Good day, ladies and gentlemen, and welcome to the Constellation Energy Corporation Third Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this call may be recorded. I would now like to introduce your host for today's call, Emily Duncan, Senior Vice President, Investor Relations. You may begin.

Thank you, Abigail. Good morning, everyone, and thank you for joining Constellation Energy Corporation's Third Quarter Earnings conference call. Leading the call today are Joe Dominguez, Constellation's President and Chief Executive Officer, and Dan Eggers, Constellation's Chief Financial Officer. They are joined by other members of Constellation's senior management team who will be available to answer your questions following our prepared remarks. We issued our earnings release this morning along with the presentation, all of which can be found in the Investor Relations section of Constellation's website. The earnings release and other matters, which we discuss during today's call contain forward-looking statements and estimates regarding Constellation and its subsidiaries that are subject to various risks and uncertainties. Actual results could differ from our forward-looking statements based on factors and assumptions discussed in today's material and comments made during this call. Please refer to today's 8-K and Constellation's other SEC filings for discussions of risk factors and other circumstances and considerations that may cause results to differ from management's projections, forecasts and expectations. Today's presentation also includes references to adjusted EBITDA and other non-GAAP measures. Please refer to the information contained in the appendix of our presentation and our earnings release for reconciliations between the non-GAAP measures and the nearest equivalent GAAP measures. I'll now turn the call over to our CEO of Constellation, Joe Dominguez.

Thanks, Emily. Thanks to the operator for getting us started. Good morning, everyone. Thanks for joining our call. I apologize if the quality of the audio isn't great. We are all, if you could believe it, sitting around Emily Duncan's cell phone here because we lost a trunk line into the building. But as you can see from our numbers, pretty much everything else is going well around here. I want to begin by thanking the good people of Constellation for delivering an outstanding third quarter. They continued the strong performance from the first half of the year, and they are the best at what they do. For the third quarter, we earned $1.199 billion in adjusted EBITDA. As a result of this continued strong performance, we are again raising our full year guidance range to $3.8 billion to $4 billion. The strength is not limited to 2023, and you will see in our disclosures that we have raised our 2024 gross margin by $250 million. I want to emphasize here that the South Texas Project (STP) is not yet in our final disclosures for 2024. As you recall, we estimated that the average STP EBITDA contribution would be an incremental $190 million per year, with 2024 being a little lower due to an extra outage every third year. And as it so happens, 2024 is one of those years. However, we believe that the impact of that extra outage will be offset by the higher Texas energy prices we have seen since we announced the transaction. So we're back to an estimated $190 million for 2024, with 2025 looking even better. We will provide all of the STP and other updated financials in our fourth quarter call. We talked about this before, but it bears repeating. Constellation owns the largest and most reliable clean energy fleet in the country and has the best commercial and industrial (C&I) platform in the business. We strategically couple these businesses with a strong balance sheet that, in turn, gives us a powerful competitive advantage across retail and wholesale channels. It translates into a unique ability to give our customers the certainty and visibility that they want on energy costs as well as to provide them sustainability solutions. All of that ultimately leads to margin expansion and creates value for you. Before I turn to operational performance, I want to talk about some exciting developments since our last call. First, as I noted earlier, we closed ahead of schedule on our acquisition of 44% of the South Texas Project, expanding our clean, reliable annual nuclear production to approximately 180 million megawatt hours. We're looking forward to working and forging a strong relationship with our new co-owners, Austin Energy and CPS. This includes working to resolve pending litigation and explore mutually beneficial opportunities to improve performance. I talked last quarter about the fact that an average outage at STP lasts around 31 days. At Byron, we just completed an outage for a very similar machine in 17 days. And if you think that's amazing, consider that we just completed the Peach Bottom outage in 13 days. I was happy to see that Bryan Hanson, our Chief Generation Officer, was named as Chairman of the STP Board and will begin immediately to realize some of the opportunities we see in that asset. The second development I want to highlight is that the US Department of Energy awarded a $1 billion grant to the Midwest Hydrogen Hub, which includes our hydrogen project at LaSalle. A portion of this award will offset our costs for the project. The award is proof that the DOE and the administration want existing nuclear energy to play a vital role in jump-starting domestic clean hydrogen production. However, it remains critical that the Treasury Department guidance confirms that using existing nuclear energy to produce hydrogen qualifies for the full clean energy production tax credit. Certainly, we think that the hub award is a good sign, but we need to see the right rules, or the hub won't happen. Third, we signed a deal with ComEd to power its facility with hourly matched carbon-free energy, which I'll cover in more detail in a few minutes. And finally, probably the most exciting thing is that we earned a 2023 Great Place to Work certification. I am really proud of this because it's based on how our employees rate their experience at Constellation. 5,000 of our colleagues participated in the survey and 81% of them said that Constellation is a great place to work. That's 24 percentage points higher than the average US company. Our team is talented, hard-working, and they are passionate about what they do, and that shows up in our results over and over again. Our culture and our mission are also an asset in attracting the best talent in the market. We've onboarded 3,000 new colleagues since the separation, and that's pretty incredible for a workforce of about 14,000 people. Now, I'll turn to the quarterly operational updates, starting on Slide 6. During the hottest summer on record, our fleet helped to support the grid and ensure that American families could cool their homes and that businesses have the electricity to power our economy. Our nuclear plants had a third quarter capacity factor of 97.2%, but they ran at nearly 100% during June, July, and August. The only reason we are at 97.2% is that in September we started our planned refueling outages. Our power and renewable assets also ran extremely well. Our Texas fleet, which includes state-of-the-art combined cycle gas turbines (CCGTs), produced 1.4 million megawatt hours more this year than last year, supporting ERCOT during an extremely challenging summer. This summer, ERCOT was affected not only by extreme heat but also by unprecedented loads and the impacts of a changing resource mix. For example, during the summer, ERCOT had 49 days with a peak higher than 80 gigawatts, exceeding the all-time summer peak demand set in 2022 and exceeding 2021's peak by nearly 11.8 gigawatts or an incredible 16%. The system is constrained not just at peak but in the hours after peak due to the intermittent output that comprises much of its generation portfolio. As the grid continues to change, we expect these conditions to amplify, and challenges could occur at any hour. The changes in ERCOT stack and the hours of challenging operating conditions will increase the importance of dispatchable generation and particularly clean, reliable, dispatchable generation. The quality of our gas fleet, coupled with our newly acquired STP assets, sets us up for great success. I want to send a special thank you to the people who operate our nuclear and power fleets for all that they do. Now let me move to Slide 7. The success of the Commercial business is the foundation for our financial performance. This year, they knocked it out of the park. We're able to optimize our positions across both the generation and customer portfolios to create additional gross margin. And we can provide our customers with certainty on energy bills in volatile times, which leads to margin expansion. We're also leading the way on sustainability solutions. In the second quarter, we spent time talking about the Microsoft deal where we used nuclear and renewable energy to produce a time-matched clean energy product. We continue to see very strong interest in this product. This quarter, we're excited to announce an agreement with one of the largest utilities in the country, ComEd, to power its facilities with hourly matched carbon-free energy from nuclear power. Microsoft and ComEd are both sustainability leaders, and we're thrilled to be able to help them move forward in their efforts to address the climate crisis through the recognition of the importance of 24/7 carbon-free electricity made by nuclear energy. Matching regionally produced clean energy to the exact moment when a customer uses energy is essential to reaching carbon reduction goals while maintaining electric reliability and affordability. That is why our nuclear fleet is essential today and will be even more valuable tomorrow. With that, I'm going to turn it over to Dan for the financial update.

Thank you, Joe, and good morning, everyone. Beginning on Slide 8, as Joe mentioned, the business continues to perform extremely well. We earned $1.199 billion in adjusted EBITDA in the third quarter, which compares to $592 million in the third quarter of last year. Our commercial organization continued with the success we have seen over recent quarters. Our renewal rates have been strong and margins remain above historical levels as market volatility and customers' desire to control their budgets have created opportunities for our team. As we've discussed on prior calls, the volatility in commodity markets and higher interest rates are leading to more appropriate risk pricing by our competitors. These market conditions create opportunities for us to optimize our combined portfolio of generation and load, which we see in results for 2023. And as we look out to 2024 and 2025 with favorable gross margin uplift that I'll talk about in a moment. On the generation front, our nuclear and power fleet performed extremely well during a record-setting hot summer. As Joe said, our nuclear fleet ran full out during June, July, and August. And as a result of the extreme heat and load growth in Texas, ERCOT set 10 new peak demand records during the summer. In addition to record peaks, we observed more significant operating conditions in the subsequent hours after the peak load due to low intermittent output and a stretched thermal fleet, which at times resulted in prices above $1,000 a megawatt hour and with a $5,000 cap for a few hours. The investments we made in our Texas fleet in advance ensured we were ready to help support the grid when the plants were needed, and they ran more than they did the previous year. Through September, our Texas plants ran 13% more than they did last year. Turning to Slide 9 and our gross margin outlook. We have increased our gross margin forecast for 2023 and 2024, incorporating the strong execution and performance Joe and I have discussed. For 2023, total gross margin increased by $400 million to $9.2 billion. Our projected gross margin is now $850 million higher than our expectations when we began the year, reinforcing the unparalleled operating environment we have seen this year. In 2024, our total gross margin, including production tax credits (PTCs), is $9.45 billion. Total gross margin increased by $250 million from our last update. Market prices increased across the major regions relative to last quarter. As a result, we expect to earn less nuclear PTC revenues at our four plants without state support due to higher expected gross receipts. Turning to our Commercial business. As we renew existing contracts and enter into new ones, we are seeing the favorable margin trends with our C&I customers and load auctions extending out into 2025. We have seen some moderation in margins from highs earlier this year and more participants in load auctions, but see opportunity for these margin trends to continue for some time as we anticipate sustained commodity market volatility, in part due to the changing composition of the generation stack. With the strength of our balance sheet, along with our integrated generation and load business, we are well-positioned during this volatile environment to continue meeting our customers' needs while also creating value for our shareholders. Moving to Slide 10. We are raising our full year adjusted EBITDA guidance outlook by $400 million to a $3.9 billion midpoint and narrowing the range to $3.8 billion to $4 billion. This upward revision reflects the significant increase to our gross margin forecast since the beginning of the year. And as we flagged last quarter, the gross margin upside is somewhat tempered by an increase to operating and maintenance (O&M), driven primarily by increased compensation for our employees, including stock compensation due to the strong financial performance of the company. I should note that considering we just closed the STP acquisition last week, our gross margin and cost forecast do not yet reflect STP. We'll layer that plant into our year-end disclosures. That said, our updated EBITDA guidance for 2023 includes STP for November and December, which is a relatively small part of the increase to our guidance. And as Joe mentioned in his remarks, we anticipate contributions from STP to at least meet the $190 million of EBITDA starting in 2024, which again is not reflected in the gross margin or cost disclosures in our earnings materials today. Turning to the financing and liquidity update on Slide 11. To help fund the STP transaction, we issued $1.4 billion of debt, including $900 million of 30-year and $500 million of 10-year senior unsecured notes. We saw significant demand with order books peaking at seven times across both tranches. We also achieved very tight pricing when we look at both spreads to treasuries and between the 10 and 30-year tranches, pricing competitively with recent utility holding company transactions. We appreciate the support from our fixed-income owners and the vote of confidence in the long-term need for our assets into the 2050s and well into their next licensed lives to 80 years. As we stated at the time of the announcement, the transaction will be credit-neutral and a debt issuance did not strain our forward credit metrics. In fact, our credit metrics are now projected to be at or above the 35% at Moody's and 45% in S&P that we laid out at the beginning of the year due to the additional cash flows captured in our earnings guidance. We continue to execute on our commitments to return capital to our shareholders. We completed another $250 million of share buybacks during the third quarter. When we look at the opportunities ahead of us, we still see our stock as attractive at current levels and will continue to be opportunistic with the remaining $250 million authorized by our Board. As we discussed in June, we have $1.2 billion of unallocated capital for 2023 and 2024, which will be used to create additional shareholder value through growth investments, M&A, or return of capital to our owners. I should remind you that this $1.2 billion is based on our disclosures at year-end 2022 that we shared on the fourth quarter call and does not reflect any additional cash created by this year's outperformance and upward revisions to next year's expectations. We'll provide an updated view of all this on our fourth quarter call. I'll turn the call back now to Joe for his closing remarks.

Thanks, Dan. The management team here remains focused on creating value for our shareholders. You know our business is unique, and we continue to have many unique opportunities in front of us. As you know, we're the best operator of nuclear plants and the largest producer of carbon-free electricity in the US. And now with STP, we'll make more than 180 million megawatt hours annually just from our nuclear fleet. Our commercial business serves more than 22% of the competitive C&I market in the United States and is helping customers like Microsoft and ComEd meet their sustainability goals through products like our hourly matching product. Our businesses are essential to addressing the climate crisis and our assets are durable. The Inflation Reduction Act provides a long-term commitment to nuclear energy as part of the national security of this great nation. We have many ways to grow and bring even more value to our shareholders against a baseline earnings level supported by the PTC. And over the life of the PTC, we'll benefit from price war inflation. We have opportunities ahead of us to create additional value for the clean, reliable nuclear energy that we provide like hydrogen, data centers, and expanding our hourly matched product. We have the ability to relicense our nuclear fleet to run for at least 80 years without needing to replace it. We have many ways to grow and bring more value to shareholders. We generate strong free cash flow that could be used to fund robust organic growth at double-digit unlevered returns, pursue disciplined M&A, support our growing dividend, and buy back our stock. Each of these opportunities will create additional value for you, our owners, and we're executing on that strategy. We closed the STP deal. We announced $1.5 billion in growth spending in hydrogen and wind repowering. We doubled the per share dividend, and we bought back approximately $750 million of our own stock as part of an authorized $1 billion buyback plan, and there's more we can do. We have significant unallocated capital in 2023 and 2024, as Dan just outlined, and we could use those funds to further enhance our earnings growth and provide value to you. Constellation cannot be matched anywhere in the market. Our large clean carbon-free nuclear fleet, paired with our customer-facing business and strong balance sheet provides us with unparalleled opportunities to create value for you. And that's what we're focused on. Now we, as a management team, stand ready to address your questions. Thanks, operator.

Our first question comes from David Arcaro with Morgan Stanley. Your line is open.

Good morning, David.

Hey, good morning. Thanks for taking my questions. Wondering if you could elaborate a bit on what you're seeing in the competitive environment in retail just in terms of churn and any changes in market share as you're experiencing higher margins there?

Dan provided some insights on this in his prepared remarks, and I will let him expand on it further.

Hey, good morning, David. I would say that we continue to see a strong market backdrop for our Commercial business, both on kind of the C&I side, we talk about a lot, and also the load auction side. Margins have been strong this year, particularly strong earlier in the year. Market volatility created opportunity for us as we saw some competitors pull back and get less active as you saw them put a higher price on risk capital for them to be involved in the business. So we've done a good job of maintaining, and in some areas, expanding our win rates where we've seen opportunity at quite strong margins relative to history. I would say probably in the last few months as the year has moved on, we've seen a little more pressure on margins, so well above historical norms, but off the highs we saw earlier this year as people start to engage a little bit more in the markets. And as I said, in the load auction side, there hasn't been a huge amount of activity, but we are seeing more participants show back up again now than we had seen in the past. Again, all margins better than history, but we're keeping a close eye on that trend as we go through the rest of this year.

Got it. Yeah, that's helpful color. And just the latest guidance update, does that fully reflect the patterns that you're seeing so far in fourth quarter? If the dynamics that you experienced in third quarter continue here, are there further opportunities to bolster the outlook into 2024?

Yeah, as we continue to add business, I think we've taken a reasonable approach to our expectations for margins next year. As I said, we're assuming the world stays better than it has been historically, but we have embedded some moderation in margins from what we're seeing, which probably makes sense considering kind of movements to ensure that we meet our expectations for all of you. As we go through the balance of this year, the fourth quarter is an important one to watch and we'll see how much more we can add to backlog for 2024 and 2025. So yeah, we're hopeful we'll continue to find opportunity.

Okay great. Thanks so much. I appreciate the color.

Thanks, David.

One moment for our next question. Our next question comes from Steve Fleishman with Wolfe Research. Your line is open.

Hi, Steve.

Yeah. Hey, good morning. Good work, Emily, with your cell phone there. So just on the remaining IRA things that we're kind of watching here, the hydrogen PTC rules and then of course the nuclear PTC, could you just give us the latest thoughts on the timing of those? And then also maybe more color on how much we should interpret the hydrogen hub announcement as kind of hinting at where the hydrogen PTC comes out with respect to nuclear?

I'm happy to address your question, Steve. We are actively engaging in conversations with various stakeholders, including frequent discussions with the White House. Overall, I'm pleased with how these discussions are progressing, though it's important to incorporate many details accurately into the rule. Therefore, I remain cautiously optimistic. A key aspect of progressing the hydrogen economy involves obtaining reliable, time-matched clean energy, which will provide both environmental benefits for the grid and allow for the economical production of hydrogen while transitioning the economy. I'll leave it at that; the discussions have been constructive and we've invested significant time on this matter, but we need to finalize the details. Regarding the timing, the administration recognizes that many entities are anticipating the hydrogen rule and require guidance, not just for the hubs. As mentioned in a Bloomberg article where I was interviewed, we've been delaying several contract signings until this matter is resolved, and we are not the only ones in this situation. I believe they are diligently working to finalize everything. As for the nuclear production tax credit, it seems to be uncontroversial, at least based on my observations, but it only pertains to a select few players like us who possess nuclear assets, unlike the broader implications of hydrogen or domestic content rules that have consumed Treasury's attention. I expect the production tax credit for nuclear to be established as anticipated, though it may come closer to the year’s end or during the first quarter. I am hopeful for some guidance on hydrogen before the year's end that will clearly address the use of existing nuclear to produce hydrogen at the appropriate pace.

Okay. Thanks. And then one other question just on the 24/7 clean product and the like. Just how should we think about the pace of adoption here and interest levels you're seeing? And this part, you probably can't really answer, which is just the type of premium that you might be getting for this type of product versus just normal power sales. Yeah. Thanks.

I believe that typical power sales and their fluctuations are considered in our overall power sales strategy. Historically, we've maintained margins in the range of $2 to $4, and we're currently positioned near the upper end of that range as the market stabilizes. Our sustainability offering will yield significantly higher margins since it represents a new product that adds substantial value for customers. However, for competitive reasons, we haven't disclosed specific margin figures. Ultimately, the pace of adoption is still something we are trying to fully understand. We have 180 million megawatt hours of power available, and while not all of it will be utilized through CFE, we anticipate other applications, such as hydrogen production and data centers, to contribute to demand. The customer aspect will be crucial, but policy decisions will also influence how states and other entities choose to obtain carbon-free, time-aligned energy. At this stage, we're pursuing every opportunity, but it's challenging to determine how quickly we can deploy a significant portion of the 180 million megawatt hours, so the overall picture remains somewhat incomplete.

Okay. Great. Thank you.

Thanks, Steve.

One moment for our next question. Our next question comes from Shar Pourreza with Guggenheim Partners. Your line is open.

Good morning, Shar.

Good morning. The EBITDA was raised again, but we haven't received an update on free cash flow guidance or any incremental buyback plans. Dan, could you provide some insight on why we haven't moved forward with incremental buybacks? We've passed the key quarter, so is there any reason for holding back? A little insight would be appreciated.

We have a $1 billion program in place and have utilized $750 million so far. Currently, we anticipate spending about $250 million each quarter, leaving us with additional funds to deploy. We will engage with the Board to discuss our updated budget plan and the outlook for 2023, 2024, and beyond, which will help guide our next steps in capital allocation. Completing STP has been a solid use of capital this year, and it appears to be increasingly favorable with the current ERCOT prices. We continue to seek similar opportunities that allow us to invest significant capital when they arise. While we want to maintain some liquidity, we recognize that as we progress with this program, we still hold substantial capital, which we aim to return to our shareholders, especially since we are focused on finding investments that provide double-digit unleveraged returns.

Got it. And then another quarter of obviously outsized marketing portfolio gains, right? I mean, can we just maybe unpack that $760 million year-over-year gain a little more? I guess, what percentage is durable margin expansion versus maybe opportunistic trading or more one-time items like ERCOT sparks? Thanks.

I think it's difficult to break that down completely. When we consider how we manage the portfolio, the Commercial business takes charge of our generation operations once we encounter technical difficulties. Collaborating with the team on dispatch and how we establish positions will evolve. It's challenging to distinguish between generation dollars and commercial dollars in the way you're considering. However, the Texas plants performed exceptionally well this summer, and with the prices we saw, we exceeded our production expectations. This quarter and throughout the year, we received significant contributions from ERCOT, which is a factor. Additionally, margins have been quite strong. We've experienced unusually high margins, particularly in our load auctions, which have yielded unprecedented results in that sector during the first half of this year. We do anticipate that, in time, those margins will moderate, and we are beginning to see some of that shift. In the C&I and mass markets, we have also achieved very solid margins this year that will carry over into next year and 2025. However, as I mentioned earlier, we expect some moderation in those margins because we are considering what has not yet been secured or accounted for at this time. Finally, while I won't delve deeply into it, the volatility has presented us with opportunities to optimize our portfolio in the physical markets, and we have been successful in this area over the past couple of years.

Got it. Lastly, I understand that you are still working on your capital planning before the next phase. However, there have been many recent updates regarding upgrades, especially for boiling water reactors, in light of the IRA. Could you share your updated thoughts on the potential opportunity and timing? Thanks.

Shar, we believe the total universe is under 1,000, with actionable opportunities between 500 and 1,000 megawatts that are economically viable. Bryan and his team have identified nearly all the opportunities available to us. We are currently re-evaluating the costs associated with these, and we expect to incorporate them into the fleet by the end of this decade, although some may take a little longer. We will announce updates as we finish the work and begin ordering parts for these projects. Additionally, we see opportunities beyond what has already been shared, but we do not have any further updates on those at this time. This situation may appear calm on the surface, but there is significant activity happening within Bryan's organization, and we will keep pursuing these opportunities, which we believe are promising and could yield outstanding results.

Fantastic, guys. Thank you so much. Appreciate it.

Thanks, Shar.

One moment for our next question. Our next question is from Julien Dumoulin-Smith with Bank of America. Your line is open.

Good morning, Julien.

Good morning. Thank you for your time. I appreciate it. I wanted to revisit some of the last questions regarding timing and the postponement of hedge commitments. Depending on the feedback we receive about hydrogen, could we expect a significant increase in commitments at the beginning of next year? Is this linked to data centers or capital allocation, such as buybacks, particularly if the hubs proceed or not? I'm trying to understand how all these elements connect in terms of timing. Additionally, are you effectively waiting for more information on hydrogen before making more firm commitments?

Certainly, Julien. Hydrogen will develop for us in two main ways. First, we have what we call the behind the fence line clean energy center opportunities, where we will produce the gas. In these cases, we're looking for partners who will commit to taking 100% of the gas output, ensuring we do not become market players in hydrogen. We are actively engaged in these discussions and see potential opportunities beyond LaSalle, although our primary focus will likely be on optimizing LaSalle and increasing its megawatt capacity first, if feasible. That said, the opportunity for hydrogen exists across several plants. The second avenue for hydrogen development is through clean hydrogen by wire, where we enter contracts similar to what Microsoft and ComEd have done. This allows a customer to utilize the contract to secure tax credits for hydrogen production. We are having in-depth discussions with various players across the country, many of whom are part of our existing customer base, to explore these opportunities. However, I cannot predict how quickly they will procure electrolyzers and integrate them into their operations, so it’s difficult to specify if this will materialize in 2025 or 2026; it could even extend to 2027. If the regulations develop as we anticipate, we can expect a surge in contractual opportunities. We would begin to scale LaSalle and explore behind the fence line hydrogen production at various other locations. Our discussions and efforts are ongoing. On the front of data centers, they represent substantial incoming interest in our company. Both hydrogen and data centers hinge on clarifications from the Treasury regarding the progression of these projects. If the regulations align favorably, I anticipate an exciting period in 2024 and 2025, with data centers likely following a similar trajectory. However, I can’t yet specify the timing, number of megawatts, or financial impact. In my 25 years in this industry, I can say these are some of the most promising opportunities we have, and I expect they will gain significant traction. We need to carry the work through before we can announce results, allowing you to see the outcomes.

Right. But it's not as if you're waiting for one or the other here on, let's say, fourth quarter, right? Patience is a virtue as they say. And 2027 is out there. And more to the point, it's not as if you're holding back on data centers or capital allocation ahead of a decision on hydrogen, just to set expectations?

No. No, that's right. I think you've described it well. And I said it in response to Steve's question. It's not like we're yet confronted with the scarcity of the clean megawatt hours that we produce. We've got 180 million of these things. So that gives us the luxury of exploring multiple channels at once. There will be a point in time where we'll be looking at kind of the financial value of one channel versus another. But I think in the early going, we're going to be wide open and we're certainly working every angle and none are mutually exclusive at this point.

Got it. Excellent guys. Best of luck. See you soon.

Thank you.

One moment for our next question. Our next question comes from Durgesh Chopra with Evercore ISI. Your line is open.

Good morning.

Hey, good morning. Thank you for taking my question. I just have one question on the asset generation. Year-to-date, it's kind of been around that 80% to 83% range that hasn't moved. Last year, I was just looking at the Q3 2022 deck for the next year that would be 2023 back in Q3 2022, you were like 90-ish percent. So this is just nuclear PTCs and your willingness to stay more open next year? Maybe you can just comment on that and how should we think about hedging practice going forward into like 2025 and beyond?

Let me begin by addressing that. Last year, after the passage of the IRA, the initial questions we received were about whether we would maintain the hedging strategy we've used for many years at Exelon and in the early days at Constellation, often described as a third, a third, a third. We've been exploring all options related to this. We're not bound to any fixed hedging strategy aimed at covering a specific number of megawatts in any given year. We now have the freedom to consider various opportunities and to be patient, which we have been. Over time, the percentage of our fleet that is hedged and the disclosures we’ve traditionally used may become less significant as we alter our hedging approach. We intend to provide more details about this at the end of the year when we update for the next year and evaluate different opportunities. The IRA allows us to wait and take advantage of the $43.75 at the bus that we are entitled to under the policy. Any actions we take must enhance that opportunity, which shapes our business outlook. This could involve holding onto more power or selling more, depending on how these channels ultimately function. We now have greater flexibility, and it's essential for us to deliver the best financial results for our fleet. Additionally, I believe that the value of clean, reliable energy will increase over time, which encourages me to be patient. While I won’t comment on specific technology, I see the challenges in expanding offshore wind capacity. Our stakeholders are likely aware of how difficult it is to introduce clean energy solutions that also ensure reliability. This reinforces our commitment to patience through this transition, and the IRA provides the policy backing needed to explore the best opportunities for us, our customers, and the country.

Understood. I appreciate that color, Joe. I did have one more question. You guys have talked about different or added reporting metrics, not just EBITDA. Just any thoughts or additional color that you can share there?

Yeah. We're still working through that, right? I think our plan is at the year-end update, we'll probably provide the whole host of new measures and disclosures for all of you. We've had these hedge tables, I think, we're going on something like 15 years. Moving out of the world of a third, a third, a third as Joe mentioned, getting into the structure where the PTC provides a very different revenue dynamic for us. It's going to make sense to refresh everything. I also think that with the PTC being an after-tax revenue stream, I was probably talking about earnings on an after-tax basis makes more sense for all of you guys.

Understood. Thanks guys. Congrats.

Thank you.

Thank you. That concludes the question-and-answer session. At this time, I would like to turn the call back to Joe Dominguez for closing remarks.

Thank you, operator, for managing the call. I want to conclude as I began, by expressing my gratitude to everyone here at Constellation. When companies are separated, the advantage often noted is that the management team can concentrate on a single line of business rather than multiple ventures, which creates value. From my experience, the significant benefit we have gained is a clear mission for both our management team and our employees. I am thrilled that they are passionate about the business. The results we share reflect their efforts. Once again, I want to thank them and thank all of you for your interest in the company. We look forward to speaking with you at the end of the fourth quarter.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone, have a great day.