Constellation Energy Aktie

Good morning, ladies and gentlemen, and welcome to the Constellation Energy Corporation Second Quarter Earnings Conference Call. [Operator Instructions]

As a reminder, this call is being recorded. I would now like to introduce your host for today's call, Tim Flottemesch, Vice President, Investor Relations. You may begin.

Thank you, Kevin. Good morning, everyone, and thank you for joining Constellation Energy Corporation's Second Quarter Earnings Conference Call. Leading the call today are Joe Dominguez, Constellation's Chairman, President and Chief Executive Officer; and Shane Smith, Constellation's Chief Financial Officer. They are joined by other members of Constellation's senior management team, who will be available to answer your questions following our prepared remarks.

We issued our earnings release this morning along with the presentation, all of which can be found on the Investor Relations section of Constellation's website.

The earnings release and other matters, which were discussed during today's call contain forward-looking statements and estimates regarding Constellation and 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 material and comments made on the call. Please refer to today's 8-K and Constellations of our SEC filings for discussions of risk factors and other circumstances and conditions 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 non-GAAP measures and the nearest equivalent GAAP measures.

I'll now turn the call over to Joe.

Thanks, Tim. Good morning, everyone. Thanks for joining our call and for your continued interest in Constellation. We have got a terrific update for you today: strong results, an increase in guidance, positive regulatory developments and good progress on strategic transactions. But as always, we want to start off with the most important part of our business, our people.

First, let me begin by recognizing [ Bob Wallace, ] who this week retired from Constellation's Board after more than 25 years of spectacular service to Constellation and its predecessors as a Board member. From Constellation's early years as a stand-alone company through our time as part of Exelon and in the years since our separation, Bob has played a critical role in helping to position the company for the long-term success we enjoy today. He is one of a kind. On behalf of all of us at Constellation, I want to thank Bob for his leadership, his guidance, his friendship and his dedicated service. We wish him all the best in retirement. God speed, Bob.

Next, I want to thank the women and men of Constellation for delivering another strong quarter operationally and financially. During the mid-Atlantic heat wave ahead of the 4th of July holiday, our employees delivered, achieving a nuclear capacity factor above 99%, while safely managing our dispatchable generation fleet through challenging operating conditions as the new organization came together effectively. Their dedication and execution helps sustain grid reliability when our customers and communities needed it most.

Constellation is a special company, and we pride ourselves in making our company a place where people want to spend their career doing important work for America. So we're especially gratified that Constellation has been named a Great Place to Work for the fourth year in a row. As you know, this certification is meaningful because the recognition can only be earned through the direct input of our people. I'm also pleased to report to you that for the first time, Constellation has been recognized as the world's top business for people with disabilities. And finally, we were extraordinarily pleased to receive the Points of Light honor as one of the nation's 50 most community-minded companies based upon the positive impact we make every day through volunteerism and investment in our communities.

Now I know that some may think that these awards and recognitions are nice but maybe not quite as important as the financial and operational results that we'll talk about in just a moment. We don't see it that way. We think our values are the most important things. And when I talk in a few minutes about what it takes to restart Crane and get the overwhelming public support, which we have, and doing it in a place known for the worst moment in U.S. nuclear history, then I think you will come to understand why we believe our durable community values matter so much to our business.

Now turning to the quarter and our financial results. We delivered second quarter GAAP earnings of $1.42 per share and adjusted operating earnings of $2.55 per share. Given our team's strong commercial and operational performance year-to-date, we are increasing our operational earnings guidance range by $0.50 and to $11.50 to $12.50 per share. Our midpoint is now what used to be the top end of the guide, and we still have many opportunities to deliver more value this year. Shane will talk through the details in his remarks.

Since our business and earnings outlook in March, we have made meaningful progress across several key focus areas, reinforcing our confidence in delivering long-term value for our owners. In March, I candidly shared that we were behind our targeted time line for completing long-term agreements due to new uncertainty in the regulatory environment. I told you that we were hopeful that PJM under FERC's oversight would move quickly to provide needed clarity so that work critical to our nation's future might proceed forward.

I know that many were skeptical that reforms could be accomplished quickly and feared that the PJM process would drag on for years, something we have unfortunately seen in the past. But those concerns have not materialized. Instead, we are seeing PJM prompted by FERC move at the necessary speed. And while additional work remains for PJM to get the details right, I am pleased to report that the progress is giving customers greater confidence to evaluate long-term solutions and move forward with planning and contracting activities.

Since the last call, we have signed approximately 920 megawatts of long-term nuclear deals that are consistent with our view of long-term value. These contracts have an average duration of 18.5 years and are with investment-grade customers. Now as we talked about and as I explained to you last quarter, we will continue to follow our customers' lead on how and when their agreements are disclosed so that they may protect their procurement strategies.

Turning to Crane. Important progress has also been made on the restart. During the quarter, the NRC approved the Crane new fuel licensing amendment request, clearing the path for the receipt of new fuel and representing another significant milestone towards returning the facility to service in the second half of 2027. In addition, FERC granted the waiver request to transfer the capacity injection rights from our Eddystone facility, which is slated to close to Crane. We expect that this transfer will help clear many of the transmission contingencies identified in PJM's initial deliverability review and will pave the way for Crane to deliver full value to the grid.

Further strengthening the value and unique long-term durability of our nuclear fleet, we continue to extend the lives of our clean energy centers. During the quarter, we filed subsequent license renewal applications for both the Ginna and Nine Mile Point 1 clean energy centers. These extensions were made possible by Governor Hochul and the New York Service Commission, recognizing the value of clean, reliable nuclear energy and extending the ZEC program, advancing our strategy to preserve these critical assets for New York and for America. As a reminder, these programs and license extensions mean that Constellation is truly in a unique space with the vast majority of our power generation secured through 2050 and beyond.

Integration with Calpine is progressing well, and we are seeing strong collaboration across the combined organization as teams identify opportunities to create additional value for you. In addition, we're pleased to have reached an agreement with LS Power to sell the Brazos Valley Energy Center. Following regulatory approvals and closing, the sale will satisfy the final DOJ requirement tied to the Calpine acquisition. The fact that smart private equity buyers with long track records and competitive power markets are willing to pay over $1,400 a kW for Texas assets in a soft ERCOT market should tell you everything you need to know about the value of the efficient gas fleet that we now own.

Finally, we continue to execute on our capital allocation strategy. Year-to-date, we have deployed approximately $2.2 billion toward opportunistic and accretive share repurchases. Shane will talk about it, but we already are seeing upside to our earnings from these buybacks.

Turning to Slide 6. As I mentioned at the outset, we executed this quarter on 920 megawatts of long-term contracts for nuclear power. While I can't disclose pricing, what I can say is that the deals recognize the value of existing clean and reliable nuclear energy as a premium product. After a successful quarter in signing deals, we have now contracted roughly 30% of our clean baseload output under long-term agreements and our transactional pipeline for future deals is both robust and active.

Taking an additional moment on the deal that was announced this quarter with our partner, Walmart, I wanted to mention that Walmart has a long history of supporting clean energy development. But this agreement represents their first nuclear power purchase agreement and the first transaction of its kind for a major retailer. Walmart is helping to define how corporate customers think about nuclear energy, reflecting a growing recognition that achieving ambitious decarbonization goals requires access to around-the-clock carbon-free generation. This transaction is only the beginning of a wonderful partnership with this iconic American company. The Walmart deal taken together with the others this quarter reinforces the broad appeal of our products and capabilities to customers of all kinds.

Moving to Slide 7. I want to provide some additional context on regulatory developments that are improving the backdrop for customer contracting. In June, we received strong validation from FERC, which made clear its desire to move more quickly in establishing new pathways for serving large loads. FERC ordered every RTO to justify how their existing tariffs provide for the just and reasonable interconnection of large loads to the grid or propose revisions to their tariffs. FERC also called balls and strikes on the rules for new transmission services for co-located loads and directed PJM to explain why they cannot make those services available more quickly.

Beyond its support for exploring co-located solutions and pushing for speed in resolution, FERC has also demonstrated a willingness to consider innovative approaches that removed barriers to economic growth, including studying generation and load together at a common point of interconnection, something that Constellation has advocated. Initiatives like these could create a meaningful pathway for customers to access affordable solutions more quickly while maintaining reliability and supporting broader economic development objectives.

As these frameworks develop, the value of existing generation and infrastructure will become increasingly apparent. Our fleet is uniquely positioned to help meet these objectives by leveraging assets that are already operating, connected to the grid and capable of supporting growing customer demand more efficiently than many other alternatives, even as we bring on new capacity to meet the growing demand.

Last week, PJM released proposals for the reliability backstop procurement or RBP, and the Interim Resource Adequacy Service, or IRAS. While aspects of PJM's proposals, need clarification and further consideration, we are now on path for resolution and certainty, which will allow customers and suppliers to make investment decisions with greater visibility and confidence in the market rules. PJM has also established a clear target of 6.8 gigawatts for the RBP, and we are currently in the bilateral matchmaking process, which is intended to pair customers with new supply and reduce the amount of capacity ultimately required through certain central procurement. PJM has proposed conducting the procurement auction this fall with results expected by year-end.

Overall, we are pleased by the pace of progress. As those who have followed PJM for years understand, the speed at which FERC is requiring PJM to move is unprecedented, and many of the concerns we raised earlier this year on that front are being addressed.

On a parallel path with the PJM and FERC processes, Constellation and other stakeholders are urging EPA to make clear that any curtailments ultimately directed by FERC tariffs should be excluded from the 50-hour annual limit for the use of backup generators at data centers. This could unlock meaningful optionality for our data economy customers while preserving reliability and reducing energy costs for all customers.

Remember what we've discussed before. We have plenty of unused capacity in generation and in the wires grid over 99% of the hours of the year. We have a peak capacity concern, not an energy concern. The secret sauce here is to deal with a handful of peak hours that present reliability concerns and at the same time, to harvest the stranded capacity that exists every other hour of the year. If we do this right, then we can actually bring on these critical technologies and lower energy costs for everyday families and businesses. In conclusion, we still have some wood to chop here, but the direction and the speed are very promising. We urge PJM to keep it up.

Turning to Slide 8. I'm going to conclude my remarks on this slide and return back to the point that I made at the top about business values and our focus on communities. This slide talks about the fantastic progress we've made at Crane by creating a win-win-win for Pennsylvanians, the local communities and our customer. I'm not going to drain the slide, you could read the words yourself.

Instead, I want to draw a parallel between what it takes to build, operate and start nuclear plants with what it takes to build, operate and start data centers. And the basic point that I want you to consider is this. Like in the case of nuclear, the public reaction we are seeing to data centers in terms of moratoriums or opposition in places can be strong at times. No one can deny that. But as the Crane example shows, the concerns underlying the opposition to data centers are far from unsolvable. Indeed, I would suggest to you that if we can restart Crane at Three Mile Island and earn overwhelming political and public support, then we can certainly earn the public support to build a 21st century data economy in our communities. It comes down to the trust we earn with the right business values focused on making our communities better and stronger. It's all about the things on this slide: jobs, tax base and community contribution. When it's done right, it works.

With that, I'll turn it over to Shane.

Thanks, Joe, and good morning, everyone. Turning to Slide 9. We earned $1.42 in GAAP earnings per share and $2.55 in adjusted operating earnings per share in the second quarter, which is $0.64 higher than the second quarter last year. The higher year-over-year quarterly results are primarily attributable to accretion from Calpine, higher capacity prices in PJM and strong performance from our commercial business that has once again delivered value through higher realized customer margins and from portfolio optimization during periods of volatility. This strong performance has contributed to our improved full year outlook, which I will cover shortly.

Our favorable quarterly drivers were partially offset by higher planned nuclear refueling outage days and the timing of revenue recognition from the Illinois ZEC program. As we've discussed on prior second quarter calls, Illinois ZEC revenue timing can vary year-to-year. This quarter, we recognized $85 million of bank credits compared with $200 million last year. This timing item was already reflected in our 2026 guidance and has no impact to full year results. This true-up also reflects the final planning year adjustment before the Illinois ZEC program ends in May of 2027. Slide 19 of the appendix provides additional details on the program.

Moving to Slide 10. Our nuclear fleet delivered a 93% capacity factor and generated 40 terawatt hours of reliable, low-carbon electricity while completing 6 planned refueling outages. As expected, the quarter included additional planned outage days, which reduced our capacity factor by 1.8% compared to the second quarter of 2025. Our 23-day average refueling outage duration in the quarter included the successful implementation of our turbine upgrade at Byron Unit 1. And even with that longer outage, the team still outperformed the industry average duration by 40%. This outstanding result in a quarter with elevated planned refueling activity speaks to the consistency, discipline and expertise of our nuclear operations team that performs this work efficiently and most importantly, safely.

Turning to Slide 11. We are raising our full year adjusted operating earnings guidance range to $11.50 per share to $12.50 per share, up from our prior range of $11 to $12 per share. Strong commercial execution combined with the benefits of our disciplined capital allocation gives us the confidence to raise the midpoint of our full year guidance by $0.50 per share just halfway through the year. We will revisit our full year outlook in the Q3 call as we put the summer behind us. We have reflected these updates in the modeling appendix on Slide 25.

Turning to Slide 12. We continue to operate from a position of financial strength, supported by our strong investment-grade credit ratings. That financial strength gives us flexibility to best serve our customers, invest in our business and also return capital to shareholders in a disciplined way. Since the first quarter call, we returned just under $2 billion of capital to our owners through share repurchases. Together, with the $335 million we shared on the Q1 call, we have allocated about $2.2 billion to accretive share repurchase in the 4 months since our business and earnings outlook at the end of March. We will continue to be opportunistic as we deploy the remaining $2.8 billion of available authorization.

Today, after a very competitive process, we announced an agreement with LS Power to sell the Brazos Valley Energy Center for $860 million or about [ $1,420 ] per kilowatt. It was great to see such a high level of interest for the asset in spite of recent ERCOT weakness. It was clear from a very competitive process that buyers recognize the long-term value of gas-fired assets with the potential for even higher utilization rates. Once approved, this divestiture will satisfy the remaining DOJ settlement obligations for the Calpine acquisition.

In total, the assets that were required to be divested by the DOJ are expected to generate approximately $5.9 billion in gross proceeds, which added nearly $1,200 per kW basis reflects a healthy premium to the implied $960 per kilowatt purchase price of the Calpine assets.

Moving to Slide 13. As discussed in March, we see meaningful opportunities to grow our earnings and free cash flow over time. We have already started translating a few of those growth levers into tangible contributions. The sensitivities provided in March were informed by active discussions across a diverse set of customers. Now that we have executed nearly 1 gigawatt of nuclear PPAs within the range contemplated by this view, we thought it was worth revisiting this table. While the agreements announced today have later start dates and are not expected to materially impact 2029 earnings, they provide additional visibility into sustained growth in our base earnings over time.

Separately, we are also updating our 2029 capital allocation sensitivity range to reflect the share repurchases we have completed to date. The updated range now includes a [indiscernible] of $0.20 per share with potential of upside of greater than $0.75 per share. The low end reflects the benefit of the repurchases already completed, while the high end reflects the meaningful optionality we still have under our buyback authorization and our ability to continue deploying capital when we see attractive growth opportunities.

Last, I would also like to highlight an update to the nuclear production tax credit, as shown on Slide 17 in the appendix. Following the IRS publication of the 2025 inflation adjustment, we updated our forward PTC strike price assumptions, incorporating a 2.8% adjustment for 2025 and continuing to assume 2% inflation annually in 2026 and beyond, the projected 2030 PTC strike price will increase from $49.88 to $50.88 per megawatt hour. This change will increase our view of 2030 base earnings by approximately $0.30 per share. More broadly, the PTC's inflation linkage continues to provide upside to our base earnings outlook should inflation exceed our 2% long-term assumption and is another factor supporting our goal of sustaining double-digit base earnings growth into the 2030s.

With that, I'll turn the call back to Joe.

Thanks, Shane. To close out today in practical terms, we're seeing the benefits of speed in the regulatory process. Our customers are gaining more certainty every day, and we're hopeful that PJM and FERC could remain on track and deliver regulatory clarity by year-end.

Our team also is actively engaged with customers and policymakers to explore different options for connecting new large load to the grid, and our conversations are strong. We're focused on what we do best, operating our assets at world-class levels, helping our customers achieve their energy and sustainability objectives and creating long-term value for our owners, customers and the communities where we live and work.

Thanks for your time today, and the team is now ready for your questions.

[Operator Instructions] Our first question comes from Nick Campanella with Barclays.

So it's great to see the new long-term nuclear deal. I guess just can you kind of talk about if it's acceptable in your terms of long-term value, just price and term, I guess, how do we think about the customer? It sounds like it's a hyperscaler, but is this just more of a traditional C&I? And is it one deal that's incremental to Walmart? Just how to think about that?

Yes. Look, I'm not going to -- as I said, I'm going to adhere to the rule that we're going to let the customers explain their deals and announce them to the extent that they choose to. But Nick, it is consistent with our view of long-term value for the nuclear fleet. And I think this is one of many opportunities we're continuing to see in the market.

Okay. Great. And then you mentioned being engaged in the bilateral process in PJM. Can you just give detail, obviously, that'd be new capacity that would net against the 6 gigawatt figure, but could hybrid deals be in play, if you could work to address the nonpeak issues? And maybe talk about the 5 gigawatts of new capacity that could be eligible that you highlighted on the last call.

Yes, I'm going to -- Dan Eggers is kind of overseeing a bit of that. So I'm going to ask him to chime in here. But look, the process, the bilateral process is confidential, and we'll keep it that way. But you should assume that all of the opportunities we have to add megawatts are being talked to with customers in combination with our existing capabilities. Think about it. I mentioned this on the call. The best outcome for America is to take advantage of the stranded capacity that exists in the U.S. grid. That's wires and generation capacity. That's fastest and it also reduces costs.

How does it reduce cost? We know on the wire side, all the fixed cost elements of the system get spread out over more hours of usage that brings the per hour usage rate down. So that's how it works on the wire side. On the energy side in competitive markets, what it means is it puts downward pressure on capacity prices over time. Remember, the capacity price that generators seek in the PJM market or the so-called missing money is the difference between what it costs them to build and operate and what they're receiving in energy markets. So the more the existing generators fully utilize efficiently the -- are fully utilized by customers, but less dependent they are on a big capacity payment. We've seen that over the years. As energy and ancillary services go up, capacity prices go down.

So all of the incentives here where everyday families and businesses are aligned with tapping into this stranded capacity. Our customers know that. At the same time, we do have to manage the peaks. That could be managed with batteries, with demand response, with peaking resources, other forms of generation could be a part of that. But they still have to figure out, not just the peak, but what they're doing every other hour of the year. That's where our fleet becomes extraordinarily valuable because it's a fixed price, clean energy resource that they could count on for decades, and that's what they want.

So this kind of idea where we're trying to -- or this notion that existing and new or completely bifurcated and don't come together, it's just not the reality of the way customers look at their procurement strategies. The backstop auction is a part of that. But it's also part of what we're doing every single day in our conversations with customers.

Dan, I said I was going to hand it over to you, and then I went on and talked about it.

It was great. I just -- Nick, what I would add to what Joe said, right, is that when we put forward the megawatts in the interconnect queue, it was a full range and anywhere from up rates on the baseload side, the batteries to peakers. Our motivation here is consistently to provide our customers with what they need, right? So solutions are important. The bilateral market is clearly a place where we can get those things done. We'll see how that works out and what's left to address in the RBP when we get there.

Yes. Nick, I'll just come back. Dan, thank you for that. And I'll just come back, Nick, to another big piece of this. I think what EPA ends up doing here and its clarification process of its rules for the backup generation at sites is really going to matter because as resources have to be curtailed to address these few peak hours, the utilization of those backup generators may be the most effective way for us to kind of address the peak demand and do the things we're talking about in terms of really taking advantage of the stranded capacity in the system and lowering prices for customers.

Our next question comes from Steve Fleishman with Wolfe Research.

So a couple of questions on the new contracts. So it's from nuclear. So most of your nuclear is in PJM. So should we assume these are in PJM?

Steve, we're not really going to pinpoint the origin. But yes, you're right. Most of our stuff is in PJM.

Okay. And just I think there have been some concern that with the connect and manage or IRAS like whether customers can contract for existing like whatever contracts you have, have they kind of incorporated kind of whatever outcomes could come out of that?

Yes. It's -- Steve, I think I probably droned on about it a bit long just a moment ago, but just let me give you a specific example. Let's suppose that in the context of connect and manage, a customer is deciding to use batteries or further rely on backup generation. They could do that and comply with what we see as the proposed rules going forward. But they'll still need to buy power, they'll still need to buy energy really for all of the other hours they're not managing, the other 99%.

And so that's where the existing resources are going to be able to provide quick solution sets. Otherwise, we'd be waiting for every data center to wait for every megawatt to be interconnected and built. And if that's the case, we might as well hand over the keys to China. We're never going to build this economy if the outcome is going to be, we got to wait for new power plants to be built before we can connect any data center.

It's clearly not what FERC is thinking about. It's clearly not what Secretary Wright is thinking about. What we're trying to do is manage the peaks, a lot of devices to do that, but the bedrock of building out at least this early phase of the data economy is going to roll out heavily in my view on existing generation as it has.

Okay. And then one more question. Just your range of the potential value of contracts, I mean, I think it's $20 to $50 a megawatt hour, pretty wide. Can you give us any sense of how things are trending within that range?

Steve, it's Shane. I mean, again, to the point of trying to protect customer sensitivity around the exact pricing, we're going to keep that range as it is. I mean I think it is important to note that when we provided that disclosure in March, we were obviously talking with a number of different counterparties and the transactions all fit that profile. So I think we're comfortable with keeping that sensitivity as it is.

Our next question comes from David Arcaro with Morgan Stanley.

I was wondering if you could -- maybe shifting over to the ERCOT market. Wondering if you could give your view on the Batch Zero process. Do you have projects that you're partnering within that program? I'm curious how you see that evolving from here?

Yes. Let me turn it over to Dave Dardis for comments on that. The answer is yes. We also have, by virtue of the acquisition of Calpine, some projects that we're really early first movers, I think, in Texas, where we've gone through necessary approvals, and we're proceeding with clients on it. But some of our sites are in the Batch Zero process. And so we're evaluating what it means to answer the questions presented by the Governor's letter, and we're hoping to see activity here from ERCOT and the Texas PUCT to clarify those things soon.

David, anything to add?

I guess all I would add is, Governor Abbott has been very clear that he is a champion for responsible data center development in the state of Texas. He understands its importance for Texas competitiveness and ultimately, American competitiveness. So I don't think anything has changed there where he said Texas should be the epicenter of AI. I don't think his view has changed on that.

But like all these folks, particularly coming into the midterm elections, they want to be responsive to their constituents. And Governor Abbott has asked for some pretty reasonable information to be included as part of Batch Zero. We think all that information can be provided quickly, and we don't think it should be a meaningful delay and ultimately moving through that process and getting answers quickly. So we see this as a temporary measure here that we think is manageable by the industry, and we look forward to working with the Governor and the PUCT.

And David, I think some of the answers here are going to be pretty darn good. There's some fanciful kind of numbers out there about the use of, for example, water and things. Some of the solutions that we're seeing for water usage from some of our clients are -- put order consumption on the level of a restaurant or a large store for data centers. So I think it's going to be an eye opener to people. I think they're the right questions to be asked, not all data centers are the same. So maybe this is intended to ferret out those that have been less efficient with water resources. But I think there's a lot of good answers out there.

Absolutely. Yes, that's really helpful. And curious if you could also maybe give your view on the outlook for just on the power market side of things for ERCOT outlook for power prices and spark spreads from here. We know the market has been under pressure. And curious your view on that and maybe also just the battery storage, how that's impacting the market from here, too.

Yes. Thanks for the question, David. This was one that came up last quarter. I think, Jim and Andrew talked a bit about it. What we're seeing in Texas is what we fully anticipated. The the battery storage and other things you're talking about started earlier and they're arriving on the grid earlier than the load is. And so we talk a lot about data centers in Texas. But if you really take a look at where the construction of that build-out lies, you'd find that the vast majority of the data centers that are anticipated are still at some stage of construction and not on the grid.

So Andrew, I think, was the one that mentioned, we would expect to see, dependent on weather, and if you don't have the right weather, you're not going to see a lot of price action in taxes. And that's what we've seen this year. It was completely, completely expected by us at Constellation, completely expected by Calpine, and we positioned ourselves in the market accordingly. I think the market will start to tighten up as the data centers get built and you start to see the market come into more or less equilibrium.

Our next question comes from Jeremy Tonet with JPMorgan Securities.

Just want to turn to Slide 13, if I could. And looking at the earnings and free cash flow before growth opportunities in '29. And I think the capital allocation is bolded on the table. I think that might be new this quarter. I saw the share repurchases there. But just wondering on the growth investment side, is there anything kind of new to think about with regards to this table here?

Jeremy, it's Shane. So in the initial disclosure back in March, we gave -- we didn't give a floor, we kind of gave a $0.50 plus as an upside. And so what the $0.20 as a floor is meant to represent is the progress we've made in the last 4 months from those accretive $2.2 billion of buybacks. So I wanted to establish that floor. Naturally, that raises kind of our view of the higher end and we'll see what's beyond. From a growth angle, obviously, we continue to explore, but there's nothing that we've disclosed that would directly inform that range at this time.

Got it. That's helpful. And then just wondering about customer conversations in general, how the tone might have changed over time here at PJM. You're seeing some kind of improvements in energy prices, capacity prices later dated here. And wondering how that's influenced conversations even with like existing large load and the interest in derisking their power exposure, price exposure over time. Just curious how conversations might have changed over time.

Yes. Jeremy, I feel like I've been talking about it for 20 years, but it's probably more like 2 years. The worst thing for deal execution is ambiguity and uncertainty. I think I've said -- and for those of you who've been on our calls for a while, remember, we were talking about which components of the transmission service should large load pay and be excused from. And I think I offered just -- you got to just tell these people what it is and then they could plan around it. I think what we'll see is very shortly the entirety of the data economy investing what could be upwards of $1 trillion in infrastructure annually when you put all the pieces together.

People want to get this stuff going. You've read the Morgan Stanley report the other day, the returns for the investments they're making in data economy and these AI models are proving out. What our customers want is to understand the rules of the road. And then they'll manage around them. Some things need to be done better, PJM's connect and management program needs a lot of improvement. But the reality is, at the end of the day, the rules and rule clarity are going to be the thing that are going to encourage deal flow for us and completion of these nation critical projects for these large customers.

So just over the course of this year as we've been -- when we started the year, we really started from a position where the executive order that the President signed with the hyperscalers and the pledges they signed, people were trying to figure out what that would look like in actual practice. A lot of really good work has been done. And although we don't agree with everything that PJM has proposed, we applaud them for providing clarity that is needed here. And quite naturally, that is fueling kind of a resumption of contracting activity. And I believe that once we do get clarity, we're going to see here in PJM what we've seen in many places where deal flow will kick off with a bit of a bang.

Our next question comes from Sophie Karp with KBCM.

Right. Congratulations on a good quarter and announcements here. I was wondering, what do you guys see as the next step in the co-location process in the PJM? Will there be like a definitive document coming out of PJM that will be the final and authoritative, I guess, document in this process as we establish the final clarity for everyone and when will that be?

Yes. Sophie, as you know, Constellation has been turning up the heat to get that moving more quickly. We've seen some extensions of time to answer that. In short, we think that we're going to see rule clarity in the first to second quarter of '27 in terms of co-location, far ahead of where PJM might have been before where they were targeting 2029. So this is an area where FERC has put some good pressure on PJM and the RTOs to provide some clarity. We have some ideas. One of those things I mentioned in my prepared remarks was this notion of modeling load and generation at the same point of interconnection. So there, really what I'm talking about is adding batteries, adding other generation resources at existing operating generating facilities, and then co-locating a load there. So you might have a data center next to an existing power plant, but that power plant has supplemental capacity capability through the incorporation of batteries and other devices.

We think those hybrid solutions of mixing new capacity resources, existing generation and co-locating that with load, that's the promise we see going forward. We still -- that's moving a little bit slower still than we wanted, but a lot faster than was anticipated at the beginning of the year. But in answer to your question, I think with the 90-day extensions, we're expecting a response from PJM here in about the November time frame. I'm looking at David. Does that sound right, David?

That's right.

And then an order from FERC in the first to second quarter of next year.

Great. And then just a higher level question. You've been allocating capital to share buybacks quite a bit, and that makes sense given the variation and the opportunistic nature of that. How do you think about jump starting the cycle of investing organically into maybe new builds in addition to the -- let's say, nuclear start you're working on. Is there a place in the U.S. that you think is where the economics work for that right now?

We're having some good conversations in New York about the future of nuclear. But there's nothing right now that I would describe as imminently on the horizon for investment in new nuclear. What you're seeing us do and what you'll see us continue to do here is to prepare our sites for new nuclear development because that work's got to get done anyway. The permitting, the early site permits that are needed. So we want to, when we've been able to figure out the construction schedule and pricing and the customers on the other side of that, we want to have a bunch of different locations where customers could come. New York is a very exciting opportunity for us, and that's something we're pursuing with Governor Hochul and her administration. But it's not yet going to show up on financial disclosures for capital. It's not that imminent.

Our next question comes from James West with Melius Research.

Joe, you've been kind of somewhat of alone, but kind of clear voice here in the market about some of the stranded generation assets or underutilized assets, while a lot of people have been beating the drum on new generation. And I think you've laid out your reasons why already. But I'm curious, from the customer standpoint, as you're talking to them about this latent capacity. Are they -- what's their view on that? Are they willing to say, "Hey, that's here, it's ready to go. We'll build infrastructure next to it or near it." And then are they also talking about, "Hey, are you willing to build a little more capacity, but we'll start with the existing capacity?" Kind of how is that conversation evolving with the customers?

Definitely all of the above. One of the things that it really has just been remarkable is the level of sophistication that our clients now possess about the grid is as good as the energy companies themselves. That, quite honestly, not to insult anybody, wasn't true 2 years ago. And so this kind of combination of resources and what batteries could do, what demand response could do, all of our sophisticated customers understand that. .

And I appreciate you give me a bit of a shout out for being a clear voice. But I think the most powerful voice on this subject has actually been Department of Energy Secretary, Chris Wright, who has been saying exactly what I've said on these calls now for 3 years. And that's been now backed up by study after study from Duke and Brattle and many others who have talked about the same thing.

So sometimes when we talk about capacity, it is for the layperson, easy to confuse that with energy and it gets really complicated pretty quickly in our business. But our clients understand it. And what they seek from us is all of the above, really. I think you're seeing that basically in our contracting where we're relicensing facilities that are adding life. We're talking about uprates with clients, that's exciting. You saw that in the Walmart deal. But it doesn't operate to the exclusion of recognizing that the existing megawatts have an important role to play in this ecosystem.

Right. Got you. And then you mentioned batteries as well. Are we -- has the battery technology evolved to the point now where real significant long-duration storage is available to help backstop the grid?

I think batteries are already doing that. We're talking a bit of that about the effect we're seeing in Texas of batteries. Now that's -- when we talk long duration, you got to get pretty into the weeds here. But I'm talking about it, just to be clear, about 4-hour batteries, and we continue to think that 4-hour batteries have a very big role. And as you know, Calpine has been one of the U.S. leaders in terms of the development and integration of those batteries. And now at Constellation, we're drawing on that substantial expertise.

Our next question comes from Julien Dumoulin-Smith with Jefferies.

Look, a couple of clarifications here. Starting with bilateral, if you can. I know you said it was confidential, but can you speak a little bit to the timing, right, in as much as, obviously, the RBP is somewhat specific on when it goes down. How do you think about the time line here in as much as where are you in those negotiations vis-a-vis this potential RBP coming up in the next couple of months. Is it lagged by a couple of months here, thereafter, or is it even prior? How do you think about that and the considerations that may be playing out there?

Yes, Julien, and I'm sorry, I had intended to be clear earlier. But I think the RBP is one avenue, but it is not the exclusive avenue for customer conversations. And indeed, I think customers will consider whether they want to participate in that or do something completely separate, bilaterally separate as they've done now for a couple of years before this PJM process was even dreamed up. So I think kind of all of that is playing out.

What customers want to understand is, is what I'm doing in contracting space going to meet the requirements in a future PJM rule such that I could be assured that I'm compliant, right? And I understand what my backup and curtailment responsibilities might be. So as we get to some clarity here in terms of what PJM is proposing, they're able to do that. They're able to say, yes, I don't know exactly yet. It's not been rubber stamped by FERC. Rubber stamped is a bad phase here. But it hasn't been approved by FERC. But I understand what PJM is proposing, and now I could start crafting a strategy to meet any requirements that come out of that. The backstop is a piece of that. But it may not be that each client is going to depend on the backstop. It's just one other avenue for meeting the requirements.

Julian, if I would add to add. Contracts today, those are signed contracts. So if the question was, are we dependent upon something on the FERC decisions or PJM decisions. These deals are not dependent upon those outcomes.

Yes. Sorry, I didn't know that. .

No, that part was clear. No, no, no. No, that wasn't. But I appreciate you confirming it regardless. And I appreciate it. Actually, if I can pivot real quickly to the other side of the equation. Obviously, Illinois has a lot of interest. They've kicked off a process on nuclear procurement here this year. You all are an obvious counterparty here. And I suspect you don't want to negotiate this on the call per se. But can you speak to the time line around what the state is looking to do on procurement here in as much as, from what I understand, that includes operates as well as new nuclear. How would that time line play out in hand with anything else you have going on? And obviously, you have a CMC expiration here next year. Any considerations there and you'd care to share given where we stand today alongside the state's wider new nuclear emissions?

Well, I think the state has a process here where they're going to do an IRP and then ultimately, a procurement plan. And we'll have a voice in those things. We don't have anything separately that we're negotiating with the state of Illinois to be absolutely clear, we'll see what they come up with the IRP. We think New York is a wonderful template for what Illinois should be looking to do.

Ladies and gentlemen, this does conclude the Q&A portion of today's conference. I'd like to turn the call back to Joe for any further remarks.

Well, again, thanks for your continued interest in Constellation. Our people had really a spectacular quarter. And we look to finish off and have a spectacular year the rest of the way. I want to wish you all a safe rest of the summer and look forward to getting together at the end of the third quarter. Thanks again.

Ladies and gentlemen, thank you for your participating in today's call. This concludes the program. You may now disconnect. Everyone, have a great day.

Good morning, ladies and gentlemen, and welcome to the Constellation Energy Corporation First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this call may be recorded. I would now like to introduce your host for today's call, Tim Flottemesch, Vice President, Investor Relations. You may begin.

Thank you, Daniel. Good morning, everyone, and thank you for joining Constellation Energy Corporation's first quarter earnings call. Leading the call today are Joe Dominguez, Constellation's President and Chief Executive Officer; and Shane Smith, Constellation's Chief Financial Officer. They are joined by other members of Constellation's senior management team, who will be available to answer your questions following our prepared remarks.

We issued our earnings release this morning along with the presentation, all of which can be found in the Investor Relations section of Constellation's website.

The earnings release and other matters, which are discussed during today's call, contain forward-looking statements and estimates regarding Constellation and 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 material and comments made during this call. Please refer to today's 8-K 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 estimates in our earnings release for reconciliations between non-GAAP measures and the nearest equivalent GAAP measures.

I'll now turn the call over to Joe.

Thanks, Tim. Good morning, everyone. I hope you enjoyed a wonderful Mother's Day, celebrating the great moms in our lives. Thanks for joining us today and for your continued interest in Constellation. Our prepared remarks this morning will be relatively brief. We spent a good amount of time with you just over a month ago when we shared our business and earnings outlook, so we could be more efficient with your time today.

I'll begin by summarizing the key messages from the business update and then talk about the quarter, some of our generation development activities and the PJM regulatory landscape. First and foremost, I want to remind you that our long-term outlook is compelling with a base earnings growth rate that exceeds 20% through 2029, anchored by highly visible drivers that include the nuclear production tax credit, which grows with inflation, long-term contracts with high-quality counterparties and durable customer margins supported by the nation's largest commercial and industrial retail platform.

We also have conviction that we could grow the business at a long-term rolling 10% plus base EPS growth rate, which we see as a common characteristic of high-quality and well-valued companies. Further, our outlook is arguably conservative through 2029 with considerable levers to drive upside that are quantified on Page 13 of this deck. You will see that this is an updated version of Page 23 of the business update that we reviewed last month, which so many of our owners told us that they liked.

As Shane will cover in more detail, some of the opportunities include additional long-term offtakes for data center customers at our nuclear and gas plants as well as with customers wanting clean, firm and reliable power with price visibility, higher utilization of our gas fleet due to rising around-the-clock demand, positive gearing to higher than 2% inflation through the nuclear PTC construct, and finally, the benefit of higher returns on our strong and growing free cash flow.

The second big story line here is the mix of our base and enhanced earnings. The Calpine business brings high quality, visible earnings to Constellation, supporting our growth outlook and reinforces the value of bringing these 2 companies together.

Lastly, I would call out here the free cash flow outlook, which, upon reflection, we could have probably done a better job of when we provided the business outlook, but we've provided the updated numbers now on Page 13.

Much like the strong EPS growth, we see similar growth in our free cash flow outlook with the '26, '27 period producing a forecasted $8.4 billion and the '28, '29 period rising to $11.5 billion to $13 billion before the levers I just mentioned. We will have significant opportunity to productively deploy capital over the balance of the decade to drive value.

Turning to Slide 6 and the quarterly results. I want to, as I always do, first start out by thanking the women and men here at Constellation for their dedication and for delivering another strong operational and financial performance quarter.

We posted first quarter GAAP earnings of $4.49 per share and adjusted operating earnings of $2.74 per share. Based on our performance year-to-date and our outlook for the remainder of the year, we are affirming our full year adjusted operating earnings guidance range of $11 to $12 per share. Shane will cover the details in his section.

Since we last spoke, we moved quickly to get back into the market buying our stock in a pretty narrow window. Over the past few weeks, we have successfully repurchased approximately 1.2 million shares at an average price of roughly $285 per share for a total of $335 million of purchases. These purchases underscore our commitment to disciplined capital allocation and our confidence in the long-term value of the business.

The buyback was an intentional statement from management and our Board that we are excited about the growth opportunities ahead, but that at these prices, we see our stock as a compelling use of our cash.

We were excited to be named Barron's 2026 most sustainable U.S. company in the quarter, ranking #1 among the 1,000 largest publicly traded companies in the United States. This recognition is based on an evaluation of more than 230 performance indicators measuring how companies treat a broad range of stakeholders, including their employees, their owners, customers, communities and, of course, the environment. Being recognized by Barron's as the most sustainable U.S. company is a very, very big deal to us, and it validates our approach to doing business.

At Constellation, we have a culture of doing hard things and doing them well. Despite an increasingly challenging market environment for new development, this quarter, we successfully delivered 2 new generation projects to the grid, demonstrating our ability to execute and deliver when it matters. First, we placed the 105-megawatt Pastoria solar project into service. This solar project is next to a combined cycle machine of over 750 megawatts at the same location. And it's the first part of a combined solar and battery storage project that supports the California Department of Water Resources' goal of achieving carbon neutrality by 2035. And it further strengthens Constellation's leading position as the largest producer of carbon-free energy in the country.

Second, we commenced commercial operations at our 460-megawatt Penn Oak Creek natural gas peaking facility in Texas. Designed for rapid startup, Penn Oak Creek will provide critical peak demand support and enhance grid reliability during periods of elevated electricity demand. Together, these projects demonstrate Constellation's ability post the Calpine acquisition to execute on complex development efforts and deliver new generation that meets the evolving needs of both our customers and the grid.

On the transaction front, last week, we received PUCT approval of the net metering agreement associated with our powered land deal with CyrusOne at the Freestone Energy Center. This approval is an important signal to the market regarding expectations for colocated projects going forward. Construction is currently underway on the substation that will enable power delivery to the data center, which we expect to be energized in the fourth quarter of this year.

Turning to Slide 7. We are making good progress on regulatory clarity in PJM. PJM has put forward a market-based solution to address the incremental capacity needs driven by large customer -- large load customer growth, creating a pathway with options for customers to manage their capacity requirements and cost exposure. There have been constructive conversations with stakeholders since the release of the initial proposal. While we expect to see further refinements over the coming weeks, PJM has established a proposed time line for providing clarity on when it expects to vote on the final framework with the goal of submitting the proposal to FERC in June. Frankly, this is faster than we had hoped. And having this defined time line and a pathway to final rules will provide greater certainty for market participants as they plan and invest.

Clarity is critical to unlocking economic expansion across the Mid-Atlantic and Midwest regions by providing a clear path for new large loads to connect to the grid. We think this is a great opportunity for robust economic development in our states, providing the benefits of meaningful construction jobs, ongoing employment, property tax and local community support, while helping to advance the most important economic and national security we have as a country. We are also excited for the customers in our states, both residential and commercial, who are paying the high cost of fixed grid infrastructure. By bringing on these large loads and by being more dynamic in managing peak usage, we have a real opportunity to improve system utilization and lower the average hourly usage cost for all customers.

On the contracting front, customer engagement has varied as PJM works through these policy issues. As I mentioned during our last update, some customers have been willing to continue advancing project discussions and agreement negotiations while others have chosen to pause and wait for regulatory clarity. That's why I'm pleased to see PJM moving forward so quickly to address this need for clarity.

The backstop proposal needs to happen on the time line PJM has laid out, and PJM has to replicate that time line on the colocation document. Last year, there was a prevailing concern that Senate Bill 6 in Texas would significantly constrained data center development in ERCOT. Instead, once the requirements were established for colocating new load with generation, we began to see transactions come forward. We expect to see the same thing in PJM.

The bottom line is that customers want to get their data centers online as quickly as they can. They need regulatory clarity for that to happen. And once the options are understood, they will make the decisions that work for their specific needs. We will continue to work with PJM to help shape the rules to support economic growth, protect residential customers and to stabilize and perhaps actually lower cost for all Americans.

Turning to Slide 8. One point that has remained clear is that demand for additional compute and by extension, additional power, has not slowed from hyperscaler customers. In fact, projected spending levels for 2026 are nearly 75% higher than last year and continue to be revised upward. There is also a growing recognition that reliability must be supported and done in a way that does not burden existing customers. Constellation is well positioned to provide solutions for our customers. We have submitted approximately 5,000 megawatts of new capacity resources into PJM's interconnection queue, including unique nuclear uprates, new natural gas generation and new battery storage projects.

As customers look to contract new capacity to offset incremental demand at peak, we have a diverse set of projects that align well with PJM's proposed framework and can meet those needs. If a customer prefers to participate in demand response or enable participation through third parties, we can provide those solutions as well through our retail business. We are highly motivated to identify and provide workable capacity solutions for both customers and for the broader market. Ultimately, our objective is to unlock the full value of our clean, firm energy and associated attributes in a way that benefits all stakeholders.

Turning to Slide 9. While we continue to engage with customers and regulators in PJM, it is important to recognize that our opportunity to drive meaningful upside to our outlook extends beyond any single region. We have a demonstrated track record of delivering powered land solutions to customers in ERCOT, and we see additional opportunities across our broader fleet to build on that success. Importantly, we have sites with available land and a path to grid interconnection along with a proven ability to successfully navigate the regulatory framework, positioning us well to continue advancing customer solutions.

At our 3 data center projects in Texas, we have customers addressing their reliability commitments both by bringing firm backup generation to cover peak constraints and, in another instance, accepting full curtailability during times of grid stress. These gas adjacent powered land deals command a meaningful privilege in their own rate and importantly, they allow full access to the grid, so customers could pair them with purchases of firm carbon-free energy from great connected nuclear plants, and we are working with customers on those offerings.

Now before I turn to Shane, I want to share an observation about this slide and the Pastoria and Penn Creek development projects that I covered back on Slide 6. Obviously, all of this good work was underway at Calpine when we bought the company. And when we announced the Calpine transaction a little more than a year ago, we talked about the compatibility and complementary nature of the commercial and retail businesses. We talked about Calpine's industry-leading natural gas and geothermal assets. And of course, we talked about its terrific people. But we also shared with you that in the future we saw coming, Calpine would help to supplement Constellation's existing skills in new natural gas, solar and battery storage development as well as Constellation's abilities in connection with natural gas data center transactions. And as you reflect on the regulatory requirements in PJM and ERCOT and in other places, I trust that you can now see how supplemental development and commercial capabilities will help us to unlock the value of Constellation's amazing and unique fleet of nuclear natural gas assets in a way that help our customers and America grow while stabilizing and potentially reducing costs for everyday American families.

With that, let me turn the call over to Shane to talk a little bit more about our financial performance in the first quarter. Shane?

Thanks, Joe, and good morning, everyone. Beginning on Slide 10. For the first quarter, we earned $4.49 per share of GAAP earnings and $2.74 per share of adjusted operating earnings. This is $0.60 per share better than the first quarter of last year and consistent with our expectations. Higher earnings for the quarter can mostly be attributed to the EPS accretion from Calpine. As a reminder, our guidance included approximately $2 per share of accretion for Calpine on a full year basis.

In addition to incremental earnings from Calpine, results benefited from higher capacity prices in PJM and lower stock-based compensation expense. These positives were partially offset by more planned nuclear fueling -- refueling outage days compared to the first quarter of last year, lower ZEC pricing across state programs and higher cost to serve load associated with winter storm Fern. While the business performed well operationally through the storm, the extended nature of the event caused the grid operator to call on operating reserves to support system reliability. Those incremental ancillary charges resulted in higher cost to serve customer load.

Looking to the full year 2026, we are affirming our adjusted operating earnings range of $11 to $12 per share that we provided on March 31.

Moving to Slide 11. Our nuclear performance was once again strong this quarter. We generated 40 million-megawatt hours of firm and emissions-free energy from our operated nuclear plants with a capacity factor of 92.3%. Our capacity factor included the aforementioned impact of more planned outage days than typical in the first quarter. Our combined cycle and cogeneration fleet generated 23 million-megawatt hours with a 47.1% capacity factor. It's important to note that operational metrics differ across these asset types. The thermal fleet is subject to dispatch signals that vary by weather and system conditions.

Operationally, the CCGT and cogeneration fleet had a forced outage factor of 5.1%, meaning our units delivered when called upon nearly 95% of the time. As large load customers, including data centers come online, we believe our strong operations will be a differentiator in meeting that increased demand and higher utilization of existing assets will benefit customers over time.

Turning to Slide 12. Our commercial team continues to support our customers by delivering tailored energy solutions that address their evolving needs. In our business and earnings outlook, we showed customer margins in our base earnings assumptions, those that we view as highly visible and predictable that were higher than our previous disclosures for both the power and gas portfolios. This margin expansion has been driven by 3 factors: first, traditional C&I power margins have expanded; second, the growing customer demand for carbon-free solutions we spoke to in our outlook adds incremental margin; and third, incorporating the Calpine retail portfolio further enhances our outlook, reflecting a higher mix of tailored products in attractive high-value markets.

The scale of our customer solutions platform has delivered durable value and growing earnings for over a decade. With the addition of Calpine's retail business, we now serve approximately 275 million-megawatt hours of electricity and 800 Bcf of natural gas annually to customers across 40 states. Importantly, most of that volume is through commercial and industrial customers, including over 80% of the Fortune 100. These are the customers most likely to recognize the value we bring as a strategic partner with the ability to tailor solutions to meet their needs as they are the customers most likely to place a premium value when the firm clean megawatts produced by Constellation.

On Slide 13, in our business and earnings outlook, we outlined expected free cash flow before growth of $8.4 billion across 2026 and 2027, and how we plan to deploy our cash flow within our established capital allocation framework over that 2-year period. Today, I am focusing on our forecast for free cash flow before growth in 2028 and 2029 and providing transparency about how the optionality that we highlighted for our earnings also applies to free cash flow.

I think given our track record of success in allocating capital, it's important we highlight projected free cash flow before growth that we expect will be available for accretive deployment. Over 2028 and 2029, we expect to generate between $11.5 billion and $13 billion of free cash flow before growth. Using the midpoint of that range, that represents approximately a 45% increase relative to the $8.4 billion we expect in '26 and '27.

On the right side of the slide, we reflect the same opportunities we shared last month, now including what each lever could provide in growing free cash flow before growth on an annual basis starting in 2029. These figures are illustrative and not intended to necessarily be additive, but they provide useful context for how the optionality we have highlighted will also drive incremental free cash flow. All of this upside for both earnings and cash sits on top of a highly visible and durable base with meaningful growth that exists today, reinforcing the strength of the core business and the optionality we have to create additional long-term value.

Turning to Slide 14. As Joe mentioned, we got to work right away deploying capital towards share buybacks under our increased authorization, utilizing $335 million to repurchase about 1.2 million shares, and we will continue to execute opportunistically. Our capital allocation framework remains consistent and disciplined. We are committed to maintaining our strong investment-grade credit metrics, investing in growth opportunities across the portfolio that meet our double-digit unlevered return targets, maintaining and growing the dividend at 10% per year and returning excess capital to our owners. Supported by strong and growing free cash flow, we will continue to apply this framework thoughtfully and intentionally.

With that, I'll turn it back to Joe.

Thanks, Shane. Good job. So to close, we continue to work hard to deliver value for our owners and the communities in which we operate. For nearly 2 years, we've navigated regulatory uncertainty alongside of our customers and other stakeholders as they seek to connect large load projects to the grid, and meaningful progress has been made. ERCOT's move the ball forward, and now it's time for PJM to move the ball forward. And we see that once regulatory clarity exists, projects move forward. The light now is clearly visible at the end of the tunnel in PJM, and we'll continue to work constructively with policymakers and market regulators to ensure we arrive at a framework that makes sense for all stakeholders while also helping to facilitate potential cost relief for American families.

Our customers are keen to get moving in PJM, and we're working with them to make that happen. And while we await final clarity, our focus remains firmly on execution. We'll continue to operate our assets at world-class levels and deepen our engagement with customers across our platform, including those in the data economy to secure durable premium-priced agreements for our clean, firm and reliable generation.

I want to thank you again for your time this morning, and we'll open it up to questions now.

[Operator Instructions] Our first question comes from David Arcaro with Morgan Stanley.

I was wondering if I could get your latest views on the power market, maybe ERCOT, in particular. Just curious your interpretation and viewpoint here as to the weakness in the forwards even despite some of the very strong data center activity in the pipeline that we're seeing there. What do you make of that and thoughts on the evolution of that market?

David, I take the short answer -- I'm going to turn this over to Andrew Novotny here for a moment, but -- in a moment, but I think the short answer on ERCOT is it's about timing. We've seen that market be all over the place in the last, call it, 90, 120 days in terms of pricing. And the real questions are how much load and when. While there's been a lot of talk about data center and other development activities in ERCOT, it's kind of important to remember that, that load isn't yet on the system, it's getting built. And so the timing of that is going to be one driver. And then there is, I think, as you know, an incredibly wide range of forecasted additional potential growth in the ERCOT market and when that comes in and how it's interconnected remain the questions.

We think ERCOT is undervalued, and we don't think that the prices in the outer years, in particular make a great deal of sense. But Andrew chime in.

Yes, Joe, I agree with all that. Maybe just to add some, just to get specific when Joe says the market is undervalued, we're really focused on the 28, 29 and beyond period of time. That's really where the load growth can come. So there's been over 400,000 megs of large loads in the queue. Obviously, we don't expect anything near that. But the forward market beyond '29 to us, appears like something that's only expecting 10,000 to 15,000 megs. So if we see numbers like 30,000 megs, we believe that the market will see upward pressure. In the meantime, in the short term, we're not surprised by the weakness, and we've been well hedged and protected against it.

Got it. Understood. That's helpful. And then maybe separately, wondering if you might be able to just comment on the current level of state support in Pennsylvania, just a direction around favorability towards data center activity. We saw the governor recently sending a letter to the regulated utilities in the state. Wondering kind of what the posturing is, maybe does that shift perspectives on how they see the wholesale market and general impression of support for data centers in Pennsylvania?

Yes. Look, I -- even that letter, which obviously pertain to regulated utilities and not to entities like Constellation, reference the importance of the competitive market. So I think, look, Pennsylvania is very supportive, has been very supportive of competitive market solutions. The governor was clearly one of the leaders in terms of the cost cap in RPMs and was likewise one of the leading voices in the large load bring your own generation kinds of discussions that we see now as part of this regulatory proceeding in PJM. But with the exception of those things, [indiscernible] continues to be very supportive under the right circumstances in data economy development and reindustrialization in Pennsylvania.

The governor has spoken about the importance of the jobs and the economic development for Pennsylvania to be a leader in AI and other technologies under the right conditions. So we see it as continuing to be very constructive, David.

Our next question comes from Steve Fleishman with Wolfe Research.

So I guess, first on Crane. Any updates on the time line there? And just what should we be watching for to suggest that maybe it comes on sooner than the 2031 connection?

Steve, it will come on sooner. I mean what we're talking about is getting full capacity credit for the assets. So I don't want anybody to be under the misconception that the plant won't start sooner. In terms of getting the full capacity credit, right now, the ball is actually in FERC's court. We have filed, as you know, to transfer the CIRs from Eddystone to Crane, which we think will facilitate a '27 capacity credit. We're also continuing to work every day with the utilities on speeding up the transmission interconnection process. Kind of normally is the case that they start off with a pretty long time line and shorten that up, and we're working with the utilities involved here to shorten up these projects so that we can get on sooner. So that is really the update. We'll know more when we hear back from FERC.

David, do you have anything. I'll ask David Dardis, if he's got anything more on that.

No, I'll just see, we're hoping to get a response back from FERC in the June, July time frame. You also saw that PJM acknowledged the importance of the requested waiver with not taking any substantive position otherwise. So everything Joe said, I just want to double down on and really this is about who bears responsibility for the congestion being ultimately relieved by the RTEP projects and Eddystone does not need those CRs and will continue to perform for the DOE order as an energy-only resource, but we think that there's a clear path for FERC to approve the CIR transfer to meet the 2027 deadline.

Okay. Great. And then other question, just it was good to see the buybacks. We do have this first lockup coming up for the Calpine holders the end of June. Any kind of sense on where their heads are at? And should we read in anything into the fact you were willing to buy stock kind of before that kind of came up?

Look, I don't think you should read anything into the fact that we bought early. I think I covered that in the prepared remarks. We thought that was a very compelling price to be buying back our shares. We're going to be pretty careful about kind of signaling how different investors may be acting in this space. But Shane, why don't you provide whatever color you can?

Yes. Just to remind folks of the context here, in the consideration for Calpine, we issued $50 million Constellation shares to the owners, $25 million the lockup expires on June 30, 2026, and the remaining $25 million are June 30, 2027. And so when we contemplated the $5 billion authorization, we certainly wanted to have flexibility to the extent there could be a transaction of note around the lockup. But to Joe's point, it's really conditional upon what the current owners of the shares want to do. And so just in the nature of being prudent, I won't speak on their behalf around their intent, but we'll have the flexibility if there's something that makes sense for both sides.

Our next question comes from Shar Pourreza with Wells Fargo.

Joe, maybe just starting on PJM. You noted that some hyperscaler conversations stopped, some continued. Peers have been a little bit more open to working on deals in parallel with the FERC and PJM process. Is anything preventing having a bilateral deal in hand before the RBP? I mean, do you need to match new capacity plus existing capacity to get a contract?

No. First of all, there's 2 questions there, Shar. Nothing is stopping us from moving forward on a deal now. And I think as I indicated during the last update, we see clients that are interested in doing that. And they figured they'll manage whatever comes out of the regulatory process with the tools that they have or other purchases. For other clients, they kind of want to see what this looks like, what the cost implications are, what our solutions look like, how our solutions pair up with other things we're looking at in the market before they're going to move forward. So I don't think this is a full stop. I do think it is a pause to see what this looks like and then a quick resumption hopefully, of those conversations.

Got it. Okay. Perfect. And then just maybe a follow-up. There's obviously a substantial amount of cash to allocate $5 billion buyback authorized, $8.4 billion of free cash through '27 and even higher run rate thereafter. How does that kind of tie into the $0.50 of upside sensitivity? And do you anticipate incremental investment opportunity to be more accretive versus the $0.50? Are the alternatives on asset acquisitions limited at this point just given market power? Just an overall capital allocation update would be great.

Sure. I'm going to turn it over to Shane. Look, I don't know that -- I don't see it as a competition, given our free cash flow capability at the company. We're going to have organic investment opportunities over 10% IRR. We've talked about a number of those things like the uprates on prior calls. Those things are going to move forward. But we're also going to be in a position where if our stock is trading at a level that we think is inconsistent from a value standpoint with the future that we think we're going to be able to accomplish with all the different levers that are in front of us and capabilities then we're not afraid to buy back our shares. But I think at the end of the day, it's going to be a mixture of all those things. Shane?

Yes, Joe, you said it well. I think, Shar, what I would say about the $0.50 is where we wanted to ensure that there was a range or some flexibility is the nature that those investments could take. To the extent that you're bringing development online, it obviously has a longer period of time until it becomes accretive, whereas if it's M&A, obviously, in the case of Calpine of being up scale and you're adding $2 per share of EPS a year later. So I think we just wanted to be thoughtful and measured and help people think through what the range of outcomes would be as you deploy capital at the right return profile, and that could take a number of different shapes and sizes. But the $0.50 was intended to be illustrative based on assumptions you can make on that capital allocation.

Our next question comes from Nicholas Campanella with Barclays.

I wanted to ask -- I appreciate the free cash flow clarity out to '29. I mean, could you maybe just talk a little bit about the cash conversion between EBITDA and free cash through '29? And as you get some of these projects up and running, like Crane is going to ramp and a few other things in the back end of the plan, how do you kind of think about cash conversion?

Nick, it's Shane. I mean it's not going to change materially from what you've seen historically with regard to the nature that most of the cash contribution is from the nuclear fleet. So if you think about the appropriate assumptions around cash tax, maintenance CapEx, how you're accounting for fuel, the conversion won't look significantly different than historical. What I would highlight is, to the extent we're able to execute those levers identified in that conversion between the EPS and free cash flow, a lot of that you'll see drops to the bottom line. Those aren't requiring incremental investments and so a lot of those are really just a tax adjustment from the earnings to cash flow.

Okay. And then I wanted to ask just on the new capacity resources. You're highlighting about 5 gigawatts into the interconnect queue between uprates and natural gas and battery storage. And just how does that kind of compare to where you were in the March 31 update? I know you spoke about some idle turbines then and -- are you willing to kind of commit to more new build in this plan here? And how should we kind of think about the threshold for that?

Look, I think it probably is a good bit more just because we're adding in some of the Calpine capability. But at the end of the day, in terms of how we're going to utilize it or what's going to move forward, I think we're also waiting to see a little bit more from PJM in terms of what projects will qualify and also where they are in the queue process. But I don't know that at this point we're in a position to commit anything until we get a little bit more detail from PJM on the backstop proposal and obviously get further along on contracts that might call for some of our resources as part of the bilateral agreements we enter into.

Our next question comes from Julien Dumoulin-Smith with Jefferies.

Just able to follow up a little bit about the conversation we were having about the cadence of things. How do you think about Calvert here versus [indiscernible] or versus any of the permutation? Is there sort of -- given the evolution of the regulatory dialogue you've had, is there a specific direction? Obviously, we heard more about Calvert in recent weeks from you all at the Analyst Day. How would you just set expectations around that? And then go back a little bit to this conversation. Is there like a specific ratio that you guys think about in terms of additionality? Or how does the curtailment demand response piece? You guys just did this net metering thing in Texas, for instance, but -- how does that play out into kind of firming up a specific process to be able to move forward on this?

Yes. Julien, I'm going to give you a bit of a nonanswer on the first one on who's going to get through the finish line first as between any different site we mentioned Calvert because as folks probably undoubtedly saw later on during the course of the day when we did the business outlook, there was a newspaper article on it. And so we wanted to share some thoughts before the newspaper article came out. But otherwise, we're going to let our customers announce transactions when they're ready to announce transactions as opposed to us doing it here.

In terms of how folks are going to manage it, Julien, and what the ratio of new to existing might be, I think we're going to see a mix is my personal opinion. We talked a little bit about the Texas deals during our prepared remarks today. And I think that's a pretty good indicator of how wide this range could be from folks who are completely comfortable with using backup generation or other curtailment tools that they might have to manage. Keep in mind that these are sophisticated buyers that, in many instances, are already out there buying things like battery storage and solar and other things. So sometimes they're coming into these transactions with some existing contracts. And you remember when Jim McHugh was talking a couple of years ago about our CFE, our original CFE agreements, the first one with Microsoft, in fact, was exactly that situation. Somebody came in through the door and said, "Look, we've got this big portfolio, we want you to manage it and then set it up so that we have really around the clock, 24/7 environmental attributes." So we have clients that will walk in with that capability, and I think all the way to clients that are going to want things like demand response and backup generation. But the mix is going to be interesting.

Because I think it's going to be different for different customers in terms of their ability to handle curtailment and their willingness to handle curtailment.

I'll make another point, and I think the data centers themselves are going to increasingly be able to manage some of the curtailment risk by moving data economy jobs around. So as you think about the U.S., as data centers proliferate in different regions. I think it's going to give them the ability to identify jobs that don't either have to happen at peak hours of energy consumption or could be shipped away to other data centers in different regions of the country that might not be experiencing a reliability issue at that moment in time.

So I just think the landscape is changing, and I think we're going to see a mixture of solution sets that is going to be really broad all the way from people being able to manage curtailment by shifting jobs and doing that sort of thing, depending on that data center, all the way to people who are going to need backup generation for every single megawatt of the data center in terms of peaking capacity. And so I just think any attempt to kind of generically say this is the ratio is kind of a fool's errand at this point based on what we know of the market.

Yes. I totally hear it. I respect that. And just as a quick follow-up. You talked about Clarity a lot in the prepared remarks and otherwise here. Is there a specific threshold docket you're looking for to really unlock things? At the same time, I heard you in the Q&A comments saying, "Look, Other customers are working for it on this anyway." Is there a moment that you think that you get this stock at resolved and that could unleash some of this? Or again, as you suggested earlier, some of them and some may or may not be waiting for said deadlines.

Yes, again, I don't want to speak for all of them. I think just the [indiscernible] filing will be clarity for some because they will anticipate given where the FERC has been on. And I think the FERC clearly has an appetite for moving quickly here, right? So I think the details of the filing themselves have been helpful already. But I don't know. At some point in time, some of these guys may wait all the way to the end of the backstop proceeding. If they have a colocation idea that they're working on, it might need to wait for the colocation filings and for FERC's final order on that. The important thing is we're seeing speed here that is really, I've been doing this 20-plus years with PJM. And I'm seeing this stuff move at a speed that is really unprecedented. The only other time I saw anything move with this kind of speed was when we had the -- some of the RPM changes when PJM first adopted the internal rules that allowed them to move forward in an expedited way without a stakeholder vote.

So we're seeing a commission that anxiously wants to solve this. They understand the importance of getting this right, but also the importance of the data economy to America, and that's very, very clear. The administration is clearly focused on this. And we're seeing PJM act very quickly here. I would like to see the colocation implementation date, which PJM had indicated was 2029, I'd like to see that move up. And I think on that, we're aligned with the signals that are coming out of FERC, but stuff is moving very quickly, and I expect we'll have clarity on all these issues by the end of the year.

Our next question comes from Jeremy Tonet with JPMorgan Securities.

I was wondering if I could ask a question, a bit of a high level to start off here. Looking at the white paper last week at a PJM powering reliability through market design, wondering if you were able to provide any initial reactions to path A, B and C. Just any high-level thoughts would be welcome.

Let me turn it over to David Dardis for his thoughts on that.

Jeremy, thanks. So we certainly appreciate PJM issuing the white paper and acknowledging the need to revisit its market rules. And frankly, it's commitment to competitive markets for ensuring reliability. A lot of what's in that white paper or things we've talked to PJM for a number of years about including, in particular, optimizing the energy and reserve markets together and better reflecting value in the energy market as opposed to as much reliance has had on capacity markets for a number of years. So we think that's very positive. In addition, we've been very supportive. We've been talking for at least 2 years to anyone who will listen to us about bilaterally contracting and firming up their supply given what we saw on the horizon around rising energy prices. And so we think that's also quite positive.

As it relates to option B and the differential reliability, I think we need some more time to digest that and think about what that could potentially mean. We certainly agree with the flexibility of load being a very important solution going forward in the marketplace. But some sort of a permanently put in the rules, discriminatory treatment of different loads around the reliability, allocating reliability on that basis, I think that -- there's some real legal questions impeded in that one, and that's going to require more consideration. But if we can start moving more quickly, in particular, on energy market reform and the reserve market and co-optimizing that, that we see is quite positive.

And Jeremy, that's something we've urged them to do for a long, long time. And frankly, something that PJM has put on the back burner to [indiscernible]. Look, there are 2 things that got us into the pickle we're in. One is capacity prices were ridiculously low because we weren't considering the actual capacity capabilities of the resources adequately. That has changed. And we saw a pop up in capacity prices. That should have been managed better all along. The other thing that should have been managed better all along is that more of the revenue should have been recognized in the energy market, putting less strain on the capacity market, which, as we've learned, could be punitive to residential customers.

So it's good to see in this white paper that these issues are back in front of PJM. That's where they need to be. Competitive market solutions are going to be the right answer. These markets need to enable that quickly. And so hopefully, PJM actually follows up with real action on the white paper, but they're going to be pressed. I mean, I think this commission is very hot to trot on getting clarity and getting this stuff settled very quickly. And so PJM's got to keep moving this issue forward.

Got it. That's very helpful. Pricing scarcity is difficult. That's it for me.

It is.

Our final question comes from Nick Amicucci with Evercore ISI.

Just Wanted to get a sense just on the near-term kind of nuclear uprates, how near term are those? And when are we kind of -- what's kind of baked into the 2029 assumptions?

All right. So the ones that are in plan are Byron and Bradewood as a general rule. And is there anything else in the plan right now?

None of the uprates. The capital is out the door, but nothing is showing up as EPS accretion in '29. 2030 is the earliest that they'll add to EPS.

Except for Byron and Gradewood de better implant.

Perfect. Perfect. And then just given kind of the strong results in the first quarter, right, you guys have mentioned they were relatively in line with your expectations. But historically, we've seen kind of the biggest question mark around the first quarter. So just wanted to get some type of sense, I guess, where -- what would you guys need to see kind of going forward to get kind of more confidence in the upper half of the range and understanding you just spoke a little over a month ago.

Look, at least another quarter. Look, we -- when you think about the timing of our business update call, we were well into the first quarter. So we had a pretty good sense of how the quarter was going to come out when we set guidance initially.

All right. Operator, are there any additional calls questions, excuse me?

I'm showing no further questions at this time. This does conclude the question-and-answer session. I would now like to turn it back to Joe Dominguez for closing remarks.

Well, just thanks again, everybody, for your interest in Constellation. We had a good first quarter, thanks to our folks. We'll continue to strive to execute through the balance of '26, and we'll talk again in about 90 days. Operator, we'll end the call.

Ladies and gentlemen, thank you for participating on today's call. This concludes today's program. You may disconnect. Everyone, have a great day.

Good morning, ladies and gentlemen, and welcome to the Constellation Energy Corporation Business and Earnings Outlook Conference Call. [Operator Instructions] As a reminder, this call may be recorded.

I would now like to introduce your host for today's call, Tim Flottemesch, Vice President, Investor Relations. You may begin.

Thank you, Carmen. Good morning, everyone, and thank you for joining Constellation Energy Corporation's business and earnings outlook. Leading the call today are Joe Dominguez, Constellation's President and Chief Executive Officer; and Shane Smith, 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 a presentation and 8-K this morning, all of which can be found in the Investor Relations section of Constellation's website. The release and other matters, which we discuss during today's call, contain forward-looking statements and estimates regarding Constellation, 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 material and comments made during the call. Please refer to today's 8-K 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 information contained in the appendix of our presentation for reconciliations between non-GAAP measures and the nearest equivalent GAAP measures.

I'll now turn the call over to Joe.

Thanks, Tim. Thanks, Carmen, for getting us started. Good morning, everyone. Thank you for joining us, and thank you for your continued interest in Constellation. We're thrilled to be speaking with you for the first time since closing the Calpine transaction. As you can imagine, both companies are filled with people who just want to get on with it. And so we talked for a while and getting on with it is fun for us. We're excited to be where we are. As always, I want to start by thanking the 16,000 women and men across the combined companies for all the hard work that brought us to this moment. We couldn't be here without them.

Let's begin on Slide 6. Today, Shane and I intend to do more than provide 2026 guidance. We're going to provide a longer-term and more comprehensive update on the business, describe what makes Constellation special and explain why we think Constellation has unmatched opportunities to grow beginning with a 20% CAGR on base earnings growth through 2029.

As you will see, this longer-term visibility into how we see our earnings through 2029 admittedly uses some conservative assumptions. But what we're trying to do here is establish a baseline and then quantify and describe for you some of Constellation's many actionable opportunities to improve earnings materially beyond this baseline and ultimately to repeat double-digit annual base earnings growth into the next decade. In his part of today's talk, Shane will walk you through some of the EPS sensitivities that we think you will find very interesting.

Before we move into the business update, though, I want to say that we're not going to be announcing a new data economy deal today, nor can I comment much on Amazon's community night last week in Maryland, where they described a large data center project next to our Calvert Cliffs Clean Energy Center. I recognize that the last time we spoke, I indicated that we expected to be done with an important transaction by this call, but we're not ready to announce anything today.

There are two reasons for this. First, there is clearly more scrutiny on data center development. And so we think it's really important that data center announcements occur when all stakeholders, including supportive policymakers and community leaders are present and prepared to discuss the elements of these important transactions so that all of the community benefits are clearly understood. Obviously, earnings calls give us a limited opportunity to do that.

Second, since our last call, and as you're aware, hyperscalers have announced a new pledge in response to President Trump's executive order, which required us to rethink and renegotiate some of the terms of the PPAs we were working on to anticipate any outcomes of the PJM rule-making process. With regard to President Trump's executive order and the resultant PJM regulatory proceedings, our sense is that data center development will benefit from regulatory clarity, and we now have strong momentum to get just that.

All of you know regulatory clarity helps deals get done. Importantly, for you, our owners, we're not waiting on regulatory clarity or certainty. Regardless of how the PJM proceedings resolve, Constellation can structure deals now to power America's growth in AI with our firm and clean nuclear power.

But not every deal is going to look the same because our customers are expressing different approaches to how they intend to manage future regulatory requirements. Some of our customers will meet future regulatory requirements by pairing our nuclear power with Constellation's ability to bring incremental capacity through batteries, demand response, uprates and gas-fired generation. I'll talk a little bit more about that capacity in a moment. This combination gives customers the clean, firm power and price certainty they want and also allows them to meet any new regulatory requirement for peak energy capacity.

Other customers are willing to pay for backstop capacity from PJM and buy power and attributes from us. This is the way we typically contract with our C&I customers where they buy capacity from the PJM market and buy energy and attributes directly from us. Finally, some customers are willing to flexibly respond or curtail during peak hours by using on-site backup generation or by reducing demand.

And what excites us is that the very AI technology that we're powering is now being used to better dispatch the power system and manage data center load at peaks. You might have seen an announcement we made with NVIDIA, Emerald AI and other companies last week, where we are pioneering new technology that will allow the data centers to move data projects from one data center to another [ at a ] peak. So for example, if you have a data center operating in Philadelphia and you're approaching a peak demand hour, you would transfer that work through -- at the speed of light through fiber optics to other data centers around the country that aren't in a region that's -- experienced a peak energy demand. So we think these companies are evolving in the way they're able to manage their demand at peak through a lot of different resources.

And it's important to get this right because there have been a number of recently released studies, the Brattle Group put out one just this last month that says that the best way we can make bills more affordable for all customers is by ensuring that the grid is better utilized during the 99% of the hours of the year when there's surplus wires and generation capacity, while at the same time, providing flexibility during these less than 1% of the hours when system demand is at its highest. According to Brattle, getting this right could unlock tens of billions of dollars in annual consumer savings, and we believe will result in a paradigm shift in how policymakers and customers view data center development, changing the perception of data centers from cost causers to potentially cost reducers.

Although sometimes it seems longer, we have to keep in mind that we remain in the early stages of the AI data center boom. People naturally question the durability of the demand and strategies like ours. From DeepSeek to FERC's rejection of the Talen interconnection agreement and now the executive order, we've had bumps in the road where enthusiasm and value momentum either stalls or retrenches. We see this as the natural course of things. But it's important that in each instance, we and our partners found solutions and momentum resumed.

Two things are occurring simultaneously that give us great confidence. First, the growth we're seeing is like nothing we've seen before. And second, the cost of replacement megawatts for any kind of firm power generation is now multiples of what it was less than a decade ago. You're going to see this in one of our later slides. I talked in a previous earnings call about combined cycle machines having replacement costs at around $2,500 a kW. I now see that more like $3,000 based on what I'm hearing at CERA and other conferences. And we think both the demand being real and the cost of replacement generation means that an incumbent coast-to-coast fleet of the best and most unique assets like ours are going to do exceptionally well, and that's what we have here.

Constellation's industry-leading balance sheet also gives us a competitive advantage in serving customers and protecting against increases in the cost of debt. We have the ability to opportunistically grow through M&A and fund growth capital projects like our uprates that easily exceed 10% unlevered IRRs.

Finally, our balance sheet and strong cash flows give us the ability to return value to you in the form of more buybacks. Today, I'm pleased to share that Constellation's Board has approved an increase in our buyback authority to $5 billion, underscoring our confidence in the strategy. The path ahead is exciting. The demand is real, and our competitive position is excellent. We're excited about the future we're building and confident in our ability to deliver.

Turning to Slide 7. While market attention understandably focuses on the large hyperscaler deals, the value of nuclear energy is not limited to any single customer segment. That value is broadly accessible, and recent developments in New York reinforce that point. Since we last spoke, Governor Hochul and the State of New York extended the Zero Emission Credit Program, recognizing both the value of nuclear energy and the essential role that our upstate facilities play in meeting New York's climate and reliability goals.

This extension preserves more than 3,000 megawatts of clean, reliable energy that will power New Yorkers through at least 2050. This is a meaningful development, and the average pricing, which is shared in our appendix, is an important validation of the long-term value of our nuclear fleet to ordinary families and businesses as well as the data economy customers.

As I mentioned at the outset today, we want to give you a baseline for Constellation's performance through 2029 as if we did nothing more, in the way of hyperscaler deals, in the way of contracting, investing growth, buybacks or refining our Calpine synergies. But of course, we expect to do more on all of these fronts. We know that signing long-term deals is a focus for our investors, and it's our focus too, and we will execute. We think our historic performance in executing these contracts is the best indicator of future results.

So we show here on this slide that Constellation and Calpine have executed deals for over 10,000 megawatts of our fleet, serving a wide range of customers, all at compelling prices that provide the reliability and price visibility our customers are looking for, as well as the revenue certainty that we desire.

These deals are not concentrated in one region or one type of customer. They span multiple generation technologies, deal configurations, customer types and markets. But it shows here that we have a proven ability in our teams to structure long-term agreements, particularly when it comes to clean megawatts. We have now signed long-term agreements with multiple hyperscalers, commercial customers, the U.S. government, the State of New York and municipal and utility customers across America. This is a level of customer diversity that reinforces the strength and flexibility of our platform.

Our natural gas fleet has added even more optionality, and you saw that in some announcements from Calpine. We have successfully delivered solutions at both ends of the spectrum to meet speed to power and grid connection for data economy customers for long-term capacity and reliability agreements for our end-use customers.

And while no deal is the same, all deals share two defining characteristics. First, trust. Customers trust that we're going to be able to deliver for decades. Second, fair and premium value. Each agreement reflects a tailored solution that meets a specific customer need and solutions that solve real problems in returning -- in return for good pricing.

Moving to Slide 8. Over the past year, we have reached agreements for an additional 36 million megawatt hours of our clean energy that will flow in 2030. As you see in this update, we've increased the total amount of energy we will have under long-term contract in 2030, from 12 million megawatt hours to 48 million megawatt hours or roughly 25% of our available clean, firm output.

But even after that, we still have about 147 million megawatt hours available for contracting, an opportunity no one else can match. Indeed, if you combine all of the available nuclear power owned by all of the other competitive market participants in the U.S., the total amount would be about half of what Constellation still has available for clients.

As we move forward and integrate Constellation and Calpine commercial teams this year, we're bringing together under one roof two of the preeminent teams in the business when it comes to meeting clients' needs with tailored long-term contracts. And clearly, they're going to have plenty of megawatts to work with.

I would ask that you bear a few additional points in mind as you wait for this opportunity to manifest. First, all of our contracted nuclear generation is supported by the production tax credit, which grows with inflation and is guaranteed by the federal government. This structure ensures stable, predictable revenue regardless of near-term economic conditions or market volatility, while at the same time allowing us to retain the optionality to fully participate in market upside as supply-demand fundamentals continue to improve.

Second, as we face potentially higher inflationary environmental drivers, the PTC automatically adjusts for inflation, making Constellation stock a unique and safe investment in a pro-inflationary environment. The baseline of earnings growth that we're showing you today conservatively assumes 2% inflation. But if instead of 2%, inflation were 3% or 3.5% as some are predicting in light of the Iran contract (sic) [ conflict, ] the PTC cap for 2031, for example, would move from $50.88 per megawatt hour to $52.88 at 3% and $56 at 3.5% inflation, a more than $5 a megawatt hour jump in the tax credit available to our full open position.

The third factor I'd like you to keep in mind is that the demand is real. And it's so big that really smart people are literally discussing shooting data centers into space to solve for energy and infrastructure constraints. I can assure you that despite some of the PJM rule-making complexities, we have far more efficient and achievable solutions than launching data centers into outer space.

Fourth, we think the climate imperative is not going to go away. There is enduring value for being clean and being able to provide firm and clean energy together. Large customers are not wavering on their long-term commitments to clean and no one can better serve that need than Constellation.

Moving to Slide 9. The quality and diversity of our agreements demonstrate our flexibility to place megawatts where they create the greatest value. And I fully expect the team to continue reaching agreements with customers in multiple ways. For hyperscalers and data center developers, our offerings include virtual PPAs or co-located data centers at our site. If customers need load-enabling support, whether through new supply-demand response or transitional power, we have the ability to answer that call.

For enterprise-wide C&I customers, we offer long-term contracting options at scale that help them meet their sustainability goals with dependable zero carbon power. We can provide long-term energy capacity and clean energy agreements for states, utilities, government and co-op customers that desire visibility. Taken together, this is the broadest and most capable suite of energy solutions available in the competitive market today, and it gives us multiple pathways to place our clean megawatts at a premium.

Turning to Slide 10. I want to pivot here to PJM. As I mentioned at the top of the call, there's a need for regulatory certainty. And we're finally seeing greater alignment among stakeholders on core priorities that need to be addressed. We see an engaged FERC that's rightly pushing for clarity on the rules. And we see a visible time line for resolution this year.

We all agree on some key points. Demand forecasts have to be accurate. We need to ensure that large-load customers cover their infrastructure costs. We need to provide avenues for competitive solutions, understanding that utilities alone can't do this. And we know that customers need to be flexible at peak. We're on a path between PJM and FERC to have these core issues resolved.

We are also seeing efforts underway at EPA to alleviate constraints on the use of backup generation so that data centers can better manage peaks and agree to curtail at peaks. But make no mistake, as we await regulatory clarity, customers are moving forward, and we have solutions available that anticipate any reasonable outcome, from providing backstop generation to simply incorporating a PJM backstop capacity cost in our agreements.

Moving to Slide 11. At the top of the call, I spoke about the importance of managing peak energy demand, while taking advantage of the surplus we have in wires and generation capacity that exists in the system about 99% of the time. This chart shows PJM's load duration curve and illustrates the point that the system has massive unused capacity for most hours of the year.

Last year, half of all hours saw more than 40% of available generation sitting idle. And 80% of the time, 30% of our resources were unused. The same is true for the wire system where transmission capacity is designed, as you know, for a handful of peak hours, and therefore, by definition, is vastly underutilized when the system is not at peak.

The Brattle report that I mentioned shows how small improvements in system utilization could drive meaningful benefits for existing customers, extrapolating that a mere 10% improvement in system utilization could yield up to $17 billion of annual utility bill savings. These are huge numbers for American families and businesses.

The shadow box explains Brattle's point in their own words, but basically, what they're modeling here is spreading, like peanut butter, some of the fixed costs of the system, whether they be wires or generation among many more kilowatt hours.

And the reason we want to make you aware of these studies is because obviously, there's this growing narrative that data centers are bad for customers. It's based on the peak energy power issues we've been talking about. And that negative reaction is causing policymakers and investors to worry about grid-connected data centers. But we think that's an overreaction. We think a more nuanced view is that if we do this right, the opposite is true, that data centers could actually bring costs down. And I'm pleased to see this message starting to go through the policymaker communities.

Turning to Slide 12, it's all about bringing solutions at peak, and Constellation is willing to bring new megawatts to the grid and Constellation has and will continue to do its part. Last year alone, we placed 750 megawatts of battery storage, renewable resources and expanded geothermal capacity into service. Calpine brings us that ability to use batteries and other devices we weren't fully using at Constellation.

Looking at just the balance of the decade, we have the flexibility to add new megawatts through multiple channels. I'm not going to drain this, but you could see here the license extensions. You see Crane. I'm going to talk about Crane a little bit more here in a moment. We have 400 megawatts of new gas generation coming online this year, plus another 1,400 megawatts of idled turbines. We have 1,100 megawatts of uprates. We have 9,600 megawatts of additional batteries we could deploy. And we're trying to get to 1,000 megawatts of demand response that is actionable for data center customers to reduce peak demand concerns.

On Crane, we talked this week about PJM studies that indicate interconnection could be delayed into the 2030s. I want to assure you we are working on that with PJM, and we continue to expect to start this unit in '27. Today we will be filing at FERC a request to be able to transfer capacity injection rights from our Eddystone unit to Crane to facilitate restart in '27 according to our plan. David Dardis is here and can talk more about that to the extent anyone has questions.

But taken together, Crane and all of our capabilities have the inherent ability to add about 10 gigawatts of support to the grid at exactly the right moment. And we're excited to be able to offer this to our data center customers to pair with our clean and firm nuclear power.

Now moving on to the next slides. Before I turn it over to Shane, I want to use the next few slides to remind you of the capability and scale we have at Constellation post the Calpine acquisition. Starting with integration, our efforts are well underway, and the enthusiasm across both teams is tremendous. The energy and engagement we're seeing gives us real confidence in what we're going to be able to accomplish together. With the combination, we now have true coast-to-coast scale and a platform that is the envy of every other player in the market. That reach, paired with the quality of our assets and the duration of our assets, gives us a great foundation for growth.

Our leadership team is aligned and moving quickly. A top priority is capturing the best of both organizations, aligning operational and commercial best practices to elevate performance across the board. This includes finding new ways for our commercial platforms to give customers unique and innovative solutions.

And we're already realizing the benefits of upgrading Calpine's credit profile. Beyond lowering borrowing costs that Shane will talk about, an investment-grade balance sheet allows us to pursue commercial opportunities that were previously out of reach for the Calpine commercial team. In short, integration is progressing as planned. The momentum is real. The teams are energizing, and we're ahead of schedule.

Turning to Slide 15, this chart shows you what being the most important player in every market looks like. We are the unrivaled leader in serving commercial and industrial customers, delivering more than 190 million megawatt hours of energy, nearly twice as much as the next largest supplier in the competitive market. We serve more than 80% of the Fortune 100. These are strategic customers, and they want a partner who could solve complicated challenges in multiple jurisdictions for firm, low and zero carbon energy.

And that's exactly what our platform delivers. Our suite of solutions, from short or long-term carbon offerings, access to renewables through our core product, or an innovative demand response participation with partnerships with GridBeyond and others, gives us strategic capability to meet regulatory requirements as well as customer needs. We can meet customers wherever they are on their sustainability journey.

And importantly, demand for these advanced offerings continues to grow. Compared to 2024, we saw a 300% year-over-year increase in carbon-free product placements, a clear signal that our product offerings are appealing to the customers that need these services.

Turning to Slide 16. Constellation is now the largest private sector power producer in the world, generating nearly 300 million megawatt hours annually with 2/3 of that being carbon-free. We produce over 35% more carbon-free firm power than the next largest producer whose output includes intermittent renewables. Importantly, even after integrating the largest natural gas portfolio, we still maintain the lowest carbon intensity among the top 10 power producers in the country. The reason for that is our nuclear assets as well as the fact that the assets that we bought from Calpine are efficient machines. This is a special portfolio of assets that provides a foundational competitive advantage that's durable for the long term.

Moving to Slide 17. Everything we do at Constellation is supported by the bedrock of operational excellence, and it applies to everything we do. For our nuclear fleet, we run these assets better than anyone. We've been doing that for well over a decade, and we consistently outperformed the industry in both capacity factor and outage duration. And that operational excellence delivers real tangible value to the grid and to our owners.

On a fleet of our size, outperforming the industry's average capacity factor by roughly 4 percentage translates into roughly 8 million megawatt hours of additional clean reliable generation every single year. That's effectively the output of one nuclear unit. And that's what happens when scale meets world-class operations, backed by a culture to keep doing it every single day.

And we're not just running our plants better, we're innovating too. In 2028, Constellation will begin using new fuels to transition its remaining fleet of eight pressurized water reactors from 18-month refueling cycles to 24-month refueling cycles, significantly reducing future O&M costs for outages and increasing the amount of power available on the grid. And pending NRC regulatory approvals in 2028, Constellation will load the first full core of accident-tolerant fuel, fulfilling a long-term promise that industry has made to America.

Moving to Slide 18, I want to talk a little bit more about the gas fleet and some opportunities we see here. On the left-hand side of the slide, you'll see that 80% of our natural gas fleet is comprised of modern combined-cycle and co-gen assets. These are highly efficient, low heat rate units that operate far more hours than traditional peaking resources, and they form the backbone of the flexibility of the grid. As system conditions change, whether driven by load growth, renewable variability or tightening reserve margins, this is the fleet that's uniquely positioned to respond, delivering reliable, cost-effective power precisely when it's needed.

On the right-hand side of the chart, I want to share an opportunity we see. Today, combined-cycle units across the ERCOT system have excess capacity roughly 90% of the time. That underscores the point I just made that these units today are underutilized. But as new load comes on, particularly these large baseload data centers, CCGT utilization is expected to move significantly higher by 2030. This increase benefits the system by meeting rising demand in the most efficient way, while also providing upside for us through increased economic output. That represents a significant value-enhancing shift for assets that have more to contribute to the grid, and Shane will quantify that sensitivity in his remarks. Over time, that increased utilization and improved dispatch economics translate into meaningfully higher and durable earnings.

With that, I'm going to turn it over to Shane to provide the financial update.

Thanks, Joe, and good morning, everyone. Before I turn to the financial update, I want to take a moment to acknowledge our 2025 results.

Last year, we delivered adjusted operating EPS of $9.39, that once again exceeded the midpoint of the guidance range we set at the beginning of the year. That marks 4 consecutive years, every year since becoming a public company that we have beat. With 2025 now behind us, I also want to echo my appreciation for the collective effort of our teams that make these results possible, working tirelessly to position Constellation for long-term success.

Beginning on Slide 20, we are initiating our 2026 adjusted operating EPS guidance at $11 per share to $12 per share. This range is consistent with the $2 of EPS accretion we shared when we announced the Calpine deal. But it doesn't tell the full story. Our underlying business is performing better than originally projected, allowing us to overcome two headwinds related to the acquisition.

First, as part of the settlement with the DOJ, we were required to divest more assets than we originally anticipated, notably the highly efficient York 2 and Jack Fusco stations that are both meaningful earnings contributors. We are also assuming all of the asset sales close in the third quarter versus our original assumption of year-end, creating a bit of an earnings hole.

Second, depreciation expense related to purchase accounting is higher than we expected at deal case as we had to mark the acquired assets to fair value at the time of close. As we have all seen, the value of generation assets has increased considerably since we announced the transaction in January of 2025 and that higher value is resulting in higher noncash depreciation expense. When we announced the deal, we also targeted at least $2 billion of annual incremental free cash flow, which we continue to expect even absent the cash flow from the additional asset sales.

I'm also excited to share that we are increasing our share repurchase authorization to $5 billion, enabled by our strong balance sheet and significant free cash flow, while still growing our dividend and reinvesting $3.9 billion in growth projects that deliver compelling returns of at least 10% on an unlevered basis. The increase in the buyback is a strong vote of confidence in the outlook for our business.

Finally, Moody's and S&P reaffirmed our credit ratings, supported by our strong cash generation, long-term contracted cash flows and clear deleveraging trajectory. We remain committed to returning the balance sheet to our target credit metrics by the end of 2027. On the following slides, I will walk through our base and enhanced earnings outlook that now includes Calpine, how to think about upside earnings opportunities and our capital allocation strategy.

Turning to Slide 21, I want to provide a short review of our base earnings framework and discuss how we are incorporating the Calpine portfolio. The goal of base EPS is to highlight our earnings that are consistent, visible, straightforward to calculate and that will grow over time.

The components of our base earnings are well defined. First, long-term contracts from our generation fleet that provide durable and predictable cash flows. Second, our available nuclear generation that is priced at the PTC floor, assuming a 2% inflation adjustment over time. Third, for our nonnuclear fleet, we anchor to minimum expected gross margin and volume grounded in historical experience. And finally, commercial unit margins and volumes that use a 10-year historic and forward weighted average. Taken together, these elements provide a transparent and repeatable foundation that supports visibility today and growth over time. Detailed modeling tools for base earnings can be found starting on Slide 32 in the appendix.

Constellation's enhanced earnings capture value generated above our base assumptions that we will constantly deliver but is not always easily modeled as a P x Q. This portion of earnings reflects contributions from a variety of sources, such as revenues from power and capacity above the PTC floor for our nuclear output, higher spark spreads in our base assumptions, commercial margins above the 10-year average and a host of other opportunities that come with the scale and depth of our portfolio and customer-facing business.

In 2026, enhanced earnings will represent approximately 40% of total EPS. Over time, we expect enhanced earnings to represent more like 30% to 35% as base EPS grows and enhanced contributes less on a relative basis.

Turning to Slide 22, our base earnings are expected to grow from a range of $6.65 per share in 2026 to a range of at least $11.40 per share to $11.90 per share in 2029, representing at least a 20% compound annual growth rate over the period. As we have discussed in prior guidance updates, our growth will not be linear. Year-to-year results will fluctuate based on the timing of long-term contracts going into effect, the roll-off of Illinois CMCs, inflationary adjustments to the PTC and the impact of our nuclear refueling outages, which vary in number and costs depending on the year. Despite that variability, we have a highly visible path to base EPS growth at a 20% CAGR over the next 3 years and continued growth of at least 10% compounded annually on a rolling 3-year basis.

Importantly, this outlook reflects only the long-term agreements for our nuclear and natural gas units that have already been announced, the base assumptions discussed on the prior slide and current market conditions for enhanced earnings. The optionality embedded in our fleet, which represents a meaningful upside opportunity, is not reflected in this guidance.

Turning to Slide 23. Let me provide context and add dimension to the optionality that remains in our business beyond our base earnings starting point. Long-term contracts for our nuclear natural gas generation command a market premium from customers seeking reliable megawatt hours, supported by the depth and strength of our portfolios. To put that into perspective, a deal on each gigawatt of nuclear could increase our base earnings between $0.40 per share and $1 per share at full run rate, translating to a 1% to 3% increase to our growth rate over the period. A reminder that the assumption in base earnings is at the PTC floor, so the sensitivity being reflected here is relative to that price, not to the forward curve.

Our natural gas portfolio has significant optionality as well. Contracting an additional gigawatts through long-term agreements could also result in an incremental $0.20 to $0.50 of base earnings per share, adding another 1% to 2% to the growth rate. Additionally, as Joe discussed earlier, in a period of increased load growth, grid needs will be increasingly met through higher utilization across our fleet driven by dispatch economics. A modest 1% to 2% increase in natural gas fleet capacity factors would lift base EPS by $0.10 to $0.20, which is roughly 1% to our growth rate. This higher utilization translates directly into stronger and more durable earnings, while also improving overall grid efficiency.

As demand continues to grow, we expect more customers to see clean megawatt hours and reliability solutions, both of which are in high demand, yet of finite availability. The optionality of our fleet, including the ability to combine clean generation with natural gas solutions, is unmatched, and it is a key reason for bringing Calpine onto the Constellation platform.

Similarly, expanding the adoption of premium-priced products and cross-selling opportunities across our commercial business can drive higher unit margins that could have a meaningful impact on our 2029 base earnings and growth rates. The nuclear PTC inflation adjustment, a unique protection backstop by the U.S. government and particularly valuable in the current market environment, could provide a meaningful tailwind if inflation remains above 2%. A 100 basis point increase to our 2% inflation assumption would add approximately 100 basis points to EPS CAGR through 2029.

Continued investment in compelling growth projects alongside disciplined share repurchases has the potential to drive meaningful value creation in a relatively short period of time. We are actively working to execute across all of these levers to deliver results beyond our current projections.

Turning to Slide 24. Constellation's disciplined approach to capital allocation has been a hallmark of our success over the past 4 years. Since our time as a public company, we have consistently demonstrated an ability to create shareholder value, while preserving the financial flexibility required to pursue strategic opportunities as they arise. This balanced approach has also allowed us to navigate evolving market conditions, address regulatory requirements and invest in growth at compelling returns. It also strengthens the long-term durability of the business.

Going forward, we will continue to apply the same principles that have guided our decisions to date, maintaining balance sheet strength, prioritizing growth at double-digit unlevered returns, and returning capital to our owners through dividends and share repurchases. This continuity reflects both our confidence in the strategy and the results it has delivered.

On Slide 25, the portfolio we own and operate today is significantly larger and more diverse than where we started 4 years ago, and we are confident we can deploy growth capital organically and through strategic acquisitions at compelling returns. Our strategic acquisitions of Calpine and the South Texas Project have expanded our generation fleet, increased scale and enhanced our ability to serve a broader and more diverse customer base. We are growing organically through the restart of the Crane Clean Energy Center, nuclear uprates and operating license extensions, reinforcing our commitment to delivering clean, reliable and dispatchable power.

These investments are particularly important as demand accelerates across a more data-driven and increasingly electrified grid where reliability, carbon-free electricity and long-term price certainty are becoming increasingly valued by customers.

Looking ahead, our growth capital plan remains firmly anchored in value creation. We expect to invest approximately $3.9 billion during 2026 and 2027 to add new megawatts and enhance the performance and longevity of the existing fleet across all fuel types. In addition to the nuclear investments, we are placing more than 600 megawatts of new natural gas, battery, wind and solar capacity into service in 2026, further diversifying our portfolio and supporting growing customer demand. Collectively, these investments reflect our continued focus on capital efficiency, asset optimization and long-term earnings durability, while continuing to strengthen our unique position in the market.

Turning to Slide 26. Our strong free cash flow over the next 2 years has some unique characteristics related to the acquisition. Let me take a minute to walk through 2026 and 2027 and then explain how to think about it on a forward basis.

When accounting for the expected after-tax proceeds from the sales of the PJM and ERCOT assets, we expect to have $13.6 billion to deploy over the next 2 years. I spoke to the $3.9 billion of identified growth that will be accretive to long-run base EPS CAGR. Additionally, we will continue to grow our dividend at 10% per annum, and we have earmarked $3.4 billion to delever the Calpine debt stack to meet target consolidated credit metrics by the end of 2027. We then have authorization of -- we then have authorization for $5 billion in share repurchases, which, for planning purposes, we assume to happen by the end of 2027. We of course retain flexibility on execution, especially as we continue to prospect for strategic and accretive growth opportunities.

On a forward basis, we expect free cash flow before growth to follow the trajectory of our base EPS. After rightsizing the balance sheet by year-end 2027, we expect to have additional leverage capacity supported by increasing cash from operations, while maintaining our Baa1 and BBB+ leverage profile.

Turning to Slide 27. We have long highlighted our investment-grade balance sheet as a core competitive advantage, one that enables us to capitalize on market opportunities and execute complex transactions. We have seen two recent tangible examples of how this strength continues to differentiate Constellation. In January 2026, as part of the $2.75 billion issuance to replace Calpine sub-investment grade debt at the Constellation level, we issued a 40-year tranche with a 5.75% coupon. This is certainly unique in the competitive power sector, demonstrating the strong vote of confidence from fixed income investors in the long-term cash flow generation and risk profile of Constellation.

An additional vote of confidence came from the U.S. Department of Energy in its $1 billion loan in support of the historic restart of the Crane Clean Energy Center. The DOE highlighted Constellation's financial strength as a key determining factor in the award and underscores continued federal support for nuclear energy as a critical source of clean and reliable power.

Finally, as expected, S&P and Moody's affirmed Constellation's credit ratings, reflecting the combined company's strong cash generation and our clear plans to deleverage by 2027. In addition, Calpine's ratings were upgraded to investment grade following the close of the transaction. The rating agencies emphasize the geographic diversification, irreplaceable asset base and the strength of the combined portfolio, as well as Constellation's track record of disciplined capital deployment and commitment to balance sheet targets. While expected, these favorable assessments position us well to pursue additional strategic opportunities going forward.

Thank you all for your time today. 2026 marks the beginning of another new and exciting chapter for Constellation. I think we have a truly unique investment thesis, a highly visible and predictable trajectory for base earnings to grow 20% on a compounded basis through 2029, a coast-to-coast fleet of nuclear, gas-fired and geothermal generation assets ideally positioned to meet growing customer demand, and growing free cash flow that can continue to be deployed to create value for our owners, whether -- or both via accretive growth and by being returned to owners via buybacks and dividends. Put all this together and you can see why we have a truly compelling growth story into the next decade.

With that, I will now turn the call back to Joe.

Thanks, Shane. Good job. So folks, we couldn't be more excited about where Constellation is headed. We're built on a foundation of strong growth, unmatched scale, geographic reach and truly irreplaceable assets, all supported by a commercial platform that sets us apart. Our base earnings will grow more than 20% through 2029. And as Shane said, we intend to replicate double-digit growth after that. And we see a number of meaningful opportunities even through 2029 to improve and outperform our trajectory.

We'll continue to take a disciplined, practical approach to capital allocation, deploying our substantial free cash flow in ways that create long-term value for you. We'll keep executing with customers across the data economy and beyond, securing durable premium-priced agreements for our clean, reliable megawatts.

We'll expand the contributions of our natural gas fleet, meeting customer needs in ways that were not possible before. We will preserve and expand generation supply in the markets we participate. And we will keep working closely with federal, state and local policymakers and market regulators to drive common sense solutions, solutions that will allow America to grow and also reduce the burden on American families.

Thanks for your time. We have the whole management team here, and we look forward to your questions.

[Operator Instructions] Our first question is from David Arcaro with Morgan Stanley.

Joe, could you maybe comment on, in maybe a little bit more detail, if you could, just what's the status of discussions you're having with other hyperscalers? You did mention one maybe possible opportunity in Maryland here. But just more broadly, if you could touch on what's the status, how close, how advanced, how broad across your portfolio that you're in discussions here for in terms of data center contracting?

Well, I want to avoid, David, promising delivery dates here because we all know that there are bumps that -- unexpected and otherwise that occur in these transactions. But I think it's fair to say that there continues to be strong interest in clean and reliable power. But look, the data economy customers are very conscious of either being flexible at peak, using backup generation, some of the AI technologies that move data demand around. And so we're certainly seeing that in our conversations. I think there could be a point in time where the flexibility that data centers have at peak will be substantially greater than what we've seen historically. And then we have ongoing conversations with customers that just want to buy energy and capacity from us. They'll absorb whatever the backstop proposal is.

And here's what I would say. I would say that those conversations grew more complicated after the executive order as we found solutions and delayed some of the transactions. But I see the momentum resuming.

Got it. That's helpful. And a bit of a follow-up on your comments there too. Is flexibility and/or additionality, is that really the path forward here? I'm curious if -- as we maybe think about the backstop procurement, just how does that interact with the potential to bring new megawatts onto the grid or being flexible?

Yes. I think it is, David. I think there has been, since we announced this strategy, overhang of do we have enough peak capacity in the system. And so that ambiguity is going to be addressed, hopefully, here by FERC in a way that gives our customers clear line of sight that if they're going to rely on the backstop capacity auction, what the cost of that is going to be and what the terms are going to be for that. Other customers are going to look at the ability to either bring batteries, demand response, new gas-fired generation or some of this AI flexibility I just mentioned into play to manage the peaks.

But if you manage the peaks, right, what we're really talking about is the capacity slice of what we have to offer. And I see a potential where we're going to do the same thing we've been doing with C&I customers historically, and that is we sell our capacity into the market and our customers are buying a capacity product from PJM. That could be that backstop capacity or they could bring their own capacity or flexibility, as I mentioned. But what is uninterrupted is the other 99% of the hours, the energy and the attributes they need to meet their goals for firm and reliable and clean power.

Our next question comes from Steven Fleishman with Wolfe Research.

I'm sure there'll be other questions on that topic, so let me just maybe move to a different one. The capital allocation, so one point of clarity. In the plan to '29 and outlook that you have, what are you assuming or doing with cash in '28 and '29, just in the plan, the growth rates and all, et cetera? Yes.

Steve, it's Shane. There's nothing planned with regard to accretion relative to that free cash flow. So that's all upside opportunity for how we deploy it. It's essentially earning interest income at the current assumption.

You're just having it sit in cash effectively. So any use of capital better than that is accretive.

Correct. That's right.

Correct.

That's what leads to the $0.50 upside you see on the sensitivity table is we think there's a meaningful opportunity to find opportunities above that low threshold.

That's helpful. And then maybe related to that then, Joe, over the last 3, 6, 9 months, you've mentioned renewables a couple of times. You did talk again here a little bit about new nuclear. Could you just, maybe on those specific topics or others other than new gas, that you could talk to kind of what are you seeing there, what are -- how are you looking at that? And -- yes.

No, no, I'm sorry, complete your question. I thought you were...

No, no, that's it. I'll leave it there.

Okay. Yes. So look, on new nuclear, we're continuing to look at both large reactors and small modular reactors. I think the last time we talked, I commented that we have to have really clarity on three things. One is, what's it going to cost and what the schedule is going to be? Obviously, a number of the new reactor designs, particularly on SMR, still have a bit of work to be done in their design and regulatory approval journey. We've got to get to the other side to make sure that we understand that. We need to understand the operating cost of these machines.

And while we continue to chip away at that, I am not yet at a confidence level where I could say to you that we are committed on a path to new nuclear. I think we just -- we need a lot more data before we could get there, and some of that is just going to have to play out over time.

In the case of renewables, what I'm really looking for here, Steve, is to have the capability with battery storage and other renewables as well as gas-fired gen, to really facilitate these transactions that are the core of our growth strategy, these deals with hyperscalers and C&I customers. So what we're thinking about there is capability that gives us some peak capability or some incremental new capability. That is a deal sweetener. And that's kind of our focus on renewables, what platforms might we add to the business that give us that incremental capability to do the things our customers want.

It is a secondary objective to have another means of deploying some of the vast amounts of free cash flow that Shane alluded to. But I've said this before, and I stick with it, the returns on renewables are often underwhelming when we're looking at some of these deals. So in other -- in order for a platform to be something we're going to want, it has to come with it the ability to unlock our essentially contracting of 147 million megawatt hours of nuclear. And that's where we see some potential value. But I don't yet see a platform that is attractive enough and is going to meet our threshold for 10% unlevered IRRs. We'll continue to search for that opportunity, but we're not there.

I have one last question on the capital allocation and I'll then turn it to others. Just going back to -- so obviously, your free cash '28, '29, you're just leaving in cash. How about just like balance sheet targets? Because your EBITDA is going up a lot, '28, '29, so just what should we be using? Because there could be just balance sheet cash or leverage capability too that grows. Just any view of kind of leverage targets?

Yes. I mean we'll continue in the long run kind of -- I think it's fair to assume that 2x debt to EBITDA, Steve. So with that rising EBITDA that will -- to follow the base EPS trajectory, if you will, from your modeling, you can assume that if we're levering at 2x EBITDA, we'll have significantly more leverage capacity in '28 and '29 than were reflected in '27.

Our next question comes from Shar Pourreza with Wells Fargo.

It's actually Constantine here for Shar. You noted 9 gigawatts of additionality including the nuclear relicensing. Do you see that as enough offering for hyperscalers looking to contract? And maybe is there a rule forming around matching new and existing capacity 1:1? Or is there a lower mix palatable, similar to the Vistra deal earlier this year?

Yes. I think on what's going to ultimately come out of the PJM process, I think we're still -- we're going to still await clarity, I think it's more about just managing the peak and whether the customer is willing to take interruptible service or not.

As to whether the 10 gigawatts is enough, I think there's going to be instances where we'll partner with another party. We've shown that with DR, for example, where they bring the incremental capacity. And we have another company that's partnering with Constellation. I could see that happening with natural gas development projects or other things, where we'll be more aggressively working with other companies that have a queue position in a particular area. And then we're going to fill in our energy and our attributes into that contract.

So in answer to your question, I'm not sure that the 10 gigawatts is enough or rightly placed. We may have to supplement that. And I spoke a moment ago in response to Steve's question about continuing to search out platforms -- renewable battery storage platforms, that may add some incremental capabilities. So I think it's a hell of a good start, but I don't think it's a finished story.

Excellent. And in regards to the 147 million megawatt hours that you called out, obviously, a really big number, is there kind of a level of interest that you would highlight in more immediate term versus long term and maybe an order of preference by region, especially, as you mentioned, with the kind of reforms going on at PJM?

I don't think we could get into that level of detail here yet. There's interest in -- kind of across the board in different places, and it's different types of interests that we get. But we don't yet have, hey, this is the number of megawatts we're going to be able to do at this point in time in a particular geography.

And maybe just a quick follow-up on PJM, is there kind of a level of interest in the reserve backstop auction? What's CEG's position kind of going into the potential procurement later part of the year?

Yes. I would simply say I think there is certainly a level of interest in it, but we have to see the details.

Our next question comes from Angie Storozynski with Seaport.

So my first question is about the free cash flow generation. I'm just wondering what kind of assumptions you're making about cash taxes in that $8.4 billion free cash flow assumption for '26 and '27?

We're in the low teens from an overall effective cash tax rate in the front 2 years, Angie.

Okay. I mean that low teens as in like based on net income? So -- yes.

Yes. Essentially, if you convert -- instead of using your book tax rate, if you use the cash tax rate, it would essentially be in that lower -- in the low teens.

Okay. Because that number looks a little bit low, no? It's just that I was looking at your free cash flow generation for Constellation standalone, you were already in around, I think, $3.5 billion range on average per year. So the Calpine accretion with some, like tax benefit should have been -- should have boosted the free cash flow generation more. I mean so what am I missing? Is it the interest expense? Is it that there are no tax efficiencies related to this transaction?

Yes. I think one, the $3.5 billion is probably a little bit too high. Two, there's still some ongoing CTAs regarding the integration in the front years that we need to be mindful of. Three, there might be probably higher maintenance CapEx than you may have had in your model. So those are a few of the variables that I think are leading to some of that delta. But it's not off of what we anticipated.

Okay. And then secondly, when I'm looking at Slide 32, the assumptions, the modeling assumptions for '26 and '27, so just wondering how you flow through the sale of PJM assets. It doesn't seem like it's having any benefit on either O&M or other like cost items. Is it just because, again, you're picking an additional time for Calpine's ownership and thus higher costs? Because I would have expected that there is some cost benefit by divesting these assets.

Yes, there's a little bit of a lumpiness year-to-year on O&M for some onetime things. It's dependent upon nuclear fuel outages and things like that. So it's not always easy to look at just a 2-year view and say, "Well, if these are coming out, I wouldn't see this material delta year-over-year." So there's some more intricacies to it that create some lumpiness besides just looking at 2 years and trying to adjust for inflation.

Okay. And then just one big picture question, Joe. I mean we've had a lot of announcements -- semi-announcements about new build in PJM. How do you see those potential capacity additions? I mean as you said, the cost basis is pretty high. And I'm not quite sure if there is offtake agreement behind this potential CapEx on the gas-fired side. But are you concerned that there could be some, I don't know, noncompetitive entrants into the PJM market, which in turn would suppress both energy and capacity prices?

Yes, Angie, I think two things have happened in that space. We saw kind of a wave of interest in legislation that would allow the utilities to return to building generation. And I thought that was a risk to the market. I think favorably, we haven't really seen that gain traction anywhere, and people seem to be rejecting that idea. So since the last time we talked, probably improvement in terms of that risk vector.

There have been announcements for things that are, at least based on what we understand about the projects, that are going to exist off the grid. And so there doesn't seem to be to us any meaningful impact that those things will have on energy and capacity markets. But we're still looking at that. Frankly, what we have on some of this stuff is just press releases and not much more. So a more fulsome answer would require us to kind of understand what's going on.

And I don't know what's real or not real. There's a lot of press release activity going on all over the place about different things that, I think you correctly point out, might add some noncompetitive supply, whether energy and capacity into the market. But who knows how long it's going to take to actually build that stuff or, frankly, whether it's real and it has offtake agreements yet. We're seeing the same thing, but I can't really give you anything meaningful on that because I don't understand the details yet.

Our next question comes from James West with Melius Research.

One of the things I wanted to ask about that I think gets under-recognized by the market overall is the increased demand on your capacity is leading to much better durability in your earnings. And I wonder if you could comment on that. And one, if you agree with that. But two, if you could comment on how that creates -- is creating durability and how we should think about that durability?

Yes. I mean -- so I think about it in a few ways. On the nuclear side, you all understand what we're doing. We're taking the production tax credit and we're modeling that as the base earnings. So there's obviously -- what we're seeing is power prices in certain regions exceeding that, and so giving us some additional opportunity above the production tax credit floor price. So we're seeing a bit of that.

We're also seeing it in terms of the gas-fired generation being dispatched more often. So that would translate into what I would think of as a tailwind for enhanced earnings more than for base earnings.

Where it kind of converges though is that in long-term contracting, in the mind of the customer, ultimately, it's about doing better than they're going to do over the long term with the variability in the market. So I think that -- I think the fundamentals that you're talking about are actually driving people to want to secure long-term contracts at prices that we would then put into base earnings and making the base earnings more durable in that sense. But I really think the way we've explained it here is probably the best way. And that's to give you this baseline that we think of as durable and then quantify for you some additional opportunities on top of that.

And in terms of the way I kind of simply think about the stock and the value we're trying to deliver to owners is we're taking a look at the S&P, and we're saying, what's the average multiple in that S&P? And then underneath that, what are the growth rates for different companies? What are their cash flow capabilities? What's their long-term durability to have assets that are going to be around for decades?

And that's where we're trying to distinguish ourselves, as always being better than that average. That's the philosophy of the company. So that when we show up and we present to you, look, in a very conservative way, we see a 20% CAGR. What we're saying is go look for other opportunities in the S&P, and we bet that our opportunity is going to be better than other things that you could find.

And then you layer on top of that kind of catalysts for even better performance, some of which would land in base earnings, like PTC increases as a result of inflation, some of it would land in enhanced earnings. But to give you a page here, and Page 23 does this, to say, look, here are the opportunities we're going after. And if we realize those opportunities, here's what it's going to mean on top of what we just talked about.

Okay. Makes sense. And then maybe just a quick -- Joe, a quick follow-up for me. You've mentioned the PJM clarity. When do you expect to have clarity in that market? I mean I know you're very close and you're working with the federal government and all state regulators, and everybody is trying to come to that moment. When do you expect to see that happen?

Look, I expect to see that this year. I mean that -- again, these things are out of Constellation's control. But what I'm seeing is a FERC that's highly motivated to get this done, an administration that believes that leading in the data economy and this important part of innovation is essential to America going forward. So they want to have this clarity. And then obviously, you have other market participants like us, the utilities, everybody's pushing for some clarity here so we know the rules of the road going forward.

And so look, I'm hoping all of that pressure drives us to a place where we get that clarity from FERC this year and it clears up questions in the minds of customers and others.

Our last question comes from Julien Dumoulin-Smith with Jefferies.

Can you guys hear me okay?

Absolutely. Loud and clear, Julien.

A couple of things real quickly. First, some of the nuances here. I think it says that '27 assumes average shares outstanding are held flat. Are you guys assuming this $5 billion buyback is executed in the core EPS? I just want to clarify that real quickly.

And then separately, I think Steve got at this a little bit, but how do you think about capital allocation and further buybacks as maybe a policy for beyond this '27 period, like '28, '29? Is there a ratio? Is there a payout? Is there something that -- to give people as a heuristic on that front? And then I got a quick follow-up.

Julien, it's Shane. So let me take the first part. I mean we did not reflect an assumption on how many shares we would repurchase in '26 in part to not overly signal to the market what our strategy is here. We want to preserve flexibility there. So I trust you all can make some assumptions on how we would probably allocate that over the next 21 months or so. But our '27 share count is not reflected on an assumption of what we take out before year-end '26.

Secondly, let me make sure I hit your question there. But I think it's consistent with what we've done to date. I mean we're -- as Joe hit on, we think we have a number of opportunities to bring new megawatts to the grid in a variety of different areas. We obviously are looking for some policy clarity here as well as customers that want the long-term contracts. And so our priority is on identifying growth at double-digit unlevered returns.

To the extent that doesn't present itself as an opportunity, we're very comfortable acquiring our shares at this price. And we think we have a lot of cash flow ultimately to end up doing both. But we won't make an ill-informed investment decision because we feel the money has got to go somewhere. We're very confident in reacquiring our shares.

Awesome. So the EPS guidance per se doesn't include the buyback, but the 20% EPS CAGR in the more -- in the broader sense does.

And then if I can, just to follow up on this, you have this 10% rolling CAGR. Can you describe a little bit about how to think about that? And obviously, you talked about a base EPS number there too. Is this 10% rolling supposed to be like off of that '29 that you should be thinking about is implicitly growing 10% from '29 onwards? Or is this more, hey, next year, when you roll the plan from '27 to 2030, you should be kind of thinking about it being more in the 10% ZIP code? I just want to clarify how you're thinking about that. I think I get the concept, but I want to make sure we're crystal clear about what you're suggesting here. Is growth kind of implied beyond '29?

Sure. So let me clarify on your first point, there is no benefit in the 20% base EPS CAGR from capital allocation for the share repurchase. So that is all upside. That's all reflected in the $0.50 upside on Slide 23.

Secondly, when we recalibrated the base EPS CAGR of 20% on a 3-year view, we are projecting to roll that forward and a commitment to essentially grow base EPS CAGR at 10% each rolling 3-year cycle. And that's kind of our minimum target, Julien.

What I'd say is, again, that Slide 23 that shows the optionality, we're assuming that we're going to execute on some of those levers and ideally have a higher growth rate than the 10%. But we're saying we have great line of sight that if you start next year, looking at following 3 years and so forth, that we have good line of sight into a rolling 3-year view of a 10% base EPS CAGR.

All right. Perfect. So again, stress, no buyback reflected in any of this '26 onwards. More to the point, the rolling piece is truly genuinely a rolling 3-year average, and that's a minimum here. But if you thought about '27 to 2030 here, again, obviously, you've got a plus at the end of that 10%. Don't necessarily take it too literally.

I think you've got it.

This concludes the Q&A session, and I will turn it back to Joe Dominguez for closing comments.

Great. Well, thank you, again, all of you for joining us. We've got a lot of work still in front of us to integrate Calpine. The future is very bright. Hopefully, we've given you something here this morning that allows you to understand what the baseline strategy is for the company and what we intend to return to our owners in terms of value and the many upside opportunities. Thanks again for participating, and have a great day.

And ladies and gentlemen, thank you for participating in today's call. This concludes today's program. You may all disconnect. Everyone, have a great day.

Good morning, ladies and gentlemen and welcome to the Constellation Energy Corporation Third Quarter Earnings Call. [Operator Instructions] As a reminder, this call may be recorded.

I would now like to introduce your host for today's call, Emily Duncan, Senior Vice President, Investor Relations and Strategic Initiatives. You may begin.

Thank you, Lydia. Good morning, everyone, and thank you for joining Constellation Energy Corporation's third quarter earnings conference call. Leading the call today are Joe Dominguez, Constellation's President and Chief Executive Officer; and Dan Eggers, Constellation's Chief Financial Officer. They are joined by other members of Constellation's senior management team, who will be available to answer your questions following our prepared remarks. We issued our earnings release this morning along with the presentation, all of which can be found in the Investor Relations section of Constellation's website.

The earnings release and other matters, which we discuss during today's call contain forward-looking statements and estimates regarding Constellation and its subsidiaries that are subject to various risks and uncertainties. Actual results could differ from our forward-looking statements based on factors and assumptions discussed in today's material and comments made during this call. Please refer to today's 8-K 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 the call over to Joe.

Thanks, Emily, and thanks Lydia, our operator this morning for getting us started. Thanks to all of you for your continued support, for your interest in the company and for joining us today at the end of a very busy week for all of you.

As always, I want to start by thanking the incredible women and men at Constellation for delivering another quarter of strong operational and financial performance. Powering America is a 24/7 business, and our continued success derives from the simple fact that our folks are exceptional at what they do. This summer, our nuclear plants delivered near-perfect reliability. Our power fleet of gas and renewables answered the bell when dispatched and our commercial and retail teams have once again proven why they are some of the best in the business.

I'm going to turn to Slide 5 to get us started with our financial results. We delivered third quarter GAAP earnings of $2.97 per share and adjusted operating earnings of $3.04 per share, higher than the third quarter of last year. Our commercial and generation teams delivered outstanding performance and the stock has performed tremendously again this year, benefiting you, our owners. But this great performance also benefits our people through stock compensation plans that we have aligned with your interest as owners. This year, because of the magnificent performance over a number of years, these plans are triggered and create some nonrecurring O&M headwinds that Dan will cover in his section.

But notwithstanding these onetime events, what I don't want you to miss is the continued growth and strong performance of our business. On the data economy front, our team has never been more active with serious and knowledgeable customers. I know in the last call, I hinted that we are far along on a transaction, making use of a baseball metaphor that we were past the seventh inning stretch. That remains true, and we continue to progress. But as we have recently witnessed in real life baseball and as I'm sure, Dodgers and Blue Jays fans, especially can attest some of the later innings can seemingly drag out. Nonetheless, we're confident in our ability to complete these transactions, and we will let you know just as soon as we can.

But perhaps more important to you than any set of transactions is what we are seeing in the broader data economy market. Our general observation is that the market is hotter now than ever. And the real big difference we're seeing is buyer maturity. In the earliest days, we had a great deal of interest from a lot of customers. But I think it's fair to say in retrospect that many customers in the early days were exploring options, kicking tires, as some might say. Sometimes, they were wondering whether nuclear energy would fit into their own sustainability plans. And even the most serious buyers were still on the shallow part of the learning curve when it came to understanding our markets and the interconnection of really large [ loads ].

Today, we're seeing a far more sophisticated and aggressive customer walk through our door. They have done deals. They understand pricing and term. They know they want nuclear. They understand the accounting and the collateral needs of a large transaction. They understand the interconnection process. Most importantly, they walk in our door with a strong understanding of what we can offer and what we need to secure on behalf of our owners and therefore, had to best execute.

At the end of the day, we are often paced by the speed of interconnection in these deals. But in terms of our own commercial terms, the negotiations move much more quickly than ever before.

Now with regard to the interconnection process, we were encouraged to see the letter from Secretary Wright to FERC, ordering FERC to initiate a rule-making proceeding to develop a standard approach for quickly connecting large loads to the transmission system. It was a clear message from the administration. If America is going to maintain a leadership position in artificial intelligence, we need practical reforms to make it easier to connect large loads to the grid. As you know, this is something we have been saying for a long time. We look forward to FERC's quick action. They have a docket in PJM that is complete with evidence and with arguments. It's ready for decision.

Turning to other developments this quarter. We reached a landmark agreement with the state of Maryland and other key stakeholders that lays out the path for the continued operation of Conowingo Dam for the next 50 years. On Slide 5, you can see a picture of the stakeholders that gathered together with Governor Moore and others to celebrate this outcome. You see the handsome guy in the middle of the photograph and to my right, is Governor Moore. This was a win-win outcome. It brought together previously opposed coalitions to create a long-term solution that helps and protects the bay, while ensuring the continued operations of a vital source of Maryland Clean Energy for the region. I want to thank Governor Moore and Attorney General Brown for their leadership. We look forward to continuing to work with them and other elected officials to explore energy options for Maryland and the region.

Lastly, Calpine remains on track to close in the fourth quarter. The DOJ is our final approval, and we presently are not seeing any effect on their work from the government shutdown. We're looking forward to getting the transaction closed, and to start working as a combined company to bring coast-to-coast solutions for our customers and to create value for you, our owners and for our communities.

Turning to Slide 6. The momentum and support for nuclear has never been stronger. Nearly 3/4 of the public now supports nuclear energy. But it doesn't stop there. 9 out of 10 people think that the licenses on existing nuclear plants should be extended, and you know we're doing that work. And 2 out of 3 people believe we should be building more nuclear plants in the U.S. This is a tremendous level of public support. The public gets it and so do the policymakers. I'd point out to you that just in the last 10 days, the Trump administration and Westinghouse announced a public private partnership with the goal of building 10 gigawatts of new nuclear reactors. And the government is pledging $80 billion to help ensure it happens.

Our nation recently announced a trade deal with Japan and the centerpiece of that was the investment of more capital in nuclear and the data economy. And then finally, Next Era, a company known for renewables announced the restart of Duane Arnold, all enabled by another contract with hyperscalers. And that's just what happened in the last 10 days, and it builds upon the bipartisan support that we've seen for nuclear tax credits that not only support new nuclear, but crucially support the existing fleet so that it could continue to operate, upgrade and relicense.

States are also leading the way through ZEC and other programs to ensure that clean, reliable nuclear power continues to benefit their citizens. Under Governor Hochul's leadership in New York, the state is looking to build 1 gigawatt of new nuclear built on a foundation of the new -- of the existing nuclear fleet that has been so successful for New York. The Public Service Commission has called for the extension of the ZEC programs, and we are involved in that proceeding. All of these developments are wonderful and a great affirmation of what I think has been the core principle of this company from its beginning.

Nuclear energy is the most valuable and important energy commodity in the world today, and Constellation produces more of it than any other private sector company in the world. But our advantage doesn't just stop with the existing fleet. I think the most valuable asset that we have, that presently isn't fully recognized is the nuclear sites themselves. This is the place where nuclear was built. It's the place where we have the infrastructure, the land, the capability and the talent to build the next generation of nuclear plants. These land assets that Constellation owns more than anyone provides unique value that is difficult, if not impossible, to replicate. And what it means to me is that the path to new nuclear in many places is going to walk through Constellation.

Turning to Slide 7. Constellation has had an excellent track record, as you know, of working with stakeholders to find solutions. And we once again stepped up to meet the needs of the grid by answering Maryland's call with options for the state to consider that would bring new dispatchable generation resources to the state as well as the continued operation and expansion of the world's best 24/7 clean energy resources. As part of the Next Generation Energy Act of 2025, the Maryland Public Service Commission solicited applications for dispatchable generation and large capacity resources that could proceed through an expedited process known as a CPCN or Certificate of Public Necessity. In response, we're providing Maryland options to potentially bring up to 800 megawatts of battery storage and more than 700 megawatts of low-carbon natural gas to help Maryland meet its future energy needs.

Being part of the solution is who we are at Constellation, and no other company is doing more to bring and secure power for our communities than Constellation. As you know, we've committed to bring 835 megawatts through the restart of the Crane Clean Energy Center. We continue to provide nearly 600 megawatts from the relicensing of Conowingo that we spoke about a moment ago. We are bringing 160 megawatts of new nuclear uprates online at Byron and Braidwood beginning next year, and we're doing far more than this.

As we talked about last quarter, we're collaborating with customers to pioneer about 1,000 megawatts of AI-enabled demand response capacity. We're targeting 500 megawatts under contract this year and another 500 next year. And we have identified an additional 900 megawatts of uprates at our sites, including 190 megawatts at Calvert Cliffs in Maryland.

Constellation has and will continue to support reliability everywhere and operate in our competitive markets, effectively and performing well. And we have seen that over a decade since deregulation with generators, the competitive market has provided the best solutions to customers.

With that, I'm going to turn it over to Dan for the financial results.

Thank you, Joe, and good morning, everyone. Beginning on Slide 8, we earned $2.97 per share in GAAP earnings and $3.04 per share in adjusted operating earnings in the third quarter, which was $0.30 per share higher than last year. In the third quarter, we saw fewer nuclear outage days, both planned and unplanned compared to the same period last year. These results reflect the outstanding efforts of our teams whose dedication and skill have driven higher generation volumes and help us operate more efficiently than ever with lower O&M expenses on a year-over-year basis.

Last quarter marked the first period where we recognized a full 3 months of higher PJM capacity revenues following the breakout 2025, 2026 capacity auction. With our plants currently near or above the top end of the PTC zone, the non-CMC units captured almost all of the benefit of higher capacity prices. This capacity upside is partially offset by a reduction in PTC revenues compared to last year when more of our plants were in the PTC zone. Additionally, ZEC prices in both the Midwest and New York were lower compared to the third quarter of last year. As a reminder, for the full year 2025, our Illinois ZEC revenues are about the same as last year, but the timing is different since we booked banked ZECs last quarter, whereas in 2024, more of the ZECs were booked across the quarters.

Moving to Slide 9. Our nuclear team continues to execute at levels of reliability and with a commitment to excellence that yields differentiated operating performance. During the third quarter, they once again hit that mark with a fleet-wide capacity factor of 96.8%. Our team consistently delivers a capacity factor about 4% higher than the industry average, which at our fleet size is the equivalent to having another reactor's worth of power on a full year basis.

Our renewable and natural gas fleets performed near plan during the quarter, with renewable energy capture at 96.8% and power dispatch match at 95.5%. Consistent, reliable and excellent operations across our generation fleet, especially during the critical summer months, are a testament to the thousands of tasks and hours of planning, our teams complete on an ongoing basis to make sure we can meet our commitment to provide clean, firm and reliable power.

Turning to Slide 10. Our commercial team continues to meet the needs of our customers, delivering tailored energy solutions that meet their evolving needs. This collaborative approach is driving strong performance with sales margins above the long-term averages we use in our forecast and above the margins we anticipated at the beginning of this year. The renewal rates for both power and gas remained strong. The quarter-over-quarter decline we experienced in our C&I gas renewal rate is almost entirely driven by the loss of one very large low-margin customer and expected part of the normal ebbs and flows of the business.

Our relationships with long-standing customers remain strong and our scale and ability to deliver products to meet the needs of our customers remains a competitive advantage.

Continuing on Slide 11. We are narrowing our full year stand-alone adjusted operating earnings guidance range to $9.05 to $9.45 per share. The commercial and generation businesses have had another outstanding year. Our commercial team's ability to optimize the portfolio and deliver value beyond targets is a key driver again this year. Additionally, the world-class operating performance of our nuclear fleet has also contributed upside to our gross margin. This operational strength reinforces the reliability and consistency of our company's earnings profile.

Our stock has appreciated over 50% year-to-date, significantly benefiting our owners, but also creating O&M headwinds from stock compensation, which is offsetting much of the gross margin favorability this year.

Finally, as a reminder, our revised guidance is stand-alone to Constellation and does not include any impacts from the Calpine transaction.

Speaking of guidance and looking to 2026 with the Calpine deal, we get a lot of questions on what to expect. We plan to provide combined company guidance and modeling tools on or around our typical fourth quarter call in late February. We expect to fold Calpine into our current base and enhanced EPS constructs. And as you all revisit your models in the interim, let me remind you when we announced the transaction in January, we provided preliminary expectations for EPS and free cash flow accretion. Those expectations were based on forward power prices and spreads that look relatively similar to today despite the market having moved around a lot since last December.

Calpine also has a history of locking in sales or hedging its fleet like other generators to ensure meeting its financial commitments. So near-term open exposure is relatively limited. And the guidance included our view of expected synergies, which, as we talked about, we're not a major value driver for this deal, but were anticipated based on what we knew about putting the 2 companies together, and recognizing Calpine was long held by private equity outside of the public markets. It also reflected estimates for accounting policy harmonization adjustments and purchase accounting with fair value calculations, which are inherently difficult to model from your seats.

We will fill in all the details when we get to early spring. But I know it has been a little while since the deal was announced. So we thought a quick refresh back to our original conversation would be helpful for all of you.

Turning to Slide 12. In September, we executed a renewal and upsizing of our credit facilities, positioning us for the close of the Calpine transaction. Combining the expanded revolver with the other liquidity tools that we use, we'll have $14 billion of liquidity after the deal closes, underscoring the strength of our balance sheet and the strategic flexibility afforded by our investment-grade credit rating allowing us to move forward with confidence.

We're also asked regularly about our capital allocation strategy after the deal closes, and it remains unchanged. With the significant free cash flow the combined company is expected to generate, our priorities remain clear. We will maintain a strong balance sheet and high investment-grade credit ratings targeting a return to our metrics by year-end 2027, deliver at least 10% annual dividend growth, pursue growth opportunities that meet our double-digit unlevered return threshold, and return capital to shareholders with $600 million remaining on our existing buyback program.

Our goal remains the same: to deliver long-term value for our owners. The philosophy behind our capital allocation strategy is consistent even as we evolve into a larger, more diversified company with even greater opportunities.

With that, I'll turn the call back to Joe for his closing remarks.

Thanks, Dan. So folks Constellation performed very well during the third quarter and throughout the year. But we've got 2 months basically to finish it up. And so we've got a lot of work going on in the business, and we remain focused on closing the Calpine transaction and bringing together these 2 great companies. We're looking forward to proving that 1 plus 1 will equal 3. And that the size and scale of the combined company will deliver value for our customers and for our nation that neither company could have done on its own.

We're working hard to execute transactions with our customers in the data economy. And we're working with the states and regulators to provide sensible solutions for meeting this moment where new generation and new capabilities are going to be needed to allow America to lead as it should on AI.

Constellation is built on a foundation unlike any other company in the energy sector. That foundation enables us to consistently deliver value to our owners year after year. We generate strong cash flow and base earnings supported by a nuclear production tax credit, which continues to enjoy broad and growing bipartisan support. We have a strong earnings growth profile through the decade, and we are in the middle of strategic transactions or PPAs with hyperscalers, which we expect to complete, which will be additive to both our growth and our base earnings.

We benefit uniquely from higher inflation, which causes the PTC floor to automatically adjust and further strengthens the economics of our nuclear fleet. We're well positioned to capture value from the opportunities ahead, selling our megawatts at a premium through long-term contracts with customers, including those in the rapidly expanding data economy, which we've talked about quite a bit during this call.

As overall power demand grows and new generation resources are required, our existing fleet is ready to meet the needs with clean, reliable and available today energy, and our land gives us a great opportunity to participate in future development.

With that, I look forward to your questions.

[Operator Instructions] Our first question coming from the line of Shahriar Pourreza with Wells Fargo.

Joe, just on your hyperscaler comment. I mean, obviously, we've seen a lot of BTM deals being done ironically with nonpower companies, couldn't quite tell from the baseball analogy, but are you still kind of confident with announcing another hyperscale deal by year-end? Or should we assume early next year. And despite FERC, should we still assume that this deal or any deal will be structured in front of the meter?

Yes. As to the last question, yes, right now, as I've indicated on prior calls, we're really focused exclusively on front-end meter deals, which is why this interconnection process ends up becoming to a certain extent, the gating function on these deals, and we often have to wait for other parties. Shar, my expectation is that deals will be completed soon. I think it will happen before we talk again. But I don't -- there are these approval processes that customers have to go through that sometimes are time consuming. And I don't want -- I can't guarantee the work of other parties. But we're quite close here. So I'm hopeful that this stuff will get done soon and certainly before our fourth quarter call.

Okay. No, that's actually helpful. And then just lastly, just from a contracting pricing perspective, I mean, we obviously -- we have a proxy right now in Texas for BTM deal with significant backup gen. Are you seeing FOM and BTM pricing kind of converge in your conversations, especially since you're focused more on the FOM side? And just what about gas versus nuclear, especially as you're closing the Calpine deal?

Yes. I think gas has some capabilities in this space. Just to answer that part of your question. I think the real issue with gas for the customers is twofold. One is, it doesn't meet their longer-term sustainability goals for some customers, it's okay; for other customers, it isn't. And then separately, in the case of gas, it's sometimes more difficult to predict the kind of long-term pricing. So when you're asking me to compare pricing for gas, whether that's behind the meter or front of the meter or to a nuclear deal, we end up having to speculate about what future gas prices are going to be, say, over 20 years, we end up having to speculate whether or not there are going to be other compliance costs associated with carbon emissions from gas.

So really hard to do that. Oftentimes, the gas deals leave those issues open to different inputs for either a carbon price, a change in policy and of course, for the underlying cost of gas. So hard to compare the 2 things. And generally speaking, the deals that you're alluding to that have been done really haven't been done with new clean resources that allow for the comp. So a bit hard to say.

I do think that from an economic perspective, what we're offering, and I think it's part of the heat that we're seeing in terms of the inflow of customers through the door is very attractive pricing relative to other options, and pricing that's firm and sustainable for a long-term period and something that they know from their own environmental pledges and sustainability goals is going to be compliant for them.

Got it. But just -- I guess, just focusing a little bit on just nuclear FOM versus BTM pricing. Is there a material difference? Are you seeing when those conversations just honing in on nuclear?

Sure. I think it's hard yet to fully understand what the new nuclear pricing is going to be. I mean, that's -- the bottom line is we do a tremendous amount of work on that. And I think it's far from settled what that's going to look like. Obviously, what we could offer is significantly more economic. And most importantly, it's available right now.

Our next question coming from the line of Steve Fleishman with Wolfe Research.

I guess, first, just a question on the Calpine. There were some stories about a potential delay in the asset sale process by you? Just anything that we should read into that?

Probably a couple of things, Steve. One is we kicked off the asset sale process because we weren't sure how much time we were going to be given to divest needed assets. And so we're feeling more confident that we're going to have a reasonable amount of time to execute the divestiture post regulatory approvals. And secondly, as we complete the regulatory approvals, it is, as you know, DOJ and FERC utilize different tests. And so we want to make sure we're targeting the exact right assets to divest.

The biggest point here is that we just don't feel like we need to be in a hurry to complete an asset sale transaction, and we want to take our time. The market is very supportive of sales of these assets right now.

Yes. And I guess there'll be others that have pending ones that will be done later on maybe -- that could be buyers. Okay. So the other question is more just high level, I mean for the last several months, we just keep hearing different new entrants to the Power business, whether it's oil companies, gas companies, new technologies, et cetera. And then obviously, huge focus on time to power. But then at the same time, it seems to take a very long time to work out deals for those same customers with the assets that are there already. And maybe you can just help connect the dots of what's going on and your conviction level that you'll be able to kind of execute on the ability to capture these new customers?

I think the excitement and interest in new generation is just really a reflection on how durable this growth cycle is going to be. We're seeing these -- the investment in new data centers just grow over year-over-year, and we're now seeing capital deployment projected to be [indiscernible] on building data centers. And notably, that's probably twice as large as the 3 largest publicly traded power companies in the United States.

So we're seeing an investment in the data economy that's simply enormous, and it's going to call for all hands on deck. And I'm always pleased to see that they believe in it so much that they're lining up power needs that are really going to come on 5 or in certain cases, maybe up to 10 years down the road. So I think that's all indicative of the size of the opportunity that we're seeing.

Steve, I'd just simply stand by my earlier comments that the amount of interest we have, the number of deals that are being negotiated is far different now and far bigger and more serious now than it's been before. And so that's what gives me confidence we're going to be able to continue to execute the strategy. And I think we provide something uniquely and that's available now. Power with a predictable opportunity to scale that.

Our next question coming from Jeremy Tonet with JPMorgan.

We're just wondering if you could provide a little bit of color on Three Mile Island, it seems like progress is going well there. Just wondering if you could provide any updated thoughts?

Well, just what you said. I mean the progress is going well there. We've had a number of critical items that we've completed just recently. The plant looks really well. We talked at the beginning of this whole project that we are going to need a couple of components, the main transformer being one of them. Fuel was another gating item, getting the people ready to operate the site. That was a gating item, Bryan, who's here and his entire team have just done an exceptional job getting the plant ready and really tackling some of these challenges that we identified.

Most importantly, we're not seeing new challenges emerge, right? So as we continue to do our work, there's always going to be some discovery that comes along with the inspections of the plant. And what gives me great confidence is that we're not on earth in anything that we didn't anticipate. And in point of fact, the condition of the plant is better.

Got it. Very helpful there. And just wondering if you might be able to comment a little bit as well separately on power markets. We've seen energy prices moving up recently and just wondering thoughts you have on these moves where it could go in -- do you see this having any, I guess, impact on conversations when you're discussing contracts?

Well, I think it has 2 impacts strategically for us. One, right, is the -- questions I think we've already gotten here. Are we seeing some sort of convergence that causes us to think we're not going to achieve our pricing expectations. And I would say the opposite is true. And then secondly, we're going to have to sell some assets here to get through regulatory approvals. And I think the impact there, again, is favorable and that the environment for the sale of assets is more constructive now than probably when we started the -- when we announced the Calpine deal. But let me ask Jim McHugh, who's here to kind of weigh in on what he's seeing in the power markets and their durability.

Yes. Yes. Thanks, Joe. I'd break it into a couple of components. One is maybe short term, we've seen a small rebound in the nearby, just kind of the nearby month, maybe gas rebound a little bit, that's had somewhat to do with power upward pressure that we've seen. But actually, the power upside has been longer duration than that, and it's been stronger in the outer years. And it's really outperformed gas. I think we're seeing expansion -- heat rates expanding and spark spreads expanding, mainly due to the data growth we're talking about, the load growth in general that we're talking about. We'll have continued -- some continued retirements down the road. There's less line of sight right now, as we've talked about 2 additional megawatts in the grid except for all these wonderful opportunities that we've talked about in -- that Joe talked about in the call earlier as well as what we're seeing in terms of our corporate PPAs, bringing on new generation 2.

But really, it's -- over the last few months, it's been the realization and positive developments on load interconnection and the reality of load growth happening where I think the power markets are pushing stronger. It's still rather tight on the supply-demand fundamentals in general. And it's really about the expectation that we'll see higher energy prices to go with some of the upward pressure we've seen on capacity prices in these markets, too.

Our next question coming from the line of David Arcaro with Morgan Stanley.

Our next question coming from the line of Andrew Weinfeld with Scotiabank.

A few questions for you. First, in Maryland. You talked about the 700 megawatts of natural gas capacity. I believe that's existing assets and you maintained relocated turbines. Can you get a little more specific where would those be coming from? And maybe on timing, how quickly would those be available to come online?

They're physically located in buildings in the Midwest and in New England. And they're -- I would describe them as incredibly lightly used assets that we could relocate relatively quickly to Maryland. But in terms of their performance capabilities are relatively speaking, state-of-the-art in terms of their heat rates. And we have taken measures to refurbish those units and get them ready for rapid redeployment. So that, I think, is the answer to your question.

Great. Then on new nuclear. I know I'm pretty new to the story, but I know that you sounded pretty cautious about new nuclear construction, given the high cost and risks. But with the announcements from the federal government, has that changed your comfort level or given -- has that changed your appetite and what would it take you to get you to move forward? Whether you need government support and the customer contracts? I know you've talked about exploring potentially 2 gigawatts in your [indiscernible] in Maryland. And New York is considering adding a gigawatt, as you mentioned. Maybe just high-level thoughts on all of that?

First and foremost is a PPA, right? We need a durable PPA. And the second thing is, we need clear pricing that we're going to be able to achieve with constructability. And that means good partners that bring the technical capability and the ability to construct along with that. We also think, as I alluded to in my prepared remarks, we also think the land value that we offer is the secret sauce to this whole thing. I think you're not going to build nuclear plants in the places we do business with the exception perhaps of Texas, in communities that have never had nuclear before. And I think there's a huge value to having that talent, having the big water, the rail, all the infrastructure and most importantly, the community acceptance.

So what I'm looking to do is to monetize the value of that land and that set of capabilities that we bring and convert that into a position that gives us some of the output of the new units.

The next thing we're trying to do is make sure that whatever gets operated on our land because we have operating units gets operated by us, not by others. So an operating services agreement will have to be part of it.

In terms of what enables it, I talked about the importance of the PPA. I think the involvement of the administration and the way that they're talking about with Westinghouse likewise is going to be critically important. And I commend President Trump for his incredible leadership on nuclear. We still need to see the details, and we still need to see, as I said, earlier, some very, very clear cost numbers and some very, very clear commitments to deliver those costs on time and on schedule with an operating unit before we are going to put significant capital at risk for these things. I like the way things are evolving. I have been cautious, and I remain cautious, and I will always be cautious because it's a lot of your money that we are talking about here. But I am gaining confidence daily as more and more qualified players are coming forward. And as we're seeing things like the Westinghouse announcement. We still need to get all of the details to really fully understand it, but it is no doubt a positive.

Our next question coming from the line of David Arcaro with Morgan Stanley.

Could you maybe also reflect on your demand response efforts and the initiative that you're pursuing there? And I know you've talked about flexibility of data centers in the past. Are you seeing progress there in terms of data center willingness to go that route? And just the update on that initiative across different markets?

Well, let me start on what I'm seeing in terms of flexibility from a technical capability. And then I'm going to turn it over to Jim McHugh, again, who runs our commercial team to talk about this exciting work we're doing on demand response. So we have been, since the very beginning, one of the core participants in EPRA and their DC Flex or data center flex capability. And we're seeing a lot of great capability to use backup generation and flex compute. I don't want to overstate that, however, I don't think we're going to get to a point where we could flex on and off the full output of data centers. I think it's going to have a meaningful impact, but it's going to have an impact at the margins.

That's why we began to explore using AI to see if we can attract some of our other customers to actually providing the relief or the slack on the system during the key hours, and they would then use their own backup generation or curtail their own consumption of energy during peak hours. And we could play this kind of well, middleman role between the hyperscalers and the data center owners and operators and our other customers through this commercial agreement that gives them the ability to call on our other customers to curtail during high-demand events. So Jim will talk about the work that we've done to start developing that and the exciting progress we've made.

Yes. Thanks, Joe. It kind of started with what we were doing in the market prior to kind of the recent dynamics. We still had a large amount of our customers who are interested in peak response programs and managing their energy usage. But really with the dynamic shifting towards supply needed in the capacity markets, we saw the opportunity that some of these customers may be interested in being demand response providers and supply to the capacity markets. So we're partnering with [ Grid Beyond ] and who is going to help us do a lot of the execution on the operations side with our demand response customers, but we're seeing interest from our industrial customer base to participate in this demand response product.

And what's a little unique about the product we're offering is we've gone to customers to get longer tenors or longer-term commitments and they're interested in potentially longer-term deals with good pricing associated with it and we're providing some floor pricing capability in that too for them to be incented to sign up for these longer duration. So we've found kind of this unique opportunity. We're trying to be innovative around the product structure itself. And the pipeline looks really strong right now. We started executing the deals that Joe talked about working towards 1,000 megawatts or so between now and the next couple of capacity auctions. So things are going well.

And David, what's cool about that is when you think about that 1,000 megawatts at the electric load carrying capacity or through that computation that PJM does, that looks like a new nuclear plant. It's not like a 1,000 megawatts of battery, for example, that would look like at the end of the day, 1/10 of a new nuclear plant. But this portends to look like a full nuclear units worth of output in terms of demand response. So I think we're still in the early days of this, but I think the combination of the 2 things you talked about in your question, the ability to flex at the top of peak by the data centers themselves in combination with new commercial arrangements to get others to pull back consumption during these hours is really going to open up a lot of room on the system and really pave the way for easier interconnection.

Yes. Understood. Okay. Great. That's helpful color. Then I was wondering if you could just touch on what you're seeing in terms of retail margins in PJM. One of your peers suggested that margins in PJM might be somewhat more competitive. I'm wondering if that's reflective of what you're seeing.

Jim?

I think on the retail side, our margins are on the upper end of the range that we've always talked about. We've certainly seen on the wholesale load auction and polar procurement. So we've seen some new participants coming in, that's gotten a little bit more competitive, but we're still seeing stronger margins than the historical averages there. On the retail side, really on the upper end of the ranges we've always talked about. And I want to -- I would have -- I'd be remiss if I didn't add since we're seeing a lot of success with some of these sustainability products and CFE and other types of solutions that are sustainability related, those margins tend to be stronger than pure true commodity margins, too.

Our next question coming from the line of Angie Storozynski with Seaport.

I'm just wondering, and again, somewhat of a playing the devil's advocate here. I mean you have a huge portfolio of generation assets, especially pro forma Calpine. There's this growing chatter about bringing on generation. And I'm just wondering if you feeling a bit unease about how many of these units you will be able to sign and granted that solar power curves are rising, but it's not just about earnings, right? It's also about the visibility and the quality of earnings. And so we do need more of your units to have that long-term visibility into their earnings power?

Yes, Angie, and I'll just -- my comments during the call were formed by all things, including what we're seeing in terms of policy regulatory, we still believe that we're going to be able to execute transactions. I think this product offering that Jim just talked about with demand response is a bit of an anticipation isn't it, some of what you're talking about, which is to try to make sure we have BYOG or bring your own generation equivalent as we think about demand response as we think about the turbines that we have on the sidelines as we think about our ability to offer up rates.

And we also think that policymakers fully understand a relicensing while not exactly a new megawatt is the continuation of megawatts beyond the period that they might otherwise shut down. So we think that there's great awareness of that issue. I think in large measure, it was that issue and other compelling arguments that caused PJM to pull back from their bring-your-own generation kind of requirements that they had in other places. I think we might see some voluntary BYOG. But I'm frankly not concerned with where it is right now in the States. And we're marching forward on these transactions, and that has not been an issue for us right now.

Okay. And then so it's been mentioned by you in previous questions that we have seen a lot of announcements from other companies vaguely associated with power -- for power plants. And I'm wondering, is it -- do you think those are comparable deals like quality-wise, firmness wise, to the ones that you guys are working on? I mean some power companies suggest that those deals are more equivalent to LOIs than firm take-or-pay power contracts that public cloud companies announce?

Look, I think there's probably room for a bunch of different contracting. But Angie, I feel and I could only gauge this from the customer interest in what we're offering. I feel that what we have and what we're offering outcompetes just about any other opportunity in the space.

Our next question coming from the line of James West with Melius Research.

Curious, given all this demand from the data economy and the data centers, how are you thinking about the portfolio of generating assets that you would like to or would be comfortable locking into long-term PPAs versus keeping available for normal generation markets?

Great question. I think -- and you're certainly hearing this from Angie's question and others, I think there's more room to run on the long-term deals that we want to get executed. But there will be a point, and there will be a point where 1 or 2 things is going to happen. Either we're going to slow it up or we're going to change our pricing to more aggressive levels to reflect, frankly, the scarcity value of what we'll be able to offer. We're not quite there yet.

But -- look, our incentive is to provide sustainable long-term and growing earnings for our owner base. That's what the company is set up to do. And so in the short term, what we're trying to do is get these deals done. We're happy with the kind of atmospherics in the market being quite positive for us. But we're not at a point where we're even entertaining the discussion of, hey, are we going to stop selling long term? I think it's in our interest, it's in our customers' interest, it's in the nation's interest, for us to meet this demand for this incredibly important load that's coming on the system. And so we're going to continue to execute in that space. And I appreciate your question, but I think it's probably more theoretical than practical at this point.

The last question coming from the line of Paul Zimbardo with Jefferies.

Joe, the powerbroker, that was a nice piece recently, I got to say, nicely done. Let me talk a little bit...

Well, it's one of those embarrassing things that happens when you're in the middle of something like this, but thank you for noting it.

Absolutely, [indiscernible]. Look, let me follow up on a couple of things here real quickly. First, with respect to operate, you've alluded to it, both on scale and scope here. I mean can you speak to the opportunity generically. I'll take note of the Pennsylvania governor's disclosure on costs relative to the 340 megawatts at Limerick. I mean, are there more limits out there in terms of effectively providing an upgrade that's tantamount the [indiscernible] and specifically, as it pertains to limit, can you elaborate a little bit on where you are on the transmission interconnect process there? I mean it seems like there's some public disclosure about some potential data center there, if you can?

Yes. So [ Julien ], I apologize for the Paul thing. I now see the 2 of you guys as the same person apparently, sorry about that. We identified about 900 extra megawatts. And so the big chunky ones there are La Salle and Limerick, which are effectively kind of the same size, but have different costs. La Salle is a bit easier to execute than Limerick. And I don't think we've published costs on that. And then we've got Calvert Cliffs 190 megawatts that I talked about. So all told, we're looking at about 900 to 1,000 megawatts that we've completed engineering work on and feel pretty confident about. So that's the answer to the upgrade question.

In terms of -- I think you were talking about crane interconnection. Is that what you asked about?

Well, I was thinking about Limerick, right? I mean it seems like there's some transmission, yes, go for it.

Yes. So there's a good deal of demand going in that area. So we're quite hopeful that any new megawatts at Limerick would be welcomed and fairly easy to interconnect. That's a big growing area of Pennsylvania in terms of the data economy that and, of course, the PPL zone.

In terms of what's being done by customers to interconnect data centers around Limerick, I think I'm going to just kind of decide not to answer that question.

No worry, maybe I'll give you another n to follow up on here. You talked about the cost of new nuclear here, both for yourselves as well as the industry. I mean cost of these uprates though seems to be materially cheaper than any new nuclear costs we're seeing out there, even if it's more relevant than what we've seen historically. Would it be fair to assume that the next round of efforts on your front, especially with this focus on additionality would focus on these -- leveraging these uprate sites first and foremost. I mean, obviously, we've seen your restarts here take a lot of the limelight at the outset, but the up rate seem to be the next wave here of where you could really win on additionality in contract it would seem, right?

Yes. Although [ Julien ], I tend not to think about these things as binary, i.e., you're not going to not do something because you're doing upgrades. But in terms of the economic merits of the operates, you're spot on. Those are great investments for us. They have the advantage of not just being additional. We think the relicensing are additional as well. But they also have the ability to be something that's really well within our wheelhouse to execute. We've done a lot of this work historically. And Bryan, the team do really great work in that regard.

As I said, we've done the engineering work. It's in communities that already like this stuff. And most importantly, when you're talking about an upgrade like this reason the economics are so attractive is you're not adding people, you're not adding O&M. The plant is just getting more output, but you don't have either an O&M drag from people and you don't have an O&M drag on extra fuel. So it's hard to compare kind of the capital numbers for an up rate to a brand-new plant, which would, of course, require you to have a whole bunch of additional O&M.

And I think let me just -- not to drag this out, but I think sometimes when people are talking about the cost of new nuclear and whether it's going to be competitive as a solution for contracts, so on and so forth. They tend to look at it from a capital cost perspective, and I certainly understand that because that's the way people have become accustomed to looking at things like renewables and storage and even new gas fire generation. But there's a huge O&M piece with nuclear that has to be carefully understood that factors into the ultimate price of that resource.

I think that brings the end, Lydia, right? That's the end of the call list here?

Yes, sir, there are no further questions.

All right. Well, terrific. So we'll bring the conversation for this morning to a close. Thank you again for your interest in Constellation for your time during this busy week, and we look forward to catching up with you at the end of the fourth quarter.

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.