Q4 2023 Constellation Energy Corp Earnings Call

Okay.

Operator: Good day, ladies and gentlemen, and welcome to the Constellation Energy Corporation Business and Earnings Outlook call. At this time, all participants are in a listen-only mode.

Good day, ladies and gentlemen, and welcome to the constellation Energy Corporation business and earning at the outlook call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time.

Operator: Later we will conduct a question and answer session, and instructions will follow at that time. If anyone should require operator assistance, as a reminder, this call may be recorded. I would now like to introduce your host of today's call, Emily Duncan, Senior Vice President, Investor Relations and Strategic Growth. You may begin. Thank you, LaTanya.

If anyone should require operator assistance as a reminder, this call maybe recorded.

I would now like to introduce your host for today's call Emily Duncan Senior Vice President Investor Relations and strategic growth you may begin.

Emily Duncan: Good morning, everyone, and thank you for joining Constellation Energy Corporation's Business and Earnings Outlook 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 an 8K this morning, which includes our earnings release detailing 2023 results, along with a separate press release and business outlook presentation to be covered on today's call, all of which can be found in the Investor Relations section of Constellation's website. The materials in the 8K and other matters which we discussed 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.

Thank you.

Good morning, everyone and thank you for joining us.

<unk> Energy Corporation earnings outlet call, leading the call today are Joe Dominguez, constellations, President and Chief Executive Officer and Deanna.

Constellation's Chief Financial Officer.

Joined by other members of senior management team, who will be available to answer your questions. Following our prepared remarks.

In the 8-K this morning, which you can create.

Earnings.

Are you feeling 2023 results along with a separate press release and business outlook presentation to be covered on today's call all of which can be found in the investor Relations section of Constellation's website.

Materials, and the 8-K and other matters.

During today's call contain forward looking statements and estimates regarding constellation and its subsidiary that are sub.

Various risks and uncertainties.

Actual results could differ from our forward looking statements based on factors and assumptions discussed in today's material and comments made during this call. Please refer to today's 8-K and constellations SEC filings for discussions of risk factors and other circumstances in consideration that may cause results to differ from management.

Emily Duncan: Please refer to today's 8K 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, and 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 it over to Joe Dominguez, CEO, Perseverance. Thanks, Emily. LaTanya, thanks for getting us started this morning and Emily for starting our agenda. Thank you all for joining us today.

Projections forecasts and 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 it over to Joe Dominguez CEO constantly you said.

Thanks, Emily Latanya. Thanks for again. This started this morning, an MLA for starting our agenda. Thank you all for joining us today.

Joe Dominguez: While this call is going to be focused on 2024 guidance and Constellation's future, I want to start out by commenting on the outstanding year we had in 2023, where we materially raised guidance in both the second and third quarter calls and yet still managed to exceed the top of the range in our full year results. It's Constellation's second full year in business, and I think it's great that in both years we exceeded the midpoint of our guidance range, and last year just really blew up. We hope that these results underscore for you the importance that our entire management team places on meeting all of our commitments to you, and we're going to continue to do that. As always, the secret sauce here at Constellation is a unique mixture of the best generation assets in the world and a best-in-class commercial business, all run by an outstanding team of women and men. And I want to take a moment to thank them for the wonderful results because they're the ones that deserve the credit.

This call is going to be focused on 2024 guidance in constellation's future.

To start out by commenting on the outstanding year, we had in 2023, where we materially raise guidance in both the second and third quarter calls and yet still manage to exceed the top of the range in our full year results.

It's constellations second full year in business and I think it's powerful in both years, we exceeded the midpoint of our guidance range and last year, just really Walt it.

We hope that these results underscore for you the importance that our entire management team places on meeting all of our commitments to you and we're going to continue to do that.

As always the secret sauce here at constellation has a unique mixture of best generation assets in the world and a best in class commercial business all run by an outstanding team of women and men and I want to take a moment. Thank Dan for the wonderful wonderful results because they are the ones that deserve the credit.

Joe Dominguez: Turning to 2024 and the future, I'm going to kick us off by focusing on our unique business and the advantages we see coming to us in this evolving marketplace. First, I'll talk a little bit about who we are, the best operator of carbon-free nuclear plants in the world, backstopped by a nuclear PPC by the federal government, and with a wide-reaching commercial business that's focused on the kinds of customers that need us the most. Second, that in changing power markets, we provide something that I think others struggle to do, and that's carbon-free energy and reliability together. We think that's going to be the bedrock of the future for the country, and third, that we're best positioned to capture value in volatile markets and through the energy transition by selling the clean and reliable attributes of our 180 million megawatt-hour nuclear plant.

Turning to 2024 in the future I am going to kick us off by focusing on our unique business and the advantages we see coming to us in this evolving marketplace first I'll talk a little bit about who we are the best operator of carbon free nuclear plants in the world Backstopped by our nuclear PTC by the federal government.

And with a wide, reaching commercial business, that's focused on the kinds of customers that need us the most.

Second in the changing power markets, we provide something that I think others struggled to do and Thats carbon free energy and reliability together, we think that's going to be the bedrock of the future for the country.

And third that we're best positioned to capture value in volatile markets and through the energy transition by selling the clean and reliable attributes of our $180 million megawatt hour nuclear stated.

Joe Dominguez: Now, Dan's going to follow up and discuss our 2024 EPS guidance range of $723 to $803 per share, our visible 10% plus growth on the vast majority of our earnings through the end of the decade, which we call base EPS, and our updated two-year free cash flow outlook. And also, we'll cover some of our new disclosures and walk you through that. And I appreciate that we've already heard this morning from a number of investors who find them to be very useful. Hopefully, you all will too.

Now Dan is going to follow up and discuss our 2024 EPS guidance range of $7 23 to $8 three per share are visible, 10% plus growth on the vast majority of our earnings through the end of the decade, which we call base EPS and our updated two year free cash flow outlook and all.

So we'll cover some of our new disclosures and walk you through that and I. Appreciate that we've already heard this morning from a number of investors who find those to be very useful.

Joe Dominguez: So, let's get started on page 5 of the material. Constellation is a special company that supports our country's and our customers' economic growth and sustainability goals, as we've said from the very beginning when we launched this company. The most important and valuable energy commodity in the world today is carbon-free electricity that operates predictably and reliably, and we produce more of that than any other company. Our fleet has the best track record, stretching back for well over a decade as being both the most cost-effective and reliable in the world. Our scale cannot be replicated because we already own more competitive nuclear generation than all of the other U.S. competitive nuclear generators combined. Likewise, our assets have a special longevity. The longevity of our asset base is unparalleled, and we could operate for at least another 30 to 40 years.

Hopefully you're all well so let's get started on page five of the materials.

Constellation is a special company that supports our countries and our customers economic growth and sustainability goals.

As we've said from the very beginning when we launched this company the most important and valuable energy commodity in the world today is carbon free electricity that operates predictably and reliably and we produce more of that than anyone.

Our fleet has the best track record stretching back for well over a decade as being both the most cost effective and reliable in the world.

Our scale cannot be replicated because we already own more competitive nuclear generation and all of the other U S competitive nuclear generators combined.

Likewise, our assets have a special longevity, the longevity of our asset base is unparalleled and we could operate for at least another 30 to 40 years.

Joe Dominguez: In a conflicted political world, nuclear energy emerges as a consensus pick for both Republicans and Democrats because of its unique qualities. The reach of our customer business, serving nearly one-fourth of all of the commercial industrial demand in the U.S. and three-fourths of the Fortune 100 puts us in the best position to use our unique assets and capabilities to meet the needs of our customers. In the same vein, the combination of our assets and commercial business gives us the ability to earn enhanced earnings over and above the base earnings of the company, just as we did in the first two years of our business. We will continue to use our high investment-grade balance sheet and disciplined approach to capital allocation to create value, including through share buybacks, because we firmly believe in the future value of this company. And as our nuclear fleet and customer business help meet the growing demand for clean, reliable energy to power the U.S. economy, there are multiple opportunities for us to generate base earnings growth beyond the 10% that we're laying out today, and I'll walk you through that. The world is clearly moving in our direction.

In a conflict at political world nuclear energy emerges as a consensus pick for both Republicans and Democrats because of its unique qualities.

The reach of our customer business, serving nearly one fourth of all of the commercial industrial demand in the U S and three fourths of the Fortune 100 puts us in the best position to use our unique assets and capabilities to meet the needs of our customers.

In the same vein the combination of our assets and commercial business give us the ability to earn enhanced earnings over and above the base earnings of the company just as we did the first two years of our business.

We will continue to use our high investment grade balance sheet and disciplined approach to capital allocation to create value for you including through share buybacks, because we firmly believe in the future value of this company.

And as our nuclear fleet and customer business helped me at the growing demand for clean reliable energy to power. The U S economy, there are multiple opportunities for us to generate first base earnings growth beyond the 10% that we're laying out today and I'll walk you through that.

The World clearly is moving in our direction in the coming years, the demand for reliable and clean energy will only grow.

Joe Dominguez: In the coming years, the demand for reliable and clean energy will only grow. We're the ones that are best positioned to meet that growing demand for clean energy and to tackle the energy transition, to unlock the value through compensation for the unique, clean, and reliable attributes of our 180 million megawatt hours of nuclear energy. And to help America power the technologies of the future, whether that be EVs, electric heating, industrial electrification, or the booming demand for the data economy that America must lead in for both economic and national security reasons. The production tax credit uniquely gives us the ability to be patient so that we can capture the value in this evolving market through strategic hedging and portfolio optimization. Simply stated, because of the PTC, we can now decide whether and, frankly, how to We don't have to hedge a third, a third, a third.

We're the ones that are best positioned to meet that growing demand for clean energy and to tackle the energy transition.

To unlock the value through compensation for the unique clean and reliable attributes of our 180 million megawatt hours of nuclear and to help America power the technologies of the future whether that be evs electric heating industrial electrification or the booming demand for the data economy.

That American must lead in for both economic and National Security reasons.

The production tax credit uniquely gives us the ability to be patient so that we could capture the value in this evolving market.

Through strategic hedging and portfolio optimization.

Simply stated because of the PTC, we can now decide whether and frankly, how to hedge our fleet. We don't have to hedge a third a third a third.

Joe Dominguez: And that option, that flexibility, is enormously valuable and will drive enhanced earnings for us. And we could use the cash flow from these earnings to consolidate the industry, bet on ourselves through buybacks, and make double-digit, unlevered returns on growth investments. In sum, no other complex has such a potent combination of predictable growth, upside exposure to power markets, strong cash flows, and downside protection from the federal government. Let's turn to slide 6.

And that option and that flexibility is enormously valuable and will drive enhanced earnings for us and we could use the cash flow from these earnings to consolidate the industry bet on ourselves through buybacks and make double digit unlevered returns on growth investments and some no other company.

As such a potent combination of predictable growth.

Upside exposure to power markets strong cash flows and the downside protection from the federal government.

Let's turn to slide six.

Joe Dominguez: As I mentioned a moment ago, this team is committed to delivering on the promises we make because we know that delivering on promises is the way to create long-term sustainable value for our owners. So as we celebrate Constellation's second anniversary as an independent company, slide six is a summary of the promises we made. Promises We Have Kept. It's a long list, but I just want to highlight a few items.

As I mentioned, a moment ago. This team is committed to delivering on the promises we make because we know that delivering on promises is the way to create long term sustainable value for our owners.

So as we celebrate constellation second anniversary as an independent company Slide six is a summary of the promises we made to your promises we have kept it as a long list, but I just wanted to highlight a few items.

Joe Dominguez: As I noted earlier, we've outperformed our financial expectations. Our balance sheet remains a competitive advantage and is now triple B thanks to upgrades at both S&P and Moody. We've accumulated growth in our dividend of 150%, exceeding our 10% annual target. We have also completed our first billion dollar buyback, and we started a second billion dollar buyback in January. Now, on several calls, I've reiterated that we're happy to buy our shares all day long, and we still feel that way. And I'm proud to say that that commitment to the future of the value of this company has already delivered value for you. Buying back our own shares has been one of our best investments.

As I noted earlier, we've outperformed our financial expectations, our balance sheet remains a competitive advantage and is now triple b. Thanks to upgrades at both S&P and Moody's.

We've accumulated growth.

Our dividend of 150% exceeding our 10% annual target.

We have also completed our first billion dollar.

Our buyback and we started a second billion dollars buyback in January.

Several calls I've reiterated that we're happy to buy our shares all day long and we still feel that way.

And I am proud to say that that commitment to the future of value of this company has already delivered value for you by.

Buying back our own shares has been one of our best investments, it's already created $400 million in value.

Joe Dominguez: It's already created $400 million in value. We successfully advocated for the inclusion of the nuclear PTC in the IRA, which is a game changer for our business. We've had a disciplined approach to M&A, adding our ownership in SDP to our fleet because of our focus on dual unit nuclear power plants and the competitive advantage they have. We made the smart decision to aggressively buy fuel and secure costs for this decade and beyond.

We successfully advocated for the inclusion of the nuclear PTC in the Iraq, which is a game changer for our business. We've had a disciplined approach to M&A, adding our own ownership and STP to our fleet because of our focus on dual unit nuclear power plants and the competitive advantage they have.

We made the smart decision to aggressively buy fuel secure cost for this decade and beyond.

Joe Dominguez: We created an hourly match carbon-free energy product for our customers, and we're selling that product now to sustainability leaders like Microsoft. I think it's going to position us well in this data economy. We've begun the process to extend the lives of our nuclear fleet, which brings our asset lives to 80 years.

We created an hourly matched carbon free energy product for our customers and we're selling that product now to sustainability leaders like Microsoft and I think it is going to position us well in this data economy.

We've begun the process to extend the lives of our nuclear fleet, which brings our asset lives to 80 years and we've maintained our status and this is the most important thing we've maintained our status as the best operator of nuclear power plants in the world.

Joe Dominguez: And we've maintained our status, and this is the most important thing, we've maintained our status as the best operator of nuclear power plants in the world. We're very excited to have accomplished all of that and all the things that are listed on this slide in two short years. But we're even more excited about what the future brings. As I turn to slide 7, we've talked about this before, but I want to spend a few moments talking about the nuclear PTC and how it's fundamentally changed our business now that the program is in effect. Prior to the PTC, the outlook for our nuclear fleet was dependent on power prices, low or high, and our revenues would fluctuate year over year, sometimes quite significantly. The PTC has changed that.

We're very excited to have accomplished all of that and all the things that are listed on this slide in two short years, but we're even more excited about what the future brands.

As I turn to slide seven we've talked about this before but I wanted to spend a few moments talking about how the nuclear PTC and how it's fundamentally changed our business now that the program is in effect.

Prior to the PTC the outlook for our nuclear fleet was dependent on power prices lower high and our revenues would fluctuate year over year, sometimes quite significantly.

PTC has changed that at its core the PTC ensures that our fleet will have revenue visibility starting at $43 75 per megawatt hour in 2024.

Joe Dominguez: At its core, the PTC ensures that our fleet will have revenue visibility starting at $43.75 per megawatt hour in 2024. This provides our fleet with significant downside protection, ensuring its operation, but we keep the upside above board, and the upside is unlimited. In addition, as you can see on the left-hand side of the chart, the PTC floor revenue grows with inflation, and we'll support our earnings per share growth target. Now we're assuming that the PTC grows at 2% in our financial disclosures, including our 10% growth rate target.

This provides our fleet with significant downside projection, ensuring its operation, but we keep the upside above the PTC, Florida.

And the upside is unlimited.

In addition, as you can see on the left hand side of the chart. The PTC floor revenue grows with inflation.

And we will support our earnings per share growth target now.

Now, we're assuming that the PTC grows at 2% and our financial disclosures, including our 10% growth rate target.

Joe Dominguez: However, as you can see on the right, higher inflation than 2% would have a significant positive impact on our revenue growth. So if you believe that 2% is going to be hard to hold for a decade or more, this is a company that you ought to be interested in. For example, in 2028, the difference in revenue between the 2% and 3% inflation cases is more than $750 million. And in a 3% inflation case, our EPS growth rate would be in the mid to high teens rather than the 10% we're talking about on this call. It's really quite significant. Let me turn to slide 8.

However, as you can see on the right higher inflation than 2% would have a significant positive impact on our revenue growth.

So if you believe that 2% is going to be hard to hold for a decade or more this is a company that you ought to be interested in.

For example in 2028 the difference in revenue between the 2% and 3% inflation cases is more than $750 million and in a 3% inflation case, our EPS growth rate would be in the mid to high teens, rather than the 10%. We're talking about on this call it's really quite significant.

So let me turn to slide eight.

Joe Dominguez: And what we want to talk about here is public support that's growing as well as political support between Republicans and Democrats who recognize the importance to our energy system of baseload power, baseload clean power, from a transition and a national security standpoint. You have quotes here from both President Biden and former President Trump, both of whom are proponents of nuclear energy. Prior to the PTC, states stepped up with programs to ensure that these valuable resources do not prematurely retire. Now, in Illinois, some of those programs were signed by Republican governors. Other times, they were signed by Democratic governors.

And what we want to talk about here is the public support that's growing as well as the political support between Republicans and Democrats, who recognize the importance to our energy system of base load power base load clean power from a transition and a national security standpoint.

You have quotes here from both President <unk> and former President Trump both of whom are proponents of nuclear energy.

Prior to the PTC states stepped up with programs to ensure that these valuable resources to not prematurely retire.

Now in Illinois, some of those programs were signed by Republican Governors. Other times. They were signed by Democratic Governors at the federal level was federal it was former president and Trump and you might recall. This he was focused on the need to retain base load energy was the right idea and remember heat.

Joe Dominguez: At the federal level, former President Trump, and you might recall this, he was focused on the need to retain baseload energy. It was the right idea. And remember, he proposed using DOE's authority, its emergency authority under 202C, to support existing nuclear plants when he was in office. And it was Republicans both in the House and the Senate who were among the first to introduce tax credit bills for nuclear energy. So, in a sharply divided political world where the parties don't seem to agree on much... Each party recognizes the unique and critical nature of nuclear energy and how essential it is to our country. As a consequence, we believe that this policy is durable now and into the future. Let's go to slide 9.

Post using do authority its emergency authority under 200 to say to support existing nuclear plants. When he was in office and it was Republicans both in the house and the Senate who were among the first to introduce tax credit bills for nuclear.

So in a sharply divided political world, where the parties don't seem to agree on March <unk>.

Each party recognizes the unique and critical nature of nuclear energy and how essential it is to our country. So as a consequence, we believe that the policy is durable now and into the future.

Let's go to slide nine.

Joe Dominguez: Slide 9 kind of shows you the many reasons why policymakers and the public have come to appreciate nuclear energy. And I think it really does a good job here of summing up the case for nuclear energy. On the left-hand side, you can see that nuclear plants produce more energy for the same amount of installed capacity than any other energy technology. It operates more than 90% of the time; in our case, it operates 95%.

Slide nine kind of shows you. The many reasons why policymakers and the public have come to appreciate nuclear and I think it really does a good job here of summing up the case for nuclear.

On the upper left hand side, you can see that nuclear produces more energy for the same amount of installed capacity than any other energy technology. It operates more than 90% of the time in our case operates 95% of the time and Thats nearly three to four times greater than wind and solar.

Joe Dominguez: And that's nearly three to four times greater than wind and solar. It's also there 24 hours a day, in the heat of the cold, day or night, no matter the weather. The grid reliability and support provided by nuclear energy is unparalleled by any other energy resource. And I've got to tell you, this is not theoretical. We've already seen this in event after event, whether it was the polar vortex in 2014, the Elliott event, the URI event, or numerous others.

It's also their 24 hours a day in the heat of the call day or night no matter the weather the grid reliability and support provided by nuclear is unparallel by any other energy resource and I can tell you. This is not theoretical we've already seen this in event after event, whether it was the polar vortex and <unk>.

14, the Elliott event, the jewelry event or numerous others. It was nuclear that carried this system on its shoulders and people know that.

Joe Dominguez: It was nuclear power that carried this system on its shoulders, and people know that. Now moving to the bar charts on the upper right side of slide 9, note that existing nuclear plants could run at least for 39 more years, and I say at least because we believe that some of our plants could actually run to 100 years, much longer than existing wind and solar operating today, and it's also longer than all the renewables that are being built right now and we think all the renewables that will be built this decade. Going to the chart on the lower left shows that nuclear energy has the lowest life cycle emissions of any technology.

Now moving to the bar charts on the upper right side of slide nine note the existing nuclear plants could run at least for 39 more years than I'd say at least because we believe that some of our plants could actually run to 100 years.

Much longer than existing wind and solar operating today and its also longer than all the renewables that are being built right now and we think all the renewables that will be built this decade.

Go on to the chart on the lower left shows that nuclear has the lowest lifecycle emissions of any technology. This is a big thing from a sustainability standpoint now we've included here everything from construction to the mining of fuel in this calculation and that makes nuclear the best technology.

Joe Dominguez: This is a big thing from a sustainability standpoint. Now we've included everything from construction to the mining of fuel in this calculation. And then on the lower right-hand side of the slide, you can see that nuclear energy is essentially tied with solar as the safest technology, highlighting the safe operations of nuclear plants and the abundant power they produce and their ability to do that without emitting Harmful Pollutants into the atmosphere.

<unk> from a climate perspective.

Then on the lower right hand side of this slide you can see that nuclear is essentially tied with solar as the safest technology highlighting the safe operations of nuclear plants in the abundant power they produce and their ability to do that without admitting harmful pollutants into the atmosphere.

Joe Dominguez: And finally, look, unlike any other technology, nuclear energy is the only generation resource where we know and control where every gram of fuel is, and we have set aside the funds to restore the sites to greenfield condition after eventual plant retirements many decades from now. So, in a nutshell, whether you're talking about sustainability. For faith, reliability, waste management, or long-lived durability, nuclear energy offers benefits at levels that no other resource can. And that's not all.

And finally look unlike any other technology nuclear is the only generation resource, where we know and control where every gram of fuel is and we have set aside the funds to restore the sites to greenfield condition. After eventual plant retirements many decades from now.

So in a nutshell, whether youre talking about sustainability safety reliability waste management or long live durability.

<unk> offers benefits at levels that no other resource care and Thats not all it uses a lot less land it could be positioned almost anywhere and it creates more family sustaining jobs than any other generation type for US right. We just start we started the company with 13000 employees in the lab.

Joe Dominguez: It uses a lot less land, it can be positioned almost anywhere, and it creates more family-sustaining jobs than any other generation type, for us, right? We just started the company with 13,000 employees. In the last two years, we hired 2,500 people, and these are long-term jobs, and the communities love those jobs. And, of course, the politicians love those jobs.

Two years, we hired 2500 people so and these are long term jobs in the communities love those jobs and of course, the politicians love those jobs.

Joe Dominguez: Nuclear power is the backbone of the energy system now, and it will become even more important in the future. So, as we turn to slide 10, I want to start talking to you about the kind of changing energy fundamentals we're seeing in the market. We all know that the clean energy transition must happen, and it is happening, and Constellation's role in it will only grow. But as America transitions, there will be an impact on Electric Reliability and Electric Markets. The EIA, the Energy Information Administration, forecasts that installed generation has to grow.

<unk> is the backbone of the energy system now and it will become even more important in the future. So as we turn to slide 10, I want to start talking to you about the kind of changing energy fundamentals, we're seeing in the market.

We all know that the clean energy transition must happening and it is happening and constellations rolling it will only grow but as American transitions, there will be impacts on electric reliability and electric markets.

The EIA the energy information administration forecast that installed generation has to grow and what you can see on the chart on the left hand side is that what we're saying is intermittent generation, replacing dispatch will generation and it's been happening for a while at the same time in the market.

Joe Dominguez: And what you can see on the chart on the left-hand side is that what we're seeing is intermittent generation replacing dispatchable generation. It's been happening for a while, but at the same time in the market, if you look at the chart on the right-hand side, you can see we're beginning to see for the first time load growth. And I say, for the first time, we've seen load growth in places like Texas, but, of course, PJM, we've kind of seen a flat line on load growth for a decade or more, but that is changing. PJM's peak demand forecast for 2028 increased by 2% just in the last year.

Look at the chart on the right hand side you can see we're beginning to see for the first time load growth and I'd say for the first time, we've seen load growth in places like Texas, but of course of course, PJM, we've kind of seen a flatline on load growth for a decade everywhere, but that is changing.

<unk> peak demand forecast for 2028 increased by 2% just in the last year <unk> forecast for 2028 increased a whopping six 6%.

Joe Dominguez: ERCOT's forecast for 2028 increased by a whopping 6.6%. That increase is being driven by economic development across the country. This past year, more than 200 manufacturing facilities have been announced, and almost half a trillion investments have been made since 2020. We're seeing onshoring of businesses from Europe and other parts of the world that simply don't enjoy America's affordable energy dominance. And we're seeing on-shoring of supply chains here in America due to political tensions that are rising between the U.S., China, and other nations. We're also seeing electrification of transportation, buildings, and manufacturing. We're seeing increases in the frequency of extreme weather events, driving peak demand growth. And demand growth is being talked about quite frequently in the data economy, where AI is driving a significant increase in these forecasts. So, we think the combination of the energy transition and clean energy resources that are reliable. And again, we own more of them than anybody in the world.

That increase is being driven by economic development across the country. This past year more than 200 manufacturing facilities have been announced.

And almost half a trillion investments have been made since 2021, we're seeing onshoring of businesses from Europe and other parts of the world that simply don't enjoy Americas affordable energy dominance and we are seeing onshoring of supply chains here in America due to political tensions that are rising between the.

U S China and other nations.

We're seeing electrification of transportation buildings and manufacturer, we're seeing increases in the frequency of extreme weather events driving peak demand growth and the demand growth is being talked about quite frequently in the data economy, where AI is driving significant increase in these.

Forecast.

So we think the combination of the energy transition deteriorating supply reliability as we lose dispatch will generation and rising demand is all going to put a premium on clean energy resources that are reliable and again, we owned more of them than anybody in the world and <unk>.

Joe Dominguez: And in short, we're seeing signs in this marketplace for the first time in a while where we're seeing prices begin to converge on the cost of new build, but I don't know that we know that cost just yet. When we think about the offshore wind that has been challenged in the Mid-Atlantic and other areas, we're now seeing prices that are well above $100 a megawatt hour. And that's without the kinds of storage and other things that would be required to make those things anywhere close to the reliability of a nuclear power plant. So as I turn to slide 11, we want to kind of talk a little bit about the data economy. I know that it is something that is a focus for many of our investors. Boston Consulting Group believes that AI and regular data-centered demand will grow by 7% to 7% of total electricity demand by 2030. To put this in context, this is the equivalent of the electricity used for lighting in every home, business, and factory across the United States. It's a huge amount of energy.

Short, we're seeing the signs in this marketplace for the first time in a while where we're seeing prices begin to converge on the cost of new build and I don't know that we know that cost just yet when we think about the offshore wind that.

That has been challenged in the mid Atlantic and other areas. We're now seeing prices that are well above $100, a megawatt hour and thats without the times of storage and other things that would be required to make those things any close anywhere close to the reliability of our nuclear power plant.

Turn to slide 11, we wanted to kind of talk a little bit about the data economy I know that it is something that is a focus for many of our investors.

Boston Consulting group believes that AI and regular data center demand will grow by 7% to 7% of total electricity demand by 2030 to put this in context. This is the equivalent of the electricity used for lighting in every home business and factory across the United States, It's a huge amount of.

Joe Dominguez: Most traditional data centers that were built 10 years ago were 10 megawatts or less. Today, it's not uncommon to see 100 megawatt data centers, and with our clients, we're talking about data centers that approach 1,000 megawatts. And they require 24-7 power. This is something that doesn't get talked about enough, in my opinion.

Energy most traditional data centers that were built.

10 years ago, where 10 megawatts or less today, it's not uncommon to see a 100 megawatt data centers and with our clients. We're talking about data centers that approach a thousand megawatts and they require $24. Seven power. This is something that doesn't get talked about enough in my opinion.

Joe Dominguez: You know, when we do system planning, and I, you know, I've done this over the course of my career, we don't just kind of willy-nilly decide what generation we need; we first look at the load profile, what's growing in the economy. So, for example, if it's peaking load like air conditioning or electric heating, as an example, as we get into the energy transition, that kind of load growth will call for a particular kind of generation, peaking gas, Midmeric Gas, or in the future, Battery.

When we do system planning.

I've done this over the course of my career, we don't just kind of Willy Nilly decide what generation. We want we first look at the load profile, what's growing in the economy.

So for example, if it's peaking load like air conditioning.

For electric heating as an example, as we get into the energy transition.

That kind of load growth will call for a particular kind of generation.

Peaking gas mid.

Mid merit gas or in the future batteries.

Joe Dominguez: But if the load growth is 24-7 base load growth, then it calls for a very different technology. And that's us. Data centers are 24-7 consumers. We are 24-7 producers. So, it's kind of a perfect marriage.

But if the load growth is $24 seven baseload growth then it calls for very different technology and Thats us.

Data centers are $24 7 million consumers, we are $24 seven producers. So it's kind of a perfect marriage and then when we add on top of that our ability to provide clean energy to meet the sustainability objectives of this company. We think that there is an opportunity for us.

Joe Dominguez: And then, when we add on top of that our ability to provide clean energy to meet the sustainability objectives of this company, we think that there is an opportunity for us that is quite sizable. And we think the advantage Constellation can bring, quite frankly, is that it could meet this demand across multiple jurisdictions. And we could, frankly, serve the needs of some of the largest customers in the world. So, it is certainly exciting for us and something I'm sure we'll talk about. As we turn to slide 12, what we're going to talk about here in 12 and 13 is both seasonal and day-to-day variability. And what I want to put in your mind is the challenge of serving load when we're seeing this sort of variability, a challenge that we don't believe we face at Constellation given the profile of our generation. Now, look, before we start this, I want to be clear.

That is quite sizeable and we think the advantage constellation, giving brand quite frankly is that it could meet this demand across multiple jurisdictions and we could frankly serve the needs of some of even the largest customers in the world. So it is certainly exciting for us and something I am sure we will talk.

As we turn to slide 12, what we're going to talk about here in 12, and 13 is both seasonal and did day to day variability and what I want to put in your mind is the challenge of serving load. When we're seeing this sort of variability of challenge that we don't believe we face at constellation given the profile of <unk>.

Our generation assets now look before we start this I want to be clear, we think renewables have an important place.

Joe Dominguez: We think renewables have an important place in our efforts to decarbonize. Constellation's off-site renewable business has grown rapidly, and we're on track to grow the business by 3-4% of the volumes that we were talking about just in 2021. So our customers very much like renewable energy, but they are also striving to get to 24--7 clean energy. And the intermittency of renewables does create some challenges for grid operators.

In our efforts to Decarbonize.

Constellations Offsite renewable business has grown rapidly.

And we're on track to grow the business by 3% to 4% of the volumes that we were talking about just in 2021, so our customers very much like renewable energy, but they also are striving to get to $24 seven clean energy and the Intermittency of renewables does create some challenges for grid operators.

Joe Dominguez: So what you can see on this slide here is really kind of a macro-seasonal disconnect between the performance of renewables and demand growth. You can see that demand growth, no surprise here, is peaking in July and August, and we also see that a lot of renewable assets are underperforming during that period of time. When I did a lot of work in the Midwest, it was very common for a 10-year period or more that we would see capacity factors for wind in the Midwest drop to 5% or lower on the very hottest days of the year. That's why people talk about hot still days.

So what you can see on this slide here is really kind of <unk>.

Macro seasonal disconnect.

The performance of renewables and demand growth you can see here that demand growth no surprise here is peaking in July and August and we also see that a lot of renewable assets are underperforming in that period of time.

When I did a lot of work in the Midwest. It was very common for a 10 year period or more that we would see capacity factors for wind in the Midwest dropped to 5% or lower on the very hottest stays here and that's why people talk about hot still base that happens and so again it's.

Joe Dominguez: It happens. And so, again, if you have a lot of dispatchable energy, you can address this, but as dispatchable energy is retiring, this load has to be picked up by nuclear plants. It's one of the challenges we face, and it's not just a seasonal challenge. As we flip to slide 13, you kind of see this on a day-to-day basis. Particularly in the spring and the winter, these moves could be 50% of the production, or to give you some sense of the dimensionality of this, it's the equivalent of instantaneously turning on and off five nuclear reactors without notice.

If you have a lot of dispatch full energy you can address this but as dispatch full energy is retiring this load has to be picked up by nuclear plants. It's one of the challenges we face and it's not just a seasonal challenge as we flip to slide 13.

Kind of see this on a day to day basis, particularly in the spring and the winter. These moves can be 50% of production work.

To give you some sense of the dimensionality of this.

It gets the equivalent of instantaneously, turning on and off five nuclear reactors without notice and so if you step back you could well imagine that managing this much day to day and seasonal and seasonal variability and assessed on that expect certainty and reliability is going to be a big challenge and we're seeing that.

Joe Dominguez: And so, if you step back, you could well imagine that managing this much day-to-day and seasonal variability in a system that expects certainty and reliability is going to be a big challenge, and we're seeing that, but it's also an opportunity for us, because as other firms are selling into this market, they have to deal with clients that need 24-7 power, right? And clean power, like utilities, like the daily economy. They have to translate the ability to find this power in the market into higher risk premiums in their bid, right, because there's going to be scarcity in certain hours. But that's not true for Constellation, because our unique blend of reliability and clean assets gives us the ability to meet customer demand in any single hour.

But it's also an opportunity for us because as other firms are selling into this market and they have to deal with clients that need $24 seven towers right.

<unk> clean power like utilities like the data economy.

They have to translate the ability to find this power in the market into higher risk premiums entered their bid right because theres going to be scarcity in certain hours.

But that's not true for constellation because our unique blend of reliability and clean assets gives us the ability to meet customer demand in any single hour. So those higher competitive risk premiums that other folks see turn into higher margins at constellation and our owners.

Joe Dominguez: So those higher competitive risk premiums that other folks see turn into higher margins at Constellation, and our owners benefit from better results and enhanced earnings, while our customers benefit from reliable energy and sustainability. Let's take a look at slide 14. We put an ERCOT slide in here because, in many respects, we think ERCOT is an example of where other markets are going, and so. That's just a powerful data point. In 2023, ERCOT had 222 hours when demand exceeded $80,000, compared to just one hour in 2022. ERCOT also exceeded the all-time summer peak demand set in 2022 and 2021 by 11.8 gigawatts, or an incredible 16 percent. And the system isn't just constrained at peak times.

Benefit from better results in enhanced earnings, while our customers benefit from reliable energy and sustainability.

Let's take a look at slide 14, we put in ERCOT slide in here because in many respects. We think ERCOT is an example of where other markets are going.

And so.

Just a powerful data point here in 2023, ERCOT had 222 hours, where demand exceeded 80000 megawatts compared to just one hour and 2022.

ERCOT also exceeded the all time summer peak demand set in 2022, and 2020 ones by 11, eight gigawatts for an incredible 16%.

And the system isn't just constrained at peak I think historically, we would have said well then there are challenges at peak, but what we're really seeing here and I think this chart does a really nice job of it is that it's not necessarily peak demand that is driving high prices.

Joe Dominguez: I think historically we would have said, well, then there are challenges at peak. But what we're really seeing here, and I think this chart does a really nice job of showing it, is that it's not necessarily peak demand that is driving high prices. When wind and solar make up less than 26 percent of the total demand, the prices in Texas start to move dramatically higher and kind of asymmetrically, into the thousands of dollars per megawatt hour.

When wind and solar make up less than 26% of the total demand the prices and taxes start to move dramatically higher and kind of asymmetrically higher.

And into the thousands of dollars per megawatt hour. These high prices are signals that the market is giving to investors that there is a premium on reliability and these prices quickly carryover into the average price of the year. For example every hour at the maximum price of 5000.

Joe Dominguez: These high prices are signals that the market is giving to investors that there's a premium on reliability, and these prices quickly carry over into the average price of the year. For example, every hour at the maximum price of $5,000 per megawatt hour impacts the full year price around the clock by 50 cents per megawatt hour.

<unk> per megawatt hour impacts the full year price around the clock energy price by 50 per megawatt hour. So you don't have to see a ton of these hours to move energy prices and we've seen that and we think that what's happening in our archive is eventually going to happen in other markets to different degrees.

Joe Dominguez: So you don't have to see a ton of these hours to move energy prices, and we've seen that. And we think that what's happening in ERCOT is eventually going to happen in other markets to different degrees. And frankly, ERCOT has some advantages in that the solar and wind profiles there are among the very best in the entire nation.

And frankly ERCOT has some advantages in that the solar and wind profiles. There are among the very best in the entire nation.

The thematic is this.

Joe Dominguez: Reliability is equally as important as sustainability, and we have to solve for both. And that's why we say the most valuable energy commodity in the world today is a commodity that does both of those things. And that's what Constellation owns. Nuclear sustainability attributes were ridiculously undervalued for so many years. And it's now beginning to be recognized, but it's only the beginning.

Reliability is equally as important as sustainability.

And we have to solve for ball.

And that's why we say the most valuable energy commodity in the world today is a commodity that does both of those things and Thats what constellation owns.

Nuclear sustainability attributes were Rediculous Lee undervalued for so many years.

And it's now beginning to be recognized but it's only the beginning.

Joe Dominguez: And we're still a long way off, as I mentioned before, of fully understanding or valuing what clean and reliable energy together means. But we think that spells a very good future for Constellation, beyond what we're talking about this morning. As I turn to slide 15, our states were the first to recognize how vital nuclear energy was in supporting the economy and the environment.

And we're still a long way off as I mentioned before of fully understanding or valuing what clean and reliable energy together means we think that spells a very good future for constellation to exceed what we're talking about this morning.

As I turn to slide 15.

Our states were the first to recognize how vital nuclear was in supporting the economy and the environment.

Joe Dominguez: Illinois, New Jersey, and Connecticut. They had controversial programs, I would say, in the ZEC programs for nuclear energy initially, but they all look pretty prescient now, don't they? And what we're seeing is that customers are following their lead, showing more willingness to contract for the attributes of our fleet. And we have quite a few ways to monetize getting paid for these attributes, and we're going to be able to sell those more and more as the state programs roll off. And as we progress through the decade, you can see on the chart on the left-hand side, we're going to have a full 180 million megawatt hours of clean nuclear power to sell annually that is leveraged at exactly the right time as these transitions in the energy market and the economy are occurring.

New York, Illinois, New Jersey, Connecticut.

They had controversial programs I would say in the zec programs for nuclear initially, but they all look pretty pressing it now don't they.

And what we're seeing is that customers are following their lead showing a more willingness to contract for the attributes of our fleet and.

And we have.

Quite a few ways to monetize getting paid for these attributes and we're going to be able to sell those more and more as the state programs roll off and as we progress through the decades, you can see on the chart on the left hand side, we're going to have a full 180 million megawatt hours of clean nuclear power to sell <unk>.

<unk> that is leveraged at exactly the right time, these transitions and energy market and the economy are occurring.

Joe Dominguez: And so, as I talked about earlier, we see opportunities in the data center area for 24-7 clean generation because of the sustainable needs, because they need energy 24-7, and our dual unit sites are competing for behind the fence line opportunities with those technologies, depending on the outcome of the final treasury rules, and if we don't get the right outcome, depending on the outcome of the litigation, hydrogen remains an opportunity for us going forward. We are committed to the view that we are correct in the interpretation of the statute and will win.

And so as I talked about it earlier, we see opportunities in the data center.

Area for $24 seven clean generation because of the sustainable needs because they need energy 24, 7% and our dual.

<unk> unit sites are competing for behind the fence line opportunities with those technologies depending.

Depending on the outcome of the Treasury final Treasury rules and if we don't get the right outcome, depending on the outcome of litigation hydrogen remains an opportunity for us going forward we are.

Committed to the view that we are correct in the interpretation of the statute and will win.

Joe Dominguez: The states and the federal government are now entering the marketplace to look for hourly-matched carbon-free energy. We've seen that in the case of ComEd. And we continue to see opportunity with our C&I customers who want to follow the lead that Microsoft and ComEd have set for an hourly-matched clean energy product.

The states and the federal government are now entering into the marketplace to look for hourly matched carbon free energy, we've seen that in the case of commerce and we continue to see opportunity with our customer C&I customers, who want to follow the lead that Microsoft and Comed have set for an hour.

Match clean energy products.

Joe Dominguez: Importantly, when we talk about the 10% growth for base earnings through the decade, these opportunities aren't included in either our forecast or our expected growth rate. Now, it's a little bit early to share what we think the value of the attributes would be, and I think this is the kind of thing that needs to get updated as contracts get signed. But if you just look at the chart on the upper right-hand side, you can kind of see the impact.

Now importantly, when we talk about the 10% growth for base earnings through the decade. These opportunities arent included in either our forecast or our expected growth rate.

It's a little bit early to share what we think the value of the attributes would be and I think this is the kind of thing that gets needs to get updated as contracts get signed but if you just look at the chart on the upper right hand side, you can just kind of see the impact if we sold attributes for half of our fleet at 10.

Joe Dominguez: If we sold attributes for half of our fleet at $10 per megawatt hour, and I'm not claiming that $10 is the right price; it isn't, but that alone would be $900 million of additional revenue. And since there's no additional cost to us to generate the revenue. The upside would be more than $2 of additional earnings per share. So you can kind of see how both inflation and the sale of attributes meaningfully change the 10% growth rate and make sizable leaps to upwards of 20% or more. And remember, while we pursue opportunities in the market through attribute sales, our revenues are protected by people. On slide 16, I want to bring back a couple of the points I've already made.

<unk> per megawatt hour and I'm not signaling that $10 for the right price isn't but that alone would be $900 million of additional revenue and.

And since there is no additional cost to us to generate the revenues the upside would be more than $2 of additional earnings per share. So you can kind of see how both inflation and the sale of attributes meaningfully change the 10% growth rate.

And make sizeable leaves to two to upwards of 20% or more and remember while we pursue the opportunities from the market through attribute sales our revenues are protected by the PTC.

On slide 16, I want to bring back a couple of the points I've already made.

Joe Dominguez: We're the largest generator of nuclear power in the country, all of which sits in competitive markets. And you can see from the chart on the left-hand slide here that if you accumulated all of the other merchant or competitive nuclear power in the market, it still doesn't total what Constellation is. But more than that, our fleet is overwhelmingly dual units.

We're the largest generator of nuclear power in the country, all of which sets and competitive markets and you can see from the chart on the left hand slide here and that if you have accumulated all of the other merchant or competitive nuclear in the market. It still doesn't total what constitute the constellation.

<unk> is well more than that our fleet is overwhelmingly dual units. If you think about the 25 units were invested in.

Joe Dominguez: So if you think about the 25 units we're investing in, all but Clinton and Guinea are dual unit sites that enjoy those economics, and that's important both from the cost of producing the megawatt hour but also behind the fence opportunities with data centers and others. We're the cleanest generator with the most attributes to sell in the market, and because we can operate in competitive markets, we have the opportunity to create value unlike any regulated peer, and we're the best operator of plants. We've led the industry, and you can see this on the right-hand side, and we produce more energy by something like 4% of the capacity factor than the industry average. That doesn't sound like it would.

All but Clinton and <unk> are dual unit sites that enjoy those economics and that's important both from the cost of producing the megawatt hour, but also behind the fence line opportunities with data centers and others, where the cleanest generator with the most attributes to sell in the market and because.

We could operating in competitive markets, we have the opportunity to create value. Unlike any regulated peer and where the best operator of plants and we've led the industry and you can see this on the right hand side and.

And we produce more energy by some something like 4% of capacity factor than the industry average.

It doesn't sound like a lot but.

Joe Dominguez: But operating 4% better than the industry average is the equivalent of having another reactor's worth of power, or for you, $335 million in additional revenues with costs only higher for the fuel consumer. If I turn to slide 17, I want to talk a little bit about what we're seeing in the competitive C&I market and how these businesses kind of fit together very well from our perspective. The story here isn't just about sheer size.

Operating 4% better than the industry average is the equivalent of having another reactors worth of power.

Or for you $335 million in additional revenues with costs only hire for the fuel consumed.

If I turn to slide 17, I wanted to talk a little bit about what we're seeing in the competitive C&I market and how these businesses are kind.

Kind of fit together very well from our perspective.

The story here isn't just about sheer size. So you can see on the upper upper.

Joe Dominguez: You can see on the upper chart here that we're the second largest retail supplier. It's the composition of the customers that we have. We've been focused from the beginning on the C&I customer base. Again, when you think about our generation profile providing 24-7 power, we want to have the kinds of customers that have a load profile, demand profile, that works best with our machine. And that is commercial industrial customers. Secondly, these are the kinds of customers that have sustainability goals. So as we introduce products like 24-7 and as we continue to roll out CORE with its sizable growth, which is our offsite renewable program, it's become a real win-win for Constellation and its customers. And we could serve that load with lower risk than others, meaning the margin expansion that we foresee will go into our earnings.

The chart here that we're the second largest retail supplier it's the composition.

Of the customers that we have we've been focused from the beginning on the C&I customer base again, when you think about our generation profile, providing $24 seven power, we want to have the kinds of customers that have a load profile demand profile that works fast with our machines and.

That is commercial and industrial customers. Secondly, these are the kinds of customers that have sustainability goals. So as we introduce products like 24, seven and as we continue to rollout core with its sizable growth, which is our offsite renewable program.

Become a real win win for constellation and its customers and we could serve that load with lower risk than others, meaning the margin expansion that we foresee will go into our earnings now slide 18 talks.

Joe Dominguez: Now, slide 18 talks about how we're uniquely positioned to help our C&I customers meet their demand. And frankly, like our country, customers are on a journey to meet environmental and sustainability goals and do that in a way that is most affordable. And we position the business to be a great partner to these customers. We anticipated the drive for clean energy, and so we created the Emissions-Free Energy Certificates, the EFEX, that now..., effectively memorializes nuclear generation.

Talks about how we are uniquely positioned to help our C&I customers meet their demand and frankly like our country customers are on a journey here to meet environmental and sustainability goals and to do that in a way that is most affordable and we've positioned the business to be a great partner to these customers.

We anticipated the drive for clean energy and so we created the emissions free energy certificates the effects that now.

Effectively memorialized nuclear generation.

Joe Dominguez: We've worked with PJM and other RTOs to have the data available to the market so that customers could see the hourly match because we know that this is moving towards hourly match and has already happened. Customers wanted energy tied to specific projects, so we created our core off-site renewables program, and we work with renewable developers to match their projects with our customers. And as I've said several times here, we're leading the way with the first truly... hourly match carbon free program in the market. Customers now get to see a particular asset that produces their clean energy where we need it. The big thing here, folks, I think the change has been the acceptance of nuclear as a sustainability solution. We've been around for a long time, and years ago, we couldn't get customers to look at nuclear power regardless of its economics, its reliability, or its environmental benefits. But that's changed.

We've worked with PJM and other <unk> to have the data available to the market. So that customers can see the hourly match because we know that this is moving towards hourly matching it already has.

Customers wanted energy tied to specific projects. So we created our core off site renewables program and we work with renewable developers to match their projects with our customers.

And as I've said.

Times here, we're leading the way with the first truly.

Hourly match carbon free program in the market.

Customers now get to see a particular asset that produces their clean energy, where we need it and the big thing here folks I think the change is been the acceptance of nuclear as a sustainability solution been around for a long time and years ago, we couldn't get.

Customers to look at nuclear regardless of its economics, it's reliability, where its environmental benefits, but that's changed states led the way and customers increasingly accept nuclear and that opens the door for us to have a sales discussion and once customers see what we can do from affordability and time match.

Joe Dominguez: States led the way, and customers increasingly accept nuclear energy, and that opens the door for us to have a sales discussion, and once customers see what we can do from an affordability and time match perspective, they like it. And our customers are exploring behind-the-meter opportunities, and we're looking at different partnerships as that landscape develops. As we move from just energy to more sustainability products, the other thing we're looking at is that the duration of the contracts tends to expand. And so we see margins significantly above historic margins and a duration, a term, that is significantly longer.

They like it.

And our customers are exploring behind the meter opportunities and we're looking at different partnerships is that landscape evolves.

As we move from just energy to more sustainability products. The thing. The other thing. We're looking at is the duration of the contracts tends to expand and so we see margins significantly above historic margins and the duration of term that is significantly longer and that adds to visibility of our earnings for.

Joe Dominguez: And that adds to the visibility of our earnings for the decade and beyond. Our customer relationships and the focus on C&I will put us on the path to monetize the assets that we have, we uniquely have, and reliable and clean energy. So, I'll close this part of the presentation with slide 19.

The decade, and beyond our customer relationships and the focus on C&I will put us on the path to monetize the assets that we have we uniquely Av and the reliable and clean energy.

So I'll close this part of the presentation with slide 19.

Joe Dominguez: Success in the outperformance of the past few years would not have happened had we not had this unique, world-class generation portfolio with the best commercial team in the business. And we've integrated those two things as one part of the platform, showing how, over the past two years, our commercial business has demonstrated that it could thrive in volatile and changing markets, and I think that's what we're going to see going forward. I think all of the data indicates volatility and change both from growing demand and the turnover in the composition of the fleet is going to lead to volatility, and our team is well positioned to handle that because of the stability of our assets. So we're going to be able to price in higher margins to customers to manage their exposure through these volatile moments. We're going to be able to optimize our individual generation and load positions to create the best position using both the understanding that we control fully now when we hedge. We're going to be able to sell customized sustainability solutions. 10.

The success and the outperformance of the past few years would not have happened had we not had this unique world class generation portfolio with the best commercial team in the business.

And we've integrated those two things as one part of the platform.

Over the past two years, our commercial business has demonstrated that it could thrive.

In volatile and changing markets and I think that's what we're going to see going forward I think all of the data indicates volatility and change both from growing demand and the turnover and the composition of the fleet is going to lead to volatility and our team is well positioned to handle that because of the.

The stability of our assets, so we're going to be able to price and higher margins to customers to manage their exposure through these volatile moments, we're going to be able to optimize our individual generation and load positions to create the best position using both understanding that we control fully now when we have.

We're going to be able sell customized.

Sustainability solutions.

Ken.

Joe Dominguez: You know, these businesses will work in tandem to serve our customers, help America transition, and provide the carbon-free and reliable energy that we need. And I think it's going to produce results that are better than our current plan. So now I'll turn it over to Dan to talk a little bit about the financial outlook and some of the changes that we've made. And again, I very much appreciate the positive comments we've already received. Dan

These businesses will work in tandem to serve our customers help America transition and provide the carbon free and reliable energy that we need and I think it is going to produce results that are better than our current plan. So now I'll turn it over to Dan to talk a little bit about the financial I'll.

Look in some of the changes that we've made and again very much appreciate the positive comments, we have already received Dan. Thank you Joe Good morning, everyone. We're very proud of what we've accomplished since we launched and we're even more excited about what lies ahead.

Daniel L. Eggers: Thank you, Joe. Good morning, everyone. We're very proud of what we've accomplished since we launched, and we're even more excited about what lies ahead. I'm starting on slide 20.

Starting on slide 21.

Daniel L. Eggers: As Joe outlined, the Nuclear PTC has fundamentally changed our business by providing revenue visibility, supporting earnings growth through its built-in inflation adjustment, and protecting against power market downside by providing a floor or base level of earnings while maintaining exposure to higher prices. From a mechanical perspective, the PTC will be treated as an after-tax revenue, which will fill the gap between spot revenues at each plant. Will we consider the after-tax earnings support, our high investment grade credit ratings, and our strong free cash flow generation to support reinvestment or return of capital to our owners? We are transitioning our primary financial metric to operating EPS. Our guidance range for 2024 is $7.23 to $8.03 per share, up considerably from the $6.28 earned in 2023, which I remind you is well ahead of our original expectations for last year. On page 31 of the appendix, we provide 2023 EPS by quarter to help you calibrate against last year. And since EPS is new, the easy rule of thumb is that every $4 million of pre-tax income equals one cent of EPS. This ties back to some of Joe's slides earlier.

As Joe outlined the nuclear PTC has fundamentally changed our business, providing revenue visibility supporting earnings growth through its built in inflation adjustment and protected against power market downside or providing a floor or base level of earnings while maintaining exposure to higher prices from our.

Antical perspective, the BDC will be treated as an after tax revenue stream that will fill the gap between spot revenues at each plant what we consider the after tax earnings support our high investment grade credit ratings, and our strong free cash flow generation to support reinvestment or return of capital to our owners <unk>.

<unk>, our primary financial metric to operating EPS, our guidance range for 2024, and $7 23 to $8 three per share up considerably from the $6 28 earned in 2023, which I'll remind you is well ahead of our original expectations for last year.

On page 31 in the appendix, we provide 2023 EPS by quarter to help you calibrate against last year and since EPS is new the easy rule of thumb is every $4 million of pretax equals one set of Etfs and ties back to some of Joe's slides earlier more than just helping their prompt the changed.

Daniel L. Eggers: More than just helping to prompt the change to EPS, the nuclear PTC is reshaping how we approach the sale of electricity from our nuclear plants. Historically, we hedged on a three-year routable basis to provide earnings visibility, support our credit metrics, and ensure that we had the cash needed to run the business, with the downside revenue protection from the nuclear PTO. In Current Interpretation of Gross, we no longer need to hedge our generation output in the same way, allowing us to better take advantage of power prices. This also means that the traditional way of modeling the company is changing to help.

EPS the nuclear PTC is reshaping how we approach the sale of electricity from our nuclear plants. Historically, we hedge on a three year ratable basis to provide earnings visibility support our credit metrics and ensure that we have the cash needed to run the business with the downside revenue protection from the <unk>.

PTC and in current interpretation of gross receipts, we no longer need to hedge our generation output in the same way, allowing us to better take advantage of power price moves.

Also means the traditional way of modeling the company is changing.

Daniel L. Eggers: We're also introducing new disclosures, which are to provide simplicity, a longer time horizon, and greater visibility into our business that you've all been asking for. Turning to slide 22, our total earnings can be thought of in two parts. First, we have a significant portion of our business that delivers consistent, visible, and easy-to-calculate earnings that will grow over time. This goes beyond the support the PTC provides for our nuclear fields and includes our commercial business and non-nuclear assets. We call these base earnings, and they can be easily modeled using simple P times Q.

We're also introducing new disclosures also provide simplicity a longer time horizon and greater visibility into our business that you've all been asking for.

Turning to slide 2022 our total earnings can be thought of in two parts first we have a significant portion of our business, which delivers consistent visible and easy to calculate earnings that will grow over time. This goes beyond the support the PTC provides our nuclear fleet and includes our commercial business and not.

Nuclear assets, we call. These base earnings and they can be easily model, usually simple P times Q for example, retail margin times volume sold and the nuclear EDC price times generation output.

Daniel L. Eggers: For example, retail margins times volume sold, and the nuclear PTC price times generation output. Base earnings for 2024 are $5.45 to $5.55 per share, which we are confident will grow at least 10% through the decade. I'll discuss the tools for calculating base earnings in a moment, to get to our total EPS, which we call a hamster. Our company consistently makes more money than what is captured in the easy-to-calculate base earnings, but these earnings don't comport to the same P times Q math and can also vary year-to-year depending on market opportunities.

Base earnings for 2024, or $5 45 to $5 55 per share, which we're confident will grow at least 10% through the decade I'll discuss the tools for calculating base earnings in a moment.

To get to our total EPS.

The second bucket that we call enhanced earnings our company consistently makes more money than what is captured in the easy to calculate base earnings but these earnings don't comport to the same P times Q math and can also vary year to year, depending on our market opportunities are extraordinary results last year a good example.

Daniel L. Eggers: Our extraordinary results last year are a good example of outsized value capture created by market volatility that provided an opportunity for greater margin. When we look forward, you can think about enhanced earnings as including stronger than average retail margins. Realize power price is above the Moore, and Captured Value from Volatility Driven by the Factors Joe talked about. We feel comfortable that enhanced EPS will add at least 10 to 20% to total EPS on top of base earnings, but we're doing better than that in 2024 and 2025 due to the big backlog gains in forward power prices in those years. This breakdown in the base and enhanced earnings is a modeling tool that will help provide visibility into our disclosures and greater clarity into our business. We plan to refresh the split on base and enhanced earnings once a year when we provide new guidance on the fourth quarter earnings call. During the year and for our quarterly results, we only report total EPS. Turn to slide 23.

Ample of outsized value capture created by market volatility that provided the opportunity for greater margins. When we look forward you can think about enhanced earnings is including stronger than average retail margins realized power prices above the PTC floor and capture value from volatility driven by the factors.

Joe talked about we.

We feel comfortable that enhance EPS will add at least 10% to 20% of total EPS on top of base earnings, but we're doing better than that in 2024 and 2025 due to the big backlog gains in forward power prices in those years.

This breakdown in the base and enhance earnings are modeling tools, which will help provide visibility into our disclosures and greater clarity into our business. We plan to refresh refresh the split on base and enhanced once a year when we provide new guidance on the fourth quarter earnings call during the year and for our quarterly results we only.

We report total EPS.

Turning to slide 23.

Daniel L. Eggers: Through the end of the decade, our base EPS will grow at a compound rate of at least 10%, and we see opportunity to do better since this outlook assumes a 2% inflation rate for the PTC adjustment, and does not include getting paid for our clean and reliable attributes through data centers or additional CFE sales that Joe talked about, or margin expansion from our customer business that we have seen in recent years, to name a few potential drivers. All of those items would be additive to our growth. I do want to be clear that the growth rate will not be a straight line. It will vary from year to year due to a variety of factors, including the lumpiness of the PTC floor adjustment, as well as the number and duration of outages in any given year. You can see this most clearly when looking at 2026. At 2% inflation, the PDC does not increase that.

Through to the end of the decade, our base EPS will grow at a compound rate of at least 10% and we see opportunity to do better since this outlook assumes a 2% inflation rate for the PTC adjustment does not include getting paid for our clean and reliable attributes through datacenters or additional <unk> sales.

That Joe talked about our margin expansion from our customer business that we have seen in recent years to name a few potential drivers all of those items would be additive to our growth rate.

I do want to be clear that the growth rate will not be a straight line. It will vary from year to year due to a variety of factors, including the lumpiness of the PTC floor adjustments as well as the number and duration of outages in any year you can see this most clearly when looking at 2026 at 2% inflation the PTC does not incur.

Daniel L. Eggers: And it is a heavy outage here, but we also expect longer than normal outages because we'll start installing our turbines for the upgrades of Byron and Braidwater. Over the long term, we are confident that we will grow base EPS by at least 10%, and we've included all the tools you need to be able to model and validate our outlook. Moving on to slide 25, you can see the types of simple tools that can be used to calculate base earnings.

<unk> and it is a heavy outage year, where we also expect longer than normal outages, because we started selling our turbines for the up rates of Byron and braidwood.

Over the long term, we are confident that we will grow base EPS by at least 10% and we've included all of the tools you need to be able to model and validate our outlook.

Moving on to Slide 25, you can see the types of simple tools that can be used to calculate base earnings the model inputs, including costs can be found on pages 32 to 34 in the appendix and will help you model out to 2028.

Daniel L. Eggers: The model inputs, including costs, can be found on pages 32-34 in the appendix and will help you model out to 2028, for our generation, provide expected generation times and prices. For Newport Nuclear, this is broken down by the CMC units in Illinois, New York units inclusive of the ZEC revenues, and the remaining PTC units. On the non-nuclear side, we provide capacity prices and volumes, historical renewable PPA prices, and minimum expected spark spread. On the commercial side, we provide 13-year average historical and forecasted margins for both our power and gas business, which captures the vast majority of the base earnings for our commercial business. We have other businesses, like Constellation Home, Energy Efficiency, and Portfolio Management, that consistently contribute to our earnings year in and year out.

For our generation fleet, we provide expected generation times price for Nucor. This is broken down by the CMC units in Illinois, New York units inclusive of the Zec revenues and the remaining PDC units on the non nuclear side, we provide capacity prices and volumes historical renewable PPA prices.

And minimum expected spark spreads.

On the commercial side, we provide 13 year average historical and forecasted margins for both our power and gas businesses, which captures the vast majority of the base earnings for our commercial business.

Other businesses like constellation home energy efficiency and portfolio management, the year in and year out consistently contribute to our earnings.

Daniel L. Eggers: These tools will help to easily model Constellation well into the future, giving you much longer visibility in the base earnings. Moving to the next slide, we know that we'll earn more each year than our base earnings, and you can see that with our performance in the last two years. As I mentioned earlier, these earnings are not as easy to model from a P times Q approach.

These tools will help easily model constellation well into the future given you much longer visibility than the base earnings.

Moving to the next slide we know that we will earn more each year than our base earnings and you can see that with our outperformance in the last two years.

As I mentioned earlier these earnings are not as easy to model from a P times Q approach you can vary year to year as we take advantage of market opportunities.

Daniel L. Eggers: It can vary year-to-year as we take advantage of market opportunities. That said, we are confident that we will continue to drive additional value from our competitively advantaged customers. For 2024 and 2025, commercial margins will be above the 13-year average used in base EPS, which you've already put in the backlog through forward sales made in 22 and 23.

That said, we are confident that we will continue to drive additional value from our competitively advantaged businesses for.

For 2024, and 2025 commercial margins will be above the 13 year average used in base EPS, which you've already put into backlog through forward sales made in 'twenty, two and 'twenty three.

Daniel L. Eggers: For example, in 2024, we are seeing electric margins of $1.75 per megawatt hour more than the 13-year average as we've monetized recent commodity price volatility, and as customers have wanted the certainty that a fixed-price product offers. Enhanced earnings are also benefiting from plants where forward power prices are above the PTC floor, as well as optimizing positions between our retail and generation businesses. When we look into the future and the assumptions underpinning base EPS, we expect enhanced earnings to add at least 10 to 20% to total EPS in typical years but see that contribution increase for the next couple of years, given the extraordinary commercial margins we've locked in. On page 35 in the appendix, we provide some inputs around enhanced gross margin that should help add dimension to this earnings.

For example in 2024, we are seeing electric margins $1 75 per megawatt hour more than the 13 year average as we monetize recent commodity price volatility and as customers have wanted the certainty that a fixed price product offers now.

Enhanced earnings are also benefiting from plants, where forward power prices are above the PTC floor as well as optimizing positions between our retail and generation businesses. When we look into the future and the assumptions underpinning based Etfs, we expect enhanced earnings to add at least 10 to 20.

Percentage of total EPS in typical years, but see that contribution higher for the next couple of years given the extraordinary commercial margins we've locked in on.

On page 35 in the appendix, we provide some inputs around enhanced gross margin. This should help add dimension to this earnings stream.

Daniel L. Eggers: I'll now turn to our capital allocation plan on page 26, which should look familiar to all of you. Our goal is to deliver value for our owners through the Capital Allocation Plan, and our philosophy on how to do so is unchanged. Our high investment grade credit ratings are our foundation. Our strength has been recognized by both S&P through our recent upgrade to BBB Plus and by being placed on Positive Outlook at Moody.

I'll now turn to our capital allocation plan on page 26, which should look familiar to all of you.

Our goal is to deliver value for our owners through the capital allocation plan on our philosophy on how to do so is unchanged our high investment grade credit ratings. Our foundation, our strength has been recognized by both S&P. So our recent upgrade of Triple B, plus and by being placed on positive outlook at Moody's are high.

Daniel L. Eggers: Our high investment grade credit ratings and strong credit metrics reflect the high quality nature of our business. We remain committed to the dividend. We'll grow our dividend per share by 25% this year, starting with the March 2024 dividend, bringing our total dividend increase since we started in 2022 to 150%.

Investment grade credit ratings and strong credit metrics reflect the high quality nature of our business.

We remain committed to the dividend, we will grow our dividend per share by 25%. This year, starting with the March 2024 dividend, bringing our total dividend increase since we started in 2022% to 150%. We will continue to target 10% annual growth in future years, we will continue to invest in our asset.

Daniel L. Eggers: We'll continue to target 10% annual growth in future years, and we'll continue to invest in our assets. We will supply the grid with clean energy from our nuclear fleet for decades to come and help decarbonize the American economy. Our 2024 and 2025 capital plans can be found on page 36 of the appendix. On growth, we will continue to be disciplined on both organic and inorganic opportunities, making investments where we exceed our double-digit unlevered return threshold. Last year, we were thrilled to buy a large part of the South Texas Project nuclear plant.

Where is the supply of the grid with clean energy from our nuclear fleet for decades to come and help Decarbonize. The American economy, Our 2024 and 2025 capital plans can be found on page 36 of the appendix.

On growth, we will continue to be disciplined on both organic and inorganic opportunities, making investments, where we exceed our double digit unlevered return threshold.

Last year are thrilled to buy a large part of the South Texas project nuclear plant. We will continue to look for acquisitions that meet our business priorities and returns thresholds.

Daniel L. Eggers: We'll continue to look for acquisitions that meet our business priorities and returns threshold. Additionally, over the next two years, we'll also invest in organic projects that will grow and continue the operations of our invaluable carbon-free assets. We're making investments at some of our plants to get them ready for future behind-the-meter demand, and hydrogen remains an opportunity for us, but it is admittedly dependent on the outcome of the final rules by Treasury. In addition, we happily invested alongside our owners last year, completing our first $1 billion share repurchase program. Our board authorized the next billion-dollar program in December, and we've already been buying this quarter.

Over the next two years, we're also invest in organic projects that will grow and continue the operations of our invaluable carbon free assets, we're making investments at some of our plants to get them ready for future behind the meter demand and hydrogen remains an opportunity for us but is it in Italy dependent on the outcome of the final rules of Treasury.

In addition, we happily invested alongside our owners last year, completing our first $1 billion share repurchase program.

Our board authorized the next billion dollars program in December we have already been buying this quarter.

Daniel L. Eggers: We're excited about the opportunities to invest in our business and get the right returns, but we're also more than happy to keep buying our own stock. Turning to slide 27, let's talk about our free cash flow outlook for the next two years, covering 2024 and 2025. Starting on the left, we forecast approximately $6 billion in free cash flow before growth, after accounting for base capex and nuclear fuel, which is still a lot of money to deploy. As I mentioned on the last slide, we have nearly $900 million in organic investments over the next two years, with returns that exceed our double-digit threshold. $900 million will be returned to our owners in common dividends, reflecting this year's 25% increase and then the projected 10% future growth. We then plan to return another $1 billion to owners should the share purchase authorization be approved in December, and we have already completed $150 million of that authorization. That leaves us with approximately $3.1 to $3.5 billion of unallocated capital over the next two years.

We're excited about the opportunities to invest in our business. The right returns, but we're also more than happy to keep buying our own stock.

Turning to slide 27, let's talk about our free cash flow outlook for the next two years covering 2024 and 2025, starting on the left we forecast approximately $6 billion in free cash flow before growth after accounting for base Capex and nuclear fuel, which is still a lot of money to deploy.

As I mentioned on the last slide we have nearly $900 million and organic investments over the next two years with returns that exceed our double digit threshold.

$900 million will be returned to our owners in common dividends, reflecting this year's 25% increase and then the projected 10% future growth.

We then plan to retire another $1 billion to owners of the share repurchase authorized in December and have already completed $150 million of that authorization.

That leaves us with approximately three 1% to $3 $5 billion of unallocated capital over the next few years. This unallocated capital provides us the flexibility to pursue our strategic priorities, including M&A and additional organic growth as long as those projects meet our return thresholds and us.

Daniel L. Eggers: This unallocated capital provides us with the flexibility to pursue our strategic priorities, including M&A and additional organic growth, as long as those projects meet our return thresholds. And, as you've seen us do, if those opportunities do not materialize, we will return the capital to our owners. Thank you all for your time today.

<unk> seen us do if those opportunities do not materialize, we will return the capital to our owners. Thank.

Daniel L. Eggers: We're incredibly excited about the opportunities ahead at Constellation and our great growth story. We look forward to another strong year in 2024 in delivering on our financial targets. I'll now turn the call back. Thanks, Dan. Folks, I'm going to close here basically where I started.

Thank you all for your time today, we're incredibly excited about the opportunities ahead of constellation and our great growth story.

Look forward to another strong year in 2024 and delivering on our financial commitments I'll now turn the call back to Joe.

Thanks, Dan.

Books.

Going to close here basically where I started.

Joe Dominguez: We've had a fantastic first couple of years of this business. But as we look at the fundamentals of power markets, as we look at growing demand, the need for sustainability solutions, we think there is.

We've had a fantastic run.

For the first couple of years in this business, but as we look at the fundamentals of power markets as we look at growing demand need for sustainability solutions.

Joe Dominguez: Huffington, D.C. We have a ton of room to run yet, and we think we have a very durable policy in the PTC because of the kind of unique position we're in where both political parties have strongly supported nuclear energy for all of the reasons that we covered earlier in the presentation. At our core, we have visible base earnings growth of 10% through the decade, backstopped by the PTC. Again, our assets are the best in the world, run by the best people that operate those sorts of plants in the world, and this company can't be replaced. There's simply not enough nuclear energy out there to replace it.

We think there is a ton of room to run yet and we think we have very durable policy in the PTC because of the kind of a unique position we're in where both political parties strongly supported.

Nuclear energy for all of the reasons that we covered earlier in the presentation.

At our core we have visible base earnings growth of 10% through the decade backstopped by the PTC and.

Again, our assets.

One of the best in the World run by the best people.

That operate those sorts of plants in the world.

And.

This company can't be replaced there's simply not enough nuclear out there to replace it and we all know from having seen Vogel what the cost of new nuclear is notably having 25 of these assets and having to just replace two of them that Vogel was $35 billion should give you.

Joe Dominguez: And we all know, from having seen Vogel, what the cost of new nuclear plants is. Notably, having 25 of these assets and having to just replace two of them at Vogel cost $35 billion should give you some sort of insight into the replacement value of clean energy that is also 100% dependable throughout any sort of weather event. Our businesses. Our commercial and our generation business are a great marriage.

Some sort of insight in the replacement value of clean energy that is also 100% dependable throughout any sort of weather event.

Businesses.

Our commercial and our generation business are a great marriage that 24% share of the C&I business gives us the ability to connect our unique capabilities with some of the most sustainable companies in the country and that's just seems to be growing.

Joe Dominguez: That 24 percent share of the C&I business gives us the ability to connect our unique capabilities with some of the most sustainable companies in the country, and that just seems to be growing. As we look at the dynamics of energy markets, it's impossible not to conclude that if we're going to continue with the energy transition, reliability is going to become just as important as sustainability, and we're able to do both of those things. We just think that we're a huge part of the solution for America.

As we look at the dynamics of energy markets, it's impossible not to conclude that if we're going to continue on the energy transition that reliability is going to become just as important is sustainability and we're able to do both of those things.

Just think that we're a huge part of the solution for America, and our clean reliable nuclear plants, coupled with our ability to reach customers and help them achieve their sustainability goals supports our vision as being the leading company in this space.

Joe Dominguez: And our clean, reliable nuclear plants, coupled with our ability to reach customers and help them achieve their sustainability goals, support our vision as being the leading company in this space, on top of the opportunities that we've talked about. We're going to have 180 million megawatt hours of carbon-free electricity that we could receive additional compensation for through 24-7 sales, behind the meter opportunities, hydrogen subject to the final rules or the outcome of litigation, government procurements of clean energy, and just simply capturing prices above the PTC price floor as volatility continues and accelerates in the market. All of these opportunities are on top of what is a wonderful profile for the company of growing a very solid and predictable part of our business that comprises a huge chunk of our earnings by 10% per year.

On top of the opportunities that we've talked about.

We're going to have a 180 million megawatt hours of carbon free electricity that we could receive additional compensation for <unk> through 'twenty four seven sales behind the meter opportunities hydrogen subject to the final rules or the outcome of litigation government procurements of.

Clean energy and just simply capturing prices above the PTC price floor as volatility continues and accelerates in the markets.

All of these opportunities are all on top of what is a wonderful profile for the company of growing a very base and predictable part of our business that comprises a huge chunk of our earnings by 10% per year, and Dan and I have already discussed that number could be considerably better.

Joe Dominguez: And Dan and I have already discussed how that number could be considerably better. That's the reason, as we talk about capital allocation, that we're happy to buy the shares of this company all day long because the road we've traveled for the first two years is nothing compared to the future that we're going to have as a company here at Constellation. And with that, I look forward to answering your questions with the rest of the management team. Ladies and gentlemen, if you have a question at this time, please press star 11 on your telephone. If your question has been answered or you wish to remove yourself from the queue, please press star 11 again.

So that's the reason as we talk about capital allocation that we're happy to buy the shares of this company all day long because the road. We've traveled for the first two years is nothing compared to the future that we're going to have as a company here at constellation and with that I look forward to answering your.

<unk> with the rest of the management team here.

Ladies and gentlemen, if you have a question at this time. Please press star one on your telephone.

<unk> has been answered or you wish to remove yourself from the queue. Please press star one again.

Operator: One moment while we compile our Q&A roster. Our first question will come from... Steve Fleishman of Wolf. Your line is open, Steve. Yeah, hey, good morning. Can you hear me?

While we compile the Q&A roster.

Yeah.

Our first question will come from.

Steve Fleishman of Wolfe Your line is open Steve.

Yeah, Hey, good morning can you hear me okay.

Steven Isaac Fleishman: Okay. Steve, we could hear you great. Good morning to you.

Steve We can hear you great good morning to you.

Joe Dominguez: Okay, great, thanks. So I guess first for Joe, just. As you're thinking about the attribute values, the fleet, and the different options, you know, whether it's the 24-7 or the on-site, hydrogen on-site, Data Center, et cetera, just. How are those kind of weighing against each other right now in terms of the most likely and, and then just also kind of the timing of when you're likely to kind of be in a position to start making more of those decisions? And just to clarify, those are all kind of upsides to Base and Enhanced, the way they think about it. Thank you. I think so, Steve.

Okay, great. Thanks.

So I guess first for Joe just.

As youre thinking about the.

The attribute values the fleet and the different options.

Whether it's the 24 seven or onsite hydrogen on site.

Data center et cetera, just.

How are those kind of weighing against each other right now in terms of most most likely in.

And then just also kind of the timing of.

When you're likely to kind of be in a position to start making more of those.

Decisions and just to clarify those are all kind of upsides too.

Base and enhanced the way to think about it.

Steven Isaac Fleishman: I think it will represent itself both as an improvement in base and as an enhancement because when you think about how the PTC pricing elbow works, right? Wherever, assuming your overall price is below that elbow, there's extrinsic value above the elbow. It's effectively the, you know, possibility that prices will be higher than the elbow come the time of delivery. So whenever you're getting, you know, whenever you have a contract value that's in that range, if you're adding to it, for example, PJM capacity payments, if those end up being higher, even if the plant right now is residing in the PTC level, the closer it gets to that elbow, the higher It also gives you what Dan has talked about, the potential for higher margins and better portfolio opportunities as you handle the contracts.

Thank you I think so Steve I think it will represent itself both as an improvement in base and enhance because when you think about how the PTC pricing Alpha works right.

Wherever it is.

Assuming your overall prices below that elbow theres extrinsic value above the alpo effectively the.

The possibility that prices will be higher than the outcome the timing of the delivery year. So whenever youre getting whenever you have a contract value that's in that range, if you're adding to it for example, PJM capacity payments, if those end up being higher even if the plant right now is residing in the PTC level the <unk>.

Closer it gets to that elbow the higher the value of the extrinsic floor and that gives you enhanced earnings. It also gives you what Dan has talked about the potential for higher margins and better portfolio portfolio opportunities as you handle the contracts, but effectively.

Joe Dominguez: But effectively, you know, what we're thinking is the contracts will be well above the PTC levels, right, to reflect the value of the attributes. In terms of how we're seeing the opportunities, let me just go from kind of maybe worst to best. I think hydrogen right now. We've stayed in the game on the hydrogen hub in Illinois because DOE has asked us to cover the cost pending the outcome of the fund. If we don't get the right final rule, we'll head into litigation, but we'll suspend further capital deployment or opportunities in hydrogen until we get an outcome from the courts.

What we're thinking is the contracts will be well above the.

PTC levels rate to reflect the value of the attributes in terms of how we're seeing the opportunities. Let me just go from kind of maybe worst the best I think hydrogen right now we've stayed in the game on the hydrogen hub in Illinois because.

<unk> and they're covering the cost pending the outcome of the final rules. If we don't get the right final rule, we'll head into litigation, but we will suspend further capital deployment.

Or opportunities in hydrogen until we get an outcome from the course in terms of $24 seven we're continuing to see uptake from our customers on those opportunities. They are some of the same customers that appear to us in the data economy right. So Microsoft shows up as a as the first pioneering.

Joe Dominguez: In terms of 24-7, we're continuing to see uptake from our customers on those opportunities. They are some of the same customers that appear to us in the data economy world, right? So Microsoft shows up as the first pioneering 24-7 customer. It's also a potential customer for powering the data economy and growth in that economy. And so I think of those two things as kind of similar.

$24 seven customer, it's also a potential customer in powering the data economy and growth in that economy, and so I think those two things is kind of similar there will be customers that obviously are pursuing sustainability solutions that aren't in the data center economy like comment than others, but I think.

Joe Dominguez: There will be customers that obviously are pursuing sustainability solutions that aren't in the data center economy, like ComEd and others. But I think probably the biggest piece of this, at least as we see it right now, is going to be in the data economy and selling 24-7 solutions to those companies that are in the data center business or intending to grow in the data center business and trying to do that across multiple jurisdictions so that we could get a template agreement in one place where we could agree on pricing and then quickly move to other opportunities with that same customer, and other parts. I think when you think about who we are, the spread of our assets, we are probably the only company that could do this at scale, that has the megawatts available, and do it with the geographic diversity that these clients seem to like. In terms of timing, Steve.

Probably materially the biggest piece of this at least as we see it right now is going to be in the data economy and selling $24 seven solutions to those companies that are.

In the in the data center business for intending to grow in the data center business and trying to do that across multiple jurisdictions. So that we could get a template agreement in one place where we could get greedy on pricing and then quickly move to other opportunities with that same customer in other and other parts I think when you think about who we are.

We are the spread of our assets, we're probably the only company that can do this at scale that has the megawatts available and do it with geographic diversity that these clients seem to like in terms of timing Steve.

Joe Dominguez: You know, we're working on all of these issues. There is a huge team at Constellation that is involved in these discussions and sorting them out. They're a big deal.

We're working on all of these issues there is a huge team at constellation that is involved in these discussions and sorting sorting them out there are big deals and they take a long time to materialize and what I don't want to get into in these calls is predicting when.

Joe Dominguez: So, and they take a long time to materialize. And what I don't want to get into in these calls is predicting when the outcome of those deal discussions will occur. But, you know.

The outcome of those deal discussions will occur but.

Steven Isaac Fleishman: They want speed to the market, and we want speed in terms of getting this started. So I think the incentive... Hey, Steve, just to tie that into the earnings expectations, right? As we sign long-term contracts, you know, for the attributes, sales, the data center, what have you, those long-term earnings contributions would flow into the base earnings given the long-term visibility. Okay, thanks. One other question, just on the when you kind of came out with this base, Gross rate. How are you?

<unk>.

They want speed to the market and we wanted to speed in terms of getting this started so I think the incentives are aligned.

Hey, Steve just to tie that into your earnings expectations right as we sign long term contracts for the attribute sales data set or what have you. Those long term earnings contributions would flow into the base earnings given the long term visibility that go with them.

Okay. Thanks. So one other question just on the when you kind of came out with this.

Yes.

Gross rate how are you.

Joe Dominguez: How are you, what are you assuming for the kind of use of free cash in that plan? We use a range of expectations. We have a billion dollar buyback on right now. We've got the one to three, five of unallocated.

How are you what are you assuming for kind of use of free cash.

In that plant.

Yes, we use a range of expectations right.

The $1 billion buyback on right now we've got the three 1% to three five of unallocated.

Steven Isaac Fleishman: We assume that we'll use some of that for growth opportunities and some of that for buybacks, but I would say that that outcome covers a range of outcomes, so it's not as if it was an all buyback assumption, which would probably be the highest additive contribution EPS, right, because you get immediate contribution, whereas growth investments probably have a higher return but take a little more time to get into play. So our growth rate encompasses a wide range of capital deployments to make sure we'll meet our commitment. Thank you. Congratulations!

We assume that we will use some of that for growth opportunities.

Some of that for buyback, but I would say that that that outcome covers a range of outcomes. So it's not as if it was at an all buyback assumption, which would probably be the highest additive contribution EPS right because you get a immediate contribution whereas the.

The other growth investments, probably they have a higher return, but take a little more time to get into place. So we our growth rate is encompasses a wide range of capital deployment is to make sure we'll meet our commitments.

Okay, great. Thank you congrats thanks, Steve.

Joe Dominguez: And one moment for our next question. Our next question will be coming from David Arcaro of Morgan Stanley and Linus. Good morning, David.

And one moment for our next question.

Our next question will be coming from David.

David Arcaro: Morning. Morning. Thanks for the comprehensive update here. Let's see, I was wondering about the free cash flow outlook or the really solid outlook here for 2024, 2025, as earnings grow, will free cash flow before growth be growing at a similar level over time, or just wondering if there are other important puts and takes over the guidance period for cash flow? I think that's a fair expectation.

Carl of Morgan Stanley Your line is open.

Good morning, David good.

Good morning, Thanks for the comprehensive update here.

Let's see I was wondering.

On the free cash flow outlook really solid outlook here for $2024 225.

As earnings grows will free cash flow before growth be growing at a similar level over time or just wondering if there are other important puts and takes over the guidance period for cash flow.

Yes, I think Thats a.

Daniel L. Eggers: If you think about setting aside the nuclear PTC and the tax attributes of it, we will work through the tax credits we've accumulated previously. So depending on capital investment and bonus depreciation, things like that, our functional cash tax rate is probably going to be a bit higher in the future than it has been in the past. That could be a little bit of an impediment.

A fair expectation if you think about setting aside the nuclear PTC in the tax attributes of it we will work through our.

Our tax credits that we've accumulated previously so depending on the capital investment and bonus depreciation things like that are functional cash tax rate is probably going to be a bit higher in the future than it has been in the past that could be a little bit of an impediment year to year, you can see different timing on nuclear fuel spend our base capex spend, particularly if we.

Joe Dominguez: Year to year, you can see different timing on nuclear fuel spend or base capex spend, particularly if we think about the work we're doing to extend the useful lives of the assets. But I think it's fair to assume that we should have some good follow-through on free cash flow. Yeah, David, I just want to supplement Dan's point. I think that the opportunities we're talking about don't necessarily come with more O&M. Some of the behind-the-meter opportunities might, but that'll be factored in. Eggers, Steven Fleishman, Paul Zimbardo, Kathleen Barrn, Constellation, Yep, got it.

Think about the.

The work, we're doing to extend the useful lives of the assets, but I think it's fair to assume.

We should have some good fall through on free cash flow, yes, David I, just want to supplement Dan's point I think that the opportunities we're talking about.

<unk> com necessarily with more iron out some of the behind the meter opportunities might but that'll be factored in to the contract pricing, but simply selling attribute it doesn't add a bit of O&M to to our company. So its cash conversion is quite large.

David Arcaro: Thanks. That makes sense. And then, let's see, you give a range of 10 to $20 per megawatt hour for attribute payments. Is that the right range that you think about for each of those different clean attribute potentials, you know, whether it's hydrogen, whether it's data centers, and I guess what your confidence is in achieving that uplift in terms of the pricing level for those end customers? Yeah, David, I think we put those in as kind of just benchmarks for you to kind of quickly do. We're not selling an attribute for $10 here. You know, that, you know, that's just not what we would be interested in over the long term. What we're, you know, what it doesn't make sense to do on this call is kind of reveal our pricing curve for attributes, because that's obviously competitively sensitive information. We put the $10 in as just an illustration; it could have just as easily been $20. Okay, great. I got it. I'll leave it there. Thanks so much.

Yeah got it thanks that makes sense.

And then let's see you gave a range that range of 10 to $20 per megawatt hour for the attribute payments.

Is that the right range that you think about for each of those different clean attribute attend.

Potential.

It's hydrogen whether it's data centers and I guess, what's your confidence in achieving that that uplift in terms of the pricing level for those and customer sources.

Yes.

David I think we put those in as kind of just benchmarks for you to kind of quickly do the math.

We're not selling an attribute for $10 a share.

That's that.

That's just not what.

We would be interested in over the long term.

What we are what doesn't make sense to do on this call is kind of reveal our pricing curve for attributes.

Because that's obviously competitively sensitive information but.

We put the $10 and as just an illustration that could have just as easily been $20 range. So.

Okay great.

Got it I'll leave it there thanks so much.

Joe Dominguez: In one moment for our next question, and our next question will be coming from Durgesh Chopra of Evercore ISI. Durgesh, your line.

And one moment for our next question.

And our next question will be coming from <unk> Chopra of Evercore ISI. Your line is open.

Durgesh Chopra: Hey, good morning team. Thanks for taking my questions. Just wanted to follow up with a quick clarification, Dan, the unallocated capital, the $3 billion, is that factored into the base? EPS growth rate, or is that in the other bucket on top? I think you should think about it as some deployment of capital for buybacks and then whether it was used for paying down debt, although we'll manage our balance sheet differently, or reinvestment in projects, which would have contractual visibility, which is really how we think about our growth investments by and large. I think you should assume a decent amount of that would show up in Bayes, right? Because your denominator is changing in a share buyback calculation.

Hey, good morning team thanks for taking my questions.

Wanted to follow up a quick clarification.

<unk>.

The unallocated.

Capital the $3 billion.

Is that factored into the base.

The EPS growth rate or is that in the.

In the other bucket on top.

Kevin I think you should think about it is some deployment of capital for buybacks and then whether it was used for paying down debt, although we will manage our balance sheet differently or reinvestment in projects, which would have in your contractual visibility was really how do we think about our growth investments by and large.

I think you should assume a decent amount of that would show up in base right. Because your denominator is changing on a share buyback.

Joe Dominguez: It would also help enhance it a little bit, to be totally honest, if your share count's falling. But, you know, we used a range of different allocations to get comfortable with both the growth rate and the range that we provided. We didn't want to lock ourselves into one version of future capital, got it. That's helpful, and then maybe any color that you can share on your M&A strategy going forward, obviously there's a healthy bit of free cash flow here for you to execute on, but just, you layered out the return parameters, but what kind of assets, uh, is it predominantly nuclear, or could you be looking at other renewable assets? If you could just M&A activity would be focused on both of those things, and in the case of nuclear, we've kind of long said that. Young Dual Unit Sites are our kind around here.

Calculation. It would also help enhance a little bit to be totally honest if your share counts falling.

But we used a range of different allocations to get comfortable with both the growth rate in the range. We provided we didn't want to lock ourselves into one version of <unk>.

Future capital deployment.

Got it that's helpful. And then maybe any color that you can share on your M&A strategy going forward. Obviously, there is a healthy bit of free cash flow year.

For you to execute on but just and you laid out the return parameters, but what kind of assets is.

Is it <unk>.

<unk> nuclear or could you be looking at other renewable assets. If you could just provide more color there. Thank you.

Yes look I think we talked about the two parts of our business the commercial business and the nuclear asset base I think it's fair to say that M&A activity would be focused on both of those things in the case of nuclear we've kind of alongside that.

Young dual unit site. So are our types around here. So those are that sort of mark or anything thats in that fits that description will be something we'd be interested in.

Joe Dominguez: So that sort of mark, anything that's in that description would be something we'd be interested in. Perfect. I'm very excited to add, you know, if you think about, sorry, I'd say if you think about, last year, we were successful on STP, which certainly fit that template, and other assets where we were not successful because they didn't fit our return profile or our asset mix. But look, it's all at the right price, right?

Perfect.

If you think about as far I would say if you think about last year.

We were successful on STP would certainly fit that template and other assets, where we were out successful because it didn't fit our return profile or our asset mix, but look it's all at the right price right. What you are seeing here in terms of the management presentation is that.

Joe Dominguez: What you're seeing here, in terms of the management presentation, is that... We like the future of this company. We like the future contracting opportunity. We like the future realization of the reliability benefit. So, stated quite simply.

We like the future of this company, we like the future contracting opportunity, we like the future realization of the reliability benefit that we think we can.

Joe Dominguez: We think there's a lot of value that is still unrealized. So as we look at different M&A opportunities, it's going to be judged against buyback in the sense of where there is going to be the greatest impact or return for our investors. And I'm not sure where that's going to be. We have a type of plant that we would be interested in buying.

So stated quite simply we think theres a lot of value that is still unrealized here.

So as we look at different M&A opportunities, it's going to be judged against buyback in the sense of where it's going to be the greatest impact or a return for our investors.

And I'm not sure where that's going to be I think.

We have a type of plant that we would be interested in buying we have commercial businesses that we'd be interested in buying but those things have to come at the right price and if we've demonstrated anything very well over the first couple of years is we're going to be real disciplined in how we look at that.

Durgesh Chopra: We have commercial businesses that we'd be interested in. Those things have to come at the right price. And if we've, I think, demonstrated anything very well over the first couple of years, we're gonna be real disciplined in how we look. Got it. Thank you so much for giving me time. I appreciate all the disclosures in the appendix. That's really helpful. Thanks again.

Got it. Thank you so much forgive me time and appreciate all the disclosures in the appendix that's really helpful. Thanks again.

Joe Dominguez: Thank you. Thank you. Thank you.

And one moment for our next question.

Our next question will be coming from Angi stores Lynskey of Seaport Angie Your line is open.

Operator: One moment for our next question. Our next question will be coming from Angie Storazinski of Seaport. Angie, your line is open. Thank you. Good morning.

Good morning.

Good morning.

So just just maybe two things one is.

Angie Storazinski: So, just maybe two things. One is, can you tell us how you did against the free cash flow projections from Analyst's Day on 22? You know, whenever I think about power, it should be a cash business. Right? So I'm just wondering how you tracked against that guidance range. And also, what was the main reason why you decided to change from EDI to EPS? I understand the nuclear PTCs. But just like conceptually, what was the reason? Angie, Stan, on the Freecast performance, we exceeded our commitments in both years. I think that's how I described it.

Can you tell us how you did against the free cash flow projections from the.

Analyst day from 22.

Again.

Whenever you think about power it should be a cash estimates. So I'm just wondering how you're tracking against that guidance range and also what was the main reason why you decided to.

Range from Edp, EBITDA walk from EBITDA to EPS I understand the nuclear PTC, but just conceptually what was the reason.

And you stand on the free cash flow performance.

We exceeded our commitments in both years I think is how I'd describe it we can get you the actual numbers.

Daniel L. Eggers: We can get you the actual numbers. We will follow up, but we did exceed the numbers on the plan for both years. As far as going from EBITDA to EPS, I think a major factor was the nuclear PTC because you're calculating gross receipts. The PTC value can move within the calendar year. It is an after-tax number, so how you affect your net income would be consistent as those two balance themselves out. From an EBITDA perspective, it added a lot of volatility, and there's not an ability to... Gross.

Follow up but we did.

The numbers on that plant for both years.

As far as going from EBITDA to EPS.

A major factor was the door PTC.

As you are calculating it.

Gross receipts.

The PTC value can move within the calendar year. It is an after tax number so.

How you affect your net income would be consistent.

As as those two balanced themselves out from an EBITDA perspective, it added a lot of volatility.

There's not the ability to.

Daniel L. Eggers: The PTC to a pre-tax EBITDA equivalent value on the advice of our outside counsel and auditors and all those folks. I think the other part, more significantly, is that when we look at our story, we're a strong investment grade company with a, you know, a bit modestly levered business. We've got a really compelling growth story, as we see it with the PTC growth and the opportunity to redeploy capital, the free cash flow as we return it to our owners or reinvest in the business drives a unitized growth story, which we all felt was a lot closer to an EPS-driven business and a more mature business than we would have experienced with the volatility and variability of results that, you know, a lot of the So we thought it was a really natural time to make the transition and probably suits us to compare ourselves to companies that we think we look a lot more like as we go forward. Okay. And just one other thing.

Gross up the TTC to a pre tax EBITDA equivalent value.

The consult of our outside counsel and auditors and all of those folks I think the other part more significantly right is that when we look at our story right word a strong investment grade company with.

They are modestly Levered business, we've got a really compelling growth story as we see it with the PTC growth and the opportunity to redeploy capital. The free cash flow is returned it to our owners or reinvest in the business.

What drives that unitize growth story, which we all felt it a lot closer to.

And EPS driven business in a more mature business than.

And then probably what would have experience with the volatility and variability of results that a lot of the ibp's have had over time or they didn't have.

The certainty provided by the PTC and our core commercial business. So we thought it was a really natural time to make the transition and probably suits us to compare to how many you said, we think we will look a lot more like as we go forward as a company.

Okay, and just one other thing so when.

Angie Storazinski: So, when I look at the progression, for example, of O&M expenses and CapEx, right, those numbers seem to be going even faster, AP versus EBITDA projections. So, I mean, that would imply, well, at least the CapEx one would imply lower free cash flow generation of the EBITDA that you're adding. And admittedly, and again, there's no question about it, you guys have been on the forefront of addressing the nuclear fuel cost risk. I obviously appreciate all of the additional purchases, nuclear fuel expense, nuclear fuel CapEx, etc. But just again, is there a shift in how cash heavy the earnings are? Or is it just, again? I don't know if you can comment at all.

When I look at your the progression for example of O&M expenses and Capex light those numbers seem to be going actually even faster.

Versus EBITDA projections, so I mean that would imply like.

Well at least the Capex, one who would imply lower free cash flow generation.

The EBITDA that you're adding and admittedly and then again there is no question about it you guys have been on the forefront of addressing thats the nuclear fuel cost risk.

I appreciate all of.

The additional purchases nuclear fuel expense looks like your capex etcetera, but.

But just again is there a shift in how cash heavy the cash that the earnings are or is it just.

Daniel L. Eggers: Yeah, I mean, Angie, I think on the O&M front, right, you got to remember that we did buy STP last year, right? So there's a fairly meaningful step up in our projected O&M, you know, for 24 from last year's update because STP is in us, the biggest piece of the increase. In 24, we also, just like we saw in 23, we do have higher O&M for performance-based compensation for employees given the extraordinary results we've had in commercial. As you know, there is a lot of backlog in 22 and 23 that's going to show up in 24, hence the strong enhanced earnings numbers. We pay at delivery, not at inception, right?

Hi, Ken.

Don't know if you can comment at all.

Yes, Angie I think on the O&M front right I mean, you got to remember that we did buy STP last year right. So there's a fairly meaningful step up in our projected O&M for 'twenty four from last year's update because <unk> is the biggest piece of the increase.

In 2004, we also just like we saw in 2003, we did have higher O&M for performance based compensation for employees given the extraordinary results we've had in commercial.

As you're aware, we locked a lot of backlog in 'twenty, two and 'twenty three that's going to show up in 24, hence the strong enhanced earnings numbers.

<unk> repaid at delivery not at inception, right. So our O&M is going to be up with extraordinarily higher profits for that pace I think we're really comfortable with the O&M profile relative to earnings expectations and if you look at how much.

Daniel L. Eggers: So our O&M is going to be up with extraordinarily higher profits for that pace. I think we're really comfortable, you know, with the O&M profile relative to earnings expectations. And if you look at how much the numbers have moved for 24 from where we were a year ago, I think that's pretty clearly validated.

The numbers that move for 'twenty four from over a year ago, I think thats pretty clearly validated.

Daniel L. Eggers: On the CapEx front, you know, I think timing will vary from year to year depending on what our workload is for maintenance capital at the plants. When we've done things like the upgrades, we've moved some capital forward in order to get that on and get those high-return projects in place. So, you know, I mean, you look at a long-term CapEx program that's incredibly consistent where we expected things to be maybe a few more dollars here and there for, you know, long-term support of the assets going to the SLRs. But we feel good on that front.

On the Capex front, I think timing will vary from year to year, depending on what our workload is for maintenance capital at the plants. When we've done things like the op rates. We've moved some capital forward in order to get that on and get those high return projects in place. So I think.

When you look at our long term Capex program, that's been incredibly consistent where we expected things to be maybe a few more dollars here and there for the long term support of the assets go into the SLR, but we feel good on that front on nuclear fuel.

Daniel L. Eggers: On nuclear fuel, you know, we were, you're correct, well ahead of where the world was heading on the need to procure fuel. We had bought it out through 28. That has continued beyond 28.

Were youre correct well ahead of.

Where the world was heading on the need to procure fuel we had bought out through 28 that has continued beyond 28, we have contracts extending well out into the <unk> at this point in time across.

Daniel L. Eggers: We have contracts extending well out into the 30s at this point in time across the fuel chain. So I think that, you know, we've managed our fuel exposure very well. We talked about last year's 28 nuclear fuel expense being around $6 a megawatt hour. It might be a smidge over that, but not a whole lot more.

The fuel change so I think that we've.

Managed our fuel exposure very well, we talked about last year 28 nuclear fuel expense to be around $6, a megawatt hour it might be a smidge over that but not a whole lot more so I think we've.

Daniel L. Eggers: So I think we've done a good job controlling where our fuel costs are, certainly in an inflationary environment. And, you know, I guess the last point on fuel is because people ask about it a lot because you can see the spot price move around. I'll just remind you that, you know, we don't buy in the spot market, right? We buy in the term market for all of our products. We are a long-term buyer with a very sophisticated fuels group. So, you know, where we're procuring is certainly different than what you're seeing on a very illiquid market. And none of your fuel contracts have any indexation to the card.

Done a good job controlling where our fuel costs are certainly in an inflationary environment and I guess the last point on fuels because people ask about it a lot because you can see the spot price move around I'll, just remind you that.

We don't buy in the spot market or are we buying the term market for all of our products. We are long term buyer with a very sophisticated fuels group. So.

We're we're procuring is certainly different than that and what youre seeing on a very illiquid tape.

And none of your.

Fuel contracts have any.

Daniel L. Eggers: Some of them will have collars around them, and I will tell you that all the numbers we're showing you basically have those contracts at their max collar value. Good. Thank you. Thank you, Andrew.

Indexation to the contract.

Some of them will have collars around them and I will tell you that all of the numbers. We're showing you basically have those contracts at Max color value.

Okay. Good thank you.

Thank you Angie.

Angie Storazinski: And one moment for our next question. Our next question will be coming from Neal Calton of Wells Fargo. Neal, your line's open. Hi, everyone.

And one moment for our next question.

Our next question will be coming from Neil Colton.

Wells Fargo Neil Your line is open.

Neal Calton: Thanks for taking my question. Just a question on the retail power margins. You're showing in 2024 about $1.75 above the 13-year average is trending down to $0.50 in 2025. Just curious, does that reflect the market coming in in 2025? Is that just where the hedges sit?

Hi, everyone. Thanks for taking my question.

Just a question on the retail power margins.

You are selling in 2020 for about $1 75 above the 13 year average is trending down to <unk> in 2025 I'm. Just curious is that does that reflect the market coming into 25 is that just where the hedges just any kind of comment on how we should be thinking about 25 and beyond there.

Daniel L. Eggers: Just any kind of comment on how we should be thinking about 2025 and beyond? Yeah, I think when you look at our commercial business, we tend to sell forward in contract terms, let's call it 24 months plus or minus. We would have sold a lot more of our 24 volumes in 22 and 23 than we would have sold 25 volumes in 22 and 23.

Yes, I think when you look at our commercial business right, we tend to sell forward and contract terms, let's call. It 24 months plus or minus right. We would have sold a lot more of our 2000 and for volumes in 'twenty, two and 'twenty three than we would have sold 25 volumes in 'twenty two 'twenty three so what we have in our numbers reflects really the <unk>.

Joe Dominguez: So what we have in our numbers really reflects the positive backlog gains. We have had very good margins on what we've been signing to the point that margin sustain is higher than these long-term average margins. You would expect that enhanced value to improve as we sell more contracts, right? So anything that isn't sold at this point in time, we assume reverts back to this long-term average. We've seen volatility continue. We've seen good margins hold up into this year.

Positive backlog gains right, we had very good margins on what we've been signing to the point that margins sustain at the higher than these long term average margins you would expect that enhance value to improve as we sell more contracts right. So anything that is in.

Sold at this point in time, we assume reverts back to this long term average we have seen volatility continue you've seen a good margins hold up into this year, So I'd say theres probably.

Daniel L. Eggers: So I'd say there's probably, in my mind, a bit of opportunity if we can sustain these market conditions. And the commercial business has just done a tremendous job taking advantage of the market but also helping our customers. The volatility is disruptive to them. So our ability to sign contracts and provide them with long-term certainty about their energy costs is really valuable for them. And it's been a.., a good relationship for sure.

My mind a bit of opportunity if we can sustain at these market conditions.

The commercial business has just done a tremendous job taking advantage of the market, but also helping our customers to volatility as disruptive to them. So our ability to sign and provide them long term certainty to their other energy costs is really valuable for them and it's been at.

A good relationship for sure.

Neal Calton: Okay, and then, yeah, sure, please, yeah. I was going to say that it could be pointed out that we're probably a little conservative here in returning back to historical margins as opposed to resetting margins. But there's probably a flavor of conservatism throughout the materials, as Dan has covered, and that's just, we anticipated that you or someone else would raise this question. We just use the historicals as a plug for right now until we see how the market continues to evolve. Yeah, that's, um, that's what I thought. I just wanted to make sure that was the case.

Yes.

Yes sure.

No I was going to say anything I don't think it could be it could be pointed out that we're probably a little conservative here and resort and returning back to historical margins as opposed to resetting margins, but there's probably a flavor of conservatism throughout the materials as Dan has covered and that's just.

We anticipated you would you or someone else would races question. We just used to historically for a plug for right now until we see how the market continues to evolve.

Yes.

That's what I thought I just wanted to make sure that was the case and then in terms of the growth or how should we think about I think it's like two.

Daniel L. Eggers: And then in terms of the growth there, how should we think about it? I think it's like 200 terawatt hours is sort of your base. I mean, how do you think internally about the growth longer term there? Meaningful, or should we think about it as kind of being in that range for the foreseeable future?

200, terawatt hours as sort of your base I mean, how do you think internally about the growth longer term there.

Meaningful or should we think about it as kind of being in that range for the foreseeable future.

Joe Dominguez: Well, you know, I think that gets into the question of operations. We've already announced some; we have others that we're looking at. We're looking at some other fairly material opportunities to increase the number of megawatts that we produce and then anything that would happen from an M&A perspective. We're not going to build more, you know. So that's it's really how we optimize the existing fleet, which is already running at a pretty high capacity factor.

Well I think that gets into the question of operates.

Already announced some we have others that we're looking at.

We're looking at some other fairly material.

Opportunities to increase the number of megawatts that we produce and then anything that would happen from an M&A perspective, we're not we're not going to build.

More nuclear.

So that's it's really it's really how we optimize the existing fleet, which is already running at a pretty high capacity factor will look at op rates M&A opportunities and possibly some unique opportunities that we have to bring megawatts. So that's.

Daniel L. Eggers: We'll look at upgrades, M&A opportunities, and possibly some unique opportunities, three megawatts on. So that's, I think this is a neighborhood we're going to be talking about. Neil, on the retail side of the house, I think that we have been optimistic in our ability to grow. We've been a consolidator in retail for a long period of time, so I think when things that fit our portfolio could be added to our volumes.

I think this is a neighborhood we're going be in for a while.

Yeah, Okay retail side of the house I think that.

We have an opportunistic and our ability to grow we've been a consolidator.

Retail for a long period of time, so I think when things that fit to our portfolio could.

Joe Dominguez: I think the team always challenges themselves on the profitability of the customers and the margin gains that we're looking at, right? So we're going to balance all those pieces as we go forward, making sure that it's not just volume driven but profitable for the organization. Okay, perfect. Thank you. That concludes our Q&A session today. I would now like to turn the call over to Joe. Well, again, it's been a longer than usual call. We had a lot to go through in terms of the evolving marketplace, Constellation's strategy, and the change in guidance that we're providing.

Could be added into our volumes I think the team always challenge themselves on the profitability of the customers and the margin gains that we're looking at right. So we're going to balance all those pieces as we go forward.

Making sure that it's not just volume driven but its profit to the organization driven.

Okay perfect. Thank you.

That ends our Q&A session today, I would now like to turn the call to Joe.

Well again, it's been a longer than usual call. We had a lot to go through in terms of the evolving marketplace constellation strategy and the change in guidance that we're providing I appreciate again, all the positive feedback.

Joe Dominguez: I appreciate, again, all the positive feedback. We look forward to continuing to deliver on the promises that we make to you. I'm so looking forward to the first quarter call.

We look forward to continuing to deliver on the promises that we made to you. So looking forward to the first quarter call and with that I'll end it and thank you again for your time and attention.

Operator: And with that, I'll end it. And thank you again for your time and attention. Ladies and gentlemen, this concludes today's program. You may all disconnect. Everyone have a great day. Link in the description Consider subscribing

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program you may all disconnect everyone have a great day.

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