It's been more than a year since Constellation Energy (CEG +5.35%) announced it will reopen Three Mile Island Unit 1 and sell electricity from that nuclear plant to power data centers for Microsoft (MSFT 1.35%) -- kick-starting the nuclear renaissance and tying it to artificial intelligence's insatiable demand for power.
One year later, Constellation just got some excellent news, and it's helping send the electric utility's stock price up 5.6% through 11:20 a.m. ET.
Image source: Getty Images.
Constellation gets a loan
Last night, Constellation announced the U.S. Department of Energy (DOE) will loan it $1 billion, under its Energy Dominance Financing Program, to help with the reopening of Three Mile Island -- now known as the "Crane Clean Energy Center."
Constellation says its "strong balance sheet and credit worthiness" helped seal the DOE deal, and it's a good one for Constellation. The $1 billion loan should cover all but $600 million of the $1.6 billion Constellation estimates it will cost to reopen Unit 1. It will also "vastly expedite this restart," says Constellation, and "inspections of key plant components and regulatory reviews continue on schedule."
The terms of the deal also look favorable to Constellation. Reportedly, the DOE loan will carry a variable interest rate set at "0.375% per annum over the current average yield on comparable U.S. Treasury obligations." Based on current rates for 30-year Treasury bonds, that probably works out to a little over 5%.
The loan will not have to be repaid in full until Nov. 17, 2055.
NASDAQ: CEG
Key Data Points
Is Constellation stock a buy?
I'm still not convinced Constellation Energy stock is a "buy" at its current price, nearly 39 times trailing earnings. But that doesn't change the fact that yesterday's news is very good for Constellation.
The stock is going up today -- and it deserves to.
