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 nine months ended September 30, 2026, compared to the three and nine months ended September 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 September 30, 2026 and 2025

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

Net Income (Loss) Attributable to Stockholders decreased by $(69) million, primarily driven by the factors discussed below.

•Operating Revenues, net of Energy Expenses. $147 million favorable increase, primarily due to the following:

◦Energy and other revenues, net of Fuel and energy purchases.$216 million favorable increase. This is primarily related to: (i) an increase in generation volumes as a result of the Freedom and Guernsey acquisitions that were completed in November 2025 and the Cornerstone Acquisition that was completed in June 2026; and (ii) an increase in realized prices and generation volumes at Susquehanna and our other dispatchable fossil generation facilities. Such amounts were offset by a decrease in realized hedge results.

◦Capacity revenues.$157 million favorable increase. This is primarily related to: (i) higher cleared capacity prices, partially offset by lower volumes cleared through the 2026/2027 PJM BRA compared to the 2025/2026 PJM BRA; and (ii) higher capacity revenue due to the Freedom and Guernsey acquisitions that were completed in November 2025 and the Cornerstone Acquisition that was completed in June 2026.

◦Unrealized gain (loss) on derivative instruments, net.$(226) million unfavorable decrease. This is primarily related to the impact of higher forward power prices on the fair value of mark-to-market contracts that were entered into during the period.

•Operation, maintenance and development. $(36) million unfavorable increase. This is primarily related to higher generation facility operating costs due to: (i) an increase associated with the Freedom and Guernsey acquisitions and the Cornerstone Acquisition, which were completed in November 2025 and June 2026, respectively; and (ii) operations and routine maintenance projects at our dispatchable fossil generation facilities.

•General and administrative.$(38) million unfavorable increase. This is primarily due to an increase in grant date stock price of RSUs and grant date fair value of PSUs. See Note 13 to the Interim Financial Statements for additional information on stock-based compensation.

•Depreciation, amortization and accretion. $(96) 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 and the Cornerstone Acquisition completed in June 2026.

•Nuclear decommissioning trust funds gain (loss), net. $(63) million unfavorable decrease. This is primarily due to an aggregate decrease of unrealized and realized net gains on investments in equity securities.

•Interest expense and other finance charges.$(81) million unfavorable increase. This is primarily related to the: (i) TLB-3 and the 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; and (ii) 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.

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

•Gain (loss) on sale of assets, net.$41 million favorable increase. This is primarily related to the September 2026 sale of interests in the Keystone generation facility and certain related assets.

•Income tax benefit (expense). $40 million favorable decrease. This is primarily related to a decrease in pre-tax income and NDT taxes.

Results for the Nine Months Ended September 30, 2026 and 2025

Nine Months Ended September 30, 2026 compared to Nine Months Ended September 30, 2025

Net Income (Loss) Attributable to Stockholders decreased by $(35) million, primarily driven by the factors discussed below.

•Operating Revenues, net of Energy Expenses. $483 million favorable increase, primarily due to the following:

◦Energy and other revenues, net of Fuel and energy purchases.$522 million favorable increase. This is primarily related to: (i) an increase in generation volumes as a result of the Freedom and Guernsey acquisitions that were completed in November 2025 and the Cornerstone Acquisition that was completed in June 2026; and (ii) an increase in realized prices and generation volumes at Susquehanna and our other dispatchable fossil generation facilities. Such amounts were offset by a decrease in realized hedge results.

◦Capacity revenues.$464 million favorable increase. This is primarily related to: (i) higher cleared capacity prices, partially offset by lower volumes cleared through the 2026/2027 PJM BRA compared to the 2025/2026 PJM BRA; and (ii) higher capacity revenue due to the Freedom and Guernsey acquisitions that were completed in November 2025 and the Cornerstone Acquisition that was completed in June 2026.

◦Unrealized gain (loss) on derivative instruments, net.$(501) million unfavorable decrease. This is primarily related to the impact of higher forward power prices on the fair value of mark-to-market contracts that were open or entered into during the period.

•Operation, maintenance and development. $(73) million unfavorable increase. This is primarily related to higher generation facility operating costs due to: (i) an increase associated with the Freedom and Guernsey acquisitions and the Cornerstone Acquisition, which were completed in November 2025 and June 2026, respectively; and (ii) operations, outage, and routine maintenance projects at our dispatchable fossil generation facilities.

•General and administrative. $(85) million unfavorable increase. This is primarily associated with (i) an increase in grant date stock price of RSUs and grant date fair value of PSUs; and (ii) an accounting change of certain awards to liability classification in the fourth quarter 2025 as well as the periodic expense recognized for awards granted prior to 2026. See Note 13 to the Interim Financial Statements for additional information on stock-based compensation.

•Depreciation, amortization and accretion. $(147) 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 and the Cornerstone Acquisition that was completed in June 2026.

•Interest expense and other finance charges. $(278) million unfavorable increase. This is primarily related to the: (i) interest associated with the TLB-3 and the 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), (ii) combined effect of financing transactions in April 2026 that included the issuances of the Unsecured Notes due 2031 and 2033 (each issued in connection with the Cornerstone Acquisition that was completed in June 2026) as well as the redemption of the Secured Notes, and (iii) $(77) million nonrecurring make-whole payments associated with the Secured Notes redemption. Such amounts were partially offset primarily by the recognition of net gains associated with the change in fair value of interest rate swaps due to higher SOFR forward prices.

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

•Gain (loss) on sale of assets, net.$33 million favorable increase. This is primarily related to a $66 million gain on the sale of our interests in the Keystone generation facility and certain related assets, partially offset by a $22 million gain from the sale of the Camden and Dartmouth generation facilities in September 2025. See Note 17 to the Interim Financial Statements for additional information.

•Income tax benefit (expense). $32 million favorable decrease. This is primarily related to a decrease in pre-tax income and an increase in permanent differences reducing the effective tax rate, partially offset by a change in the state blended tax rate due to the Cornerstone Acquisition.