Dominion Energy

The data-center demand thesis is no longer thematic — high-load Virginia revenue nearly doubled to $814M in the quarter and is now ~18% of the company — while a locked-in $566M Virginia rate increase drives operating EPS up 5% and shareholders hold what is effectively a claim on 0.8138 NextEra shares at a ~3% discount.

• High-load revenue — Virginia customers at 25 MW or more with a 75%-plus load factor, which is the filing's own proxy for data centers — grew 93% YoY to $814M in the quarter and 80% to $1,450M in the first half, all of it at Virginia Power. This is a hard, filed, quantified number, not a pipeline of 'interest', and it is now roughly 18% of consolidated revenue.
• The regulated earnings machine delivered: operating EPS rose to $0.79 from $0.75 with Dominion Energy Virginia contributing $0.76 versus $0.64, driven by $105M from the 2025 Biennial Review and $79M of higher rider equity return. The Virginia Commission approved a $566M base rate increase effective January 2026 with a further $210M coming in January 2027 at a 9.80% authorized ROE — earnings growth that is already granted, not requested.
• Both headline lines beat consensus (operating EPS $0.79 vs $0.75; revenue $4.48B vs ~$4.10B), and Virginia Power's own net income rose 12% in the quarter and 20% for the half. The underlying regulated business is performing ahead of expectations even as the consolidated GAAP line is obscured by charges.
• The merger is progressing on a visible, dated schedule rather than in limbo: the joint S-4 was filed and went effective, both shareholder votes are set for Sept 3, 2026, the Virginia SCC has issued a procedural schedule with evidentiary hearings from Nov 17, and South Carolina's proposed order sets a Dec 8 hearing with a final order by Jan 29, 2027 — with the SC Senate, House and Office of Regulatory Staff all indicating no objection to the schedule.
• At $68.75 against ~$70.84 of implied deal value, the stock offers a ~3% discount plus continuing dividends through close, and management confirmed the dividend continues. For a holder who believes the deal closes, that is a defined return with a regulated utility as the downside asset.
• Capital intensity is actually easing at the margin: first-half capex fell to $5,799M from $6,216M, and CVOW's cost estimate movement included a $0.4B DECREASE for revised onshore interconnection and PJM network upgrade costs. The largest project is 'installation of the final turbines' — the back end of the build, not the front.
• The $195M Millstone Unit 1 asset-retirement-obligation benefit and $341M of nuclear decommissioning trust gains show the nuclear fleet's balance-sheet value is being revised upward, in an environment where existing carbon-free baseload is the scarcest asset for serving large loads.
• Management reaffirmed all guidance including credit and long-term growth, and the guidance framework survived a quarter containing an $820M writedown — evidence the charge was contained to the nonregulated portfolio rather than symptomatic of the regulated core.

GAAP earnings fell 58% on an $820M renewable-natural-gas writedown, net debt climbed to ~$52.9B, first-half free cash flow was -$3.3B, CVOW's estimate crept to ~$11.7B with non-recoverable costs charged again — and the equity's value is now mostly a levered function of NextEra's share price through a close that is over a year away.

• This is no longer a standalone equity. Consideration is 0.8138 NextEra shares plus ~$0.41 of cash, so D's price is a derivative of NEE's price. Any thesis on D is really a thesis on NEE (which itself carries ~$107B of net debt and a ~$12B first-half cash outflow) plus deal-close probability. The ~3% discount is the market's price for a 2H 2027 close through five regulators and two shareholder votes.
• The $820M impairment of nonregulated renewable natural gas facilities is a capital-allocation verdict, not an accounting quirk — and the irony is sharp: $0.03 of the quarter's $0.79 operating EPS came from RNG 45Z credits, meaning the company booked non-GAAP benefit from the same asset class it wrote off. A further $78M of nonregulated solar was impaired and $23M of strategic undergrounding costs were disallowed.
• Net debt reached ~$52.9B at Jun 30, 2026, up from ~$46.7B at Dec 31, 2025 — roughly $4.2B of net additional debt in six months. Junior subordinated notes alone rose from $5,978M to $7,462M, and the company plans $6.0B-$9.5B of 2026 long-term debt issuance. Interest and related charges are already up 10% YoY to $555M.
• Free cash flow was -$3,342M in the first half ($2,457M operating cash flow against $5,799M of capex), with another $1,174M paid in dividends. Operating cash flow grew just 1.2% YoY ($2,457M vs $2,429M) while revenue grew 20% — precisely because the revenue growth is fuel pass-through, which cycles through cash without adding margin.
• The 20% revenue growth headline is substantially hollow: $870M of the $1,613M first-half increase was fuel-related pass-through recovered from customers, which the filing itself notes does not impact net income. Anyone reading the top-line acceleration as demand-driven margin growth is misreading a commodity-cost recovery.
• CVOW keeps drifting. The total estimate is now ~$11.7B with only $0.1B of remaining contingency; the quarter carried another $195M charge for costs not expected to be recovered from customers; and the cost estimate embeds $0.2B from Section 232 tariffs enacted in April 2026 plus $0.3B from turbine-installation weather delays. The filing's own risk language flags the ability to build it within the proposed timeline 'or at all'. Levelized cost has risen to ~$83/MWh.
• Dominion is under-earning its authorized returns in a growth market — the clearest tell being the North Carolina filing, where Virginia Power presented an earned ROE of 7.53% against a 9.95% authorized return. Rising rate base with a sub-authorized realized ROE is value-destructive until a rate case fixes it, and that case is pending.
• Shareholders are being diluted: diluted shares rose 3.4% to 882.1M from 853.2M, costing $0.02/sh in the quarter and $0.05 for the half. Growth is being part-funded with equity at a price now anchored to the merger ratio rather than to intrinsic value.
• Guidance was reaffirmed, not raised, despite beating on both lines and booking $1.75 of operating EPS against a $3.57 midpoint. Either the second half is expected to be materially weaker, or management is holding back — and merger covenants reduce its freedom to do much about either.
• Virginia regulatory goodwill is the deal's single largest dependency, and there is visible friction: the earnings call acknowledged 'headlines in Virginia that certain folks would like to see a more extended time period for review', with management arguing against 'changing the rules in the middle of the game'. A schedule extension or extracted concessions in the Commonwealth is the most probable route to a delayed or repriced close.
• Concentration is structural: the data-center load is primarily in Loudoun County, Virginia, per the filing's own risk factors, and Stonepeak's noncontrolling interest in CVOW means Dominion lacks sole decision-making authority on its largest project.