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 and six months ended June 30, 2026, compared to the three and six months ended June 30, 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 June 30, 2026 and 2025

Three Months Ended June 30, 2026 compared to Three Months Ended June 30, 2025

Net Income (Loss) Attributable to Stockholders decreased by $(164) million, primarily driven by the factors discussed below.

•Operating Revenues, net of Energy Expenses. $(9) million unfavorable decrease, primarily due to the following:

◦Energy and other revenues, net of Fuel and energy purchases.$149 million favorable increase. This is primarily related to an increase in generation volumes: (i) as a result of the Freedom and Guernsey acquisitions that were completed in November 2025; and (ii) at Susquehanna and our other dispatchable fossil generation facilities.

◦Capacity revenues.$149 million favorable increase. This is primarily driven by higher cleared capacity prices received through the 2025/2026 PJM BRA compared to the 2024/2025 PJM BRA, and higher capacity results due to the Freedom and Guernsey acquisitions that were completed in November 2025.

◦Unrealized gain (loss) on derivative instruments, net.$(303) million unfavorable decrease. This is primarily related to the change in fair value of mark-to-market contracts resulting from higher forward power prices that is partially offset by the change in fair value associated with mark-to-market contracts acquired as a result of the Cornerstone Acquisition.

•General and administrative. $(57) million unfavorable increase. This is primarily associated with: (i) the expense recognized in the current period for stock-based compensation awards granted in the first quarter 2026, and (ii) the effects from a change from equity to liability classification for certain awards in the fourth quarter 2025. Refer to Note 13 to the Interim Financial Statements for additional information on stock-based compensation.

•Depreciation, amortization and accretion. $(33) million unfavorable increase. This is primarily due to an increase in depreciation associated with the Freedom and Guernsey acquisitions that were completed in November 2025.

•Nuclear decommissioning trust funds gain (loss), net. $54 million favorable increase. This is primarily due to unrealized gains on investments in equity securities.

•Interest expense and other finance charges.$(152) million unfavorable increase. This primarily consisted of:

◦$(60) million increase in cash interest expense on the TLB-3 and Unsecured Notes due 2034 and 2036, each issued in the fourth quarter 2025 in connection with the Freedom and Guernsey acquisitions that were completed in November 2025.

◦$(25) million increase in cash interest expense due to the combined effect of financing transactions in April 2026 that included the issuances of the Unsecured Notes due 2031 and 2033 and redemption of the Secured Notes.

◦$(54) million non-recurring make-whole payments associated with the redemption of the Secured Notes.

Refer to Note 10 to the Interim Financial Statements for additional information on long-term debt transactions, including the issuances associated with the Cornerstone Acquisition.

•Income tax benefit (expense). $62 million favorable increase. This is primarily related to a change from pre-tax income for the three months ended June 30, 2025 to pre-tax loss for the three months ended June 30, 2026.

Results for the Six Months Ended June 30, 2026 and 2025

Six Months Ended June 30, 2026 compared to Six Months Ended June 30, 2025

Net Income (Loss) Attributable to Stockholders increased by $34 million, primarily driven by the factors discussed below.

•Operating Revenues, net of Energy Expenses. $336 million favorable increase, primarily due to the following:

◦Energy and other revenues, net of Fuel and energy purchases.$306 million favorable increase. This is primarily related to a favorable increase in margin associated with electric generation as a result of: (i) the Freedom and Guernsey acquisitions that were completed in November 2025; (ii) higher realized market prices; and (iii) higher generation volumes at Susquehanna and our dispatchable fossil generation facilities. Such favorable increase in margin associated with electric generation is partially offset by lower realized hedge results.

◦Capacity revenues.$307 million favorable increase. This is primarily driven by: (i) higher cleared capacity prices, partially offset by a decrease to lowered cleared volumes through the 2025/2026 PJM BRA compared to the 2024/2025 PJM BRA; and (ii) higher capacity results due to the Freedom and Guernsey acquisitions that were completed in November 2025.

◦Unrealized gain (loss) on derivative instruments, net.$(275) million unfavorable decrease. This is primarily related to the change in fair value mark-to-mark contracts resulting from higher forward power prices associated with net short power positions that is partially offset by the change in fair value associated with market-to-market contracts acquired as a result of the Cornerstone Acquisition.

•Operation, maintenance and development. $(37) million unfavorable increase. Higher generation facility operating costs are due to: (i) an increase associated with the Freedom and Guernsey acquisitions, which were completed in November 2025; (ii) outage and major maintenance projects at our dispatchable fossil generation facilities; and (iii) ongoing operating costs associated with the Brandon Shores and H.A. Wagner RMR Agreements, which began in June 2025.

•General and administrative. $(47) million unfavorable increase. This is primarily associated with the expense recognized in the current period for stock-based compensation awards granted in the first quarter 2026. Refer to Note 13 to the Interim Financial Statements for additional information on stock-based compensation.

•Depreciation, amortization and accretion. $(51) million unfavorable increase. This is primarily due to an increase in depreciation associated with the Freedom and Guernsey acquisitions that were completed in November 2025.

•Nuclear decommissioning trust funds gain (loss), net. $44 million favorable increase. This is primarily due to unrealized gains on investments in equity securities.

•Interest expense and other finance charges. $(197) million unfavorable increase. This primarily consisted of:

◦$(120) million increase in cash interest expense on the TLB-3 and Unsecured Notes due 2034 and 2036, each issued in the fourth quarter 2025 in connection with the Freedom and Guernsey acquisitions that were completed in November 2025.

◦$(25) million increase in cash interest expense due to the combined effect of financing transactions in April 2026 that included the issuances of the Unsecured Notes due 2031 and 2033 and redemption of the Secured Notes.

◦$(54) million non-recurring make-whole payments associated with the redemption of the Secured Notes.

Refer to Note 10 to the Interim Financial Statements for additional information on long-term debt transactions, including the issuances associated with the Cornerstone Acquisition.