Schedule 1 - Segment Reported and Operating Earnings

Unaudited

(millions, except earnings per share)

Three months ended December 31,

2018

2017

Change

REPORTED EARNINGS ¹

$          641

$       1,312

$         (671)

Pre-tax loss (income) ²

(50)

207

(257)

Income tax ²

1

(934)

935

Adjustments to reported earnings

(49)

(727)

678

OPERATING EARNINGS

$          592

$          585

$              7

By segment:

Power Delivery

123

141

(18)

Power Generation 

216

311

(95)

Gas Infrastructure

374

285

89

Corporate and Other

(121)

(152)

31

$          592

$          585

$              7

Earnings Per Share (EPS):

REPORTED EARNINGS ¹

$         0.97

$         2.04

$        (1.07)

Adjustments to reported earnings (after tax)

(0.08)

(1.13)

1.05

OPERATING EARNINGS

$         0.89

$         0.91

$        (0.02)

By segment:

Power Delivery

0.19

0.22

(0.03)

Power Generation 

0.32

0.48

(0.16)

Gas Infrastructure

0.57

0.44

0.13

Corporate and Other

(0.19)

(0.23)

0.04

$         0.89

$         0.91

$        (0.02)

Common Shares Outstanding (average, diluted)

660.9

643.9

(millions, except earnings per share)

Twelve months ended December 31,

2018

2017

Change

REPORTED EARNINGS ¹

$       2,447

$       2,999

$         (552)

Pre-tax loss (income) ²

201

235

(34)

Income tax ²

3

(945)

948

Adjustments to reported earnings

204

(710)

914

OPERATING EARNINGS

$       2,651

$       2,289

$          362

By segment:

Power Delivery

587

531

56

Power Generation 

1,254

1,181

73

Gas Infrastructure

1,214

898

316

Corporate and Other

(404)

(321)

(83)

$       2,651

$       2,289

$          362

Earnings Per Share (EPS):

REPORTED EARNINGS ¹

$         3.74

$         4.72

$        (0.98)

Adjustments to reported earnings (after tax)

0.31

(1.12)

1.43

OPERATING EARNINGS

$         4.05

$         3.60

$         0.45

By segment:

Power Delivery

0.90

0.83

0.07

Power Generation 

1.92

1.86

0.06

Gas Infrastructure

1.85

1.41

0.44

Corporate and Other

(0.62)

(0.50)

(0.12)

$         4.05

$         3.60

$         0.45

Common Shares Outstanding (average, diluted)

654.9

636.0

Schedule 2 - Reconciliation of 2018 Operating Earnings to Reported Earnings

2018 Earnings (Twelve months ended December 31, 2018)

The  $201 million pre-tax net effect of the adjustments included in 2018 reported earnings, but excluded from operating earnings, is primarily related to the following items: 

• $759 million net benefit associated with the sales of our non-core assets, primarily reflecting the gains on sales of certain merchant generation assets and our investment in Blue Racer.
• $219 million impairment charge associated with gathering and processing assets.
• $215 million charge associated with Virginia legislation enacted in March that requires one-time rate credits of certain amounts to utility customers.
• $170 million net loss related to our investments in nuclear decommissioning trust funds.
• $124 million charge associated with disallowance of FERC-regulated plant.
• $81 million charge associated with the asset retirement obligations for ash ponds and landfills at certain utility generation facilities in connection with the enactment of Virginia legislation in April.
• $74 million of restoration costs associated with major storms, primarily affecting our Virginia service territory.
• $37 million of transaction and transition costs associated with the Dominion Energy Questar combination and the acquisition of SCANA Corporation.

1Q18

2Q18

3Q18

4Q18

YTD 2018²

Reported earnings 

$503

$449

$854

$641

$2,447

Adjustments to reported earnings ¹:

    Pre-tax loss (income)

305

145

(199)

(50)

201

    Income tax expense (benefit)

(67)

(34)

103

1

3

238

111

(96)

(49)

204

Operating earnings

$741

$560

$758

$592

$2,651

Common shares outstanding (average, diluted) 

650.5

653.1

654.9

660.9

654.9

Reported earnings per share

$0.77

$0.69

$1.30

$0.97

$3.74

Adjustments to reported earnings (after-tax)

0.37

0.17

(0.15)

(0.08)

0.31

Operating earnings per share

$1.14

$0.86

$1.15

$0.89

$4.05

1) Adjustments to reported earnings are reflected in the following table:

1Q18

2Q18

3Q18

4Q18

YTD 2018

Pre-tax loss (income):

    Sale of non-core assets

(70)

(689)

(759)

    Impairment of gathering & processing assets

219

219

    Impact of Virginia rate legislation

215

215

    Net (gain) loss on NDT funds

43

(50)

(149)

326

170

    FERC-regulated plant disallowance

122

2

124

    Future ash pond and landfill closure costs

81

81

    Storm costs

31

43

74

    Merger-related transaction and transition costs

16

9

3

9

37

    Other

(17)

15

42

40

$305

$145

($199)

($50)

$201

Income tax expense (benefit):

   Tax effect of above adjustments to reported earnings *

(67)

(34)

38

11

(52)

    Re-measurement of Deferred Tax balances **

47

(1)

46

    Valuation Allowance ***

18

(9)

9

($67)

($34)

$103

$1

$3

* Income taxes for individual pre-tax items include current and deferred taxes using a transactional effective tax rate. For interim reporting purposes, such amounts may be adjusted in connection with the calculation of the Company's year-to-date income tax provision based on its estimated annual effective tax rate.

** During 2018, the Companies recorded further adjustments to deferred taxes in accordance with recently released tax reform guidance and to revise estimates made at year-end 2017.

*** In 3Q18, a valuation allowance was established against the portion of a deferred tax asset associated with the non-core assets that was no longer projected of being utilized to offset future taxable income. In 4Q18, the amount was adjusted based on management's assessment that it is more-likely-than-not that a portion of the deferred tax asset would be realized in 2018, to reduce tax expense associated with the sale.

Schedule 3 - Reconciliation of 2017 Operating Earnings to Reported Earnings

2017 Earnings (Twelve months ended December 31, 2017)

The  $235 million pre-tax net effect of the adjustments included in 2017 reported earnings, but excluded from operating earnings, is primarily related to the following items:

• $158 million of impairment charges associated with our equity method investments in wind-powered generation facilities.
• $72 million of transaction and transition costs, primarily associated with the Dominion Energy Questar combination.
• $46 million net gain related to our investments in nuclear decommissioning trust funds.

The 2017 Tax Reform Act reduced the corporate income tax rate from 35% to 21%.  Dominion Energy recognized $851 million of tax benefits resulting from the re-measurement of deferred income taxes to the new corporate income tax rate.

1Q17

2Q17

3Q17

4Q17

YTD 2017²

Reported earnings 

$632

$390

$665

$1,312

$2,999

Adjustments to reported earnings ¹:

    Pre-tax loss (income)

(31)

47

12

207

235

    Income tax

10

(16)

(5)

(934)

(945)

(21)

31

7

(727)

(710)

Operating earnings

$611

$421

$672

$585

$2,289

Common shares outstanding (average, diluted) 

628.1

629.2

642.5

643.9

636.0

Reported earnings per share

$1.01

$0.62

$1.03

$2.04

$4.72

Adjustments to reported earnings (after-tax)

(0.04)

0.05

0.01

(1.13)

(1.12)

Operating earnings per share

$0.97

$0.67

$1.04

$0.91

$3.60

¹⁾Adjustments to reported earnings are reflected in the following table:

1Q17

2Q17

3Q17

4Q17

YTD 2017

Pre-tax loss (income):

    Impairments of equity method investments

158

158

    Merger-related transaction & transition costs

3

20

16

33

72

    Net gain on NDT funds

(34)

(3)

(4)

(5)

(46)

    Other 

30

21

51

($31)

$47

$12

$207

$235

Income tax expense (benefit):

   Tax effect of above adjustments to reported earnings *

10

(16)

(5)

(83)

(94)

   Re-measurement of Deferred Tax Balances **

(851)

(851)

$10

($16)

($5)

($934)

($945)

* Income taxes for individual pre-tax items include current and deferred taxes using a transactional effective tax rate. For interim reporting purposes, such amounts may be adjusted in connection with the calculation of the Company's year-to-date income tax provision based on its estimated annual effective tax rate.

** Federal tax reform, enacted in December 2017, reduced the corporate income tax rate from 35% to 21%, effective 1/1/2018. Deferred taxes are required to be measured at the enacted rate in effect when they are expected to reverse.  As a result, deferred taxes were re-measured to the 21% rate.  For regulated entities, where the reduction in deferred taxes is expected to be recovered or refunded in future rates, the adjustment was recorded to a regulatory asset or liability instead of income tax expense.

²⁾ YTD EPS may not equal sum of quarters due to share count differences

Schedule 4 - Reconciliation of 4Q18 Earnings to 4Q17

Preliminary, Unaudited

Three Months Ended

Twelve Months Ended

(millions, except EPS)

December 31,

December 31,

2018 vs. 2017

2018 vs. 2017

Increase / (Decrease)

Increase / (Decrease)

Reconciling Items

Amount

EPS

Amount

EPS

Change in reported earnings (GAAP)

($671)

($1.07)

($552)

($0.98)

Change in Pre-tax loss (income) ¹

(257)

(34)

Change in Income tax ¹

935

948

Adjustments to reported earnings

$678

$1.05

$914

$1.43

Change in consolidated operating earnings

$7

$362

$0.45

Power Delivery ²

Regulated electric sales:

Weather

$1

$0.00

$29

$0.05

Other

11

0.02

48

0.08

Rider investment

15

0.02

26

0.04

Tax reform impacts

0

-

0

-

Other

(45)

(0.07)

(47)

(0.07)

Share dilution

-

-

-

(0.03)

Change in contribution to operating earnings

($18)

($0.03)

$56

$0.07

Power Generation ²

Regulated electric sales:

Weather

$1

$0.00

$57

$0.09

Other

8

0.01

(5)

(0.01)

Merchant generation margin

1

0.00

110

0.17

Planned outage costs

5

0.01

46

0.07

Electric capacity

(12)

(0.02)

(66)

(0.10)

Renewable energy investment tax credits

(87)

(0.13)

(138)

(0.21)

Tax reform impacts

1

0.00

45

0.07

Other

(12)

(0.02)

24

0.04

Share dilution

-

(0.01)

-

(0.06)

Change in contribution to operating earnings

($95)

($0.16)

$73

$0.06

Gas Infrastructure ²

Farmout transactions

($6)

($0.01)

$27

$0.04

Transportation and storage growth projects

3

0.00

30

0.05

Cove Point

91

0.14

247

0.39

Tax reform impacts

50

0.08

141

0.22

Interest

(27)

(0.04)

(86)

(0.14)

Other

(22)

(0.03)

(43)

(0.07)

Share dilution

-

(0.01)

-

(0.05)

Change in contribution to operating earnings

$89

$0.13

$316

$0.44

Corporate and Other ²

Renewable energy investment tax credits

$68

$0.10

$0

$0.00

Tax reform impacts

(20)

(0.03)

(80)

(0.13)

Interest expense

(18)

(0.03)

(25)

(0.04)

Share dilution and other

1

0.00

22

0.05

Change in contribution to operating earnings

$31

$0.04

($83)

($0.12)

Change in consolidated operating earnings

$7

($0.02)

$362

$0.45

Change in adjustments included in reported earnings¹

($678)

($1.05)

($914)

($1.43)

Change in consolidated reported earnings

($671)

($1.07)

($552)

($0.98)

¹⁾

Refer to Schedules 2 and 3 for details, or find "GAAP Reconciliation" in the Earnings Release Kit on Dominion Energy's 

website at www.dominionenergy.com/investors.

²⁾

For period over period comparability reconciling items tax effected using a 35% federal tax rate.

Segment specific tax reform impacts outlined as individual reconciling items.

Note: Figures may not add due to rounding