Dive Brief:

• The lackluster performance of Dominion Energy’s stock in recent years has prompted the company to launch a “top-to-bottom” review of its businesses, Robert Blue, Dominion Energy president and CEO, said Friday during a call on third-quarter earnings.

• No option will be off the table as the Richmond, Virginia-based company seeks to create “significant long-term value for our shareholders,” he said.

• Meanwhile, the company expects state regulators to approve by the end of the year a settlement agreement addressing its concerns over a performance guarantee tied to its $9.8 billion, 2.6-GW offshore wind project.

Dive Insight:

“There are two drivers behind today's announcement of a review: One, enhancing shareholder value and two, ensuring the sustainability” of plans to decarbonize Dominion’s regulated utility business, Blue said. 

Despite improved earnings in the most recent period compared with a year earlier, Blue said the stock price – down about 12% this year – “has not met our expectations,” especially given strong performance on the operating side across its businesses.

Dominion plans to review “value-maximizing strategic business actions,” alternatives to its business mix and capital allocation and regulatory options that may help customers manage costs and provide greater predictability, Blue said.

Inflation, supply chain problems and higher fuel prices are having an impact on customer rates and Dominion’s balance sheet, he said.

"We're monitoring what's going on in the broader economy, he said.  

Dominion has been able to change its focus as market conditions demand. In 2014, Dominion sold off its retail electricity business to NRG Energy and in 2020, it parted with most of its natural gas storage and transport assets in a deal with Berkshire Hathaway.

Blue told analysts on a conference call that with M&A and capital allocation Dominion has materially increased its state-regulated profile” and achieved more predictable, stable returns on equity.

 “Our strategy remains anchored on this pure-play, state-regulated utility operating profile that centers around premier states that share the philosophy [of] a common sense approach to energy policy and regulation,” he said.

 The top-to-bottom review is needed because, he said, “Some would suggest that doing the same thing over and over and expecting a different result doesn't make a lot of sense.” 

Blue did not say how long a review would be.

On Oct. 28, Dominion Energy Virginia announced a proposed settlement over how cost overruns on the Coastal Virginia Offshore Wind project would be allocated with the office of the Attorney General, Walmart, Sierra Club and Appalachian Voice.

The project, 27 miles off the coast of Virginia Beach, is scheduled to be completed in late 2026 when it would generate enough energy to power up to 660,000 homes.