Craig Shirley: Constellation Energy Nuclear is Profitable Only Because it Depends on Subsidies

The executives and investors in Constellation Energy are celebrating.  Constellation, which bills itself as “America’s largest producer of clean energy” recently revealed its first quarter earnings and the results are impressive.

In a conference call with investors, Constellation CEO Joe Dominguez reported that the company’s  net income for the first quarter of 2024 increased to $2.78 per share from $0.29 per share in the first quarter of 2023. Adjusted Operating Earnings for the first quarter of 2024 increased to $1.82 per share from $0.78 per share in the first quarter of 2023.

According to  Mr. Dominguez, “Given the performance, we're confident in our full year outlook and we look forward to another strong financial year. Our performance and creditworthiness is being recognized. Moody's upgraded our credit rating to B AA-1, which is further recognition of our strong financial footing, and we issued the first green bond to fund nuclear power in the United States.”

Constellation sounds like a company in which one might invest to save for retirement or a child’s college education.  However, these strong figures do not come about from sales and profits.

It is an open secret that the nuclear industry is aided by generous government subsidies. Taxpayer funding.  In fact, the nuclear industry cannot compete head to head with the fossil fuel industry in the free market.

In February 2024, Constellation reported that its stock rose 13 percent.  This success was attributed to the productions tax credit, which established a floor price of nuclear energy at $43.75/MWh, and an unlimited ceiling.  How many other industries receive this kind of preferential treatment?

“Constellation said nuclear production tax credit (PTC) in the act is providing a stable foundation that will allow it to continue investing in growth opportunities, including by adding clean energy generation to its fleet through measures including uprates, licence extensions and asset acquisitions while also returning capital to shareholders. "The PTC provides revenue visibility and also preserves Constellation’s ability to capture upside from tightening power market conditions,"

The company acknowledges that subsidies and tax credits provide a solid foundation for the company to make money for its investors.  The preferential treatment being given to nuclear is another effort by the left to pick winners and losers in the marketplace rather than have them compete on a level playing field.

 While nuclear energy has caught the attention of liberal elites---a complete turnabout from forty years ago,---its ability to compete in the marketplace without subsidies gives it an unfair advantage over other energy sources and puts their workers’ jobs at risk.

There is nothing wrong with seeking so called clean energy sources.  Propping them up is corrupt and an unfair advantage.

It is akin to biological males competing in track evens with naturally weaker females.

Where is the real victory?

Craig Shirley is Chairman of Citizens for the Republic.

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