Constellation Energy Corp

3. Regulatory Matters

The following matters below discuss the status of our material regulatory and legislative proceedings.

New England Regulatory Matters

Mystic Units 8 and 9 Cost of Service Agreement. In December 2018, FERC issued an order accepting a cost of service agreement for Mystic Units 8 and 9 for the period between June 1, 2022 to May 31, 2024. The agreement was intended to preserve the two gas-fired electric generating units for the two-year period while allowing the Mystic units to recover their costs of operating, including a substantial portion of the costs associated with the adjacent EMT. Upon the expiration of the agreement on May 31, 2024, the two generating units retired.

The Mystic COS requires an annual process whereby we identify and support our projected costs under the agreement and/or true-up previous projections to the actual costs incurred. Interested parties then have the opportunity to challenge our filings. In September 2022, we made our second of the five annual filings at FERC. In December 2023, FERC issued an order setting for settlement/hearing certain components of the second annual filing, including the issue of Mystic’s recovery of historical rate base costs. In July 2024, the active parties to the proceeding reached a settlement in principle to resolve the second annual filing. The same parties then proceeded to reach a global settlement that would resolve all outstanding matters related to the Mystic COS, including the fourth and fifth annual filing proceedings. A global settlement was filed with FERC in November 2024, and FERC approved the settlement in January 2025. The global settlement does not have a material financial impact on our consolidated financial statements.

Federal Regulatory Matters

Inflation Reduction Act of 2022. In August 2022, President Biden signed into law the IRA, which, among other things, includes federal tax credits, certain of which are transferable or fully refundable, for a number of clean energy technologies including existing nuclear plants (45U). In addition, the IRA provides for a federal tax credit for technology-neutral clean energy production (45Y PTC or 48E ITC). We believe the planned restart of Crane and our planned nuclear uprates will be eligible for these credits. The nuclear PTC recognizes the contributions of carbon-free nuclear power by providing a federal tax credit of up to $15/MWh, subject to phase-out, beginning in 2024 and continuing through 2032. The nuclear PTC includes adjustments for inflation. The PTC benefiting existing nuclear plants included in the IRA continues to be the subject of additional guidance issued from the U.S. Treasury and IRS.

Operating License Renewals

Conowingo Hydroelectric Project. In 2012, we submitted an application to FERC for a new license for the Conowingo Hydroelectric Project (Conowingo). In connection with our efforts to obtain a water quality certification pursuant to Section 401 of the Clean Water Act (401 Certification) from MDE for Conowingo, we had been working with MDE and other stakeholders to resolve water quality licensing issues, including: (1) water quality, (2) fish habitat, and (3) sediment.

In 2019, we and MDE filed with FERC a Joint Offer of Settlement (Offer of Settlement) that would resolve all outstanding issues relating to the 401 Certification. FERC subsequently issued a new 50-year license for Conowingo, effective March 1, 2021. Several environmental groups appealed FERC’s ruling to the U.S. Court of Appeals for the D.C. Circuit. The court of appeals issued a decision vacating FERC’s decision to grant Conowingo its license renewal and sending the matter back to FERC for further proceedings. Upon issuance of

Note 3 — Regulatory Matters

the mandate from the U.S. Court of Appeals for the D.C. Circuit, we began operating under an annual license, which renews automatically, containing the same terms as the license that was in effect prior to the 2021 FERC order.

MDE informed us that as a result of the U.S. Court of Appeals decision, they would be resuming their administrative reconsideration of the 401 Certification. In response to the procedure outlined by the MDE, supplemental briefs on the 401 Certification were filed by the Lower Susquehanna Riverkeeper Association and Waterkeepers Chesapeake (jointly) and us. In addition, we filed a supplemental reply brief. We are currently participating in mediation with MDE and the parties that sought reconsideration of the 401 Certification. We are unable to further predict the outcome of this proceeding at this time. Depreciation provisions continue to assume operation through 2071 given our expectation that a 50-year license will be issued.

Peach Bottom Units 2 and 3. In March 2020, the NRC approved a second 20-year license renewal for Peach Bottom Units 2 and 3. As a result, Peach Bottom Units 2 and 3 were granted the authority to operate through 2053 and 2054, respectively.

Notwithstanding its 2020 approval, in February 2022, the NRC took action to modify Peach Bottom's subsequently renewed licenses in response to a request for hearing that the NRC had not previously adjudicated. In its February 2022 decision, the NRC reversed itself and concluded that the previous environmental review required by the National Environmental Policy Act (NEPA) for the Peach Bottom subsequently renewed licenses was incomplete because it did not adequately address environmental impacts resulting from renewing the units’ licenses for an additional 20 years. As a result, the NRC undertook a rulemaking to modify its regulations and guidance to specifically address environmental impacts during the period of subsequent license renewal. In addition, the NRC modified the expiration dates for the Peach Bottom licenses from 2053 and 2054 to 2033 and 2034, respectively, pending the completion of the updated NEPA analysis. The NRC approved final revisions to the rule in May 2024, and we have begun working with the NRC to close out the remaining environmental issues and restore the Peach Bottom expiration dates to 2053 and 2054. Depreciation provisions and ARO assumed retirement dates continue to assume Peach Bottom Units 2 and 3 will operate through 2053 and 2054, respectively, given our expectation that the previously approved expiration dates will be restored.