Talen Energy Corp

Results of Operations

The results of operations presented below are prepared in accordance with GAAP and should be reviewed in conjunction with the Interim Financial Statements and the related Notes in this Report. The following discussion provides an analysis of the changes in our results of operations for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

In the explanations below, “Energy and other revenues” and “Fuel and energy purchases” are evaluated collectively because the price for power is generally determined by the variable operating cost of the next marginal generator dispatched to meet demand. “Energy and other revenues” relate to sales to an RTO or ISO, and sales under wholesale bilateral contracts. “Fuel and energy purchases” includes costs for fuel to generate electricity and settlements of financial and physical transactions related to fuel and energy purchases.

Unrealized gains (losses) on derivative instruments resulting from changes in fair value during the periods are presented separately as revenues within “Operating Revenues” and expenses within “Energy Expenses.” We evaluate them collectively because they represent the changes in fair value of our economic hedging activities.

Results for the Three Months Ended March 31, 2026 and 2025

Three Months Ended March 31, 2026 compared to Three Months Ended March 31, 2025

Net Income (Loss) increased by $198 million, primarily driven by the factors discussed below.

•Operating Revenues, net of Energy Expenses. $345 million favorable increase, primarily due to the following:

◦Energy and Other Revenues, net of Fuel and Energy Purchases.$157 million favorable increase. This is primarily related to the combined effects of: (i) $432 million increase in margin associated with electric generation and ancillary revenue, primarily due to higher realized prices received at Susquehanna and our PJM fossil fleet; and (ii) higher generation volumes at Freedom and Guernsey. Such amounts are partially offset by $(271) million decrease in realized hedge results.

◦Capacity Revenues.$158 million favorable increase. This is primarily driven by higher cleared capacity prices, partially offset by lower volumes cleared through the 2025/2026 PJM BRA compared to the 2024/2025 PJM BRA.

◦Unrealized Gain (Loss) on Derivative Instruments, net.$28 million favorable increase. This is primarily related to the combined effects of: (i) $142 million increase due to the reversal of positions previously recognized as mark-to-market liabilities which settled during the period, partially offset by $(114) million decrease in net short power positions resulting from higher forward power prices.

•Interest Expense and Other Finance Charges.$(45) million unfavorable increase. This primarily consisted of: (i) a $(60) million increase in cash interest expense on the TLB-3 and Unsecured Notes due 2034 and 2036, each issued in October 2025 in connection with the Freedom and Guernsey Acquisitions, offset by (ii) a $15 million decrease in non-cash interest expense resulting from changes in unrealized positions on interest rate swaps.

•Income Tax Benefit (Expense). $(70) million unfavorable increase. This is primarily related to an increase in pre-tax income for the three months ended March 31, 2026.