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Speaker 1: This is Bloomberg Markets. I'm Katie Greifeld. So now for

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Speaker 1: our sock the hour, and Constellation Energy has been hitting

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Speaker 1: highs after announcing it would invest one point six billion

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Speaker 1: dollars to bring the three Mile Island nuclear reactor in

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Speaker 1: Pennsylvania back online. Microsoft will purchase the energy for two decades,

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Speaker 1: and this, of course is the latest sign of surging

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Speaker 1: interest in the nuclear industry as power demand for AI.

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Speaker 1: Soares joining us now, and please to say we have

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Speaker 1: Joe Domingez. He is the CEO of Constellation Energy joining

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Speaker 1: me on set. It's great to see.

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Speaker 2: You, great to see you. Thanks for having me on.

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Speaker 1: So let's talk about the TikTok of this deal. Of course,

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Speaker 1: Microsoft agreeing to buy two decades worth of energy when

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Speaker 1: it comes at when you come at it from the

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Speaker 1: investor perspective, it feels like investors have just been waiting

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Speaker 1: for a catalyst for nuclear So with that perspective in mind,

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Speaker 1: I'm curious how long this steal had been in the works.

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Speaker 3: Oh God, we started thinking about twenty months ago that

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Speaker 3: the right thing was to figure out a way to

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Speaker 3: restart the machine. So from an inside Constellation discussions with

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Speaker 3: our board, you know, The conversation started twenty months ago,

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Speaker 3: but for a long period of time it was just

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Speaker 3: how do we do it?

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Speaker 2: Can we do it?

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Speaker 3: What are their critical pieces of equipment we'd have to

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Speaker 3: buy in advance.

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Speaker 2: So we got that.

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Speaker 3: Done, and then earlier this year we started talking to

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Speaker 3: Microsoft about it. We had partnered with Microsoft on different

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Speaker 3: products before, so they made.

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Speaker 2: Sense as a client. Of course they have the.

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Speaker 1: Need, so the relationship was there, and of course we

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Speaker 1: see the culmination of that now. I'm curious. I mean,

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Speaker 1: when it comes to the nuclear industry, you have bipartisan support,

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Speaker 1: You've read a lot of academics and other thought pieces

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Speaker 1: that nuclear just makes so much sense, but there's still

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Speaker 1: that reputation cloud, if you want to call it, hanging

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Speaker 1: over it. I'm curious when you think about the industry

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Speaker 1: now versus when you were spun out of Exelon in

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Speaker 1: twenty twenty two, how has it changed.

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Speaker 3: Oh god, it feels like ten years, right, it's really

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Speaker 3: thirty one months that we have been And back then

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Speaker 3: the thought was.

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Speaker 2: You know, there wasn't going to be a catalyst.

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Speaker 3: It's always one of these things where in retrospect you

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Speaker 3: think the pieces are coming together. Electrification of the transportation sector,

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Speaker 3: home heating industry. We're on shoring a lot of industry

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Speaker 3: now to deal with supply chain issues.

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Speaker 2: But AI was the thing.

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Speaker 3: That just really drove the load projections to a point

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Speaker 3: where you said, without nuclear, it's not going to happen.

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Speaker 1: Did that surprise you, the fact that you did have

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Speaker 1: AI come along and be such a theme. I mean,

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Speaker 1: it feels like it's almost in every part of conversation

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Speaker 1: that you could have right now, and you've seen power

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Speaker 1: demand tick up as a result. Did that surprise you?

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Speaker 3: Well, that it was AI, of course, because I wasn't

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Speaker 3: focused on that, But that nuclear was going to be important.

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Speaker 3: It was absolutely clear to me for a long time,

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Speaker 3: and I spoke about this for a long time that

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Speaker 3: if we're going to run a full time economy on

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Speaker 3: emissions free energy, couldn't just run it.

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Speaker 2: On part time power.

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Speaker 3: We had to have resources that we could dispatch and

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Speaker 3: would run all the time, especially as we transitioned away

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Speaker 3: from fossil fuels.

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Speaker 2: So the fact that nuclear.

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Speaker 3: Was going to be relevant and important, again, that was

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Speaker 3: no news to me or anybody else in the industry,

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Speaker 3: especially folks who had grown up planning the business. But

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Speaker 3: the catalysts and when they would happen, that was a surprise.

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Speaker 3: I knew nothing about it, really, you know, just to

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Speaker 3: be honest.

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Speaker 1: Yeah, well, let's talk about the balancing act here, because

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Speaker 1: of course AI tech companies, they get a lot of

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Speaker 1: the headlines when it comes to power demand. But how

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Speaker 1: do you plan to balance out their needs with the

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Speaker 1: needs of regular customers and industrial demand for example.

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Speaker 3: Well, you know, the markets in which we operate are

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Speaker 3: so called competitive markets, so we don't have a regulator

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Speaker 3: that says, well, we're going to build you know, these

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Speaker 3: five power plants. We use price signals in our market

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Speaker 3: to drive investment, much like you would for wheat farming

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Speaker 3: or not gas or oil or any other commodity. So

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Speaker 3: as prices increase in supply demand titans, we would expect

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Speaker 3: people to come in. And that's what's happened over the

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Speaker 3: last twenty years in our markets. People have put private

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Speaker 3: capital to work building power plants when needed.

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Speaker 2: And I expect that will happen again here.

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Speaker 1: And of course we're about six weeks away from a

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Speaker 1: presidential election, and you know, we already said this, but

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Speaker 1: you think about nuclear it has support from the right

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Speaker 1: and the left, but even that being said, I mean,

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Speaker 1: how do you anticipate a change in administration potentially affecting

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Speaker 1: your business? Are you planning for that?

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Speaker 3: Well, you have to be cognizant of it. But in

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Speaker 3: our business, if you're going to change the strategy every

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Speaker 3: time there's a new occupant in the White House or

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Speaker 3: every time something changes in Congress in terms of which

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Speaker 3: party is in control, you're going to do nothing. You're

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Speaker 3: going to be so constipated that your strategy is never

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Speaker 3: going to work.

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Speaker 2: So for us, we look at.

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Speaker 3: The long term needs of America. Here's what's clear to me.

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Speaker 3: AI is here to stay, and the country has to

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Speaker 3: be successful in AI from a geopolitical securities perspective as

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Speaker 3: well as an economic perspective. Number two, the climate crisis,

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Speaker 3: although we may change our focus over a period of time,

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Speaker 3: is going to be something that we are going to

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Speaker 3: have to deal with as humanity. So I think about

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Speaker 3: our assets and our strategy around those two pillars and drivers,

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Speaker 3: and the third thing being reliability and affordability. So that's

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Speaker 3: what we're working to solve, and we can't redesign it

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Speaker 3: every four years.

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Speaker 1: So I want to bring this conversation to your share

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Speaker 1: price you and I were speaking beforehand before the sentiment

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Speaker 1: started about how I often ask CEOs about their share

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Speaker 1: price and they say, I don't monitor it. But your

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Speaker 1: shares have doubled over the past year. So theoretically you

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Speaker 1: have plenty of money to spend here, a lot of

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Speaker 1: cash on hand. How might you plan to spend it?

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Speaker 3: Well, look, we think the best investment we can make

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Speaker 3: is in Constellation. So when we don't see a growth

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Speaker 3: opportunity like the growth opportunity we have here with MYOT,

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Speaker 3: we have and will continue to invest in Constellation through

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Speaker 3: share buybacks.

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Speaker 2: I will say this because.

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Speaker 3: I do watch your show, and I have seen CEOs

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Speaker 3: say they don't watch their sock price, and I wonder

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Speaker 3: if their bored really buys into that. But look again,

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Speaker 3: I mean, it's like the politics question. It's a thing

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Speaker 3: you have to be cognizant of, and when you have

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Speaker 3: big moves, you're always watching it. You probably endure the

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Speaker 3: pain of the downs more than the joy of the ups,

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Speaker 3: to be quite honestly, but you have to have a

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Speaker 3: long term, durable strategy.

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Speaker 2: So I keep a pretty good eye on it.

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Speaker 1: Yeah, I mean, if I had a real time report

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Speaker 1: guard telling me how I was doing. It's the only

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Speaker 1: thing I would look like look at. But in any case,

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Speaker 1: shifting away from just nuclear, I am curious, what's going

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Speaker 1: on with your hydrogen program in specifics.

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Speaker 3: Well, we're looking for final regulations out of Treasury, and

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Speaker 3: at this point, I'm anticipating we'll see those final regulations

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Speaker 3: after the election, given everything that's on Treasury's plate in

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Speaker 3: terms of IRA rules, So.

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Speaker 2: We're at a stalemate right now.

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Speaker 3: Right now, the Treasury rules do not permit existing nuclear

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Speaker 3: to participate in making hydrogen.

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Speaker 2: We think that's a mistake.

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Speaker 3: We think that's contrary to the law, and we've been

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Speaker 3: quite outspoken about this. I think we've advanced a very

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Speaker 3: good case to explain why Treasury should change its thinking

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Speaker 3: in the final regulations, and I'm cautiously optimistic they'll do that.

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Speaker 3: Then we'll really get into it, because here's the important thing.

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Speaker 3: While we want to transition away from fossil fuels, keep

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Speaker 3: in mind that roughly eighty three percent of industry is

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Speaker 3: still relying on.

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Speaker 2: Fossil fuels for their processes.

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Speaker 3: It's only seventeen percent electrified, and we're going to need

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Speaker 3: replacement drop in fuels like hydrogen to replace some of

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Speaker 3: fossil fuels in those operations, and we.

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Speaker 1: Don't have much time left. But I have to ask,

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Speaker 1: I mean the human element of what we're talking about

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Speaker 1: reopening the three three Mile Island nuclear reactor. I mean

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Speaker 1: a lot of people there. My first thought was, Okay,

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Speaker 1: I'm thinking about that partial meltdown that we saw in

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Speaker 1: nineteen seventy nine. I mean, how do you answer those fears.

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Speaker 1: You have all the great benefits of nuclear but still

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Speaker 1: there is that human emotion element there.

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Speaker 3: Oh sure, Look, you got to remember that was the

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Speaker 3: worst black guy we ever had as an industry, But

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Speaker 3: it was something else for us that we were inside of.

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Speaker 2: It was it also began in this.

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Speaker 3: Conversation about how do we get better all of the time,

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Speaker 3: and the thousands of process improvements and equipment improvements, construction

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Speaker 3: improvements all began.

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Speaker 2: Much like in our personal lives.

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Speaker 3: Where you have a hiccup or a bad thing happens,

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Speaker 3: you learn and grow from it.

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Speaker 2: To us in the industry, that was the rebirth.

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Speaker 3: That was the beginning of figuring out how to do

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Speaker 3: it better. And I'm proud that the World Health Organization

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Speaker 3: scores nuclear as the safest technology, tied with solar. In fact,

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Speaker 3: a lot of people don't talk about this, but in

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Speaker 3: the fifty plus years since Eisenhower's famous speech, right, more

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Speaker 3: people have been killed falling off rooftops installing solar panels

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Speaker 3: than have ever been injured in industrial accidents at nuclear plants.

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Speaker 2: So it is a good safety record.

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Speaker 3: But we understand the critical importance of this compact. We

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Speaker 3: have communities and safety will always be number one for us.

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Speaker 1: All right, well, that is a good place to leave it.

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Speaker 1: Really appreciate you taking the time. That, of course, is

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Speaker 1: Joe Dominguez. He is the CEO of Constellation Energy. This

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Speaker 1: is Bloomberg