Constellation Energy Corporation Common Stock

Social and demographic · Public perception and reputation

We could be the subject of public criticism. Adverse publicity of this nature could render public service commissions and other regulatory and legislative authorities less likely to view energy companies in a favorable light, and could cause those companies, including us, to be susceptible to less favorable legislative and regulatory outcomes.

Natural and catastrophic events · Force majeure and business interruption

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.

Economic and market conditions · Inflation and deflation pressures

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. If inflation rates rise or become elevated for a sustained period, they could have a material adverse effect on our business, financial condition, results of operations and liquidity.

Economic and market conditions · Credit market conditions

We could be negatively affected by unstable capital and credit markets and increased volatility in commodity markets. 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.

Market position and competition · Pricing pressure and margin compression

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.

Market position and competition · Disruptive competitors and new market entrants

We may be affected by emerging technologies that could, over time, affect or transform the energy industry. Advancements in both distributed and utility-scale power generation technology could impact market prices and demand size and behaviors. Advancements in AI and other technology could lead to reduced barriers of entry resulting in increased competition from new market participants.

Strategic execution · Merger acquisition and divestiture risks

We may not realize all the expected benefits of the merger because of integration challenges. The success of the merger will depend, in part, on our ability to realize all or some of the anticipated benefits from integrating Calpine's business with our existing businesses. The integration process will be complex, costly and time-consuming.

Digital transformation and innovation · Artificial intelligence and automation

The rapid development and integration of AI technologies into our processes presents several risks to our business. 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.

Digital transformation and innovation · Technology obsolescence and evolution

These developments could affect the price of energy, levels of customer-owned generation, customer expectations and current business models and make portions of our generation facilities uneconomic prior to the end of their useful lives. If we fail to keep pace with the rapid evolution of AI technologies in our industry and the segments we serve, our competitive position and business results could be negatively impacted.

Market and investment · Asset valuation and impairment

Long-lived assets – principally, generation assets – represent the single largest asset class on our Consolidated Balance Sheets. An impairment would require us to reduce the carrying value of the long-lived asset and goodwill to fair value through a non-cash charge to expense by the amount of the impairment and could have a material adverse impact on our future operating results or financial condition.

Credit and liquidity · Debt service and covenant compliance

If we fail to meet project-specific financing agreement requirements, we could experience an impairment or loss of the financed project. Failure to meet those arrangements could give rise to a project-specific financing default which, if not cured or waived, could result in the specific project being required to repay the associated debt.

Market and investment · Investment portfolio performance

Market performance and other factors could decrease the value of our NDT funds and employee benefit plan assets, which then could require significant additional funding. Disruptions in the capital markets and their actual or perceived effects on particular businesses and the broader economy could adversely affect the value of the investments held within our NDTs and employee benefit plan trusts.

Market and investment · Interest rate and yield curve risk

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.

Credit and liquidity · Liquidity and cash flow constraints

The inability to access capital markets or credit facilities, and longer-term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of significant financial institutions could result in the deferral of discretionary capital expenditures.

Industry regulation · Safety and environmental regulations

We could incur substantial costs to fulfill our obligations related to environmental and other matters. We are subject to extensive environmental regulation and legislation by local, state and federal authorities. These laws and regulations affect the way we conduct our operations and make capital expenditures.

Legal and litigation · Litigation and legal proceedings

Legal proceedings could result in a negative outcome, which we cannot predict. We are involved in legal proceedings, claims, and litigation arising from our business operations. Adverse outcomes in these proceedings could lead to significant expenditures, loss of revenue, or the restriction of existing business activities.

Supply chain and procurement · Geographic concentration of suppliers

The cycle of production and utilization of nuclear fuel is complex, and we engage a diverse set of suppliers to secure the nuclear fuel needed to continue to operate our nuclear fleet long-term. Non-performance by these suppliers could have a material adverse impact on our results of operations or financial condition.

Core operations · Safety incidents and operational accidents

Our employees, contractors, customers and the general public could be exposed to a risk of injury due to the nature of the energy industry. As a result, employees, contractors and the general public are at some risk for serious injury, including loss of life.

Supply chain and procurement · Raw material availability and cost volatility

Cost and Availability of Fuel. 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.

Human capital and workforce · Talent acquisition and retention

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.