Constellation Energy Corporation (CEG) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the Constellation Energy Corporation Business Update Conference Call. [Operator Instructions] 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 and Strategic Initiatives. You may begin.

Thanks, Kevin. Good morning, everyone, and thank you for joining us on such short notice for this very exciting day for Constellation where we're announcing the restart of the Crane Clean Energy Center. Leading the call today are Joe Dominguez, Constellation's President and Chief Executive Officer; Dan Eggers, Constellation's Chief Financial Officer; and Bryan Hanson, Constellation's Chief Generation Officer. They are joined by other members of Constellation senior management team, who will be available to answer your questions following our prepared remarks. We issued a press release this morning along with the presentation, all of which can be found in the Investor Relations section of Constellation's website. The release and other matters, which we will discuss today, during the 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 the 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 non-GAAP measures. Please refer to the information contained in the appendix of our presentation and our latest earnings release for reconciliations between the non-GAAP measures and the nearest equivalent GAAP measures. I'll now turn the call over to Joe.

Thanks, Emily, for getting us started. Folks, it's a beautiful day here in Pennsylvania. I hope it is where you are. Emily said it right. This is a very special day for Constellation for America as we announce our plans to restart our plant located at Three Mile Island, Pennsylvania, and bring to life 835 megawatts of what is the most important energy commodity in the world today, clean and reliable electricity. And we're going to bring it on at a time when Pennsylvania, PJM and our entire country needs it the most. We are very proud that this incredible milestone is made possible by a continuing partnership with Microsoft, one of the most important and forward-thinking companies in the entire world. As you know, this is not our first partnership with Microsoft. As part of their all above strategy, Microsoft recognizes that clean, firm and reliable nuclear energy is a critical component in meeting America's clean energy needs. We embarked on a strategic relationship with Microsoft just after we launched Constellation. Our first project was the development of Constellation's 24/7 carbon-free energy matching product. That's the product where we're able to provide our customers with time matching of clean energy at exactly when they use energy. Microsoft was able to help us develop the software and analytical capability to provide this product and then they became our first anchor tenant in the product, powering one of their Virginia data centers with 100% carbon-free electricity around the clock. Since they paved the way, many other customers have followed, including other industry leaders like Comcast, and we continue to see great interest in that product. So thank you to Microsoft for that work. Then in 2023, Constellation and Microsoft partnered on advanced nuclear, the fusion work with Helion. And now our partnership enters a truly new level as we bring back this vital resource for America. I'm going to turn to Slide 3, and that details the impact of the project on Constellation and the societal benefits to Pennsylvania and the entire region. Microsoft will take the full output of the plant as part of its plan to match its data center development needs in PJM with clean power. The plant will begin operations in 2028 and have the ability to run until at least 2054. There's some financial data here. Dan will go into it in more detail as he discusses the financial impacts. In addition to the clean, reliable firm and needed energy, it will provide to PJM, Crane will create more than 3,400 jobs, including 600 permanent family-sustaining jobs at the plant. It will add $16 billion in Pennsylvania state GDP and contribute $3.6 billion in state and federal tax revenues. We've committed an additional $1 million in philanthropic giving to the region over the next 5 years to support the workforce development and other community needs. Understandably, given the desire for clean energy and the reliability needed for the grid, there is tremendous support for restarting the plant at the state, at the local and at the federal levels. And like we see in the case of nuclear generally, it's both Republicans and Democrats alike that support the project from Governor Shapiro; the state representative, Tom Mehaffie, both who have been instrumental in bringing this project to life. I want to thank them and all of the other stakeholders that made this possible. The decision to bring Crane back onto the grid represents much more to us than a technical or strategic partnership between 2 companies. It's more to us than a validation of Constellation or even more than all of the points that are on this slide. To me, the decision here is the most powerful symbol of the rebirth of nuclear power as a clean and reliable energy resource. It reflects all of the lessons we learned from the past, the technical capabilities of the present and our aspirations for a sustainable future. As this amazing asset rises once more to meet the challenge, it carries with it the hopes of the nation striving to balance the energy demand for new and important AI capabilities with the need for environmental stewardship. In this rebirth, we see the most powerful sign that America will turn to the enduring promise of nuclear energy, an old and loyal ally that is renewed and ready to light the way forward. And folks, our people at Constellation are over the moon excited to be able to carry this mission on their shoulders. To us, it's powerful that the announcement comes from here at Three Mile Island, the location of the industry's worst setback. For generation of Americans, they remember that it was our worst failure but it was always much more to that. To those of us who dedicated our lives to the promise of nuclear energy, this place represents both a location where the industry lost its innocence and some [indiscernible] and replaced it with a dedication and commitment to improve and always be better. That event like the painful lessons we all learn in life made us what we are as an industry today. It resulted in thousands of process and equipment improvements across the industry that paved the way for today's success and rebirth. To me, it's especially fitting that we renamed this clean energy center and honor a man who epitomized the best qualities of the innovation and hard-working women and men who improved our industry over the last few decades. As you know, this past spring, Chris Crane took ill and die. Just a handful of months really after he retired from a wonderful career in nuclear. He passed away a relatively young man, but he left a deep and profound legacy. I spoke to you on one of our earnings calls about Chris and what he meant to the industry, what he meant to each of us at Constellation. And I want to thank Chris' family, especially his wife, Jillian, for allowing us the great privilege of honoring Chris in this manner. His most important legacy is the people that he mentored and left behind. The special people that he trained, he cared for and who, in turn, have become inspirational leaders and wonderful advocates and professional in the nuclear space. So I'm going to turn this over to one of those people today. Bryan Hanson is Constellation's Executive Vice President and Chief Generation Officer. He was one of Chris' special people. So it's fitting that he is the one that describes this project. Bryan?

Yes. Thanks, Joe. It's still very humbling to have my name used in the same sentence as Chris. He's just a giant and -- well, good morning, everybody. It was 5 years ago to this very day that I was at TMI on its last day of operations. And when it's shut down, it was one of the nation's best running plants running break at a breaker. So I can't tell you how thrilled I am to be here with you today to announce that we are bringing the plant back and it will be one of the nation's best again. It's also extra special to me that the plant will be named after my friend, mentor and boss for most of my career, Chris Crane. Closing plants was the hardest thing he had to do as a CEO because he knew what it meant to our employees and the communities they live in. Chris would not have liked this attention of naming the plant after him, but I know he'd be so proud that the plant is coming back. When we launched as a company a little over 2.5 years ago, we knew that restarting TMI was the right thing to do for America because clean and reliable electricity is the most valuable commodity in the world today. So we immediately began thinking about a restart. We've conducted extensive technical analysis and equipment exams to determine if we can restart the plant, and I've personally walked the plant top to bottom, and the inspections we have done reveal what I've seen with my own eyes that the plant is in excellent condition. One of the first activities was to perform inspections and maintenance of the steam generators. I can tell you they are healthy and ready for start-up today. We also inspected and cleaned the main generator and verified that it does not require any major maintenance. We did determine that the main power transformers need replacement and have placed an order for new ones. We've restored our training and simulator building, and we're well underway at restoring the simulator itself, which will enable us to train dozens of operators who will run the Crane Clean Energy Center world-class levels. For us, restarting the plant is just a big outage, and with 2 outages better than anyone else by a wide margin. And like outages, we have developed an extensive project plan with thousands of precisely sequenced activities. The plan provides strategic scheduling to manage the people, processes, programs and plant activities needed to restart the unit. It's a multiyear day-by-day schedule that integrates projects, major plant work, licensing activities and staffing and training to manage the activities and all the interdependencies. Our work on the project plan enabled us to quickly identify long lead items so we could jump start the procurement process and ensure we meet our schedule. In addition to the main power transformers, we have begun procuring fuel and including the neutron start-up source that we'll need for the initial restart. In short, we know we need to acquire the people we need to hire, and we've already started doing so. The team has done a huge amount of work so far in anticipation that the restart would move forward and that work gives us a 1-year head start. We have laid a solid foundation for success, but enormous task lies ahead of us, but I can promise you this team is up to the task. Major projects include low-pressure turbine major inspection, buried pipe inspections and restoration, feed water heater inspections and control system restoration and testing. We'll also be installing 2 new main power transformers, which we expect to have on site by the third quarter of 2026. By the end of this year, we will have evaluated 88 restoration system groups, which are collections of planned systems, structures and components with related functionality. We'll also have a clear understanding of what will be needed to restore necessary permits and licenses, and Dan will talk more about that process. And as we all know, people are the foundation of our success. Staffing and training is critical to our ability to restart this great asset. We'll need to hire 600-plus employees that we need to carry out our restoration efforts, including at least 2 classes to train reactor operators. Those operators who will go through an extensive 1.5 years long training and testing program with the goal of being granted an NRC license to operate the plant. In addition, we'll be working to ensure the other technical disciplines such as radiation protection and chemistry will achieve their necessary qualifications and certifications required for their roles. To wrap up, I'm extremely proud of the work that our employees have already done to move forward with the Crane Clean Energy Center and paving the way to add more clean, reliable megawatts to the grid. Our people, our industry leaders and the ability to make today's announcement is a testament to their hard work, technical acumen, creativity and motivation to meet our common goals of supporting a cleaner, brighter future for America. I'll now turn the call over to Dan with a special huge thank you from all nuclear employees on your personal commitment and leadership to get the Crane Clean Energy Center approved. Thank you, Dan.

Thank you, Bryan, and good morning, everyone. As you can tell from Joe and Bryan, we're all extremely excited to be restarting the Crane Clean Energy Center. It adds more reliable carbon-free megawatts to meet the growing demand in PJM while also delivering value for our shareholders. Combined with our uprates at Byron and Braidwood, we are adding nearly 1,000 megawatts of clean, reliable generation to PJM. And we believe we have opportunities to add even more through other uprates at our plants. Like Joe and Bryan, Chris had a significant impact on my career, and I'm forever grateful. He hired me at Exelon, saw future for me to grow and invested in my development, like you did for so many across the nuclear industry. We're all here today in part to you to, Chris, and I'm so excited this plant will be a perpetual reminder of his contributions. The Crane plant is a truly unique opportunity that is enabled by our growing relationship with Microsoft, where we both see the need to address growing power demand and meet it with clean, reliable electricity. We truly appreciate this strong customer relationship and believe that we offer -- what we offer will apply to other technology leaders who are similarly committed to growth and sustainability. Turning to today's announcement. As Joe discussed, we expect Crane to be operational in 2028 and operate in a best-in-class capacity factor levels by 2030. So from an earnings perspective, 2030 is a good year to use for a run rate, although it will vary year-to-year due to refueling outages. The 20-year PPA with Microsoft provides long-term certainty in earnings and cash flows and will be included in our base earnings. It will increase our double-digit annual base EPS growth rate by 3 percentage points from at least 10% to at least 13% when we look from 2024 through 2030. We plan to update our disclosures for the impact of Crane on our fourth quarter call. We said from the beginning that we will look to grow our nuclear megawatts where it met our return threshold, and this project solidly meets that commitment. To restart the plant, we will invest approximately $1.6 billion of capital through 2028, including nuclear fuel. The restart is eligible for the then roughly $30 per megawatt hour 45Y clean energy production tax credit starting in 2028, which like the 45U nuclear PTC grows with inflation. This deal recognize the critical role that nuclear has in providing clean energy and supporting reliability. It also paves the way for strategic relationships with our customers where we can deliver these attributes to support their growth. Turning to Slide 7. We show our cash allocation plans for 2024 and 2025. We have updated numbers for the growth CapEx that will be spent on Crane, which brings total growth CapEx to $1.3 billion. We will still have $1.8 billion of unallocated capital for the remainder of this year and next on top of the $1 billion remaining of authorized share repurchases. We remain bullish on the near-term and long-term outlook for our stock. I should also note that we have only updated the uses of cash available on this slide. The available cash on the far left is the same as we disclosed in February, and does not include the increase in free cash flow from raising our earnings guidance and gross margin expectations on our second quarter earnings call. Turning to Slide 8. We will begin taking the steps necessary to restore the operating license with the NRC immediately. While Crane has an existing NRC license, it does not have the authority to load fuel or operate the reactor under that license. In order to restore these authorities, we will need to obtain approval from the NRC for authorization to resume operations. Based on our expertise on plant licensing and regulatory processes and through observation of the Palisade's restart, we are highly confident we'll be able to restore the plant's operational licensing authority to the same state that existed prior to the shutdown in 2019. We will engage with the NRC on a restart plan and will submit a series of licensing actions for NRC approval. The NRC's review will also include an evaluation of environmental impacts, consistent with the National Environmental Policy Act, also known as NEPA. NRC inspections and oversight will coincide with restoration activities. Once the inspections are completed, the NRC has verified adequate operational readiness, and all restart licensing actions will have been completed, they will authorize the restart. We anticipate the review to be completed in 2027. PJM will also need to study the plant's impact on the grid before the plant can come back online. PJM is expecting to begin processing new interconnection applications in early 2026. And we will likely submit our application next year. Once PJM completes the required studies, we'll negotiate a generator interconnection services agreement between Constellation, PJM and the interconnecting utility. We anticipate executing this agreement by the first quarter of 2028, allowing us to sink Crane to the grid by the planned 2028 restart. As you can see with the time line, the PJM interconnection process stands to be the last step before restart. We are hopeful that PJM will embrace changes to interconnect process to speed up interconnections for new firm resources to address tightening supply/demand fundamentals and the market's need for more firm generation. Success here could speed up our restart date. With that, thank you for joining us on a Friday morning to discuss this incredibly exciting opportunity not only for Constellation but for the country. I'll now turn the call back to Joe.

Thanks, Dan. And Bryan, thank you both for your leadership. One of the things we did here at Constellation is we had Dan act as really the executive sponsor the entirety of this project, given that it touches so many aspects of our business. He did a remarkable job. The entire team did. The nuclear team putting this together just continues the special work they do. Today's announcement is a big deal for us. So it is a big deal for the country. But I imagine personally, for all of us here, the enthusiasm is about being able to do something so important. And then to be able to name it and honor somebody who you love and a dear friend. So it's truly kind of a magical experience. It shows we're executing our strategy to deliver value to you, while enabling the country's growth and the ability of the country to develop this AI technology that's critically important. We don't think we're done. On our calls and in our meetings, we've told you that we have up to 2,000 megawatts of new nuclear that we could bring to the grid. That's the equivalent of 2 units. And when you think about how long it took to get Vogtle online and you think about how much money it costs, you could understand how powerful it is for one company to be able to say we're going to get 2 units worth of nuclear power on the grid in a handful of years, and that's our objective. Today's announcement brings us to half of that objective, 1,000 megawatts. That's going to be online by 2028. These megawatts will support the system reliability and will help our clients develop their business plans. Importantly, the costs are being borne here by Constellation and Microsoft. So I hear comments about utility build and all of that. This demonstrates the power of the competitive market when allowed to work. This demonstrates that the competitive market once again will meet the challenge in PJM. We welcome anyone who wants to create a division of their utility to become a competitive power generator. But monopolization of the sector is not needed. Microsoft's partnership with us shows us that the customers understand that clean, firm and reliable attributes of nuclear are finite resource. We continue to see great interest, not just from Microsoft but from others. We have a unique set of opportunities that no one else could create. This has been the strategy from the beginning of the company to provide solutions to America and to help in the energy transition. And the execution of that strategy has already created value for you, and we'll continue to do so. With this project, as Dan said, our base earnings growth rate grows from at least 10% to at least 13% through the decade, and we are far from done. Power demand continues to grow, and at the same time, reliability is becoming a premium product. We don't need to look any further than the capacity option to see the proof of this. Increased demand from the data economy and others as we transition means that these markets will continue to be tight, and that presents opportunities for us, opportunities for our customers and for partnerships like the partnership that led to today's spectacular development. And on top of all of the opportunities we've talked about, we continue to have more than 180 million megawatts of carbon-free power that we produce annually, and we could use that power from -- for all of the in front of the meter deals that you hear are being announced by customers throughout PJM. We could use that power for behind-the-meter opportunities and those discussions continue with the same degree of optimism that we have expressed in prior calls. We have, as I said a moment ago, an additional 1,000 megawatts of uprates that we could offer to our customers to solve their energy needs. We have in front of us government procurements for clean energy, and we could capture energy and capacity prices well above what is already a one-of-a-kind PTC floor price guarantee. Now not many companies are growing at, at least 13% through the decade with that sort of backstop. We have a lot more we can do. We are working these things. And like today's announcement, we will bring them to you when they are done, but we have a super exciting future, and we can't wait to continue to execute here. So with that, let me end the prepared remarks portion of this and turn it over to you for some questions.

[Operator Instructions] Our first question comes from David Arcaro with Morgan Stanley.

Congratulations on the announcement here and really great tribute to Chris Crane.

Thanks, David. He deserves it.

Absolutely. Maybe could you touch a little bit more on what this might mean for the other opportunities that you're pursuing with nuclear plants and data centers? Does this change the pacing? Or is there still more work that you could do with Microsoft from here? And just I guess, I would be curious any thoughts on the Federal -- the FERC issues that are being explored in PJM as well as it relates to them.

David, I think what this demonstrates is the power of the relationships that we could have with hyperscalers. The power to bring megawatts back to the grid at exactly a time when they're needed, the power to relicense units, the power to operate units. And I think it's a clear signal to policymakers at all levels that we want to encourage those partnerships and not do anything that undermines the ability of the utilization of these partnerships to do great things for the country and for the grid. So if anything, I think what this does is further illustrates the importance of allowing competitive solutions to work, including competitive solutions on the wire side, where we could quickly interconnect large data center load closer to our plants. That's the only solution that makes sense for data centers of substantial size. And I think policymakers continue to be enlightened on the possibilities. I think in fairness, this again, is another signal, not in terms of our relationship with Microsoft, it's evident but it's another signal to everyone else that is out in this space of the importance of nuclear energy and their solution sets. And I think it's going to drive further excitement not just in terms of behind-the-meter solutions, but on grid solutions just as our first announcement on the 24/7 carbon-free energy product with Microsoft did 2 years ago. So I think this is a very, very additive piece. I think it answers a lot of questions about the competitive market's ability to respond at a time where some people are asking those questions. So net-net, I think this is an overwhelmingly positive development. As I mentioned in my prepared remarks, it does not at all change the trajectory or our optimism for co-located deals. In fact, it encourages them. It encourages more deals around uprates and relicensing and it encourages on-grid solutions that we know at Constellation we could provide. And we are working those things every single day.

Excellent. That's really helpful. And then just wondering if you might be able to elaborate at all on the economics of this. And how we should think about the revenue stream. Is there any way to frame just the pricing level that you'll receive or the different components of revenue between -- you mentioned the clean energy tax credits and how the pricing structure might interrelate with either the PTC or the power market price?

I'm going to ask Dan to comment on that.

I think that if you think about the components of the payment, right? Obviously, we gave you a pretty good look at what the earnings power would be when you get out to 2030, and that's, I think, pretty straightforward math to solve. The revenue streams, I think there's 2 primary revenue streams. One is going to be the 45Y production tax credit. If you look at it inflation adjusted when you get to 2028, it should be somewhere around $30 depending on where inflation lands in the next few years. And then that will grow with inflation for the 10-year period, the credits in effect. The other component is the 20-year PPA for all the output of the plant to Microsoft. I guess you've heard us say in other past conversations we have a lot of opportunities, as Joe pointed to for new megawatts to come to the grid as well as behind the meter solutions at our existing assets, and we're going to be rightfully and understandably cautious about how much detail we share on those contracts for competitive reasons for us and our customers. So I think you can probably fair it out an idea of how much revenue it is, but we're not going to be directly answering that.

Our next question comes from Shahriar Pourreza with Guggenheim Partners.

I can echo David's comments on Chris, I know he also shaped a lot of us on the Street as well. So much appreciated on that. Let me just -- I know, Joe, you mentioned risk sharing. I guess can you just talk about who bears the risk for any kind of cost or runs and delays? And maybe just how is that split between you and Microsoft?

Shahriar, we have a clear obligation to get the plant on. And if it costs more, it's on our done. Their obligation begins with when the plant starts to pay us for the energy added agreed upon price.

Okay. Perfect. And then just from a technical perspective, assuming this isn't kind of behind the meter, given the site configuration and the need for outages at a single unit site? Is that the correct way to think about it?

There's no behind the meter. They're going to use this power on the grid.

Okay. Perfect. And then I know the plant obviously comes online in 20 -- I guess what does the Microsoft offtake ramp kind of look like? Are you supplying a fraction of the 835 in '28 and ramping to 2030 or all of it in 2030?

No. It's full output from day 1.

Next question comes from Steve Fleishman with Wolfe.

Congratulations and a nice memorial to Chris. So just following up on the question on the kind of managing the risk of the cost of the project and timing. Could you just talk to maybe kind of like contingency and other things you put in and just to kind of give us conviction on the timing and cost.

Yes. First of all, Steve, I think it's fair to say that the group of work here are things we've done. We've replaced main transformers. Everything that Bryan identified is things that we have done routinely and outages at different plants. We understand the cost of doing the work, the time it takes to do the work, and we have embedded within the budget here, robust contingencies to address any unexpected change. This is a big outage. And if there's anything that this company should be known for, its operations and outage management. That's what we do. We just finished one, just set a record at Fitzpatrick, the other day, 14 days, never happened, not even close before this. We do that every single year. Our team is vesting what has already been industry-leading records. Here, we've got a pretty good chunk of time to get this work done. And as Dan indicated, if anything, if PJM will allow it, we will get on earlier than our anticipated plan. And I also expect we will do very well against the budget. That's the expectation. We have a very good contingency. So that's the way we think about it, the confidence that both Dan and Bryan expressed is built upon the fact that we've done all of this work before, and we have planned it. We have sat quietly now for well over a year thinking about how to execute this project and get it done flawlessly, and we expect nothing less.

Great. And then just one question on the PPA. Just -- is it energy and capacity? Or is it just energy and the capacities available for PJM auction?

It's everything. It's energy capacity and attributes, Steve.

Everything. Okay. And then just one other technical question there. Just when the plants in refueling, do you need to provide other nuclear to kind of back up that? Or do you not have to provide any power?

No. there's no provision.

It's unit contingent. So you just need to provide it when it's run?

Right.

Our next question comes from Ross Fowler with Bank of America.

And I just echo the thoughts on Chris Crane. I think he was also a mentor to all of us on the Street throughout his career. So I think it's only appropriate to name this after him. But just walk us through this a little bit. So I think I heard you say that Microsoft shares the cost. But I think in your Q&A answer, you sort of said that the capital cost upfront is on use. So you sort of get back that cost sharing throughout the life of the 20-year term and the PPA, like that's sort of imputed into the margins you're capturing on this. Is that how we should think about it?

Yes, Ross, exactly. It's our obligation to get the plant ready and get it started. And then we anticipate recovering the cost of that plus a return through the power purchase agreement.

Okay. Okay. And then how do I think about the context of maybe -- you've got a lot of different sites, most of which other than TMI, I mean, all of which are the TMI except for the uprates, which is different. Don't have to sort of be brought through this CapEx restart, right, which to me does have some execution risk. And I know you've sort of gone through that a little bit to give us some comfort in that. But why this site with that sort of capital investment versus another site that maybe you could just tie the data center to or do the sort of PPA across the grid with. What's the differential there?

Ross, there's not -- we're doing this one. So we're not doing others aspect of this. This was a unique opportunity at a time where both we and Microsoft felt it was important to bring on new clean energy to the grid. That does not change the fact that customers continue to be interested in those other assets. As you could see from the financial information that Dan walked through, the returns here are very appropriate for what we are trying to do. So the capital deployment makes complete sense and easily meets the thresholds that we outlined for the business and expectations for the business from day 1. So this is one that just ticked all of the boxes but it doesn't compete with anything else in the space. It doesn't compete with co-location. It doesn't compete with selling uprates at other plants. Certainly, doesn't compete with the sale of our clean energy firm or many other assets. But this was a unique opportunity. That meant 2 companies had to get together and lead the industry. That's precisely what we're doing here today.

Okay. Makes complete sense. And then just to clarify a couple of things. I think you already answered this, but -- this is not a behind-the-meter deal. So we're talking about Microsoft taking power off the grid, you putting power up to the grid and then the PPA balances that off for the -- whatever the pricing is on margin and that fully includes capacity, ancillaries, services, power price. All of that is sort of in there.

That's right.

Our next question comes from Paul Zimbardo with Jefferies.

The first add was, do you expect to be eligible for any energy community or domestic content benefits under 45Y as well?

I'll let Dan cover that.

Yes, Ross (sic) [ Paul ] I would say it's not in our base expectations. We are working on some opportunities for some matters on the PTC, but it really depends on a community-specific calculation, which varies by year.

So we'll see the data on that, Paul. We've been tracking it for every year both the unemployment pieces of it, the domestic content things. So those are opportunities we'll look at. We're certainly tracking data. But as Dan said, it's kind of been flopping around as to whether this particular area fits into the criteria or doesn't.

Okay. Yes, that's why I noticed trying to do in on some maps this morning. Okay. And then the other was, are there opportunities for any federal, local, state funding or tax incentives to reduce those CapEx numbers? Or is there something embedded in there? Just any color you could provide on that.

We're not pursuing anything at the moment, Paul. We'll take a look as we finance the project at loan guarantees and other things that will be available, but there's nothing to announce today.

Our last question comes from Durgesh Chopra with Evercore ISI.

Joe, nice words to Chris. Just one question on the PPA. And then I have a follow-up question on the fuel. On the PPA itself, Dan, is there an escalation on the fixed price that Microsoft is paying you? Or is it truly a fixed dollar amount, whether it's for capacity, energy per month. How should we think about that?

Yes. Go ahead, Dan, sorry.

It's a fixed price contract, is what we said in the slides, that would be correct, the PTC will increase with inflation over the 10-year window where the PTC is in effect.

Got it. And just to be clear, your contract just covers capacity energy. Any sort of transmission grid charges would be additive to that, right? Like that's not your responsibility and Microsoft is going to handle that with whoever the transmission provider?

Yes. We're selling energy capacity attributes to them, and they have energy on the grid just like they would if they're buying any other PPA.

Yes. So they're using in flyers charges are going to be those.

Got it. That's very clear. And then just one last quick one. Can you address fuel procurement and sort of your strategy there?

So go ahead, Dan.

Yes. So we've been -- as we said before, on our fuel supply that we are covered well into 2029 on an existing basis for our fleet. We have gone and gone to additional procurement to cover all of our needs for the Crane facility in addition to that, right? So we found an independent sourcing for that fuel. The cost of that is embedded both in the $1.6 billion CapEx plan we have where we've got to do a full core load at one point in time. And then that would also be reflected in the economics for the cost of that fuel in our plant. So we feel very comfortable with our fuel needs both for the fleet, as we talked about for quite a while, but also to meet the needs of this restart.

And I'm not showing any further questions at this time. I'd like to turn the call back over to Joe Dominguez for any closing remarks.

Well, Kevin, thank you for doing an excellent job handling the call. Everyone, thanks again for jumping on, on short notice to hear this exciting news from us. We look forward to continuing to execute for our owners, and we're going to get right back to work on that. Happy Friday and have a great weekend. With that, Kevin, we're going to wrap it up.

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