Virginia Power Fuel Securitization, LLC Annual Performance Review

I’m writing this guide to help you understand how Virginia Power Fuel Securitization, LLC performed this year. My goal is to turn complex financial filings into simple terms, helping you decide if this investment fits your goals.

1. What does this company do?

Think of Virginia Power Fuel Securitization, LLC as a financial "pass-through" vehicle. Virginia Electric and Power Company (a Dominion Energy subsidiary) created it for one reason: to hold "deferred fuel costs" and issue bonds to investors.

It has no employees, no offices, and no business strategy. It exists only to collect specific "fuel cost securitization charges" from utility customers and use that money to pay back bondholders. The entity was set up to recover $650 million in fuel costs through Series 2024-A Senior Secured Fuel Cost Bonds.

2. Financial performance

Because this is a specialized structure, we measure its performance by its ability to collect the funds needed to pay off its bonds.

The entity completed its first full year of operations after the February 2024 bond issuance. It successfully made all scheduled interest and principal payments to investors on February 15 and August 15, 2024.

3. Financial health and compliance

The entity is in excellent standing. Both the parent company (acting as the servicer) and the trustee (U.S. Bank Trust Company) underwent formal audits to ensure they followed all rules for collecting and distributing funds as required by the Virginia State Corporation Commission. Both parties passed these audits with no issues. This confirms that the "plumbing" of this investment works as intended, ensuring customer charges reach bondholders without delay.

4. Key risks

The biggest risk is the legal and regulatory environment:

• The Trustee’s Legal Issues: You may see news reports about U.S. Bank facing lawsuits regarding unrelated mortgage-backed securities. These legal issues have not impacted this entity’s performance or compliance. The entity’s assets are legally separated from the parent company. This "bankruptcy-remote" structure protects bondholders even if the parent company faces financial trouble.
• Dependency: This entity relies entirely on the parent company to collect funds from utility customers. These charges are "non-bypassable," meaning they are part of the rates paid by all retail customers. The Virginia Fuel Cost Securitization Act ensures these charges continue to be collected and paid to bondholders, which protects the investment from the parent company's general credit risk.

5. Leadership

Dominion Energy executives manage this entity. It is a lean operation with no salaries for managers, keeping costs at a minimum. A board of managers governs the entity, including at least one "independent manager" who must approve any major actions, such as filing for bankruptcy. This ensures the entity stays focused solely on servicing the Series 2024-A bonds.

Is this right for you? This investment is designed for those looking for a predictable, bond-like return backed by regulated utility charges. Because the entity is "bankruptcy-remote" and the charges are non-bypassable, it is built to be insulated from the typical ups and downs of the parent company’s business. If you prioritize stability and consistent payment history over high-growth potential, this structure is designed to provide exactly that.