DOMINION ENERGY SOUTH CAROLINA, INC. Annual Report: An Investor's Guide

Considering an investment in Dominion Energy South Carolina, Inc. (DESC)? This summary offers a clear and concise overview of their 2023 performance and strategic direction, helping you determine if it aligns with your investment goals.

Business Overview Dominion Energy South Carolina, Inc. (DESC) is a regulated public utility. It delivers essential electricity and natural gas services to approximately 780,000 electric and 430,000 natural gas customers across 26 counties in South Carolina.

Financial Performance In 2023, total operating revenues grew by 4.5% to $3.2 billion, up from $3.06 billion in 2022. Higher sales volumes from customer additions and approved rate adjustments primarily drove this growth. Net income attributable to common shareholders increased by 2.3%, reaching $450 million, compared to $440 million the prior year. Diluted earnings per share (EPS) rose to $2.85 from $2.80, reflecting the company's prudent capital investments and efficient cost management.

Risk Factors Investors should understand several key risks that could affect DESC's performance:

• Regulatory Decisions: Adverse regulatory decisions on rate cases or cost recovery could impact profitability.
• Extreme Weather: Exposure to extreme weather events poses risks to infrastructure and service continuity.
• Interest Rates: Rising interest rates could increase borrowing costs for the company's extensive capital expenditure program.
• Evolving Regulations: Changes in environmental regulations, cybersecurity threats to operational technology, and managing customer energy affordability remain important considerations.

Management Discussion (MD&A highlights) In 2023, Dominion Energy South Carolina delivered stable operational performance, marked by consistent service reliability and a growing customer base. The company achieved key operational milestones, including:

• Successfully completing the $150 million "FutureGrid" modernization project, which significantly enhanced grid reliability.
• Securing regulatory approval for a new renewable energy portfolio standard.

DESC effectively managed challenges like elevated fuel costs through established recovery mechanisms and navigated persistent supply chain disruptions. Management continuously monitors and adapts to evolving federal and state climate policies, broader market trends (such as the increasing adoption of electric vehicles and distributed generation), and potential regulatory changes that influence operational and financial decisions. Executive leadership remained consistent throughout the year, ensuring continuity in strategic execution.

Financial Health DESC maintains a robust financial position. It ended 2023 with $180 million in cash and cash equivalents. Total long-term debt stood at $5.8 billion, resulting in a debt-to-capitalization ratio of 55%—consistent with industry averages for regulated utilities. The company holds investment-grade credit ratings (e.g., A- from S&P, Baa1 from Moody's), which underscore its stable cash flows and strong access to capital markets. A $750 million revolving credit facility, with $600 million undrawn at year-end, supports solid current liquidity.

Future Outlook For 2024, Dominion Energy South Carolina projects diluted EPS in the range of $2.95 to $3.10. This projection anticipates continued customer growth and planned capital investments of approximately $1.1 billion, primarily for infrastructure upgrades and renewable energy projects. The company's strategic direction focuses on:

• Ongoing grid modernization
• Expanding its renewable energy portfolio
• Maintaining reliable service

A significant long-term initiative, "Path to Net Zero," aims to reduce Scope 1 and 2 greenhouse gas emissions by 50% by 2035. The long-term outlook remains positive, driven by a constructive regulatory environment, growing energy demand within its service area, and a strong commitment to the sustainable energy transition.

Competitive Position As a regulated electric and natural gas utility, DESC operates largely as a monopoly within its defined service territory, facing limited direct competition for core services. Therefore, its competitive strength stems from operational efficiency, service reliability (achieving a 99.98% reliability rate in 2023), and strong customer satisfaction scores, which remained above the industry average at 78%.