Third Bridge专家访谈称Constellation受益于数据中心电力需求与Calpine整合，但未披露新增订单或量化指引

[[00:02:37]]
What is your demand outlook across the wholesale and retail segments for Constellation Energy, including any major headwinds or tailwinds that you see?

[[00:02:54]]
I think it's promising. I think it's promising for anyone who does a good job in today's environment. It's the most robust development business I have seen in energy in my whole 40 years. I've never seen it like this. It should be good for them as well as anybody else who does a good job in the industry.

[[00:03:18]]
You've got a pretty rosy outlook. What specific factors drive your optimism?

[[00:03:27]]
It's not only just data centres, but there's just so many new projects and technologies coming to the forefront and both the combination of relying on what we have, such as natural gas and grid power as well as finding new ways to develop electricity. I see SMRs on the horizon. I see a lot more efficiency in energy. Just yesterday, I met with a new plasma company who's pretty excited about how quickly they can get to fusion energy. All these new technologies are amazing. There are increasing different battery technologies. I think we'll be away from lithium in not too long. Graphene may be very good. There's a lot of other new batteries coming to the forefront. I just think that the world just needs more and more energy, especially for electricity, and it should only grow for quite a while.

[[00:04:45]]
Looking at the power market developments that impact Constellation, FERC [Federal Energy Regulatory Commission] has issued some show-cause orders to major RTOs [regional transmission organisations] to get them to address the inadequacies with the existing large-load interconnection rules. What do you think these show-cause orders mean to Constellation, depending on what the RTOs come back with, especially PJM and ERCOT [Electric Reliability Council of Texas]?

[[00:05:16]]
It's more regulatory to look at. Given the fact that Constellation is the leading nuclear energy provider in the US, they're ahead of a lot of others in many areas. They just purchased Calpine. As a matter of fact, I met with Calpine recently again. Calpine provides things to Constellation that really help them broaden how they can do things. Constellation did not have natural gas-fired electricity prior to purchasing Calpine. Calpine is maybe the leader in carbon capture. They are the leading geothermal power developer in the world. All these things help Constellation expand the things they can do.

[[00:06:13]]
We'll come to Calpine in a bit. The reason why I mentioned the regulatory landscape is because of the potential consequences on things such as behind-the-meter arrangements and rules around that, guidelines for colocation, cost allocation, etc.

[[00:06:33]]
I think everybody has to be cognisant of the fact that they just can't take power that's on the grid or waste on the grid now. They've got to find their own power. You've got to use the existing grid or their own power. That is happening. I think it's all doable, not everywhere, but there's a lot of areas of the country that, say, have a lot of natural gas, not much population and they like economic development. It's making states like North Dakota, Wyoming, states like that, very robust for data centre development, and that was never the case previously.

[[00:07:20]]
If we focus on colocation for a moment, if there are any limits to colocation, or anything where behind-the-meter arrangements are constrained, for example, there's no possible avenue to cut out, say, the utility as a middleman, or as you point out, there are issues with using…

[[00:07:44]]
In some states, that's true, but not everywhere.

[[00:07:54]]
If there are issues with using existing grid-scale generation for data centres, would that limit the opportunity set for Constellation, given that it has over 20GW worth of nuclear capacity, but also with Calpine, it has got plenty of existing baseload gas as well, which might be difficult to contract because it's existing generation? How do we think about the limits of that?

[[00:08:26]]
I think that all of the Constellation's gas-fired generation is now in demand. It can either support the grid or it can be supporting data centres. I know at ERCOT, some of the new rules and things, but it's all workable. I'm doing deals in Texas. It's workable.

[[00:08:56]]
If we were to take ERCOT – so Texas, where Constellation has a lot of capacity – do you think it would be possible to strike a deal today to take a gigawatt or gigawatt-plus CCGT [combined-cycle gas turbine] off-grid and hook it up with a bespoke deal for a data centre? Can you do that, or is that constrained by RTO guidelines or lack thereof?

[[00:09:28]]
There are guidelines, but there's also ways around the guidelines or working with the guidelines in Texas. I see that very clearly. There's a lot of things you can do in Texas. Not only just Texas. I think that it is good if you can keep the utilities happy and involved in things, but they don't have to have a large involvement in many cases. The colocation, that obviously is difficult for Constellation is if they have a nuke and it's already supporting the grid, they cannot take that power away from the grid to a data centre even if it's colocated. They have to do it as additionality. They can't do it as moving grid power to a data centre. I'm sure Constellation is working on a lot of more nuclear. Here, I live in California, we're the only state that absolutely will not approve new nuclear, but that's starting to change in the minds of people.

I think Constellation could be here developing nuclear in not too many years in California. I think that that mindset is changing. Nuclear is clean energy. Of course, some people still think it's dangerous, but look at the great success France has had for years with nuclear. I think people are starting to come around to the idea and that they like the idea of these SMRs now, smaller nuclear. There is a move away from just 24/7 nuclear with the SMRs to be peaker plants, because we probably have, in many places, too much baseload power. Our problem is we don't have enough peaking power. Whoever can solve more of that should do well in the future.

[[00:11:40]]
We've been told that the best-case scenario for an IPP [independent power producer] such as Constellation might be similar to what we saw with Talen Energy and AWS for Susquehanna with the Cumulus data centre – taking it in a multiple-year, long-duration behind-the-meter contract with a fixed price. Obviously, FERC blocked the amended ISA [interconnection service agreement] for that. It became an issue and has subsequently been moved front-of-the-meter with PPL as their facilitating utility. Do you think the original structure for Susquehanna – behind-the-meter colocation – is something that we could eventually see more broadly as a result of what's going on with regulatory change or a push for that? Or do you think we'll ultimately see mostly front-of-the-meter constructs for IPPs such as Constellation?

[[00:12:57]]
Very good question. In general, I am working a lot of behind-the-meter transactions now gas direct. It really depends on each city, the city goes along with it, what role can the utility play or do they want to. States like Florida, Alabama, some places in the Carolinas, Pennsylvania, I still see very good opportunities for behind-the-meter gas direct, in Ohio. There's a lot of places you can still do this without too much regulatory intervention. You got to get along with the regulatory bodies, but a lot of these states want the additional economic development. I'm finding a lot of places where I think it works well in Constellation. I think they're very smart to buy Calpine. Right now, I think they're smart leaving Calpine really as a sub, not as being brought into Constellation. I think over the long term, Constellation and Calpine will be one and the same eventually. We'll see. Right now, Calpine is doing some very innovative things. I see them as a leader here in California as well as Texas.

[[00:14:35]]
We'll come to Calpine, but just one more line of questioning on what's going on with RTOs and the regulatory landscape. The other thing is PJM, which is obviously a key market for Constellation. The other thing is the backstop auction.

[[00:14:50]]
PJM is harder. PJM is harder. PJM is harder, I agree. Especially New York State seems ridiculous to me, but that's what they want, I guess.

[[00:15:04]]
PJM has RBP [reliability backstop procurement] or backstop auction, which is accelerated to September 2026. I think there still isn't a final form yet, but it is meant to be bilateral long-term contracting between generators and the data centre loads or large loads. What are the pros and cons of having the bilateral contracting process in PJM, where there is already a capacity auction framework, but it's apparently not incentivising generators, given the gap between the target and what was actually procured in the capacity auction – not the most recent one, but the one before that?

[[00:15:54]]
California has got the same problem with reliability. It is having enough reliability. That is definitely an issue, but this makes it a lot better for data centres to do behind-the-meter and not get caught into all those reliability traps. However, I will say that I see a lot of data centres now doing the N+ 1 for the utility. The base is gas directly to the data centre. They build a second plant that is just for backup to sell to utilities when they get short in cold weather, hot weather, etc. That is a nice model that's starting to happen in quite a few places in the country. It's more expensive for the data centre to begin with, but the data centres then sell a lot of power along the way, so they can make up some of the cost of the data centre by actually selling to utilities. This is a new model that's starting to gain traction.

[[00:17:12]]
For PJM specifically, depending on what the parameters look like for the RBP or backstop auction – for example, I think they're talking about clearing prices capped at USD 550 or something such as that, whereas with most recent capacity auctions, it's been USD 330 per megawatt day – do you think there is any chance that capacity prices could be suppressed as a result of what happens with this RBP?

[[00:17:47]]
That's possible. I am only working PJM for behind-the-meter gas. I'm not trying to get involved. I have sold direct access power in the past in Pennsylvania and some in New York that you can't do anymore, really, and Maryland, Virginia, etc. I'm busy enough in all these other states to say that I'm really that involved in PJM. I do like behind-the-meter gas in Pennsylvania direct where you can do it, but as far as wanting to really deal with all those utilities and all the regulations in PJM, that seems like a huge headache to me.

[[00:18:39]]
If someone that does deals and has looked at PJM in Pennsylvania, do you think you can do a behind-the-meter deal with utility-scale generation, or is it primarily for distributed energy and reciprocal, on-site generation?

[[00:18:58]]
It's for on-site.

[[00:19:02]]
You wouldn't be able, or it would be a lot harder, to get it behind-the-meter for, say, a CCGT plant, such as what Constellation is in, vs sub-10MW or sub-20MW blocks or generating units?

[[00:19:18]]
I agree. I agree with that.

[[00:19:20]]
That's the state of play.

[[00:19:24]]
In other parts of the country, it's not going to be as hard now, and maybe it'll get harder there, too. California has got some of the same things because of reliability with the utilities. I think the utilities here are hunting and agreeing that they actually have some benefits with behind-the-meter. They lose some load on their system, but they gain the fact that there's more power being generated and in a crunch time, they can get some more reliability from the behind-the-meter developments. There's always going to be a utility interconnect that will help both the data centre and the utility.

[[00:20:18]]
What are your thoughts on the pros and cons of Constellation's January 2026 acquisition of Calpine, as well as the integration quality at this point?

[[00:20:34]]
One of the things that is actually surprising me is in getting to know Calpine more and looking at California more. California is coming up with a lot more geothermal than they thought, and because Calpine is so good at geothermal, this is a real benefit where people will be calling in Calpine to develop more and more of this geothermal in California. I'll give you an example. I live one mile from the University of California, Berkeley. They are shutting off their gas and their cogens that do all the power for the university within 2-3 years. They have found a huge geothermal source underneath the campus. There's more and more of this starting to happen.

[[00:21:35]]
You mentioned the geothermal upside. It already has The Geysers. Are you talking about there being an opportunity through Calpine in new geothermal development? Where do you think that is in its priority?

[[00:21:59]]
They're getting asked to look at it. I'm sure some of it will be interesting to them, because they have The Geysers, which already are, like you said, very well-developed, and they've done well there, and they do well with The Geysers. There are other places in California, the down at long (ph 22.23) Salton Sea, there's more geothermal being discovered. Near Ridgecrest, Edwards Air Force Base, they're finding more and more geothermal. Like I mentioned, underneath the campus at the University of California, Berkeley. There seems to be a lot of more places they are exploring for geothermal and having success. It can take a while, but it's a new source and it's a new clean energy source, which excites California very much.

[[00:22:56]]
That's one pro. What about any other pros regarding the massively expanded fleet and coast-to-coast coverage? What does that do for commercial or contracting flexibility?

[[00:23:08]]
They sure promote that because I've been out at Calpine with groups. They invite groups to come and hear their whole story now. They do tours of their carbon capture system, and they spend about one hour promoting all of what Calpine is doing. Whether it's all marketing spin or really that's what they really believe, we'll find out, but they have a good marketing spin on all of that.

[[00:23:40]]
What's your opinion on it? Do you think it does gain any commercial or contracting flexibility by having greater geographical coverage?

[[00:23:52]]
Yes, they do. Now some of what Calpine is doing is frustrating me also because I know a lot of the industrials around their two big gas-fired plants, Delta and Los Medanos, and they were selling power directly to some of my customers. I was supplying the natural gas, they were supplying the power, and this was at Constellation. Now those plants have gone out of operation and they could come back and there's data centres that want to be built on those sites. Calpine is a little bit balking. I think it's not that they won't supply them. I think it's that Calpine had given US Steel and Dow Chemical pretty attractive rates of power. Now they are trying to be a lot tougher on their negotiations on those rates, because back in the day when California was not the most expensive power state, USD 0.06-0.07 power was a good deal, but it was not the good deal it became when they did long-term USD 0.06 and USD 0.07 power when on PG&E, you might be paying USD 0.30-plus, USD 0.38. They don't need to be quite as competitive on those prices as they had to be 20 years ago.

[[00:25:36]]
Are there any cons to the Calpine deal?

[[00:25:46]]
Calpine has been a very independent actor for a long time. Whether Constellation will be able to totally rein them in. Calpine was out of money. Calpine was going broke. They needed Constellation, but they started doing well as part of Constellation. We'll see. It's always hard. I worked at Shell where Shell brought in a lot of companies. Some stuff worked and some didn't at all. I can always see downfalls in every acquisition. Right now, it's all new and rosy. That's how it's going now.

[[00:26:36]]
Is there any realistic upside to the integration between Constellation and Calpine? Ultimately, what is the overlap, if any?

[[00:26:48]]
Sure. If Calpine keeps developing more of these gas-fired plants that can be used by Constellation to market to industrials, to other utilities, etc, that's just more power to sell for Constellation. I would think that has some upside. We're going to be needing more and more power in this country. We went 20 years with the only peaks being really weather extremes and baseload power just wasn't growing. Now we have a chance for baseload power to grow again. Calpine can help that growth of baseload power for Constellation.

[[00:27:41]]
Constellation has highlighted powered land deals as a major growth opportunity. Most recently, that would be with CyrusOne for Calpine's Freestone Energy Center in Texas. Could you outline how these powered land deals could look and how they might compare to the typical C&I [commercial and industrial] retail contracts?

[[00:28:11]]
I'm actually working on a number of powered land deals. That's really what data centres like very much right now. It makes it so much easier than doing everything behind-the-meter with gas and building all the gas infrastructure. To have already some base in a building and then grow from there is easier. Some places still have grid power that's being offered. It depends on the size of the data centre, of course. I think powered lands is very attractive right now. There's people that's their whole business is powered land. You can't get nowhere and they're starting to develop traction.

[[00:28:59]]
What are the parameters of powered land? For Constellation, that could be an existing generation asset with ample land and interconnection slack in order to grow the overall interconnection. What parameters strike you as definitive of a powered land deal?

[[00:29:25]]
I will say that what people like is a building that still has connections to take 5-10MW and then you add some more gas to it and add more generation and you quickly go from a 10MW load to a 100MW load. That's the goal of a lot of these now. They want to see in the future, they can get at least the 30MW, 50MW, 100MW. They do not have to be a hyperscaler. They can do well at 100MW.

[[00:30:07]]
Obviously, if we look at Constellation's fleet of opportunities where it could do a powered land deal, I have to assume that the underpinning generation asset would be about 1GW or excess of 500MW of scale for a lot of the CCGTs. I would assume that it would aim for hyperscaler campuses or at least larger data centre development.

[[00:30:35]]
They thought about that with the Calpine acquisition, absolutely. We'll see how they do, but they might do well with that. That's part of the whole promotion of Calpine, that if you go out to their… Los Medanos is where I was recently. I've been out there a couple of times. That's what they're talking about. What frustrates me, though, is I have a lot of folks that are looking for 30MW and 50MW and Calpine doesn't seem that interested in those sizes anymore. Now they're 100MW and more. They want to be larger on their sales.

[[00:31:15]]
My takeaway there would be that Calpine, and therefore Constellation, with these power land deals, would be looking for less rather than more offtakers, and larger, more creditworthy offtakers.

[[00:31:31]]
What they really are looking for is one primary buyer of the power, but some optionality still, for example, with the Cal ISO. The presentation I saw said that Southern county plant that's going to be about 600MW. Southern is going to take what they need for Smud, which is one of the largest muni utilities in the country. Then the additional power should go to Cal ISO. That's their plan there.

[[00:32:14]]
In the pre-data centre era, what did the typical retail contract that you worked on look like, in terms of duration, how pricing was set or indexed and what it was indexed to? What key clauses should we know about?

[[00:32:34]]
I would say that if you were indexing, it was some index vs what the utility would cost, some savings. They were usually not longer than three years. I did do a couple of 10-year deals, but that was very unusual. There was a lot of one year with options to renew with price reopeners. If it wasn't a price reopener, it was usually 2-3 years. That's the Direct Access programme in California. I did those programmes in Texas as well and a couple in New York until New York became really hard.

[[00:33:19]]
Basically, the benchmark for pricing would be the equivalent or relevant tariff schedule for the load size for that particular zone's utility. Is that the benchmark?

[[00:33:32]]
Yes. If you can't save money vs utility rate, why would you buy your own power? For certain months or certain time periods, you might not be able to beat the utility. In the long term, you should always be able to beat the utility because there is a transition cost to switching off the utility to buying directly and utility charges for that. Over time, they get less and less of that transition cost, and that makes the savings better. That's the argument for going to direct access power in California now, even if you start out barely saving any money, if you go to all these customers that have been doing it for 20 years, they're saving quite a bit of money. Their transition costs are much less.

It's different. ERCOT is the best direct sales market because they made sure that the utilities were really just delivery functions, no longer really having a lot of their own generation or anything. They really made it a very open market to anybody who wanted to build power and sell it. California is a little different. They still want PG&E and Edison, San Diego Gas & Electric to have a lot of powered sales as well as just delivery only combination. There's a lot of the CCAs in California. They're around the country places, too, around Massachusetts, Illinois. There's different places with CCAs. In California, to really want a CCA, you have to totally believe in the whole climate change thing because in many cases, you're not saving any money vs buying from the utility. It's just that their mix of generation is more renewable than the utilities. That is their marketing in California, CCAs.

[[00:35:53]]
The typical C&I retail contract was a three-year affair, and prices were benchmarked against the relevant tariff product from the utility with some cost savings. Typically, what was the band of savings, and was the pricing fixed vs floating or indexed?

[[00:36:24]]
Both, but I would say that you had to prove to your customer that your fixed price would guarantee you a 5-10% savings vs what… There's companies here in California that do nothing but consult on tracking for the marketers. For Constellation, for Shell, anybody I worked for, what they expected utility rates to be and how much savings there could be, you could calculate all that. Then you can take that to your customer and said, "The PG&E rate is going up. If you can just buy at this price today, you'll save more money because PG&E is going to be higher." A lot of that is… I wouldn't say it's unspoken, but it's not that generally known. We've had a lot of fires in California. Many of them, you have to really follow it to really know the truth about a lot of this. A lot of this is really not caused by, say, PG&E.

Unfortunately, there's a lot of arsonists trying to prove a point about climate change that wanted to just say, "Oh, these are climate change fires," etc, but they were actually arsonists. The PUC had to cut a deal with PG&E that PG&E would cover the cost of these fires because nobody else could. That's kind of a deal with the devil, as I say, but it allowed PG&E to get along with the PUC and the PUC keep approving rate increases to cover all these additional costs that were never imagined, acts of God that suddenly cost PG&E, but they get it back in rates.

[[00:38:49]]
Regarding Constellation's assumptions, it mentioned that 1GW long-term natural gas powered land contracts will price at a USD 10-25 per megawatt-hour premium vs wholesale benchmarks. These deals would be in the 2029 reference year. With those assumptions, does that sound feasible to you in terms of all the parameters?

[[00:39:30]]
If data centres can keep making the kind of money they are, they look feasible, but maybe that changes. Why would they do it if they didn't get a premium? I can see why they want a premium. It's going to be a matter of how much premium.

[[00:39:52]]
If there's going to be a premium vs wholesale energy prices, do you think the contract pricing would still need to reflect the savings vs tariff products for the data centre, or would they be less sensitive to that typically?

[[00:40:11]]
It is so much speed to market now. I'm amazed at how much data centres are willing to pay just to have speed to market. I don't understand the business as well on what's going on with AI, but it must be unbelievably attractive or they think it will be or they wouldn't be paying these premiums, but they seem to be doing it.

[[00:40:44]]
Which plants or assets do you think are best-positioned for new powered land deals or other long-term contracting structures post Constellation's acquisition of Calpine?

[[00:41:00]]
I still think that developing more nuclear and SMRs is in the mind of Constellation. They have really become a great company with the nuclear fleet. They really are going to be pushing that. The nuclear fleet made enough money to allow them to buy Calpine to do other things. It was amazing because I started at Constellation was still Exelon really having the nukes. Exelon, when Exelon and Constellation separated, I think Exelon made a bad bet. They let Constellation have the nukes. I think they thought that the nukes were just not liked by the general public in the US. Even if they are clean energy, there's still a lot of scare that they are dangerous. I think that's alleviated most parts of the country quite a bit, don't you think?

[[00:42:13]]
The grand majority of Constellation's new capacity is in PJM, which we've already discussed. It could be harder to get a utility-scale behind-the-meter contract, at least at the moment until it figures out what the final rules are going to be regarding colocation or behind-the-meter structures.

[[00:42:33]]
They have a lot of nukes and ideas for nukes around the rest of the country, not just PJM.

[[00:42:40]]
Which ones would be most opportune for a powered land deal, if not PJM-based nukes?

[[00:42:49]]
I think Texas would be very good for more powered land.

[[00:42:53]]
Is it mostly the ERCOT assets that it has post Calpine that would be the immediate candidates for powered land?

[[00:43:03]]
Yes, those Calpine cogens could be very attractive. They could build more. Calpine wants to build more. Constellation does a good job of watching what other people do and imitating it but being better at imitating it. I think that's one of the things I saw about the Constellation. The other thing about Constellation was working there, they don't feel that other marketers are superior to them. They think they have the arguments and they have a good marketing feel that you're better off paying a little bit more to get Constellation because they value you and give you more support and more options than XYZ marketer. They really try to talk a good game. Without violating everything, I just know that Constellation have really nice margins in their retail business. Let me just say that. I'm sure they still do.

[[00:44:29]]
Do you see any risk that Constellation will be over-indexed to large-load demand in the long term? How would the company mitigate that risk? How would it find load for its capacity, especially post the acquisition of Calpine, if the data centres don't come as expected?

[[00:44:49]]
No, that's a good point. You should be back to what they were before them, I guess, somewhat. They are pretty dominant in retail gas and power in many states. Those are still good businesses. Not the great business that having all this nuclear fleet is, but still good businesses.

[[00:45:08]]
That's an interesting point. What role do you think the company's retail platform plays in mitigating that risk, whether it's diversifying offtakers or being able to get more value per megawatt-hour of generation?

[[00:45:25]]
I think that Constellation, while I was at Constellation, really went to a lot more finding things that customers weren't thinking about. Really, they were quite interested in helping develop all the renewables and renewable credits and making the customers feel better about themselves being cleaner sustainability. Of course, I think they had a shock that Trump has cut off a lot of this stuff. I think Constellation will still say, "Yes, this has happened under Donald Trump, but 2-3 years from now, that will not be the factor. We'll go back to all the sustainability things that Constellation is really making a lot of money on." That's another growth area. They still are pitching to their retail customers. I think that RE100 people, most of them have not abandoned their long-term goals for renewable energy. Some have, but not quite a few that are still true believers. Constellation thinks that will come back in phase again and happen beyond nukes. If I were Constellation, I would really be picking behind the scenes on nuclear power here in California. California is in tough shape in growing power supply. Constellation could help with that. You look at how much ERCOT has added to their supplies, California has not done much of anything in growing it. There's still a 57,000MW peak. What's ERCOT, 80,000MW-some now.

California looks bad, at least to me and others that study this. I'm sure Constellation has some ideas to maybe help California. What you're going to have to convince California citizens are there… I think there are, you got to convince them, there are places you can build nuclear plants in California that are not on a fault. Yes, California has a lot of faults, but it also has a lot of areas that don't have faults, but just coming to that realisation. Governor Newsom, I'm sure, woke up a couple of years ago when we almost lost the grid. He learned that Diablo Canyon was the last nuke and it was going to be closing. It produces 10% of our power in California. It is still on and it probably will be on the indefinite future, 20-30 years more. California needs more of that. With all these smart, technical minds here in California, it's shocking that we have the second highest rates only to Hawaii in the country with all of our resources. That is a lot of mismanagement in government in California.

[[00:49:35]]
How do retail margins in the retail business help hedge against any wholesale market volatility, especially if there's any material deviation regarding capacity prices, given Constellation's exposure there?

[[00:49:48]]
If you can get those same premiums on selling retail power, then the fact that if wholesale margins shrink, that's somewhat of an offset. That's why Constellation love the retail business because it was not as competitive as wholesale. That's how Constellation grew so much retail business. Some states are still hold-outs. I am still shocked that Indiana hasn't fully gone open retail. They talk about it and talk about it and talk about it, and they haven't. Michigan has a very convoluted retail power market. Some states don't have it at all. There's only 20-some states that actually have competitive retail markets for power. That's why Constellation still likes gas because gas is the one place where you can do in 40-some states, retail natural gas and make good margins.

[[00:50:56]]
While we have seen some data centre deals, my understanding is that there has been relative disappointment that Constellation hasn't announced more deals, given how much baseload the company has. Why do you think that's the case? Why have contract signings perhaps lagged expectations?

[[00:51:18]]
Because Constellation started out and saying, "We only want to use our nuclear fleet for this," because I was there, I said, "Let's offer other things." They didn't want to. That's one of the reasons I left Constellation. I could still work at Constellation. I was very interested in this data centre growth, and Constellation wasn't that much. I've been gone one year, maybe it's changed more. When I was still there, I was finding data centres… A few of them now, I've seen, have done some deals with Constellations, but they were not encouraging me to really go after data centres with gas. Now they've got Calpine, that might change, too. They really wanted to emphasise nuclear to data centre.

[[00:52:16]]
That's an interesting point. At least pre-Calpine, why do you think it was not actively going after data centres more aggressively, except with nuclear?

[[00:52:31]]
Because they had built… That stock price was not very high when I started Constellation. Look where their stock price is. Still, it got up to USD 300 and some amounts still at USD 250 or whatever. They have really grown their stock price based on that nuclear fleet. That's what caused it because they were already a good retailer when their stocks were at USD 30 and USD 40. They weren't getting any growth on having a good retail business. It was all based on the nukes. I know just talking to friends I have, Constellation, I'm sure they're looking at SMRs as maybe a new thing they can do. Given that they know nuclear power, they might be the most poised to go into SMRs. SMRs are approved in very few states right now. Constellation talks a good game in hydrogen, but I have not seen them really do it, but they talk a good game in hydrogen. Maybe they've got some plans for hydrogen that I don't know. What are your thoughts about hydrogen?

[[00:53:46]]
What would be the use case of hydrogen at the moment past the medium term? Would it be hydrogen blending with the gas fleet or standalone as fuel cells?

[[00:53:59]]
I think fuel cells for one thing, fuel cells. Yes, fuel cells for sure. I don't know, there's a lot of people talking all kinds of wild stuff about hydrogen. I don't know. I know the people, I work there. I'm sure they're working on a lot of new stuff and new things to attract attention. They did a great job of nuclear marketing, and they probably can do a good job. Marketing is one of their strengths. I would say that Constellation doesn't have the strongest trade desk. They don't have the trade desks like the major wholesalers, but they do have great marketing. I'm sure they've got a whole idea of all these different things they want to market for the future. They've always got three- and five-year plans at Constellation, "We'll do this, and then we'll move to this, and we'll move to that." I'm sure they're doing that. Dominguez have been amazing for them.

[[00:55:05]]
How should we think about the pros and cons of going contracted vs staying merchant? Is there variation in that depending on it being nuclear or gas-fired baseload?

[[00:55:26]]
I'm sure that they will do more gas-fired baseload. I'm sure they would want to do that. They will be watching the retail market and anything that some other people doing start to work a little bit. Constellation is a good imitator of success. They think they can take somebody's minor success and make it a major success. I've seen that.

[[00:55:59]]
To clarify, I'm talking about the pros and cons of taking an asset such as a nuclear plant or a gas-fired one and either contracting it or keeping it merchant and playing volatility.

[[00:56:16]]
I was saying with Calpine, it's going to be part baseload to a good user, a data centre or Smud for Southern, but then they will still leave some power to sell in the wholesale market, to sell to Caiso when Caiso is short, get those premiums. They're going to do both of those things, I think. Calpine said that to me recently when I was out there, "We don't want to sell all this power because I have some data centres that could take all the power from some of these baseload plants at Calpine." They said, "We don't want to do that again. We want to give a certain amount, a large amount to somebody, for somebody creditworthy and know we're going to be there 10-20 years, but we want to leave some power for the volatility in the Caiso."

[[00:57:19]]
What do you see as the big worst-case risks for Constellation at the moment, given the environment of relative exuberance?

[[00:57:30]]
I guess if they can't grow their nukes much more, somehow problems come with nukes. Obviously, you would hate to ever see a nuclear problem again, but that would be the biggest risk, the nuclear problem. Some people worry about in California, "We've saved Diablo, we need it, but Diablo is on a fault. What if they had a huge earthquake on Diablo Canyon?" That would hurt anybody trying to go into nuclear. That's very unlikely, but, yes, that's right.

[[00:58:12]]
What about long-term price competition from renewables and those PPA [power purchase agreement] prices being lower-cost options for loads in the long term?

[[00:58:27]]
I will say that Constellation was never about being cheap. They always want that marketing spend to get premiums on their sales of their products. It's been pretty good for them. Maybe that will dry up at some point, but it hasn't so far.

[[00:58:50]]
If the environment gets more price-conscious, would that be a straight negative for Constellation?

[[00:58:56]]
It's not good for Constellation. That would not be good for Constellation, but Constellation has been so smart. The way Illinois gave them that floor price for their nuke, they would love to do that everywhere. I don't know if you know how that deal works.

[[00:59:16]]
The Illinois nuclear PTCs [production tax credits]?

[[00:59:22]]
Yes, how Constellation… You may know better than me, but it seemed like their floor price was about USD 45. If the market price was USD 55, Constellation could share above the USD 45-55. The Constellation won on both ways. They won on, if there was ever a low power price, they got that floor price, but if the market price went up, they got the market price. That's an incredible deal for Constellation. They can do more of those deals. Wow. I was impressed with negotiating that.

[[01:00:06]]
Do you see any risk regarding Constellation's access to gas feed, especially post its acquisition of Calpine? Could that be a supply issue for the company in the long term?

[[01:00:20]]
If all the gas goes to data centres, it's not leftover for the wholesale market, I suppose. I know they were very frustrated when New York wouldn't let gas go through the state anymore, and they had to move it up to Canada and around to serve New England or Constellation has had to get waivers from the Jones Act on that LNG facility outside of Boston just to keep customers warm in the winter with high-priced LNG. Those are frustrating things for a marketer, but they can be reality. Right now, gas is having a heyday. Will it always be that way? Will it go back to where it's a transition fuel again, or is it a long-term baseload? Hard to predict the future.

[[01:01:19]]
No idea. I think that's what we're trying to do today. That's pretty much all my questions, so I'll park it there. I wanted to say thanks so much for joining me and sharing your insights.

[[01:01:33]]
I enjoyed this. Any time you want to talk about data centres and any of the stuff I do, I'm quite open to it.

[[01:01:46]]
We'll be in touch. Thanks so much. Appreciate your time.

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