Good morning, and welcome to the Dominion Energy and Dominion Energy Midstream Partners Third Quarter Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Stephen Ridge, Director of Investor Relations for the Safe Harbor Statement.

Good morning, and welcome to the Third Quarter 2018 earnings conference call for Dominion Energy and Dominion Energy Midstream Partners. I encourage you to visit the Investor Relations page on our website to view the earnings press releases and accompanying materials as well as the slide presentation that will follow this morning's prepared remarks. Schedules in the earnings release kit are intended to answer detailed questions pertaining to operating statistics and accounting, and the Investor Relations team will be available immediately after the call to answer additional questions. The earnings releases and other matters that will be disclosed - discussed on the call today may contain forward-looking statements and estimates that are subject to various risks and uncertainties. Please refer to our SEC filings including our most recent annual reports on Form 10-K and our quarterly reports on Form 10-Q for a discussion of factors that may cause results to differ from management's projections, forecasts, estimates and expectations. Also on this call, we will discuss some of our company's performance that differ from those recognized by GAAP. Reconciliation of our non-GAAP measures to the most directly comparable GAAP financial measures which are able to calculate and report are contained in the earnings press release kit in the Dominion Energy Midstream Partners press release. For our prepared remarks, Jim Chapman, Chief Financial Officer will provide a financial update including quarterly earnings results, Tom Farrell, Chairman, President and Chief Executive Officer will review safety and operating performance, highlight progress on growth initiatives and provide other updates. I will now turn the call over to Jim Chapman.

Good morning. Dominion Energy reported operating earnings of $1.15 per share for the third quarter of 2018, which was at the top of our guidance range. Drivers relative to our guidance including - includes lower operating and maintenance expense, higher-margins and our power generation group in better and normal weather. GAAP earnings were $1.30 per share for the quarter. The principal difference between GAAP and operating earnings is a gain on nuclear decommissioning trust funds. A reconciliation of operating earnings to reported earnings can be found on Schedule 2 of the Earnings Release Kit. Moving to results by business segment. EBITDA for the Power Generation Group was $820 million in the third quarter, at the top end of its guidance range. Lower operating and maintenance expense, higher margins and favorable weather contributed to the outperformance. The Power Delivery Group produced EBITDA of $434 million, which was near the midpoint of the guidance range. And the Gas Infrastructure Group produced third quarter EBITDA of $598 million, which was in the top half of its guidance range. Lower operating and maintenance expense was the primary driver for that outperformance. Overall, we're pleased with another quarter of very strong execution across our businesses. Dominion Energy Midstream Partners produced third quarter adjusted EBITDA and distributable cash flow of $76 million and $50 million respectively. On October 19, Dominion Energy Midstream's Board of Directors declared a distribution of $0.369 per common unit payable on November 15. This distribution represents a 5% increase over last quarter's distribution. On September 19, Dominion Energy announced an offer to exchange each outstanding public Dominion Energy Midstream common unit for 0.2468 of a Dominion Energy common share. The board of Dominion Energy Midstream has authorized its independent complex committee to evaluate that offer. Given Dominion Energy's existing ownership interest in…

Thank you, Jim. I congratulate Jim on his new role as our company's Chief Financial Officer. Since joining Dominion, Jim has played a key role in our most important strategic and financing initiatives, and I'm confident that he will do very well in this new role. Also we should take a moment to recognize the transition of Mark McGettrick who has been with the company for 38 years, the last nine of which have been exemplary CFO. We wish Mark our very best. Going into the final quarter of the year, our company is operating at the last OSHA recordable incident rate in our more than 110-year history. Exceeding our record-setting results last year and placing us ahead of 15 of the 17 peer companies operating in the southeast United States. On the job safety just does not just often. These results represent years of focus on making sure that every employee returns from in the same condition in which they arrived at work that day. We will continue to improve until we achieve the only acceptable safety statistics, zero. Operating performance across our asset portfolio continues to be excellent. I'd like to share four examples. First, our nuclear units extended a company record by operating for 753 days and still counting without an unplanned automatic reactor shutdown. This represents the nuclear power industries best fleet performance. Second, Hurricane Michael. Represented as the sixth-largest outage event in the company's history with over 600,000 customers without power at their peak, representing nearly 1/4 of our electric customers. Within 48 hours of Michael exiting our service territory, our crews had safely restored power to nearly 90% of the customers affected, and we've restored service to every customer within just five days. Third, the Cove Point Liquefaction facility which was the largest single…

[Operator Instructions]. And our first question comes from Shahriar Pourreza from securities.

So very healthy transaction multiple on Blue Racer, so quick thoughts there as I'm assuming this kind of surpassed your internal assumptions but more importantly, can you just elaborate further on the earn outs and are they incremental to your current delevering timeframe assumption or do you assume the earn outs are in your plan. So what I am trying to get at is can we see a further reacceleration of your parent leverage targets?

It's Jim. We are very happy with that transaction. We satisfied with the value and the term. In particular, we are happy with the structure which allows us on to on the one hand derisk at 1.2, but on the other hand still participate in the growth of that business over the next three years would be up to $300 million of earn out payments. The detail - the very specific details of those earn outs are not going to be public that's between us and first reserve. But it's formally. So if Blue Racer revenues and EBITDA grow over the time period above some reasonable threshold, we participate in that every year, participate in that growth upto that $300 million maximum level. So very happy. As it relates to our credit profile, we are using the upfront proceeds this year to repay parent company debt. I think that brings us to where we need to be on a credit basis already. So the 300, the upto 300 over the next three years is just a part of the give-and-take on our overall plan of 6% to 8% earnings growth through 2020.

Got it, okay. So it's incremental. Just real quick on ACP. We got the delay. We got the higher cost estimate, right? So can you elaborate a little bit further on how should we think about the impact of the projects returns versus your original estimate? Or does sort of tax reform kind of mitigate any return pressures versus what your original assumptions were? And then just real quick around sort of the delays. And it seems like your hedging yourself a little bit around potential for further delays. You know can just hit on a little of contingencies you have in place to sort of have in place to mitigate any further delays, I mean do you feel better about this updated and service date?

I'll answer the question on the return, Shahr, and Diane will talk about the hedging as you referred to it. Through this process, we've already been through one process with customers on the rates, and we'll continue to work with them. The returns are going to be very adequate and comments with the normal returns we get in projects like this in our midstream business. Now I'll turn it over to Diane.

This is Diane Leopold. Would say is when we first updated the cost estimates in light of the delay and the stop work order, we also updated all cost estimates for aspects - all aspects of our construction plan, including seasonality and when we're going to be building each of the spread and related productivity factors. We believe those are very reasonable for the plan that we have in place. And then we did add appropriate contingency level to cover a range of risk that are typical for our project at this phase.

The next question will come from Steve with Wolfe Research.

So just agree on a rate sales price on Blue Racer. So just in the context of reaffirming your 6 to 8% growth. Does that fully include now all these asset sales and the debt paydown?

It does.

Okay, great. And then Jim, you mentioned the business mix improvement. Is that so obviously - we can see that. Is it possible you also get some kind of business risk reassuring from the agencies. Or from these changes or is that not likely?

I think that's possible. We certainly see it that way as the reason we have done it in that manner. It's a little bit early to comment as we haven't really held those discussions yet with agencies. But that will be a fair argument to make in my view.

Okay. And then, maybe one last question for Tom on the SCANA deal, I think you said you remain very optimistic on getting it done. It's obviously very noisy down there. And it's hard to - when you're watching it from the newspapers that necessarily be that strong on it. So could you maybe just give a little more rational why you're very optimistic about getting it done?

Sure, Steve. It is noisy. There's lot of things going on, there's lots of moving parts, but we we've been working on all those moving parts now for 10 months. We're very familiar with the folks that we're dealing with and what their interest are and their needs are. And in the end of the day, the Dominion offer or two offers now, our original offer which very popular with customers by the way, and the alternative offer which is popular with other kinds of customers are by far in a way, it's not even close, the best alternative for SCANA in the state of South Carolina, we were confident that the policymakers will come to that conclusion. We saw that last week or earlier I guess this week with the letter from Speaker Lucas for example, recognizing that among all the alternatives, this was the best.

The next question will come from Greg Gordon with Evercore.

Can you hear me? There is no mention in the official slide deck or the release on dividend policy, so can you just restate where you are on the dividend policy, please?

No change for our dividend policy.

So 10% growth for '19?

Yes, but it's obviously up to the board, it's up to the board but that's the expectation, yes.

The next question comes from Julien Dumoulin-Smith with Bank of America.

I just wanted to follow up little bit on the credit question still. Can you elaborate a little bit on the use of proceeds year useful rates are obviously very well on the manger proceeds there. by just thinking about the near-term and practically what you're doing?

Yes, so for the Blue Racer proceeds and the generation sale proceeds all expected this quarter. So we will take that and use it to repay parent level debt as mentioned. And we have kind of an array of debt in parent company, some of which is prepayable, some of which is commercial paper, which is kind of a shock absorber on our baseline timings of their receipt etcetera, cetera. So we have identified ways to use that cash this quarter and pay down debt. I would expect some Big Bang kind of liability management exercise with standards and the like. It's going to be managed on a more solid basis with our existing securities which are prepayable, et cetera.

And maybe to clarify that. Just obviously it's very good multiples here. I mean net-net, how do you see it in terms of accretion, dilution on an earnings basis relative to the liability management?

Given the sales price - prices achieved, and given the reduction in interest from the debt paydown, and given the likely receipt of earn out proceeds on the Blue Racer side, we are very comfortable with that impact is modest and in line with our 6% to 8% growth profile through 2020.

Got it, excellent. And then just a quick clarification on SCANA. Just with respect to the deal and of course the court case pending, how do see that court case. is there a pathway to that court case and the ability to close the transaction given any net range of outcomes?

Well, one of the conditions we have to close is to no change in law, that court case with change law as we - as it existed when we made the decision transaction. But no orders being entered. Lots of rumors running around South Carolina and I just wouldn't believe everything one reads in the newspaper about every single thing everybody is saying. We're going to continue to work with all the parties including that we have the lawsuit, we're not a party of the law suit. But obviously the interest of that law suit. As well as what's going on at the Public Service Commission. So all these things have to be resolved without affecting financial parameters that we entered into the original financial parameters we entered into with SCANA in January. Or we won't close. I'm optimistic that that will all - we work our way through all of it, and we will close by the end of the year.

The next question will come from Praful Mehta with Citigroup.

So quickly just following up on SCANA. I wanted to understand what prompted the new proposal? Was there some feedback you received that suggested this would go better? And is there room for another proposal? Or this is it at this point, this is what's on the table and you're expecting one of these to go through?

We have been in dialogue with people, variety of customers, customer classes, policymakers, all name it for literally last 10 months. And it became apparent to us that there was the significant interest by many in moving the refund into more of a non-rate going reduction. So we work through that and came with the proposal that you saw us put forward I guess it was last week. Things are all sort of running here. I guess it was last week that we put that proposal out. But that's all, there's two proposals, either one we're comfortable with. We don't expect any changes to either one of them.

Got you. Fair enough. And then secondly, in terms of Blue Racer, the $300 million earn out, Jim, is that expected to show up in operating earnings, is that going to be removed more as onetime?

The $200 million, most likely in operating earnings.

I got you. And finally just on ACP. If you have a - you kind of highlighted the point that you want to hit the late 2019 timeframe to meet the critical winter period. If you do not hit that timeframe, is there any implications from an earnings or any penalties perspective?

No, I wouldn't expect any change in earnings. The construction plan and costs are going to be similar regardless given the AFUDC that we have when we get into service.

Thank you. This does conclude this morning's conference call. You may now disconnect your lines, and enjoy your day.