Fixed Income Investor Meetings. March 2017

Transcription

1 Fixed Income Investor Meetings March 2017

2 Important Note to Investors This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding Dominion and Dominion Midstream. The statements relate to, among other things, expectations, estimates and projections concerning the business and operations of Dominion and Dominion Midstream. We have used the words "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", outlook, "predict", "project", should, strategy, target, "will, potential and similar terms and phrases to identify forward-looking statements in this presentation. As outlined in our SEC filings, factors that could cause actual results to differ include, but are not limited to: unusual weather conditions and their effect on energy sales to customers and energy commodity prices; extreme weather events and other natural disasters; federal, state and local legislative and regulatory developments; changes to federal, state and local environmental laws and regulations, including proposed carbon regulations; cost of environmental compliance; changes in enforcement practices of regulators relating to environmental standards and litigation exposure for remedial activities; capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms; fluctuations in interest rates; changes in rating agency requirements or credit ratings and their effect on availability and cost of capital; impacts of acquisitions, divestitures, transfers of assets by Dominion to joint ventures or to Dominion Midstream, and retirements of assets based on asset portfolio reviews; receipt of approvals for, and timing of, closing dates for acquisitions and divestitures; the execution of Dominion Midstream s growth strategy; changes in demand for Dominion s services; additional competition in Dominion s industries; changes to regulated rates collected by Dominion; changes in operating, maintenance and construction costs; timing and receipt of regulatory approvals necessary for planned construction or expansion projects and compliance with conditions associated with such regulatory approvals; the inability to complete planned construction projects within time frames initially anticipated; and the ability of Dominion Midstream to negotiate, obtain necessary approvals and consummate acquisitions from Dominion and third-parties, and the impacts of such acquisitions. Other risk factors are detailed from time to time in Dominion s and Dominion Midstream s quarterly reports on Form 10-Q or most recent annual report on Form 10-K filed with the Securities and Exchange Commission. The information in this presentation was prepared as of February 1, Dominion and Dominion Midstream undertake no obligation to update any forward-looking information statement to reflect developments after the statement is made. Projections or forecasts shown in this document are based on the assumptions listed in this document and are subject to change at any time. In addition, certain information presented in this document incorporates planned capital expenditures reviewed and endorsed by Dominion s Board of Directors in late Actual capital expenditures may be subject to regulatory and/or Board of Directors approval and may vary from these estimates. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy securities. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the requirements of the Securities Act of 1933, as amended. This presentation has been prepared primarily for security analysts and investors in the hope that it will serve as a convenient and useful reference document. The format of this document may change in the future as we continue to try to meet the needs of security analysts and investors. This document is not intended for use in connection with any sale, offer to sell, or solicitation of any offer to buy securities. This presentation includes various estimates of EBITDA which is a non-gaap financial measure. Please see the fourth quarter 2016 Dominion Midstream Press Release for a reconciliation to GAAP. Please continue to regularly check Dominion s website at and Dominion Midstream s website at 2

3 Dominion s Strategic Advantages Investment Consideration ~90% Regulated Operations Diverse Capital Growth Gas / Electric Industry Leading 8%+ Dividend Growth* 6-8% EPS CAGR MLP Cash Flow Flexibility Large Project Execution *Annual dividend rates subject to Board approval 3

4 Total Dominion Capex Growth Plan ($ billions) $13 - $15 billion Growth Capex $3.0 - $4.0 $61 - $63 $3.0 - $4.0 $48 $4.2 $3.2 Net Plant 1 Net Plant Average annual spend of ~$3.3 - $3.8 billion 2019 & 2020 growth opportunities include: Additional VA solar Clean power plan compliance Pipeline expansions Questar pipeline and storage Surry / North Anna license extensions Excludes DD&A and Maintenance Capex 4

5 Growth Project Updates Dominion Virginia Power Strategic undergrounding SCC approved $139mm investment Electric transmission ~$800M growth capital planned in 2017 Dominion Generation Greensville County 1,588 MW CCGT $1.3 billion investment, construction began in June ,500 MW solar under development or operating Expect 500+ MW in Virginia and North Carolina Dominion Energy Cove Point Liquefaction Project on-line in late 2017 Atlantic Coast Pipeline on-line in 2H additional pipeline projects underway ~$700 million investment to move ~900 Mcf/day by the end of

6 Dominion Generation Growth Project Update Greensville 1,588 MW plant in Greensville County, VA 3-on-1 gas fired combined cycle Duct burners, inlet air chillers, gas only Estimated Costs of $1.3 billion Major Milestones All three gas turbines have been delivered to final staging area Charlottesville Greensville Richmond 19% complete overall as of year-end Expected in-service late 2018 The Greensville 3x1 CC will be the largest and most efficient in the U.S. 6

7 Dominion Generation Growth Project Update Solar Project State Capacity Expected In-service Eastern Shore Solar VA 80 MW 4Q 2016 Scott, Whitehouse, Woodland Solar VA 56 MW 4Q 2016 Summit Farms Solar NC 60 MW 4Q 2016 Additional projects with Amazon Focus on Virginia and North Carolina solar demand VA 180 MW Late 2017 Remington Solar* VA 20 MW Late 2017 Oceana Solar* VA 18 MW Late 2017 UVA Hollyfield Solar* VA 17 MW Late 2018 Total solar portfolio of 1,500 MW in-service or under development in 9 states ** *Subject to SCC approval ** Includes 405 MW Dominion operates outside of Virginia and owned by a joint venture partner 7

8 Dominion Energy Growth Project Update Cove Point Liquefaction Engineering and procurement are essentially complete Completed setting all major equipment in December Commissioning is underway for electrical, compressed air, and water treatment Construction is On-time & On-budget Project is ~84% complete Heat exchanger 8

9 Dominion Energy Growth Project Update Atlantic Coast Pipeline and DTI Supply Header Received FERC Draft EIS December 30, 2016 Expect Final EIS June 2017 ACP OWNERSHIP STRUCTURE: Dominion Resources* 48% Duke Energy 47% Southern Company 5% SUPPLY HEADER OWNERSHIP: Dominion Resources* 100% Anticipate construction to start in 2H 2017 Development costs updated to $5.0-$5.5 billion Maintain returns through project contingencies and negotiated rate adjustments Expect completion in 2H 2019 Supply Header receipt points ACP DTI Pipeline Storage Cove Point Utica Shale Marcellus Shale * Dominion will construct, operate and manage the pipeline 9

10 Growth Drivers 2019 and Beyond VEPCO VEPCO Annual electric transmission spend $750 million VA sales growth military spending Completion of Greensville County power station Solar development in VA License extensions at Surry and North Anna Environmental riders for coal ash remediation at active generating facilities Potential pump storage facility in Southwest VA Strategic Undergrounding rider program Merchant Generation Rising NEPOOL power prices Merchant Generation Legislation in Northeast Gas Infrastructure Gas Infrastructure Completion of Atlantic Coast Pipeline Completion of Supply Header Project ~$1 billion of incremental gas expansion projects Pipeline replacement riders Dominion Midstream Dominion Midstream-Related ~$7 billion of cash flow to Dominion Share repurchases and DRI debt reduction Enables Dominion dividend growth >8% per year beginning in

11 Dominion Midstream Partners 11

12 Dominion Midstream Partners Overview Dominion Midstream (DM) is a growth-oriented limited partnership formed in March 2014 and controlled by Dominion Resources, Inc. DM owns long-term contracted assets that generate stable and predictable cash flows with no commodity risk Dominion s asset dropdown strategy supports DM s 22% annual distribution growth rate Updated Asset Dropdown Strategy* Cove Preferred DCG Iroquois Questar Pipeline Cove Equity ACP / BRM IPO * Dropdowns subject to DRI and DM Board approval. 12

13 Dominion Midstream Benefits to Dominion Uses of Cash from Asset Contributions and Distributions DM expected to generate ~$7 - $8 billion in cash for Dominion from * Strengthen Balance Sheet Delever DRI as a percent of overall leverage to ~30% - 40% by 2020 Support high triple-b target rating at DRI Grow the Dividend Grow dividends at more than 8% annually beginning in 2018 ** Reduce Equity Needs Optimize cash flows to fund growth projects and / or buyback Dominion common shares *Pre-tax **Annual dividend rates subject to Board approval 13

14 Dominion Fixed Income 14

15 Financing Structure with Operating Segments DRI * VEPCO* Dominion Gas* Dominion Midstream Utility Generation Dominion Transmission Merchant Generation Atlantic Coast Pipeline**(48.0%) Dominion Carolina Gas Electric Transmission Dominion East Ohio Questar Gas* Blue Racer** (50.0%) Iroquois Pipeline (25.9%) Electric Distribution Iroquois Pipeline (24.1%) Cove Point** Cove Point Preferred Equity Applicable Operating Segments Questar Pipeline Dominion Virginia Power Dominion Generation Dominion Energy * Indicates current issuer of registered debt securities **Dominion s interests in ACP, Blue Racer and Cove Point are subject to ROFOs which have been granted to the MLP. 15

16 Financial Management Credit Ratings Profile Target Credit Ratings: DRI: High Triple-B range Utility OpCos: Single-A range Committed to A-2/P-2/F2 ratings for the Commercial Paper Program at DRI Dominion Resources, Inc. Moody's S&P Fitch Corporate/Issuer Baa2 BBB+ BBB+ Senior Unsecured Debt Securities Baa2 BBB BBB+ Junior Subordinated Notes Baa3 BBB BBB Enhanced Junior Subordinated Notes Baa3 BBB- BBB- Short-Term/Commercial Paper P-2 A-2 F2 Outlook Stable Stable Stable Virginia Electric and Power Company Moody's S&P Fitch Corporate/Issuer A2 BBB+ A- Senior Unsecured Debt Securities A2 BBB+ A Short-Term/Commercial Paper P-1 A-2 F2 Outlook Stable Stable Stable Dominion Gas Holdings, LLC Moody's S&P Fitch Corporate/Issuer A2 BBB+ A- Senior Unsecured Debt Securities A2 BBB+ A- Short-Term/Commercial Paper P-1 A-2 F2 Outlook Stable Stable Stable Questar Gas Moody's S&P Fitch Corporate/Issuer A2 BBB+ A- Senior Unsecured Debt Securities A2 BBB+ A Short-Term/Commercial Paper P-1 A-2 F2 Outlook Stable Stable Stable Questar Pipeline Moody's S&P Fitch Corporate/Issuer A3 BBB N/A Senior Unsecured Debt Securities A3 BBB N/A Outlook Stable Stable N/A 16

17 Long-term Financing Activities 2017 Financing Plan ($ millions) Entity Financing Plan Completed DRI DRIP Equity $300 In progress DRI Debt 1 $2,000 - $2,300 $1,200 DRI 2014 MC Jr Debt Remarketing 2 $1,000 - VEPCO Debt $1,400 - $1,700 $750 DGH Debt $0 - QGC Debt $75-$125 - DM Debt/Equity $0 - Total $4,775 - $5,425 $1,950 (1) In addition to Sr Note/Bond issuances, financing could include private placements, asset level loan financing, hybrid securities, etc. (2) Remarketing transactions do not represent increases in total debt. Dominion Resources, Inc. (DRI) Virginia Electric and Power Company (VEPCO) Dominion Gas Holdings, LLC (DGH) Questar Gas Company (QGC) Dominion Midstream Partners, LP (DM) 17

18 Mandatory Convertible Remarketings Conversion of mandatory convertible units entails: Re-marketing of junior subordinated note (JSN) host, which receives JSN credit ratings Issuance of common equity 1 Completed (2016) 2013 Series A ($550M) and Series B ($550M) 5-year tenor / 3-year tenor Upcoming (Q2/Q3 2017) 2014 Series A ($1B); 3-year tenor Re-marketing window: 3/30/17 6/28/17 Expected Ratings (JSN equivalent): Baa3/BBB/BBB 2 1. Number of common shares issued depends on the share price at conversion. 2. Prior to conversion, the subordinated notes exist as a component of the equity units and appear on the Dominion balance sheet as Remarketable Subordinated Notes (RSNs). These pre-conversion RSNs are rated Baa3/BBB-/BBB-, as they contain an interest deferral feature. 18