Dominion Energy Financial Model

• Total assets: Approximately $100 billion.
• Key asset categories: Net Property, Plant & Equipment (PP&E) constitutes over 70% of total assets. Regulatory Assets are also highly material, representing deferred costs (like fuel or storm expenses) approved for future recovery from customers.
• Goodwill & intangibles: Historically significant due to past acquisitions (e.g., SCANA), but reduced following the gas distribution divestitures.
• Working capital profile:
• Days Sales Outstanding (DSO): 35-45 days.
• Days Inventory Outstanding (DIO): 20-30 days (primarily fuel inventory).
• Days Payable Outstanding (DPO): 30-40 days.
• Net working capital as % of revenue: Typically negative or near zero.
• Working capital funding: The company frequently operates with negative working capital, using short-term commercial paper to bridge timing differences between fuel purchases and customer billings.
• PP&E: Consists of generation facilities (nuclear, gas, solar, wind), transmission lines, and distribution networks. Useful lives range from 30 to 60 years.
• Right-of-use assets: Immaterial relative to the massive PP&E base.

• Capex as % of revenue: 70-85% (utilities are exceptionally capital intensive).
• Maintenance capex vs. growth capex: Approximately 30% maintenance, 70% growth.
• Major capex programmes: A $50 billion to $65 billion capital plan for 2025-2030. The centrepiece is the $11.5 billion CVOW offshore wind project, alongside massive transmission upgrades to support Northern Virginia data centres.
• Capitalised software: Immaterial compared to hard infrastructure.
• M&A pattern: Historically a major acquirer, but recently executed a massive divestiture programme to simplify into a pure-play electric utility.
• Typical acquisition multiple paid: Not applicable for the current organic growth strategy.

• Total debt: Approximately $40 billion to $45 billion (significantly reduced by $21 billion following the 2024 strategic review).
• Debt/EBITDA ratio: 6.0x to 6.5x.
• Credit rating: BBB+ (S&P), with a stable outlook following the Enbridge and Stonepeak transactions.
• Key debt instruments: Senior unsecured notes, tax-exempt bonds, commercial paper, and junior subordinated notes.
• Maturity profile: Laddered maturities with heavy reliance on rolling short-term commercial paper for working capital.
• Interest rate profile: Predominantly fixed-rate long-term bonds, but sensitive to interest rates during new debt issuance for the $65 billion capex plan.
• Covenants: Standard debt-to-capitalisation limits.
• Share repurchase programme: Inactive. The company issues equity (often via at-the-market programmes or dividend reinvestment) to fund capex.
• Dividend policy: The company pays an annual dividend of $2.67 per share. Management has committed to holding this flat until earnings grow sufficiently to bring the payout ratio down to the mid-60% range.

• Operating cash flow conversion: OCF / Net Income typically ranges from 1.5x to 2.5x due to massive depreciation add-backs.
• Free cash flow margin: Deeply negative (-40% to -50% of revenue) because capital expenditures vastly exceed operating cash flow.
• Major non-cash items: Depreciation, deferred income taxes, and Allowance for Funds Used During Construction (AFUDC).
• Working capital cash flow impact: Highly volatile year-to-year based on the over- or under-recovery of fuel costs from customers.
• Capex intensity: Extreme. The company must constantly raise external capital (debt and equity) to fund its infrastructure build-out.
• Cash tax rate: Near zero or negative in many years due to accelerated depreciation and production tax credits (PTCs) from renewable energy investments.

1. Assumptions: Macroeconomic drivers, allowed ROEs by jurisdiction, equity ratios, rate base growth targets, and the $65 billion capex schedule.
2. DEV Segment: Virginia rate base roll-forward, data centre load additions, CVOW capital tracking, and revenue build.
3. DESC Segment: South Carolina rate base roll-forward, customer growth, and revenue build.
4. Contracted Energy Segment: Millstone generation volumes, PPA pricing, and renewable asset tracking.
5. Consolidated Income Statement: Aggregation of segment revenues, fuel costs, O&M, D&A, interest expense, and taxes.
6. Rate Base Roll-Forward: Beginning rate base plus capex minus depreciation minus deferred taxes equals ending rate base (the core driver of utility earnings).
7. Balance Sheet: PP&E schedule, regulatory assets/liabilities, debt tranches, and equity.
8. Cash Flow Statement: OCF, Capex, and Financing activities (calculating the exact debt and equity funding gap).
9. Debt & Interest Schedule: Tranche-level debt tracking, commercial paper balances, and interest expense calculation.
10. Valuation: Dividend Discount Model (DDM) and standard Unlevered DCF, including a calculation of the regulatory asset base terminal value.

1. "DEV Revenue = (DEV Average Rate Base x DEV Regulatory Equity Ratio x DEV Allowed ROE) + DEV O&M + DEV D&A + DEV Fuel Costs"
2. "DESC Revenue = (DESC Average Rate Base x DESC Regulatory Equity Ratio x DESC Allowed ROE) + DESC O&M + DESC D&A + DESC Fuel Costs"
3. "Ending Rate Base = Beginning Rate Base + Segment Capex - Segment Depreciation - Segment Deferred Taxes"
4. "Contracted Energy Revenue = Millstone Generation (MWh) x Average PPA Price + Renewable Generation (MWh) x Renewable PPA Price"
5. "Consolidated Fuel Expense = DEV Fuel Costs + DESC Fuel Costs" (Note: Fuel expense must exactly equal fuel revenue in the regulated segments).
6. "Total Depreciation = Beginning Gross PP&E x Blended Depreciation Rate (approx. 2.5-3.0%)"
7. "AFUDC Equity = Average Construction Work in Progress (CWIP) x Allowed Equity Return"
8. "External Funding Requirement = Operating Cash Flow - Capital Expenditures - Dividends Paid"
9. "New Debt Issued = External Funding Requirement x Target Debt-to-Capital Ratio"
10. "New Equity Issued = External Funding Requirement x Target Equity-to-Capital Ratio"
11. "FFO = Net Income + D&A + Deferred Income Taxes - AFUDC Equity"
12. "FFO to Debt = FFO / Total Debt"

The Assumptions sheet feeds the Rate Base Roll-Forward and DEV/DESC Segments. The segment sheets calculate revenue and operating profit, which feed the Consolidated Income Statement. Net Income and D&A flow to the Cash Flow Statement. The massive capex outflow on the Cash Flow Statement creates a funding deficit, which triggers new debt and equity issuance on the Debt & Interest Schedule. The new debt generates interest expense, which flows back to the Income Statement, creating a circular reference that must be managed with a toggle.

• Revenues, assets, and equity are positive.
• Expenses (O&M, fuel, D&A, interest) are entered as positive numbers in their specific build schedules but subtracted in the Income Statement.
• Capital expenditures are positive in the PP&E schedule but negative in the Cash Flow Statement.
• Debt paydowns and dividends are negative in the Cash Flow Statement.

• Fuel Pass-Throughs: Modellers often apply a margin to fuel costs. Regulated utilities earn zero profit on fuel; revenue must increase by the exact dollar amount of fuel expense.
• Discontinued Operations: Historical financials include the gas distribution businesses sold to Enbridge. The model must use pro-forma 2024 figures that exclude these operations to establish a clean run-rate.
• Stonepeak Partnership: Dominion sold 50% of the CVOW project. The model must accurately reflect the non-controlling interest (NCI) in both the capex funding and the eventual earnings, otherwise CVOW returns will be overstated by 100%.
• AFUDC Accounting: Utilities capitalise the cost of debt and equity used to fund long-term construction (like CVOW). Failing to include AFUDC will severely understate reported earnings during the construction phase.
• Data Centre Load: Extrapolating historical load growth will fail to capture the step-function increase from Northern Virginia data centres. This must be modelled as a specific, discrete load addition.
• Dividend Flatline: Applying a historical dividend growth rate will break the model. Management has explicitly stated the $2.67 dividend will remain flat until the payout ratio normalises.
• Circularity: Interest expense depends on debt balances, which depend on the cash flow deficit, which depends on net income, which depends on interest expense. A circuit breaker is mandatory.
• Tax Credits: Ignoring Production Tax Credits (PTCs) and Investment Tax Credits (ITCs) will overstate the cash tax burden and understate cash flow.

• "FFO to Debt must remain between 14.0% and 15.0%; flag if it drops below 14.0% as this threatens the BBB+ credit rating."
• "DEV Allowed ROE must not exceed the SCC-approved 9.8%."
• "Dividend per share must equal exactly $2.67 until the payout ratio drops below 70%."
• "Consolidated Capex must sum to between $10 billion and $13 billion annually to match the $65 billion 2025-2030 guidance."
• "Fuel Revenue must exactly equal Fuel Expense in the DEV and DESC segments."
• "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period."
• "Operating EPS growth must fall within the management guidance range of 5.0% to 7.0%."
• "Net working capital should remain near zero or slightly negative; flag if it becomes a major source of cash."

• Filings: Dominion Energy SEC EDGAR page (10-K, 10-Q, 8-K) and the Dominion Investor Relations website for the 2024/2025 Strategic Review presentations.
• Peers: Southern Company (SO), Duke Energy (DUK), NextEra Energy (NEE), and American Electric Power (AEP).
• Industry Data: PJM Interconnection load forecasts (for Northern Virginia data centre demand), Virginia State Corporation Commission (SCC) docket filings, and S&P Global Market Intelligence for utility ROE averages.
• Consensus Estimates: FactSet or Bloomberg for EPS and capex consensus.

• Dominion Energy 2024 and 2025 Annual Reports (Form 10-K)
• Dominion Energy Q4 2024 and Q4 2025 Earnings Releases
• S&P Global Ratings: Research Update on Dominion Energy Inc. (June 2024)
• Utility Dive: "Dominion seeks higher ROE, rate hike in South Carolina" (January 2026)
• Gabelli Funds: Utilities Sector Update (January 2026)
• Virginia State Corporation Commission (SCC) Rate Case Filings (November 2025)