Constellation Energy (CEG) Q2 2026 Earnings Call: Q&A Summary

Q: Nick Campanella from Barclays asked for details on the new long-term nuclear deal, including customer type and pricing.

A: Joe Dominguez stated the deal aligns with their view of long-term value and is one of many market opportunities, though he declined to disclose specific customer or pricing details to respect customer confidentiality.

Q: Nick Campanella from Barclays asked about the bilateral process in PJM and the potential for hybrid deals using new capacity.

A: Joe Dominguez and Dan Eggers explained that the bilateral process is confidential but involves discussing all megawatt-adding opportunities, including uprates, batteries, and peakers, alongside existing assets. They emphasized that utilizing existing stranded capacity is the fastest and most cost-effective way to support grid reliability while managing peak demand.

Q: Steve Fleishman from Wolfe Research asked if the new nuclear contracts are located in PJM.

A: Joe Dominguez confirmed that while they would not pinpoint the origin, most of their assets are located in PJM.

Q: Steve Fleishman from Wolfe Research asked if contracts account for potential outcomes from connect and manage or IRAS processes.

A: Joe Dominguez explained that customers can manage peak demand through batteries or backup generation while still needing to purchase energy for the remaining 99% of the year, where existing resources provide a reliable, fixed-price solution. He argued that waiting for new power plants to be built before connecting data centers is not a viable strategy.

Q: Steve Fleishman from Wolfe Research asked about trends within the $20 to $50 per megawatt hour contract value range.

A: Shane Smith stated they would maintain the current range and noted that all transactions discussed in March fit within this profile, declining to provide further specifics to protect customer sensitivity.

Q: David Arcaro from Morgan Stanley asked about the status of the Batch Zero process in ERCOT.

A: Joe Dominguez and Dave Dardis confirmed they have projects in the Batch Zero process and are working to provide the requested information, viewing the measure as temporary and manageable. They noted that Governor Abbott remains a strong supporter of data center development in Texas.

Q: David Arcaro from Morgan Stanley asked about the outlook for power prices, spark spreads, and the impact of battery storage in ERCOT.

A: Joe Dominguez explained that the current market conditions in Texas were expected, as battery storage arrived on the grid before the anticipated load growth from data centers. He expects the market to tighten as data centers are completed and come online.

Q: Jeremy Tonet from JPMorgan Securities asked about the new capital allocation floor on Slide 13 and growth investment.

A: Shane Smith clarified that the $0.20 per share floor represents the progress made from the $2.2 billion in share repurchases over the last four months, noting that while they continue to explore growth, there are no new disclosures informing that range.

Q: Jeremy Tonet from JPMorgan Securities asked how customer conversations regarding PJM have changed over time.

A: Joe Dominguez noted that customers are becoming increasingly sophisticated about grid dynamics and are seeking rule clarity to proceed with investments. He stated that as PJM provides necessary regulatory certainty, contracting activity is resuming.

Q: Sophie Karp from KBCM asked about the next steps and timeline for the co-location process in PJM.

A: Joe Dominguez stated they expect a response from PJM around November and a FERC order in the first or second quarter of 2027. He highlighted the potential for hybrid solutions, such as co-locating load with existing power plants supplemented by batteries.

Q: Sophie Karp from KBCM asked about the strategy for investing in new builds versus share buybacks.

A: Joe Dominguez said there is nothing imminent regarding new nuclear investment, though they are preparing sites for future development. He mentioned that New York is an exciting opportunity they are pursuing with the state administration, but it is not yet reflected in financial disclosures.

Q: James West from Melius Research asked about customer views on utilizing latent or stranded capacity.

A: Joe Dominguez stated that clients are highly sophisticated and understand the value of existing generation. He noted that customers are seeking a mix of solutions, including uprates and new capacity, but recognize the important role existing megawatts play in the ecosystem.

Q: James West from Melius Research asked if battery technology has evolved enough to provide long-duration storage.

A: Joe Dominguez confirmed that 4-hour batteries are already playing a significant role in the grid, and the company is leveraging the expertise acquired from Calpine to integrate these resources.

Q: Julien Dumoulin-Smith from Jefferies asked about the timeline of bilateral negotiations relative to the PJM RBP process.

A: Joe Dominguez clarified that the RBP is not the exclusive avenue for customer conversations, as many clients prefer separate bilateral agreements. He noted that customers are crafting strategies to meet potential future PJM rules while maintaining flexibility.

Q: Julien Dumoulin-Smith from Jefferies asked about the timeline for Illinois nuclear procurement and the CMC expiration.

A: Joe Dominguez stated that the state has a process involving an IRP and procurement plan, and the company will participate in those discussions. He noted that New York serves as a good template for what Illinois could consider.