Earnings call transcript: Constellation Energy’s Q2 2025 performance and future outlook

Constellation Energy Group (CEG), with a substantial market capitalization of $106 billion, reported its Q2 2025 earnings, showcasing robust performance with GAAP earnings of $2.67 per share and adjusted operating earnings of $1.91 per share, marking a $0.23 increase from the previous year. The company reaffirmed its full-year operating EPS guidance of $8.90 to $9.60. The stock has demonstrated remarkable momentum, delivering an impressive 89.65% return over the past year. According to InvestingPro analysis, CEG is currently trading above its Fair Value.

Key Takeaways

• Constellation Energy’s adjusted operating earnings increased by $0.23 from last year.
• The company completed a $400 million accelerated share repurchase program.
• A new 20-year power purchase agreement was secured with Meta.
• The Calpine acquisition is expected to close by year-end, adding $2 in EPS.
• Nuclear fleet operations maintained a high capacity factor of 94.8%.

Company Performance

Constellation Energy demonstrated strong operational efficiency in Q2 2025, particularly in its nuclear fleet, which produced 41 million megawatt-hours with a capacity factor of 94.8%. The company’s strategic focus on clean energy solutions and long-term power purchase agreements has positioned it well in the competitive energy market. The reaffirmation of its full-year operating EPS guidance underscores confidence in its financial stability and growth trajectory.

Financial Highlights

• Revenue: Not disclosed
• GAAP earnings per share: $2.67
• Adjusted operating earnings per share: $1.91 (up $0.23 from last year)
• Nuclear fleet production: 41 million megawatt-hours
• Capacity factor: 94.8%
• Accelerated share repurchase: $400 million completed

Outlook & Guidance

Constellation Energy has projected a positive outlook, expecting a $0.50 per share EPS impact from the 2026 capacity auction and a $1.50 increase in 2027. The Calpine acquisition is anticipated to contribute significantly to earnings and cash flow, with an expected addition of $2 in EPS and $2 billion in free cash flow. The company remains focused on expanding its clean energy portfolio and enhancing its competitive edge in the market.

Executive Commentary

CEO Joe Dominguez emphasized the critical role of clean and reliable energy, stating, "Clean and reliable megawatts are the most important energy commodity in the world today." He also highlighted the company’s solid foundation for capturing emerging opportunities, asserting, "We have an unbelievable foundation for capturing value from all the opportunities we’re seeing."

Risks and Challenges

• Interconnection challenges with utilities could impact future growth.
• Pricing dynamics in data center energy markets may affect profitability.
• The integration of the Calpine acquisition poses operational risks.
• Regulatory changes and tax legislation could influence financial outcomes.
• Market volatility and economic pressures might affect demand for energy.

Q&A

During the earnings call, analysts inquired about the company’s strategies for overcoming interconnection challenges and potential new nuclear developments. Discussions also covered the impact of recent tax benefits and pricing dynamics in the data center energy markets, providing insights into Constellation Energy’s strategic direction and operational focus.

Full transcript - Constellation Energy Group (CEG) Q2 2025:

Tanya, Conference Call Operator: Good morning, ladies and gentlemen, and welcome to the Constellation Energy Corporation Second Quarter Earnings Call. At this time, all participants are in a listen only mode. Later, will conduct a question and answer session and instructions will follow at that time. As a reminder, this call may be recorded. I would now like to introduce your host for today’s call, Emily Duncan, Senior Vice President, Investor Relations and Strategic Initiatives.

You may begin.

Emily Duncan, Senior Vice President, Investor Relations and Strategic Initiatives, Constellation Energy Corporation: Thank you, Tanya. Good morning, everyone, and thank you for joining Constellation Energy Corporation’s Second Quarter Earnings Conference Call. Leading the call today are Joe Dominguez, Constellation’s President and Chief Executive Officer and Dan Eggers, Constellation’s Chief Financial Officer. They are joined by other members of Constellation’s senior management team who will be available to answer your questions following our prepared remarks. We issued our earnings release this morning along with the presentation, all of which can be found in the Investor Relations section of Constellation’s website.

The earnings release and other matters which we will discuss during today’s call contain forward looking statements and estimates regarding Constellation and its subsidiaries that are subject to various risks and uncertainties. Actual results could differ from our forward looking statements based on factors and assumptions discussed in today’s materials and comments made during this call. Please refer to today’s eight ks and Constellation’s other SEC filings for discussions of risk factors and other circumstances and considerations that may cause results to differ from management’s projections, forecasts, expectations. Today’s presentation also includes references to adjusted operating earnings and other non GAAP measures. Please refer to the information contained in the appendix of our presentation and our earnings release for reconciliations between the non GAAP measures and the nearest equivalent GAAP measures.

I’ll now turn the call over to Joe.

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: Thanks Tanya and Emily for getting us started. Good morning everyone. Thanks for joining our call and for your interest in Constellation. I know it’s a busy time with all these earnings calls going on around the same time and you guys are hopping from call to call. We appreciate your interest in what we’re doing here.

Last but not least, I wanna thank our team here at Constellation for delivering another strong operational and financial quarter. We always say this, people are the backbone of our success here. I’m really proud of the culture we have built together. It requires constant work and attention, and we’re never perfect at it. But our leaders are all over it, they work at it every day.

And that’s why I’m especially thrilled to start the call by telling you that for the third year in a row, we’ve been recertified as a great place to work. Now, I’ve talked about this before. This is the only certification you get based on the input from your own folks. And when you think about them as customers, as a servant leaders we wanna be, getting that feedback and their appreciation for what we’re trying to do is everything to me. Now turning to the quarter and our financial results, we delivered second quarter GAAP earnings of $2.67 per share and adjusted operating earnings of $1.91 per share, improving on last year’s second quarter performance.

As always, Dan’s here and I’ll walk through the details. Now, as you recall, last quarter, we were a bit frustrated by our inability to be in the market buying back shares due to where we were in the Meta Clinton deal process. In fact, to let you in on it, I think we were thinking it was a horse race as to whether we were going to get the call in before the announcement or vice versa. Now since the Meta announcement, we have executed 400,000,000 in accelerated repurchases. And like the others we’ve done, these stock repurchases continue to generate a wonderful return.

With long term contracts like our Meta and Microsoft deals now becoming an ordinary part of our strategy and a normal course of our business and hopefully you think we’re good at it, we don’t have to pause stock repurchases and to be crystal clear, you shouldn’t assume anything about the timing of any new transaction from whether or not we’re in the market purchasing shares. Outside of our strong financial performance, it’s been an exciting time for the company since we last met. We saw the big beautiful bill signed into law, preserving and actually strengthening the nuclear provisions and serving as a continued demonstration of the unique and strong support for nuclear across party lines. We announced that we were bringing the restart of the Crane Clean Energy Center forward into the 2027. I remember when we talked about that, people were skeptical that we would restart in 2028.

They were right to be skeptical. We’re gonna start it in ’27. We received New York, Texas and FERC approvals for the Calpine acquisition, and we remain on track to close by the end of the year. And as we just discussed, we announced a twenty year power purchase agreement with Meta for the off take of Clinton Clean Energy Center to help them meet their clean energy needs. This transaction is a big win for everyone.

The PPA ensures that over 1,100 megawatts of emissions free nuclear energy will be around for decades to come. And it actually allows us to make investments to increase the output and bring even more megawatts to the grid in Southern Illinois at a critical moment for America. Meta made this happen. We love the partnership and I’m hopeful we continue that partnership. Beyond the Clinton transaction, we continue to make very good progress with customers to reach additional agreements to sell our clean, reliable and available megawatts from our nuclear plants.

Now look, this is always gonna be the part of the call where we get questions. Inevitably, of course, you wanna know exactly where we are in every deal. And inevitably, of course, I’m gonna tell you that we can’t comment on deals until they’re done, and even then, we’re gonna keep some of the terms confidential. So let me try to guide you here with as much as I can say. First, for those of you who are fond of the baseball analogy to describe progress, I would simply say that we’re in the late innings on one transaction.

We’re past the seventh inning stretch. We’ve sung Take Me Out to the Ballpark on that one. And I’d say we’re in the middle to early innings on other transactions. But most importantly, from my perspective, we’re seeing a continued acceleration of interest from a growing number of entities. The second thing that I’d like you to remember here is that sometimes you have the pricing and the deal terms done, but you need other things to enable a transaction.

Specifically, in the case of front of the meter deals, interconnection work with the utilities. So if you wanna connect the dots here, I think on one transaction, we are well, on the way to being done, but are waiting for some inputs, from utilities. As we said from the start of the company, clean and reliable megawatts are the most important energy commodity in the world today. The many customers we engage with every day believe the same thing And that gives us great confidence that we’ll be able to continue to transact whether that be front of the meter or in co located configurations. When we announced the Calpine acquisition, we talked about the importance of natural gas’s role in the data economy and the reliability of the system.

Notably in this regard, we were pleased to see Calpine’s announcement supporting 190 megawatt data center near the Thad Hill Energy Center in Bosque County. We expect to see more of these transactions in the future across the industry and with respect to Calpine, we think that combination of gas and nuclear gives us a huge competitive advantage. It allows us to provide a differentiated product that combines fast and reliable interconnection at both nuclear and gas sites and the benefits of being able to provide clean and reliable energy product to our customers. Firm, clean energy that is priced at a visible rate for twenty years or more if the customer desires it. That’s a big deal.

Now, let me shift gears a bit. Justifiably, given its scale, we talk a lot about data center customers, but you got to remember here that many of our businesses value and buy clean nuclear and that continues to accelerate. This quarter, I’m pleased to announce a significant new carbon free energy transaction with Comcast, a company that’s been a wonderful partner to Constellation for many years. As part of it, Comcast will be supporting upgrades. So again here in this deal, we see a connection between private customer agreements and our country’s objectives of preserving and growing clean and reliable energy.

And finally, as we’ve talked about before, we see interest from governments. The interest was shown to you with the GSA deal. And while many of you’ve been grinding through industry calls this week and the last week, you might have missed that the New York Department of Public Service staff released an important white paper calling for a twenty year extension of the ZEC program in New York that covers over 3,000 of our megawatts. In New York, the staff concluded that it’s essential that nuclear be preserved to meet its clean energy goals and our facilities be re licensed. You remember that New York was the first state to have a policy to support existing nuclear plants, understanding their importance as clean, firm and reliable.

Extending the ZEC program ensures that these plants will be there to support New York for decades to come. We commend the paper to your reading. As I said, it’s been an incredibly exciting quarter here at Constellation and in many respects, it’s been a historically important quarter. It’s a quarter where you see everything we have told you now coming to pass. The customer and bipartisan political support for nuclear getting the big beautiful bill behind us is just huge.

Constellation’s ability to execute deals has been demonstrated. The importance of reliable natural gas to both the data economy and to America supporting our Calpine deal is more evident now than ever. Our continued ability to grow organically and inorganically through M and A, and most importantly, the strength of Constellation’s commercial and operational performance. And that’s of course the foundation for everything we do and why I always start out the calls thanking our great team here. Let me turn to slide six.

The passage of One Big Beautiful Bill was an undisputed win for nuclear power. Now, here, it was passed by all Republicans and it preserved and actually expanded the nuclear credits from the inflation reduction act, a bill that was passed by all democrats. So it’s one of the only things the two bills have in common is that it supports existing and new nuclear plants. There’s a lot of things we have a hard time agreeing on as a country, And like you, I wish we could find more. But one thing is clear, the benefits of nuclear energy for families, for local communities, for states, and the economy as a whole is something that we all can agree on.

And I’d like to thank President Trump and the political leaders on both sides of the aisle for acting to preserve and advance nuclear power in this country. The bill maintains the critical 45U production tax credits for existing facilities through 02/1932, and it gives us great confidence that those tax credits will be renewed going into the future. It also preserves the 45Y clean energy tax credit for new nuclear and up rates, providing the full credit for projects that begin construction into 2033 and partial credit through 02/1935, recognizing that new nuclear will take some time to get going. In addition, it adds a new nuclear energy community bonus of 10% on top of the 45Y credit. We expect the Crane Clean Energy Center as well as every one of our operate projects to qualify for this 10% bonus.

Finally, the bill also extended the tax provisions that were set to expire with the Tax Cuts and Jobs Act of 2017. And I’ll let Dan talk about these additional and significant positive impacts for us. Support of nuclear from the administration did not stop, as you know, with the legislation. I was very pleased on behalf of the industry to join President Trump in the Oval Office when he signed the executive orders that signaled full support and a clear intention by his administration that they want to preserve and expand nuclear power because it’s vital to the economic and national security of The United States. The nuclear EOs rightly focus on common sense initiatives to expand the existing fleet with fast track licensing, increased domestic conversion and enrichment, and accelerate the deployment of new reactors, all while maintaining the NRC’s track record of being a responsible regulator that places safety at the top of every consideration.

And this administration, like many policymakers on both sides of the aisle, knows that American energy is critical to winning the AI race against China. The AI action plan unveiled in July calls for streamlining permitting of data centers and energy infrastructure, and developing a grid that could match the pace of AI innovation. We’re gonna be at the heart of that. But it’s not just Republicans who are taking actions to support nuclear, both new and existing. At the June, in addition to supporting the continuation of the ZEC program through 02/1949, which we just talked about, New York Governor Hochul called for building one gigawatt of nuclear in Upstate New York to support a reliable and affordable electric grid, while providing the necessary zero emission to achieve a clean energy economy.

This follows our work at 9 Mile Point on an early site permit. And as I said to all of you before, I think one of the unique advantages we have here at Constellation is the real estate that we own around our existing plants, because it just makes sense to us that when we build out new nuclear, we’re gonna build it out in communities that already have all of the infrastructure and the enormous support for the existing plants. And most importantly, a talented workforce that could operate the new nuclear units. We’re excited to participate. You know it’s early innings on this work, but I think it is going to be a signpost for other states, and I’m excited for the opportunities to expand nuclear in places like Maryland, Illinois, Texas, and Pennsylvania.

To sum this all up, while political and customer sentiment doesn’t always follow logic and facts, in this case it clearly does. Firm, clean, reliable nuclear power is the most important energy commodity in the world today and through Constellation, you, our owners, have more of it than anyone. We will do great things together for America. Turning to slide seven, I wanna talk a little bit about the PJM capacity auction and what we see going forward. First, before I talk about future auctions, I think it’s time to level set a little bit on the past.

There’s a narrative that’s been building up that data centers are entirely responsible for prices going up. You got to remember here that that narrative is false. Certainly, there’s been a rise in demand driven by the growth in the data economy, by things like vehicle electrification, by general economic growth, and the re industrialization of America as our nation pursues its America First strategy. All of these things are cumulatively increasing demand and prices will rise through simple supply and demand economics. But the principal reason that we saw a step change in the PJM capacity prices, because FERC ordered changes to the PJM market that were absolutely necessary to address reliability gaps.

Why were those changes needed? Remember, those changes were needed because the market design that we used to have, pretended that we live in a fairy tale land where all megawatts had equal reliability, equal to nuclear. When the analytical evidence screamed at us for many years that some forms of generation are simply more reliable than others. It took longer to effectuate the changes than it should have, and the delayed auctions added to the uncertainty. But the design work is completed and the market is working.

Already in this last auction, the market cleared 2,700 megawatts of new and uprated generation capacity on what was a really short turnaround since the last auction, bringing in more supply to support the growing demand. And through PJM’s RRI process, which Governor Shapiro and Constellation and many others supported, we know that more than nine gigawatts of new firm reliable supply will come online by 02/1932. In addition, we saw more than 300 megawatts of generation participate in the auction rather than retire. We were happy to support the consumer protection price cap championed by Governor Shapiro, and it worked. It starts to stabilize prices, so that we could step in to the higher prices that were inevitable as a result of the design changes that FERC has made.

And we think that will continue to work to help customers transition. It’s important because we understand the focus on customer costs, especially residential customers. But again, let’s put this all in context. Starting with the critical fact that generation costs have actually declined 38% from where they were from 2010 to 2024. This compares very favorably to transmission and distribution costs, which have not declined, but instead have risen 29057% respectively.

And electric wires costs are not alone. Water, sewer, and trash is up 77% on average. Car insurance, which we all pay for, at least should, is up 125%. We appreciate the impact on everyone’s pocketbook, and we will do what we can to mitigate these things. But the competitive generation market has been a remarkable story, particularly in comparison to other aspects of the energy ecosystem.

And Constellation is doing more than anyone to meet its part to deliver the reliability that is needed for America. We’re investing billions of dollars to restart, operate and extend the lives of nuclear generation. We had more than one gigawatt approved through the RRI process, including Crane and the Byron and Braidwood upgrades. We’re bringing Crane online earlier than planned, moving it up to the 2027, with the aim to try to get it in the capacity auction for the period that begins 06/01/2027. We still got some work to do there, but I’m hopeful we could get there.

We have three large upgrades that we are completing engineering work on, totaling nearly 900 megawatts that we could bring on at LaSalle, Calvert, and Limerick with adequate customer support. And last week, we announced our collaboration with GridBeat Beyond to use AI to help our customers reduce peak energy use. This program will offer customers the opportunity to cut energy costs and unlock new revenue streams, while helping the market maintain system reliability as we respond to growth. Reducing peak demand by only a small amount, 25% or twenty two hours a year would allow 76 gigawatts of new demand to be absorbed. That’s the most effective way to deal with the new demand.

The latest auction results once again prove how markets, not monopolies, best work to attract enormous private investment. And we all see, any observer all sees the tremendous interest by so many parties to build generation in these markets. And private investment by these companies means that companies and not captive monopoly customers take the financial risk, the market risk, the technology risk, and the construction risk, rather than saddling captive customers with the consequences of poor decisions for decades to come. We have no doubt how policymakers will view these issues. Turning to slide eight, in June I was incredibly proud to announce that the Crane Clean Energy Center will return faster and it was great to have Governor Shapiro at the event.

To give you some follow-up details on that, we’ve secured fuel, we’ve got all the major equipment, we’re 70% staffed, and we’re walking through all aspects of the plant. And quite frankly, we’re just so confident in the team there because the plant was in such phenomenal condition when Brian and team laid it up in 2017. To say I’m proud of all the work here has been an understatement. Before I turn it over to Dan, I wanna touch briefly on the Calpine transaction, details are here for you on slide nine. The more time we spend with the Calpine team, the more I’m excited about the combination of the talented people in both companies.

We’ve received three of the necessary approvals, and we’re working with the Department of Justice on a second request for data. And it hopefully puts us on a track to complete the work with the department and have this transaction close by the end of the year. The sooner we could get it closed, the sooner we could offer American families and businesses the unique capabilities of the combination of these businesses. And I’m super proud of the regulatory team that has worked to get the three approvals we’ve gotten and I’m hopeful that we will get the last one here shortly. With that, let me flip it over to Dan and then I’ll have some closing comments after Dan and we’ll finally take your questions.

Dan Eggers, Chief Financial Officer, Constellation Energy Corporation: Thank you, Joe. Good morning, everyone. Beginning on Slide 10, we earned $2.67 per share in GAAP earnings and $1.91 per share in adjusted operating earnings in the second quarter, which is $0.23 per share higher than last year. Similar to the second quarter last year, the fleet performed exceptionally well and provided critical around the clock supply at a time when PJM saw peak lows materially outpacing its summer demand forecast. Our commercial team once again successfully managed a period of extreme volatility where at times we saw triple digit real time pricing across much of the East Coast.

In addition to the strong performance from our generation and commercial teams, we also recognized $2.00 $1,000,000 from the Illinois ZEC program for bank credits. This is similar to what you saw in the 2023. As you may recall, the Illinois ZEC program includes an overall cost cap as one of its consumer protection features that allowed us to bank excess credits for use in future years if there was a fall to the cap, which is what we did again this year. The impact of these credits and the banking mechanism have always been included in our full year 2025 guidance. Slide 21 in the appendix provides more details on the mechanics of the Illinois exec program.

Full year gross receipts for the majority of our fleet continue to be at or above the PTC floor, resulting in significantly fewer PTCs being accrued this quarter compared to the second quarter last year. This is a good outcome and the means tested program continues to work as expected, but it will result in noise when comparing year over year results on a quarterly basis. The extraordinary stock performance this year translates into higher book compensation expense for us, creating some earnings headwinds that we will continue to monitor. That said, we are reaffirming our full year operating EPS range of $8.9 to $9.6 per share. Moving to slide 11, as I mentioned before, our fleet performance was excellent during a period when it was needed to support unseasonably high demand across our operating footprint.

Our nuclear team posted its second best fleet production ever in the second quarter and was ahead of plan with a capacity factor of 94.8% producing more than 41,000,000 megawatt hours of reliable, available, and emissions free power. We completed three refueling outages in the quarter with an average duration of nineteen days, beating the industry average by over two weeks. Being able to execute on these outages significantly better than the industry provides incremental benefit to the grid, energy in the communities where we operate, and of course, power to sell. It truly is a testament to the operational excellence of our nuclear organization. Our renewables and natural gas fleets were also ahead of plan for the quarter with renewable energy capture at 96.1% and power dispatch matched 98.3%.

Our plants continue to perform when they are most needed. Turning to Slide 12, our commercial team is off to another strong start this year. We’re creating value from continued market volatility by optimizing our portfolio, locking in higher than average margins on retail sales and finding success in selling value added products around the clean attributes of our nuclear plants. We continue to see robust renewal and new business win rates with our power and gas products, reflecting the durable relationships we have with these customers. Our scale and ability to develop products to meet the needs of our customers is truly a competitive advantage.

We have spent a lot of time over the last year and a half talking about the incredible demand for long term, clean, firm, and reliable power from the data economy customers and for good reason. But it has arguably overshadowed our success in selling these same products to our traditional commercial customers. For example, through June, we have sold nearly double the volume of hourly carbon free and emission free products than we signed all of last year. Let me offer a little more dimension what we’re seeing with these sales. Remember the ability to offer time max clean power has only been around for just over two years in PJM, so we’re encouraged by the growth in what is still a relatively new market.

Also interesting is that our customers for these products have mostly been from industries outside of the data economy, reflecting the breadth of demand for these offerings. Their products are rightly sold at a premium to typical CNI deals, compensating us for the uniqueness of a scarce firm around the clock carbon free energy solution. And finally, the duration of these products varies, but they are typically much longer terms than those of our traditional commodity business. Another area where we’re seeing tremendous growth is with data center customers we already serve, Focusing just on the accounts we have continually served over the last three years, we have seen their usage in the 2025 increase 45% compared to the 2023. This step up in usage is probably not unique to Constellation, but it is indicative of the increased demand coming from the data economy, expansion of existing sites, and gains in energy density even in existing facilities.

Turning to slide 13, I want to provide some brief comments around the financial impacts of the latest capacity auction. As a reminder for everyone, help with your modeling. With the nuclear PETC now in place, calculating the benefit from higher capacity prices is admittedly a little more involved than just the p times q and depends on expectations for gross receipts. When we are below the PTC floor, upside in pricing will first offset PTCs being generated, and then when above the floor, we would retain the upside. Fortunately, given where the current forwards are, our nuclear fleet is above the PTC floor for 2026 and 2027, so the uplift in capacity markets will flow to our earnings outlook assuming prices hold.

This earnings upside above the PTC floor will show up in our enhanced earnings bucket. That said, for the three sites in Illinois that are in the CMC program through mid twenty twenty seven, any revenues above the CMC price will be refunded to customers. So we will not realize any upside benefit for these three CMC plants in Illinois even though they cleared the auction. So from a financial impact perspective, we’ll just focus on Constellation standalone and not include Calpine given where we are in the approval process. For 2026, the net EPS impact at Constellation is approximately $0.50 per share.

For 2027, assuming that we carry the same capacity prices forward to the twenty seventwenty eight auction, we’d expect an approximately $1.0.5 per share increase in EPS. And to help calibrate with these earnings benefits, the delta upside is, again, conservatively low number around $100 low 200s per megawatt day embedded in our expectations. Turning to Slide 14, the strength of our balance sheet continues to be foundational to the company and our capital allocation. The combination of our investment grade balance sheet and strong free cash flow creates strategic flexibility to fund the Calpine acquisition as well as pursue future growth investments and return capital to our owners. On our first quarter call, we talked about our disappointment in not being able to repurchase shares on the short lived dip.

During the second quarter, following the announcement of the Meta transaction, along with reiterating that more long term PPAs are part of our strategy, we’re able to enter into an accelerated share repurchase program for $400,000,000 We expect this view of data economy deals as now being normal course to our business will afford us flexibility and when we can be in the market buying back stock going forward. And with this quarter’s $400,000,000 we will have repurchased $2,400,000,000 of our outstanding shares since the beginning of our buyback program and still have about $600,000,000 remaining under the current Board authorization. We’ll remain opportunistic in returning that capital to our owners. Let me now turn to the One Big Beautiful Bill Act. Joe already talked about our excitement around the support for the nuclear PTC provisions, but there are some key other benefits from the legislation constellation.

The OBBBA includes an incremental 10% bonus on the 45Y credit for nuclear energy communities that will provide incremental tax benefits for new nuclear megawatts. We expect the Crane Clean Energy Center as well as our other upgrade projects to qualify for this bonus. We also benefit from the general corporate provisions included in the legislation, Moving from 40% to 100% bonus depreciation on our entire capital plan, including fuel, as well as an immediate deduction for research and development expenses will meaningfully benefit our cash position. These provisions create an expected $200 to $300,000,000 of annual tax cash favorability per year for Constellation standalone. We expect that benefit to grow with Calpine and the capital plans there.

We’re excited about Constellation’s performance and our financial position as we head into closing Calpine later this year. And with that, I’ll turn

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: the call back to Joe. Thanks, Dan. Great job. So look, Dan and I have covered, we had a pretty great first half of the year from our perspective financially and operationally. Real big wins on the policy front.

We have some terrific significant opportunities on the horizon to kinda continue to build on the successes you have seen us achieve already. And we’re focused on closing the Calpine transaction the second half of the year and really doing the work here, to bring these two great companies together. Our company is really like no other and our unique and strong foundation will create value for our owners year in and year out. So we produce robust cash flow and base earnings, which are protected by the nuclear PTC, which as you’ve seen now has tremendous bipartisan support and I think we should reasonably expect the policy to be continued. Our earnings grow at 13% through the decade and any long term deal we do would be additive to that growth as well as to our base earnings.

We’ve had a track record of finding ways to improve our earnings and just this update here, you’re seeing what we’re doing with the cranes restart. We’ve done the deals with Meta and Microsoft. We’ve got the Alpine acquisition. I think we’re pretty smart about finding those things and getting them done. Alpine will add $2 in EPS and $2,000,000,000 of free cash flow before growth starting next year.

And Dan of course covered some of the cash benefits of Big Beautiful to us. We’ve got upgrades that we’re now through the engineering process on and we’re hoping to partner with customers to bring to the grid. And then finally, not only does the PTC provide protection for the nuclear fleet, but in a world where people are concerned about inflationary impacts, the PTC gives us some unique protection through higher PTC floors that are adjusted with higher inflation. So we feel like we have an unbelievable foundation for capturing value from all the opportunities we’re seeing and for meeting the demand of, the data economy and the demand of just growth here in America, and capturing the value that you deserve as our owners. Our existing fleet can serve customers with clean, reliable energy that they need now for decades and decades to come.

So, unbelievable platform. We think it’s unmatched in in, the world in which you operate, And I’m excited to take your questions.

Tanya, Conference Call Operator: Certainly. And our first question will be coming from Steve Fleishman of Wolfe. Your line is open, Steve.

Steve Fleishman, Analyst, Wolfe: Yes, morning. Thanks for the updates. So I guess first on the potential late inning data center deal. The you mentioned interconnection being kind of maybe a crux issue. Could you just talk to the timeline for that specific one you’ve already had to go through?

And then just generally, what are you seeing on PJM interconnection timelines from utilities? Like is this how long are they? Yeah, any thoughts there kind of high level as well?

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: Yeah, I mean, Steve, just I’ll do them a little well, I’ll do them in order. I’m hoping we’ll get that done this year, the one I was referring to. Obviously, the work is in other hands, but we’re in close contact and coordination. In terms of some generic statement about how long it takes to interconnect, I think it’s really impossible. I think everybody’s recognizing getting closer to plants and big transmission infrastructure is the key to speeding up the process and it depends on the particular projects.

But as a general rule, what we laid out a year ago to all of you has come to pass as the kind of conventional wisdom in the business of how you do this most effectively. Thankfully, I’ve seen all the utilities be far more responsive to where we were a year ago. When we started this stuff out and exploring these opportunities, it wasn’t uncommon to see studies and those sorts of processes take a year or more. And I think all of the utilities to their credit and to our appreciation of their work have figured out ways to expedite the engineering work and to go through the many requests they get in in, you know, kind of a principled way. We’ve seen some utilities group request to deal with them more quickly, but every seems to be responding to the need for speed.

And so I’m glad to see that, but still at the end of the day, it depends where you put this stuff. And you could get a good answer at one place and a bad answer at the other. What’s important here is that the utilities transparently share that information so that the customers can understand the viability of different projects in different places. I I think they’re doing that.

Steve Fleishman, Analyst, Wolfe: And then just on this late inning one, is this a matter of kind of just timing and cost? Or is this kind of like any risk of it just not being viable?

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: Steve, I wouldn’t be talking about it in the call if I didn’t think it was a viable thing. So

Steve Fleishman, Analyst, Wolfe: Yeah.

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: It it’s it’s more of, we just gotta let them get through their process and

Steve Fleishman, Analyst, Wolfe: Yeah.

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: Figure out when the interconnection works. And then, we’ll tell you about it. But, you know, what I think folks on these calls tend to think is that we’re sitting around debating dollars per megawatt hour for eight or nine months. There’s a lot of complexity to these transactions. You’ve seen that in Microsoft, you’ve seen that in Meta, you’ve seen that in the work that Talend has announced, and there’s just a lot of process.

And some of these things are within the control of our customer and ourselves, and when you’re on the grid, you do need the involvement of other parties. And then making sure that the equipment that is needed for upgrades is available and all of that stuff. So it ends up taking a good bit of time as you can appreciate, but we feel we’re in a pretty good spot.

Steve Fleishman, Analyst, Wolfe: Okay. I’ve got a million PJM questions, but I’ll let other people ask those. Just other questions just on new nuclear. Has your kind of strategy changed there? Like, are you more willing now to invest in new nuclear?

And what would be the risk reward conditions for you to do that?

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: Steve, I don’t think this is gonna be like big step change changes approach for Constellation. I think it’s more of an evolution. And with time, with the work that Brian Hansen and his team at Nuclear put into studying the designs and then not only just looking at the designs from a viability and operational standpoint, but kind of getting into the nitty gritty of the cost line items for the different component parts to better understand how the thing is actually going to be manufactured, whether it’s modular in the case of an SMR, where the equipment is coming from timelines, all of that stuff is that is work that we are literally refining every single day. And here’s what I would say. As a general rule, I feel better with the passage of each week in terms of better understanding cost structures and the time to complete the work.

And so I would say that our confidence is growing, but it’s growing incrementally, not in terms of major step changes. And so I think it’s quite viable. I think it’s very, very real. I don’t think that everybody’s design is going to actually work and be commercially viable. But we’ve got a pretty good beat on who we think the winners are going to be.

We’ve had a lot of conversations with companies to think about how Constellation, given its unique access to real estate, its operational expertise, its construction expertise, all of those things could be brought to bear in aid of one of these companies. So there’s I’m pretty pumped up about where this could go, but I’m not yet at a point where I could say on a call like this what the cost is gonna be and here’s when we think we’re gonna be able to do it. Do I think we’re going to get there? Yes, I do.

Steve Fleishman, Analyst, Wolfe: Okay, great. Thank you.

Tanya, Conference Call Operator: And our next question will be coming from Jeremy Tonet of JPMorgan Securities LLC. Your line is open, Jeremy.

Jeremy Tonet, Analyst, JPMorgan Securities LLC: Hi, good morning.

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: Hey, Jeremy. Good morning, Jeremy. How are you doing?

Jeremy Tonet, Analyst, JPMorgan Securities LLC: Good, good. Thanks. Just wanted to pick up with the auction a little bit more if I could. And highlighted the clear benefits of demand response and the importance in the future going forward there. Just wondering if you might be able to comment a bit more on thoughts on the level that materialized in this past auction trends there and how you see this trending in the future or what would it take to get more?

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: Look, think one of the things it’s going to take to get more is that the ELCC changed. So for folks on the call who don’t follow this at a granular level, PJM creates an electric load carrying capacity for every resource that gets bid into the auction, demand response, combined cycle machines, nuclear plants. The star of the show of course is always nuclear plants because they’re the strongest, most reliable units in the system, and everything else gets kind of a haircut from there. In the case of demand response going into this last auction, the ELCC, the carrying capacity for peak was set at less than 70%. From a financial perspective, that means that if you bid a megawatt of demand response, your price that you got back was haircutted by over 30% right from the go.

So that limited a bit the amount of Doctor that participated in market. This next auction, that goes up to over 90%. So the economics of bidding in for demand response will change over the course of this next auction. Their requirements will also change instead of having to be available for eighteen hours, it will stretch to twenty four hours. But one of the reasons that we got involved with this new company to develop these AI products is because we think there’s a bear there.

Is Doctor by itself gonna be a solution? No, but it’s got to be a unique and important contributor. And I say unique because it represents an incredible speed to deliver reliability. So as I applaud PJM for improving the ELCC, I wish they had done it for the last app auction, but I’m not going to cry over that spilled milk and I think it’ll deliver megawatts into the future.

Jeremy Tonet, Analyst, JPMorgan Securities LLC: Got it. That’s very helpful. Thank you for that. Just continuing with the auction, if I could. We’ve seen state attention from governors and other stakeholders, you know, after the last auction here.

I’m just wondering what you’re expecting in terms of state level action on PJM changes going forward here, whether that’s incentivizing new supply or other reforms? And could there be opportunities for constellation out of this?

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: I think there will be. Look, I think what Governor Hochul is doing in terms of the New York RFP for nuclear, I could see that transpiring other places. I mentioned other states in which we do business where new nuclear might make sense. And depending on the work that Brian and his team could do, I am quite sure we’re gonna not take ten years to bring that stuff on, that it’ll be done in a much more time effective way. So I think that’s real in the long run.

But Jeremy, I think the one thing that states are going to have to evaluate, one of the points that we’ve championed is, we’ve had a number of states that have required fossil fuel plants to leave the system by a certain date. And I don’t think it should be a surprise to you that we would recommend that they rethink those requirements. And so we have advanced some ideas. I think there’s some really good ideas out that would say, for example, if you’re scheduled to retire in 02/1930, maybe as a compromise that generator starts ramping down from a historical baseline, their emissions in call it ’20 seven, 28, 29, so that they could bank emissions that could then allow them to operate between 2030 and a new set time to retire, right? So that they could buy their way in to an extension by reducing air pollution in these interim years.

We’ve heard that, we’re supportive of that, makes complete sense to us to keep some of these generating facilities on to give the market time to respond. Now, look, I know there’s been a lot of discussion out there about monopoly build versus competitive market build. There’s no timing advantage to having monopoly built here. We’re going to have to manage these next few years where the system is going to be tight. We’re going to have to see DOR come in.

We’re going to have to have states perhaps revisit some of the timing for the retirement of units and we’re going to have to spend that, so that we manage this interim period. And then we’re going to see nine gigawatts come into the system through PJM’s RRI. We are here not because of a failure of markets, we are here because of a failure of regulatory design that has now been addressed, but took way too long to address and cast a cloud of uncertainty over the market for too long. Again, can’t get on these calls and cry about spilt milk, but if somebody is out there saying, oh, this is the failure of competitive markets, or this is all the fault of the hyperscalers. I’m just calling it a bunch of hooey.

That’s just not true.

Jeremy Tonet, Analyst, JPMorgan Securities LLC: Got it. That’s helpful. Thank you.

Tanya, Conference Call Operator: Thank you. Our next question will be coming from David Arcaro of Morgan Stanley. Your line is open, David.

David Arcaro, Analyst, Morgan Stanley: Hey, thanks so much. Good morning. I was wondering if you could touch on the direction pricing in discussions you’re having on some of these data center deals. We’ve seen obviously with the capacity auction prints coming in higher and it does seem like conversations in demand has been fairly elevated. What are you seeing in terms of some of these most recent discussions with regard to pricing versus previous?

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: Yes, David, I’m not going to talk about well, first of all, David, good morning. Thanks for being on the call. Not going to talk about specific deals because I don’t want to reference a particular transaction from a timing standpoint. What I think we’re all seeing is the market is getting more scarce, the price of capacity is becoming more scarce, the availability of other resources in light of what happened with Big Beautiful on renewables and in light of the FIOC limitations for things like storage, think are going to pressure those elements of supply. We talked in our last call about the cost of combined cycle machines going up.

So, all of these things as a grouping, and of course the consumption of the available megawatts is going to make the things that exist more scarce and all things considered, that should mean that prices will continue to rise. Stated differently, what I would say to customers is, this is a good opportunity to begin having those discussions.

David Arcaro, Analyst, Morgan Stanley: Great. Thanks. Appreciate that. And then, you know, how are you seeing the, you’ve got a couple of different maybe structures or offerings here. How are you seeing the balance between front of the meter virtual versus co located on-site data centers?

How is the interest been in maybe in the co location side of things? Is there a common structure for some of the deals that are moving forward?

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: Yeah. Let me change the labeling a little bit here, so that I could precisely answer your question. When I think of co locating, think of approximately located. I think just about everything is going to be approximately. That is of size, right?

It’s going to be approximately located to major power elements, whether it be the power plant or major elements of the transmission grid, which again are generally near power plants. So I think the question you’re getting to is, Joe, is that gonna be front of the meter or behind the meter going to kind of this broader issue that has been in front of FERC now for some time? I don’t think anyone right now has given up hope that FERC is going to address and provide flexibility for true behind the meter configurations. And I happen to be with the president in Pittsburgh during the summit that senator McCormick organized, which is really a wonderful event. And one can’t hear the president talk without coming to the conclusion that the president very strongly feels that things that are behind the meter and that generation built specifically for data centers has got to be a part of the solution set that is available to customers.

But right now, listen, given the ambiguity on this issue at FERC and what’s going on in terms of the selection and appointment of FERC leadership, we don’t have an answer to that just yet. So we continue to think about it as a longer term option, but what we’re working on right now is all front of the meter. That if that, David, is kinda what you were getting at.

David Arcaro, Analyst, Morgan Stanley: Yeah. No. That’s helpful. I was curious if co locating and kind of offering in your own whether it’s land, maybe transmission interconnection, if that could add value versus something that’s a little bit more distant or virtual as I was thinking the Clinton deal was.

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: Yeah, look, I think we could do both, but I think the land around the plants, because of again, the proximity to these major elements is going to be enormously valuable and we’ve talked about that from the beginning. There’s no change in my view. My conviction around that has been nothing but strengthened. And so I think that’s gonna be the way this thing plays out. But the thing I was trying to bring out on the call in my prepared remarks was that, post Calpine what we have is the opportunity to be approximately located in the major element.

There might be a gas plant and associated transmission. But because of Constellation’s unique capabilities, the ownership of this nuclear fleet and our commercial ability, we could take that interconnection and we could couple that with a clean energy product for 20 fourseven clean energy, which not only gives the customer the sustainability value that they want and we definitely see that desire for sustainability. But the other thing they want is they want certainty on pricing for a twenty year deal. And that’s pretty hard to do with a gas plant because you don’t know the input price of the natural gas and so it’s always going to be indexed to a certain extent. And it’s very difficult to do because you don’t know what future environmental policies might mean to the cost of CO2.

So typically, when you’re looking at a long term deal at a gas plant, you’re saying, hey, it’s going to be indexed to something on the supply side or we need a long term supply arrangement, you need to deal with the firmness of that supply arrangement, and then you have to have a conversation with the customer around what happens if a carbon tax or regional program comes into play or something else happens. The beauty of having the nuclear megawatts is, as you’ve seen, we have no trouble giving somebody a price sheet for clean, firm energy that’s gonna be here for decades to come. That’s where the pairing works.

David Arcaro, Analyst, Morgan Stanley: Excellent, yeah, that’s helpful. Thanks so much.

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: And

Tanya, Conference Call Operator: our next question will be coming from Sophie Karp of KBCM. Your line is open.

Sophie Karp, Analyst, KBCM: Hi. Good morning. Good morning. Thank you for taking my question. I have a question about, I guess, how utilities respond to, the interconnection request and proliferation of those requests.

So what we and how that might impact you by by extension. So I guess what we see is that utilities are increasingly requiring longer term contracts, some take or pay features in those contracts of guaranteed returns and, you know, features like that. And from what we hear in a lot of data center customers are finding these exceedingly onerous. Right? What what from your standpoint, could that have implications for, you know, your operation where you operate and maybe that you know, maybe could you see that as under customers migrating away from some territories that are perceived as more difficult towards more vertically integrated markets where it might be easier for them to operate?

Like, what is your view on that?

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: Look. I I I I think the the thing that’s going on in the American politics and touching on the American regulatory compact, whether that be in vertically integrated markets or in competitive markets, is it’s kind of best to hire to visit upon the data centers all of the costs associated with increases in supply demand fundamentals. That’s kind of why I talked about what I did in the prepared remarks to dispel what I think is an inaccurate narrative. But whether that’s in a vertically integrated market, we certainly see tariffs that are being created in vertically integrated markets that appear very onerous to data center developers. And each state, whether it’s an integrated monopoly model or competitive market, I think is gonna have some choices that they make here that will in effect drive the development to particular regions that are more friendly.

I’ve seen Pennsylvania, for deliberately be quite friendly, Northern Virginia deliberately be quite friendly to the data economy. We’ll watch how that unfolds. But there the the the kind of, from my perspective, the kind of nonsensical aspect of this is that if you are in a region where your adjoining state is building data centers, then whatever is going to occur to supply demand fundamentals as a result of that growth is going to happen to your state, even if you abolish data centers in your state. The grid, as we all know, doesn’t stop at state borders. We don’t have 50 different electrical islands.

We’re all related and so supply and demand affects all of us. I think most informed governors and policy makers have taken the view that we have to mitigate these impacts to the extent possible, but artificially trying to suppress data center development in order to suppress costs would be as effective as, oh, I don’t know, the state of New Jersey trying to affect interstate milk prices by directing residents to no longer drink milk. It just doesn’t work. And so, you see a lot of activity in that area, but it just, I think rationality will play out. We have to navigate what is going to be a tougher few years.

We’ve made it tougher by having a bad market design to begin with that had artificially low prices. But we’re all adults and we understand that that has to be navigated in a way that works for American families and Constellation is doing its part to do it.

Sophie Karp, Analyst, KBCM: Thank you. And one quick one, if I may. A lot have been said about the nuclear credits in the OBBB, but are there any other provisions there that you can discuss that may indirectly benefit you, related to depreciation and something that can spur growth that maybe is a secondary benefit to your business as well?

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: Well, the bonus depreciation clearly was a big impact. Dan, you covered that a bit. I think you quantify that.

Dan Eggers, Chief Financial Officer, Constellation Energy Corporation: Yes, Sophie. We expect bonus depreciation to be between bonus and R and D expensing 200 to $300,000,000 favorable per year out the horizon. Calpine should be added to that, and we’ll come back to you on that once the deal closes. Obviously, certainty on the federal statutory tax rate provided by the bill, also of value, 45U, 45Y credit’s important, a 10% add or up 45Y for nuclear communities, another incremental opportunity. Those are, from our seats, the biggest ones from what we’re focused on today.

Sophie Karp, Analyst, KBCM: Thank you. That’s all for me.

Tanya, Conference Call Operator: And I would now like to turn the call back to Joe for closing remarks.

Joe Dominguez, President and Chief Executive Officer, Constellation Energy Corporation: Well, look, as always, thanks for your time this morning. Again, I know it’s a busy time for everybody. I hope we answered your questions and we thought it was the second quarter was the end here of a wonderful first half for us in 2025. We look forward to continuing to execute for our owners and for all of our stakeholders. So until the next time, be well.

Tanya, Conference Call Operator: Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may now disconnect. Everyone have a great day.

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