Operating revenue jumped 17% on higher fuel pass-throughs, but the absence of a one-time tax benefit and a reversal in operating cash flow weighed on the utility’s first-quarter results.

Dominion Energy South Carolina, Inc., the regulated electric and natural gas utility subsidiary of Richmond, Virginia-based Dominion Energy, reported a meaningful drop in first-quarter earnings even as operating revenue surged, according to its quarterly report covering the three months ended March 31, 2026.

The Cayce-based company, known as DESC, posted net income of $131 million for the first quarter, down $19 million, or roughly 13 percent, from $150 million a year earlier. Operating revenue rose 17 percent to $1.15 billion from $986 million, reflecting a steep increase in pass-through fuel and commodity charges that flowed through both sides of the income statement without altering profitability.

A Tax Item, Not Operations, Drove the Earnings Decline

The principal explanation for the earnings shortfall was the absence of a tax benefit that had bolstered the prior-year quarter. In the first quarter of 2025, DESC recognized a benefit tied to the remeasurement of an uncertain tax position. With that item not recurring in 2026, income tax expense climbed to $33 million from $20 million — a 65 percent increase that effectively accounted for the entire year-over-year decline in net income.

Operating income was little changed, slipping just $4 million to $234 million from $238 million, suggesting the underlying utility business performed roughly in line with the prior-year quarter. Interest charges, net of allowance for funds used during construction, edged up to $72 million from $71 million.

Revenue Surge Reflects Higher Fuel Costs, Not Volume Growth

The 17 percent jump in operating revenue was driven primarily by higher fuel-related charges that DESC collects from customers and remits to suppliers. The company attributed the gain to:

• A $149 million increase in fuel-related revenue tied to higher commodity and purchased power costs — $99 million from electric utility retail customers and $50 million from gas utility customers
• An $8 million uplift from increased infrastructure cost recovery under South Carolina’s Natural Gas Rate Stabilization Act

Those gains were partially offset by a $5 million decline in electric retail sales attributable to the capital cost rider and another $5 million decline in gas utility sales tied to economic and usage factors.

The expense side reflected the same pass-through dynamic. Fuel used in electric generation jumped 32 percent to $269 million, purchased power rose to $58 million from $22 million, and gas purchased for resale climbed 40 percent to $176 million. Because South Carolina’s regulatory framework allows DESC to recover those costs from customers without a markup, the increases on both sides of the ledger have no impact on net income. Depreciation and amortization rose to $149 million, while other taxes climbed to $89 million.

Cash Flow Reverses, Capital Structure Activity Slows

Cash flow trends marked one of the more notable shifts in the quarter. Net cash used in operating activities reached $43 million, a swing from $54 million of cash provided by operations a year earlier — a roughly $100 million reversal. The change reflected larger working-capital outflows, including a $199 million increase in regulatory assets, compared with a $98 million increase in the prior-year quarter.

Investing activities consumed $336 million, up from $319 million, with property additions and construction expenditures of $319 million accounting for the bulk of the spending. Capital outlays were 7 percent higher than the $297 million recorded a year earlier, consistent with the company’s continued investment in its electric and gas infrastructure.

The financing-activities profile shifted meaningfully:

• DESC paid a $50 million dividend to its parent in the first quarter of 2026, compared with no dividend payment a year earlier
• The company issued no new debt during the quarter, in contrast to the prior-year period, when it received $450 million in debt proceeds
• There was no capital contribution from the parent, versus a $250 million contribution a year earlier

Balance Sheet and Segment Detail

DESC reported total assets of $18.2 billion at quarter-end, with the entire asset base attributable to its core regulated utility segment. The company organizes its operations into two reportable segments — Dominion Energy South Carolina, which contains the regulated electric and gas utility business, and Corporate and Other, which captures items not included in the segment-level performance measures used by management. The Corporate and Other segment again contributed an inconsequential amount in the first quarter of 2026.

Comprehensive income available to the common shareholder was $123 million in the quarter, down from $142 million a year earlier, reflecting the same drivers that affected net income. The company also disclosed that it incurred $72 million in direct and allocated costs from affiliate Dominion Energy Services during the quarter, up from $62 million a year earlier.

Environmental Compliance Looms in the Background

The quarterly report devoted considerable space to ongoing environmental compliance matters affecting DESC’s generating fleet. The company continues to monitor EPA rules covering coal combustion residuals, effluent limitations guidelines for steam electric power plants, cooling water intake structures under Clean Water Act Section 316(b), and greenhouse gas permitting. A December 2025 EPA action extended certain compliance deadlines under the May 2024 final effluent rule, with individual facility deadlines now spanning 2029 through 2034.

DESC indicated it is moving forward with wastewater treatment retrofits at its Williams generating station and is evaluating a similar project at Wateree. The company also flagged compliance work tied to a groundwater capacity use area in the counties surrounding the Cope Generating Station, where it must restore long-idled surface water withdrawal equipment to reduce reliance on deep wells.

In each instance, DESC emphasized that South Carolina’s regulatory framework provides rate-recovery mechanisms that could substantially mitigate the financial impact of compliance costs, though it cautioned that some of the underlying expenditures could still be material on an absolute basis.

Controls and Other Disclosures

Senior management, including the chief executive and chief financial officer, concluded that the company’s disclosure controls and procedures were effective as of the end of the period, and reported no material changes to internal control over financial reporting during the quarter. Certain 2025 figures were reclassified to conform to the 2026 presentation, but DESC said the changes did not affect net income, total assets, liabilities, equity, or cash flows.

DESC remains a wholly owned subsidiary of Dominion Energy, with its results consolidated into the parent company’s broader financial reporting.