Constellation Energy Corp

2. Mergers, Acquisitions, and Dispositions

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. Other owners include City Public Service Board of San Antonio (CPS,40%) and the City of Austin, Texas (Austin Energy,16%). See Note 2 — Mergers, Acquisitions, and Dispositions of our 2023 Form 10-K for additional information.

On July 28, 2023 NRG accepted service of a lawsuit filed by the City of San Antonio, Texas, acting by and through CPS, in the 130th District Court of Matagorda County, Texas against NRG and certain of its subsidiaries, claiming the existence of a right of first refusal that applies to the transaction contemplated between us and NRG. On July 31, 2023 we intervened in the lawsuit and Austin Energy also intervened in the lawsuit claiming a similar right of first refusal. Per the terms of our Equity Purchase Agreement, NRG made representations that no right of first refusal applied to the transaction contemplated between us.

Notes to Consolidated Financial Statements

Note 2 — Mergers, Acquisitions, and Dispositions

Separately, on July 31, 2023, San Antonio and Austin filed motions to dismiss and (in the alternative) immediately stay proceedings and petitions to intervene on the license transfer application that was filed with the NRC. Notwithstanding this, the NRC issued approval of the license transfer application on October 30, 2023. However, the NRC staff’s approval of the license transfer is subject to the Commission’s authority to rescind, modify, or condition the approved transfer based on the outcome of any post-effectiveness hearing or motions on the license transfer application.

On May 2, 2024 we executed a settlement agreement with all parties (CPS/City of San Antonio, Austin, and NRG), resolving all litigation involving our purchase of the ownership interest in STP. The terms of the settlement include us selling a 2% ownership interest in STP to CPS at the same price and terms that we paid NRG for our 44% interest, subject to regulatory approvals from the NRC and the Public Utility Commission of Texas. Pursuant to the Settlement, CPS and Austin filed Notices of Dismissal with Prejudice with the Court, which ends the litigation, and likewise withdrew their pending objections to the sale with the NRC. We anticipate closing on the sale will occur in the second half of 2024. Upon closing of the sale, we and CPS will each own a 42% interest in STP, and Austin’s interest will remain at 16%. The terms of settlement are not expected to have a material impact on our consolidated financial statements.