Summary
Dominion Energy, Inc. (D) has announced the termination of the Atlantic Coast Pipeline (ACP) project, a significant natural gas pipeline initiative, in partnership with Duke Energy Corporation. This decision, approved by Dominion's Board of Directors on July 2, 2020, stems from persistent permitting delays and ongoing legal challenges that have rendered the project unviable. The cancellation is expected to result in substantial pre-tax charges for Dominion Energy, estimated to be between $2.7 billion and $3.2 billion, primarily impacting its second quarter 2020 earnings. This development marks a major strategic shift for Dominion Energy, as the ACP was a cornerstone of its growth strategy. Investors should note the financial impact of these charges and re-evaluate the company's future growth prospects and capital allocation plans in light of this project's cancellation. The company will incur additional exit costs as they are incurred.
Key Highlights
- 1Cancellation of the Atlantic Coast Pipeline (ACP) project due to permitting delays and legal challenges.
- 2Dominion Energy holds a 53% ownership stake in the ACP project through its subsidiary.
- 3Significant pre-tax charges estimated between $2.7 billion and $3.2 billion are expected to be recognized by Dominion Energy.
- 4The majority of these charges will be recorded in the second quarter of 2020 earnings.
- 5This decision was approved by Dominion Energy's Board of Directors on July 2, 2020.
- 6The press release announcing the cancellation was furnished on July 5, 2020.