Investor Meetings. September 2017

Transcription

1 Investor Meetings September 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 Energy and Dominion Energy Midstream Partners. The statements relate to, among other things, expectations, estimates and projections concerning the business and operations of Dominion Energy and Dominion Energy Midstream Partners. 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 Energy to joint ventures or to Dominion Energy Midstream Partners, 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 Energy Midstream Partners growth strategy; changes in demand for Dominion Energy s services; additional competition in Dominion Energy s industries; changes to regulated rates collected by Dominion Energy; 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 Energy Midstream Partners to negotiate, obtain necessary approvals and consummate acquisitions from Dominion Energy and third-parties, and the impacts of such acquisitions. Other risk factors are detailed from time to time in Dominion Energy s and Dominion Energy Midstream Partners 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 September 7, Dominion Energy and Dominion Energy Midstream Partners 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 Energy 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 second quarter 2017 Dominion Energy Midstream Press Release for a reconciliation to GAAP. Please continue to regularly check Dominion Energy s website at and Dominion Energy Midstream Partners website at 2

3 Investor Relations Contact Information Thomas E. Hamlin, CFA VP Financial Planning & Investor Relations (804) Steven Ridge Director, Investor Relations (804) Sarah Scott Investor Relations Specialist (804) Whitney Johnson Investor Relations Specialist (804) Dominion Energy Investor Relations P.O. Box Richmond, VA website: dominionenergy.com/investors 3

4 Dominion Energy Strategic Advantages Drive Value for Shareholders ~90% Regulated Operations Significant Scale in Gas & Electric Industry Leading Dividend Growth* 6-8% EPS CAGR MLP Cash Flow Flexibility Robust Business Growth Programs *Annual dividend rates subject to Board approval 4

5 Big Rivers Electric TransAlta Tri-State Hoosier Energy Buckeye Power Fortis Inc. Intermountain Power Agency Wisconsin Energy Dynegy Associated Electric Coop Alliant Energy JEA Seminole Electric Coop AEP Energy Future Holdings DTE Energy TECO Omaha Public Power District Xcel Berkshire Hathaway Energy Salt River Project NE Public Power District ArcLight Capital LS Power Southern Puget Holdings Pinnacle West Duke Brazos Electric Power Coop GDF Suez Tennessee Valley Authority The Carlyle Group Occidental Tenaska Rockland Capital Exxon Mobil Sempra Dominion Avista Entergy NextEra Energy BP International Paper New York Power Authority NC Public Power Iberdrola US Corps of Engineers EDP PUD No 1 of Chelan County PUD No 2 of Grant County Lbs/MWh Lbs/MWh Percent Reduction (Lbs/MWh) Million Cubic Feet of Gas Saved Sustainability & Environmental Leadership Reducing our environmental footprint by investing in air quality improvements 0% -20% Reducing Air Emissions SO₂ NOx Hg Cumulative methane emissions reductions -40% % -80% -100% -81% -95% -96% About 4.4 Billion Cubic Feet of Gas Saved Companywide Pre ,500 2,000 1,500 1, Dominion Energy s low carbon emissions rate is in the top quartile among energy producers in the U.S. 1,500 1,400 1,300 1,200 1,100 1, Company CO 2 Intensity Reductions 1,304 1,315 1,138 1,127 1,109 1,177 1,105 1,114 1,085 1,024 1, % decrease in carbon intensity Industry CO 2 Intensity declined 23% over the same time period* 745 Source: Benchmarking Air Emissions of the 100 Largest Electric Power Producers in the U.S. (M.J. Bradley, July 2016) Numbers include assets which were divested during this period. *Source: EIA, U.S. Power Sector 5

6 Dominion Energy Contents Dominion Energy is Delivering Sustainable Annual Growth and Best-in-Class Shareholder Returns Major Project Updates Sustainable Growth: Highlights Across Each Business Capital Growth Dividends Shareholder Return 6

7 Dominion Energy Shareholder Return Last Ten Years: Total Return* Dominion Energy s Track Record of Strong Shareholder Returns D +182% DJIA +117% UTY +116% S&P % As of 8/31/2017. * Note: Reflects share price appreciation plus dividends. 7

8 Major Project Updates Greensville Power Station Cove Point Liquefaction Atlantic Coast Pipeline and Supply Header 8

9 Greensville County Power Station On-time & On-budget The Greensville 3x1 CC will be the largest, most efficient single combined-cycle plant in the U.S. 1,588 MW Gas Fired Combined Cycle plant in Greensville County, VA 3-on-1 Combined Cycle Charlottesville Richmond Greensville Duct burners, inlet air chillers, gas only Estimated Cost of $1.3 billion Major Milestones CPCN/Rider approved March 2016 Began construction in June 2016 Expected in-service December 2018 Project is 52% complete * As of August 31,

10 Cove Point Liquefaction 94% of the project s systems are in commissioning phase Q3 Activities: Achieve Mechanical Completion and Ready for Start-Up Q4 Activities: Sustained period of LNG production FERC approved introduction of feed gas to liquefier Construction is On-time & On-budget DOE approved exporting of commissioning cargoes Expect in-service late 2017 Heat exchanger Project is ~96% complete * As of August 31,

11 Atlantic Coast Pipeline and Supply Header Received favorable FERC Final Environmental Impact Statement on July 21 Expect to receive final FERC certificate and state permits this fall Project level construction financing in place in Q Expect construction to begin in Q and completion in second-half 2019 ACP OWNERSHIP STRUCTURE: Dominion Energy* 48% Duke Energy 47% Southern Company 5% SUPPLY HEADER OWNERSHIP: Dominion Energy* 100% Supply Header receipt points Significant Progress Continues >93% subscribed by end-use customers ACP DETI Pipeline Storage Cove Point Utica Shale Marcellus Shale Design and engineering essentially completed Executed construction contracts Materials procurement over 84% complete * Dominion Energy will construct, operate and manage the pipeline 11

12 Sustainable Growth: Highlights Across Each Business Power Generation Power Delivery Gas Infrastructure 12

13 Power Generation 13

14 Nuclear Relicensing Eligible for Rate Rider Recovery* Nuclear life extension from 60 years to 80 years License extension requires NRC approval NRC has issued final guidance on application requirements Expect to file application for Surry in Q North Anna to follow Eligible for rider recovery Up to ~$4 billion of capital spend over duration of program Surry North Anna *Subject to VA State Corporation Commission (SCC) approval 14

15 VA Pumped Storage Eligible for Rate Rider Recovery* Virginia legislation supports renewable integration through pumped storage Largest, most efficient utility-scale battery Progress made toward site selection in Southwestern Virginia FERC pre-permit application filed September 6, 2017 on one site Awarded a study to Virginia Tech on an additional site Expect final site selection in early 2018 Investment expected to be up to $2 billion* Generation of up to 1,000 MW for a minimum of 10 hours of operation per day Dominion Energy already owns and operates the largest pumped-storage plant in the world** 3,000 MW facility in Bath County, Virginia largest battery in the world Up to $2 billion capital opportunity in public interest *Subject to VA SCC approval / deemed to be in the public interest recoverable through riders. **Dominion Energy owns 60% of facility, operates 100% 15

16 Coastal Virginia Offshore Wind 16MW Demonstration Project Two 8-MW wind turbines Located ~27 miles off Virginia Beach Estimated cost of $300 million Rider eligible* Major Milestones Signed agreement and strategic partnership with DONG Energy of Denmark, a global leader in offshore wind, June 2017 Currently refining EPC agreement Target COD Q Full deployment could lead to development of 2,000 MW of generation *Subject to VA SCC approval 16

17 Future Generation IRP Identified Sustainable, Non-Carbon & Low Carbon Generation* ~3,280 MW (~240 MW/ year) of solar generation potential in support of VA and NC customers CC CT CT CT ~2,970 MW of complementary, dispatchable gas generation ~$600 - $800 million of annual investment *Per Integrated Resource Plan, Plan C, filed May 1, 2017, subject to VA SCC approval. 17

18 Power Delivery 18

19 Sustainable Electric Transmission Growth Eligible for Rate Rider Recovery* Optimizing Operational Reliability and Integrating Renewables 500 kv Rebuild ~400 mile loop is the backbone of reliability for DomZone (40% complete) ~500 additional miles remaining to be updated 230 kv Rebuild >500 miles remaining to be updated 115 kv Rebuild ~1,300 miles remaining to be updated Transmission Substation Reliability and Physical Security Upgrades Replace aging equipment to improve system reliability Total capex spend of ~$800 million per year *Subject to VA SCC approval 19

20 Strategic Undergrounding Program Eligible for Rate Rider Recovery* Represents $2 billion of rate base additions over duration of 12-year program A capex plan designed to ramp to $175 million per year Legislation provided clear criteria for priority Designed to place underground ~4,000 miles of most vulnerable distribution tap lines for improved reliability Program Benefits: Decreased outage time Decreased outage locations Potential O&M savings *Subject to VA SCC approval 20

21 Grid Modernization Program Actively Developing Plan for Transformational Grid Modernization Effort Grid Modernization Initiatives: Smart meters Intelligent grid devices Automated control systems Communications network Grid resiliency Customer information platform Select Benefits Increase renewable integration Enhance customer experience Improve resiliency and security Program will enhance reliability and customer experience 21

22 VA Sales Growth Trends Achieved Industry Leading Sales Growth 2017 YTD Virginia boasts an excellent business environment Virginia s 3.8% unemployment rate continues to be well below the national average of 4.7%* Virginia ranked among the Best States for Business by Forbes (#6 2016) Strong data center demand Large governmental & military presence Achieved >1.5% sales growth YTD** Expect strong sales growth to continue at least ~1.5%** *U.S. Bureau of Labor Statistics as of March 2017 **Forecast includes 1% in 2017 and 1.5% annually. 22

23 Gas Infrastructure 23

24 Gas Distribution Infrastructure Programs Regulatory frameworks allow for immediate return on investments Pipeline Infrastructure Replacement Programs Accelerate the replacement of aging infrastructure with pre-approved recovery of investment through rates Provides additional safety, environmental and service expansion benefits Dominion Energy Ohio Dominion Energy West Virginia Dominion Energy UT / WY / ID ~$325 - $350 million of annual capital spend 24

25 Demand Driven Pipeline Expansions Economics & carbon reduction driving gas demand 6 current pipeline projects under construction ~$700 million investment to move ~900 Mcf/day by the end of 2018 Dominion Energy Virginia ~1.5 GW** Duke Energy Carolinas ~1.7 GW Virginia Natural Gas Planned development of additional ~5.5 GW* of new gasfired generation by 2025 Public Service North Carolina Piedmont Natural Gas 29 GW of coal-fired generation remains in Southeast ~2 GW slated for retirement by 2025 Note: GW in yellow boxes reflects planned gas generation development from company integrated resource plans. *Source: Utility integrated resource plans. **Dominion Energy 2017 IRP-Plans B through E. Duke Energy Progress ~2.2 GW Transcontinental Pipeline Operating NG or planned NG-fired plants Coal-fired plants Atlantic Coast Pipeline Dominion Energy Carolina Gas 25

26 Western Gas Distribution Projects New Investments in Reliability and Capacity Customer growth over 2.0% per year Northern Utah On-System LNG Facility* Ensures system reliability during critical peakneed periods for growing customer base Dominion Energy brings LNG expertise to deliver best execution possible for customers Southern Utah System Expansion* Provides needed capacity to fastest growing county in the Dominion Energy Utah system ~$300 million of project investment *Subject to regulatory approval 26

27 Gas Infrastructure Regulatory Initiatives Dominion Energy Transmission Modernization Program* Preparing to file a DETI rate case mid-2018 Base system rates have not been reset since 1994 Revenue Recovery of modernization capital investment through FERC tracker Incremental Contracts ~40% Base System ~60% Investments in pipeline, storage and system infrastructure provide reliability, safety, regulatory compliance and service enhancements ~$250 million of modernization capital spend per year *Subject to regulatory approval 27

28 Delivering Sustainable Annual Growth 28

29 Dominion Energy Future Capital Growth Reliability, Demand Driven Programs Provide Sustainable Growth Scale in Gas and Electric Sustainable Infrastructure Programs Annual Growth Capital* Gas Infrastructure Power Gen. Power Delivery - Nuclear Life Extension - Pumped Storage - Coastal Offshore Wind (16 MW) - Solar - Dispatchable Gas Generation - Electric Transmission Rebuild - Substation Reliability - Critical Security Upgrades - Strategic Undergrounding - Other Grid Modernization - Distribution Pipeline Replacement - Western Gas Reliability & Expansion - Transmission Pipeline Expansions - DETI Infrastructure Modernization ~$1.2 ~$1.4 ~$1.3 New Annual Growth Capital $3.7-$4.2 billion Net Plant to grow 6-7% per year *$ in billions 29

30 Dominion Energy Midstream Partners Benefits to Dominion Energy Uses of ~$7 - $8 billion in DM Cash Contributions * Strengthen DEI Balance Sheet Through Debt Reduction Grow the Dividend >8% Per Year 2018+** Supports Growth / Share Repurchases Dominion Energy Unique MLP Structure Produces Significantly Positive Cash Flow *Pre-tax **Annual dividend rates subject to Board approval 30

31 Dominion Energy EPS Growth Sustainable Earnings Drivers Beyond % EPS CAGR Net Plant Growth 6-7% Per Year VA Power Sales Growth Regulatory Strategy Control Expense Growth MLP Cash Flows - Debt reduction - Share repurchase - Invest in infrastructure growth programs Post 2020 Annual EPS Growth of At Least 5% 31

32 Dominion Energy Dividend Growth Best-in-Class Dividend Growth 10% Annual Dividend Growth Over Next Three Years Beginning in Q4 2017** 8% 10% 5% UTY Peer Dividend Growth Rate* Annual Dividend Growth Rate ( ) Annual Dividend Growth Rate ( ) *Three-year historical average UTY peer dividend growth rate. Note: Regulated payout ratio targeted at up to 75%. **Dividends subject to Board approval. 32

33 Dominion Energy Value Proposition Delivering Strong Shareholder Returns Sustainable core business growth and consistent execution on-time and onbudget Unique structure produces significantly positive cash flow Dominion Energy has increased its annual dividend rate 14 straight years Core Business Growth (EPS CAGR 6-8% ) (Post 2020 annual EPS growth at least 5%) Benefits of MLP Cash Flows ($7-8 billion *) Best-in-Class Annual Dividend Growth** (10% ) Attractive Current Dividend Yield (~4%) 4% Dividend Yield + 10% Dividend Growth Drives Leading Shareholder Value *Pre-tax **Annual dividend rates subject to Board approval 33

34 Dominion Energy Fixed Income 34

35 Financing Structure with Operating Segments DEI * VEPCO* Dominion Energy Gas Holdings* Dominion Energy Midstream Utility Generation Dominion Energy Transmission Merchant Generation Atlantic Coast Pipeline**(48.0%) Dominion Energy Carolina Gas Electric Transmission Dominion Energy Ohio Questar Gas* Blue Racer** (50.0%) Iroquois Pipeline (25.9%) Electric Distribution Iroquois Pipeline (24.1%) Dominion Energy Wexpro Cove Point** Cove Point Preferred Equity Power Delivery Applicable Operating Segments Power Generation Gas Infrastructure Dominion Energy Questar Pipeline * Indicates current issuer of registered debt securities **Dominion Energy s interests in ACP, Blue Racer and Dominion Energy Cove Point are subject to ROFOs which have been granted to the MLP. 35

36 Dominion Energy TopCo DEI Not Only a Traditional Utility HoldCo Cove Point DEI Level Assets/Operations Dominion Energy Midstream GP/LP Distributions Merchant Generation Atlantic Coast Pipeline (48%) Regulated Gas Supply Contracted Solar Blue Racer JV (50%) Dominion Energy Solutions Dominion Energy WV 100% ownership 100% ownership 100% ownership VEPCO Dominion Energy Gas Holdings Questar Gas 36

37 Financial Management Credit Ratings Profile Target Credit Ratings: DEI: High Triple-B range Utility OpCos: Single-A range Committed to A-2/P-2/F2 ratings for the Commercial Paper Program at DEI Dominion Energy, Inc. (DEI) 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 (VEPCO) 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 Energy 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 Negative Stable Negative Questar Gas 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 Energy Questar Pipeline, LLC Moody's S&P Fitch Corporate/Issuer A3 BBB N/A Senior Unsecured Debt Securities A3 BBB N/A Outlook Stable Stable N/A 37

38 Long-term Financing Activities 2017 Financing Plan ($ millions) Entity Financing Plan Completed DEI DRIP Equity $300 In progress DEI Debt 1 $2,000 - $2,300 Complete DEI 2014 MC Jr Debt Remarketing 2 $1,000 Complete VEPCO Debt $1,400 - $1,700 Complete DEGH Debt $0 - QGC Debt $75-$125 - DM Debt/Equity $0 - Dominion Energy, Inc. (DEI) Virginia Electric and Power Company (VEPCO) Dominion Energy Gas Holdings, LLC (DEGH) Questar Gas Company (QGC) Dominion Energy Midstream Partners, LP (DM) (1) In addition to public senior note issuances, financing included private placements, asset level loan financing, etc. (2) Remarketing transactions do not represent increases in total debt. 38