Constellation Energy Corp CEO Joseph Dominguez Talks Three Mile Island Nuclear Reactor, Microsoft and AI Power

This is Bloomberg Markets. I'm Katie Greifeld. So now for our sock the hour, and Constellation Energy has been hitting highs after announcing it would invest one point six billion dollars to bring the three Mile Island nuclear reactor in Pennsylvania back online. Microsoft will purchase the energy for two decades, and this, of course is the latest sign of surging interest in the nuclear industry as power demand for AI. Soares joining us now, and please to say we have

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

So let's talk about the TikTok of this deal. Of course, Microsoft agreeing to buy two decades worth of energy when it comes at when you come at it from the investor perspective, it feels like investors have just been waiting for a catalyst for nuclear So with that perspective in mind, I'm curious how long this steal had been in the works.

Oh God, we started thinking about twenty months ago that the right thing was to figure out a way to restart the machine. So from an inside Constellation discussions with our board, you know, The conversation started twenty months ago, but for a long period of time it was just how do we do it?

Can we do it?

What are their critical pieces of equipment we'd have to buy in advance.

So we got that.

Done, and then earlier this year we started talking to Microsoft about it. We had partnered with Microsoft on different products before, so they made.

Sense as a client. Of course they have the.

Need, so the relationship was there, and of course we see the culmination of that now. I'm curious. I mean, when it comes to the nuclear industry, you have bipartisan support, You've read a lot of academics and other thought pieces that nuclear just makes so much sense, but there's still that reputation cloud, if you want to call it, hanging over it. I'm curious when you think about the industry now versus when you were spun out of Exelon in twenty twenty two, how has it changed.

Oh god, it feels like ten years, right, it's really thirty one months that we have been And back then the thought was.

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

It's always one of these things where in retrospect you think the pieces are coming together. Electrification of the transportation sector, home heating industry. We're on shoring a lot of industry now to deal with supply chain issues.

But AI was the thing.

That just really drove the load projections to a point where you said, without nuclear, it's not going to happen.

Did that surprise you, the fact that you did have AI come along and be such a theme. I mean, it feels like it's almost in every part of conversation that you could have right now, and you've seen power demand tick up as a result. Did that surprise you?

Well, that it was AI, of course, because I wasn't focused on that, But that nuclear was going to be important. It was absolutely clear to me for a long time, and I spoke about this for a long time that if we're going to run a full time economy on emissions free energy, couldn't just run it.

On part time power.

We had to have resources that we could dispatch and would run all the time, especially as we transitioned away from fossil fuels.

So the fact that nuclear.

Was going to be relevant and important, again, that was no news to me or anybody else in the industry, especially folks who had grown up planning the business. But the catalysts and when they would happen, that was a surprise. I knew nothing about it, really, you know, just to be honest.

Yeah, well, let's talk about the balancing act here, because of course AI tech companies, they get a lot of the headlines when it comes to power demand. But how do you plan to balance out their needs with the needs of regular customers and industrial demand for example.

Well, you know, the markets in which we operate are so called competitive markets, so we don't have a regulator that says, well, we're going to build you know, these five power plants. We use price signals in our market to drive investment, much like you would for wheat farming or not gas or oil or any other commodity. So as prices increase in supply demand titans, we would expect people to come in. And that's what's happened over the

And I expect that will happen again here.

And of course we're about six weeks away from a presidential election, and you know, we already said this, but you think about nuclear it has support from the right and the left, but even that being said, I mean, how do you anticipate a change in administration potentially affecting your business? Are you planning for that?

Well, you have to be cognizant of it. But in our business, if you're going to change the strategy every time there's a new occupant in the White House or every time something changes in Congress in terms of which party is in control, you're going to do nothing. You're going to be so constipated that your strategy is never going to work.

So for us, we look at.

The long term needs of America. Here's what's clear to me. AI is here to stay, and the country has to be successful in AI from a geopolitical securities perspective as well as an economic perspective. Number two, the climate crisis, although we may change our focus over a period of time, is going to be something that we are going to have to deal with as humanity. So I think about our assets and our strategy around those two pillars and drivers,

So I want to bring this conversation to your share price you and I were speaking beforehand before the sentiment started about how I often ask CEOs about their share price and they say, I don't monitor it. But your shares have doubled over the past year. So theoretically you have plenty of money to spend here, a lot of cash on hand. How might you plan to spend it?

Well, look, we think the best investment we can make is in Constellation. So when we don't see a growth opportunity like the growth opportunity we have here with MYOT, we have and will continue to invest in Constellation through share buybacks.

I will say this because.

I do watch your show, and I have seen CEOs say they don't watch their sock price, and I wonder if their bored really buys into that. But look again, I mean, it's like the politics question. It's a thing you have to be cognizant of, and when you have big moves, you're always watching it. You probably endure the pain of the downs more than the joy of the ups, to be quite honestly, but you have to have a long term, durable strategy.

So I keep a pretty good eye on it.

Yeah, I mean, if I had a real time report guard telling me how I was doing. It's the only thing I would look like look at. But in any case, shifting away from just nuclear, I am curious, what's going on with your hydrogen program in specifics.

Well, we're looking for final regulations out of Treasury, and at this point, I'm anticipating we'll see those final regulations after the election, given everything that's on Treasury's plate in terms of IRA rules, So.

We're at a stalemate right now.

Right now, the Treasury rules do not permit existing nuclear to participate in making hydrogen.

We think that's a mistake.

We think that's contrary to the law, and we've been quite outspoken about this. I think we've advanced a very good case to explain why Treasury should change its thinking in the final regulations, and I'm cautiously optimistic they'll do that. Then we'll really get into it, because here's the important thing. While we want to transition away from fossil fuels, keep in mind that roughly eighty three percent of industry is still relying on.

Fossil fuels for their processes.

It's only seventeen percent electrified, and we're going to need replacement drop in fuels like hydrogen to replace some of fossil fuels in those operations, and we.

Don't have much time left. But I have to ask, I mean the human element of what we're talking about reopening the three three Mile Island nuclear reactor. I mean a lot of people there. My first thought was, Okay, I'm thinking about that partial meltdown that we saw in nineteen seventy nine. I mean, how do you answer those fears. You have all the great benefits of nuclear but still there is that human emotion element there.

Oh sure, Look, you got to remember that was the worst black guy we ever had as an industry, But it was something else for us that we were inside of.

It was it also began in this.

Conversation about how do we get better all of the time, and the thousands of process improvements and equipment improvements, construction improvements all began.

Much like in our personal lives.

Where you have a hiccup or a bad thing happens, you learn and grow from it.

To us in the industry, that was the rebirth.

That was the beginning of figuring out how to do it better. And I'm proud that the World Health Organization scores nuclear as the safest technology, tied with solar. In fact, a lot of people don't talk about this, but in the fifty plus years since Eisenhower's famous speech, right, more people have been killed falling off rooftops installing solar panels than have ever been injured in industrial accidents at nuclear plants.

So it is a good safety record.

But we understand the critical importance of this compact. We have communities and safety will always be number one for us.

All right, well, that is a good place to leave it. Really appreciate you taking the time. That, of course, is Joe Dominguez. He is the CEO of Constellation Energy. This is Bloomberg