The paragraph details the opening statements of Constellation Energy Corporation's Third Quarter 2024 Earnings Conference Call. The operator introduces the session, mentioning it includes a presentation and a subsequent Q&A segment. Emily Duncan, Senior VP of Investor Relations and Strategic Growth, then introduces the call, highlighting key speakers, including Joe Dominguez, CEO, and Dan Eggers, CFO. The paragraph notes that the earnings release and presentation materials are available on the company's website and cautions that the call includes forward-looking statements subject to risks and uncertainties, with actual results potentially differing from projections. It also mentions references to non-GAAP financial measures.

In the paragraph, Joseph Dominguez addresses a recent FERC ruling that rejected Talen's Interconnection Service Agreement (ISA), highlighting its narrow nature and the potential for future actions from FERC, PJM, or other parties. He emphasizes the importance of colocation in competitive markets for building large data centers crucial for AI leadership in the U.S., noting that national security and economic interests are at stake. Both presidential candidates and National Security Advisor Jake Sullivan agree on the urgency of maintaining AI leadership to prevent competitors from gaining an advantage.

The paragraph discusses Constellation's unique position to address power issues related to AI growth, emphasizing that there is a capacity issue rather than an energy one. It highlights the need for demand response, peakers, and batteries, contingent on effective market pricing signals. The paragraph supports PJM's decision to delay the latest auction to address capacity market challenges, like changing the reference unit and RMR units. It expresses trust in FERC to prioritize these RPM matters. With load increasing, it's crucial for the market to have proper price signals. The paragraph mentions the expected additional load in PJM's upcoming auction and the importance of colocation in enhancing reliability. Lastly, it underscores Constellation's principle of supporting the grid with its power during emergencies.

The paragraph discusses strategies and updates from Constellation, emphasizing the role of nuclear energy in supporting grid reliability while compensating fairly. It highlights the importance of addressing regulatory and cost issues related to co-located loads at FERC. Constellation reported strong third-quarter earnings, raising its full-year guidance due to robust financial performance. The company aims for a 13% EPS growth by 2030, supported by nuclear production tax credits, with a focus on its large, reliable fleet of nuclear plants. These assets will meet the increasing demand for carbon-free electricity and reliable power. Additionally, Constellation is committed to providing innovative products and services through its C&I business.

The paragraph discusses Constellation's financial strength and strategic initiatives in clean energy. It highlights the restart of the Crane Clean Energy Center, symbolizing nuclear energy's revival and affirming the value of clean, reliable electricity. The growing demand for 24/7 clean energy, driven by factors like the data economy and electrification, benefits the company's stakeholders. Constellation plans to expand nuclear capacity by at least 1,000 megawatts and reports high customer interest and progress in contracts. The company is focused on negotiating and supporting data center development across the PJM region.

The paragraph discusses Microsoft's agreement with Constellation, enabling the use of energy across multiple states, highlighting Constellation's ability to construct energy transactions for data economy customers both within and outside the PJM region. Constellation is committed to economic development and national security by aligning with state governors' clean energy goals and expanding co-location and grid sales opportunities. The company is a leader in promoting clean energy, developing new nuclear energy designs like SMRs in partnership with Rolls-Royce Nuclear, and advancing carbon capture technologies with partners like GE. They are also preparing for advanced engineering tests at their Texas facility for their investment in NET Power.

The paragraph discusses the company's commitment to natural gas as part of its sustainable energy strategy, emphasizing the importance of addressing both economic and environmental goals. It highlights the company's strong performance, including a 13% compounded growth target until the end of the decade and its successful operational metrics. The nuclear sector is particularly noted for its high reliability and efficiency, with strong refueling performance. The renewables and natural gas sectors also reported high operational efficiency. The paragraph concludes by emphasizing the value created by integrating the company's generation fleet with its commercial business, as evidenced by impressive performance metrics.

The company has been successful because of its customer-focused energy solutions, including CORe+ and CFE products, which support renewable energy generation and carbon-free electricity distribution. Since 2020, CORe+ has significantly expanded, adding 2,800 megawatts of wind and solar to the system, aligning with customers' sustainability goals. The CFE product enhances these efforts by providing round-the-clock clean energy. Financially, the company reported strong earnings and benefitted from declining natural gas prices and efficient renewable energy performance. The Nuclear PTC tax credit also supported revenue, while the acquisition of interest in the South Texas project contributed to earnings. The commercial team effectively managed market volatility, reinforcing their strong performance.

The company reported strong third-quarter financial results, outperforming expectations and increasing its earnings outlook for the year. Despite not repurchasing shares during the quarter due to timing and negotiations, $1 billion remains authorized for buybacks, and $1.8 billion of capital is unallocated for 2024-2025. They’ve raised their full-year adjusted operating earnings guidance midpoint from $8 to $8.20 per share, exceeding the original range. The commercial business performed well, boosting enhanced gross margin by $275 million. Higher employee compensation costs were noted due to strong earnings and stock performance. The company will update its earnings guidance, including 2026, in the next quarter's call.

The paragraph discusses Constellation's plans and expectations for future growth and challenges. In 2026, the company will face more and longer refueling outages due to planned uprates at Byron and Braidwood, which will reduce electricity production and increase operational costs. Despite this, Constellation forecasts at least 13% compound annual EPS growth through 2030, supported by federal backing. The company is confident in its position as a leading nuclear plant operator and plans to capitalize on the growing power demand driven by the data economy, electrification, and onshoring. It sees significant opportunities in providing energy solutions and leveraging its unique assets and market share with competitive commercial and industrial customers.

The paragraph discusses Constellation's plans to add 2,000 megawatts of new nuclear energy to the grid by 2027, highlighting the bipartisan support for nuclear energy in the U.S. among policymakers and the public. It mentions recent pro-nuclear legislation like the ADVANCE Act and the role of production tax credits, originally supported by Republicans. It emphasizes that both Vice President Harris and former President Trump have been proponents of nuclear energy. Despite political divisions, the demand for clean and reliable energy remains strong. The paragraph concludes with the intention to continue providing clean energy regardless of election outcomes. Finally, it invites questions, with the first from Jeremy Tonet of JPMorgan Securities, inquiring about Constellation's strategies for front-of-the-meter versus behind-the-meter solutions in terms of value creation and market speed.

In the paragraph, Joseph Dominguez discusses the aggressive pursuit of opportunities to support data center development using power stations, emphasizing the importance of speed to market in different regions. He mentions partnering with utilities and states to provide clean, reliable power to meet growth objectives. Dominguez also highlights that certain states are actively promoting data economy development, with governors understanding its importance for national security and economic growth as part of an interconnected grid.

The paragraph discusses the efforts to attract data center development by Republicans and Democrats, highlighting the economic benefits such as jobs and taxes associated with these projects. It mentions the strategy of working with utilities and advancing data economy development. The company has experience in selling terawatt hours to various regions and managing associated risks. There's an emphasis on following customer demand and expanding transmission capacity to accommodate it. The team's work with hyperscalers is ramping up to explore buying and deploying energy capacity flexibly. Additionally, Shar Pourreza of Guggenheim Partners asks about the transmission capacity in ComEd and PECO zones, considering other peers' strategies in front-of-the-meter deals.

The paragraph discusses the current state and future prospects of energy transmission capabilities, particularly in the PJM market and the ComEd zone, which has robust export capabilities. New transmission infrastructure is being developed, enhancing the ability to move energy and capacity. There is also a focus on resolving issues related to behind-the-meter (BTM) tariffs in the FRCC, though a quick resolution is unlikely. Various parties are interested in progressing these matters following a recent tech conference, with an emphasis on creating a comprehensive strategy to address the comments and concerns raised there.

The paragraph discusses the uncertainty around organizations like FERC or PJM taking the lead on an unfolding issue at a tech conference happening in 72 hours. It highlights the growing significance of AI and suggests it will be a defining factor for America's success in the 21st century, transcending the energy business. It mentions that not everyone recognizes AI's importance yet, but this perception will likely change by November 2024. The speaker, Joseph Dominguez, is asked by Steve Fleishman to elaborate on the idea of using nuclear power for emergency situations and its compensation, as well as challenges related to demand response at data centers, and Dominguez begins addressing these topics.

The paragraph discusses the role of demand response (DR) in managing peak energy demand within PJM, emphasizing the need for consistent and strong price signals to encourage commercial and industrial customers to reduce energy consumption. The article notes that while past price drops in capacity markets discouraged participation, recent auction prices could revive DR as a valuable resource. The importance of a stable capacity market is highlighted. Additionally, the paragraph touches upon how nuclear units can help manage grid stress by reducing their co-located load during crises, with the cooperative understanding of customers.

The paragraph discusses the challenges and solutions related to integrating data centers with the electric grid, particularly around nuclear plants. It refutes the notion that data centers would remain operational while the grid is down, suggesting instead that they have solutions to re-engage with the grid when necessary. Joseph Dominguez mentions past issues with the PJM committee but emphasizes the need for coordinated efforts to enable nuclear plants to efficiently connect with the grid. Steve Fleishman asks about transitioning to co-located structures, and Dominguez explains that while such changes might require further study and could delay implementation, they could be managed without significant time lost by adhering to existing tariffs.

In the paragraph, Joseph Dominguez discusses the impact of a recent narrow ruling by three commissioners on his company's market plans. He downplays the ruling's significance, noting it doesn't align with their strategic planning and customer expectations. Dominguez emphasizes ongoing activities in front-of-the-meter deals with customers in PJM, pointing out these efforts are progressing well, especially after a collaboration with Microsoft. He expresses confidence that these initiatives will contribute positively to the company's growth targets, despite the anticipated timeline for finalizing deals. An unidentified analyst acknowledges the time required for these processes.

The discussion focuses on the scarcity and strategic value of upgrade opportunities at Constellation, with Joseph Dominguez suggesting that they're using these limited opportunities to create broader strategic relationships with customers, including potentially relicensing efforts. Hyperscalers, who are large-scale cloud computing providers, are particularly interested, indicating a strong demand despite regulatory challenges in regions like PJM. David Arcaro from Morgan Stanley inquires about the hyperscalers' perspectives, and Dominguez acknowledges that although there are regulatory issues, PJM remains a critical and competitive energy market for these companies, who continue to invest heavily without finding a 'Nirvana' or ideal solution elsewhere.

The paragraph discusses the challenges and considerations surrounding energy supply and regulatory flexibility in the PJM market, emphasizing its importance despite logistical hurdles. It highlights the need for creative regulatory solutions to meet energy demands without waiting a decade for infrastructure development. The speaker, Joseph Dominguez, counters the notion of major market changes like re-regulation or subsidized new generation, expressing skepticism about their practicality. He points out issues with the auction process, such as delayed auctions and pricing variability due to a reference unit, suggesting PJM's need to revisit these decisions.

The paragraph discusses the potential impact of realistic pricing on demand response and competitive supply options, suggesting that allowing the market to work could lead to utility investments in power plant generation. The conversation then shifts to a question from Nick Campanella of Barclays about grid charges and their impact on economics and return targets. Joseph Dominguez responds by stating that his views on what the front-of-the-meter charges should be have not changed, suggesting that charges should apply when the grid is used, and that previous charge ranges remain applicable.

The paragraph discusses the importance of efficient interconnection in the transmission system, emphasizing that properly placed projects near data centers and power sources can help control costs. It notes that data economy customers are more concerned with speed and efficiency than cost, as they wish to avoid lengthy study processes. The dialogue then shifts to a conversation between Nick Campanella and Daniel Eggers about capital allocation. Campanella inquires about potential stock buybacks and expectations for the fourth quarter, to which Eggers responds that a comprehensive financial update will be provided during the fourth quarter earnings call.

The paragraph discusses the company's plans for future financial guidance and updates. They mention providing formal guidance for 2025 and significant inputs for 2026 to offer a multiyear outlook, with projections extending to 2028 and potentially adding more years to support growth targets until 2030. The company will update cash availability figures for the year-end and for 2025 and 2026, considering all capital expenditure plans and new growth opportunities. Regarding stock buybacks, they intend to participate in the market as long as they are not restricted by insider information, expressing regret for missing an opportunity when the stock was lower. The conversation then shifts to a question from Durgesh Chopra about a Federal Energy Regulatory Commission (FERC) decision, where Joseph Dominguez expresses uncertainty about FERC's next steps but mentions the possibility of driving the agenda if necessary.

The paragraph discusses the ongoing efforts to collaborate with like-minded parties to understand and respond to developments involving PJM and FERC, particularly due to the recusal of two commissioners. The speaker highlights the importance of gathering information and formulating a plan in the coming weeks. Joe Dominguez then provides closing remarks, expressing appreciation for the discussion and excitement about future growth opportunities, before the conference call is concluded.

This summary was generated with AI and may contain some inaccuracies.