Dominion Energy, Inc. (D) | The Buildout — AI Infrastructure

The Verdict

Dominion Energy is a regulated electric and gas utility headquartered in Richmond, Virginia. It generates, transmits and distributes electricity across Virginia, North Carolina and South Carolina, and it is the incumbent utility in Northern Virginia — the market management describes as the world's leading data center market. Its AI exposure is entirely demand-side: it sells no chips, servers, cloud capacity or AI software, but it must build the generation, transmission and distribution that large-load customers, including certain data centers, need. The 10-K describes it as one of the nation's leading developers and operators of regulated offshore wind and solar power, and the largest producer of carbon-free electricity in New England.

Earnings Beat

Q2 2026 revenue was $4,558 million at a 49.7% gross margin. Operating EPS was $0.79, including $0.03 of renewable natural gas 45Z credits, against GAAP EPS of $0.37. The standout disclosure was on demand: data-center capacity in various stages of contracting passed 53 GW, with approximately 12 GW contracted under electric service agreements.

Management tone: Management stayed confident and disciplined on the July 2026 call while reframing CVOW as substantially de-risked, even as it acknowledged the six-month slip in the final turbine date and the roughly 2% cost increase. Millstone timing language loosened from specific quarters to "near term." Management answered directly on the Virginia merger timeline and on the transmission fault that sent data centers to backup power.

Management Guidance

Management reaffirmed all guidance provided on the Q4 2025 call — operating earnings, credit, dividend and long-term growth — at both the Q1 and Q2 2026 calls, and said the 2026 common equity program is complete. Project-level guidance moved in both directions: the CVOW cost estimate rose about 2% to $11.65 billion including $123 million of unused contingency, and final turbine installation was adjusted by six months to end-2027. Incremental delay cost was guided at about $144 million per additional quarter, below the prior $150 million–$200 million rule of thumb, with approximately one-third of the most recent increase shared with the financing partner.

Trajectory

Revenue has grown year over year in each of the last four quarters. Q2 FY2026 revenue was $4,558 million against $3,810 million a year earlier — about 19.6% higher (calculation). The mix is tilting toward large load: Q1 2026 high-load revenue rose to $636 million from $383 million. Margins are compressing on the reported lines — Q2 FY2026 gross margin was 49.7% versus 50.4% a year earlier, and EBITDA margin was 37.0% versus 46.0%. The Q1 2026 MD&A attributes much of the revenue increase to fuel and purchased-power costs that are recovered in operating revenue and do not affect net income.

The Model

The model projects FY+1 revenue of $19,600 million with EBITDA of $8,075 million, a 41.2% margin, and FY+2 revenue of $21,700 million with EBITDA of $8,788 million, a 40.5% margin. The near term rests on the regulated capital program built to serve data-center load and on CVOW, which is 81% complete with the third and final offshore substation due to be energized by year-end 2026. FY+2 depends on how much of the data-center pipeline converts into energized load, and on whether the Virginia battery storage mandate and Millstone recontracting add capital not yet in the plan.

Projections are the median of 5 independent model runs. The model’s revenue sits 11.2% above analyst consensus.

Management reaffirmed all guidance provided on the Q4 2025 call — operating earnings, credit, dividend and long-term growth — at both the Q1 and Q2 2026 calls, and said the 2026 common equity program is complete. Project-level guidance moved in both directions: the CVOW cost estimate rose about 2% to $11.65 billion including $123 million of unused contingency, and final turbine installation was adjusted by six months to end-2027. Incremental delay cost was guided at about $144 million per additional quarter, below the prior $150 million–$200 million rule of thumb, with approximately one-third of the most recent increase shared with the financing partner.

What Could Go Right — and Wrong

Looking Ahead

The next 12 months are dominated by the NextEra merger review — Virginia evidentiary hearings from November 17, 2026, a South Carolina hearing on December 8 and a final order by January 29, 2027. CVOW's third and final offshore substation is expected to be energized by year-end 2026. A Virginia SCC technical conference on battery storage is scheduled for this fall, with an IRP update later in the year and a capital-plan update on the Q4 call in early 2027 that would show whether the 20 GW storage mandate becomes funded capital. A Millstone solicitation decision is expected in the near term.

Financials

Annual Summary

Key Ratios (Trailing)

The Company

Dominion Energy is a regulated electric and gas utility headquartered in Richmond, Virginia. The FY2025 10-K describes service to approximately 4.1 million primarily electric utility customers in Virginia, North Carolina and South Carolina, with a portfolio of approximately 30.7 GW of electric generating capacity, 10,800 miles of electric transmission lines and 80,400 miles of electric distribution lines. It reports three segments: Dominion Energy Virginia, Dominion Energy South Carolina and Contracted Energy. The 10-K calls it one of the nation's leading developers and operators of regulated offshore wind and solar power and the largest producer of carbon-free electricity in New England.

The company runs three nuclear fleets: four operating reactors at Surry and North Anna in Virginia, two at Millstone in Connecticut, and a two-thirds interest in one at Summer in South Carolina. Its largest construction project is the 2.6 GW Coastal Virginia Offshore Wind project. Revenue is overwhelmingly regulated — electric transmission at FERC-approved rates, Virginia electric distribution and generation at Virginia and North Carolina commission rates, and South Carolina electric and gas at that state's commission rates — alongside nonregulated long-term contracted solar and renewable natural gas, including an Align RNG investment. Management describes the model as vertically integrated: it builds the generation it needs to serve load through a state-regulated utility.

Business Segments

Competitive Landscape

Dominion's competitive position is geographic rather than product-based. The only competitors named as parties to an agreement in the filings are AEP and FirstEnergy, which joined Dominion in an agreement for the operation of Valley Link transmission; the source's further competitor list is flagged as inferred. Management's own framing of the moat is the Virginia footprint — it says customers tell it their highest-value workloads need to be built and need to stay in Virginia because of the unique network density, connectivity and ecosystem advantages. What makes the position hard to replicate, per the source, is the combination of an existing transmission and distribution network, an approved large-load tariff framework and commission-permitted cost recovery. The counterweight in the source is that alternative sites are scaling, including Meta's 1 GW El Paso venture and Digital Realty's Kansas City expansion with 600 MW of initial utility power.

Supply Chain

Dominion sits at the delivery end of the chain as the utility that powers data centers, and at the buying end as a purchaser of turbines, nuclear fuel, batteries and grid equipment. None of the neighbour call content in the source contains a direct operational mention of Dominion by name.