Executive Summary / Key Takeaways

• Regulated Growth Engine: Dominion Energy is strategically repositioning as a pure-play regulated utility, shedding non-core assets to focus on high-growth service territories in Virginia and South Carolina, underpinned by a robust $50 billion capital plan through 2029.
• Data Center Demand Catalyst: Unprecedented load growth, particularly from hyperscale data centers in Virginia, is a significant tailwind, driving substantial infrastructure investment opportunities and long-term earnings visibility.
• Transformative Offshore Wind Project: The Coastal Virginia Offshore Wind (CVOW) project, now over 60% complete and on schedule for 2026, represents a massive regulated investment, derisked by strategic partnerships and favorable cost-sharing mechanisms, offering competitive clean energy.
• Financial Discipline & Outlook: The company has successfully executed a $21 billion debt reduction and reaffirmed its 5-7% annual operating EPS growth target through 2029, supported by constructive regulatory outcomes and a commitment to balance sheet conservatism.
• Technological Leadership & Diversification: Dominion's investments in advanced nuclear (SMRs, Millstone uprates), large-scale offshore wind, and grid modernization position it at the forefront of the clean energy transition, enhancing reliability and long-term value.

The Dawn of a New Energy Era

Dominion Energy, Inc. (NYSE:D), a stalwart in the U.S. utility sector since its incorporation in 1983, is charting an ambitious course, transforming itself into a focused, regulated growth powerhouse. With a rich history dating back to its 1909 predecessor, Dominion Resources Inc., the company has long served electric utility customers across Virginia, North Carolina, and South Carolina. Its strategic evolution, particularly following a comprehensive business review initiated in March 2023, has sharpened its focus on core regulated operations, divesting non-strategic assets to fortify its balance sheet and enhance predictable earnings.

The company's overarching strategy is built on three pillars: consistent achievement of financial commitments, on-time delivery of major infrastructure projects like the Coastal Virginia Offshore Wind (CVOW), and fostering constructive regulatory outcomes. This disciplined approach aims to rebuild investor trust and deliver compelling long-term value, while simultaneously fulfilling its critical mission to provide reliable, affordable, and increasingly clean energy. This strategic pivot is particularly timely, as the energy landscape is being reshaped by burgeoning demand from digital infrastructure and an accelerating clean energy transition.

Dominion Energy operates primarily through three segments: Dominion Energy Virginia (DEV), Dominion Energy South Carolina (DESC), and Contracted Energy. DEV, the largest segment, generates, transmits, and distributes electricity in Virginia and North Carolina, with its transmission facilities integrated into the PJM wholesale electricity markets. DESC provides similar services in South Carolina, alongside gas distribution. The Contracted Energy segment manages non-regulated long-term contracted electric generation, including renewable natural gas operations.

Powering the Digital Frontier: Unprecedented Load Growth

A defining characteristic of Dominion's current market environment, and a central driver of its investment thesis, is the "unprecedented load growth" in its service territories, particularly in Virginia. The company's unique exposure to the world's largest data center concentration in Northern Virginia is a significant competitive advantage. Since 2013, Dominion has connected approximately 450 data centers, representing nearly 9 gigawatts (GW) of capacity, with data center sales now accounting for about 26% of total sales for DEV. This growth is not merely sustained but accelerating, driven by the increasing number and size of facilities, and their rapid ramp-up schedules.

The PJM DOM zone, where Dominion operates, projects peak summer load growth of approximately 6.3% per year for the next decade. This translates to a staggering nearly 60% increase in projected peak load by 2034 compared to 2022 estimates, from 26.1 GW to 41.5 GW. To meet this demand, Dominion has approximately 40 GW of data center capacity in various stages of contracting as of December 2024, an 88% increase from July 2024. This includes over 26 GW in the initial substation engineering phase, indicating a robust pipeline of future connections. The company is actively investing in new and upgraded transmission infrastructure, including new 500 kV lines in Eastern Loudoun County, to ensure reliability. This substantial, contracted demand provides unmatched earnings visibility and regulatory insulation, differentiating Dominion from peers with less concentrated growth drivers.

Technological Edge and Strategic Diversification

Dominion Energy's strategic response to this demand and the broader clean energy transition is rooted in a diversified and technologically advanced portfolio. The company is not just expanding capacity but is doing so with a focus on cutting-edge and carbon-free solutions.

The Coastal Virginia Offshore Wind (CVOW) Commercial Project stands as a cornerstone of this strategy. This 2.6 GW wind generation facility, located 27 miles off the Virginia coast, is a testament to Dominion's technological leadership in offshore wind. The project is currently over 60% complete and remains on schedule for first electricity delivery in early 2026 and full completion by the end of 2026. Key operational details highlight its progress: 134 of 176 monopiles (76%) and all 12 penpiles have been installed, with a new project record of 26 monopiles installed in July 2025. Over 90% of monopiles have been delivered to Virginia. The first offshore substation's commissioning is complete, and turbine fabrication by Siemens Gamesa is on track, with 58 full towers completed. The "Made in America" Charybdis installation vessel is expected to begin sea trials in August 2025, with first turbine installation planned for September 2025. This purpose-built vessel significantly derisks the installation process by eliminating the need for barges, a tangible operational benefit that has already translated into faster monopile installation rates compared to other U.S. offshore wind projects.

The CVOW project's updated Levelized Cost of Energy (LCOE) is $63 per megawatt-hour, inclusive of Renewable Energy Credits (RECs), benchmarking "very favorably with new generation alternatives, including solar, battery and gas-fired generation." This competitive LCOE, driven by increasing REC prices, underscores the project's value proposition. While the project's total budget increased to $10.9 billion due to PJM network upgrades and tariff impacts, a robust cost-sharing settlement with Virginia regulators and a 50% noncontrolling interest partnership with Stonepeak effectively mitigate shareholder exposure. This cost-sharing mechanism, which bore a $20 million after-tax charge for costs not expected to be recovered in Q2 2025, is working "as intended to protect customers and shareholders."

Beyond wind, Dominion is actively exploring Small Modular Reactor (SMR) technology at its North Anna nuclear facility, evidenced by an MOU with Amazon (AMZN). This initiative aims to support customer power needs and advance next-generation nuclear energy. The company's approach to SMRs is cautious but strategic, emphasizing structures that protect customers and capital providers from "first of a kind risk" and "cost overrun risk," while preserving its balance sheet and business risk profile. This proactive engagement with emerging nuclear technology, alongside its existing Millstone nuclear power station (which provides over 90% of Connecticut's carbon-free electricity and is exploring uprates for Unit 2), positions Dominion as a leader in carbon-free baseload generation. The company's 2024 Virginia Integrated Resource Plan (IRP) reflects an "all-of-the-above" approach, calling for more solar, storage, wind, gas, and nuclear, with no fossil retirements planned within the 15-year IRP horizon due to the significant load growth.

Financial Strength and Strategic Execution

Dominion Energy's financial performance in the first half of 2025 reflects the early successes of its strategic repositioning. For the six months ended June 30, 2025, net income attributable to Dominion Energy increased by 48% to $1,425 million compared to $966 million in the prior year period. This substantial improvement was driven by higher rider equity returns from capital investments, increased unrealized gains on economic hedging activities, and the absence of prior-year impairments and pension-related impacts. Operating revenue for the same period increased by 11% to $7,886 million, primarily due to higher non-fuel rider recoveries and increased sales to electric utility retail customers.

The company's disciplined approach to capital allocation is evident in its updated 5-year capital forecast (2025-2029) of $50 billion, a 16% increase from prior guidance. Approximately 80% of this increase is allocated to Dominion Energy Virginia, focusing on transmission, distribution, and nuclear subsequent license renewal spend. Crucially, 60% of this updated capital spend is eligible for recovery under rider mechanisms, providing a high degree of earnings predictability.

Dominion has made significant strides in strengthening its balance sheet. The company successfully completed $21 billion in debt reduction initiatives announced during its business review, including the divestitures of East Ohio Gas, Questar Gas, and PSNC. This has allowed the company to maintain its parent leverage consistently below 30% and target an FFO to debt ratio of approximately 15%, aligning with mid-BBB range credit ratings for the parent company and single-A range for its regulated operating companies.

Liquidity remains robust, supported by an amended $7.00 billion joint revolving credit facility and a new $1.00 billion 364-day revolving credit agreement, providing $4.60 billion in unused capacity as of June 30, 2025. The company has also proactively derisked its 2025 and 2026 equity needs through forward-settled ATM programs.

Competitive Positioning and Market Dynamics

Dominion Energy holds a strong competitive position in its regulated service territories, particularly in Virginia and South Carolina, where it benefits from long-standing regulatory licenses and an integrated utility model. Its residential electric rates in Virginia and South Carolina are 14% and 11% below the U.S. average, respectively, contributing to customer affordability and loyalty. This contrasts with competitors like NextEra Energy (NEE), which, while a leader in renewables with strong growth rates and profitability (Net Profit Margin 28% vs. D's 15%), operates with a different risk profile due to its more aggressive focus on non-regulated renewable development. Dominion's regulated status and strategic long-term contracts with data centers provide a competitive edge and predictable revenue streams, which might be less susceptible to market volatility than some of its peers.

Compared to other large, integrated utilities like Duke Energy (DUK) and Southern Company (SO), Dominion's strategic focus on the burgeoning data center market and its proactive investments in offshore wind and SMRs provide a unique growth vector. While Duke and Southern maintain strong positions in their respective regions with solid profitability (DUK Net Profit Margin 15%, SO Net Profit Margin 16%), Dominion's concentrated load growth in Virginia offers a distinct opportunity for sustained rate base expansion. However, Dominion faces challenges such as regulatory lag in South Carolina, which makes it "practically impossible to earn our allowed return" compared to other regulated jurisdictions. This vulnerability highlights the ongoing need for legislative reform to ensure equitable returns.

Indirect competitors, such as electrical infrastructure service providers like MYR Group Inc. (MYRG), could influence the market by enabling faster infrastructure builds for other energy providers. However, Dominion's integrated approach, from generation to distribution, and its deep relationships with large customers like data centers, provide a significant competitive moat. The company's "unique expertise and proprietary knowledge associated with offshore wind" further gives its customers a competitive advantage, as demonstrated by its rapid monopile installation pace on CVOW, which "exceeds any other U.S. offshore wind project to date."

Outlook and Key Considerations

Dominion Energy has reaffirmed its 2025 operating earnings per share guidance of $3.28 to $3.52, inclusive of RNG 45Z income, with a midpoint of $3.40. The company anticipates an annual operating earnings growth rate of 5% to 7% through 2029, off a 2025 midpoint of $3.30 (excluding RNG 45Z credits). Management is confident in achieving the upper half of its 2025 guidance range, contingent on continued strong sales and favorable weather. The current dividend of $2.67 per share annually is expected to be maintained until a utility industry-aligned payout ratio is achieved.

Key regulatory proceedings, such as the Virginia biennial review, are progressing as expected, with a final order anticipated in November 2025. The proposed base rate increase of $822 million effective January 2026, and an incremental $345 million effective January 2027, reflects necessary investments and inflationary pressures. The proposed new rate class for high-energy users, including data centers, aims to ensure these customers pay their full cost of service, protecting other customer classes from stranded costs. In South Carolina, the recent enactment of the Energy Security Act in May 2025, which includes a rate stabilization mechanism and permitting reform, is viewed as supportive of the state's growing economy and addresses future generation needs.

While the outlook is positive, investors should monitor several factors. The CVOW project faces potential tariff impacts, though the company believes these are manageable and mitigated by cost-sharing. Finalization of PJM network upgrade costs in late September 2025 is another point of attention, although no changes of significant magnitude are expected. Broader environmental regulations and the ongoing efforts to address regulatory lag in South Carolina remain areas of focus. Despite a slight delay in the Charybdis vessel's delivery, it is not expected to impact the overall CVOW project schedule.

Conclusion

Dominion Energy stands at a pivotal juncture, successfully executing a strategic transformation that promises a compelling investment narrative. By shedding non-core assets and doubling down on its regulated utility businesses in high-growth regions, the company is aligning itself with powerful macro trends: the insatiable demand for digital infrastructure and the accelerating transition to clean energy. Its proactive investments in large-scale offshore wind, advanced nuclear technologies, and grid modernization, coupled with a disciplined financial strategy, position it for predictable and sustainable growth.

The company's ability to consistently deliver on its financial commitments, as evidenced by strong recent earnings and successful debt reduction, reinforces its credibility. While competitive pressures and regulatory dynamics are inherent to the utility sector, Dominion's strategic focus on customer affordability, technological leadership, and robust capital investment in critical infrastructure provides a durable competitive moat. For discerning investors seeking exposure to a resilient utility poised for long-term growth driven by fundamental demand and a clear strategic roadmap, Dominion Energy presents a compelling opportunity.