Talen Energy Corp

3. Revenue

The components of operating revenues for the periods were:

Accounts Receivable

“Accounts receivable” presented on the Consolidated Balance Sheets were:

During the nine months ended September 30, 2026 and 2025, there were no significant changes in accounts receivable other than normal receivable recognition and collection transactions. See Note 2 for additional information on Talen’s credit risk on the carrying value of its receivables.

Future Performance Obligations

Talen’s estimated future fixed fee performance obligations primarily include capacity volumes awarded, net of capacity repurchases by the Company, through PJM BRAs and incremental PJM capacity auctions, and components of capacity contracts with customers for which consideration is fixed and determinable. See Note 9 for additional information on the PJM BRAs.

Future performance obligations that were unsatisfied or partially unsatisfied were:

(a)Estimated for the period from October 1, 2026 through December 31, 2026.

(b)Contractual maturities through 2035.

(c)Includes capacity revenues from volumes awarded in PJM BRAs through May 2029.

PJM Capacity Monetization

On October 1, 2026, TEM closed on a capacity monetization agreement with an unaffiliated third party, transferring its rights of future cash flows related to an aggregate $1.5 billion of certain future capacity revenues awarded by PJM and cleared by TEM in PJM BRAs. Such revenues are associated with cleared volumes of approximately 6.5 GW and 6.0 GW for the 2027/2028 and 2028/2029 PJM Capacity Years, respectively. In exchange, TEM was advanced $1.5 billion of proceeds which were reduced by a $157 million discount. The proceeds advanced to TEM will be repaid by PJM to the third party from monthly settlements of PJM capacity revenues beginning in June 2027 until the expiration of the arrangement in May 2029. The Company used the $1.3 billion of net proceeds from this arrangement to fund accelerated share repurchases. See Note 15 for additional information on accelerated share repurchases.

Talen remains responsible for operating its generation facilities, retains the obligation to perform as a PJM generation capacity resource with respect to the capacity sold in the transaction, has retained its rights for any earned capacity performance bonus payments, and has retained the risks associated with performance deficiency penalties.

As Talen continues to have future capacity performance obligations to PJM, amounts advanced to Talen under the arrangement will be presented as a liability on the Consolidated Balance Sheets. Capacity revenues are expected to be recognized over a period of time consistent with the fulfillment of the Company’s obligations to PJM. The $157 million discount is an implied finance charge, subject to amortization through expiry of the arrangement, and will be presented as “Interest expense and other finance charges” on the Consolidated Statements of Operations.

The future expected capacity monetization repayments are: