Constellation Energy

“Advancements in both distributed and utility-scale power generation technology could impact market prices and demand size and behaviors. For instance, commercial and residential solar generation installations, energy storage improvements that include batteries and fuel cells, and other emerging technologies are improving the cost-effectiveness of customer self-supply of electricity.”

Annual report 2025A · The company itself

“We could continue to pursue growth in our existing businesses and markets and seek further diversification across the competitive energy value chain. This could include opportunistic emissions-free energy acquisitions, creating new value from our existing fleet through nuclear uprates, renewable repowerings, development of additional capacity for battery storage, natural gas, and CCUS, co-location of customer load, growing sustainability solutions for our customers, and investment opportunities in other emerging technologies and innovations.”

Annual report 2025A · The company itself

“The market price for electricity is also affected by changes in the demand for electricity and the available supply of electricity. Unfavorable economic conditions, milder than normal weather, regulatory intervention, and the growth of energy efficiency and demand response programs can rapidly increase supply or depress demand.”

Annual report 2025A · The company itself

“Our retail operations compete for customers in a competitive environment, which affects the margins we can earn and the volumes we are able to serve. In periods of sustained low natural gas and power prices and low market volatility, retail competitors can aggressively pursue market share because the barriers to entry can be low and wholesale generators (including us) use their retail operations to hedge generation output.”

Annual report 2025A · The company itself

“Advancements in nuclear technology, CCUS, storage and advanced geothermal may contribute to a substantial increase in the supply of clean, reliable baseload power, impacting market prices.”

Annual report 2025A · The company itself

“The rapid development and integration of AI technologies into our processes presents several risks to our business. The use of AI technologies in our operations presents risks that could adversely affect our business, financial condition, results of operations and reputation. AI systems, whether developed internally or used by our vendors, service providers or business partners, may produce inaccurate, biased or misleading outputs or experience errors, security vulnerabilities or other failures, which could result in operational disruptions, flawed decision‑making, data loss, cybersecurity incidents or reputational harm.”

Annual report 2025A · The company itself

“Demand associated with data centers and AI applications may be subject to technological change, shifts in customer behavior, regulatory developments, or changes in capital investment cycles and may not grow at the pace currently anticipated by the market. Our results of operations, growth opportunities, and the price of our common stock could be adversely impacted if the demand for energy driven by the data economy does not continue or fails to achieve current market expectations.”

Annual report 2025A · The company itself

“We could continue to pursue growth in our existing businesses and markets and seek further diversification across the competitive energy value chain. This could include opportunistic emissions-free energy acquisitions, creating new value from our existing fleet through nuclear uprates, renewable repowerings, development of additional capacity for battery storage, natural gas, and CCUS, co-location of customer load, growing sustainability solutions for our customers, and investment opportunities in other emerging technologies and innovations.”

Annual report 2025A · The company itself

“This includes the demand and perceived value of certain attributes of our generation, such as reliability or clean energy, as well as the overall demand for energy in the markets in which we operate. Recently, we have benefited from increased demand for our generation as a result of the developing data economy, including demand driven by data centers and AI and other high-performance computing applications, evidenced by the execution of long-term contracts with technology companies as well as increased interest in prospective contracts from our customers.”

Annual report 2025A · The company itself

“Demand associated with data centers and AI applications may be subject to technological change, shifts in customer behavior, regulatory developments, or changes in capital investment cycles and may not grow at the pace currently anticipated by the market. Our results of operations, growth opportunities, and the price of our common stock could be adversely impacted if the demand for energy driven by the data economy does not continue or fails to achieve current market expectations.”

Annual report 2025A · The company itself

“This includes the demand and perceived value of certain attributes of our generation, such as reliability or clean energy, as well as the overall demand for energy in the markets in which we operate. Recently, we have benefited from increased demand for our generation as a result of the developing data economy, including demand driven by data centers and AI and other high-performance computing applications, evidenced by the execution of long-term contracts with technology companies as well as increased interest in prospective contracts from our customers.”

Annual report 2025A · The company itself

“In addition, our retail sales subject us to credit risk through competitive electricity and natural gas supply activities to serve C&I companies, governmental entities, and residential customers. Retail credit risk results when customers default on their contractual obligations.”

Annual report 2025A · The company itself

“In addition, our retail sales subject us to credit risk through competitive electricity and natural gas supply activities to serve C&I companies, governmental entities, and residential customers.”

Annual report 2025A · The company itself

“In addition, our retail sales subject us to credit risk through competitive electricity and natural gas supply activities to serve C&I companies, governmental entities, and residential customers.”

Annual report 2025A · The company itself

“Our operations are affected by weather, which impacts demand for electricity and natural gas, the price of energy commodities, and operating conditions.”

Annual report 2025A · The company itself

“Extreme weather conditions or storms could affect the availability of generation and the transmission of electricity, limiting our ability to source electricity or transmit it to our customers.”

Annual report 2025A · The company itself

“Our physical facilities could be placed at greater risk of damage should changes in the global climate impact temperature and weather patterns, and result in more intense, frequent and extreme weather events, unprecedented levels of precipitation, sea level rise, increased surface water temperatures, and/or other effects.”

Annual report 2025A · The company itself

“Natural disasters, war, acts and threats of terrorism, pandemic and other significant events could negatively impact our results of operations, ability to raise capital, and future growth. Our fleet of power plants and the transmission infrastructure to which they are connected could be affected by natural disasters and extreme weather events, which could result in increased costs, including supply chain costs. Natural disasters and other significant events increase our risk that the NRC or other regulatory or 41 Table of Contents legislative bodies could change the laws or regulations governing, among other things, operations, maintenance, operating licenses, decommissioning, SNF storage, insurance, emergency planning, security and environmental and radiological matters.”

Annual report 2025A · The company itself

“Some of Calpine's geothermal, natural gas power plants, and battery storage sites, which were acquired in January 2026 are exposed to frequent minor earthquakes and wildfire risks, mainly in the West. Severe weather and wildfires, especially in California, have disrupted operations and damaged assets like the Geysers Assets. Such events can cause injuries, property damage, and service interruptions, resulting in significant liabilities.”

Annual report 2025A · The company itself

“Electric utilities may shut down power for public safety reasons during periods of extreme fire hazard. Any shutdown that halts operation at our power plants may reduce our revenues.”

Annual report 2025A · The company itself

“The wholesale markets vary from region to region with distinct rules, practices, and procedures. Changes in these market rules, problems with rule implementation, or failure of any of these markets could adversely affect our business with little notice.”

Annual report 2025A · The company itself

“The imposition of price caps, the issuance of orders extending the operation of generation resources slated for retirement, the imposition of requirements that new large load secure supply from new generation resources or agree to be interrupted, policies allowing utility-owned generation in restructured states, and policies favoring new resources at the expense of existing resources may lead to a market design that results in the premature retirement of existing resources, which would negatively affect our portfolio of assets as well as the market as a whole. For example, PJM is considering market rule changes as part of its stakeholder process, and the Trump administration, in conjunction with Governors of PJM states, have proposed a framework to govern new load connection and the generation that can serve that load.”

Annual report 2025A · The company itself

“We could also be affected by state laws, regulations or initiatives to subsidize existing or new generation.”

Annual report 2025A · The company itself

“FERC’s requirements for market-based rate authority could pose a risk that we may no longer satisfy FERC’s tests for market-based rates. A loss of market-based rate authority would mean that we would sell power at cost-based rates.”

Annual report 2025A · The company itself

“Table of Contents Our results of operations and financial condition are significantly affected by our sales and purchases of commodities at market-based rates, as opposed to cost-based or other similarly regulated rates. Federal and state regulatory and legislative action designed to limit market-based rates through capacity market mitigation, energy and capacity pricing restrictions, new generation mandates, or other means, may negatively impact our results of operations.”

Annual report 2025A · The company itself

“Additionally, Federal Power Act Section 202(c) authorizes the issuance of emergency orders requiring power plants to operate or to mandate temporary electricity connections to prevent grid failure during emergencies such as severe weather, fuel shortages, or sudden demand spikes. The exercise of such authority could have an adverse impact on our results of operations if we are required to operate units when it is not economical.”

Annual report 2025A · The company itself

“Approximately 70% of our generating resources, which include directly owned assets and capacity obtained through long-term contracts, are in the area encompassed by PJM. Our future results of operations are impacted by (1) FERC’s and PJM's level of support for policies that favor the preservation of competitive wholesale power markets, recognize the value of emissions-free electricity and resiliency, complement states' energy objectives and policies and (2) the absence of material changes to market structures that would limit or otherwise negatively affect us.”

Annual report 2025A · The company itself

“Federal or state legislative and regulatory efforts to preserve the environmental attributes and reliability benefits of zero-emission nuclear-powered generating facilities could be subject to legal and regulatory challenges and, if overturned, could result in the early retirement of certain of our nuclear plants.”

Annual report 2025A · The company itself

“We may be exposed to climate mitigation and transition risks if we are adversely affected by changes to the energy systems as a result of new technologies, changing customer expectations and/or voluntary GHG goals, as well as local, state or federal regulatory requirements intended to reduce GHG emissions.”

Annual report 2025A · The company itself

“Geopolitical risks specific to nuclear fuel include the ongoing Russia and Ukraine conflict which has yielded sanctions and legislation by the United States, United Kingdom, European Union, Russia, and Canada impacting the exports and imports of Russian nuclear fuel. An example of such sanctions includes the “Prohibiting Russian Uranium Imports Act” which bans the import of low-enriched uranium into the U.S. that is produced in Russia or by Russian entities, absent a waiver from the DOE.”

Annual report 2025A · The company itself

“In addition, geopolitical issues, to include conflicts in the Ukraine and the Middle East, as well as tensions between the U.S. and China, may motivate cyber-attacks which could impact the U.S. energy sector and our Company via supply chain disruptions or direct targeting. A security breach, including, but not limited to, physical or electronic intrusions, computer viruses, malware, attacks by cyber criminals or nation state threat actors, ransomware attacks, phishing attacks, supply chain attacks, third-party breaches, and other similar breaches of our physical assets or information systems, or those of our competitors, vendors, business partners and interconnected entities in RTOs, ISOs, and other energy markets, or regulators have the potential to disrupt our business and result in harm to the Company.”

Annual report 2025A · The company itself

“The impact that potential terrorist attacks could have on the industry and on us is uncertain. We face a risk that our operations would be direct targets or indirect casualties of an act of terror.”

Annual report 2025A · The company itself

“The spot market price of electricity for each hour is generally determined by the marginal cost of supplying the next unit of electricity to the market during that hour. Thus, the market price of power is affected by the market price of the marginal fuel, in particular the price of natural gas, used to generate the electricity unit.”

Annual report 2025A · The company itself

“Risks Related to Market and Financial Factors We are exposed to price volatility associated with both the wholesale and retail power markets and the procurement of nuclear fuel, natural gas, and oil.”

Annual report 2025A · The company itself

“We depend on nuclear fuel, natural gas, and oil to operate most of our generating facilities. The supply markets for nuclear fuel, natural gas, and oil are subject to price fluctuations, availability restrictions, tariffs, counterparty default, and geopolitical risk, which could have a material adverse impact on our results of operations or financial condition.”

Annual report 2025A · The company itself

“Drought-like conditions limiting water usage could impact our ability to run certain generating assets at full capacity.”

Annual report 2025A · The company itself

“Certain of our assets in the West and Texas Regions, including Calpine's Geysers Assets acquired in January 2026, have experienced drought conditions in the recent past. Disruptions in water 37 Table of Contents availability such as droughts, curtailment, or high prices may impact our ability to generate energy or serve customers, adversely impacting our operations and financial condition.”

Annual report 2025A · The company itself

“In addition, natural disasters could affect the availability of a secure and economical supply of water in some locations, which is essential for our continued operation, particularly the cooling of generating units.”

Annual report 2025A · The company itself

“The market price for electricity is also affected by changes in the demand for electricity and the available supply of electricity. Unfavorable economic conditions, milder than normal weather, regulatory intervention, and the growth of energy efficiency and demand response programs can rapidly increase supply or depress demand.”

Annual report 2025A · The company itself

“The impacts of significant economic downturns (i.e., recession) could lead to decreased volumes delivered and increased expense for uncollectible customer balances. The impacts of significant economic downturns on our retail customers, such as less demand for the products and services provided by our C&I customers, could result in an increase in the number of uncollectible customer balances and related expense.”

Annual report 2025A · The company itself

“We are subject to evolving physical security, cybersecurity, and third-party reliability risks. Threat actors continue to seek to exploit potential vulnerabilities in the energy sector associated with protection of sensitive and confidential information, grid infrastructure, and other energy infrastructures. These attacks and disruptions, both physical and cyber, are becoming increasingly sophisticated and dynamic.”

Annual report 2025A · The company itself

“In addition, new or updated security regulations or new vulnerabilities identified by security researchers, third-party suppliers, or threat actors could require changes in current measures taken by security or our business operations and could adversely affect our results of operations or financial condition. Our acquisition of Calpine in January 2026 introduces expanded cybersecurity and physical security risks.”

Annual report 2025A · The company itself

“Unfavorable economic conditions, milder than normal weather, regulatory intervention, and the growth of energy efficiency and demand response programs can rapidly increase supply or depress demand. In addition, in some markets, the supply of electricity can exceed demand during some hours of the day, resulting in lower market prices, including periods of negative pricing, and loss of revenue for baseload generating plants such as our nuclear plants.”

Annual report 2025A · The company itself

“Improvements in energy efficiency of lighting, appliances, equipment and building materials will also affect energy consumption by customers.”

Annual report 2025A · The company itself

“We rely on the capital markets, particularly for publicly offered debt, as well as the banking and commercial paper markets, to meet our financial commitments and short-term liquidity needs. Disruptions in the capital and credit markets in the United States or abroad could negatively affect our ability to access the capital markets or draw on our bank revolving credit facilities.”

Annual report 2025A · The company itself

“The strength and depth of competition in energy markets depend heavily on active participation by multiple trading parties, which could be negatively affected by disruptions in the capital and credit markets and legislative and regulatory initiatives that could affect participants in commodities transactions. Reduced capital and liquidity and failures of significant institutions that participate in the energy markets could diminish the liquidity and competitiveness of energy markets that are important to our business.”

Annual report 2025A · The company itself

“Risks Related to Market and Financial Factors We are exposed to price volatility associated with both the wholesale and retail power markets and the procurement of nuclear fuel, natural gas, and oil.”

Annual report 2025A · The company itself

“We depend on nuclear fuel, natural gas, and oil to operate most of our generating facilities. The supply markets for nuclear fuel, natural gas, and oil are subject to price fluctuations, availability restrictions, tariffs, counterparty default, and geopolitical risk, which could have a material adverse impact on our results of operations or financial condition.”

Annual report 2025A · The company itself

“We may be adversely affected by the effects of sustained inflation. An increase in inflation rates could result in higher interest rates and capital costs, increased costs of labor, and other similar effects.”

Annual report 2025A · The company itself

“Advancements in both distributed and utility-scale power generation technology could impact market prices and demand size and behaviors. For instance, commercial and residential solar generation installations, energy storage improvements that include batteries and fuel cells, and other emerging technologies are improving the cost-effectiveness of customer self-supply of electricity.”

Annual report 2025A · The company itself

“Our employees, contractors, customers and the general public could be exposed to a risk of injury due to the nature of the energy industry. Employees and contractors throughout the organization work in, and the general public could be exposed to, potentially dangerous environments near our operations. As a result, employees, contractors and the general public are at some risk for serious injury, including loss of life.”

Annual report 2025A · The company itself

“Our performance could be negatively affected if we fail to attract and retain an appropriately qualified workforce. Certain events, such as an employee strike, loss of employees, loss of contract resources due to a major event, and an aging workforce without appropriate replacements, could lead to operating challenges and increased costs for us. The challenges include lack of resources, loss of knowledge, and a lengthy time period associated with skill development.”

Annual report 2025A · The company itself

“We are particularly affected due to the specialized knowledge required of the technical and support employees for generation operations.”

Annual report 2025A · The company itself

“An increase in inflation rates could result in higher interest rates and capital costs, increased costs of labor, and other similar effects.”

Annual report 2025A · The company itself

“In the future we may experience interruptions, delays and outages in service and availability from time to time due to a variety of factors, including infrastructure changes, human or software errors, website hosting disruptions and capacity constraints. Coordinated physical and or cyber-attacks that disrupt multiple key electric or natural gas assets of unaffiliated, interconnected parties (such as parties responsible for real-time planning and management of the bulk power system) could impact our ability to provide generation, potentially resulting in localized and regional blackouts affecting third parties and the public, many of which might have no direct commercial relationship with the Company.”

Annual report 2025A · The company itself

“We currently utilize a mix of third-party managed service providers to host and support our information technology, customer support, and generation operations. For example, our data centers are hosted in vendor-managed co-location facilities; we also host infrastructure with major cloud service providers and utilize enterprise business systems. Consequently, we may be subject to short- and long-term interruptions, delays and outages in service and availability due to third-party cybersecurity or reliability incidents that are outside of our direct control.”

Annual report 2025A · The company itself

“We are a member of an industry mutual insurance company, NEIL, which provides property and accidental outage insurance for our nuclear operations. Uninsured losses and other expenses, to the extent not recovered from insurers or the nuclear industry, could be borne by us.”

Annual report 2025A · The company itself

“Additionally, our pension and OPEB plan liabilities are sensitive to changes in interest rates. As interest rates decrease, the liabilities increase, potentially increasing benefit costs and funding requirements.”

Annual report 2025A · The company itself