Good morning and welcome to the Dominion Energy Third Quarter Earnings Conference Call. At this time, each of your lines is in a listen-only mode. At the conclusion of today’s presentation, we will open the floor for questions. [Operator Instructions] I would now like to turn the call over to Steven Ridge, Vice President, Investor Relations.

Good morning and welcome. I encourage you to visit our Investor Relations website to view the earnings release kit, a presentation that accompanies this morning’s prepared remarks and additional quarterly disclosures. The Investor Relations team will be available after today’s call to answer any questions regarding this quarter’s results. Earnings materials including our prepared remarks 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. This morning, we will discuss some measures 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 we are able to calculate are contained in the earnings release kit. Joining today's call are Tom Farrell, Chairman, President, and Chief Executive Officer; Jim Chapman, Executive Vice President, Chief Financial Officer and Treasurer as well as other members of the executive management team. I will now turn the call over to Jim.

Thanks Steve and good morning. Before I walk through the quarterly results which were above the mid-point of our guidance range, I wanted to highlight Dominion Energy’s key investment themes, all of which were consistent with the messaging from our Investor Day in March. At the highest level, we delivered exceptional value to our customers, our communities, our employees, and our shareholders. We do this by providing affordable, reliable, and sustainable energy to our customers. Approximately, two-thirds of our operating income comes from our state regulated utility operations whose customers center around five key states. Our demand for utility-centered FERC transmission and storage customers account for most of the rest of our operating income. Together, these regulated and regulated-like customers comprise approximately 95% of our total operating income. From 2019 through 2023, we plan to invest $26 billion in growth capital programs that will modernize, strengthen, and improve the sustainability of our systems to the benefit of these customers. Further, we do this by engaging with communities in which we live and work by being responsible stewards of the environment, and by focusing relentlessly on the safety of our nearly 20,000 employees. Tom will touch on these three topics more extensively in his remarks. Finally, we do this by delivering financial results that are consistently within our guidance for earnings and dividend growth. As an example, this quarter’s results represent the 15th consecutive quarter of delivering weather-normalized operating earnings per share that are at or above the midpoint of our quarterly guidance range and also the 15th consecutive quarter of being in or above the range without weather normalizing. And today, we are also reaffirming our annual and long-term growth guidance. Turning now to quarterly results on Slide 4, today we reported third quarter 2019 operating earnings of $1.18 per…

Thank you, Jim and good morning. First, a reminder that safety is our first core value. I'm pleased to report that our year-to-date safety performance is consistent with the record setting results we have achieved in the last few years. We're focused on continuing that trend over the last two months of 2019. Turning to Slide 9, I will now address the topics Jim mentioned in his remarks. First three weeks ago, we released our latest sustainability and corporate responsibility report. It's our most comprehensive report to-date and it delivers on the company's commitment to complete transparency. it embraces ESG disclosure best practices, and it includes information on corporate governance and stakeholder engagement, social and workforce metrics and industries that match the standards of the Global reporting initiative and the Sustainability Accounting Standards Board as well as the United Nations Sustainable Development Goals. Key highlights in the report include Dominion has reduced carbon dioxide emissions by 52% since 2005. We've also prevented more than 250,000 metric tons of methane entering the atmosphere from our gas infrastructure assets in the past decade, which is the equivalent of planting more than 100 million trees. The company has raised its diverse hiring rate from 27% to 42% from 2013 to 2018 and one in every five new hires is a veteran. In 2018, Dominion contributed nearly $35 million social betterment and employees volunteered more than 126,000 hours in community service. In August, we announced plans for the largest electric school bus initiative in the nation. This innovative effort aims to replace 100% of the approximately 13,000 diesel powered school buses in our Virginia Electric Utility Service territory by 2030, which will be the equivalent in emission reductions of removing 65,000 cars from the road. The vehicle to grid technology allows the bus batteries…

Thank you. At this time, we will open the floor for questions. [Operator Instructions] We'll take our first question and that is from Shahriar Pourreza with Guggenheim Partners. Please go ahead.

Hey, good morning guys.

Good morning.

So, Tom, you obviously highlighted a couple of questions here. You obviously highlighted the huge opportunity you said you guys have with offshore wind right? And we know the development cycle could be kind of long, we've seen it with vineyard. I'm curious if you could talk a little bit around how you're thinking about contingencies around permitting, construction in contract terms, and then as the projects start to go through construction, maybe just a little bit on financing. I mean, should we think about the first tranche of the projects, self-funding future projects with the cash flows they are generating. So maybe how we should think about sort of the financing of what could be a very large capital outlay?

Thanks. I'll start and then I'll turn it over to Paul Koonce who has spent an enormous amount of time working on this development, and Jim Chapman can answer any further questions on the financing. I would mention we are expecting rider recovery and we will seek rider approval for all three phases. We've been working on this project for six years. We bought the right lease option, the lease rights in a 2013 auction that was run by BOEM. And ever since that time, we've been working with a variety of stakeholders to make sure we had the right plan and we had the right folks to help us do the pilot. We got approval from the State Corporation Commission, it’s been through BOEM, we have the permits for BOEM. One of the things to keep in mind that differentiates us from the New England situation is we own the entire lease for the entire coastal region of Virginia, and ot is 26 miles offshore. It is not in fishing grounds and it is not visible from the shore. So, it's very significant differentiating aspects of what's going on here in Virginia and what you've seen happen in New England, but from the macro level, and I'll turn it over to Paul to answer the balance of your question.

Thanks, Tom. Shahriar, good morning. As Tom mentioned, we've been at this for quite some time. We expect, as Tom mentioned in his prepared remarks, to file the construction and operating permit about this time next year. We’ve got ample time to get the BOEM permit in place in order to meet the first phase construction. We will be starting the work now, the ocean mapping, the geotech work, the environmental studies, and that will take place over the course of 2020. And having, as Tom mentioned, having just gone through it on the CVOW project, well that was a research area permit and this is a commercial and operating permit. The process is identical, that we know the stakeholders, we know the process and we feel really pretty good about it. I'll ask Jim to comment on financing.

Yes, two things, Shah, one is as Tom mentioned in his prepared remarks in our existing plan that we walked through in some detail back in March, we highlighted $1.1 billion of spending in offshore wind in our plan from 2019 to 2023. So, obviously recent announcements are much larger dollars than that. The vast majority of the increase is going to come in those years of completion 2024, 2025, 2026. So the majority of the spending to come in our current planning horizon is already in our plans that we walked through, and the rest we will update over time as time comes closer, but given what Tom and Paul just described, this is all in a regulatory construct to be financed at Vepco. It's certainly achievable, but the details will come in the next period.

Got it, that’s helpful. Just around VRP, the retirement plan, is there any status, and then I know your past comments is it's supportive of your growth, maybe just a little bit of a sense on how that program is going, how it's shaping the O&M profile, and sort of bigger picture is VRP offshore wind, the rate plans you have in Virginia, is there a point in time when you can change the way we guide to grow, i.e. moving from five plus more of a range especially as we're trying to model what the incremental accretion is from offshore wind, because it just seems like between Cove Point, your plan is becoming much more visible. So, is there a point in time when you can start to layer in more of a definitive growth range versus five plus?

Shah, you have linked quite a few things into one question there, good job. Look the offshore wind, what that does to our guidance, I mean, it's beyond our five-year planning horizon. So, the spending and any associated earnings as I just walked through the $1.1 billion including the pilot, I mean that’s in our plan, it’s in our earnings guidance. There are no changes for now on that front. On the VRP, you are right, that is kind of done and dusted earlier this year. We talked about that as being a savings of, call it, $0.05 to $0.06 this year maybe double that on a full run rate next year and diminishing over time as it's given back to customers. So that -- we talked about that as being available savings to offset unforeseen headwinds, and that's still the case. But as an update this year, as you know, the vast majority of our business, 95% of our business is not commodity exposed in any way, the 5% that's not regulated, regulated like it is. And within that 5% of our operating earnings, there's a couple things. One is obviously the gas commodity environment is weak, and our business is largely immune to that. We have a little bit of exposure, mostly around our single remaining processing plant, which is in West Virginia, and that's a little bit of a headwind as those businesses go from like very small to even smaller this year. So that is a little bit of headwind, well materially though, this farm-out program that has been very successful as you know, Shar, this is monetizing acreage and mineral resources, blow our storage field. We announced that program in early 2015. And we give guidance to the end of the decade of $450 million to $500 million of pre-tax earnings. And we've been taking along that kind of like clockwork, we’re 75% through that, that guidance. But given the pricing, given the commodity environment and the pricing that's available to us today, we're choosing not to transact on a farm-out this year. And we're going to, we're going to hold that acreage, net value for farm-out transactions in future periods when there's an improvement in the commodity pricing environment. So what that means is obviously we just reiterated our guidance in the midpoint. So that means we've overcome any unforeseen headwind previously unforeseen related to our decision, not to transact on a farm-out this year. So that is basically the VRP savings which we're using it pretty much as we described, we would. VRP savings and other initiatives to overcome that decision. So no change to our guidance, those are the parts.

Perfect, guys, thank you so much.

Thank you.

Thank you. We will take our next question from Steve Fleishman with Wolfe Research. Please go ahead.

Yes, hi, good morning.

Good morning.

Hey Tom. So your offshore wind is obviously different from really any other so far that it's going to be done, plan to be done in the regulated business. How do you know that that structure of it will be approved or could there be people that want to try to bid for it, et cetera. Could you talk about that?

Sure. Well, we're the only one that owns the offshore lease. We own 100% of the offshore lease, we pay for it in the auction, nobody else can build a wind farm off of Virginia. Governor Northam if you I guess couple of months ago now called for the construction of this wind farm because it's his intention to help Virginia developed into the center of the offshore wind industry along the East Coast and that's a challenge that we embrace. And he specifically said that he recognized that there may be some who want to push back on that, whether it was necessary required or a good thing for Virginia that he was going to work very hard to ensure that public policy and regulatory supports in place to carry out this plan. And it was only after those statements that we went ahead with our announcements, the full deployment. Although we had been working obviously because we filed for the PJM interconnection agreement. So there's obviously a process in front of us, we are highly confident that it will be carried out to fruition. There is a lot of public support from this for this project, including from political leaders on both sides of the political fence, both Democrats and Republicans want to see this thing happen. So we have, obviously there are long way to go on it, but we have high confidence level in it going forward. It'll be the only offshore wind farm in Federal Waters. It will not be visible from the shoreline. So you don't have any of these visual impacts of concern people. Environmental community is very supportive of the project going forward. The economic development people In Tidewater, Virginia are very supportive of this going forward. So, obviously, we don't have any guarantees of that Steve but we have a very high confidence level in the outcome.

Okay, great. Thank you.

Thank you.

Thank you. We will take our next question from Julien Dumoulin-Smith with Bank of America. Please go ahead.

Hey, good morning, team.

Good morning.

And congratulations to all those receiving promotions here, another number. But perhaps just to pile on this offshore wind question, and perhaps the compliment that you talk about finding ways to mitigate costs to consumers, can you talk a little bit more precisely about the game plan first for qualifying on the tax credit front, just given the longevity of the plan, but if you're starting today, in theory, you should qualify the sum of it and then and then separately, when you come out with some more definitive plans and filings except maybe following the last question here to actually pursue this at the SEC level?

Well, let me just give you a macro answer, Julien. And the folks who got the promotions are in the room, they heard your congratulations. On a macro base and I'll turn over to Paul Koonce. We are very concerned here about customer rates. It's something we focused on all the time. And because our goal is to ensure that our customer rate stays very competitive, well below national averages below the regional averages, they are now and we intend for them to stay that way including with the construction of this wind farm. So we will be working very hard with the fabricators, developers, installers. We will be the operators to ensure that we get the cost down as low as we can as we go ahead, which will be important for everybody involved helping us with the project. So with that, I'll turn it over to Paul.

Thanks, Tom. Good morning, Julien. Again, just to follow up on Tom's comments about costs, I think that's one of the key reasons why we broke the project up in three phases, so that we could continue to let the supply chain mature, let the costs continue to come down, so that the impact rates are minimized. Just in terms of ITC, and safe harboring, of course as you know in order to qualify for ITC, a treatment for an offshore wind farm you have to begin in construction this year. We're looking at that, we don't have anything to comment about that, but we're aware of that timing. There may be some things that we can do to safe harbor certain of those costs. So we're before more to come on that in 2020. In terms of plans and filings we're not as Tom said, we're going to file for the BOEM application this time next year. We're not prepared to say exactly when we're going to file for the SEC application. But I can tell you that we will be conducting many public meetings over the course of 2020. As we make the environmental assessment, obviously, marine lives, plant and birds, we will be doing ocean mapping and will be doing geotech analysis or sub-service analysis. So you will begin to see all that sort of play out in 2020. And I think that will be a good way to sort of pace when we might expect to make an SEC filing.

Got it. But just to clarify the last question too, how much of this is in the five-year window as you see it, perhaps Phase 1 if you will?

Julien, as mentioned, we've got $1.1 billion in total in our five-year plan as we walk through in March and for now that's the number.

That $7 million is added to that?

That’s right, everything else comes in 2024, 2025, 2026.

Okay, all right. Fair enough, excellent and then just to clarify the prior one on 40, the order does that change the criteria that the SEC is going to be applying in that process?

Julien, this is Paul. The GTSA finds that offshore wind is in the public interest. Now the SEC process is well known whether they and how they conduct a market test anytime, we build generation for the benefit of our ratepayers, there's a certain process that we follow and that's the process we know well and we'll just step to that when that time comes.

Thanks for the patience guys.

Thank you.

Thank you. We will take our next question from Greg Gordon with Evercore. Please go ahead.

Thanks guys. Shah’s question was like the question from back to school, one question but in 27 parks right? On ACP, when I first read the release, I felt like it was kind of my first reaction was, this is kind of negative. It looks like there could be slippage in the biological permit, but now that I'm hearing your commentary on it, I feel less. I guess we should feel less concerned because you feel like even if the, even if the permit comes in, after the turn of the year, you've scrubbed your construction costs forecasts and you still feel like you can move the schedule around and comment on budget?

Thanks, Greg. I'll turn it over to Diane Leopold, who spends a lot of her life working on the Atlantic Coast pipeline. Diane?

Yes, when we looked at it, I think you haven't exactly right. When we gave guidance earlier this year, we looked at a lot of different scenarios and a lot of different contingencies to try to capture a variety of outcomes, including going to the Supreme Court, including when we would restart construction. And so just given looking at the different segments of the pipeline, we feel comfortable with that, we are well within what we've incorporated for both cost and schedule at this point.

Can you give us some sense of why the permit may have slipped a few more months? Is it just that they're being extra careful to make sure that they comply with all the nuances of the remand and don't get another stay or is there something else going on?

Greg, I don't think we're trying to imply that we think the permit is slipped. What we're trying to say is, even if it does, work still on the schedule and cost.

Okay, great. My last question…

I think it’s going to slip.

Okay, sorry. I'm sorry if I misconstrue that. The last part of my question, you talked to negotiations with the offtakers on the pipe who are mainly utilities. This is a demand driven pipe, they need the gas, which is why you're building it. It's not a supply push situation. I think investors are concerned that with the cost overruns, this winds up being a pipe that doesn't earn its cost of capital. But you seem to be positioning it in such a way that you should be able to potentially share the burden of those unexpected cost increases with the utilities who are taking the capacity. So can you talk through like how much of that you are, you think you'll be able to share given the unforeseen delays in the pipe and what type of return we should expect on the pipe, if you're successful?

Yes, this is Diane Leopold again, I won't get into the actual expected project returns, I will tell you, as Tom said, in the actual script, the customers very much need this pipeline for regional security, for their own customers needs. This is clearly a demand driven pipeline. And we are in very constructive negotiations with the customer for fair rates to their customers as well as fair returns for us and more comfortable with the returns that we’ll get for the pipeline.

Okay, thank you very much.

Thank you, Greg.

Thank you. We will take our next question from Christopher Turnure with JPMorgan. Please go ahead.

Good morning, guys.

Good morning.

Tom, I think you spent a lot of time in your prepared remarks on the political environment in Virginia. And kind of how you guys are thinking about that in the legislation from last year, but could you give us an update to both the South Carolina and North Carolina or pardon me, South Carolina, Virginia regulatory environments right now and political environments, and also just the latest on your South Carolina regulatory strategy for next year?

Sure. We announced the South Carolina the SCANA merger, I guess late in, I guess it was 2017. And then spent the year 2018 going through the process and it was a relatively hot political climate in South Carolina over because the SCANA and Santee Cooper’s cancellation of the expansion of the summer business plans. We went through that whole process very transparently, answered all the questions, went to all the meetings. And then, as we closed the transaction, we said to policymakers that our intention was to stay out of the headlines through our blocking and tackling provide reliable service, both gas and electric at reasonable and much reduced electric rates and just be part of the community. That was our goal. And that's exactly what's happened in the State of South Carolina. Things are very moving along very well there, progressing well. We're out of the headlines except when we do things in the communities we serve, including the extraordinarily prompt restoration of the loss of electricity for 40% of our customers got all their lights back in three days. All that helps, the community understand their new neighbor. We will be filing a rate case next year, we are under earning in South Carolina, it’s well known to everybody and we're formulating and completing that regulatory strategy now but we will be filing in IT May.

We can file before May 1.

Before May 1 of 2020. Now I'm sorry, in North Carolina. We have a rate case file in North Carolina, we have settled all but one or two, we consider them to be relatively small issues got agreed on 9.75% ROE, very constructive regulatory environment and economic development environment in North Carolina.

And in Virginia, if the legislature stays Republican, would that change some of the plans that you've been talking about today, or kind of shift your capital spending at all in different direction?

No, we have a long history of working with whatever parties in the majority in whatever the two houses, Democratic Governors, Republican Governors, Democratic leaders and Republican leaders, so not to expect any changes to our plan.

Okay, and then my second question is just on equity needs going forward. I think you partially addressed this in your prepared remarks. But will the sale of existing stake in Cove Point mean that you will not need any equity, internal or external for the next several years?

Yes, going back to our, it’s Jim. Going back to our guidance from our analyst day back in March, we had shown a projection through 2021 that had equity component to support our regulated capital spending of $300 million of DRIP as on and $300 million to $500 million per year of ATM. So all the number of programs. With the Cove financing, we are using 100% of those proceeds by year-end $2 billion to pay down parent level debt as I mentioned, but we will effectively offset the ATM portion of that prior guidance in 2020 and 2021. So taking to midpoint of that $300 million to $500 million, is $400 million, so that goes to zero. But the DRIP, the DRIP is always on. So that will be the only remaining program that's active for equity in those years.

Okay, that's clear. Thank you.

Thank you.

Thank you. We will take our next question from Michael Weinstein with Credit Suisse. Please go ahead.

Hi, guys.

Good morning.

On Cove Point -- good morning. Is there any interest in selling an additional stake in Cove Point at this point or is just now you're now at the minimum desired level of ownership?

Thank you for that question. There's no interest in our desired outcome.

Okay. And in the discussions with the ACP customers, I just wanted to be clear that the talks are over the cost increases above the I think $6.25 billion that's currently in the agreement embedded in current agreements?

Yes, I won't disclose anything in the contract, but it's basically negotiating cost increases up to the current anticipated level.

And is there anything you can say about what those contracts obligate each party at, on the face of it at this point before negotiations?

No, no, we don't want to disclose that thing.

Okay, and just one last question I had is about the renewable tariff, I think you know had some major C&I customers in Virginia looking for alternative suppliers and have you guys has Virginia -- has the Virginia utility received permission to have its own renewable tariff at this point, so they can compete against these renewable suppliers?

I will ask Bob Blue to answer that question.

And Michael, it’s Bob. We have pending an application for a 100% renewable energy tariff, as you know in Virginia law, our customers can seek service from a competitive service provider unless utility has 100% renewable tariff we filed for one earlier this year. But hearing on that in November, the State Corporation Commission staff filed their testimony yesterday and did not raise significant objections to our proposal and the one that we have filed is modeled closely on one that was approved not earlier by the Commission. So we feel very good about where that will go.

Okay, great. Thank you.

Thank you.

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