- Announced partnership consistent with the previously
outlined commitments & priorities of the business
review
- Partnering with Stonepeak, a leading global infrastructure
investor, to fund 50% of project construction costs with meaningful
protection from any unforeseen increases in the current project
construction budget
- Improves quantitative & qualitative business risk
profile via highly credit-positive partnership
- Transaction expected to close by the end of 2024, subject to
customary approvals
RICHMOND, Va.,
Feb. 22,
2024 /PRNewswire/ -- Dominion Energy, Inc. (NYSE: D),
today announced an agreement to sell a 50% noncontrolling interest
in the Coastal Virginia Offshore Wind commercial project (CVOW) to
Stonepeak through the formation of an offshore wind partnership.
Under the terms of the agreement, Dominion Energy will retain full
operational control of the construction and operations of CVOW.
Robert M. Blue, Dominion Energy
chair, president and chief executive officer, said:
"The Coastal Virginia Offshore Wind project continues to proceed
on-time and on-budget and consistent with our previously
communicated timing and cost expectations. A competitive
partnership process attracted high-quality interest resulting in a
compelling partner for CVOW. Stonepeak is one of the world's
largest infrastructure investors with more than $61 billion in assets under management and an
extensive track record of investment in large and complex energy
infrastructure projects including offshore wind. Their significant
financial participation will benefit both our project and our
customers.
"This transaction achieves several key objectives including: (1)
adding an attractive, well-capitalized, and high-quality partner;
(2) establishing robust cost-sharing that provides meaningful
protection from any unforeseen project cost increases; and (3)
improving our quantitative and qualitative business risk profile
through the creation of a highly credit-positive partnership. We
have reviewed the transaction with our credit-rating agencies and
expect the transaction to be viewed as a significant
credit-positive, which will ultimately benefit our customers. A
financially healthy Dominion Energy with a strong credit profile
and balance sheet is optimally positioned to attract the capital we
need to provide an exceptional customer experience and support the
Commonwealth of Virginia's
economic and environmental goals."
Transaction structure
Stonepeak will invest in a newly formed subsidiary of Dominion
Energy Virginia. Subject to State Corporation Commission of
Virginia (SCC) approval, the
subsidiary will be a public utility in Virginia entitled to recover its prudently
incurred costs of constructing and operating the project under the
existing Virginia offshore wind
rider program. Cost-recovery will utilize the capital structure of
and cost of capital at Dominion Energy Virginia.
Dominion Energy will retain full operational control of the
construction and operations of CVOW. Dominion Energy expects to
consolidate the partnership for accounting purposes. Stonepeak
will own a 50% noncontrolling equity interest and will have
customary minority interest rights.
The transaction requires approvals from the SCC and the North
Carolina Utilities Commission, as well as certain consents from the
Bureau of Ocean Energy Management and other regulatory agencies
regarding the assignment of certain contracts and permits needed
for the partnership post-closing. The transaction is expected to
close by the end of 2024 after all required approvals and consents
have been received.
Under the terms of the agreement, at closing Dominion Energy
expects to receive proceeds of approximately $3 billion, representing 50% of the CVOW
construction costs incurred through closing less $145 million (the initial withholding). If the
final construction costs of CVOW are $9.8 billion or less, excluding financing costs,
Dominion Energy will receive $100
million of the initial withholding. Such amount is subject
to downward adjustment with Dominion Energy receiving no withheld
amounts if the total costs, excluding financing costs, of CVOW
exceed $11.3 billion. The transaction
is expected to improve the company's estimated 2024 consolidated
FFO-to-debt by approximately 1.0% and reduce the company's overall
financing needs during construction.
Following closing, Dominion Energy and Stonepeak will each
contribute 50% of the remaining capital necessary to fund
construction of CVOW, provided the total project cost, excluding
financing costs, is less than $11.3
billion (mandatory capital contributions). This represents
50/50 cost-sharing up to 15%, or nearly $1.5
billion, higher than the project's current project budget
($9.8 billion) and up to 20%, or
nearly $2.0 billion, higher than the
project's current pre-contingency budget ($9.45 billion).
For project costs, excluding financing costs, between
$11.3 billion through $13.7 billion, if any, Stonepeak will have the
option to make additional capital contributions. If Stonepeak
elects to make additional capital contributions for project costs,
excluding financing costs, in excess of $11.3 billion, if any, Dominion Energy will
contribute between 67% and 83% of such capital with Stonepeak
contributing the remainder. To the extent that Stonepeak
elects not to make such contributions, Dominion Energy will receive
an increase in its ownership percentage of the partnership for any
contributed capital based on a tiered unit price for membership
interests in the partnership as set forth in the agreement.
The 2.6-gigawatt CVOW, the largest offshore wind farm in the
U.S., is on schedule to generate enough clean, renewable energy to
power up to 660,000 homes once fully constructed in late 2026. CVOW
will consist of 176 turbines and three offshore substations in a
nearly 113,000-acre lease area off the coast of Virginia Beach.
McGuireWoods LLP and Morgan Lewis
served as legal advisors. Citi and Goldman Sachs & Co. LLC
acted as co-financial advisors for the transaction.
Additional information related to the transaction can be found
in materials included on the Investor Relations website at
investors.dominionenergy.com.
Important note to investors regarding FFO-to-debt, net cash
provided by operating activities, long-term debt, short-term debt,
and securities due within one year
Dominion Energy intends
to use FFO-to-debt (non-GAAP) as a supplemental liquidity
measure of its ability to service its debt obligations in its
guidance and results for public communications with analysts and
investors. FFO-to-debt is defined as net cash provided by operating
activities adjusted for certain items, including, but not limited
to, discontinued operations and changes in working capital as a
ratio to total debt, consisting of long-term debt, short-term debt,
and securities due within one year, adjusted for certain items
including, but not limited to, under-recovered fuel balances and
operating leases. Dominion Energy management believes FFO-to-debt
provides a more meaningful representation of the company's ability
to service its debt obligations. In providing FFO-to-debt, the
company notes that there could be differences between such non-GAAP
financial measure and the GAAP equivalents of reported net cash
provided by operating activities and reported long-term debt,
short-term debt, and securities due within one year.
Reconciliations of such non-GAAP measures to applicable GAAP
measures are not provided, because the company cannot, without
unreasonable effort, estimate or predict with certainty various
components of such measures.
About Dominion Energy
About 7 million customers
in 15 states energize their homes and businesses with electricity
or natural gas from Dominion Energy (NYSE: D), headquartered
in Richmond, Va. The company is committed
to providing reliable, affordable, and increasingly clean
energy every day and to achieving Net Zero emissions by
2050. Please visit DominionEnergy.com to learn more.
This release contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 include, but are not limited to, the sale of a 50%
noncontrolling interest in the Coastal Virginia Offshore Wind
commercial project, any statements regarding the ability to
complete the proposed transaction on the anticipated timeline or at
all; the anticipated benefits of the proposed transaction if
completed; the projected impact of the proposed transactions on our
performance or opportunities; and any statements regarding our
expectations, beliefs, plans, objectives or prospects or future
performance or financial condition as a result of or in connection
with the proposed transaction, which are subject to various risks
and uncertainties. Factors that could cause actual results to
differ include but are not limited to risks and uncertainties
relating to the timing and certainty of closing the proposed
transaction; the ability to satisfy the conditions to closing of
the proposed transaction, including the ability to obtain required
approvals and consents necessary to complete the proposed
transaction; and the ability to achieve the anticipated benefits of
the proposed transaction. Other risk factors are or will be
detailed from time to time in Dominion Energy's reports filed or to
be filed with the Securities and Exchange Commission. These
forward-looking statements speak only as of the date of this press
release. Dominion Energy assumes no obligation to provide any
revisions to, or update, any projections and forward-looking
statements contained in this press release.
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