CONSTELLATION ENERGY GENERATION LLC

2. Mergers, Acquisitions, and Dispositions

Acquisition of Calpine Corporation

On January 7, 2026 (the “Acquisition Date”), we acquired all of the outstanding equity interests in Calpine in a cash and stock transaction. Pursuant to the Merger Agreement and related transaction steps, Calpine was converted into a limited liability company, Calpine LLC, and became a wholly owned subsidiary of Constellation.

This acquisition is complementary to, and aligns strategically with, our existing business operations and provides both increased scale and meaningful market diversification. The merger couples the largest producer of clean, emissions-free energy in the United States with the reliable, dispatchable natural gas assets of Calpine, and also creates the nation’s leading competitive retail electric supplier, providing increased scale, diversification and complementary capabilities that enable us to meet growing demand with a broad array of energy and sustainability products. The addition of Calpine strengthens our essential role in providing clean, reliable energy as the nation seeks to transition to a more sustainable future, and will improve our position to pursue investments in new and existing technologies to meet growing demand.

The merger consideration consisted of 50 million newly issued shares of our common stock, no par value, and approximately $4.5 billion in cash. In connection with the merger, certain of the newly issued shares are subject to a lock-up period, with 50% of the shares released on June 30, 2026, and the remaining 50% scheduled for release on June 30, 2027. In June 2026, the lock-up restrictions were waived for 11 million of these shares to permit their sale in an underwritten secondary public offering, which includedtwo million shares that were repurchased by the Company. We did not sell any shares or receive any proceeds from the offering.

Calpine operates a competitive retail electric supplier platform serving approximately 62 TWhs of load annually. Calpine also owns and operates a generation fleet of natural gas, oil, geothermal, battery storage, and solar assets with approximately 23 GWs of generation capacity, after considering divestitures required by certain regulatory approvals for the transaction. The final regulatory clearance for the merger was the DOJ resolution, which requires the divestiture offive generating assets located in PJM, one in ERCOT, and Calpine's minority interest in the Gregory Power Plant, also in ERCOT. The DOJ resolution requires us to enter into definitive agreement(s) to divest these assets within 240 days of closing the acquisition, by September 4, 2026.

The transaction was accounted for as a business combination using the acquisition method of accounting where we are considered the acquirer for accounting purposes. We recognized the identifiable assets acquired and liabilities assumed at their estimated fair values as of January 7, 2026, with any excess of the consideration transferred over the fair value of net identifiable assets recognized as goodwill.

In January 2026, we completed the divestiture of Calpine's minority ownership interest in the Gregory Power Plant, as required under the terms of the DOJ resolution. In March 2026, we entered into an agreement with LS Power Equity Advisors, LLC (LS Power) whereby we will sell five generation assets in PJM to LS Power, which comprise approximately 4.4 GW of predominantly natural gas-fired generation capacity located in Delaware and Pennsylvania, for aggregate consideration of $5.0 billion before closing adjustments. In August 2026, we entered into an agreement with LS Power to divest the Brazos Valley Energy Center (f/k/a Jack A. Fusco Energy Center), a 606 MW natural gas-fired plant in ERCOT for $860 million before closing adjustments, which is the last asset sale required to satisfy our regulatory commitments under the acquisition. Closing of these sales is subject to receipt of applicable regulatory approvals and other customary closing conditions. We expect the transactions to close by the end of this year. The Brazos Valley Energy Center is currently secured under a project financing arrangement, see Note 13 — Debt and Credit Agreements for additional information.

Consideration Transferred

The following table summarizes the components of the total merger consideration transferred. There was no contingent consideration associated with the acquisition.

(a)Represents the fair value of approximately 50 million shares of CEG Parent common stock issued in connection with the acquisition, calculated using CEG Parent’s closing stock price of $354.58 on January 6, 2026, the last trading day prior to the Acquisition Date. The fair value of the stock consideration is based on an observable market price and represents a Level 1 fair value measurement.

(b)Represents cash paid to Calpine shareholders in connection with the acquisition. The amount reflects the $4.5 billion base cash consideration per the Merger Agreement, reduced by certain adjustments based on contractual terms also specified in the Merger Agreement.

(c)Certain CEG Parent common stock issued to Calpine employees in exchange for their equity interests is subject to a vesting period of up to 26 months and has been excluded from merger consideration. These amounts will be recognized as stock-based compensation expense over the applicable vesting period in accordance with authoritative guidance.

Purchase Price Allocation

The following table summarizes the acquisition date fair value of the consideration transferred and the identifiable assets acquired and liabilities assumed. Accounting guidance provides that the allocation of the purchase price may be modified up to one year from the date of acquisition to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. Any change could result in a change in the amount of goodwill recognized.

(a) Assets Held for Sale. Reflects the Acquisition Date fair value, less costs to sell, for thesix generating assets required to be divested. Depreciation and amortization of these assets ceased upon classification as held for sale. No impairment has been recognized subsequent to initial classification. The following table presents the carrying amounts of the major classes of assets and liabilities classified as held for sale as of the Acquisition Date:

(b) Unamortized Energy Contracts. The following table summarizes the classification and amounts of UECs in the Consolidated Balance Sheets as of the Acquisition Date:

(c) Long-term Debt (including amounts due within one year). We assumed total debt of $12,551 million at estimated fair value as of the Acquisition Date, comprising $279 million classified as Long-term debt due within one year and $12,272 million classified as Long-term debt, in the Consolidated Balance Sheets. See Note 13 — Debt and Credit Agreements for additional information.

(d) Goodwill. Represents the excess of the purchase price over the estimated fair value of the net assets acquired. Goodwill recognized primarily reflects the expected benefits from increased scale and meaningful market diversification, complementary generation, development activities, retail capabilities, and an enhanced ability to meet growing demand with a broader array of energy and sustainability products, to the extent such benefits are not separately recognizable as identifiable intangible assets. Because the design, restructuring, and integration activities of the combined organization are still ongoing, the $11.1 billion of goodwill has been provisionally allocated to the Calpine segment as of June 30, 2026. This provisional allocation may be revised as future organizational, restructuring, and integration activities are completed. The goodwill recognized in connection with the acquisition is not expected to be deductible for income tax purposes.

Valuation of Significant Assets and Liabilities

The fair values assigned to the assets acquired and liabilities assumed were determined based on significant estimates and assumptions that are judgmental in nature, including projected future cash flows; discount rates reflecting the risks inherent in the future cash flows; and future market prices, among others. These estimates and assumptions were applied to the valuation of significant acquired assets and assumed liabilities, including property, plant and equipment, assets held for sale, and unamortized energy contracts, and required assessments of current and projected market conditions and operating strategies. Forecasting future cash flows requires assumptions regarding, among other things, forecasted commodity prices for the sale of power and purchases of fuel and the expected operations of the assets, and judgments are also made to determine the expected useful lives assigned to each class of assets acquired and the duration of liabilities assumed.

Other Key Accounting Impacts & Judgments

Identifiable intangible assets acquired and liabilities assumed in connection with the acquisition include customer relationships, trade names, and energy contracts, recorded at estimated fair value. The weighted average amortization periods reflect weighted average useful lives of 15 years for customer relationships, five years for trade names, andsix years for energy contracts.

We also recognized the fair value of acquired commodity and interest rate derivatives and related hedging relationships as of the Acquisition Date; related gains or losses subsequent to acquisition will be recognized in earnings consistent with our accounting policies. For additional information on derivative instruments, see Note 12 — Derivative Financial Instruments.

The amounts recognized for property, plant and equipment, identifiable intangible assets and liabilities (including customer relationships, trade names, and unamortized energy contracts) and their useful lives, lease assets and liabilities, asset retirement and environmental obligations, contingencies, and income taxes (including deferred taxes) are provisional and subject to revision during the measurement period.

Acquisition-related costs (e.g., advisory, legal, valuation, and other professional fees) are expensed as incurred and reflected within Operating and maintenance expenses in the Consolidated Statements of Operations and Comprehensive Income. These costs, which are not included in the consideration transferred, were not material for the three and six months ended June 30, 2026.

Unaudited Pro Forma Results

The following unaudited pro forma financial information for the three and six months ended June 30, 2026 and 2025 assumes that the acquisition occurred on January 1, 2025. The unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of the results of operations that would have occurred had the acquisition been completed on January 1, 2025. The unaudited pro forma financial information is not indicative of the future results of operations, which may differ materially from the pro forma financial information presented here.

(a)Reflects Net income attributable to common shareholders for CEG Parent and Net income attributable to membership interest for Constellation.

The unaudited pro forma financial information presented above includes adjustments for incremental depreciation and amortization as a result of the fair value determination of the net assets acquired, the effects of the acquisition on tax expense (benefit), and other acquisition accounting adjustments.

As discussed in Note 5 — Segment Information, Calpine is now presented as a reportable segment, and RNF is the segment performance metric, a component of which includes revenue. Operating revenues attributable to Calpine following the Acquisition Date were $1,907 million and $5,043 million for the three and six months ended June 30, 2026. However, as a result of the commencement of integration activities for certain functions and the consolidation of financing activities (see Note 13 — Debt and Credit Agreements), it is impracticable to determine Calpine’s earnings since the Acquisition Date.