Dominion wind turbines east of Virginia Beach.
Despite a 73% surge in the cost of fuel and other energy purchases, Dominion Energy‘s profits jumped 19% from last year’s level for the three months from July to September, a time in which electric use soars.
At the same time, the energy giant, parent of Virginia’s largest electric monopoly, said it is starting a “top to bottom” business review.
It said the review would stress its efforts to reduce carbon emissions while continuing to anchor its business on being a state-regulated utility.
“Maybe it’s a little unorthodox,” Bob Blue, Dominion’s chair, president and chief executive officer, said during a conference call with Wall Street analysts.
“Our goal with this is to land on an outcome that provides predictability and quality,” he said, adding that the company wanted to listen to what investors had to say about why Dominion stock doesn’t perform as well as that of other energy companies.
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Blue said the review would include a look for the most efficient sources of capital to finance growth in the most attractive parts of its utility business, without naming those, but added that “our long-term scope and duration of our regulated decarbonization investment opportunity is very much intact.”
“Our company has an incredible opportunity to invest capital in the coming years — in fact, well into the next decade,” Blue said.
Dominion reported third-quarter earnings rose to $778 million, or 91 cents a share, from $654 million for the same period last year. Revenue was up 38% to $4.39 billion.
Its spending on electric fuel and other energy sources rose to $1.22 billion from $703 million.
Its Dominion Energy Virginia electric utility’s operating earnings — the difference between revenue received and money spent — rose just 3% to $617 million in the quarter. The sale of its Hope Gas subsidiary in West Virginia and the income tax benefit from that and stronger operating earnings from its South Carolina utility fueled much of the parent company’s profit rise.
“Like everyone, we are seeing inflation, supply chain limitations and higher fuel prices — all having an impact on customer rates and our balance sheet strength. We are keenly aware of the economic pressures that are affecting our customers,” he said.
For the first nine months of the year, Dominion reported profits fell to $1.04 billion from $1.95 billion last year, despite a rise in revenue to $12.26 billion from $10.08 billion.
Blue said last week’s agreement with Attorney General Jason Miyares, two environmental groups and Walmart to limit how much of any cost overruns on its 176-turbine offshore wind farm was passed on to customers was “a balanced and reasonable approach” that allows the project to continue moving forward.
He said work is tracking the project schedule, and that about 75% of the costs are already fixed.
Chief financial officer Jim Chapman, who is leaving to take a post with ExxonMobil, said that when the impact of weather on demand is excluded, revenue was up 2.6% during the 12 months ending Sept. 30, compared with the prior period. Residential sales were down slightly, “as you’d expect with the continued back-to-work trend,” but that was offset by growth in use by data centers in Virginia.
While Dominion’s Virginia utility is its biggest unit, it operates in 15 states serving 7 million customers.
