ceg-20230331

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission
File Number

Name of Registrant; State or Other Jurisdiction of Incorporation; Address of Principal Executive Offices; and Telephone Number

IRS Employer Identification Number

001-41137

CONSTELLATION ENERGY CORPORATION

87-1210716

(a Pennsylvania corporation)

1310 Point Street

Baltimore, Maryland 21231-3380

(833) 883-0162

333-85496

CONSTELLATION ENERGY GENERATION, LLC

23-3064219

(a Pennsylvania limited liability company)

200 Exelon Way

Kennett Square, Pennsylvania 19348-2473

(833) 883-0162

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

CONSTELLATION ENERGY CORPORATION:

Common Stock, without par value

CEG

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Constellation Energy Corporation

Yes

☐

Constellation Energy Generation, LLC

Yes

☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Constellation Energy Corporation

Large Accelerated Filer

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

Constellation Energy Generation, LLC

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-accelerated Filer

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x

The number of shares outstanding of each registrant’s common stock as of April 28, 2023 was as follows:


Constellation Energy Corporation Common Stock, without par value			324,411,457
Constellation Energy Generation, LLC			Not applicable

TABLE OF CONTENTS


		Page No.
GLOSSARY OF TERMS AND ABBREVIATIONS		1
FILING FORMAT		4
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION		4
WHERE TO FIND MORE INFORMATION		4
PART I	FINANCIAL INFORMATION	5
ITEM 1.	FINANCIAL STATEMENTS	5
	Constellation Energy Corporation
	Consolidated Statements of Operations and Comprehensive Income	6
	Consolidated Statements of Cash Flows	7
	Consolidated Balance Sheets	8
	Consolidated Statements of Changes in Equity	10
	Constellation Energy Generation, LLC
	Consolidated Statements of Operations and Comprehensive Income	11
	Consolidated Statements of Cash Flows	12
	Consolidated Balance Sheets	13
	Consolidated Statements of Changes in Equity	15
	Combined Notes to Consolidated Financial Statements
	1. Basis of Presentation	16

	2. Regulatory Matters	17
	3. Revenue from Contracts with Customers	18
	4. Segment Information	20
	5. Accounts Receivable	22

	6. Nuclear Decommissioning	24

	7. Income Taxes	26
	8. Retirement Benefits	26
	9. Derivative Financial Instruments	27
	10. Debt and Credit Agreements	32
	11. Fair Value of Financial Assets and Liabilities	34
	12. Commitments and Contingencies	40

	13. Shareholders' Equity	42
	14. Variable Interest Entities	43
	15. Supplemental Financial Information	46
	16. Related Party Transactions	49

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	50
	Executive Overview	50
	Significant Transactions and Developments	50
	Other Key Business Drivers and Management Strategies	50
	Critical Accounting Policies and Estimates	51
	Financial Results of Operations	51
	Liquidity and Capital Resources	61
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	65
ITEM 4.	CONTROLS AND PROCEDURES	70
PART II	OTHER INFORMATION	70


ITEM 1.	LEGAL PROCEEDINGS	70
ITEM 1A.	RISK FACTORS	70
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	71
ITEM 4.	MINE SAFETY DISCLOSURES	71
ITEM 5.	OTHER INFORMATION	71
ITEM 6.	EXHIBITS	72
SIGNATURES		73
	Constellation Energy Corporation	73
	Constellation Energy Generation, LLC	74

Table of Contents


GLOSSARY OF TERMS AND ABBREVIATIONS
Constellation Energy Corporation and Related Entities
CEG Parent						Constellation Energy Corporation
Constellation						Constellation Energy Generation, LLC (formerly Exelon Generation Company, LLC)
Registrants						CEG Parent and Constellation, collectively
Antelope Valley						Antelope Valley Solar Ranch One

CR						Constellation Renewables, LLC (formerly ExGen Renewables IV, LLC)
CRP						Constellation Renewables Partners, LLC (formerly ExGen Renewables Partners, LLC)
FitzPatrick						James A. FitzPatrick nuclear generating station
Ginna						R. E. Ginna nuclear generating station
NER						NewEnergy Receivables LLC
NMP						Nine Mile Point nuclear generating station
RPG						Renewable Power Generation, LLC

TMI						Three Mile Island nuclear facility


Former Related Entities
Exelon						Exelon Corporation
ComEd						Commonwealth Edison Company
PECO						PECO Energy Company
BGE						Baltimore Gas and Electric Company
PHI						Pepco Holdings LLC (formerly Pepco Holdings, Inc.)
Pepco						Potomac Electric Power Company
DPL						Delmarva Power & Light Company
ACE						Atlantic City Electric Company
BSC						Exelon Business Services Company, LLC

Table of Contents


GLOSSARY OF TERMS AND ABBREVIATIONS
Other Terms and Abbreviations


AESO						Alberta Electric Systems Operator



AOCI						Accumulated Other Comprehensive Income (Loss)

ARC						Asset Retirement Cost
ARO						Asset Retirement Obligation







CAISO						California ISO






CODM						Chief Operating Decision Maker







CMC						Carbon Mitigation Credit
CTV						Constellation Technology Ventures



DOE						United States Department of Energy

DOJ						United States Department of Justice
DPP						Deferred Purchase Price



EBITDA						Earnings Before Interest, Tax, Depreciation and Amortization




EMA						Employee Matters Agreement
EMT						Everett Marine Terminal
EPA						United States Environmental Protection Agency

ERCOT						Electric Reliability Council of Texas
ERISA						Employee Retirement Income Security Act of 1974, as amended



ERP						Enterprise Resource Program



FERC						Federal Energy Regulatory Commission


Former PECO Units						Limerick, Peach Bottom, and Salem nuclear generating units
Former ComEd Units						Braidwood, Byron, Dresden, LaSalle and Quad Cities nuclear generating units
FRCC						Florida Reliability Coordinating Council

GAAP						Generally Accepted Accounting Principles in the United States



GWh						Gigawatt hour




IPA						Illinois Power Agency

IRS						Internal Revenue Service
ISO						Independent System Operator
ISO-NE						ISO New England Inc.
ITC						Investment Tax Credit



LIBOR						London Interbank Offered Rate









MISO						Midcontinent Independent System Operator, Inc.




MW						Megawatt
MWh						Megawatt hour
NAV						Net Asset Value
NASDAQ						Nasdaq Stock Market, Inc.
NDT						Nuclear Decommissioning Trust


NERC						North American Electric Reliability Corporation
NGX						Natural Gas Exchange, Inc.


Non-Regulatory Agreement Units						Nuclear generating units or portions thereof whose decommissioning-related activities are not subject to contractual elimination under regulatory accounting


NPNS						Normal Purchase Normal Sale scope exception
NRC						Nuclear Regulatory Commission


NYISO						New York ISO
NYMEX						New York Mercantile Exchange

Table of Contents


NYPSC						New York Public Service Commission
OCI						Other Comprehensive Income

OPEB						Other Postretirement Employee Benefits

PAPUC						Pennsylvania Public Utility Commission




PG&E						Pacific Gas and Electric Company
PJM						PJM Interconnection, LLC

PPA						Power Purchase Agreement
PP&E						Property, Plant, and Equipment

PRP						Potentially Responsible Parties
PSDAR						Post-shutdown Decommissioning Activities Report
PSEG						Public Service Enterprise Group Incorporated

PUCT						Public Utility Commission of Texas


REC						Renewable Energy Credit which is issued for each megawatt hour of generation from a qualified renewable energy source
Regulatory Agreement Units						Nuclear generating units or portions thereof whose decommissioning-related activities are subject to contractual elimination under regulatory accounting (includes the Former ComEd units and the Former PECO units)





RMC						Risk Management Committee


ROU						Right-of-use





RTO						Regional Transmission Organization
S&P						Standard & Poor’s Ratings Services


SEC						United States Securities and Exchange Commission

SERC						SERC Reliability Corporation


SNF						Spent Nuclear Fuel

SOFR						Secured Overnight Financing Rate






TMA						Tax Matters Agreement
TSA						Transition Services Agreement

U.S. Court of Appeals for the D.C. Circuit						United States Court of Appeals for the District of Columbia Circuit

VIE						Variable Interest Entity
WECC						Western Electric Coordinating Council
ZEC						Zero Emission Credit

Table of Contents

FILING FORMAT

This combined Form 10-Q is being filed separately by Constellation Energy Corporation and Constellation Energy Generation, LLC, (Registrants). Information contained herein relating to any individual Registrant is filed by the Registrant on its own behalf. Neither Registrant makes any representation as to information relating to the other Registrant.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

This Report contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. Words such as “could,” “may,” “expects,” “anticipates,” “will,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “predicts,” and variations on such words, and similar expressions that reflect our current views with respect to future events and operational, economic, and financial performance, are intended to identify such forward-looking statements.

The factors that could cause actual results to differ materially from the forward-looking statements made by us include those factors discussed herein, as well as the items discussed in (1) the Registrants' combined 2022 Annual Report on Form 10-K in (a) Part I, ITEM 1A. Risk Factors, (b) Part II, ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (c) Part II, ITEM 8. Financial Statements and Supplementary Data: Note 19, Commitments and Contingencies; (2) this Quarterly Report on Form 10-Q in (a) Part II, ITEM 1A. Risk Factors, (b) Part I, ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and (c) Part I, ITEM 1. Financial Statements: Note 12, Commitments and Contingencies; and (3) other factors discussed in filings with the SEC by the Registrants.

Readers are cautioned not to place undue reliance on these forward-looking statements, which apply only as of the date of this Report. Neither Registrant undertakes any obligation to publicly release any revision to its forward-looking statements to reflect events or circumstances after the date of this Report.

WHERE TO FIND MORE INFORMATION

The SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information that we file electronically with the SEC. These documents are also available to the public from commercial document retrieval services and our website at www.ConstellationEnergy.com. Information contained on our website shall not be deemed incorporated into, or to be a part of, this Report.

Table of Contents

PART I. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

Table of Contents

Constellation Energy Corporation and Subsidiary Companies

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)


	Three Months Ended March 31,
(In millions, except per share data)		2023		2022
Operating revenues
Operating revenues		$	7,565	$	5,431
Operating revenues from affiliates		—		160
Total operating revenues		7,565		5,591
Operating expenses
Purchased power and fuel		5,729		3,545
Purchased power and fuel from affiliates		—		5
Operating and maintenance		1,432		1,161
Operating and maintenance from affiliates		—		44
Depreciation and amortization		267		280
Taxes other than income taxes		132		137
Total operating expenses		7,560		5,172

Gain on sales of assets and businesses		26		16


Operating income		31		435
Other income and (deductions)
Interest expense, net		(107)		(55)
Interest expense to affiliates		—		(1)
Other, net		314		(318)
Total other income and (deductions)		207		(374)
Income before income taxes		238		61
Income taxes		131		(53)
Equity in losses of unconsolidated affiliates		(5)		(3)
Net income		102		111
Net income attributable to noncontrolling interests		6		5
Net income attributable to common shareholders		$	96	$	106
Comprehensive income, net of income taxes
Net income		$	102	$	111
Other comprehensive (loss) income, net of income taxes
Pension and non-pension postretirement benefit plans:
Prior service benefit reclassified to periodic benefit cost		(1)		(1)
Actuarial loss reclassified to periodic cost		6		18

Pension and non-pension postretirement benefit plan valuation adjustment		(53)		—


Unrealized gain on foreign currency translation		—		4

Other comprehensive (loss) income, net of income taxes		(48)		21
Comprehensive income		54		132
Comprehensive income attributable to noncontrolling interests		6		5
Comprehensive income attributable to common shareholders		$	48	$	127

Average shares of common stock outstanding:
Basic		328		327
Assumed exercise and/or distributions of stock-based awards		—		1
Diluted		328		328

Earnings per average common share
Basic		$	0.29	$	0.32
Diluted		$	0.29	$	0.32

See the Combined Notes to Consolidated Financial Statements

Table of Contents

Constellation Energy Corporation and Subsidiary Companies

Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended March 31,
(In millions)	2023		2022
Cash flows from operating activities
Net income	$	102	$	111
Adjustments to reconcile net income to net cash flows (used in) provided by operating activities
Depreciation, amortization, and accretion, including nuclear fuel and energy contract amortization	605		602


Gain on sales of assets and businesses	(26)		(16)
Deferred income taxes and amortization of ITCs	(33)		(307)
Net fair value changes related to derivatives	273		75
Net realized and unrealized (gains) losses on NDT funds	(187)		271
Net realized and unrealized losses on equity investments	5		20
Other non-cash operating activities	54		256
Changes in assets and liabilities:
Accounts receivable	513		(78)
Receivables from and payables to affiliates, net	—		20
Inventories	168		82
Accounts payable and accrued expenses	(1,516)		36
Option premiums paid, net	(23)		(31)
Collateral (posted) received, net	(261)		1,169
Income taxes	163		254
Pension and non-pension postretirement benefit contributions	(10)		(204)
Other assets and liabilities	(761)		(909)
Net cash flows (used in) provided by operating activities	(934)		1,351
Cash flows from investing activities
Capital expenditures	(660)		(410)
Proceeds from NDT fund sales	1,977		1,130
Investment in NDT funds	(2,030)		(1,193)
Collection of DPP, net	926		853

Proceeds from sales of assets and businesses	24		28




Other investing activities	(18)		(4)
Net cash flows provided by investing activities	219		404
Cash flows from financing activities
Change in short-term borrowings	(754)		(702)
Proceeds from short-term borrowings with maturities greater than 90 days	500		—
Repayments of short-term borrowings with maturities greater than 90 days	(200)		(300)
Issuance of long-term debt	1,353		2
Retirement of long-term debt	(30)		(1,058)

Retirement of long-term debt to affiliate	—		(258)




Contributions from Exelon	—		1,750



Dividends paid on common stock	(93)		(46)
Repurchases of common stock	(231)		—
Other financing activities	(22)		(23)
Net cash flows provided by (used in) financing activities	523		(635)
(Decrease) increase in cash, restricted cash, and cash equivalents	(192)		1,120
Cash, restricted cash, and cash equivalents at beginning of period	528		576
Cash, restricted cash, and cash equivalents at end of period	$	336	$	1,696

Supplemental cash flow information
Increase (decrease) in capital expenditures not paid	$	11	$	(119)
Increase in DPP	794		918
Increase in PP&E related to ARO update	—		335

See the Combined Notes to Consolidated Financial Statements

Table of Contents

Constellation Energy Corporation and Subsidiary Companies

Consolidated Balance Sheets

(Unaudited)


(In millions)	March 31, 2023		December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	237	$	422
Restricted cash and cash equivalents	99		106
Accounts receivable
Customer accounts receivable (net of allowance for credit losses of $47 and $46 as of March 31, 2023 and December 31, 2022, respectively)	2,147		2,585
Other accounts receivable (net of allowance for credit losses of $5 as of March 31, 2023 and December 31, 2022)	542		731
Mark-to-market derivative assets	1,952		2,368


Inventories, net
Natural gas, oil and emission allowances	259		429
Materials and supplies	1,085		1,076


Renewable energy credits	720		617

Other	1,067		1,026
Total current assets	8,108		9,360
Property, plant, and equipment (net of accumulated depreciation and amortization of $16,861 and $16,726 as of March 31, 2023 and December 31, 2022, respectively)	20,074		19,822
Deferred debits and other assets

Nuclear decommissioning trust funds	14,606		14,114
Investments	223		202

Mark-to-market derivative assets	1,125		1,261




Deferred income taxes	45		44
Other	1,977		2,106
Total deferred debits and other assets	17,976		17,727
Total assets(a)	$	46,158	$	46,909

See the Combined Notes to Consolidated Financial Statements

Table of Contents

Constellation Energy Corporation and Subsidiary Companies

Consolidated Balance Sheets

(Unaudited)


(In millions)	March 31, 2023		December 31, 2022
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings	$	705	$	1,159
Long-term debt due within one year	161		143

Accounts payable	1,558		2,828
Accrued expenses	743		906



Mark-to-market derivative liabilities	1,573		1,558

Renewable energy credit obligation	865		901

Other	342		344
Total current liabilities	5,947		7,839
Long-term debt	5,763		4,466


Deferred credits and other liabilities
Deferred income taxes and unamortized ITCs	2,982		3,031
Asset retirement obligations	12,831		12,699
Pension obligations	645		605
Non-pension postretirement benefit obligations	633		609
Spent nuclear fuel obligation	1,244		1,230


Payables related to Regulatory Agreement Units	3,069		2,897
Mark-to-market derivative liabilities	700		983


Other	1,258		1,178
Total deferred credits and other liabilities	23,362		23,232
Total liabilities(a)	35,072		35,537
Commitments and contingencies (Note 12)

Shareholders' equity
Common stock (No par value, 1,000 shares authorized, 324 shares and 327 shares outstanding as of March 31, 2023 and December 31, 2022, respectively)	13,029		13,274
Retained deficit	(493)		(496)
Accumulated other comprehensive loss, net	(1,808)		(1,760)
Total shareholders' equity	10,728		11,018
Noncontrolling interests	358		354
Total equity	11,086		11,372
Total liabilities and shareholders' equity	$	46,158	$	46,909

__________

(a)Our consolidated assets include $2,506 million and $2,641 million at March 31, 2023 and December 31, 2022, respectively, of certain VIEs that can only be used to settle the liabilities of the VIE. Our consolidated liabilities include $1,033 million and $1,041 million at March 31, 2023 and December 31, 2022, respectively, of certain VIEs for which the VIE creditors do not have recourse to us. See Note 14 — Variable Interest Entities for additional information.

See the Combined Notes to Consolidated Financial Statements

Table of Contents

Constellation Energy Corporation and Subsidiary Companies

Consolidated Statements of Changes in Equity

(Unaudited)


	Three Months Ended March 31, 2023
	Shareholders' Equity
(In millions, shares in thousands)	Issued Shares	Common Stock		Retained Deficit		Accumulated Other Comprehensive Loss, net		Noncontrolling Interests		Total Equity
Balance, December 31, 2022	327,130	$	13,274	$	(496)	$	(1,760)	$	354	$	11,372
Net income	—	—		96		—		6		102
Employee incentive plans	528	6		—		—		—		6
Changes in equity of noncontrolling interest	—	—		—		—		(2)		(2)
Common stock dividends ($0.28/common share)	—	—		(93)		—		—		(93)
Common stock repurchased	(3,239)	(251)		—		—		—		(251)
Other comprehensive income, net of income taxes	—	—		—		(48)		—		(48)
Balance, March 31, 2023	324,419	$	13,029	$	(493)	$	(1,808)	$	358	$	11,086


	Three Months Ended March 31, 2022
	Shareholders' Equity
(In millions, shares in thousands)	Issued Shares	Common Stock		Retained Deficit		Accumulated Other Comprehensive Loss, net		Noncontrolling Interests		Predecessor Member's Equity(a)		Total Equity
Balance, December 31, 2021	—	$	—	$	—	$	(31)	$	395	$	11,250	$	11,614
Net income from January 1, 2022 to January 31, 2022	—	—		—		—		—		151		151
Separation-related adjustments	—	—		—		(2,006)		7		1,802		(197)
Changes in equity of noncontrolling interests from January 1, 2022 to January 31, 2022	—	—		—		—		(7)		—		(7)
Consummation of separation	326,664	13,203		—		—		—		(13,203)		—
Net (loss) income from February 1, 2022 to March 31, 2022	—	—		(45)		—		5		—		(40)
Employee incentive plan activity from February 1, 2022 to March 31, 2022	35	9		—		—		—		—		9
Common stock dividends ($0.14/common share) from February 1, 2022 to March 31, 2022	—	—		(46)		—		—		—		(46)
Other comprehensive income, net of income taxes from February 1, 2022 to March 31, 2022	—	—		—		21		—		—		21
Balance, March 31, 2022	326,699	$	13,212	$	(91)	$	(2,016)	$	400	$	—	$	11,505