Summary
Dominion Energy, Inc. (D) filed an 8-K on March 27, 2018, to disclose important information regarding its credit profile and a regulatory development affecting its master limited partnership, Dominion Energy Midstream Partners, LP (DM). The company issued a press release announcing initiatives to improve its credit profile and reaffirmed its existing earnings and dividend guidance. This suggests a proactive approach by management to strengthen the company's financial standing. Additionally, the filing addresses a recent policy revision by the Federal Energy Regulatory Commission (FERC) concerning cost-of-service rates for interstate natural gas and oil pipelines, specifically impacting the ability of MLPs to recover an income tax allowance. While this policy change could have implications for DM, Dominion Energy indicated that any future impacts are expected to be prospective, occur after a lengthy rate proceeding, and are not anticipated to be material to Dominion Energy's overall financial performance.
Key Highlights
- 1Dominion Energy issued a press release on March 27, 2018, outlining credit profile improvement initiatives.
- 2The company reaffirmed its previously issued earnings and dividend guidance.
- 3FERC revised its policy, no longer allowing MLPs to recover income tax allowance in cost-of-service rates for natural gas and oil pipelines.
- 4Dominion Energy expects any impact from the FERC policy revision on its regulated interstate gas transmission assets (held at DM) to be prospective and applied after a multi-year rate proceeding.
- 5The company does not expect a material impact on Dominion Energy's financial performance from the FERC policy revision.
- 6The market reaction to the FERC policy revision may negatively impact DM's ability to raise public equity.
- 7Dominion Energy is reviewing strategic options for DM and intends to recommend a 5% increase in DM's Q1 2018 limited partner distribution per unit, supported by excess distributable cash flow.