Slide 1: Earnings Conference Call Fourth Quarter 2022
Earnings Conference Call Fourth Quarter 2022 February 16, 2023
Slide 2: Cautionary Statements Regarding Forward-Looking Information
This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and ans and variations on such words, and similar expressions that reflect our current views with respect to future events and operationa
Slide 3: Non-GAAP Financial Measures
The Registrants report their financial results in accordance with accounting principles generally accepted in the United States (GAAP). Constellation supplements the reporting of financial information determined in accordance with GAAP with certain non-GAAP financial measures, including: • Adjusted
Slide 4: Non-GAAP Financial Measures (continued)
de operating performance by excluding items that are considered by management to be not directly related to the ongoing operations of the business. In addition, this information is among the primary indicators management uses as a basis for evaluating performance, allocating resources, setting incen
Slide 5: Delivered on Our Commitments in 2022
Delivered on Our Commitments in 2022 Enduring Businesses Ready to Meet the Climate Crisis Delivering Value for Our Shareholders Premier ESG Company • Introduced industry-leading climate goals • Issued carbon emissions reports to customers • Published first sustainability report • Launched $1M workfo
Slide 6: Providing Value to Our Shareholders Through Our Capital Allocation Plan
Doubling common dividend, targeting 10% annual future growth Authorized $1.0 billion in share repurchases $1.5 billion of organic growth meeting our double-digit return threshold • Commercial-scale hydrogen project • Nuclear uprates at Byron and Braidwood • Wind repower and refurbishment Credit Rati
Slide 7: Strong Operations Deliver Reliable and Affordable Carbon-Free Power
Strong Operations Deliver Reliable and Affordable Carbon-Free Power 7 (1) -owned units. Includes 100% ownership of CENG following closure of EDF Put on August 6, 2021. (2) Excludes Salem. Constellation and Industry averages reflect Oyster Creek and TMI partial year operation in 2018 and 2019, respec
Slide 8: Leading Customer Platform Enables Customers to Meet Their Energy and Sustainability Needs
Leading Customer Platform Enables Customers to Meet Their Energy and Sustainability Needs 8 (1) Other includes New England, South and West (2) Leading Customer Operational Metrics (TTM) 2022 Electric Load Served by Region (TWhs) 37 46 14 16 30 13 25 25 Other (1)Midwest New York 16 71 Mid-Atlantic 50
Slide 9: Accelerating the Transition to Carbon-Free Future
Accelerating the Transition to Carbon-Free Future 9 License Renewals Notified NRC of intent to apply for renewals at Clinton and Dresden Nuclear Uprates ~135 additional MWs planned at Byron and Braidwood Hydrogen Hubs DOE encouraged Midwest, Mid-Atlantic and Northeast hubs Hydrogen Production Pilot
Slide 10: Always-on Nuclear Keeps the Lights On, Fossil Fails During Grid Emergency
10 Always-on Nuclear Keeps the Lights On, Fossil Fails During Grid Emergency • Between December 23-25, Winter Storm Elliott brought record-setting low temperatures to the PJM region, threatening the reliability of the grid and safety of Americans • Always-on nuclear power provided the resiliency and
Slide 11: Initiating Full-Year 2023 Adjusted EBITDA Guidance of $2,900M - $3,300M
$2,185 $2,667 2021 Results 2022 Results $3,300 2023 Guidance Initiating Full-Year 2023 Adjusted EBITDA* Guidance of $2,900M - $3,300M 11 • Higher realized energy prices • Continued strong performance of customer business • Incremental costs to invest in the business • 14 refueling outages in 2023 ve
Slide 12: PTC Provides Support for Nuclear Units When Revenues Fall Below $43.75/MWh
20 25 30 35 40 45 50 55 60 20 25 30 35 40 45 50 55 60 Market Revenues ($/MWh) M a rk e t R e v e n u e s + P T C ($ / M W h ) 12 PTC Provides Support for Nuclear Units When Revenues Fall Below $43.75/MWh Illustrative Payoff Dynamics for Non-State-Supported Units in 2024 • The PTC provides support of
Slide 13: Gross Margin Update
Gross Margin Category ($M) (1) 2023 2024 2023 Open Gross Margin* (including South, West, New England, Canada hedged gross margin) $7,000 $6,400 ($1,500) Contracted Revenues (Capacity, ZEC and IL CMC Plant Revenues) (2) $2,800 $2,750 - Mark-to-Market of Hedges (3) ($2,300) ($1,050) $1,500 Power New B
Slide 14: Investing for Long-Term Value Through Capital Expenditures
Investing for Long-Term Value Through Capital Expenditures (1) 14 $750 $1,000 $775 $800 $850 $1,175 $1,175 $1,175 $400 $575 $525 $1,650 $50 2025E $2,575 2023E2022 $2,475$2,525 2024E Commited Growth BaselineNuclear Fuel ($M) Note: All amounts rounded to the nearest $25M. Items may not sum due to roun
Slide 15: Investments in Carbon-Free Future that Comfortably Exceed our Double-Digit Return Threshold
Investments in Carbon-Free Future that Comfortably Exceed our Double- Digit Return Threshold 15 • Hydrogen facility will initially use ~250 MWs and produce ~33,450 TPA hydrogen, with the ability to expand to 400 MWs – Expect long-term off-take agreements to consume more than 90% of the ~250 MWs • In
Slide 16: Securing Nuclear Fuel Supply Through 2028
Securing Nuclear Fuel Supply Through 2028 16 Nuclear Fuel Capital Expenditures • We have built a diverse and resilient portfolio that can withstand a Russian supply disruption • We entered into contracts to increase our inventory to mitigate the risk of possible supply disruption that could occur be
Slide 17: Adjusted O&M Flat 2023-2025
Adjusted O&M* Flat 2023-2025 17 $4,600 $4,875 $4,850 $4,850 2022 2023E 2024E 2025E ($M) Note: All amounts rounded to the nearest $25M
Slide 18: Our Investment Grade Balance Sheet is a Competitive Advantage
Our Investment Grade Balance Sheet is a Competitive Advantage 18 35% 45% Pre-WC/ Debt* S&P FFO / Debt* 1.8x Net Debt / EBITDA* (1) 2.2x Book Excluding Non-Recourse (1) 2023 forecasted year-end net debt is $6.7 billion (2) Maturity profile excludes non-recourse debt, P-Cap facility, securitized debt,
Slide 19: Strong Free Cash Flows Create Value Through Growth and Capital Return
Strong Free Cash Flows Create Value Through Growth and Capital Return 19 (1) Beginning Cash Available reflects excess cash balance above minimum targets as of December 31, 2022 (2) Available Cash is a midpoint of a range based on December 31, 2022, market prices (3) Debt Issuance & Other Financing i
Slide 20: 2023 Priorities
2023 Priorities 20 Continue as leader in operational excellence Accelerate transition to carbon-free future Work with Treasury and states to implement the IRA provisions Deliver on financial commitments Attract and retain the best talent as a premier workplace Effectively deploy capital to the benef
Slide 21: Additional Disclosures
Additional Disclosures — = Constellation
Slide 22: Constellation's Value Proposition
22 Constellation’s Value Proposition Enduring Businesses Ready to Meet the Climate Crisis ‘* World-Class nuclear operator and largest generator of 24/7 carbon-free firm electricity with ability to extend asset lives * Largest provider of energy and solutions to ‘commercial and industrial customers *
Slide 23: ESG
E S G Environmental: • Clean Energy Leadership: Continue to be the cleanest supplier of power in the U.S. and maintain leadership through our climate commitment to own 100% carbon-free generation by 2040. • Investing in a Clean Energy Economy: Leverage our platform to impact customers through enabli
Slide 24: Q4 2022 Adjusted EBITDA
24 Q4 2022 Adjusted EBITDA* $1,027 $605 $109 $133 ($56) Labor, Contracting and Materials Q4 2022Lower NEIL Distributions ($139) PJM Performance Bonuses, Net Nuclear Outages Q4 2021 ($117) Capacity Revenues ($95) Impact of the February 2021 Extreme Cold Weather Event ($83) ($131) Market and Portfolio
Slide 25: Full Year 2022 Adjusted EBITDA
25 Full Year 2022 Adjusted EBITDA* $1,132 $109 ($295) 2021 ($131) Impact of CTV Investments Lower NEIL Distributions ($17) 2022Market and Portfolio Conditions Impact of the February 2021 Extreme Cold Weather Event $70 $74 OtherNuclear Fuel Costs PJM Performance Bonuses, Net ($377) $2,667 $2,185 ($83
Slide 26: Inflation of Nuclear Production Tax Credit (PTC)
• Starting in 2025, the maximum PTC and gross receipts threshold are subject to an inflation adjustment based on the GDP price deflator for the preceding calendar year: • Maximum PTC is rounded to nearest $2.50/MWh and gross receipts threshold is rounded to nearest $1.00/MWh Inflation of Nuclear Pro
Slide 27: Extending the Life of our Nuclear Fleet to 80 Years
Extending the Life of our Nuclear Fleet to 80 years 27 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 22,000 20502022 20352030 C a p a c it y ( M W ) 2025 2040 2045 2055 2060 2065 2070 Potential Subsequent License Renewal for Remaining Fleet Clinton License Renewal (60 Years) Dr
Slide 28: Carbon-Free Commitments
28 100% 100% 100% Of our owned generation will be carbon-free by 2040 Reduction of our operations- driven emissions by 2040 (1) Of C&I customers provided with specific information about how to meet GHG reduction goals ✓Clean Energy Supply: ▪ Clean Electricity Supply: We commit that our owned generat
Slide 29: New York ZEC Price Determination
New York ZEC Price Determination 29 Tranche Date U.S. SCC ($/Short Ton) Baseline RGGI Estimate ($/Short Ton) Net CO2 Externality ($/Short Ton) Short Ton to MWh (Conversion Factor) Adjusted SCC ($/MWh) Reference Price ($/MWh) Energy and Capacity Forecast Adjustment ($/MWh) Upstate ZEC Price ($/MWh) T
Slide 30: Commercial Disclosures December 31, 2022
Commercial Disclosures December 31, 2022 30
Slide 31: Gross Margin Definitions
Open Gross Margin* Generation Gross Margin* at current market prices, including ancillary revenues, nuclear fuel amortization and fuel expense Power Purchase Agreement (PPA) Costs and Revenues Provided at a consolidated level for all regions (includes hedged gross margin* for South, West, New Englan
Slide 32: Gross Margin Categories and Reference Prices
Gross Margin Category ($M) (1) 2023 2024 2023 Open Gross Margin (including South, West, New England & Canada hedged GM)* $7,000 $6,400 ($1,500) Contracted Revenues (Capacity, ZEC and IL CMC Plant Revenues) (2) $2,800 $2,750 - Mark-to-Market of Hedges (3) ($2,300) ($1,050) $1,500 Power New Business /
Slide 33: Generation and Hedges
Generation and Hedges 2023 2024 2023 Expected Generation (GWh) (1) 196,500 198,200 (1,400) Midwest (Total) (2) 95,500 96,400 (100) Midwest (Excluding CMCs) 41,300 42,300 (100) Mid-Atlantic 54,800 56,400 (700) ERCOT 20,400 20,100 (600) New York 25,800 25,300 - % of Expected Generation Hedged (3) 94%-
Slide 34: Gross Margin Sensitivities
Sensitivities (with existing hedges) (1,2) 2023 2024 2023 2023 2024 NiHub ATC Energy Price + $5.00/MWh - $65 ($15) - - - $5.00/MWh - ($65) $15 - $30 PJM-W ATC Energy Price + $5.00/MWh - $60 ($20) - - - $5.00/MWh - ($60) $10 - - NYPP Zone A ATC Energy Price + $5.00/MWh $20 $55 $5 - - - $5.00/MWh ($20
Slide 35: Illustrative Example of Modeling 2024 Total Gross Margin
Row Item Midwest (Excl. CMCs) (2) Mid-Atlantic ERCOT (3) New York (A) Start with fleet-wide open gross margin* (B) Contracted Revenues (C) Expected Generation (TWh) 42.3 56.4 20.1 25.3 (D) Hedge % (assuming mid-point of range) 64.5% 74.5% 62.5% 61.5% (E=C*D) Hedged Volume (TWh) 27.3 42.0 12.6 15.6 (
Slide 36: Additional Constellation Modeling Data: Total Gross Margin Reconciliation
Additional Constellation Modeling Data 36 Total Gross Margin* Reconciliation ($M) (1) 2023 2024 Adjusted Operating Revenues* (2) $30,350 $31,750 Adjusted Purchased Power and Fuel* (2) ($21,500) ($22,325) Wind Production Tax Credits (PTC) ($25) ($25) Other Revenues (3) ($225) ($225) Direct cost of sa
Slide 37: Appendix: Reconciliation of Non-GAAP Measures
Appendix Reconciliation of Non-GAAP Measures 37
Slide 38: S&P FFO/Debt and CFO Pre-WC/Debt
S&P FFO/Debt (2) = FFO (a) CFO Pre-WC/Debt (3) = CFO (Pre-WC) (c) Adjusted Debt (b) Adjusted Debt (d) S&P FFO Calculation (2) -WC Calculation (3) GAAP Operating Income Cash Flow From Operations + Depreciation & Amortization +/- Working Capital Adjustment = EBITDA - Nuclear Fuel Capital Expenditures
Slide 39: Net Debt/EBITDA
Net Debt/EBITDA = Net Debt (a) Net Debt/EBITDA Excluding Non-Recourse = Net Debt (c) Adjusted EBITDA* (b) Adjusted EBITDA* (d) Net Debt Calculation Net Debt Calculation Excluding Non-Recourse Long-Term Debt (including current maturities) Long-Term Debt (including current maturities) + Short-Term Deb
Slide 40: Adjusted EBITDA Reconciliation
Three Months Ended December 31, Twelve Months Ended December 31, Adjusted EBITDA* Reconciliation ($M) 2021 2022 2021 2022 GAAP Net Income (Loss) $42 $34 ($205) ($160) Income Taxes (1) $117 $133 $225 ($339) Depreciation and Amortization (2) $268 $272 $3,003 $1,091 Interest Expense, Net $72 $64 $297 $
Slide 41: 2023 Adjusted EBITDA Reconciliation
Adjusted EBITDA* Reconciliation ($M) 2023 GAAP Net Income $550 - $850 Income Taxes $425 Interest Expense $425 Depreciation and Amortization $1,125 Unrealized (Gain)/Loss on Fair Value Adjustments (1) $400 Pension and OPEB Non-Service Credits ($50) Decommissioning Related Activity (2) $50 Separation
Slide 42: Adjusted O&M Reconciliation
GAAP to Non-GAAP Reconciliation 42 Adjusted O&M* Reconciliation ($M) 2022 2023 2024 2025 GAAP O&M $4,850 $5,425 $5,275 $5,250 Decommissioning (1) $75 ($200) ($200) ($175) Prior Merger Commitment (2) $50 - - - Direct cost of sales incurred to generate revenues for certain Commercial and Power busines
Slide 43: Free Cash Flow before Growth Reconciliation
GAAP to Non-GAAP Reconciliation 43 Free Cash Flow before Growth* ($M) 2023 - 2024 Adjusted Cash Flows from Operations* (Non-GAAP) (1) $8,050 - $8,450 Baseline and Nuclear Fuel Capital Expenditures ($4,000) Reinvestment in Nuclear Decommissioning Trust Funds (2) ($450) Collateral activity $150 O&M re
Slide 44: Contact Information
Contact Information InvestorRelations@constellation.com (833) 447-2783 Links Events and Presentations ESG Resources Reports & SEC Filings