Constellation Energy Corp

Separation from Exelon

On February 21, 2021, Exelon’s Board of Directors approved a plan to separate its competitive generation and customer-facing energy businesses into a stand-alone publicly traded company (the "separation"). Exelon completed the separation on February 1, 2022. In order to govern the ongoing relationships between us and Exelon after the separation, and to facilitate an orderly transition, we and Exelon have entered into several agreements, including a Separation Agreement, Tax Matters Agreement, a Transition Services Agreement, and an Employee Matters Agreement and other ancillary agreements. See Note 1 — Basis of Presentation of the Combined Notes to Consolidated Financial Statements for additional information.

We incurred separation costsof $101 million and $140 million for the years ended December 31, 2023 and 2022, respectively, which are primarily recorded in Operating and maintenance expense. The separation costs are primarily comprised of system-related costs, third-party costs paid to advisors, consultants, lawyers, and other experts assisting in the separation.

Share Repurchase Program

On February 16, 2023, our Board of Directors announced a share repurchase program with a $1 billion authority without expiration. Repurchases under this program commenced in March 2023. On December 12, 2023, the Board of Directors approved an increase to our previously announced $1 billion share repurchase program, authorizing the repurchase of up to an additional $1 billion of our outstanding common stock. During 2023, we repurchased from the open market 10.6 million shares of our common stock for a total cost, inclusive of taxes and transaction costs, of $1 billion. See Note 20 — Shareholders' Equity of the Combined Notes to Consolidated Financial Statements for additional information.

Acquisition of Joint Ownership in South Texas Project

On November 1, 2023, we completed the acquisition of NRG South Texas LP (renamed and converted as Constellation South Texas, LLC), which owns a 44% undivided ownership interest in the jointly owned STP, a 2,645 MW, dual-unit nuclear plant located in Bay City, Texas. The net cash paid was $1.65 billion, after certain purchase price adjustments. This acquisition is complementary to and aligned strategically with our existing clean energy business operations. See Note 2 — Mergers, Acquisitions, and Dispositions of the Combined Notes to the Consolidated Financial Statements for additional information on this acquisition. The STP operating results are included in the ERCOT operating segment. See Note 5 — Segment Information additional information on our reportable segments.

Revenue Recognized for Illinois ZECs Delivered in Prior Planning Years

Our Clinton and Quad Cities units contract with certain utilities in Illinois which requires delivery of all ZECs produced during each planning year (June 1 to May 31), with total compensation limited by an annual cap for each planning year designed to limit the cost of ZECs to each utility's customers. ZECs delivered that, if paid, would result in the annual cap being exceeded may be paid in subsequent years at the vintage year price as long as the payments would not exceed the annual cap in the year paid. In each planning year since the program commenced on June 1, 2017, we delivered ZECs to the utilities in excess of the annual compensation cap.

The ZEC price and annual compensation cap effective for each planning year are administratively determined by the IPA. In 2023, we recognized $218 million of revenue as a receivable for ZECs delivered in prior planning years, with payment expected in the third quarter of 2024. As of December 31, 2023, this receivable is included within Customer accounts receivable, net in the Consolidated Balance Sheets. See Note 4 — Revenue from Contracts with Customers of the Combined Notes to the Consolidated Financial Statements for additional information on this acquisition.