Constellation Energy CEG · USD

Segment Information Operating segments are determined based on information used by the CODM in deciding how to evaluate performance and allocate resources. We have five reportable segments consisting of the Mid-Atlantic, Midwest, New York, ERCOT, and all other power regions referred to collectively as “Other Power Regions.”The basis for our reportable segments is the integrated management of our electricity business that is located in different geographic regions, and largely representative of the footprints of ISO/RTO and/or NERC regions, which utilize multiple supply sources to provide electricity through various distribution channels (wholesale and retail). Our hedging strategies and risk metrics are also aligned to these same geographic regions. Descriptions of each of our five reportable segments are as follows:•Mid-Atlantic represents operations in the eastern half of PJM, which includes New Jersey, Maryland, Virginia, West Virginia, Delaware, the District of Columbia, and parts of Pennsylvania and North Carolina.•Midwest represents operations in the western half of PJM and the United States footprint of MISO, excluding MISO’s Southern Region.•New York represents operations within NYISO.•ERCOT represents operations within Electric Reliability Council of Texas that covers a majority of the state of Texas.•Other Power Regions:•New England represents operations within ISO-NE.•South represents operations in FRCC, MISO’s Southern Region, and the remaining portions of SERC not included within MISO or PJM.•West represents operations in WECC, which includes CAISO.•Canada represents operations across the entire country of Canada and includes AESO, OIESO, and the Canadian portion of MISO.Constellation's CEO is considered the CODM and evaluates the performance of our electric business activities and allocates resources based on segment RNF, primarily through review of budget-to-actual variance analyses. RNF is Operating revenues net of Purchased power and fuel expenses. We believe this is a useful measurement of operational performance, although it is not a presentation defined under GAAP and may not be comparable to other companies’ presentations or deemed more useful than the GAAP information provided elsewhere in this report. In our evaluation of operating segments, we noted the CODM reviews a variety of performance and profitability measures at a consolidated level with a primary focus on RNF reporting at the regional level.

Revenue from Contracts with Customers We recognize revenue from contracts with customers to depict the transfer of goods or services to customers at an amount that we expect to be entitled to in exchange for those goods or services. Our primary sources of revenue include competitive sales of power, natural gas, and other energy-related products and sustainable solutions. The performance obligations, revenue recognition, and payment terms associated with these sources of revenue are further discussed in the table below. There are no significant financing components for these sources of revenue. Unless otherwise noted, for each of the significant revenue categories and related performance obligations described below, we have the right to consideration from the customer in an amount that corresponds directly with the value transferred to the customer for the performance completed to date. Therefore, we generally recognize revenue in the amount for which we have the right to invoice the customer. As a result, there are generally no significant judgments used in determining or allocating the transaction price.

Commitments and ContingenciesCommercial Commitments. Commercial commitments as of December 31, 2025, representing commitments potentially triggered by future events, were as follows:Expiration within202620272028202920302031 and beyondTotalLetters of credit$1,784 $190 $122 $— $1 $3 $2,100 Surety bonds(a)603 — 214 — — — 817 Total commercial commitments $2,387 $190 $336 $— $1 $3 $2,917 __________(a)Surety bonds — Guarantees issued related to contract and commercial agreements, excluding bid bonds.Nuclear Insurance We are subject to liability, property damage and other risks associated with major incidents at any of our nuclear stations. Our financial exposure to these risks is mitigated through insurance and other industry risk-sharing provisions.The Price-Anderson Act was enacted to ensure the availability of funds for public liability claims arising from an incident at any of the U.S. licensed nuclear facilities and to limit the liability of nuclear reactor owners for such claims from any single incident. As of December 31, 2025, the current liability limit per incident is $16.3 billion and is subject to change to account for the effects of inflation and changes in the number of licensed reactors at least once every five years with the last adjustment effective January 1, 2024. In accordance with the Price-Anderson Act, we maintain financial protection at levels equal to the amount of liability insurance available from private sources through the purchase of private nuclear energy liability insurance for public liability claims that could arise in the event of an incident. Effective January 1, 2024, the required amount of nuclear energy liability insurance purchased is $500 million for each operating site. Claims exceeding that amount are covered through mandatory participation in a financial protection pool, as required by the Price Anderson-Act, which could provide up to approximately an additional $15.8 billion per incident at any U.S. nuclear power reactor in funds available for public liability claims. Participation in this secondary financial protection pool requires the operator of each reactor to fund its proportionate share of costs for any single incident at any U.S. nuclear power reactor that exceeds the primary layer of financial protection. Our share of this secondary layer would be approximately $3.

Debt and Credit Agreements Short-Term BorrowingsWe meet our short-term liquidity requirements primarily through the issuance of commercial paper. We may use our credit facility for general corporate purposes, including meeting short-term funding requirements and the issuance of letters of credit.Credit Agreements In September 2025, we amended our existing RCF to increase the available aggregate commitment from $4.5 billion to $7.0 billion, which included incremental revolving credit commitments of $2.5 billion and extension of the maturity date to September 2030. The incremental commitments became available upon closing of the Calpine acquisition in January 2026. The RCF may be drawn down in the form of loans and/or to support commercial paper and letters of credit issuances. The RCF fixed facility fee rate is 0.175% and borrowings under the RCF bear interest at a rate based upon either the Daily Simple SOFR rate or a Term SOFR rate, plus an adder based upon our credit ratings. The adders for the Daily Simple SOFR-based borrowings and Term SOFR borrowings are 0.075% and 1.075%, respectively. The letters of credit bear interest at a rate of 1.075%. If we were to lose our investment grade credit rating, the maximum adders for Daily Simple SOFR rate borrowings and Term SOFR rate borrowings would be 1.00% and 2.00%, respectively. The credit agreements also require us to pay facility fees based upon the aggregate commitments. The fees vary depending upon our credit rating.Accounts Receivable FacilityIn December 2024, we amended the Facility to provide NER access to revolving loans from a number of financial institutions ("Lenders") secured by certain customer accounts receivable. As part of the amendment, the maximum funding limit of the of the Facility was increased from $1.1 billion to $1.5 billion and the maturity date was extended to December 2027. Under previous terms of the Facility, certain customer accounts receivable were sold to the Purchasers. Immediately following the amendment, all receivables previously sold were assigned back to us and receivables will no longer be sold to the Purchasers under the amendment. Subsequent to the amendment, draws and repayments related to the Facility will be reflected as Proceeds from short-term borrowings and Repayments of short-term borrowings, respectively, in the Consolidated Statements of Cash Flows.

Income Taxes Income (Loss) Before Income TaxesIncome (loss) before income taxes is comprised of the following components:For the Years Ended December 31,202520242023Domestic$3,458 $4,433 $2,137 Foreign53 83 310 Total Income (loss) before income taxes$3,511 $4,516 $2,447 Components of Income Tax Expense or BenefitIncome taxes are comprised of the following components:For the Years Ended December 31,202520242023FederalCurrent$764 $451 $392 Deferred238 229 302 ITC amortization(15)(14)(15)StateCurrent136 127 142 Deferred50 (39)(34)ForeignCurrent14 (25)72 Deferred— 45 — Total Income tax (benefit) expense$1,187 $774 $859 Income Taxes PaidIncome taxes (net of refunds) paid during the year was comprised of the following components:For the Years Ended December 31,202520242023Federal$341 $242 $315 StateIllinois16 24 19 Maryland11 24 7 Other state91 141 41 ForeignUnited Kingdom(20)— 61 Other foreign7 5 23 Total income taxes paid (net of refunds)$446 $436 $466 Rate ReconciliationThe effective income tax rate varies from the U.S. federal statutory rate principally due to the following:For the Years Ended December 31,202520242023U.S. federal statutory income tax21.0 %$737 21.0 %$948 21.0 %$514 (Decrease) increase due to:State income taxes, net of federal income tax benefit(a)(b)4.2 147 1.5 69 3.5 86 Foreign tax effects0.1 2 0.1 3 0.5 12 Tax creditsPTC(2.1)(74)(9.4)(425)— — Amortization of ITC, including deferred taxes on basis differences(0.3)(12)(0.2)(11)(0.5)(12)Other(0.3)(8)(0.4)(16)(0.6)(15)Nontaxable or nondeductible itemsShare-based payment awards(1.2)(44)(0.4)(17)(0.3)(7)Excess officers compensation1.5 51 0.7 34 0.8 20 Other1.0 38 0.2 10 0.4 9 Other adjustmentsQualified NDT fund income and losses9.9 350 4.0 179 10.3 252 Effective income tax(c)(d)33.8 %$1,187 17.1 %$774 35.1 %$859 _________(a)Includes $21 million, ($42) million and ($4) million related to state rate changes and certain state tax positions in 2025, 2024, and 2023, respectively.(b)In 2025, state taxes in Massachusetts, New York, Pennsylvania, and New Jersey made up the majority (greater than 50%) of the tax effect in this category. In 2024, state taxes in Maryland, Illinois, Massachusetts, California, New Jersey, New York, Pennsylvania, and Connecticut made up the majority (greater than 50%) of the tax effect in this category. In 2023, state taxes in Maryland, Pennsylvania, New Jersey, and California made up the majority (greater than 50%) of the tax effect in this category.

Stock-Based Compensation PlansOur LTIP grants cash and stock-based awards that primarily include performance share awards and restricted stock units. Our LTIP authorized 20,000,000 shares of common stock for these awards. The following table presents the stock-based compensation expense included in the Consolidated Statements of Operations and Comprehensive Income:For the Years Ended December 31,202520242023Total stock-based compensation expense included in Operating and maintenance expense$385 $332 $178 Income tax benefit(99)(85)(45)Total after-tax stock-based compensation expense$286 $247 $133 We receive a tax deduction based on the intrinsic value of the award on the distribution date for performance share awards and restricted stock units. The tax deduction related to performance share awards and restricted stock units was not material for the years ended December 31, 2025, 2024, and 2023. For each award, throughout the requisite service period, we recognize the tax benefit related to compensation costs. For performance share awards and restricted stock units, our realized tax benefit when distributed was not material for the years ended December 31, 2025, 2024, and 2023.Performance Share AwardsPerformance share awards are granted under the LTIP. The performance share awards are typically settled 50% in common stock and 50% in cash at the end of the three-year performance period, subject to certain ownership thresholds that, if met, may result in cash settlement of the entire award.The common stock portion of the performance share awards is considered an equity award and is valued based on our stock price on the grant date. The cash portion of the performance share awards is considered a liability award which is remeasured each reporting period based on the current stock price. As the value of the common stock and cash portions of the awards are based on the stock price during the performance period, coupled with changes in the total expected payout of the award, the compensation costs are subject to volatility until payment is made.For nonretirement-eligible employees, performance share awards are recognized over the vesting period of three years using the straight-line method. For performance share awards granted to retirement-eligible employees, the value of the performance shares is recognized ratably over the vesting period, which is the year of grant.

The following table summarizes our unvested performance share awards activity:SharesWeighted Average Grant Date Fair Value (per share)Unvested at December 31, 2024535,626 $99.06 Granted120,057 321.83 Change in performance96,623 313.60 Forfeited(3,812)195.73 Undistributed vested awards(a)(469,066)332.97 Unvested at December 31, 2025279,428 $198.49 __________(a)Represents performance share awards that vested but were not distributed to retirement-eligible employees during 2025 and 2024.The following table summarizes the weighted average grant date fair value and the total fair value of performance share awards vested:December 31, 2025(a)December 31, 2024(a)Weighted average grant date fair value (per share)$321.83 $127.03 Total fair value of performance shares vested156 138 __________(a)As of December 31, 2025 and 2024, total unrecognized compensation costs related to unvested performance shares of $41 million and $50 million, respectively, are expected to be recognized over the remaining weighted average period of 1.5 years.The following table summarizes our unvested restricted stock unit activity:SharesWeighted Average Grant Date Fair Value (per share)Unvested at December 31, 2024809,093 $96.53 Granted265,512 312.97 Vested(437,388)82.45 Forfeited(11,067)197.23 Undistributed vested awards(a)(76,272)271.03 Unvested at December 31, 2025549,878 $181.54 __________(a)Represents restricted stock units that vested but were not distributed to retirement-eligible employees during 2025 and 2024.The following table summarizes the weighted average grant date fair value and the total fair value of restricted stock units vested:December 31, 2025(a)December 31, 2024(a)Weighted average grant date fair value (per share)$312.97 $134.18 Total fair value of restricted stock units vested57 42 __________(a)As of December 31, 2025 and 2024, total unrecognized compensation costs related to unvested restricted stock units of $57 million and $41 million, respectively, are expected to be recognized over the remaining weighted average period of 1.9 years and 1.8 years, respectively.

LeasesLessee We have operating leases for which we are the lessee. The significant types of operating leases are contracted generation and real estate. The following table outlines other terms and conditions of the lease agreements as of December 31, 2025. We did not have material finance leases in 2025, 2024, or 2023. In YearsRemaining lease terms1-30Options to extend the term2-30Options to terminate within2The components of operating lease costs were as follows:For the Years Ended December 31,202520242023Operating lease costs$104 $105 $96 Variable lease costs109 145 146 Total lease costs(a)$213 $250 $242 __________(a)Excludes $50 million of sublease income recorded for each of the years ended December 31, 2025, 2024, and 2023. The following table provides additional information regarding the presentation of operating lease ROU assets and lease liabilities in the Consolidated Balance Sheets:As of December 31, 20252024Operating lease ROU assets(a)Other deferred debits and other assets$371 $436 Operating lease liabilities(a)Other current liabilities72 72 Other deferred credits and other liabilities433 511 Total operating lease liabilities$505 $583 __________(a)The operating ROU assets and lease liabilities include $141 million and $241 million, respectively, related to contracted generation as of December 31, 2025, and $176 million and $289 million, respectively, as of December 31, 2024.The weighted average remaining lease terms, in years, and the weighted average discount rates for operating leases were as follows: As of December 31,202520242023Weighted average remaining lease term6.77.48.4Weighted average discount rate5.1 %5.0 %5.0 %The following table reconciles the undiscounted cash flows for our operating leases to the operating lease liabilities recorded on our consolidated balance sheet as of December 31, 2025:2026$104 2027104 2028105 2029103 203063 2031 and thereafter159 Total lease payments638 Less: Imputed interest133 Operating lease liabilities$505 Supplemental cash flow information related to operating leases was as follows:For the Years Ended December 31,202520242023Cash paid for amounts included in the measurement of operating lease liabilities$90 $87 $102 ROU assets obtained in exchange for operating lease obligations2 6 13 Lessor We have operating leases for which we are the lessor. The significant types of operating leases are contracted generation and real estate.