methodology for the way we recognize investment tax credits and earnings. This resulted in a $0.02 quarterly and $0.07 annual negative variance to guidance. I'll expand more on this accounting methodology change in a moment. A summary of all drivers for earnings relative to the prior year period is included in Schedule 4 of the earnings release kit. As we mentioned on our last earnings call, we view 2023 as a transition year for the company due to the pending results of actions we've taken as part of the business review to support our long-term objectives. With that in mind, let me refresh our housekeeping around 2023 results. In 2023, our operating earnings per share were $1.99. Similar to last quarter, we believe it warrants highlighting many of the same adjustments that investors may consider to more accurately assess 2023 results. First, we experienced historically mild weather during 2023, representing $0.18 of full year earnings headwinds, including $0.02 in the fourth quarter.…

[Operator Instructions] And we'll take our first question from the line of Shar Pourreza with Guggenheim Partners.

Can you hear me, Bob?

Yes.

Excellent. Just, obviously, congrats on the sale and getting the review to this point. Just on the process itself, can you just maybe speak a little bit more in depth of the bidding interest and why you settled on this sharing structure in the agreement? And just to confirm, this is a true sort of 50-50 pro rata sharing through the $11.3 billion, right? So the 1% difference in Slide 10, this is just tied to the potential movement of the withholding amount. Is that correct?

You have that exactly right, Shar. So it is 50-50 through $11.3 billion and then there's the adjustment that we described. So on the process, we attracted quite a bit of interest from financial and strategic counterparties. We talked a little bit about that on the last call that we were in late stages with several attractive parties. And they diligenced this project extensively. They came in with their own experts in offshore wind, obviously, teams related to regulation, finance and so forth. And what was really encouraging to me was to hear unanimously from parties who participated how well this project is going. So it was -- there was nobody who got in diligence who was concerned about the project at all and that was really helpful. So then as we thought about how we were going to choose a partner, if you refer back to some of the things that we've said before, on the last call, we noted the importance of having pro rata sharing of costs. And we've achieved that here and we feel very good about that. We said that we needed a transaction that made sense for our customers and our shareholders and that was in keeping with the objectives that we set out in terms of the business review. And we believe this transaction with Stonepeak meets that extremely well. The cost sharing, with protection from any hypothetical or unforeseen project cost increases but having a well-capitalized partner to help us there was critical. And improving our credit profile means that this is going to be extraordinarily beneficial for our customers and our capital providers, so this is a very good deal. We're very pleased with it. We're pleased with the way the process worked.

Got it. And then sorry, Bob, do you have an option to farm down a stake again in any sort of succeeding offshore wind projects, let's say, CVOW 2?

This legislation that permitted this partnership structure, I think, was designed for this project. And so we're focused very heavily on on-time, on-budget on offshore wind right now and we've got a very good partner to work with to do that.

Got it. And then just lastly, not to get too far ahead of next week, I mean, you've obviously sought to minimize external equity through this whole process. I guess, how does this announcement today inform your views around this, especially as we're thinking about an ATM versus a block? And are there sort of any other efficient sources remaining we should be aware of; thinking particularly around the vessel here with RNG may be off the table?

Thanks, Shar. Steve. I'll take it. So what we've said is that the offshore wind is the final strategic step in our process. And that next week, we look forward to sharing our comprehensive strategic and financial plan. We're not going to comment today on any specifics with regard to financing plan. I'd reiterate what we've shared since the beginning of the review that we're seeking to meet and exceed our downgrade thresholds, while seeking also to minimize the amount of external equity need. We think that the transactions we've announced to date have been very supportive of our objective. But we'll provide a fulsome plan next week and I think we're going to hold off on giving pieces and parts until we get there.

Fantastic, guys. Congrats and we'll chat next week.

Thanks, Shar.

And we'll take our next question from the line of Nick Campanella with Barclays.

So yes, congrats. So I guess, just -- you had this view in the slide out on 2025 considerations on the third quarter call and the drivers are largely the same. But you've also kind of introduced this pension and ITC disclosure. So I guess, just as you kind of think through the $0.08 to $0.10 of detriment and then from pension and then the $0.03 to $0.04 of ITC, is that kind of incremental to that 2025 view?

Yes. Nick, this is Steve. So just to be clear, we have never given 2025 guidance and we've been very careful not to do that. On the last call, we talked about sharing that list to emphasize the fact that, in order to create a view on 2025 as an external party, you need to be thoughtful about a variety of factors, many of which we haven't given any information on. And we went through that list just to highlight what some of those could be. We don't have insight into what folks have assumed around ITC or EROA in any of their internal models or estimates. So it's very difficult for us to be in a position to sort of describe how they ought to consider our updated information on those topics today in their view. And we're going to hold off from sort of providing anything like that. What I can say is, we look forward again to sharing what we think will be a very compelling result next week. And we've tried to be thorough in helping folks understand, again, what some of those drivers that they ought to be considering should be.

Okay. I appreciate that. And I guess, just -- it's great to hear the agency feedback does seem like it was positive and you're highlighting 100 basis points increase to FFO to debt from this transaction. I guess, just from a numeric perspective versus where the agencies want you to be out of this review, where does that kind of put you holistically?

Yes. Nick, again, we're not going to disclose kind of where our pro forma credit metrics are going to be. We'll provide that next week. Certainly, from a qualitative and quantitative perspective, the agencies have been publicly forthcoming with regard to their support of the steps we've been taking in the review. And so we'll -- again, we'll -- not trying to be coy but trying to be consistent with how we've approached the review for the last 15 months, we're not going to give you our sort of pro forma credit view. We'll provide that next week.

Understood. Understood. Looking forward to next week. And congrats again. Thank you.

Thanks, Nick.

And we'll take our next question from the line of Jeremy Tonet with JPMorgan.

Just wanted to kind of follow up on that last line of questioning a bit. And I appreciate there's some things that won't be said today be said next week. But some of the agency communications that we had seen said that current FFO to debt with this type of arrangement would look very strong. But then over the construction cycle, that would soften and put pressure there. And was just wondering if you have any -- anything you can share there as far as thoughts on how that stacks up, if the agencies have previewed this transaction? Or just any other thoughts in general, I guess, over the time period, the pressures, that cash drag this project had.

Yes. Thanks, Jeremy. So what I would say on that topic is, generally, I think we agree with effectively how the agencies were describing it which was some prefunding of some very heavy capital plans that we have in our plan which we've talked about in previous calls. We haven't given specific numbers. Tomorrow, when the K comes out, you'll see our capital investment this year is $10 billion which is relative to an average of $6 billion for our company. And so there was some -- effectively, some prefunding from asset sales and I think that's what they were signaling. Just generally on our relationship with the agencies, we just -- we don't speak for them. And I will say that we have been very deliberate throughout the process and making sure that they understood, in some detail, some confidential detail, how we were thinking about the review and gathering their perspectives as it related to how they think about our company. And that has extended some -- I can share, it's extended to some formal engagements with rating agencies that have allowed us to make sure that we have a good sense of where they are relative to how we're thinking about our plan and our business risk profile. And with regard to this transaction, specifically, as I mentioned and as we typically will do, we walked them through in some fairly detailed manner the terms of the offshore wind partnership transaction before we signed and made sure that we were comfortable indicating in our script today that we think that they'll view it as unambiguously credit positive.

Got it. That's very helpful. And I just wanted to pivot a little bit. Maybe I might have missed it here but language around the dividend, dividend outlook here, is there any new messaging that we should take away? Or should we just be waiting for next week?

There is no new messaging. It's the same as it has been since we started which is we are 100% committed to the current dividend.

And Jeremy, I'll go out on a limb and suggest that you won't hear something different next week, either on the dividend, sort of beat that like a drum this whole time period. So I don't want people to think that we're saying that today and we'll change our tune next week. We're obviously aware of trends in the space around payout ratios. We're aware of that but no change. And you shouldn't expect a change next week from what we've said publicly around our dividend and where we see the dividend going over time.

Got it. That's very helpful. I'll leave it there.

Thanks, Jeremy.

[Operator Instructions]

Operator, it sounds like there's a technical issue. I know there were some other folks in the queue before that. We apologize, of course.

We are getting people requeued now.

Okay, all right. Thanks.

Okay. We'll take the question from Jeremy Tonet next.

I figured I would take another shot here, if there was room. And just realizing all the news today is very fresh but maybe if you could provide any more color with regards to stakeholder feedback at this point or from the regulators, I guess, just how you're expecting this transaction to move forward?

Yes. Jeremy, we just talked to the regulatory staff this morning after the announcement went out. But let me just talk sort of generally about how we expect this to be received; so just to start with the process. We need to get approval from the State Corporation Commission in Virginia, the North Carolina Utilities Commission. We need some administrative approvals from BOEM but the primary approvals are at the state level. And as I mentioned earlier and as I believe you know, legislation that was passed unanimously in Virginia last year enabled this partnership structure that we've put together. So it has to be approved by the SEC under the Utility Affiliates and Transfers Act. And the standard there is adequate service at reasonable rates have to be maintained and that the arrangements are otherwise in the public interest. And then we need Affiliates Act approval in North Carolina as well. In Virginia, that Affiliates Act approval has a statutory time line of 90 days. The other regulatory approvals don't have particular time lines on them but we think it's reasonable to assume we'd get approval by the end of the year; so that's the process. But if you sort of step back for a moment, both Virginia and North Carolina policymakers both understand the value of a strong balance sheet. If you look at Virginia's general obligation bonds, they've been rated AAA by Moody's since 1938, by S&P since 1962 and by Fitch since 1991. And I can tell you that when you talk to policymakers in Virginia about the AAA bond rating, they usually use the adjective coveted. And that's because they realized that a strong balance sheet for the state allows them to provide the best service to their constituents. And the same is true for our company. If we have a healthy balance sheet, we're going to provide the best customer experience. We're going to be able to invest to meet the state's goals. That is a very compelling reason for regulators to approve this transaction and I'm highly confident that they'll see the benefits and approve it.

Got it. That's very helpful there. And maybe if you might be able to talk a little bit more, I guess, on the emerging PJM transmission opportunity, with PJM recently increasing the 10-year low-growth CAGR and Domain's ability to capitalize [indiscernible].

Diane will talk a little bit about that. And Jeremy, we're quite impressed with your ability to navigate the technical issues here.

Yes. Jeremy, so yes, you're absolutely right. The latest PJM forecast was somewhat higher than last year. So we're at about 5.5% a year in Dom's zone. Some of that is with our neighboring co-ops that are within our zone. We continue to see a lot of transmission investment opportunities. In the last PJM open window, there were about $2.5 billion of additional projects that were awarded to us. Much of that supports growth in the data centers and we fully expect there will be additional projects in future years to keep pace with that demand growth.

Got it. That's helpful. I'll leave it there.

Thanks, Jeremy.

And our next question, please state your name and company name before asking your questions.

This is Steve Fleishman -- is that me?

Steve, we can hear you. Thank you for hanging in there.

Yes. That was interesting. The -- I guess, just -- I assume, can you -- you can't really comment on where the FFO to debt is laying out overall but should we assume, based on kind of the downgrade threshold that we've seen in the past are likely to stay the same by the agencies from this review?

Yes.

Okay, that's helpful. And also, just a side question on -- it was a quiet legislative session this year, as far as I can tell. I just want to make sure there was nothing going on in the legislative session that we should be aware of.

Steve, your characterization is accurate. Major issues that General Assembly was dealing with didn't have much to do with energy. They obviously elected the SEC judges. And there were legislative proposals related to energy but they're none that are still active in the General Assembly at this point.

And we'll take our next question from the line of Ross Fowler with UBS.

So a couple of questions; commercial load growth was up almost 9% in 2023. And I think you guys talked a little bit about data centers. But if I remember correctly, there were a lot of constraints in sort of putting data centers into Northern Virginia because of transmission. How do you think about that growth going forward into 2024, is there a constraint that limits that in 2024? Or should I be thinking about something of the same scale over the coming year?

So when you say Northern Virginia, it was one area of Loudoun County, Virginia which is where there are a heavy concentration of data centers and we did have some transmission constraints. We've undertaken several shorter-term projects that were -- we've either completed or about to complete. And then we have, ultimately, two transmission line -- 500 kV transmission line projects, one of which is underway. The other is in the regulatory process. Those, frankly, that first one of those two 500 lines will relieve the constraint in Loudoun. And we've been able to start up connects on data centers. We had a brief period where we took a pause to make sure we understood exactly what we were doing but we've restarted. But I think the broader question is we will absolutely be able to serve the data center growth that we expect is coming. It will require investment in transmission. Diane just talked about that, out of the most recent PJM open window. We've had a lot of data center growth in our company, in our service territory for some years. We have very good relationships with the data centers. And we expect to see that growth continue and we expect to be able to serve it.

That's great, Bob. Thank you for that update. and then one more, if I may. I appreciate you can't answer a lot of questions around a lot of things today until we get to the Analyst Day next week. But hopefully, when you can discuss, fixed costs are now, I think, at 92 -- just north of 92% on this and there's about 700 -- just south of $750 million on fixed costs. How are you thinking about your capabilities and time line to lock more of that on fixed costs in -- on this project?

Yes. It will come in sort of gradually as we move closer to the end of the project. The way it worked earlier, we would lock in a contract and you might get a pretty big chunk at one time or another. From here on out, it's some onshore transmission, it's fuel for vessels that will be doing the offshore construction. And that's just going to sort of come down overtime.

And the only other is miscellaneous project management cost, just our own project management through time. So those are the largest factors.

And we'll take our last question from the line of Durgesh Chopra with Evercore ISI.

Two quick questions. Sorry, I just want to be absolutely clear. The -- with the announced offshore sale, this is the last asset sale that we should be expecting? Or are there portfolio optimizations we should be expecting heading into the Investor Day next week?

You're correct. That's the last one. As we signaled on the last call, the potential for an offshore wind equity partner was the last strategic step. We've taken that step.

Got it. And then just one small net, maybe this is for Steve. When we talk about the ITC accounting change and then the pension accounting change, Steve, can you just remind us what is embedded in your '23 representative number there, EPS number there? What is kind of baked into that number?

Yes. In 2023 -- you'll see in Footnote 22 of the 10-K tomorrow, you can actually calculate it. We disclose all this. You'll see that in 2023, we'll have generated about $0.40 of earnings associated with pension-related income. And so going forward, we've talked a little bit about EROA. There's another driver that I'll talk just briefly about that would bring us from $0.40 closer to that average of $0.20. We -- like the majority of corporate sponsors of pension plans, we calculate one of those key numbers, our expected return which like interest cost and service cost, as a component of the net income or expense for pension. We effectively smooth the actual asset returns over a 4-year period and apply our expected return on asset to that sort of smooth asset value. And that's not only permissible, that's standard. Some people smooth, I think, over 5 years. We smooth over 4 years. Again, that's pretty standard. And because of 2022's performance, at least in our portfolio, where we experienced a very significant loss to value across, to be honest, both the equity and fixed income portions of our portfolio which, again, I don't think is unusual for folks. What you'll see between '23,'24,'25 and '26 is you see that smoothing occur such that the impact of that loss is fully recognized by 2026. Now it's not just as simple as saying '22 was down and I'm going to take a portion of that each year. Every year, we do that. So you effectively have the stacked Excel spreadsheet, where each year, you're adding a little more of that -- the prior year and some years are dropping off that schedule. So it kind of it's a net look of your asset value with this smoothing construct. Hopefully, I haven't just confused you. But as a result of 2022's hurt flowing through, that will be a driver. If you're asking -- if you're at $0.40 today and you're telling it needs to be closer to $0.20 and you've given us a sensitivity around 100 basis points, how would you get to the next? That's a big driver of that remaining amount. For ITC, in 2023 as a result of the switch to deferral method, I think we'll end up with something like $0.03 in our 2023 results. And again, what that's from is the recast of historical results. We go back and we say, hey, if we had not accounted for this as a flow-through, if we accounted for it as deferral, some of that value is over that 30-year period. So as I mentioned, $0.03 to $0.04 of expected operating EPS from ITC credit going forward and that's about where we would be in 2023 as well.

Perfect. And Steve, just to be clear, I apologize, this is under the weeds. But -- so if I'm thinking about prospective EPS, net-net, we should be -- versus '23, $2.85 [ph] in '23, we should be $0.20 lower net-net, right, ITC being just kind of the same and the pension being $0.20 lower.

Yes, it's not probably quite so precise. We're using -- we're giving you $0.20 as the average over '25 to '29 and there is some fluctuation in that. But generically, versus 2023, $0.40 would be moving something to closer $0.20 over the '25 to '29 period.

Thank you, Steve.

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