# Dominion Energy (D) Financial Model Free Excel 3-statement financial model and company analysis for Dominion Energy. - Canonical: https://finamodel.com/companies/dominion-energy - Industry: Utilities - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/D.xlsx ## Model Purpose This model evaluates whether Dominion Energy's $65 billion capital expenditure plan and unprecedented data centre load growth will drive sufficient rate base expansion to support its 5-7% EPS growth target while maintaining its BBB+ credit rating following the divestiture of its gas distribution businesses. ## Company Overview Dominion Energy is a regulated electric utility holding company headquartered in Richmond, Virginia, providing electricity to approximately 3.6 million homes and businesses. Following a major strategic review concluded in 2024, the company transitioned to a pure-play electric utility by selling its gas distribution assets to Enbridge for approximately $14 billion. The company operates through three primary segments: Dominion Energy Virginia (DEV) which contributes the vast majority of earnings, Dominion Energy South Carolina (DESC), and Contracted Energy. Geographically, operations are highly concentrated in Virginia and South Carolina. The business model is an asset-heavy regulated utility, meaning earnings are driven by capital investments (the "rate base") and a regulator-approved Return on Equity (ROE). Dominion holds a monopoly position in its regulated service territories and is currently the largest data centre power provider in the United States, with data centres accounting for roughly 26% of DEV's total electric load. Recent major events include the aforementioned Enbridge sales and the sale of a 50% non-controlling interest in the 2.6 GW Coastal Virginia Offshore Wind (CVOW) project to Stonepeak for $3 billion. ## Revenue Deep Dive ### Dominion Energy Virginia (DEV) - **Segment name**: Dominion Energy Virginia - **Revenue driver formula**: (Average Rate Base x Equity Ratio x Allowed ROE) + Recoverable Operating Expenses + Pass-Through Fuel Costs - **Historical growth rate**: 4-6% CAGR - **Key growth levers and headwinds**: Massive data centre load growth in Northern Virginia (15+ new connections annually) and heavy capital investment in the CVOW offshore wind project. Headwinds include regulatory pushback on rate increases and construction execution risk on offshore wind. - **Pricing dynamics**: Regulated by the Virginia State Corporation Commission (SCC). Base rates are set via biennial reviews, with riders for specific capital projects. The SCC recently approved a 9.8% allowed ROE. - **Revenue recognition notes**: Billed monthly based on meter readings, with unbilled revenue accrued at month-end. - **Seasonality**: Highly seasonal. Q3 (summer cooling) and Q1 (winter heating) are the strongest quarters. ### Dominion Energy South Carolina (DESC) - **Segment name**: Dominion Energy South Carolina - **Revenue driver formula**: (Average Rate Base x Equity Ratio x Allowed ROE) + Recoverable Operating Expenses + Pass-Through Fuel Costs - **Historical growth rate**: 3-5% CAGR - **Key growth levers and headwinds**: Driven by strong population migration to South Carolina and regional industrial growth. - **Pricing dynamics**: Regulated by the Public Service Commission of South Carolina (PSC). The company recently requested a rate increase to achieve a 10.5% ROE, up from the previously authorised 9.94%. - **Revenue recognition notes**: Standard utility accrual accounting for delivered but unbilled electricity. - **Seasonality**: Peaks in Q3 due to heavy air conditioning demand in the Southeast. ### Contracted Energy - **Segment name**: Contracted Energy - **Revenue driver formula**: Generation Volume (MWh) x Power Purchase Agreement (PPA) Price - **Historical growth rate**: Flat to 2% CAGR - **Key growth levers and headwinds**: Driven by the Millstone nuclear power station in Connecticut and non-regulated renewable assets. Highly stable due to long-term contracts, but lacks the rate-base growth engine of the regulated segments. - **Pricing dynamics**: Contractual pricing fixed over long durations. - **Revenue recognition notes**: Recognised as power is delivered to the grid under PPA terms. - **Seasonality**: Less seasonal revenue profile due to fixed capacity payments, though generation volumes depend on nuclear refuelling outage schedules. ## Cost Structure ### Variable Costs / COGS - **Line-by-line breakdown**: Purchased power, electric fuel (natural gas, coal, nuclear fuel), and transmission pass-through charges. - **Gross margin range**: 45-49% over the last 5 years. - **Key input costs and commodity exposures**: Natural gas and uranium prices. However, fuel costs are generally pass-through items in regulated jurisdictions, meaning they impact revenue and COGS equally but do not impact gross margin dollars. - **How COGS scales with revenue**: Linear with generation volume, but highly volatile based on underlying commodity prices. ### Operating Expenses - **R&D**: Negligible for regulated utilities. - **SG&A / O&M**: Operations and Maintenance (O&M) includes labour, vegetation management, storm restoration, and grid maintenance. It is largely headcount and inflation-driven. - **Depreciation & Amortisation**: Extremely high (typically 15-20% of revenue) due to the capital-intensive nature of power plants and grid infrastructure. - **Stock-Based Compensation**: Minimal as a percentage of revenue. - **Restructuring / one-time charges**: Frequent in recent years due to the strategic review and severance costs related to the Enbridge asset sales. ### Margin Profile - **Gross margin**: 45-49% - **EBITDA margin**: 46-52% (highly dependent on fuel cost pass-throughs which dilute the margin percentage). - **Operating margin**: 22-26% - **Margin trend**: Stable in absolute dollar terms, but percentage margins fluctuate inversely with fuel prices. ## Balance Sheet Structure - **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. ## Capital Expenditure & Investment - **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. ## Debt & Capital Structure - **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. ## Cash Flow Characteristics - **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. ## Sheet Structure 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. ## Key Financial Relationships 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" ## Cross-Sheet Dependencies 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. ## Sign Convention - 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. ## Things Most Likely to Go Wrong - **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. ## Validation Checks - "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." ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | DEV Allowed ROE | 9.8 | % | Recent Virginia SCC rate case decision (late 2025) | | DESC Allowed ROE | 10.5 | % | Requested rate in 2026 SC PSC filing | | DEV Rate Base Growth | 8.5 | % | Driven by CVOW and data centre transmission upgrades | | DESC Rate Base Growth | 5.0 | % | Driven by regional population and industrial growth | | Annual Consolidated Capex | 11,500 | $ Millions | Midpoint of the $65B capital plan for 2025-2030 | | CVOW Total Project Cost | 11,500 | $ Millions | Official company estimate for the 2.6 GW offshore wind project | | Stonepeak CVOW Share | 50.0 | % | Contractual non-controlling interest split | | Target FFO / Debt | 14.5 | % | Midpoint of rating agency target to maintain BBB+ | | Blended Cost of Debt | 4.8 | % | Weighted average interest rate on long-term debt | | Effective Tax Rate | 12.0 | % | Suppressed by renewable energy tax credits (ITCs/PTCs) | | Dividend Per Share | 2.67 | $ | Management stated policy to hold flat | | Target Dividend Payout Ratio | 65.0 | % | Long-term utility sector average target | | O&M Inflation Rate | 2.5 | % | Baseline inflation assumption for labour and materials | | Cost of Equity (WACC) | 9.5 | % | Standard utility cost of equity | | Terminal Growth Rate | 2.0 | % | Long-term GDP and population growth proxy | ## Data Sources & Benchmarks - **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. ## Sources - 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) --- ## Frequently asked questions ### What does Dominion Energy do, and where does it primarily operate? Dominion Energy is a regulated electric utility holding company providing electricity to approximately 3.6 million homes and businesses. Following a strategic review, it transitioned to a pure-play electric utility, primarily operating in Virginia and South Carolina. ### How does Dominion Energy generate revenue, and what are its key growth drivers? As an asset-heavy regulated utility, Dominion Energy's earnings are driven by its capital investments, known as the 'rate base,' and a regulator-approved Return on Equity. A significant growth driver is the unprecedented data center load growth in its service territories, particularly in Virginia, where data centers account for roughly 26% of Dominion Energy Virginia's total electric load. ### What is the assumed capital expenditure as a percentage of revenue in the Dominion Energy financial model? In the financial model, the assumed capital expenditure (Capex) as a percentage of revenue is 5.56%. This reflects the company's significant investment needs as a capital-intensive utility. ### What are Dominion Energy's strategic financial targets, and how does it plan to achieve them? Dominion Energy aims to achieve a 5-7% EPS growth target while maintaining its BBB+ credit rating. This is planned through a $65 billion capital expenditure program and rate base expansion, driven partly by data center load growth. ### Can I download a financial model for Dominion Energy, and what is its forecast horizon? Yes, a downloadable Excel financial model is available for Dominion Energy. This model provides a forecast horizon spanning from fiscal year 2026 through fiscal year 2030. ### How has Dominion Energy's business model changed recently, and what are its primary asset categories? Dominion Energy recently transitioned to a pure-play electric utility by divesting its gas distribution businesses to Enbridge for approximately $14 billion. Its primary asset categories include Net Property, Plant & Equipment, which constitutes over 70% of total assets, and material Regulatory Assets. [Interactive forecast calculator](https://finamodel.com/companies/dominion-energy/forecast)