Dominion Energy Reports Sale Proceeds From Retail Contracts Contributed To Partnership With IGS Energy, Sale Of Ownership Interest

February 28, 2022

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Dominion Energy has reported its proceeds from its latest contributions to the Wrangler Retail Gas Holdings, LLC partnership with Interstate Gas Supply, Inc., which occurred in December 2021

As previously reported, in December 2021, Dominion Energy contributed various retail energy contracts to Wrangler. In a subsequent transaction in December 2021, Dominion Energy sold 5% of its noncontrolling ownership interest in Wrangler to IGS Energy (with Dominion retaining 15% ownership). The proceeds from each of these transactions is discussed below

As background, in September 2019, Dominion Energy entered into an agreement to form Wrangler, a partnership with Interstate Gas Supply, Inc. Wrangler was established to operate a nonregulated natural gas retail energy marketing business with Dominion Energy contributing its nonregulated retail energy marketing operations and Interstate Gas Supply, Inc. contributing cash.

As previously reported, the initial contribution, consisting of SCANA Energy Marketing, Inc., closed in December 2019 for which Dominion Energy received $301 million in cash proceeds and a 20% noncontrolling ownership interest in Wrangler with an initial fair value of $75 million estimated using the market approach. "This valuation is considered a Level 2 fair value measurement given that it is based on the agreed-upon sales price. In connection with the transaction, Dominion Energy recorded a gain of $147 million, net of a $73 million write-off of goodwill, presented in losses (gains) on sales of assets, and an associated tax expense of $82 million, in the Consolidated Statements of Income for the year ended December 31, 2019," Dominion Energy said in a 10-K

The second contribution, consisting of certain nonregulated natural gas retail energy contracts, closed in November 2020 for which Dominion Energy received $74 million in cash proceeds and retained a 20% noncontrolling ownership interest through its ownership interest in Wrangler in the contracts valued at $13 million using the market approach. "This valuation is considered a Level 2 fair value measurement given that it is based on the agreed-upon sales price. In connection with the transaction, Dominion Energy recorded a gain of $64 million presented in losses (gains) on sales of assets, and an associated tax expense of $19 million, in the Consolidated Statements of Income for the year ended December 31, 2020," Dominion Energy said in a 10-K

The final contribution, consisting of Dominion Energy’s remaining nonregulated natural gas retail energy marketing operations, closed in December 2021 for which Dominion Energy received $127 million in cash proceeds and retained a 20% noncontrolling ownership interest in Wrangler with an initial fair value of $23 million estimated using the market approach.

"This valuation is considered a Level 2 fair value measurement given that it is based on the agreed-upon sales price. In connection with the transaction, Dominion Energy recorded a gain of $87 million, net of a $14 million write-off of goodwill, presented in losses (gains) on sales of assets, and an associated tax expense of $32 million, in the Consolidated Statements of Income for the year ended December 31, 2021," Dominion Energy said in a 10-K

Subsequently in December 2021, Dominion Energy sold 5% of its noncontrolling ownership interest in Wrangler to Interstate Gas Supply, Inc. for $33 million and recorded a gain of $10 million, presented in other income, and an associated tax expense of $3 million, in the Consolidated Statements of Income for the year ended December 31, 2021.

At December 31, 2020, $63 million of assets and $15 million of liabilities associated with the remaining nonregulated retail energy marketing operations contributed to Wrangler in December 2021 were classified as held for sale and were included in current assets held for sale and current liabilities held for sale on Dominion Energy’s Consolidated Balance Sheets, respectively. The related disposal group is primarily comprised of customer receivables, goodwill, inventories and account payables.

At December 31, 2021 Dominion Energy has a 15% noncontrolling ownership interest in Wrangler, which is accounted for as an equity method investment as Dominion Energy has the ability to exercise significant influence, but not control, over the investee.

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