Dominion Energy's offshore wind project cost increases by nearly $300 million due to PJM tariffs, revised network upgrades, and inflation.
Dominion Energy estimates its 2.6-GW Coastal Virginia Offshore Wind project will cost approximately $11.7 billion, representing a $288 million increase from its April estimate. The company attributed the rise to revised network upgrade costs assigned by the PJM Interconnection, tariffs imposed by the Trump administration in April, and updated turbine installation projections, according to Dominion's second-quarter 10-Q filing with the Securities and Exchange Commission.
The project timeline has also shifted. Dominion now projects completion by the end of 2027, a departure from earlier guidance that anticipated work wrapping up in early 2026. At present, work is 81% complete, with operational turbines collectively producing more than 450 MW of power.
The offshore wind cost escalation and related charges on nonregulated assets weighed on second-quarter results. Rising fuel costs and Dominion Virginia's June reentry into the PJM Interconnection capacity market further pressured earnings. The company reported net income of $340 million for the quarter, down significantly from $760 million in the second quarter of 2025.
Despite these challenges, Dominion is advancing its proposed merger with NextEra Energy. The company will seek state and federal approvals beginning next quarter, with potential financial close by year-end 2027. The combined enterprise would become the nation's largest regulated utility, serving 10 million customers with a 130-GW large-load interconnection pipeline. Dominion's portion of that pipeline has grown 11% since December.
"Over the longer term, customers and communities would benefit from a stronger company with the scale and capabilities to buy, build, finance, and operate critical energy infrastructure more efficiently," said Robert Blue, Dominion Energy CEO, during Friday's earnings call.
The merger faces its first significant regulatory hurdle this fall, with an unusually expedited six-month review by the Virginia State Corporation Commission. Analysts expect a settlement attempt before hearings commence on November 17.
Regarding the offshore wind project's operational status, Blue emphasized progress. "Every type of component is in service and functioning as expected," he said, adding that Dominion has worked to deliver maximum power during recent peak demand periods. The company maintains its projection that the Coastal Virginia Offshore Wind project will save customers approximately $5 billion on fuel during its first decade of operation.
Dominion also disclosed asset transactions. In May, it agreed to sell a portfolio of nonregulated solar assets within its Contracted Energy segment to Enel, the Italian energy conglomerate, for $140 million, with closing expected by year-end 2026. The company also plans to sell nonregulated renewable natural gas assets before their anticipated retirement dates, though no timeline or buyer has been identified.
At the Millstone nuclear generating station in Connecticut, Dominion faces a critical decision point. One of the facility's two reactors, part of a 2,106-MW installation, could retire by 2035 absent a long-term power purchase contract extending past 2029, when current arrangements with Eversource and United Illuminating expire. Blue indicated Connecticut will soon decide whether to approve Millstone's participation in the state's zero-carbon energy procurement program. Following approval, Dominion would begin negotiating contracts for state regulatory submission. The company believes its bid would save Connecticut ratepayers $900 million over a decade.