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Dominion Energy announced today that it has successfully completed the sale of its three natural gas distribution companies to Enbridge. The transactions, valued at $14.0 billion, consist of an all-cash consideration of $9.4 billion plus the assumption of debt. This sale is highly credit accretive, as 100% of the after-tax proceeds will be used to retire debt.

The three natural gas distribution companies being sold are The East Ohio Gas Company, Public Service Company of North Carolina, Incorporated, and Questar Gas Company, along with Wexpro Company. These companies serve approximately 3 million homes and businesses in Ohio, North Carolina, Utah, Wyoming, and Idaho, and collectively have an extensive network of pipelines spanning over 78,000 miles.

Enbridge, one of the largest and most experienced operators of energy infrastructure assets in North America, has been chosen as the buyer due to their alignment with Dominion Energy in terms of employee engagement, regulatory transparency, community investment, and customer service. Enbridge has also pledged to protect existing employees, honor union commitments, and maintain local operating leadership.

The financial details of the transactions are as follows: The transactions have an aggregate value of $14.0 billion, including the assumption of $4.6 billion in debt. This represents approximately 1.5 times the estimated 2022 year-end rate base of $9.2 billion. The purchase price of $9.4 billion represents approximately 16.6 times the estimated 2023 operating earnings of $564 million and approximately 16.7 times the estimated 2024 operating earnings of $561 million.

The after-tax proceeds from the transactions are expected to total $8.7 billion, which will be used to reduce parent debt along with the conveyance of $4.6 billion of operating company debt. The transactions are projected to improve Dominion Energy’s consolidated FFO to debt by approximately 3.4%.

The closing of each transaction is subject to customary regulatory approvals and is expected to occur by the end of 2024. In the meantime, Dominion Energy will continue its ongoing business review and expects to announce a repositioned outlook during the fourth quarter of 2023. This review is crucial in ensuring that the company is best positioned to create maximum long-term value for shareholders.

With regards to the ongoing business review, Dominion Energy is actively exploring efficient sources of capital to strengthen its credit position and solidify its balance sheet for the long term. They are evaluating options such as de-risking their regulated offshore wind project through the assumption of a noncontrolling equity financing partner, responding to the impact of a $350 million customer rate reduction, considering the potential impact of elevated interest rates, and funding their regulated investment opportunity driven by significant demand growth.

To help navigate through the complexities and legalities of these transactions and the ongoing business review, Dominion Energy can leverage the AI legalese decoder. This advanced technology can analyze legal documents, contracts, and agreements, ensuring clarity and accuracy while identifying any potential issues or risks. By efficiently decoding and understanding legal language, the AI legalese decoder can assist Dominion Energy in making well-informed decisions and ensure compliance with regulatory requirements.

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