Dominion Energy Gives Up on Atlantic Coast Pipeline in the Face of Rising Legal Costs
Dominion Energy (NYSE: D) operates a largely boring, regulated business. That's exactly what you expect from a large U.S. utility. But it set off some fireworks recently when it changed direction on a big capital investment project. Here's what happened, why it happened, and what it could mean for investors.
Several years ago, Dominion Energy set up a master limited partnership to own midstream assets it controlled. The idea was to use the partnership as a source of funding by selling its assets (known as "dropping down" in the industry) and then reinvesting the cash in growth projects. At the time it was a common business model, with many utilities using a similar setup. However, the government changed tax rules in 2018 that reduced the value of this approach, and Dominion ended up buying back the partnership. It also had to resort to using more debt and asset sales to come up with the cash it needed to support its capital spending plans.
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Source Fool.com
