Constellation Energy (CEG) Risk Factor Changes

Merger integration efforts could place a burden on management and internal resources.

It is possible that the integration process could result in the disruption of, or the loss of momentum in, our ongoing businesses or inconsistencies in standards, controls, procedures and policies, which could negativ…

•possible inconsistencies in standards, controls, procedures and policies, and compensation structures; and

The success of the merger will depend, in part, on our ability to realize all or some of the anticipated benefits from integrating Calpine’s business with our existing businesses.

We currently anticipate that the merger will be accretive to earnings per share in 2026.

We issued 50 million newly issued shares of common stock to Calpine stockholders as noted in the Merger Agreement (including shares of our common stock issuable pursuant to Calpine restricted stock units and other

Risks Related to the Acquisition of Calpine

We are actively implementing the restart of our Crane nuclear generation facility.

We could continue to pursue growth in our existing businesses and markets and seek further diversification across the competitive energy value chain.

Certain events, such as an employee strike, loss of employees, loss of contract resources due to a major event, and an aging workforce without appropriate replacements, could lead to operating challenges and increased…

Our business is capital intensive and requires significant investments in electric generating facilities.

We maintain a level of insurance coverage consistent with industry practices against property, casualty, and cybersecurity losses subject to unforeseen occurrences or catastrophic events that could damage or destroy a…

Our fleet of power plants and the transmission infrastructure to which they are connected could be affected by natural disasters and extreme weather events, which could result in increased costs, including supply chai…

We cannot anticipate, detect, repel, or implement fully effective preventative measures against all cyber threats, particularly because the techniques used are constantly evolving.

We currently utilize a mix of third-party managed service providers to host and support our information technology, customer support, and generation operations.

A security breach, including, but not limited to, physical or electronic intrusions, computer viruses, malware, attacks by cyber criminals or nation state threat actors, ransomware attacks, phishing attacks, supply ch…

Should the expected value of the NDT fund for any former ComEd unit fall below the amount of the expected decommissioning obligation for that unit, the accounting to offset decommissioning-related activities for that…

Nuclear fuel.

Operations at any of our generation facilities that we operate as well as those that we own and are operated by others could degrade to the point where the operator must shut down the plant or operate at less than ful…

See ITEM 1.

We may be exposed to climate mitigation and transition risks if we are adversely affected by changes to the energy systems as a result of new technologies, changing customer expectations and/or voluntary GHG goals, as…

Weather projections suggest increases to summer temperature, humidity trends, and more erratic precipitation and storm patterns over the long term in the areas where we have generation assets.

Our operations are affected by weather, which impacts demand for electricity and natural gas, the price of energy commodities, and operating conditions.

We are involved in legal proceedings, claims, and litigation arising from our business operations.

Federal and state legislation mandating the implementation of energy conservation programs, GHG emission limitations, and new energy consumption technologies could cause declines in customer energy consumption and lea…

We are subject to extensive environmental regulation and legislation by local, state and federal authorities.

Our results of operations and financial condition are significantly affected by our sales and purchases of commodities at market-based rates, as opposed to cost-based or other similarly regulated rates.

We have entered into various agreements with counterparties that require those counterparties to reimburse us and hold us harmless against specified obligations and claims.

An impairment would require us to reduce the carrying value of the long-lived asset and goodwill to fair value through a non-cash charge to expense by the amount of the impairment and could have a material adverse imp…

Long-lived assets – principally, generation assets – represent the single largest asset class on our Consolidated Balance Sheets.

An increase in inflation rates could result in higher interest rates and capital costs, increased costs of labor, and other similar effects.

other borrowings earlier than otherwise anticipated, and if such repayment were not made, the lenders or security holders would generally have broad remedies, including rights to foreclose against the project assets a…

obligations.

Advancements in both distributed and utility-scale power generation technology could impact market prices and demand size and behaviors.

We may be affected by emerging technologies that could, over time, affect or transform the energy industry.

Retail Competition.

Demand and Supply.

Geopolitical risks specific to nuclear fuel include the ongoing Russia and Ukraine conflict which has yielded sanctions and legislation by the United States, United Kingdom, European Union, Russia, and Canada impactin…

Cost and Availability of Fuel.

We are exposed to commodity price risk for fuel and the unhedged portion of our generation portfolio.

•no assurance of the dividends at the current rate post-acquisition, reduced ownership and voting power for current shareholders, and potential dilution to earnings per share,

Risks related to the acquisition of Calpine primarily include:

•emerging technologies, business models, and demand driven by industry trends, including those related to climate change mitigation and transition to a low-emissions economy.

We operate in a complex market and regulatory environment that involves significant risks, many of which are beyond our direct control.

Additionally, there can be no assurance that any of the defendants will be successful in the outcome of any potential lawsuits.

One of the conditions to the closing of the merger is that no applicable law of any governmental entity having competent jurisdiction is in effect at the time of closing, which makes the consummation of the merger ill…

Although we are not aware of any pending or threatened lawsuits relating to the transactions contemplated by the Merger Agreement, lawsuits arising out of the transactions contemplated by the Merger Agreement could be…

Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered acquisition, merger or other business combination agreements like the Merger Agreement.

Lawsuits may be filed against us or our Board in connection with the merger.

Prior to the completion of the merger, we and Calpine could, by mutual agreement, amend or alter the terms of the Merger Agreement, including with respect to, among other things, the consideration to be received by Ca…

The merger may be completed on terms different from those contained in the Merger Agreement.

We are required to assess goodwill for impairment at least annually by comparing the fair value of reporting units to the carrying value of those reporting units.

adjusted for changes in the price of our common stock, which may vary significantly.

The amount of goodwill, which could be material, will be allocated to the appropriate reporting units of the combined company.

In accordance with GAAP, the merger will be accounted for as a business combination.

We may record goodwill that could become impaired and adversely affect our operating results.

The Calpine assets, liabilities, business, financial condition, cash flows, operating results and prospects to be acquired or assumed by us in the merger could be negatively impacted before or after the merger closing…

The combined company’s assets, liabilities or results of operations could be negatively impacted by unknown or unexpected events, conditions or actions that might occur at Calpine prior to the closing of the merger.

We are funding the transaction using $4.5 billion in cash and by issuing 50 million shares of common stock.

We are obligated to complete the transaction whether or not we have obtained the required funding for closing.

In addition, the companies have operated and, until the completion of the merger, will continue to operate, independently.

stock units and other equity-based awards).

Our current shareholders will have a reduced ownership and voting power after the merger.

Further, the share price of our common stock may decline to the extent that the current market price reflects an assumption by the market that the merger will be completed.

In addition, the Merger Agreement provides that either we or Calpine could terminate the Merger Agreement if the merger is not completed by December 31, 2025 (which date may be automatically extended to June 1, 2026,…

Completion of the merger is conditioned upon the receipt of consents, orders, approvals or clearances, to the extent required, from various regulatory authorities, including DOJ, FERC, and public utility commissions o…

Consummation of the merger is subject to the satisfaction or waiver of specified closing conditions, including: (1) the receipt of regulatory approvals required to consummate the Merger Agreement; (2) the expiration o…

We may encounter difficulties in satisfying the conditions for the completion of the Merger Agreement, including obtaining the necessary regulatory approvals, within the expected time frame or at all.

factors could result in higher costs or lower revenues than expected, resulting in lower than planned returns on investment.

generating units.

electric system.

For plants operated but not wholly owned by us, we could also incur liability to our co-owners.

We also periodically perform analyses of potential pathways to reduce power sector and economy-wide GHG emissions to mitigate climate change.

In addition, changes to the climate may impact levels and patterns of demand for energy and related services, which could affect our operations.

Climate adaptation risk refers to risks to our facilities or operations that may result from changes in the physical climate, such as changes to temperatures, weather patterns and sea level rise.

We are subject to risks associated with climate change.

Weather projections suggest increases to summer temperature and humidity trends, as well as more erratic precipitation and storm patterns over the long term in the areas where we have generation assets.

gas to our generating assets and our ability to supply natural gas to our customers.

We could be negatively affected by the impacts of weather.

Market Designs.

•challenges in satisfying conditions, obtaining regulatory approvals, and potential delays or abandonment of the merger agreement,

equity-based awards).

Our shareholders prior to the merger have a reduced ownership and voting power after the merger, and former Calpine stockholders are not obligated to maintain their ownership interest indefinitely.

Recently, we have benefited from increased demand for our generation as a result of the developing data economy, including demand driven by data centers and AI and other high-performance computing applications, eviden…

Industry trends can significantly impact the demand and market pricing of our generation portfolio.

The demand for our generation may be impacted by changes in industry trends, including the demand associated with the developing data economy.

Some of Calpine's geothermal, natural gas power plants, and battery storage sites, which were acquired in January 2026 are exposed to frequent minor earthquakes and wildfire risks, mainly in the West.

legislative bodies could change the laws or regulations governing, among other things, operations, maintenance, operating licenses, decommissioning, SNF storage, insurance, emergency planning, security and environment…

The use of AI technologies in our operations presents risks that could adversely affect our business, financial condition, results of operations and reputation.

The rapid development and integration of AI technologies into our processes presents several risks to our business.

Our acquisition of Calpine in January 2026 introduces expanded cybersecurity and physical security risks.

Geothermal steam fields are leased for the Geysers Assets, with most leases lasting 5 to 20 years initially and continuing as long as resources are produced and sold.

Geothermal resource productivity can decline unexpectedly, leading to insufficient reserves for sustained power generation at desired power capacity.

The productivity of Calpine's geothermal resources acquired in January 2026 may be lower than expected, and it is possible that certain of leases for geothermal steam fields may not be renewed or may be renewed at les…

We do not procure the fuel for the sites we do not operate.

In addition, we depend on facilities and assets that we do not own or control for the transmission to our customers or the distribution to our generation facilities.

We are subject to certain risks associated with the operation and maintenance of generation facilities.

availability such as droughts, curtailment, or high prices may impact our ability to generate energy or serve customers, adversely impacting our operations and financial condition.

Various forms of power generation and energy-intensive activities, such as data centers, depend on water access to operate.

We are subject to risks associated with weather, including its effect on the supply and demand for electricity, as well as impacts from climate change, including extreme weather events.