Robert M. Blue
President, Chief Executive Officer and Chairman of the Board at Dominion Energy
Thank you, David. Good morning, everyone. As always, let me begin with safety, as shown on slide three. In 2023, our employee OSHA recordable incident rate was 0.45, a significant improvement to already strong historical performance. We also achieved a record low lost time restricted duty injury rate. We're pleased but not satisfied with these results. I strongly believe that exemplary safety performance unlocks our ability to execute optimally across the three pillars of our mission, as shown on slide four. We maintained outstanding reliability in 2023 as our electric customers in Virginia and South Carolina had power 99.9% of the time, excluding major storms.
Our residential rates continue to be well below the national and regional averages. From 2005 through 2022, we've reduced Scope one carbon emissions from our electric operations by nearly 50%, even as annual energy generated over that period has increased 9%. Going forward, you'll continue to hear how we're executing against our mission because an exceptional customer experience positions our company to deliver the best results for our shareholders. I'm very pleased to share several important updates with you this morning as it relates to our business review in the Coastal Virginia Offshore Wind Project. Let me begin by reiterating my previous commentary regarding the review.
Our guiding priorities and commitments are unchanged, as is my conviction around both the decision to undertake the review and the quality of the result I expect us to deliver. The review will comprehensively and finally address foundational concerns that have eroded investor confidence in our company over the last several years. We will not pursue a series of partial solutions that leave key elements and risks unaddressed. Instead, we'll deliver a comprehensive result that will provide a durable and high-quality strategic and financial profile that optimally positions Dominion Energy to provide compelling long-term value for shareholders, customers and employees.
This morning, we announced a key part of that result with the execution of an agreement to add a noncontrolling equity partner in the Coastal Virginia Offshore Wind project. This arrangement with Stonepeak, a global leader in infrastructure investing, represents the final strategic step in the business review and delivers an exciting result for our customers and our shareholders. Before I walk through the transaction specifics, let me update you on the continued successful development of the project across all phases. The project is proceeding on time and on budget, consistent with the time lines and estimates previously provided.
We continue to achieve significant project milestones, as shown on slide five. On permitting. Last month, BOEM provided final approval of our construction and operation plan, which allows us to begin offshore construction in the second quarter. And the Army Corps of Engineers issued its permit, which has allowed us to ramp up onshore construction. On materials and equipment.
We're on track and making excellent progress. One of the keys to our success has been that from the beginning of the project, we insisted that our equipment be sourced from mature facilities under dedicated production allocations that are specific to our components. We've received 24 monopiles from our supplier, EEW, at the Portsmouth Marine Terminal, with more on the way in the coming weeks. These monopiles will begin to be installed by DEME during the second quarter.
Recall that we've scheduled monopile installation across two seasons, 2024 and 2025, which allows us to better mitigate any potential delays or disruptions without impacting final schedule. The first of three offshore substation topside structures is complete and has been delivered to Bladt/SEMco to be outfitted. We expect first delivery of transition pieces to Virginia during the second quarter.
All 161 miles of onshore underground cable has been manufactured, and approximately 200 out of 600 miles of offshore cable has been produced. Schedule for the manufacturing of our turbines remains on track. It's worth noting that even though we won't begin turbine installation until 2025, per our schedule, DEME is currently supporting an installation campaign for a project off the coast of Scotland that's using the same Siemens Gamesa wind turbine model that CVOW will use.
The lessons learned from that project will benefit our project installation in the future. Moving onshore. Construction activities have begun, including civil work, horizontal directional drills and the bores where the export cables come ashore. On regulatory. Last November, we made our 2023 rider filing, representing $486 million of annual revenue. We're currently in the testimony phase and expect the final order by August. Turning to slide six.
There have been no changes to the project's expected LCOE of $77 per megawatt hour. We've again provided sensitivities to show how the average lifetime cost to our customers is impacted by capital costs, capacity factor and interest rates. We remain well below the legislative prudency cap on this metric. Project-to-date, we've invested approximately $3 billion, and we expect to spend an additional $3 billion by year-end 2024. A little more than 92% of project costs are now fixed.
We'll gradually increase that percentage over the remainder of the project construction time line. At this stage of project completion, the current unused contingency at $351 million benchmarks competitively as a percentage of total budgeted costs when compared to other large infrastructure projects we've studied. It also compares favorably to the current level of unfixed costs. We've been very clear with our team and with our suppliers and partners that delivery of an on-budget project is the expectation. Along those lines, this morning, we posted an important video update to our Investor Relations website that features representatives from the senior executive management teams of all of our primary CVOW commercial partners, including Siemens Gamesa Renewable Energy, EEW, Bladt Industries, Semco Maritime, DEME and Prysmian, as well as the CEO of Seatrium, the constructor of our Jones Act-compliant installation vessel.
I strongly encourage our investors, government and regulatory partners, employees and other stakeholders to watch the short video. You'll hear, in their own words, a course of unwavering enthusiasm for and commitment to an on-time and on-budget in-service for the project. We're fortunate to enjoy such extraordinary support from our key suppliers and, together, we will deliver this exciting project. Moving to slide eight, a couple of final points here on Charybdis.
The vessel is currently 82% complete, up from 77% as of our last update. No change to our expected delivery time frame of late 2024 or early 2025. A few highlights. Labor levels have increased to over 1,200 and are continuing to be augmented as compared to approximately 1,000 last October and 800 last August. Recent construction milestones have been met, including installation of the remaining jack-up legs. Jack-up system commissioning is underway.
All major subcomponents are on-site and awaiting installation. We expect the vessel to be floated in coming weeks. And there's been no change to project costs of $625 million, including financing costs. In summary, there is no change to the vessel's expected availability to support the current CVOW construction schedule, including its availability to support any third-party charter agreements in 2025. As you can see, we feel very good about the progress we're making with the support of our project partners towards an on-time and on-budget completion of this very important project.
Throughout our robust and competitive offshore wind process, we had multiple high-quality strategic and financial potential partners deploy significant operational, regulatory, commercial, financial and legal resources to thoroughly diligence every aspect of the project. And the consensus independent feedback was that the Coastal Virginia Offshore Wind Project is optimally positioned to be delivered on time and on budget and is supported by enthusiastic and committed suppliers and partners.
With that, let me walk through the CVOW transaction, starting with slide nine. We're excited to be partnering with Stonepeak, one of the world's largest energy infrastructure investors with over $61 billion in assets under management. Stonepeak has a track record of investment in large and complex energy infrastructure projects, including offshore wind. Their significant financial participation will benefit both our project and our customers.
On transaction structure. Stonepeak will invest in a newly formed subsidiary of Dominion Energy Virginia. It will be a public utility in Virginia and be entitled to recover its prudently incurred cost of constructing and operating the project under the existing offshore wind rider in Virginia. Dominion Energy will retain full operational control of the construction and operations of CVOW. And as a result, we expect to consolidate the partnership for accounting purposes. Stonepeak will own a noncontrolling equity interest and will have customary minority interest rights.
On cost sharing. The agreement provides for robust cost sharing that significantly improves the company's credit profile and provides meaningful protection from any unforeseen project cost increases. Mandatory capital contributions, including an initial reimbursement, will be used to fund expenditures up to $11.3 billion on a 50-50 pro rata basis. This represents 50-50 cost sharing up to 15% or nearly $1.5 billion higher than the project's current budget, including unused contingency, and up to 20% or nearly $2 billion higher than the project's current pre-contingency budget.
The agreement also provides for additional sharing of project costs, if any, between $11.3 billion and $13.7 billion. In that hypothetical case, Stonepeak would continue to share in project costs through a gradually increasing spectrum of dilution to Dominion's share of project ownership. slide 10 shows how Dominion and Stonepeak will share project funding and ownership under a variety of hypothetical cost scenarios, and I stress hypothetical because we fully expect to deliver this project on time and on budget. Turning to slide 11. At closing, Stonepeak will make a cash payment to Dominion to reimburse 50% of the capital spent to date, less $145 million.
This nearly $3 billion project cost reimbursement will be used to reduce parent-level debt. Thereafter, Stonepeak will fund their pro rata share of capital calls during construction, consistent with the schedule included in the appendix of today's materials. At commercial operation, Stonepeak will make a payment to Dominion Energy, the amount of which will depend on the final construction cost, as shown on the slide. The transaction requires approvals from the Virginia SEC and North Carolina Utilities Commission as well as certain consents from BOEM and other regulatory agencies regarding the assignment of certain contracts and permits needed for the partnership post closing.
We expect to obtain all necessary approvals and consents by the end of 2024. Continuing to slide 12. I'm confident that this partnership is in the long-term best interest of our customers and our shareholders. The transaction achieved several key objectives. First, it adds an attractive, well-capitalized and high-quality partner who brings a track record of investment in large and complex infrastructure projects, including offshore wind, that will further derisk what is already a significantly derisked and well-developed project. Second, it provides for robust cost sharing and provides meaningful protection from any unforeseen project cost increases.
And third, it improves our quantitative and qualitative business risk profile via a highly credit-positive partnership. The transaction will improve our credit profile, reduce project concentration risk, and lower our financing needs during construction. Further, the transaction is expected to improve our estimated 2024 consolidated FFO to debt by approximately 1%. Importantly, we reviewed the transaction with our credit rating agencies in advance of signing.
And based on their feedback, we expect the transaction to be viewed as unambiguously credit positive, and that is a very key benefit for our customers. A financially healthy utility with a strong balance sheet is optimally positioned to attract the capital it needs to provide an exceptional customer experience and support the state's economic and environmental goals. In other words, this partnership will reduce our company's business and financial risk profile, which benefits our customers. Let me provide a few final updates on the business review to conclude my prepared remarks. Turning to slide 13. We're working methodically towards regulatory approvals and timely closings for the sale of our gas utilities.
No changes to our original expectations in any of these cases. We look forward to continuing to work with involved parties and expect regulatory proceedings to conclude and staggered transaction closings to occur during 2024. We intend to apply 100% of the estimated after-tax proceeds of nearly $9 billion to reduce parent-level debt, which, based on current rates, will result in a reduction of around $500 million of pretax interest expense annually. Next, Virginia regulation.
As part of the business review, we supported reasonable regulatory reform that positions Dominion Energy Virginia to serve customers, support the state's goals and compete for investor capital in support of our customer beneficial investments. Last November, Dominion Energy Virginia, State Corporation Commission staff, the Office of the Attorney General and other key parties reached a comprehensive settlement in the current biennial review. No parties to the case opposed the settlement. And last month, these same key parties reiterated their support to the original comprehensive agreement. We expect the final order in early March.
On a related topic, last month, the General Assembly unanimously elected Sam Towell and Kelsey Bagot to serve as members of the State Corporation Commission, filling the two outstanding vacancies on the commission. They have extensive experience in both government and the private sector, and we look forward to working cooperatively with these well-qualified new members.
Turning now to slide 14. There have been no changes to our original business review commitments and priorities. First, for the avoidance of doubt, we have been and continue to be 100% committed to our current dividend. Earnings growth, combined with a period of low to no dividend growth, will restore our payout ratio to a peer-appropriate range over time. Second, last year, the Board, in direct response to investor feedback, modified my compensation structure for 2023 to align my economic incentives more closely with the financial interests of our shareholders.
As a result, 100% of my 2023 long-term incentive compensation was performance-based. Last month, the Board approved my 2024 long-term compensation plan, but like last year, it is 100% performance-based. 65% is premised solely on three-year relative total shareholder return, with a 65th percentile relative performance required to achieve a 100% payout. This represents a high bar relative to industry practice, but I believe it appropriately aligns my financial interest with those of our shareholders.
Additional details around the increasing alignment of my compensation with our owners' interest will be available in our proxy statement, which will be published in March. Certainly, this has been a difficult time for our investors, and I want them to understand how seriously I take that. Third, we continue to focus on costs and identify incremental savings, particularly in the area of corporate overhead.
We are, have been and will continue to be one of the most efficient and most reliable electric utility companies in the country. Finally, we've been focused on evaluating investor feedback around perceived earnings quality and plan risks. In his prepared remarks, Steven will provide an update on our treatment of unregulated investment tax credits and assumptions around our retirement benefit plans. Turning to Slide 15. Today's announcement of an offshore wind partner marks the final strategic step of the business review. We're in the process of finalizing our financial plan, which will allow us to conclude the review.
We've scheduled an investor meeting on March 1, at which time we will provide a comprehensive strategic and financial update for the company and participate in a question-and-answer session. We encourage our investors and other stakeholders to participate virtually as their schedule allows. Following the event, we plan to initiate a comprehensive investor engagement effort to meet with our existing and prospective investors.
As we prepare to conclude the review, I am more optimistic than I have ever been about the future of our company. We recognize that we must consistently execute against the financial targets we provided at the conclusion of the review. As is always the case, I am accountable for and my entire leadership team has embraced our commitment to consistently deliver high-quality earnings growth that meets that plan.
With that, I'll turn the call over to Steven.
