1
00:00:02,520 --> 00:00:07,040
Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

2
00:00:08,039 --> 00:00:09,520
Speaker 2: First of all, thanks so much for being with us.

3
00:00:09,560 --> 00:00:10,520
Speaker 2: We appreciate your times.

4
00:00:10,520 --> 00:00:11,080
Speaker 1: Great to be on.

5
00:00:11,680 --> 00:00:14,520
Speaker 2: Obviously, a big topic of discussion here right now is

6
00:00:14,520 --> 00:00:17,760
Speaker 2: the war with Iran. Curious how it is affecting constellation.

7
00:00:18,320 --> 00:00:20,960
Speaker 1: You know, not much directly right now. You know, as

8
00:00:21,000 --> 00:00:25,720
Speaker 1: a domestic electricity producer, natural gas pricing in the US

9
00:00:26,079 --> 00:00:30,240
Speaker 1: isn't really dramatically effected. We're already shipping every molecule we

10
00:00:30,400 --> 00:00:32,680
Speaker 1: can of LNG, so there's not going to be an

11
00:00:32,760 --> 00:00:36,800
Speaker 1: uptick of natural gas leaving the country until new facilities

12
00:00:36,840 --> 00:00:39,440
Speaker 1: are built. So the price of natural gas has been

13
00:00:39,479 --> 00:00:43,560
Speaker 1: relatively stable. We don't use oil to make electricity except

14
00:00:43,600 --> 00:00:46,239
Speaker 1: during the debt of winter, and we're already past that

15
00:00:46,320 --> 00:00:49,239
Speaker 1: period of time, so we're seeing some stability. In the

16
00:00:49,280 --> 00:00:52,440
Speaker 1: long term, we're worried about what everybody else is worried about,

17
00:00:52,800 --> 00:00:56,200
Speaker 1: supply chain issues, different things as we think about the

18
00:00:56,200 --> 00:00:59,200
Speaker 1: implications to Asia, which will be of course more significant.

19
00:00:59,440 --> 00:01:01,760
Speaker 2: So right now, the long term is more of a

20
00:01:01,760 --> 00:01:02,720
Speaker 2: bigger problem for.

21
00:01:02,720 --> 00:01:05,000
Speaker 1: Yeah, I think that's right. It's both a problem and

22
00:01:05,040 --> 00:01:08,360
Speaker 1: an opportunity. I would say, how is an opportunity? Well, look,

23
00:01:08,400 --> 00:01:11,240
Speaker 1: I think, you know, before when we were thinking about

24
00:01:11,280 --> 00:01:14,000
Speaker 1: the data economy where all the data centers are going

25
00:01:14,040 --> 00:01:17,280
Speaker 1: to go, there was a pretty good debate that a

26
00:01:17,319 --> 00:01:19,760
Speaker 1: lot of the data centers were going to go to

27
00:01:19,840 --> 00:01:23,000
Speaker 1: the Middle East. We had already seen agreements to transferring

28
00:01:23,080 --> 00:01:25,640
Speaker 1: chips to the Middle East for the construction of data

29
00:01:25,640 --> 00:01:30,319
Speaker 1: centers there. Unless we end up with, you know, really

30
00:01:30,400 --> 00:01:33,399
Speaker 1: a solid piece in the Middle East, which seems you know,

31
00:01:33,520 --> 00:01:37,240
Speaker 1: unlikely at least based on the history we've all lived together,

32
00:01:37,880 --> 00:01:39,840
Speaker 1: I think people are going to start to have second

33
00:01:39,880 --> 00:01:45,319
Speaker 1: thoughts about citing major new infrastructure projects in the Middle East.

34
00:01:45,800 --> 00:01:48,040
Speaker 1: I don't think Europe is in the game for these

35
00:01:48,160 --> 00:01:52,680
Speaker 1: data centers, so that means more data centers in the US.

36
00:01:52,840 --> 00:01:56,120
Speaker 1: As the data economy builds out as an electricity producer,

37
00:01:56,160 --> 00:01:58,160
Speaker 1: that means more customers that we're going to deal with.

38
00:01:58,440 --> 00:02:01,520
Speaker 1: I think the same is true for industrial customers that

39
00:02:01,760 --> 00:02:05,320
Speaker 1: already we're moving from Europe to the United States. These

40
00:02:05,360 --> 00:02:09,360
Speaker 1: pressures on international energy prices are all going to drive

41
00:02:09,400 --> 00:02:10,480
Speaker 1: people to North America.

42
00:02:10,520 --> 00:02:12,959
Speaker 2: And you just touched on this, but also nuclear power

43
00:02:13,080 --> 00:02:16,080
Speaker 2: extremely popular right now because of data centers and AI.

44
00:02:16,280 --> 00:02:18,600
Speaker 2: So what are the different ways you can capitalize on that.

45
00:02:19,040 --> 00:02:21,399
Speaker 1: Well, the first thing we got to do is lock

46
00:02:21,480 --> 00:02:24,120
Speaker 1: down the existing fleet and make sure that we could

47
00:02:24,120 --> 00:02:26,919
Speaker 1: operate it safely for as long as we can. That

48
00:02:26,960 --> 00:02:31,079
Speaker 1: requires a good deal of investment. Having these agreements and

49
00:02:31,120 --> 00:02:34,120
Speaker 1: having this social acceptance of nuclear and this kind of

50
00:02:34,120 --> 00:02:37,040
Speaker 1: passion around nuclear means that we can make billions of

51
00:02:37,080 --> 00:02:39,640
Speaker 1: dollars investment to keep the fleet the way it is

52
00:02:39,960 --> 00:02:43,680
Speaker 1: operating for a much longer period of time. Also increasing

53
00:02:43,720 --> 00:02:46,400
Speaker 1: the output of the fleet. We think we could get

54
00:02:46,440 --> 00:02:49,920
Speaker 1: as much as six or seven brand new nuclear plants

55
00:02:49,960 --> 00:02:53,880
Speaker 1: worth of energy just by uprating the existing fleet. We're

56
00:02:53,919 --> 00:02:57,160
Speaker 1: busy underway doing those things at Constellation. And then the

57
00:02:57,240 --> 00:02:59,880
Speaker 1: last piece of it is actual new nuclear, whether that

58
00:03:00,160 --> 00:03:03,839
Speaker 1: be small modular reactors or large machines. So I mean,

59
00:03:03,960 --> 00:03:07,120
Speaker 1: in all three areas, securing the existing fleet and the

60
00:03:07,160 --> 00:03:11,240
Speaker 1: capital investments needed, increasing the output of those units, and

61
00:03:11,400 --> 00:03:14,680
Speaker 1: building new units alongside of those. We're very active.

62
00:03:15,160 --> 00:03:18,160
Speaker 2: When you power data centers, you also have consumer bills.

63
00:03:18,200 --> 00:03:20,440
Speaker 2: So how do you balance that need for data centers

64
00:03:20,440 --> 00:03:24,239
Speaker 2: and its effect on pricing while keeping reliable and affordable power.

65
00:03:24,280 --> 00:03:25,720
Speaker 2: You know, we hear a lot of people say not

66
00:03:25,800 --> 00:03:28,000
Speaker 2: in my backyard yeah.

67
00:03:27,800 --> 00:03:31,280
Speaker 1: And look, I think this is involving conversation. I think

68
00:03:31,280 --> 00:03:36,040
Speaker 1: the early days are data centers are takers, and they're

69
00:03:36,120 --> 00:03:38,960
Speaker 1: driving up the cost of energy, and that is driven

70
00:03:39,080 --> 00:03:42,920
Speaker 1: by this peak demand, which is a handful of hours,

71
00:03:43,000 --> 00:03:45,800
Speaker 1: call it forty of the eight thousand hours we have

72
00:03:45,920 --> 00:03:50,480
Speaker 1: in a year are constrained, and we're seeing higher prices

73
00:03:50,520 --> 00:03:52,960
Speaker 1: in those hours as data center demand has come on.

74
00:03:53,640 --> 00:03:57,080
Speaker 1: The President is addressing that through executive order and the

75
00:03:57,160 --> 00:04:00,880
Speaker 1: data Economy customers have agreed to be flex at that

76
00:04:01,000 --> 00:04:04,200
Speaker 1: peak or bring their own capacity resources at the peak.

77
00:04:04,640 --> 00:04:07,600
Speaker 1: If we manage the peak, we want the data centers

78
00:04:07,640 --> 00:04:10,600
Speaker 1: on the grid. Why is that because think about it,

79
00:04:10,680 --> 00:04:13,960
Speaker 1: all the wires we've built all the way down your streets,

80
00:04:14,160 --> 00:04:19,240
Speaker 1: all the big transmission lines you all see, are dramatically underutilized,

81
00:04:19,480 --> 00:04:22,279
Speaker 1: with the exception of those forty hours. If we could

82
00:04:22,320 --> 00:04:26,520
Speaker 1: get more electricity running through those wires during these periods

83
00:04:26,520 --> 00:04:29,400
Speaker 1: where the system isn't being utilized, that means we could

84
00:04:29,440 --> 00:04:33,440
Speaker 1: collect rent or tolls on those lines through these customers,

85
00:04:33,720 --> 00:04:37,159
Speaker 1: and we could actually reduce costs. Coming into this SIRAUS

86
00:04:37,200 --> 00:04:41,120
Speaker 1: session very different than last year. Our big think tank

87
00:04:41,200 --> 00:04:43,880
Speaker 1: reports that are saying, hey, if you do this right,

88
00:04:44,320 --> 00:04:48,440
Speaker 1: data centers actually drive down the cost of electricity, not out.

89
00:04:48,720 --> 00:04:50,680
Speaker 2: But if you do them right, and data centers drive

90
00:04:50,720 --> 00:04:53,040
Speaker 2: them down, what do you do in the meantime, Because

91
00:04:53,040 --> 00:04:54,400
Speaker 2: it's not going to be immediate.

92
00:04:55,000 --> 00:04:58,040
Speaker 1: In the meantime, you have to use other tools. So

93
00:04:58,080 --> 00:05:00,760
Speaker 1: in the meantime, here's what we're thinking about. We've been

94
00:05:00,800 --> 00:05:04,560
Speaker 1: working with some of our other industrial customers to voluntarily

95
00:05:04,680 --> 00:05:08,320
Speaker 1: reduce demand during these peak hours so we're able to

96
00:05:08,400 --> 00:05:12,520
Speaker 1: curtail certain customers have the data economy, customers pay them

97
00:05:12,560 --> 00:05:15,800
Speaker 1: to do that so that we get that same flexibility

98
00:05:15,839 --> 00:05:19,359
Speaker 1: on peak. The next up in terms of available generation

99
00:05:19,800 --> 00:05:22,520
Speaker 1: are the backup generators at the data centers, how to

100
00:05:22,680 --> 00:05:25,520
Speaker 1: use them more effectively as a grid resource, how to

101
00:05:25,640 --> 00:05:28,599
Speaker 1: use batteries as a resource. And then as you look

102
00:05:28,600 --> 00:05:31,480
Speaker 1: at three or four years out, that's when you're thinking

103
00:05:31,520 --> 00:05:33,040
Speaker 1: about new gas fire generation.

104
00:05:33,400 --> 00:05:35,880
Speaker 2: There's a lot of concern about a possible crash or

105
00:05:35,920 --> 00:05:38,520
Speaker 2: at least some type of correction in the AI market

106
00:05:38,560 --> 00:05:41,280
Speaker 2: and data centers. What's constellation read on this?

107
00:05:42,000 --> 00:05:45,159
Speaker 1: You know what I think people think because there are

108
00:05:45,320 --> 00:05:49,880
Speaker 1: major customers that we have some independent forecast. The reality

109
00:05:50,000 --> 00:05:52,719
Speaker 1: is this, I am looking at what they are spending.

110
00:05:53,520 --> 00:05:55,800
Speaker 1: They know their business, they know the demand. So as

111
00:05:55,880 --> 00:05:59,520
Speaker 1: long as the capital expenditures on data centers is continuing

112
00:05:59,560 --> 00:06:03,200
Speaker 1: to climb as it has, that is the best sign

113
00:06:03,279 --> 00:06:06,799
Speaker 1: post for me to gauge the growth of my own business.

114
00:06:07,080 --> 00:06:09,920
Speaker 1: We're not kind of separately going out there and evaluating

115
00:06:10,040 --> 00:06:12,920
Speaker 1: AI and whether we have a bubble. What the data

116
00:06:12,920 --> 00:06:16,320
Speaker 1: economy customers are telling us is that demand is increasing

117
00:06:16,320 --> 00:06:17,680
Speaker 1: because they're building more and more.

118
00:06:17,920 --> 00:06:20,840
Speaker 2: Speaking of growth, any specific M and A plans right now.

119
00:06:20,760 --> 00:06:22,560
Speaker 1: Well, if there were, I wouldn't be able to tell you.

120
00:06:23,400 --> 00:06:24,680
Speaker 2: All Right, we appreciate your time.

121
00:06:24,720 --> 00:06:26,800
Speaker 1: Thanks for being with that, all right, Thank you