10q10k10q10k.net

What changed in Talen Energy Corp's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Talen Energy Corp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+466 added−485 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-28)

Top changes in Talen Energy Corp's 2025 10-K

466 paragraphs added · 485 removed · 294 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

94 edited+48 added−44 removed49 unchanged
Biggest changeSusquehanna has historically generated revenues primarily from energy sales into the PJM wholesale market, PJM capacity sales, and strategic hedging. As part of the AWS Data Campus Sale in 2024, Susquehanna and AWS have contracted under the AWS PPA for the long-term, fixed-price supply of power directly from Susquehanna to the adjacent AWS Data Campus.
Biggest changeSee “—Recent Developments” and Note 17 to our Annual Financial Statements for additional information on the Freedom and Guernsey Acquisitions and the proposed Cornerstone Acquisition. 2 Form 10-K Table of Contents Our baseload fleet has historically generated revenues primarily from energy sales into the PJM wholesale market, PJM capacity sales, and strategic hedging; however, as discussed further below, in June 2025, we and AWS entered into an expanded power purchase agreement for the long-term, fixed-price supply of up to 1,920 MW of power annually from Susquehanna to the adjacent AWS data center campus through 2042.
Our subsidiaries that own or control electric generation facilities are defined as public utilities under the Federal Power Act and are subject to FERC’s exclusive ratemaking jurisdiction over wholesale sales of electricity and the transmission of electricity in interstate commerce.
Our subsidiaries that own or control electric generation facilities are defined as public utilities under the Federal Power Act and are subject to the FERC’s exclusive ratemaking jurisdiction over wholesale sales of electricity and the transmission of electricity in interstate commerce.
FERC has the authority to grant or deny market-based rate authority for wholesale sales of energy, capacity, and ancillary services to ensure that such sales are just and reasonable and not unduly discriminatory, and to suspend market-based rate authority and set cost-based rates if it finds that its previous grant of market-based rate authority is no longer just and reasonable.
The FERC has the authority to grant or deny market-based rate authority for wholesale sales of energy, capacity, and ancillary services to ensure that such sales are just and reasonable and not unduly discriminatory, and to suspend market-based rate authority and set cost-based rates if it finds that its previous grant of market-based rate authority is no longer just and reasonable.
Other matters subject to FERC’s jurisdiction include, but are not limited to: review of certain public utility dispositions of jurisdictional facilities, mergers, acquisitions of other public utility securities, or acquisitions of existing generation facilities; review of certain holding company acquisitions of securities of, or mergers with, a public utility or other holding company; third-party financings; affiliate transactions; intercompany financings and cash management arrangements; and certain internal corporate reorganizations.
Other matters subject to the FERC’s jurisdiction include, but are not limited to: review of certain public utility dispositions of jurisdictional facilities, mergers, acquisitions of other public utility securities, or acquisitions of existing generation facilities; review of certain holding company acquisitions of securities of, or mergers with, a public utility or other holding company; third-party financings; affiliate transactions; intercompany financings and cash management arrangements; and certain internal corporate reorganizations.
PJM BRAs are typically conducted three years prior to the start of the applicable capacity year (which runs from June 1–May 31), but FERC has recently accepted requests by PJM to delay certain PJM BRAs in order to propose additional changes to the PJM Reliability Pricing Model. See “Item 1A.
PJM BRAs are typically conducted three years prior to the start of the applicable capacity year (which runs from June 1–May 31), but the FERC has accepted requests by PJM to delay certain PJM BRAs in order to propose additional changes to the PJM Reliability Pricing Model. See “Item 1A.
One of the most impactful CWA programs currently affecting our business is the EPA ELG Rule, under which certain of our generation facilities have incurred operating restrictions and committed to prematurely end the use of certain fuels.
One of the most impactful CWA programs currently affecting our business is the 2024 EPA ELG Rule, under which certain of our generation facilities have incurred operating restrictions and committed to prematurely end the use of certain fuels.
RTOs and ISOs. RTOs and ISOs are FERC-regulated entities that exist in several regions to provide transmission service across multiple transmission systems. FERC has approved PJM, MISO, ISO-NE, and SPP as RTOs and CAISO and NYISO as ISOs.
RTOs and ISOs. RTOs and ISOs are the FERC-regulated entities that exist in several regions to provide transmission service across multiple transmission systems. The FERC has approved PJM, MISO, ISO-NE, and SPP as RTOs and CAISO and NYISO as ISOs.
Risk Factors—Regulatory, Environmental, and Legal Risks—We could be impacted by changes in, or state interference with, the structure or operation of the markets in which we operate, including ongoing market restructuring in PJM.” and Note 12 to the Annual Financial Statements for additional information on ongoing market reforms in PJM and related auction delays.
Risk Factors—Regulatory, Environmental, and Legal Risks—We could be impacted by changes in, or state interference with, the structure or operation of the markets in which we operate, including ongoing market restructuring in PJM.” and Note 9 to the Annual Financial Statements for additional information on ongoing market reforms in PJM and related auction delays.
Across our fleet and our corporate offices, our facilities and their employees, often in conjunction with charitable organizations such as United Way, Salvation Army, and local food banks, we strive to participate regularly in events supplying holiday toys, school supplies, food, winter coats, volunteer work, and monetary donations.
Across our fleet and our corporate offices, our facilities and their employees, often in conjunction with charitable organizations such as United Way, Salvation Army, and local food banks, we strive to participate regularly in events supplying holiday toys, school supplies, food, winter coats, volunteer hours, and monetary donations.
With the exception of Colstrip in Montana, all of our generation facilities currently participate in wholesale electricity markets administered by PJM and ISO-NE. See “—Our Operations—Our Key Markets and Revenue Streams—Wholesale Markets” for additional information on the RTOs and ISOs in which we operate. Nuclear.
With the exception of Colstrip in Montana, all of our generation facilities currently participate in the wholesale electricity markets administered by PJM. See “—Our Operations—Our Key Markets and Revenue Streams—Wholesale Markets” for additional information on the RTOs and ISOs in which we operate. Nuclear.
We will continue to periodically evaluate our policy limits and retentions as they relate to the overall cost and scope of our insurance program. See also “Item 1A. Risk Factors—Industry and Market Risks—Operation of power generation facilities involves significant risks and hazards customary to the power industry, which we cannot assure our insurance will be adequate to cover.,” “Item 1C.
We will continue to periodically evaluate our policy limits and retentions as they relate to the overall cost and scope of our insurance program. See also “Item 1A. Risk Factors—Commercial and Operational Risks—Operation of power generation facilities involves significant risks and hazards customary to the power industry, which we cannot assure our insurance will be adequate to cover.,” “Item 1C.
For instance, to date, events hosted by Susquehanna have raised over $1.1 million for the Berwick Area United Way. Our plants also provide community education through both on-site and off-site programs and events with first responders, professional organizations, students, interns, scouts, and other groups.
For instance, to date, events hosted by Susquehanna have raised approximately $1.5 million for the Berwick Area United Way. Our plants also provide community education through both on-site and off-site programs and events with first responders, professional organizations, students, interns, scouts, and other groups.
We strive to thoughtfully consider and respond to ideas and feedback from all employees, including plant management teams, asset managers, and frontline workers, and we provide a variety of avenues for employee feedback, including through performance review dialogue, appropriate escalation of informal feedback, and various identifiable and anonymous formal reporting channels.
We strive to thoughtfully consider and respond to ideas and feedback from all employees, including plant management teams, asset managers, and frontline workers, and we provide a variety of avenues for employee feedback, including through performance review dialogue, appropriate escalation of informal feedback, and various identifiable and anonymous formal reporting channels. Compensation, Benefits, and Wellness.
Our safety management system allows frequent analysis of all aspects of safety for continuous monitoring and improvement, and has been key to our safety performance in 2024. Training, Development, and Feedback.
Our safety management system allows frequent analysis of all aspects of safety for continuous monitoring and improvement, and has been key to our safety performance in 2025. Training, Development, and Feedback.
All employees are also eligible for our employee assistance program, which provides mental and physical health resources and discounts on essentials such as childcare, education, and insurance, among other things. Collective Bargaining Agreements. As of December 31, 2024, we had 1,894 full-time employees, approximately 43% of which were represented by labor unions.
All employees are also eligible for our employee assistance program, which provides mental and physical health resources and discounts on essentials such as childcare, education, and insurance, among other things. Collective Bargaining Agreements. As of December 31, 2025, we had approximately 1,880 full-time employees, approximately 43% of which were represented by labor unions.
We produce and sell electricity, capacity, and ancillary services into wholesale U.S. power markets, with our generation fleet principally located in the Mid-Atlantic and Montana. Our team is committed to generating power safely and reliably, delivering the most value per megawatt produced and driving the energy transition. Talen is also powering the digital infrastructure revolution.
We produce and sell electricity, capacity, and ancillary services into wholesale U.S. power markets, with our generation fleet principally located in the Mid-Atlantic, Ohio, and Montana. Our team is committed to generating power safely and reliably and delivering the most value per megawatt produced. Talen is also powering the digital infrastructure revolution.
PJM also operates day-ahead and real-time markets into which generators can bid to provide energy and ancillary services. We sell energy/ancillary services into these markets. We also enter into bilateral transactions for the sale of energy directly to power purchasers . ISO-NE.
PJM also operates day-ahead and real-time markets into which generators can bid to provide energy and ancillary services. We sell energy/ancillary services into these markets. We also enter into bilateral transactions for the sale of energy directly to power purchasers . WECC.
We believe the emerging data economy and the growing importance of artificial intelligence and continued re-shoring will require an all-of-the-above approach to generating the electricity necessary to power load in a responsible and efficient manner.
We believe the emerging data economy and the growing importance of artificial intelligence and continued re-shoring of manufacturing and other industries will require an all-of-the-above approach to generating the electricity necessary to power load in a responsible and efficient manner.
The current facility operating licenses for our two units at Susquehanna expire in 2042 and 2044. See Note 9 to the Annual Financial Statements for additional information on the NDT. See “—Our Operations—Fuel Supply—Nuclear” for additional information on SNF. Other Regulation. In addition to federal regulation, our operations are subject to various state and local laws and regulations.
The current facility operating licenses for our two units at Susquehanna expire in 2042 and 2044. See Note 6 to the Annual Financial Statements for additional information on the NDT. See “—Our Operations—Fuel Supply— Nuclear ” for additional information on SNF. Other Regulation. In addition to federal regulation, our operations are subject to various state and local laws and regulations.
Starting in 2025, we also offer an employee stock purchase program, under which eligible employees can purchase our common stock at a discount through payroll deductions. Full- and part-time employees also qualify for our 401(k) plan, under which we make fixed, matching, and (or) additional discretionary contributions (depending on employment specifics).
In 2025, we began offering an employee stock purchase program, under which eligible employees can purchase our common stock at a discount through payroll deductions. Full- and part-time employees also qualify for our 401(k) plan, under which we make fixed, matching, and (or) additional discretionary contributions (depending on employment specifics).
Risk Factors—Regulatory, Environmental, and Legal Risks—We could be impacted by changes in, or state interference with, the structure or operation of the markets in which we operate, including ongoing market restructuring in PJM.” Insurance Power generation involves hazardous activities, which could expose our assets, employees, contractors, customers, and the general public to various risks inherent in the nature of our operations.
Risk Factors—Regulatory, Environmental, and Legal Risks—We could be impacted by changes in, or state interference with, the structure or operation of the markets in which we operate, including ongoing market restructuring in PJM.” 5 Form 10-K Table of Contents Insurance Power generation involves hazardous activities, which could expose our assets, employees, contractors, customers, and the general public to various risks inherent in the nature of our operations.
We generate materials in the course of our operations that may be regulated as hazardous substances based on their characteristics under CERCLA and analogous state laws. The EPA’s regulation of CCRs under the Resource Conservation and Recovery Act is a currently evolving regulatory program under which we may incur significant costs impacting AROs.
We generate materials in the course of our operations that may be regulated as hazardous substances based on their characteristics under CERCLA and analogous state laws. The EPA’s regulation of CCRs under the RCRA is a currently evolving regulatory program under which we may incur significant costs impacting AROs.
Generators in PJM may earn revenues from sales of capacity, energy, and (or) ancillary services. The PJM Reliability Pricing Model is intended to ensure that resources are available when needed for grid reliability. Under this model, PJM conducts a series of forward capacity auctions, which establish a long-term market for capacity.
Generators in PJM may earn revenues from sales of capacity, energy, and (or) ancillary services. 3 Form 10-K Table of Contents The PJM Reliability Pricing Model is intended to ensure that resources are available when needed for grid reliability. Under this model, PJM conducts a series of forward capacity auctions, which establish a long-term market for capacity.
PJM is an RTO responsible for the operation of wholesale electric markets and for centrally dispatching electric systems in all or parts of 13 states and the District of Columbia. It coordinates the dispatch of approximately 180,000 MW of generating capacity to more than 65 million people and operates wholesale electricity markets with approximately 1,090 members.
PJM is an RTO responsible for the operation of wholesale electric markets and for centrally dispatching electric systems in all or parts of 13 states and the District of Columbia. It coordinates the dispatch of approximately 182,000 MW of generating capacity to more than 67 million people and operates wholesale electricity markets with approximately 1,110 members.
Consequently, future implementation and enforcement of these rules remains uncertain at this time. See “Item 1A. Risk Factors—Regulatory, Environmental, and Legal Risks” for additional information on environmental risks related to our business. The following discussion provides an overview of certain key environmental matters.
Consequently, future implementation and enforcement of these rules remains uncertain at this time. 9 Form 10-K Table of Contents See “Item 1A. Risk Factors—Regulatory, Environmental, and Legal Risks” for additional information on environmental risks related to our business. The following discussion provides an overview of certain key environmental matters.
Environmental Our emission profile is firmly anchored by Susquehanna, which enabled us to generate over half of our electricity output carbon-free in 2024, and our natural gas portfolio also includes a number of energy-efficient assets with low heat rates, which provide a lower carbon intensity than traditional fossil fuel sources.
Environmental Our emission profile is anchored by Susquehanna, which enabled us to generate 42% of our electricity output carbon-free in 2025, and our natural gas portfolio also includes a number of energy-efficient assets with low heat rates that provide a lower carbon intensity than traditional fossil fuel sources.
We have joined several parties to legally challenge the EPA’s new requirements for legacy CCR surface impoundments under the EPA CCR Rule, while also following the Rule’s timeline to assess applicability and define cost impacts to our business. Water.
We have joined several parties to legally challenge the EPA’s requirements for legacy CCR surface impoundments under the EPA CCR Rule that was finalized in 2024, while also following the Rule’s timeline to assess applicability and define cost impacts to our business. Water.
See “—Our Key Markets and Revenue Streams—Contracted Revenues—Brandon Shores and H.A Wagner RMR Arrangements” and Note 10 to the Annual Financial Statements for additional information on the RMR proceedings and settlement.
See “—Our Key Markets and Revenue Streams—Contracted Revenues—Brandon Shores and H.A. Wagner RMR Arrangements” and Note 3 to the Annual Financial Statements for additional information on the RMR arrangements.
We maintain generally constructive relationships with our labor unions. Governance We are committed to maintaining corporate governance policies and practices that support the interests of all our stakeholders. Our values of Excellence, No Harm, Integrity, and Continuous Improvement help foster a culture of robust governance from the Board of Directors and officers to each employee.
Governance We are committed to maintaining corporate governance policies and practices that support the interests of all our stakeholders. Our values of Excellence, No Harm, Integrity, and Continuous Improvement help foster a culture of robust governance from the Board of Directors and officers to each employee.
We file our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports with the SEC. You may obtain copies of these documents, free of charge, on the SEC's website at www.sec.gov.
Securities and Exchange Commission (the “SEC”). 12 Form 10-K Table of Contents We file our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports with the SEC. You may obtain copies of these documents, free of charge, on the SEC's website at www.sec.gov.
To further develop promising leadership across our organization, we offer programs such as the Talen Leadership Academy and the Union Leader Academy, which are seminars covering a variety of business, operational, leadership, and interpersonal skills. Formal and informal feedback at Talen runs in all directions.
To train the next generation of professionals, we offer apprenticeship programs, internships, and educational assistance. To further develop promising leadership across our organization, we offer programs such as the Talen Leadership Academy and the Union Leader Academy, which are seminars covering a variety of business, operational, leadership, and interpersonal skills. Formal and informal feedback at Talen runs in all directions.
ITEM 1. BUSINESS Talen is a leading independent power producer and energy infrastructure company dedicated to powering the future. We own and operate approximately 10.7 gigawatts of power infrastructure in the United States, including 2.2 gigawatts of nuclear power and a significant dispatchable generation fleet.
ITEM 1. BUSINESS Talen is a leading independent power producer and energy infrastructure company dedicated to powering the future. We own and operate approximately 13.1 GW of power infrastructure in the United States, including 2.2 GW of nuclear power and a significant dispatchable fossil fleet.
Fuel Supply Our power generation assets are advantaged by significant fuel diversity, including nuclear, natural gas, coal, oil, and various dual-fuel capabilities. Further, our natural gas generation assets are situated near the Marcellus shale region of Pennsylvania, which provides access to fuel from one of the largest producing natural gas regions in the U.S. See “Item 2.
Fuel Supply Our power generation assets are advantaged by significant fuel diversity, including nuclear, natural gas, coal, and oil capabilities. Further, our natural gas generation assets are situated near the Marcellus and Utica shale regions of Pennsylvania and Ohio, which provide access to fuel from some of the largest producing natural gas regions in the U.S. See “Item 2.
Our Key Markets and Revenue Streams Our operating revenues have historically consisted primarily of capacity revenues, energy/ancillary services revenues, and unrealized gain (loss) on hedging instruments. As further discussed below, we sell capacity and energy through a combination of forward auctions, bilateral contracts, and spot market sales (as applicable).
Our Key Markets and Revenue Streams Our operating revenues have historically consisted primarily of capacity revenues, energy/ancillary services revenues, and unrealized gain (loss) on hedging instruments. As further discussed below, we sell capacity and energy through a combination of forward auctions, future contracts, and spot market sales (as applicable). Beginning in mid-2025, our Brandon Shores and H.A.
Information contained on or accessible from our website is not, and shall not be deemed to be, incorporated by reference into this Report or any other filings with the Securities and Exchange Commission (the “SEC”).
Information contained on or accessible from our website is not, and shall not be deemed to be, incorporated by reference into this Report or any other filings with the U.S.
We maintain short-term and long-term cash incentive programs for many employees, as well as a long-term equity compensation program that aligns the interests of key team members with our strategy and the interests of our stockholders.
We are committed to maintaining a highly competitive compensation structure. We maintain short-term and long-term cash incentive programs for many employees, as well as a long-term equity compensation program that aligns the interests of key team members with our strategy and the interests of our stockholders.
Our collective bargaining agreements (“CBAs”) include: (i) a CBA with IBEW Local 1638, covering 193 Talen Montana employees, which is in effect until April 2026; (ii) a CBA with Teamsters Local 190, covering six Talen Montana employees, which is in effect until August 2027; and (iii) a CBA with IBEW Local 1600, covering 626 Pennsylvania employees, which is in effect until August 2025.
Our collective bargaining agreements (“CBA”) include: (i) a CBA with IBEW Local 1638, covering 186 Talen Montana employees, which is in effect until April 2026; (ii) a CBA with Teamsters Local 190, covering six Talen Montana employees, which is in effect until August 2027; and (iii) a CBA with IBEW Local 1600, covering 624 Pennsylvania employees, which is in effect until August 2030.
Until litigation is complete and permit conditions are established, full cost impacts remain uncertain. Health and Safety. We are also subject to the requirements of the federal Occupational Safety and Health Act and comparable state laws that regulate the protection of the health and safety of employees.
The extension rule has been legally challenged by environmental groups. Until litigation is complete and permit conditions are established, full cost impacts remain uncertain. Health and Safety. We are also subject to the requirements of the federal Occupational Safety and Health Act and comparable state laws that regulate the protection of the health and safety of employees.
As key stakeholders in our business, we invest in our employees by prioritizing their safety, presenting numerous training and development opportunities, carefully considering employee feedback, offering competitive compensation that includes our employees in the success of our business, providing comprehensive health and wellness benefits, and fostering an inclusive and respectful workplace. Safety. At Talen, safety is a core value.
Accordingly, we invest in our employees by prioritizing their safety, offering numerous training and development opportunities, valuing employee feedback, providing competitive compensation that shares in the success of our business, delivering comprehensive health and wellness benefits, and fostering an inclusive and respectful workplace. Safety. At Talen, safety is a core value.
Corporate and Other Available Information We are a Delaware corporation with our principal executive office located at 2929 Allen Parkway, Suite 2200, Houston, TX 77019. The telephone number for our principal executive office is (888) 211-6011. We maintain a website at www.talenenergy.com.
Additional information about our corporate governance will be set forth in the 2026 Proxy Statement. Corporate and Other Available Information We are a Delaware corporation with our principal executive office located at 2929 Allen Parkway, Suite 2200, Houston, TX 77019. The telephone number for our principal executive office is (888) 211-6011. We maintain a website at www.talenenergy.com.
We provide training programs covering a wide range of relevant job- and Company-specific topics for employees in all positions, including continuing education resources for professional licenses, and we also regularly promote and train interested employees into new roles. To train the next generation of professionals, we offer apprenticeship programs, internships, and educational assistance.
We provide training programs covering a wide range of relevant job- and Company-specific topics for employees in all positions, including continuing education resources for professional licenses, and we also regularly promote and train interested employees into new roles.
See Note 12 to the Annual Financial Statements for additional information on these and other environmental topics. 8 F o r m 10- K Table of Contents Air. Under the Clean Air Act, as well as comparable state laws and local ordinances, our plants are subject to extensive emission control, emission allowance, emission monitoring, and air reporting obligations.
See Note 9 to the Annual Financial Statements for additional information on these and other environmental topics. Air. Under the Clean Air Act, as well as comparable state laws and local ordinances, our plants are subject to extensive emission control, emission allowance, emission monitoring, and air reporting obligations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for additional information on our energy and capacity revenues. We are now also poised to benefit from long-term, stable cash flows from both contractual revenues under the Brandon Shores and H.A. Wagner RMR arrangements and fixed-price power sales under the AWS PPA.
Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations.” We now also benefit from long-term, stable cash flows from both contractual revenues under the Brandon Shores and H.A. Wagner RMR arrangements and fixed-price power sales under the AWS PPA.
The pattern of fluctuations in our operating results varies depending on the type and location of the facilities being serviced, the capacity markets served, the maintenance requirements of our facilities, and the terms of bilateral contracts to purchase or sell electricity. Our largest recurring maintenance project is the annual spring refueling outage at Susquehanna.
The pattern of fluctuations in our operating results varies depending on the type and location of the facilities being serviced, the capacity markets served, the maintenance requirements of our facilities, and the terms of bilateral contracts to purchase or sell electricity.
Key air matters currently affecting our business include, but are not limited to, nitrogen oxides requirements (including potential implementation of the EPA’s Good Neighbor Plan or similar requirements) as well as the revised EPA MATS and GHG Rules, both of which could significantly impact certain facilities, including our Colstrip facility, and are being legally challenged by us and others.
Key air matters currently affecting our business include, but are not limited to, nitrogen oxides requirements (including potential implementation of the EPA’s Good Neighbor Plan or similar requirements) as well as the revised 2024 GHG Rule, which could significantly impact certain facilities, including our Colstrip facility.
The following discussion provides an overview of certain key regulatory matters applicable to our business. See Note 12 to the Annual Financial Statements for additional information on these and other regulatory topics. 7 F o r m 10- K Table of Contents FERC.
The following discussion provides an overview of certain key regulatory matters applicable to our business. See Note 9 to the Annual Financial Statements for additional information on these and other regulatory topics. FERC.
Human Capital We strive to maintain a culture that empowers our employees to influence operational decisions and to trust and rely on each other, while driving safety, operational excellence, and strong financial performance. We believe our people are a valuable asset.
Human Capital We strive to maintain a culture that empowers our employees to influence operational decisions and to trust and rely on each other, while driving safety, operational excellence, and strong financial performance. We view our people as vital assets and key stakeholders in our business.
Specifically, a majority of our generation capacity (over 10 GW) is located in the MAAC (Mid-Atlantic Area Council) and BGE (Baltimore Gas and Electric) regions of PJM. The remainder of our generation capacity is in ISO-NE and WECC. See “Item 2. Properties” for additional information on the market location of each of our facilities. PJM.
Specifically, approximately 13 GW of our generation capacity is located in the MAAC (Mid-Atlantic Area Council), BGE (Baltimore Gas and Electric), and AEP (American Electric Power) regions of PJM. The remainder of our generation capacity is from the Colstrip facility within WECC. See “Item 2. Properties” for additional information on the market location of each of our facilities. PJM.
We are well-positioned to capture this significant growth opportunity, as data centers serving artificial intelligence increasingly demand more reliable, clean power. Our Operations Our Fleet The following discussion provides a brief overview of our fleet. See “Item 2. Properties” for additional information on each of our facilities. Baseload, carbon-free nuclear facility.
We are well-positioned to serve this growing industry, as artificial intelligence data centers increasingly demand more reliable power. Our Operations Our Fleet The following discussion provides a brief overview of our fleet. See “Item 2. Properties” for additional information on each of our facilities Highly efficient baseload generation.
In 2024, Talen produced over 18 GWh of reliable, zero-carbon power from Susquehanna at a low all-in cost of less than $24 per MWh, while also maintaining excellent safety and operational performance (when measured by standards adopted by the nuclear industry) .
In 2025, we produced approximately 17 TWh of reliable, zero-carbon power from Susquehanna at a low all-in cost of approximately $27 per MWh, while also maintaining excellent safety and operational performance (when measured by standards adopted by the nuclear industry) .
Cybersecurity,” and Note 12 to the Annual Financial Statements. Our Strategies We believe we are well-positioned to achieve our business objectives through the following strategies: Focus and maintain our core generation fleet that provides stable earnings and cash flows.
Cybersecurity,” and Note 9 to the Annual Financial Statements. Our Strategies We believe we are well-positioned to achieve our business objectives through the following strategies: Continue to focus on our core generation fleet that provides stable earnings and cash flows through operational excellence, high reliability, capital discipline, and prudent risk management.
See Note 12 to the Annual Financial Statements for additional information on ongoing market reforms in PJM. We face competition in wholesale markets from other suppliers of available energy, capacity, and ancillary services, which may include operators of various competing generation technologies, such as natural gas-fired, coal-fired, and nuclear generation, as well renewable and other alternative energy sources.
We face competition in wholesale markets from other suppliers of available energy, capacity, and ancillary services, which may include operators of various competing generation technologies, such as natural gas-fired, coal-fired, and nuclear generation, as well as renewable and other alternative energy sources.
If approved, the proposed RMR arrangements will extend the operating life of these plants through May 31, 2029, or until such time as the necessary transmission upgrades are placed into service.
Brandon Shores and H.A. Wagner RMR Arrangements. The Brandon Shores and H.A. Wagner RMR arrangements extend the operating life of these plants through May 31, 2029, or until such time the necessary transmission upgrades are placed into service.
We serve our fossil generation fleet through a combination of self-service and contracted maintenance activity (including long-term service agreements at certain facilities). See also “Item 1A.
We maintain our fossil generation fleet through a combination of self-service and contracted maintenance activity (including long-term service agreements at certain facilities). Our largest recurring maintenance project is the annual spring refueling outage at Susquehanna. See also “Item 1A.
Risk Factors—Industry and Market Risks—Our business is subject to physical, market, economic, and regulatory risks relating to weather conditions and extreme weather events.” 5 F o r m 10- K Table of Contents Competition Increased competition in U.S. energy markets exists in part due to federal and state competitive market initiatives.
Risk Factors—Industry and Market Risks—Our business is subject to physical, market, economic, and regulatory risks relating to weather conditions and extreme weather events.” Competition Increased competition in U.S. energy markets exists in part due to federal and state competitive market initiatives. The power generation business is regionally varied in industry structure and fundamentals.
Energy Regulation We are subject to regulation by federal and state agencies and other bodies that exercise regulatory authority in the various regions where we conduct business, including but not limited to FERC; the Department of Energy; the NRC; NERC; the Federal Communications Commission; and state public utility commissions.
Legal Proceedings” and Note 9 to the Annual Financial Statements for additional information on specific legal matters. 8 Form 10-K Table of Contents Energy Regulation We are subject to regulation by federal and state agencies and other bodies that exercise regulatory authority in the various regions where we conduct business, including but not limited to the FERC; the Department of Energy; the NRC; NERC; the Federal Communications Commission; and state public utility commissions.
Hazardous Substances and Waste Handling. Our business is subject to a range of waste laws and regulations at the federal, state, and local levels.
These rules are being legally challenged by us and others and are being reconsidered by the EPA. Hazardous Substances and Waste Handling. Our business is subject to a range of waste laws and regulations at the federal, state, and local levels.
In the future, new permit conditions could be established to meet the EPA’s most recent revisions to the EPA ELG Rule, which will be defined following negotiations with state permitting authorities. We and other parties are legally challenging the EPA’s latest revisions to the EPA ELG Rule.
In the future, new permit conditions could be established to meet the requirements in the EPA ELG Rule, which will be defined following negotiations with state permitting authorities. We and other parties are legally challenging the 2024 EPA ELG Rule. Additionally, the EPA has extended the compliance deadlines for the 2024 EPA ELG Rule by five years.
The power generation business is regionally varied in industry structure and fundamentals. PJM, the primary market in which we operate, is a competitive market and has from time-to-time considered new market rules, while some states have considered re-regulation measures that could result in more limited opportunities for competitive energy suppliers.
PJM, the primary market in which we operate, is a competitive market and has from time-to-time considered new market rules, while some states have considered re-regulation measures that could result in more limited opportunities for competitive energy suppliers. See Note 9 to the Annual Financial Statements for additional information on ongoing market reforms in PJM.
Properties” for additional information on the fuel capabilities of each of our facilities. Nuclear. Susquehanna has a portfolio of supply contracts for raw uranium, conversion, enrichment, and fabrication. Our nuclear fuel cycle is fully contracted through the 2027 fuel load, almost entirely contracted through 2028, and over 70% contracted through 2029.
Properties” for additional information on the fuel capabilities of each of our facilities. 4 Form 10-K Table of Contents Nuclear. Susquehanna has a portfolio of supply contracts for raw uranium, conversion, enrichment, and fabrication. Our nuclear fuel cycle i s fully contracted through the 2028 fuel load, more than 50% contracted through 2029, and over 20% contracted through 2030.
Federal law requires the U.S. government to provide for the permanent disposal of commercial SNF, but the government has not yet done so. Consequently, under a related settlement agreement, the government is required to reimburse Susquehanna for certain SNF storage costs through 2025. See Note 12 to the Annual Financial Statements for additional information on this arrangement.
Federal law requires the U.S. government to provide for the permanent disposal of commercial SNF, but the government has not yet done so. Consequently, the government is required to reimburse Susquehanna for certain SNF storage costs through 2025 under a related settlement agreement, which we are currently in the process of seeking to extend through 2028.
These drivers of demand have had, and could continue to have, direct impacts on the overall supply/demand balance and resulting energy and capacity prices in the markets in which we operate, the profitability, value, and growth prospects of our business, and the regulatory framework under which we operate. 4 F o r m 10- K Table of Contents Nuclear PTC The Inflation Reduction Act was signed into law in August 2022.
These drivers of demand have had, and could continue to have, direct impacts on the overall supply/demand balance and resulting energy and capacity prices in the markets in which we operate, the profitability, value, and growth prospects of our business, and the regulatory framework under which we operate.
Our 6.3 GW natural gas and oil fleet (of which 3.2 GW is from Brunner Island, Montour, and H.A Wagner Unit 3 after conversion, as discussed below) includes seven technologically diverse natural gas and oil generation facilities across the generation stack (including intermediate and peaking dispatch). Certain units are capable of utilizing multiple fuel sources, providing meaningful operational flexibility.
Our 4.6 GW intermediate and peaking fleet (of which 2.9 GW is from Brunner Island and Montour after conversion, as discussed below) currently includes three technologically diverse natural gas generation facilities, with certain units capable of utilizing multiple fuel sources.
Susquehanna has an additional corrective action Employee Concerns Program that establishes procedures for reporting and resolving nuclear safety and general work environment concerns. We continuously work to improve safety. In 2022, we implemented an annual Safety Assessment Program, under which safety professionals from across the organization inspect plants with a focus on workplace inspections, work observations, and regulatory compliance.
In 2022, we implemented an annual Safety Assessment Program, under which safety professionals from across the organization inspect plants with a focus on workplace inspections, work observations, and regulatory compliance.
This empowers our business units and operating plants to determine the most appropriate health and safety procedures, training, engagement, and incident resolution at their sites while facilitating knowledge sharing, enabling continuous improvement, and fostering a “No Harm” culture across our organization. 10 F o r m 10- K Table of Contents We track and (or) externally report OSHA recordable incidents, lost time injuries, and near miss incidents to enhance knowledge sharing and organizational learning.
This empowers our business units and operating plants to determine the most appropriate health and safety procedures, training, engagement, and incident resolution at their sites while facilitating knowledge sharing, enabling continuous improvement, and fostering a “No Harm” culture across our organization.
Beginning June 1, 2025, the CORS will provide a monthly fixed-cost payment of $12,083,333 ($312/MW-day) for Brandon Shores and $2,916,667 ($137/MW-day) for H.A Wagner, which includes a performance “hold back” of $416,667 per month for Brandon Shores and $208,333 per month for H.A Wagner, each to be paid out based on unit performance.
Beginning June 1, 2025, the RMR arrangements provide an annual fixed-cost payment of $145 million ($312/MWd) for Brandon Shores and $35 million ($137/MWd) for H.A. Wagner, which includes a performance “hold back” of $5 million per year for Brandon Shores and $2.5 million per year for H.A. Wagner, each to be paid out based on unit performance.
Our coal-fired generation assets continue to be impacted by changing environmental regulations and power market economics. We have already completed the conversion of approximately 3.2 GW of our legacy coal fleet to lower-carbon fuels, including our Brunner Island and Montour facilities, which together represent over 25% of our total generation capacity, and Unit 3 of our H.A Wagner facility.
We have already completed the conversion of approximately 3.2 GW of our legacy coal fleet to lower-carbon fuels, including our Brunner Island and Montour facilities and Unit 3 of our H.A. Wagner facility. We are currently running our H.A.
In 2024, we had seven OSHA recordable incidents and an OSHA Total Recordable Incident Rate (“TRIR”) of 0.34. Our overall safety performance is a result of an enhanced health and safety framework and training, increased leadership visibility and accountability, and a greater focus on incident reporting, including near misses and good catches.
Our overall safety performance is a result of an enhanced health and safety framework and training, increased leadership visibility and accountability, and a greater focus on incident reporting, including near misses and good catches. Our safety team reviews several proactive metrics to mitigate risks before they become safety incidents.
Natural Gas and Oil. We manage our natural gas and oil supply utilizing a combination of contracted purchases, spot market purchases, and on-site storage for the commodities and pipeline capacity. The amount and duration of contracted purchases vary due to factors including fuel availability, economic considerations, and generation facility location on the pipeline grid.
The amount and duration of contracted purchases vary due to factors including fuel availability, economic considerations, and generation facility location on the pipeline grid. A significant portion of our natural gas needs are satisfied through short-term transactions on a spot basis. Oil is generally supplied from on-site inventory and replenished through purchases on the spot market.
We actively manage our coal requirements by purchasing coal from central and northern Appalachia for our PJM facilities and from a mine adjacent to Colstrip for that facility. Reliability of coal deliveries can be affected from time to time by a number of factors, including fluctuations in demand, coal mine production issues, and other supplier or transporter operating difficulties.
Reliability of coal deliveries can be affected from time to time by a number of factors, including fluctuations in demand, coal mine production issues, and other supplier or transporter operating difficulties. We maintain coal inventory at levels estimated to be necessary to avoid operational disruptions at our coal-fired units.
We ordinarily perform planned facility maintenance during milder non-peak demand periods in the spring and fall to ensure reliability during peak periods.
In addition, our operating expenses typically fluctuate geographically on a seasonal basis, with peak power generation and expenses during the winter in the Mid-Atlantic. We ordinarily perform planned facility maintenance during milder non-peak demand periods in the spring and fall to ensure reliability during peak periods.
In today’s robust but volatile energy markets, our team has been able to capture high realized pricing through both reliable generation and strategic risk management. Capacity revenue is a key indicator of the important role that nuclear, natural gas, and peaking generation all play in PJM grid reliability. In 2024, our PJM fleet generated significant capacity revenues. See “Item 7.
In today’s robust but volatile energy markets, our team has been able to capture high realized pricing through both reliable generation and strategic risk management. See “Item 7.
Seasonality/Scheduled Maintenance The demand for and market prices of electricity and natural gas are affected considerably by weather and, as a result, our operating results may fluctuate significantly on a seasonal basis. In general, below-average temperatures in the winter and above-average temperatures in the summer tend to increase electricity demand, energy prices, and revenues.
Short- and long-term supply contracts support adequate coal inventory levels and are augmented with spot market purchases as needed. Seasonality/Scheduled Maintenance The demand for and market prices of electricity and natural gas are affected considerably by weather and, as a result, our operating results may fluctuate significantly on a seasonal basis.
See “—Demand Growth from Multiple Sources” for additional information. We also benefit from the Nuclear PTC under the Inflation Reduction Act. See “—Nuclear PTC” for additional information. Wholesale Markets The substantial majority of our generation capacity is located in, and accordingly the majority of our revenues are derived from, PJM.
See Notes 3 and 4 to the Annual Financial Statements for additional information. Wholesale Markets The substantial majority of our generation capacity is located in, and accordingly the majority of our revenues are derived from, PJM.
We will also receive separate reimbursement for variable costs and approved project investments. See Note 10 to the Annual Financial Statements for additional information on the RMR proceedings and settlement. AWS PPA.
We also receive separate reimbursement for variable costs and approved project investments. See Note 3 to the Annual Financial Statements for additional information on the RMR arrangements. Demand Growth from Multiple Sources Power demand forecasts continue to rise over time in PJM compared to previous expectations.
We will continue exploring strategic opportunities if economically favorable, but any strategic investment will require a sound basis and an attractive returns profile when compared to other uses of capital. Legal, Regulatory, and Environmental Matters Legal Matters We are involved in various legal and administrative proceedings, investigations, claims, and litigation from time to time in the course of our business.
Legal, Regulatory, and Environmental Matters Legal Matters We are involved in various legal and administrative proceedings, investigations, claims, and litigation from time to time in the course of our business.
In ISO-NE, we both earn capacity revenues and sell energy/ancillary services into the spot markets from our Dartmouth generating facility. 3 F o r m 10- K Table of Contents WECC. WECC is a non-profit corporation that promotes a reliable and secure bulk electric system in the Western Interconnection, covering all or parts of Montana, 13 other U.S.
WECC is a non-profit corporation that promotes a reliable and secure bulk electric system in the Western Interconnection, covering all or parts of Montana, 13 other U.S. States, Canada, and Mexico. WECC does not operate energy or capacity markets. The Colstrip facility in Montana operates within NorthWestern’s Balancing Authority within WECC.
We operate, and own a 90% interest in, the 2.5 GW Susquehanna facility, the sixth largest nuclear-powered generation facility in the U.S. Susquehanna typically comprises approximately half of our total annual generation.
We own and ope rate over 5.7 GW o f low- and zero-carbon baseload generation, including a 90% interest in, the 2.5 GW Susquehanna facility, the seventh largest nuclear-powered generation facility in the U.S.
Our safety team reviews several proactive metrics to mitigate risks before they become safety incidents. All employees and contractors are required to immediately report all safety-related incidents and have a responsibility to stop work when there is a safety concern.
All employees and contractors are required to immediately report all safety-related incidents and have a responsibility to stop work when there is a safety concern. Once a “stop work” situation has been identified, a corrective plan must be developed and the safety team determines a path to continue work.
We have reduced our environmental footprint over the past several years, investing heavily in environmental controls and switching to cleaner fuels in response to market and other conditions. We have already completed the conversion of our Brunner Island, Montour, and H.A. Wagner plants to lower-carbon fuels.
The acquisitions of the Freedom and Guernsey plants further enhance our fleet, adding approximately 2.8 GW of high-quality, modern, efficient, baseload natural gas generation to our portfolio. We have reduced our environmental footprint over the past several years, investing heavily in environmental controls and switching to cleaner fuels in response to market and other conditions.

… 106 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

74 edited+42 added−20 removed191 unchanged
Biggest changeFor example, certain market and operating conditions may require us to purchase electricity in the wholesale market during periods of unusually high prices to meet our supply obligations or to sell electricity in the wholesale market during periods of low prices. 12 F o r m 10- K Table of Contents The effects of storms, floods, and other climatic events could disrupt our operations and cause us to incur significant costs in preparing for or responding to these effects.
Biggest changeAdditionally, extreme weather events or sustained mild weather could result in market conditions that generate substantial gains or losses. For example, certain market and operating conditions may require us to purchase electricity in the wholesale market during periods of unusually high prices to meet our supply obligations or to sell electricity in the wholesale market during periods of low prices.
We are subject to regulation by federal and state agencies and other bodies that exercise regulatory authority in the various regions where we conduct business, including but not limited to FERC; the Department of Energy; the NRC; NERC; the Federal Communications Commission; and state public utility commissions. See also “Item 1.
We are subject to regulation by federal and state agencies and other bodies that exercise regulatory authority in the various regions where we conduct business, including but not limited to the FERC; the Department of Energy; the NRC; NERC; the Federal Communications Commission; and state public utility commissions. See also “Item 1.
Business—Legal, Regulatory, and Environmental Matters—Energy Regulation” and “—Our ownership and operation of a nuclear power facility subjects us to regulations, costs, and liabilities uniquely associated with these types of facilities.” Certain of our subsidiaries sell electricity into the wholesale markets and are subject to rate, financial, and organizational regulation by FERC.
Business—Legal, Regulatory, and Environmental Matters—Energy Regulation” and “—Our ownership and operation of a nuclear power facility subjects us to regulations, costs, and liabilities uniquely associated with these types of facilities.” Certain of our subsidiaries sell electricity into the wholesale markets and are subject to rate, financial, and organizational regulation by the FERC.
FERC retains the authority to modify or withdraw our market-based rate authority and impose cost-based rates if it determines that the market is not competitive, we possess market power in one or more markets, we are not charging just and reasonable and not unduly discriminatory rates, or we have violated FERC’s market behavior rules or engaged in market manipulation.
The FERC retains the authority to modify or withdraw our market-based rate authority and impose cost-based rates if it determines that the market is not competitive, we possess market power in one or more markets, we are not charging just and reasonable and not unduly discriminatory rates, or we have violated the FERC’s market behavior rules or engaged in market manipulation.
Any reduction by FERC in the rates that we may receive, revocation of FERC’s waivers and blanket authorizations, or unfavorable changes to the regulation of our business by federal or state regulators could materially adversely affect our business.
Any reduction by the FERC in the rates that we may receive, revocation of the FERC’s waivers and blanket authorizations, or unfavorable changes to the regulation of our business by federal or state regulators could materially adversely affect our business.
We do not own or control the transmission facilities required to deliver the wholesale power from our generation facilities to load. FERC has issued regulations that require wholesale electricity transmission services, even when offered by parties other than RTOs and ISOs, to be offered on an open-access, non-discriminatory basis.
We do not own or control the transmission facilities required to deliver the wholesale power from our generation facilities to load. The FERC has issued regulations that require wholesale electricity transmission services, even when offered by parties other than RTOs and ISOs, to be offered on an open-access, non-discriminatory basis.
For example, new air, waste, and water rules finalized by the EPA in 2024 could require us to incur significant costs if they withstand legal challenges and potential rescission or revision by the Trump administration. These costs include ARO revisions, potential asset modifications, including investments in environmental control equipment, premature retirement or reduced operations, and increased public reporting requirements.
For example, air, waste, and water rules finalized by the EPA in 2024 could require us to incur significant costs if they withstand legal challenges and potential rescission or revision by the Trump administration. These costs include ARO revisions, potential asset modifications, including investments in environmental control equipment, premature retirement or reduced operations, and increased public reporting requirements.
In addition, if we were found to have violated FERC’s market behavior rules or other FERC requirements, FERC could impose civil penalties or order us to disgorge associated profits. Our generation assets are also subject to the reliability standards promulgated by the FERC-designated Electric Reliability Organization (currently NERC) and approved by FERC.
In addition, if we were found to have violated the FERC’s market behavior rules or other requirements of the FERC, the FERC could impose civil penalties or order us to disgorge associated profits. Our generation assets are also subject to the reliability standards promulgated by the FERC-designated Electric Reliability Organization (currently NERC) and approved by the FERC.
Business—Legal, Regulatory, and Environmental Matters.” Some of the key rules and regulations impacting our business include, among others, those set forth by: (i) FERC, relating to the generation, sale, and transmission of electricity, and its designated Electric Reliability Organization (currently NERC), relating to reliability standards for the bulk power system; (ii) PJM and ISO-NE, relating to the reliability and performance of generation facilities and operation of the energy and capacity markets; (iii) the NRC, relating to the licensing, operation, and ownership of nuclear facilities; (iv) the EPA, relating to environmental protection and permitting; and (v) various state and local jurisdictions, relating to similar and other matters.
Business—Legal, Regulatory, and Environmental Matters.” Some of the key rules and regulations impacting our business include, among others, those set forth by: (i) the FERC, relating to the generation, sale, and transmission of electricity, and its designated Electric Reliability Organization (currently NERC), relating to reliability standards for the bulk power system; (ii) PJM, relating to the reliability and performance of generation facilities and operation of the energy and capacity markets; (iii) the NRC, relating to the licensing, operation, and ownership of nuclear facilities; (iv) the EPA, relating to environmental protection and permitting; and (v) various state and local jurisdictions, relating to similar and other matters.
FERC has authorized us to sell energy, capacity, and ancillary services at wholesale at market-based rates and has granted us various related customary waivers and blanket approvals, including a blanket authorization to issue securities and to assume liabilities.
The FERC has authorized us to sell energy, capacity, and ancillary services at wholesale at market-based rates and has granted us various related customary waivers and blanket approvals, including a blanket authorization to issue securities and to assume liabilities.
See “Item 1. Business—Legal, Regulatory, and Environmental Matters—Environmental Regulation” and Note 12 to the Annual Financial Statements for additional information. Furthermore, any new legislation or regulatory programs could also increase the cost of electricity production or make certain units unavailable or restricted, overall reducing the amount of reliable and affordable power available to meet our nation’s growing electricity demand.
See “Item 1. Business—Legal, Regulatory, and Environmental Matters—Environmental Regulation” and Note 9 to the Annual Financial Statements for additional information. Furthermore, any new legislation or regulatory programs could also increase the cost of electricity production or make certain units unavailable or restricted, overall reducing the amount of reliable and affordable power available to meet our nation’s growing electricity demand.
Furthermore, there remains substantial uncertainty regarding the nuclear industry’s permanent disposal of SNF, which could result in substantial additional costs to us that cannot be predicted. See Note 12 to the Annual Financial Statements for additional information on SNF. Our commercial and operational activities may constrain our liquidity or require excessive levels of financial support.
Furthermore, there remains substantial uncertainty regarding the nuclear industry’s permanent disposal of SNF, which could result in substantial additional costs to us that cannot be predicted. See Note 9 to the Annual Financial Statements for additional information on SNF. Our commercial and operational activities may constrain our liquidity or require excessive levels of financial support.
Recently, certain state legislatures have considered bills that could materially affect our ability to operate our coal-fueled generation facilities. Furthermore, other recent EPA rules (e.g., the EPA MATS, CCR, and ELG Rules) could have a significant impact on our business as discussed herein. Each of these rules are currently subject to ongoing legal challenges.
Recently, certain state legislatures have considered bills that could materially affect our ability to operate our coal-fueled generation facilities. Furthermore, other EPA rules (e.g., the CCR and ELG Rules) could have a significant impact on our business as discussed herein. Each of these rules are currently subject to ongoing legal challenges.
The risks and uncertainties associated with our nuclear generation include, among other things: • impairment of reactor operation and safety systems, unscheduled outages or unexpected costs due to equipment, mechanical, structural, or other problems, inadequacy or lapses in maintenance protocols, human error, or force majeure; • costs and liabilities relating to the procurement, safeguarding, storage, handling, treatment, transport, release, use, and disposal of nuclear fuel and other radioactive materials, including the costs of storing and maintaining SNF at our on-site dry cask storage facility; • potential impacts of natural disasters, terrorist or other attacks, cybersecurity threats and (or) cyber-related attacks, or other unforeseen events, and the costs of preventing, preparing for, and responding to any such events; • limitations on the amounts and types of insurance coverage commercially available; • the technological and financial aspects of modifying or decommissioning nuclear facilities at the end of their useful lives; • extensive regulation associated with ownership and operation of nuclear facilities (see also “—Regulatory, Environmental, and Legal Risks—Our ownership and operation of a nuclear power facility subjects us to regulations, costs, and liabilities uniquely associated with these types of facilities.”); and • uncertainties surrounding public perception of nuclear generation, as well as the potential for a serious incident at Susquehanna or another nuclear facility, which could adversely affect the demand for nuclear power and could lead to increased regulation of the nuclear power industry.
The risks and uncertainties associated with our nuclear generation include, among other things: • impairment of reactor operation and safety systems, unscheduled outages or unexpected costs due to equipment, mechanical, structural, or other problems, inadequacy or lapses in maintenance protocols, human error, or force majeure; • costs and liabilities relating to the procurement, safeguarding, storage, handling, treatment, transport, release, use, and disposal of nuclear fuel and other radioactive materials, including the costs of storing and maintaining SNF at our on-site dry cask storage facility; • potential impacts of natural disasters, terrorist or other attacks, cybersecurity threats and (or) cyber-related attacks, or other unforeseen events, and the costs of preventing, preparing for, and responding to any such events; • limitations on the amounts and types of insurance coverage commercially available; • the technological and financial aspects of modifying or decommissioning nuclear facilities at the end of their useful lives; 16 Form 10-K Table of Contents • extensive regulation associated with ownership and operation of nuclear facilities (see also “—Regulatory, Environmental, and Legal Risks—Our ownership and operation of a nuclear power facility subjects us to regulations, costs, and liabilities uniquely associated with these types of facilities.”); and • uncertainties surrounding public perception of nuclear generation, as well as the potential for a serious incident at Susquehanna or another nuclear facility, which could adversely affect the demand for nuclear power and could lead to increased regulation of the nuclear power industry.
Continued efforts to address perceived capacity market design issues are ongoing, and we cannot predict the outcome of these market reforms or their impact on future capacity revenues. See Note 12 to the Annual Financial Statements for additional information on the PJM capacity market, systemic risks, BRA delays, and related legal actions.
Continued efforts to address perceived capacity market design issues are ongoing, and we cannot predict the outcome of these market reforms or their impact on future capacity revenues. See Note 9 to the Annual Financial Statements for additional information on the PJM capacity market, systemic risks, BRA delays, and related legal actions.
In addition, Susquehanna will be obligated to continue storing SNF if the Department of Energy continues to fail to meet its contractual obligations under the Nuclear Waste Policy Act of 1982 to accept and dispose of Susquehanna’s SNF. See Note 12 to the Annual Financial Statements for additional information on this obligation.
In addition, Susquehanna will be obligated to continue storing SNF if the Department of Energy continues to fail to meet its contractual obligations under the Nuclear Waste Policy Act of 1982 to accept and dispose of Susquehanna’s SNF. See Note 9 to the Annual Financial Statements for additional information on this obligation.
See Note 12 to the Annual Financial Statements for additional information. Future adjustments to our coal ash ARO estimates may be required due to evolving regulatory programs and associated remediation requirements under federal rules and state obligations, which could have an adverse effect on our business.
See Note 9 to the Annual Financial Statements for additional information. Future adjustments to our coal ash ARO estimates may be required due to evolving regulatory programs and associated remediation requirements under federal rules and state obligations, which could have an adverse effect on our business.
See Note 9 to the Annual Financial Statements for additional information on the NDT. In addition, new or amended NRC safety and regulatory requirements may give rise to additional operation and maintenance costs and capital expenditures, and aging equipment may require more capital expenditures to keep Susquehanna operating efficiently.
See Note 6 to the Annual Financial Statements for additional information on the NDT. In addition, new or amended NRC safety and regulatory requirements may give rise to additional operation and maintenance costs and capital expenditures, and aging equipment may require more capital expenditures to keep Susquehanna operating efficiently.
See also “—Industry and Market Risks—Operation of power generation facilities involves significant risks and hazards customary to the power industry, which we cannot assure our insurance will be adequate to cover.” Additionally, an accident or other significant event at a nuclear facility within the United States or abroad, whether owned by us or others, could result in increased regulation and reduced public support for nuclear-fueled energy.
See also “—Commercial and Operational Risks—Operation of power generation facilities involves significant risks and hazards customary to the power industry, which we cannot assure our insurance will be adequate to cover.” Additionally, an accident or other significant event at a nuclear facility within the United States or abroad, whether owned by us or others, could result in increased regulation and reduced public support for nuclear-fueled energy.
See Note 12 to the Annual Financial Statements for additional information on nuclear insurance. Uninsured losses and other liabilities and expenses resulting from an incident at Susquehanna, to the extent not recovered from insurers or the nuclear industry, could be borne by us.
See Note 9 to the Annual Financial Statements for additional information on nuclear insurance. Uninsured losses and other liabilities and expenses resulting from an incident at Susquehanna, to the extent not recovered from insurers or the nuclear industry, could be borne by us.
We own minority interests in the Conemaugh and Keystone generation facilities, which are operated by other co-owners, and in the Colstrip facility, which we operate. See Note 10 to the Annual Financial Statements for additional information on jointly owned facilities.
We own minority interests in the Conemaugh and Keystone generation facilities, which are operated by other co-owners, and in the Colstrip facility, which we operate. See Note 7 to the Annual Financial Statements for additional information on jointly owned facilities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Forecasted Uses of Cash—Projected ARO and Accrued Environmental Liability Cash Flows” and Note 12 to the Annual Financial Statements for additional information on environmental remediation obligations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Forecasted Uses of Cash—Projected ARO and Accrued Environmental Liability Cash Flows” and Note 9 to the Annual Financial Statements for additional information on environmental remediation obligations.
If the assumptions underlying these ARO estimates do not materialize as expected, actual cash expenditures and costs could be materially different. See Note 11 to the Annual Financial Statements for additional information on AROs. In addition, the EPA recently finalized standards under the EPA GHG Rule for new and certain existing power plants.
If the assumptions underlying these ARO estimates do not materialize as expected, actual cash expenditures and costs could be materially different. See Note 8 to the Annual Financial Statements for additional information on AROs. In addition, the EPA finalized standards under the EPA GHG Rule in 2024 for new and certain existing power plants.
We sell our capacity, electricity, and ancillary services into competitive wholesale markets through a combination of capacity auctions, day-ahead and real-time spot markets, and bilateral agreements. Our business model depends on us successfully operating in a competitive environment and, unlike regulated utilities, we are not assured of any rate of return on capital investments through a regulated rate structure.
We sell our capacity, electricity, and ancillary services into competitive wholesale markets through a combination of capacity auctions, day-ahead and real-time spot markets, and futures contracts. Our business model depends on us successfully operating in a competitive environment and, unlike regulated utilities, we are not assured of any rate of return on capital investments through a regulated rate structure.
Since 2016, we have retired three economically nonviable coal-fired units, while our remaining coal-fired generation assets continue to be impacted by changing environmental regulations and power market economics. Although we recently reached a settlement agreement for the continued RMR operation of our Brandon Shores (a coal asset) and H.A.
Since 2016, we have retired three uneconomic coal-fired units, while our remaining coal-fired generation assets continue to be impacted by changing environmental regulations and power market economics. Although we reached a settlement agreement for the continued RMR operation of our Brandon Shores (a coal asset) and H.A.
See also “—Regulatory, Environmental, and Legal Risks—We could be impacted by changes in, or state interference with, the structure or operation of the markets in which we operate, including ongoing market restructuring in PJM.” and “—Regulatory, Environmental, and Legal Risks—We may be affected by changes in applicable laws and regulations.” Expected demand growth from the technology sector, manufacturing, and other uses of electricity, which has driven recent improvements in the outlook for the competitive wholesale power generation market, may not actually occur or be sustained.
See also “—Regulatory, Environmental, and Legal Risks—We could be impacted by changes in, or state interference with, the structure or operation of the markets in which we operate, including ongoing market restructuring in PJM.” and “—Regulatory, Environmental, and Legal Risks—We may be affected by changes in applicable laws and regulations.” 13 Form 10-K Table of Contents Expected demand growth from the technology sector, manufacturing, and other uses of electricity, which has driven recent improvements in the outlook for the competitive wholesale power generation market, may not actually occur or be sustained.
While PJM has established dates for certain upcoming PJM BRAs based upon FERC orders establishing rules for such capacity markets, we cannot guarantee those auctions will take place on those dates or at all.
While PJM has established dates for certain upcoming PJM BRAs based upon the FERC’s orders establishing rules for such capacity markets, we cannot guarantee those auctions will take place on those dates or at all.
See “Item 1. Business—Legal, Regulatory, and Environmental Matters—Environmental Regulation” and Note 12 to the Annual Financial Statements for additional information.
See “Item 1. Business—Legal, Regulatory, and Environmental Matters—Environmental Regulation” and Note 9 to the Annual Financial Statements for additional information.
As of December 31, 2024, our defined benefit pension plans, which cover certain of our retirees and employees, were underfunded by an estimated $291 million, with a total benefit liability of an estimated $1.2 billion, and we expect to continue incurring significant costs under these plans.
As of December 31, 2025, our defined benefit pension plans, which cover certain of our retirees and employees, were underfunded by an estimated $212 million, with a total benefit liability of an estimated $1.2 billion, and we expect to continue incurring significant costs under these plans.
Notable exceptions include the ability to pay dividends or distributions: (1) in an amount not to exceed the greater of $420 million and 40% of TES’s consolidated adjusted EBITDA, (2) in an unlimited amount so long as TES’s pro forma consolidated total net leverage ratio is less than or equal to 2.5 to 1.0, and (3) in an amount not to exceed the sum of: (a) the greater of $525 million and 50% of TES’s consolidated adjusted EBITDA, (b) TES’s consolidated adjusted EBITDA minus 140% of TES’s consolidated interest expense, in each case, for the period beginning June 1, 2023 (subject to compliance with either (x) a pro forma consolidated total net leverage ratio of less than or equal to 3.75 to 1.0 or (y) a fixed charge coverage ratio greater than or equal to 2.0 to 1.0), (c) equity contributions to TES, and (d) other customary “builder basket” components.
Notable exceptions include the ability to pay dividends or distributions: (1) in an amount not to exceed the gr eater of $420 million and 40% of TES’s consolidated adjusted EBITDA, (2) in an unlimited amount so long as TES’s pro forma consolidated total net leverage ratio is less than or equal to 2.5 to 1.0, and (3) in an amount not to exceed the sum of: (a) the greater of $525 million and 50% of TES’s consolidated adjusted EBITDA, (b) TES’s consolidated adjusted EBITDA minus 140% of TES’s consolidated interest expense, in each case, for the period from June 1, 2023 through the most recent fiscal quarter (subject to compliance with either (x) a pro forma consolidated total net leverage ratio of less than or equal to 3.75 to 1.0 or (y) a fixed charge coverage ratio greater than or equal to 2.0 to 1.0), (c) equity contributions to TES, and (d) other customary “builder basket” components.
Costs, conditions, denials or non-renewals, or non-compliance associated with any required permits or approvals could result in increased costs; the cessation, suspension, delay, or limitation of our operations; premature unit retirements; and monetary penalties, increased compliance obligations, or other types of sanctions. 19 F o r m 10- K Table of Contents Furthermore, certain of our operations pose risks of liability due to leakage, migration, emissions, releases, or spills of hazardous or otherwise regulated substances to the air, surface or subsurface soils, surface water, or groundwater.
Costs, conditions, denials or non-renewals, or non-compliance associated with any required permits or approvals could result in increased costs; the cessation, suspension, delay, or limitation of our operations; premature unit retirements; and monetary penalties, increased compliance obligations, or other types of sanctions. 20 Form 10-K Table of Contents Furthermore, certain of our operations pose risks of liability due to leakage, migration, emissions, releases, or spills of hazardous or otherwise regulated substances to the air, surface or subsurface soils, surface water, or groundwater.
Any of these events could adversely affect our financial condition and results of operations and (or) cause us to become bankrupt or insolvent. 24 F o r m 10- K Table of Contents TEC is a holding company; its ability to obtain funds from its subsidiaries is structurally subordinated to existing and future liabilities and preferred equity of its subsidiaries, and the agreements governing TES’s indebtedness contain certain restrictions on distributions to TEC.
Any of these events could adversely affect our financial condition and results of operations and (or) cause us to become bankrupt or insolvent. 25 Form 10-K Table of Contents TEC is a holding company; its ability to obtain funds from its subsidiaries is structurally subordinated to existing and future liabilities and preferred equity of its subsidiaries, and the agreements governing TES’s indebtedness contain certain restrictions on distributions to TEC.
See Notes 2 and 4 to the Audited Financial Statements for additional information on accounting policies and fresh start accounting. The amount and terms of our indebtedness could adversely affect our financial condition and impair our ability to operate our business .
See Notes 1 and 20 to the Audited Financial Statements for additional information on accounting policies and fresh start accounting. The amount and terms of our indebtedness could adversely affect our financial condition and impair our ability to operate our business .
Any debt financing could involve covenants limiting our financial, operational, and strategic flexibility, make it more difficult for us to obtain additional capital, and (or) result in additional financial obligations to which our stockholders are structurally subordinated. In addition, the trading market for our common stock is affected by information that industry and financial analysts publish about our business.
Any debt financing could involve covenants limiting our financial, operational, and strategic flexibility, make it more difficult for us to obtain additional capital, and (or) result in additional financial obligations to which our stockholders are structurally subordinated. 26 Form 10-K Table of Contents In addition, the trading market for our common stock is affected by information that industry and financial analysts publish about our business.
No assurance can be provided that any such transaction will result in the anticipated benefits to our business or stockholders. Regulatory, Environmental, and Legal Risks Our business is subject to extensive energy-related regulation and oversight.
No assurance can be provided that any such transaction will result in the anticipated benefits to our business or stockholders. See also “—Risks Related to the Cornerstone Acquisition.” Regulatory, Environmental, and Legal Risks Our business is subject to extensive energy-related regulation and oversight.
See also “—We may be affected by changes in applicable laws and regulations.” 20 F o r m 10- K Table of Contents There is uncertainty related to the future profitability of our fossil fuel-fired power generation business and the amount and timing of associated environmental costs.
See also “—We may be affected by changes in applicable laws and regulations.” 21 Form 10-K Table of Contents There is uncertainty related to the future profitability of our fossil fuel-fired power generation business and the amount and timing of associated environmental costs.
Wagner (formerly a coal asset, now operating primarily on fuel oil) facilities through May 2029, we do not currently anticipate that those assets will run beyond that date unless PJM continues to require their operation to maintain grid reliability.
Wagner (formerly a coal asset, now operating primarily on fuel oil) facilities through May 2029, those assets may not continue to run beyond that date unless PJM continues to require their operation to maintain grid reliability.
See also “—Regulatory, Environmental, and Legal Risks—We could be impacted by changes in, or state interference with, the structure or operation of the markets in which we operate, including ongoing market restructuring in PJM.” 13 F o r m 10- K Table of Contents Our business is subject to extensive regulation, which may increase our costs, reduce our revenues, or limit operation of our facilities.
See also “—Regulatory, Environmental, and Legal Risks—We could be impacted by changes in, or state interference with, the structure or operation of the markets in which we operate, including ongoing market restructuring in PJM.” Our business is subject to extensive regulation, which may increase our costs, reduce our revenues, or limit operation of our facilities.
If our commercial risk management activities are unable to predict or manage the market risk inherent in our operations, economic losses or other costs to our business could result. Additionally, our commercial risk management activities could contribute to significant volatility in our financial results.
If our commercial risk management activities are unable to predict or manage the market risk inherent in our operations, economic losses or other costs to our business could result. 15 Form 10-K Table of Contents Additionally, our commercial risk management activities could contribute to significant volatility in our financial results.
See also “—Regulatory, Environmental, and Legal Risks.” Our business could be adversely affected by events outside of our control, including armed conflicts, war, terrorist attacks or threats, pandemics, natural disasters, cyber-based attacks, or other significant events.
See also “—Regulatory, Environmental, and Legal Risks.” 14 Form 10-K Table of Contents Our business could be adversely affected by events outside of our control, including armed conflicts, war, terrorist attacks or threats, government shutdowns, pandemics, natural disasters, cyber-based attacks, or other significant events.
Furthermore, due to rising insurance costs and changes in the insurance markets, we cannot provide any assurance that our insurance coverage will continue to be available at economic rates or at all. 14 F o r m 10- K Table of Contents Our activities related to hedging and asset management may result in economic losses and (or) volatility in our financial results.
Furthermore, due to rising insurance costs and changes in the insurance markets, we cannot provide any assurance that our insurance coverage will continue to be available at economic rates or at all. Our activities related to hedging and asset management may result in economic losses and (or) volatility in our financial results.
See “Item 1. Business—Legal, Regulatory, and Environmental Matters—Environmental Regulation” and Note 12 to the Annual Financial Statements for additional information on new water, waste, air, and climate rules recently finalized by the EPA. 22 F o r m 10- K Table of Contents The availability and cost of emission allowances could negatively impact our operating costs.
See “Item 1. Business—Legal, Regulatory, and Environmental Matters—Environmental Regulation” and Note 9 to the Annual Financial Statements for additional information on new water, waste, air, and climate rules recently finalized by the EPA. The availability and cost of emission allowances could negatively impact our operating costs.
We currently expect a significant number of shares of our common stock to be issued in May 2025 and May 2026 upon the vesting of certain existing awards under equity compensation plans, and those shares will become unrestricted in May 2026.
We currently expect a significant number of shares of our common stock to be issued and (or) become unrestricted in May 2026 upon the vesting and (or) release from lock-up of shares pursuant to certain existing awards under equity compensation plans.
Although the safety record of nuclear reactors generally has been very good, accidents and other unforeseen problems have occurred both in the United States and abroad. The consequences of a major incident could be significant, including loss of life, destruction of property, and environmental damage.
Our ownership and operation of Susquehanna subjects us to substantial risks associated with nuclear generation. Although the safety record of nuclear reactors generally has been very good, accidents and other unforeseen problems have occurred both in the United States and abroad. The consequences of a major incident could be significant, including loss of life, destruction of property, and environmental damage.
The three largest TE C stockholders collectively own approximately 30% of our outstanding common stock. Large holders such as these may be able to significantly affect matters requiring approval by our stockholders, including but not limited to the election of directors and the approval of mergers or other business combination transactions.
Large holders such as these may be able to significantly affect matters requiring approval by our stockholders, including but not limited to the election of directors and the approval of mergers or other business combination transactions.
The issuance of equity securities or securities convertible into equity may dilute the value of our existing stockholders’ equity. Convertible securities could also be subject to conversion ratio adjustments pursuant to which certain events may increase the ultimate number of issuable equity securities.
Convertible securities could also be subject to conversion ratio adjustments pursuant to which certain events may increase the ultimate number of issuable equity securities.
Under PJM’s Capacity Performance model, we may be (and have in the past been) subject to substantial monetary penalties for failing to meet the Capacity Performance requirements set forth by PJM in certain emergency events.
Under PJM’s Capacity Performance model, we may be (and have in the past been) subject to substantial monetary penalties for failing to meet the Capacity Performance requirements set forth by PJM in certain emergency events. For example, certain of our generation facilities incurred Capacity Performance penalties for failing to meet PJM’s Capacity Performance requirements during Winter Storm Elliott in 2022.
In addition, laws and regulations governing emission allowance programs are changing and could continue to change in the future, which could have a negative impact on available allowances, our ability to purchase allowances, or the price of additional allowances. See Note 12 to the Annual Financial Statements for additional information on the EPA CSAPR and nitrogen oxides requirements.
In addition, laws and regulations governing emission allowance programs are changing and could continue to change in the future, which could have a negative impact on available allowances, our ability to purchase allowances, or the price of additional allowances.
The NRC may modify, suspend, or revoke operating licenses and impose civil or criminal penalties for failure to comply with the Atomic Energy Act or the terms of nuclear operating licenses. The current facility operating licenses for our two units at Susquehanna expire in 2042 and 2044.
The NRC may modify, suspend, or revoke operating licenses and impose civil or criminal penalties for failure to comply with the Atomic Energy Act or the terms of nuclear operating licenses.
Any of these events could adversely impact us, our joint operations, or our ability to enter into future joint operations. 17 F o r m 10- K Table of Contents Our success depends on our ability to attract and retain an appropriately qualified workforce.
Any of these events could adversely impact us, our joint operations, or our ability to enter into future joint operations. 18 Form 10-K Table of Contents Our success depends on our ability to attract and retain an appropriately qualified workforce. Our ability to attract and retain key employees is important to both our operational and financial performance.
This could result in a material and adverse effect on our consolidated income tax provision, financial position, and net income/loss for the period for which such determinations are made. Our ability to utilize our tax attributes, including net operating loss carryforwards, remaining following Emergence, if any, may be limited.
This could result in a material and adverse effect on our consolidated income tax provision, financial position, and net income/loss for the period for which such determinations are made.
If we identify material weaknesses in the future or otherwise fail to implement or maintain effective internal controls over financial reporting, we may not be able to accurately or timely comply with our financial reporting obligations, which may subject us to adverse regulatory consequences, negatively affect our business, harm investor confidence, and (or) reduce the market price of our common stock.
If we identify material weaknesses in the future or otherwise fail to maintain effective internal controls over financial reporting, we may not be able to accurately or timely comply with our financial reporting obligations, which may subject us to adverse regulatory consequences, negatively affect our business, harm investor confidence, and (or) reduce the market price of our common stock. 27 Form 10-K Table of Contents Risks Related to the Cornerstone Acquisition The proposed Cornerstone Acquisition is subject to a number of conditions which, if not satisfied or waived, could delay or impair our ability to complete the transactions on the agreed terms or at all.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Financial Condition and Results of Operations—Capacity Markets— Capacity Performance Event ” and “—Regulatory, Environmental, and Legal Risks.” Additionally, under the AWS PPA, Susquehanna has committed to certain delivery quantities over time and reliability standards and AWS may be entitled to contractual or other remedies in the event of Susquehanna’s non-performance.
See also “—Regulatory, Environmental, and Legal Risks.” Additionally, under the AWS PPA, we have committed to certain delivery quantities over time with agreed reliability standards and AWS may be entitled to contractual or other remedies in the event of our non-performance.
Furthermore, transmission constraints and outages, including line maintenance outages, can cause transmission congestion that negatively impacts energy prices at our facilities, which could affect the realized margins of our generation fleet.
Furthermore, transmission constraints and outages, including line maintenance outages, can cause transmission congestion that negatively impacts energy prices at our facilities, which could affect the realized margins of our generation fleet. The rates for transmission capacity from our facilities are set by others and thus are subject to changes outside of our control, some of which could be significant.
See also “Item 1. Business—Our Strategies—Optimize risk management program and hedging.” Nonetheless, such activities may not effectively manage or fully eliminate risks as expected due to differing conditions than those assumed or forecasted, including those related to demand, pricing, volatility, market correlations, generation facility availability, unforeseen market disruptions, and weather events.
Business—Our Strategies— Continue to focus on our core generation fleet that provides stable earnings and cash flows through operational excellence, high reliability, capital discipline, and prudent risk management .” Nonetheless, such activities may not effectively manage or fully eliminate risks as expected due to differing conditions than those assumed or forecasted, including those related to demand, pricing, volatility, market correlations, generation facility availability, unforeseen market disruptions, and weather events.
We also enter into service contracts relating to critical operational and maintenance activities. Continued delivery of vital supplies and equipment and performance of vital services is dependent upon the continuing viability of our contractual counterparties.
Continued delivery of vital supplies and equipment and performance of vital services is dependent upon the continuing viability of our contractual counterparties.
As a newly public company, we are or will be required to comply with additional laws, regulations, and requirements, including but not limited to applicable SEC rules and regulations, certain provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and Nasdaq rules and requirements.
As an independent, publicly traded company, we are required to comply with additional laws, regulations, and requirements, including but not limited to applicable SEC rules and regulations, certain provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), including maintaining internal control over financial reporting and reporting any material weaknesses in our control, and Nasdaq rules and requirements.
We are also subject to the risk of organized actions by unionized employees which, as of December 31, 2024, represented approximately 43% of our workforce.
We are also subject to the risk of organized actions by unionized employees which represent a significant proportion of our workforce.
There can be no assurance that analysts will continue to cover our business or that any such coverage will be favorable or accurate. 25 F o r m 10- K Table of Contents Stockholders may have a limited ability to influence our business and affairs due to a number of factors.
There can be no assurance that analysts will continue to cover our business or that any such coverage will be favorable or accurate. Stockholders may have a limited ability to influence our business and affairs due to a number of factors. The four largest TE C stockholders collectively own approximately 33% of our outstanding shares of common stock.
See Note 12 to the Annual Financial Statements for additional information on our legal matters. 23 F o r m 10- K Table of Contents Financial and Equity Risks We may not have sufficient access to financing for our business.
Our insurance may not adequately cover losses for damages claimed against us, and we do not have insurance coverage for all litigation risks. See Note 9 to the Annual Financial Statements for additional information on our legal matters. 24 Form 10-K Table of Contents Financial and Equity Risks We may not have sufficient access to financing for our business.
At any time, we may conclude that our internal controls, once tested, are not operating as designed or do not address all relevant financial reporting risks. In addition, once required to attest to control effectiveness, our independent registered public accounting firm may issue a report concluding that our internal controls over financial reporting are not effective.
At any time, we may conclude that our internal controls, once tested, are not operating as designed or do not address all relevant financial reporting risks.
Consequently, future implementation and enforcement of these rules remains uncertain at this time. 21 F o r m 10- K Table of Contents Our ownership and operation of a nuclear power facility subjects us to regulations, costs, and liabilities uniquely associated with these types of facilities.
Under the Trump Administration, the EPA is currently reconsidering many of the regulations that impact fossil fuel-fired power plants. Consequently, future implementation and enforcement of these rules remains uncertain at this time. Our ownership and operation of a nuclear power facility subjects us to regulations, costs, and liabilities uniquely associated with these types of facilities.
Damages or other remedies sought under such proceedings may be financially or operationally material, and a negative outcome could materially adversely impact our business, operations, and financial condition. While we will assess the merits of any legal proceedings and defend such matters accordingly, we may be required to incur significant expense and (or) devote significant management attention to such defenses.
We are, and in the future may be, subject to litigation or similar legal proceedings arising out of our business and operations. Damages or other remedies sought under such proceedings may be financially or operationally material, and a negative outcome could materially adversely impact our business, operations, and financial condition.
We may also issue additional shares under future grants of equity compensation awards, to raise capital, or in connection with future potential corporate alliances or acquisitions. In the future, we may attempt to obtain financing or increase capital by issuing additional shares of our common stock or by offering debt or other equity securities.
In the future, we may attempt to obtain financing or increase capital by issuing additional shares of our common stock or by offering debt or other equity securities. The issuance of equity securities or securities convertible into equity may dilute the value of our existing stockholders’ equity.
The NRC could temporarily or permanently shut down Susquehanna, require it to modify its operations, or refuse to permit a unit to restart after any planned or unplanned outage.
The current facility operating licenses for our two units at Susquehanna expire in 2042 and 2044. 22 Form 10-K Table of Contents The NRC could temporarily or permanently shut down Susquehanna, require it to modify its operations, or refuse to permit a unit to restart after any planned or unplanned outage.
Any draw down on these or other financial assurances in an event of default could adversely affect our financial position and liquidity, credit ratings, and compliance with our debt agreements and other contractual obligations. 16 F o r m 10- K Table of Contents We are exposed to credit risk, concentrations of credit risk, and counterparty risk from RTOs and ISOs, other customers, commercial counterparties, financial institutions, suppliers, and other parties.
Any draw down on these or other financial assurances in an event of default could adversely affect our financial position and liquidity, credit ratings, and compliance with our debt agreements and other contractual obligations.
These or other meteorological changes could lead to increased operating costs, capital expenses, or power purchase costs. Such climatic events could also affect the availability of a secure and economical water supply in some locations, which is essential for the continued operation of our generation facilities.
Such climatic events could also affect the availability of secure and economical fuel and water supplies in some locations, both of which are essential for the continued operation of our generation facilities.
In addition, any disposition would likely decrease our earnings and cash flows. 18 F o r m 10- K Table of Contents We could also engage in mergers, business combinations, or similar corporate transactions.
In connection with dispositions, we may also indemnify or guarantee counterparties against certain conditions or liabilities, which could result in disputes, litigation, and (or) future costs or liabilities to us. In addition, any disposition would likely decrease our earnings and cash flows. 19 Form 10-K Table of Contents We could also engage in mergers, business combinations, or similar corporate transactions.
These concentrations may impact our overall exposure to credit risk, positively or negatively, as counterparties may be similarly affected by changes in economic, regulatory, or other conditions. See Note 5 to the Annual Financial Statements for additional information. We purchase fuel, other required consumables, equipment and parts, and other critical products from a number of suppliers.
These concentrations may impact our overall exposure to credit risk, positively or negatively, as counterparties may be similarly affected by changes in economic, regulatory, or other conditions.
Our ability to attract and retain key employees is important to both our operational and financial performance. We cannot guarantee that any member of our leadership or workforce will continue to serve in any capacity for any particular period of time.
We cannot guarantee that any member of our leadership or workforce will continue to serve in any capacity for any particular period of time and we could have difficulty retaining certain key members of management beyond their currently agreed employment and compensation arrangements, many of which expire in early 2027.
The Inflation Reduction Act also includes amendments to the Internal Revenue Code of 1986, as amended (the “Code”), to create a nuclear production tax credit program.
For example, the Inflation Reduction Act includes amendments to the Internal Revenue Code of 1986, as amended (the “Code”) to, among other things, create the Nuclear PTC program which, if eliminated, could negatively impact our business. Our tax reporting is subject to audit by tax authorities.
Changes in tax law (including any elimination of the Nuclear PTC), the implementation regulations of certain tax provisions, adverse decisions by tax authorities, or the imposition of tariffs may adversely affect our business.
See Note 9 to the Annual Financial Statements for additional information on the EPA CSAPR and nitrogen oxides requirements. 23 Form 10-K Table of Contents Changes in tax law, the implementation regulations of certain tax provisions, adverse decisions by tax authorities, or changes to (and uncertainty surrounding) U.S. and international tariffs and trade may adversely affect our business.
Additionally, the imposition of new tariffs by government authorities or the increase of existing tariffs could materially increase the prices we pay for fuel, materials, supplies, equipment, parts, and (or) other critical products that are integral to our operations. Our tax reporting is subject to audit by tax authorities.
Any new or increased trade tariffs, restrictions, or controls, as well as any resulting delays or disruptions in global supply chains or shipping channels, could materially increase the prices we pay for, or negatively impact our ability to obtain, on a timely basis or at all, fuel, materials, supplies, equipment, parts, and (or) other products critical to our operations.
Because the consummation of the Plan of Reorganization resulted in an ownership change for purposes of Sections 382 and 383 of the Code, our ability to utilize any remaining tax attributes after reduction and disallowed business interest expense carryforwards is subject to limitation under Sections 382 and 383 of the Code.
Our ability to utilize our tax attributes, including net operating loss and interest carryforwards, if any, may be limited. If an "ownership change" (as defined in Sections 382 and 383 of the Code) occurs, the amount of attributes that could be used in any one year following such ownership change could be substantially limited.
Removed
Additionally, extreme weather events or sustained mild weather could result in market conditions that generate substantial gains or losses.
Added
The effects of storms, floods, and other climatic events could disrupt our operations and cause us to incur significant costs in preparing for or responding to these effects. These or other meteorological changes could lead to increased operating costs, capital expenses, or power purchase costs.
Removed
For example, during Winter Storm Elliott in 2022, certain of our generation facilities failed to meet PJM’s Capacity Performance requirements and, as a result, we incurred final aggregate net Capacity Performance penalties of $29 million. See also “Item 7.
Added
Additionally, during periods of federal government shutdowns, many government agencies cease to operate at full capacity or at all, which could result in the suspension of ongoing application processes, significant delays in regulatory approvals or other project timing, and difficulty in conducting any other business requiring government participation or approval.
Removed
The rates for transmission capacity from our facilities are set by others and thus are subject to changes outside of our control, some of which could be significant. 15 F o r m 10- K Table of Contents Our ownership and operation of Susquehanna subjects us to substantial risks associated with nuclear generation.
Added
We are exposed to credit risk, concentrations of credit risk, and counterparty risk from RTOs and ISOs, other customers, commercial counterparties, financial institutions, suppliers, and other parties.

… 56 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+1 added−0 removed12 unchanged
Biggest changeMitigation efforts also include annual cyber crisis response simulations and annual training. Third parties conduct periodic assessments on our cyber-related systems. To measure our non-nuclear cybersecurity framework maturity, we utilize internal and external audits and assessments, vulnerability testing, and governance processes. Our nuclear cybersecurity program is inspected biennially by the NRC and assessed annually by a quality assurance audit.
Biggest changeMitigation efforts also include annual cyber crisis response simulations and annual training. 29 Form 10-K Table of Contents Third parties conduct periodic assessments on our cyber-related systems. To measure our non-nuclear cybersecurity framework maturity, we utilize internal and external audits and assessments, vulnerability testing, and governance processes.
Risk Factors—Industry and Market Risks—Our business could be adversely affected by events outside of our control, including armed conflicts, war, terrorist attacks or threats, pandemics, natural disasters, cyber-based attacks, or other significant events.” for additional information on our cybersecurity risks. 27 F o r m 10- K Table of Contents
Risk Factors—Industry and Market Risks—Our business could be adversely affected by events outside of our control, including armed conflicts, war, terrorist attacks or threats, government shutdowns, pandemics, natural disasters, cyber-based attacks, or other significant events.” for additional information on our cybersecurity risks. 30 Form 10-K Table of Contents
Risk Factors—Industry and Market Risks—Our business could be adversely affected by events outside of our control, including armed conflicts, war, terrorist attacks or threats, pandemics, natural disasters, cyber-based attacks, or other significant events.” 26 F o r m 10- K Table of Contents Cybersecurity and Risk Mitigation Our cybersecurity policies are guided by standards or recommendations issued by, among others, the National Institute of Standards and Technology, the International Organization for Standardization, the NRC, and NERC.
Risk Factors—Industry and Market Risks—Our business could be adversely affected by events outside of our control, including armed conflicts, war, terrorist attacks or threats, government shutdowns, pandemics, natural disasters, cyber-based attacks, or other significant events.” Cybersecurity and Risk Mitigation Our cybersecurity policies are guided by standards or recommendations issued by, among others, the National Institute of Standards and Technology, the NRC, and NERC.
Nuclear vulnerability management is implemented in collaboration with Department of Homeland Security and the Cybersecurity and Infrastructure Security Agency. We have cyber incident response plans to manage significant cybersecurity incidents across different aspects of our operations.
Our nuclear cybersecurity program is inspected biennially by the NRC and assessed annually by a quality assurance audit. Nuclear vulnerability management is implemented in collaboration with Department of Homeland Security and the Cybersecurity and Infrastructure Security Agency. We have cyber incident response plans to manage significant cybersecurity incidents across different aspects of our operations.
Cybersecurity incidents are escalated based on significance to our Chief Administrative Officer, Chief Nuclear Officer, Chief Fossil Officer, General Counsel, Chief Financial Officer, Chief Executive Officer, Audit Committee, and (or) Board of Directors. Cybersecurity Governance The Audit Committee oversees our cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks.
Cybersecurity incidents are escalated based on significance to our Chief Administrative Officer, Chief Nuclear Officer, Chief Operating Officer, General Counsel, Chief Financial Officer, President, Chief Executive Officer, Audit Committee, and (or) Board of Directors.
Added
As of the date of this Report, we are not aware of previous cybersecurity incidents that have materially affected or are reasonably like to materially affect the Company. Cybersecurity Governance The Audit Committee oversees our cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks.

Item 2. Properties

Properties — owned and leased real estate

5 edited+0 added−0 removed0 unchanged
Biggest changeBethel 608 100 % 608 Natural Gas Baseload PA Conemaugh (b) (d) 1,736 22.22 % 386 Coal Intermediate PA Keystone (b) (d) 1,724 12.34 % 213 Coal Intermediate PA Camden 145 100 % 145 Natural Gas Peaker NJ Total 13,483 10,374 Other Power Markets WECC Colstrip Unit 3 (b) 740 30 % 222 Coal Baseload MT ISO-NE Dartmouth 80 100 % 80 Natural Gas/Oil Peaker MA Total 820 302 Generation Fleet 14,303 10,676 __________________ (a) Generation capacity (summer rating) is based on factors, among others, such as operating experience and physical conditions, which may be subject to revision.
Biggest changeBethel 607 100 % 607 Natural Gas Baseload PA Conemaugh (b) (d) 1,763 22.22 % 392 Coal Intermediate PA Keystone (b) (d) 1,724 12.34 % 213 Coal Intermediate PA Total 16,017 12,886 WECC Colstrip Unit 3 (b) 740 30 % 222 Coal Baseload MT Total 740 222 Generation Fleet 16,757 13,108 __________________ (a) Generation capacity (summer rating, where applicable) is based on factors, among others, such as operating experience and physical conditions, which may be subject to revision.
(b) See Note 10 to the Annual Financial Statements for additional information on jointly owned facilities. (c) Coal-fired electric generation is restricted during the EPA Ozone Season, which is May 1 to September 30 of each year. (d) Coal-fired electric generation is required to cease at Brunner Island, Keystone, and Conemaugh by December 2028.
(b) See Note 7 to the Annual Financial Statements for additional information on jointly owned facilities. (c) Coal-fired electric generation is restricted during the EPA Ozone Season, which is May 1 to September 30 of each year.
PROPERTIES GENERATION FLEET AS OF DECEMBER 31, 2024 Generation Facility MW Capacity (a) Percentage Ownership MW Ownership Fuel Type Plant Type State PJM Susquehanna (b) 2,476 90 % 2,228 Nuclear Baseload PA Martins Creek 1,705 100 % 1,705 Natural Gas/Oil Peaker PA Montour 1,528 100 % 1,528 Natural Gas Peaker PA Brunner Island (c) (d) 1,429 100 % 1,429 Coal/Natural Gas Intermediate PA Brandon Shores (e) 1,289 100 % 1,289 Coal Peaker MD H.A.
PROPERTIES GENERATION FLEET AS OF DECEMBER 31, 2025 Generation Facility MW Capacity (a) Percentage Ownership MW Ownership Fuel Type Plant Type State PJM Susquehanna (b) 2,494 90 % 2,245 Nuclear Baseload PA Guernsey 1,771 100 % 1,771 Natural Gas Baseload OH Martins Creek 1,710 100 % 1,710 Natural Gas/Fuel Oil Peaker PA Montour 1,505 100 % 1,505 Natural Gas Peaker PA Brunner Island (c) (d) 1,419 100 % 1,419 Natural Gas/Coal Intermediate PA Brandon Shores (e) 1,273 100 % 1,273 Coal RMR MD Freedom 1,049 100 % 1,049 Natural Gas Baseload PA H.A.
Wagner (e) 843 100 % 843 Natural Gas/Oil Peaker MD Lower Mt.
Wagner (e) 702 100 % 702 Fuel Oil RMR MD Lower Mt.
(e) See Note 10 to the Annual Financial Statements for additional information on the Brandon Shores and H.A. Wagner deactivations and RMR proceedings.
(d) Coal-fired electric generation is required to cease at Brunner Island by December 31, 2028 and at Keystone and Conemaugh by December 31, 2034. (e) See Note 3 to the Annual Financial Statements for additional information on the Brandon Shores and H.A. Wagner RMR arrangements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

6 edited+5 added−20 removed0 unchanged
Biggest changeOn February 20, 2025, FERC denied relief in the Exelon 205 proceeding and initiated a new Section 206 proceeding directing PJM to show cause within 30 days why its tariff is just and reasonable in light of potential discrimination around the treatment of co-located load or, in the alternative, to propose changes to its tariff to address the treatment of co-located load (the “Co-Located Load PJM Tariff proceeding”).
Biggest changeFinally, in November 2024, Constellation filed a complaint at the FERC alleging that PJM’s tariff is unjust and unreasonable because it is silent on how to treat fully isolated co-located load. 31 Form 10-K Table of Contents In February 2025, the FERC denied relief in the Exelon 205 Proceeding, consolidated the records and proceedings from the other proceedings, and initiated a new Section 206 proceeding directing PJM to show cause why its tariff is just and reasonable in light of potential discrimination around the treatment of co-located load or, in the alternative, to propose changes to its tariff to address the treatment of co-located load.
First, in August 2024, Exelon made a series of filings on behalf of each of its electric utility subsidiaries to amend portions of the PJM tariff that would clarify that co-located load arrangements must be categorized as either network load or point-to-point service (the “Exelon 205 proceeding”).
In August 2024, Exelon sought to amend portions of the PJM tariff to clarify that co-located load arrangements must be categorized as either network load or point-to-point service (the “Exelon 205 Proceeding”), making them subject to the same transmission charges and fees for transmission-related services as grid-connected load pays.
In June 2024, PJM filed at FERC an Amended Interconnection Service Agreement (the “Susquehanna ISA Amendment”) executed between the ISA Parties permitting Susquehanna to decrease by up to 480 MW the amount of power supply that it would otherwise provide to the power grid and now intends to sell to AWS instead.
As previously disclosed, in November 2024, the FERC issued an order denying an Amended Interconnection Service Agreement (the “ISA Amendment”) between PJM, a subsidiary of PPL Corporation, and Susquehanna that would have permitted Susquehanna to decrease by up to 480 MW the amount of power it would have otherwise supplied to the grid and instead supply that power directly to AWS in a co-located “behind-the-meter” arrangement.
In December, FERC issued an order stating that it would address the request for rehearing in a future order, which FERC has not yet issued. Due to FERC’s decision not to address the merits of the motion for rehearing, Talen has filed an appeal in the U.S. Court of Appeals for the Fifth Circuit.
Talen promptly filed a motion for rehearing of the denial and the FERC subsequently stated, in an order issued in December 2024 and reaffirmed in April 2025, that it would address our request for rehearing in a future order. We subsequently filed an appeal in the U.S.
See Note 12 to the Annual Financial Statements for information about other material legal proceedings to which we are subject.
When final, the new PJM tariff language will govern how large load may co-locate with generation facilities in PJM. See Note 9 to the Annual Financial Statements for information about other material legal proceedings to which we are subject.
Following the technical conference, FERC requested comments be filed by December 9, 2024. Talen both participated in the technical conference and filed comments. Third, in November 2024, Constellation filed a complaint at FERC alleging that PJM’s tariff is unjust and unreasonable because it is silent on how to treat fully isolated co-located load (the “Constellation 206 proceeding”).
In November 2024, the FERC held a separately-docketed technical conference on co-located load and requested comments. Talen both participated in the technical conference and filed comments.
Removed
ITEM 3. LEGAL PROCEEDINGS Susquehanna ISA Amendment. Under a prior, FERC-accepted ISA between PJM, Susquehanna, and a subsidiary of PPL Corporation (“PPL”) (collectively, the “ISA Parties”), Susquehanna is permitted to decrease by up to 300 MW the amount of power supply that it would otherwise provide to the power grid within PPL’s service area.
Added
Court of Appeals for the Fifth Circuit, which was transferred to the Third Circuit in November 2025. Meanwhile, in June 2025, we entered into an amended AWS PPA to, among other things, transition to a “front-of-the-meter” arrangement with AWS. See “—Our Key Markets and Revenue Streams—Contracted Revenues—AWS PPA” for additional information.
Removed
Susquehanna currently provides that power to load via load-owned transmission directly connected to Susquehanna rather than supplying load from the power grid.
Added
Following this revision, the load that was previously behind-the-meter was moved into PJM’s load forecast and, as a result, in October 2025, PJM filed a waiver request at the FERC to restore 148 MW of capacity interconnection rights (“CIRs”) to Susquehanna and add the corresponding generation back into the capacity auction.
Removed
PJM previously concluded such increase in the amount of withheld power would have no reliability impacts on the grid.
Added
The FERC approved the request and the additional CIRs were available for the 2027/2028 BRA in December 2025 and should continue to be available for future auctions. In January 2026, following approval of the CIR waiver request, the ISA Amendment appeal was voluntarily dismissed by Talen. This matter is now closed. FERC Co-Location Proceedings.
Removed
In June 2024, despite the Susquehanna ISA Amendment being applicable solely to the PPL service area, Exelon Corporation (“Exelon”) and AEP filed a protest to the Susquehanna ISA Amendment at FERC and raised generic issues involving the direct connection of load service to generators.
Added
Several consolidation matters before the FERC are likely to shape FERC and PJM policy around co-located load.
Removed
FERC responded by issuing a deficiency letter in August 2024 seeking more information about the arrangement described in the Susquehanna ISA Amendment and separately setting a Technical Conference for November 2024 to discuss broader issues related to (i) co-located load connected directly to generation; and (ii) emerging reliability issues resulting from the dramatic rise in data center demand for power.
Added
After receipt of PJM’s proposed tariff revisions and extensive comments from stakeholders, the FERC issued an order on December 18, 2025 and outlined its views on several allowable co-location configurations, concluding with instructions to PJM to propose to the FERC final tariff language implementing these configurations. That PJM filing was made on February 23, 2026.
Removed
In September 2024, PJM provided a response to FERC’s August 2024 deficiency letter on the Susquehanna ISA Amendment and filed a Construction Service Agreement between the ISA Parties and Mid-Atlantic Interstate Transmission, LLC to facilitate certain network upgrades to ultimately accommodate a 960 MW decrease of power supply to the grid.
Removed
Talen filed its own comments in September 2024 and written testimony in the FERC Technical Conference proceeding in October 2024.
Removed
Shortly after the conclusion of the FERC Technical Conference in November 2024, FERC issued a 2-1 decision rejecting the Susquehanna ISA Amendment and Talen filed a motion for a rehearing of the FERC order within the 30-day deadline for such motions.
Removed
The prior FERC-accepted ISA between the ISA Parties permitting Susquehanna to decrease 300 MW of its current power supply from the power grid remains in place and facilitates the initial sale of power to AWS under the AWS PPA.
Removed
Delivery “behind-the-meter” of more than 300 MW of power under the AWS PPA requires that FERC approve an amended ISA between Susquehanna, PPL, and PJM.
Removed
Without an amendment we will be unable to deliver the full amount of contract volume under the AWS PPA on a behind-the-meter basis, which may require a contract renegotiation to deliver the additional power “in-front-of-the-meter.” 28 F o r m 10- K Table of Contents We are evaluating our commercial and legal options to provide the most efficient path to full development of the AWS Data Campus.
Removed
Such options include, but are not limited to, potential submission of a revised form of Susquehanna ISA Amendment or alternative contract structures with AWS.
Removed
If the Company is unable commercially or legally to resolve the Susquehanna ISA Amendment approval impediments and realize the full development of the AWS Data Campus, there may be a material impact on our future results of operations, and (or) financial condition.
Removed
Separate and apart from the Susquehanna ISA proceeding, there are three other pending proceedings before FERC that could shape policy around co-located load, and thus impact the result of the Susquehanna ISA proceeding.
Removed
In effect, the proposed amendments intended to clarify that co-located load arrangements would be treated as either needing network or point-to-point service, making them subject to the same transmission charges and fees for transmission-related services that would be applicable if the same load had located at other points on the PJM grid.
Removed
Exelon requested a December 2, 2024 effective date, but in November 2024, FERC issued a deficiency letter stating that FERC required more information to make a determination.
Removed
Second, in November 2024, FERC held a technical conference on co-located load to discuss, among other things, the impacts of various co-location agreements, whether and how large co-located loads receive wholesale market services or benefits from the transmission system, the cost and impact of back-up services for large co-located load and state regulatory and policy issues (the “Co-Location Technical Conference proceeding”).
Removed
The complaint suggests that FERC import into the tariff certain terms and conditions from a non-binding guidance document PJM shared with stakeholders or set the proceeding for settlement discussions on an expedited basis with a mediator.
Removed
The order initiating the Co-Located Load PJM Tariff proceeding consolidated the records and proceedings from the Co-Location Technical Conference and Constellation 206 proceedings into the Co-Located Load PJM Tariff proceeding, which will all be considered together by FERC.
Removed
The order also established a timeline for comments to PJM’s to-be filed showing or proposed tariff revisions (30 days after PJM’s filing) and a tentative timeline for FERC to rule on the matter in the second half of 2025. The Company intends to be an active participant in the PJM and FERC process to revise PJM’s tariff.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−5 removed6 unchanged
Biggest changeDividends The holders of shares of common stock are entitled to receive dividends and other distributions (payable in cash, property, or capital stock of the Company) when, as, and if declared thereon by the Board of Directors from time-to-time out of any assets or funds of the Company legally available for the payment of dividends and shall share equally on a per share basis in such dividends and distributions.
Biggest changeSuch information shall not be incorporated by reference into any registration statement or other filings with the SEC, whether made before or after the date hereof, regardless of any general incorporation language in such filing. 32 Form 10-K Table of Contents Dividends The holders of shares of our common stock are entitled to receive dividends and other distributions (payable in cash, property, or capital stock of the Company) when, as, and if declared thereon by the Board of Directors from time-to-time out of any assets or funds of the Company legally available for the payment of dividends and shall share equally on a per share basis in such dividends and distributions.
Stock Performance Graph The following performance graph compares cumulative total stockholder return on TEC’s common stock from July 10, 2024, the first day TEC’s common stock began trading on Nasdaq, through December 31, 2024 with the cumulative returns of the S&P 500 Stock Market Index and the S&P 500 Utilities Index over the same period.
Stock Performance Graph The following performance graph compares cumulative total stockholder return on TEC’s common stock from July 10, 2024, the first day TEC’s common stock began trading on Nasdaq, through December 31, 2025 with the cumulative returns of the S&P 500 Stock Market Index and the S&P 500 Utilities Index over the same period.
In May 2024, the Board of Directors approved an increase in the then-remaining SRP capacity to $1 billion through the end of 2025. In September 2024, the Board of Directors again approved an increase in the then-remaining SRP capacity to $1.25 billion through December 31, 2026.
In May 2024, the Board of Directors approved an increase in the then-remaining SRP capacity to $1 billion through the end of 2025. In September 2024, the Board of Directors approved an increase in the then-remaining capacity to $1.25 billion through the end of 2026.
Value of Investment 7/10/2024 12/31/2024 TLN $ 100.00 $ 158.02 S&P 500 100.00 104.40 S&P Utility 100.00 109.11 The information in this “Stock Performance Graph” section is being furnished solely pursuant to Item 201(e) of Regulation S-K and shall not be deemed “filed” for the purpose of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section.
Value of Investment 7/10/2024 12/31/2024 12/31/2025 TLN $ 100 $ 158 $ 294 S&P 500 100 104 122 S&P Utility 100 109 123 The information in this “Stock Performance Graph” section is being furnished solely pursuant to Item 201(e) of Regulation S-K and shall not be deemed “filed” for the purpose of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that Section.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders TEC’s common stock trades on the Nasdaq Global Select Market under the ticker symbol “TLN.” As of February 27, 2025, there was one shareholder of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information and Holders TEC’s common stock trades on the Nasdaq Global Select Market under the ticker symbol “TLN.” As of February 26, 2026, there were two shareholders of record of our common stock.
Risk Factors—Financial and Equity Risks—TEC is a holding company; its ability to obtain funds from its subsidiaries is structurally subordinated to existing and future liabilities and preferred equity of its subsidiaries, and the agreements governing TES’s indebtedness contain certain restrictions on distributions to TEC.” 30 F o r m 10- K Table of Contents Issuer Purchases of Equity Securities In October 2023, we announced that the Board of Directors approved the SRP, initially authorizing the Company to repurchase up to $300 million of TEC’s outstanding common stock through December 31, 2025.
Risk Factors—Financial and Equity Risks—TEC is a holding company; its ability to obtain funds from its subsidiaries is structurally subordinated to existing and future liabilities and preferred equity of its subsidiaries, and the agreements governing TES’s indebtedness contain certain restrictions on distributions to TEC.” Issuer Purchases of Equity Securities Our Board of Directors approved the SRP in October 2023, initially authorizing the Company to repurchase up to $300 million of the Company’s shares of common stock.
The Company has no obligation to repurchase any amount of its common stock under the SRP.
The Company has no obligation to repurchase any amount of its common stock under the SRP. See Note 15 to the Annual Financial Statements for additional information on the SRP. There were no share repurchases, including under the SRP, during the three months ended December 31, 2025.
Removed
Such information shall not be incorporated by reference into any registration statement or other filings with the SEC, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Added
In September 2025, the Board of Directors again approved an increase in the then-remaining capacity to $2 billion through the end of 2028.
Removed
In December 2024, the Board of Directors approved the repurchase of 4,893,507 shares of common stock from affiliates of Rubric Capital Management LP for an aggregate purchase price of $1 billion. $850 million of such shares were purchased outside the SRP with the proceeds of indebtedness and the remaining $150 million were purchased under the SRP.
Added
As of December 31, 2025, there was $2 billion of remaining capacity under the SRP.
Removed
See Note 18 to the Annual Financial Statements for additional information on the SRP and other share repurchases.
Removed
The following table contains information regarding our purchases of our common stock during each month of 2024: Monthly Period Total number of shares purchased (a) Average price paid per share (b) Total number of shares purchased as part of publicly announced plan (c) Approximate dollar value that may yet be purchased under the plan (d) January 225,000 $ 63.17 225,000 $ 286 February — — — 286 March 268,000 90.38 268,000 262 April — — — 262 May — — — 1,000 June 5,280,889 115.99 5,280,889 387 July 2,413,793 116.00 2,413,793 107 August — — — 107 September 146,033 144.83 146,033 1,229 October — — — 1,229 November — — — 1,229 December 4,893,507 204.35 734,026 1,079 Total 13,227,222 $ 147.58 9,067,741 $ 1,079 __________________ (a) Includes 9,067,741 shares repurchased through the SRP, which includes 5,275,862 shares repurchased in an equity tender offer and 3,791,879 shares repurchased in bilateral transactions under the SRP.
Removed
Also includes 4,159,481 shares repurchased in a bilateral transaction outside of the SRP. See Note 18 to the Annual Financial Statements for additional information on these transactions. (b) Excludes transaction costs and excise taxes. (c) Represents shares repurchased under the SRP. See above for a description of the SRP. (d) Dollars in millions.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

60 edited+47 added−97 removed31 unchanged
Biggest changeResults for the Year Ended December 31, 2024 (Successor), the Period from May 18 through December 31, 2023 (Successor), the Period from January 1 through May 17, 2023 (Predecessor), and the Year Ended December 31, 2022 (Predecessor) The following table and subsequent sections display the results of operations for the Successor and Predecessor periods: Successor Predecessor Year Ended December 31, 2024 May 18 through December 31, 2023 January 1 through May 17, 2023 Year Ended December 31, 2022 Capacity revenues $ 192 $ 133 $ 108 $ 377 Energy and other revenues 1,881 1,156 1,042 2,035 Unrealized gain (loss) on derivative instruments (Note 5) 42 55 60 677 Operating Revenues (Note 6) 2,115 1,344 1,210 3,089 Fuel and energy purchases (694) (424) (176) (938) Nuclear fuel amortization (123) (108) (33) (94) Unrealized gain (loss) on derivative instruments (Note 5) 20 (3) (123) (52) Energy Expenses (797) (535) (332) (1,084) Operating Expenses Operation, maintenance and development (592) (358) (285) (610) General and administrative (163) (93) (51) (106) Depreciation, amortization and accretion (Note 10) (298) (165) (200) (520) Impairments (Note 10) (1) (3) (381) — Operational restructuring — — — (488) Other operating income (expense), net (38) (30) (37) (40) Operating Income (Loss) 226 160 (76) 241 Nuclear decommissioning trust funds gain (loss), net (Note 9) 178 108 57 (184) Interest expense and other finance charges (Note 13) (238) (176) (163) (359) Reorganization income (expense), net (Note 4) — — 799 (812) Consolidation of subsidiary gain (loss) (Note 2) — — — (170) Gain (loss) on sale of assets, net 884 7 50 — Other non-operating income (expense), net 61 95 10 (44) Income (Loss) Before Income Taxes 1,111 194 677 (1,328) Income tax benefit (expense) (Note 7) (98) (51) (212) 35 Net Income (Loss) 1,013 143 465 (1,293) Less: Net income (loss) attributable to noncontrolling interest 15 9 (14) (4) Net Income (Loss) Attributable to Stockholders (Successor) / Member (Predecessor) $ 998 $ 134 $ 479 $ (1,289) 35 Form 10-K Table of Contents Successor Period — Year Ended December 31, 2024 Net Income (Loss) Attributable to Stockholders totaled $998 million for the year ended December 31, 2024 (Successor).
Biggest changeUnrealized 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. 36 Form 10-K Table of Contents Results for the Years Ended December 31, 2025 (Successor) and 2024 (Successor) The following table and subsequent sections display the results of operations: Successor Favorable (Unfavorable) Variance Year Ended December 31, 2025 2024 Energy and other revenues $ 2,141 $ 1,881 $ 260 Capacity revenues 485 192 293 Unrealized gain (loss) on derivative instruments (Note 2) (45) 42 (87) Operating Revenues (Note 3) 2,581 2,115 466 Fuel and energy purchases (908) (694) (214) Nuclear fuel amortization (97) (123) 26 Unrealized gain (loss) on derivative instruments (Note 2) (61) 20 (81) Energy Expenses (1,066) (797) (269) Operating Expenses Operation, maintenance and development (620) (592) (28) General and administrative (includes stock-based compensation of $(526) and $(33)) (Note 13) (624) (163) (461) Depreciation, amortization and accretion (Note 7) (279) (298) 19 Impairments (Note 7) — (1) 1 Other operating income (expense), net (82) (38) (44) Operating Income (Loss) (90) 226 (316) Nuclear decommissioning trust funds gain (loss), net (Note 6) 182 178 4 Interest expense and other finance charges (Note 10) (302) (238) (64) Gain (loss) on sale of assets, net (Note 17) 34 884 (850) Other non-operating income (expense), net 10 61 (51) Income (Loss) Before Income Taxes (166) 1,111 (1,277) Income tax benefit (expense) (Note 4) (53) (98) 45 Net Income (Loss) (219) 1,013 (1,232) Less: Net income (loss) attributable to noncontrolling interest — 15 15 Net Income (Loss) Attributable to Stockholders (Successor) $ (219) $ 998 $ (1,217) Year Ended December 31, 2025 (Successor) compared to Year Ended December 31, 2024 (Successor) Net Income (Loss) Attributable to Stockholders decreased by $(1.2) billion, primarily driven by the factors discussed below. • Operating Revenues, net of Energy Expenses. $197 million favorable increase, primarily due to the following: ◦ Energy and other revenues, net of Fuel and energy purchases. $46 million favorable increase.
Such judgments and assumptions may include significant subjectivity due to the inherent uncertainties of future events which exist to such an extent that there is a reasonable likelihood that materially different amounts would have been reported under different conditions or if different assumptions had been used.
Such judgments and assumptions may include significant subjectivity due to the inherent uncertainties of future events that exist to such an extent that there is a reasonable likelihood that materially different amounts would have been reported under different conditions or if different assumptions had been used.
This judgment typically includes, among other things, an evaluation of the contract, its expected cash flows, and the activity levels of its principal market. Additionally, judgment is required to determine if a commodity contract intended for physical delivery meets an allowable exemption prior to accounting for its income effects under the accrual accounting method rather than at fair value.
This judgment typically includes, among other things, an evaluation of the contract, its expected cash flows, and the activity levels of its principal market. Additionally, judgment is required to determine if a commodity contract intended for physical delivery meets an allowable exemption to account for its income effects under the accrual accounting method rather than at fair value.
The following table displays the estimated increase (decrease) for defined benefit pension plans of a 1% increase and a 1% decrease in the discount rate and expected return on plan assets on the postretirement benefit obligation and net periodic pension cost as of December 31, 2024 (Successor).
The following table displays the estimated increase (decrease) for defined benefit pension plans of a 1% increase and a 1% decrease in the discount rate and expected return on plan assets on the postretirement benefit obligation and net periodic pension cost as of December 31, 2025 (Successor).
Please see Note 15 to the Annual Financial Statements for the weighted-average assumptions used for the discount rate and expected return on plan assets for all plans. A variance in the discount rate or expected return on plan assets could have a significant impact on postretirement benefit obligations and annual net periodic pension costs.
See Note 12 to the Annual Financial Statements for the weighted-average assumptions used for the discount rate and expected return on plan assets for all plans. A variance in the discount rate or expected return on plan assets could have a significant impact on postretirement benefit obligations and annual net periodic pension costs.
“Energy and other revenues” relate to sales to an RTO or ISO, sales under wholesale bilateral contracts, realized hedging activity, Bitcoin revenue, and Nuclear PTC revenue. “Fuel and energy purchases” includes costs for fuel to generate electricity and settlements of financial and physical transactions related to fuel and energy purchases.
“Energy and other revenues” relate to sales to an RTO or ISO, sales under wholesale bilateral contracts, realized hedges, Bitcoin revenue, and Nuclear PTC revenue. “Fuel and energy purchases” includes costs for fuel to generate electricity and settlements of financial and physical transactions related to fuel and energy purchases.
The capacity market construct provides generation owners some opportunity for revenue visibility on a multiyear basis and is intended to provide a price signal for new generation to be built in the future. See Note 12 to the Annual Financial Statements for additional information on the PJM capacity market, systemic risks, BRA delays, and related legal actions. Capacity Prices.
The capacity market construct provides generation owners some opportunity for revenue visibility on a multiyear basis and is intended to provide a price signal for new generation to be built in the future. See Note 9 to the Annual Financial Statements for additional information on the PJM capacity market, systemic risks, auction delays, and related legal actions. Capacity Prices.
Under the PJM Reliability Pricing Model, when held on schedule, the PJM Base Residual Auction is required to be conducted in the month of May three years prior to the start of the applicable PJM Capacity Year in order for PJM to secure commitments from capacity resources.
Under the PJM Reliability Pricing Model, when held on schedule, the PJM BRA is required to be conducted in the month of May three years prior to the start of the applicable PJM Capacity Year in order for PJM to secure commitments from capacity resources.
Liquidity and Capital Resources Our liquidity and capital requirements are generally a function of: (i) debt service requirements; (ii) capital expenditures; (iii) maintenance activities; (iv) liquidity requirements for our hedging activities including cash collateral and other forms of credit support; (v) legacy environmental obligations; (vi) other working capital requirements; and (or) (vii) discretionary expenditures, including share repurchase activities.
Liquidity and Capital Resources Our liquidity and capital requirements are generally a function of: (i) debt service requirements; (ii) capital expenditures; (iii) maintenance activities; (iv) liquidity requirements for our hedging activities including cash collateral and other forms of credit support; (v) the settlement of, or forms of credit in support of, legacy asset retirement and (or) environmental obligations; (vi) other working capital requirements; and (or) (vii) discretionary expenditures, including share repurchase activities.
See Note 10 to the Annual Financial Statements for additional information on recognized impairments. Postretirement Benefit Obligations Certain of our subsidiaries sponsor postemployment benefits that include defined benefit pension plans. Accounting for defined benefit pensions involves significant estimates to determine projected benefit obligations and company contribution requirements, which inherently require assumptions be made regarding many uncertainties.
See Note 2 to the Annual Financial Statements for additional information on derivative instruments. Postretirement Benefit Obligations Certain of our subsidiaries sponsor postemployment benefits that include defined benefit pension plans. Accounting for defined benefit pensions involves significant estimates to determine projected benefit obligations and company contribution requirements, which inherently require assumptions be made regarding many uncertainties.
The credit provides support beginning when annual gross receipts decline below an equivalent $43.75/MWh, increases ratably up to $3/MWh when annual gross receipts are equivalent to $25/MWh, and is subject to potential adjustments including inflation escalators and a five-times increase in value (up to $15/MWh) for meeting prevailing wage requirements (which we expect to meet).
The credit provides support beginning when annual gross receipts decline below an equivalent $44.60 /MWh, increases ratably up to $3/MWh when annual gross receipts are equivalent to $26 /MWh, and is subject to potential adjustments including inflation escalators and a five-times increase in value (up to $15/MWh) for meeting prevailing wage requirements (which we expect to meet).
See Note 2 to the Annual Financial Statements for additional information on accounting policies for each of the following topics. 43 Form 10-K Table of Contents Derivative Instruments Derivative instruments, which are deployed by our commercial organization to manage and (or) mitigate market and commodity price risk, are presented on the Consolidated Balance Sheets at fair value and are comprised primarily of power and natural gas commodity contracts.
See Note 8 to the Annual Financial Statements for additional information on AROs. 42 Form 10-K Table of Contents Derivative Instruments Derivative instruments, which are deployed by our commercial organization to manage and (or) mitigate market and commodity price risk, are presented on the Consolidated Balance Sheets at fair value and are comprised primarily of power and natural gas commodity contracts.
Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP.
Non-GAAP measures are not intended to replace the most comparable GAAP measures as indicators of performance. Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP.
Sensitivity Actuarial Assumption 1% Increase 1% Decrease Discount rate Postretirement benefit obligation $ (100) $ 138 Net periodic pension cost 3 (5) Expected return on plan assets Net periodic pension cost (10) 10 45 Form 10-K Table of Contents Income Taxes Significant management estimates and judgments are involved to determine the provision for income taxes, deferred tax assets and liabilities, and valuation allowances.
Sensitivity Actuarial Assumption 1% Increase 1% Decrease Discount rate Postretirement benefit obligation $ (106) $ 126 Net periodic pension cost 4 (6) Expected return on plan assets Net periodic pension cost (10) 10 43 Form 10-K Table of Contents Income Taxes Significant management estimates and judgments are involved to determine the provision for income taxes, deferred tax assets and liabilities, and valuation allowances.
As our derivative contracts generally settle within future time periods supportable by commodity exchange markets and the frequent occurrence of commercial transactions, the majority of our derivative contracts utilize quoted prices in active markets or other observable market inputs to determine fair value.
As our derivative contracts generally settle within future time periods supportable by commodity exchange markets and the frequent occurrence of commercial transactions, our derivative contracts are valued using a market approach utilizing quoted prices in active markets or other observable market inputs to determine fair value.
Capacity prices are affected by supply and demand fundamentals, such as generation facility additions and retirements, capacity imports from and exports to adjacent markets, generation facility retrofit costs, non-performance risk premium penalties, demand response products, RTO/ISO demand forecasts, reserve margin targets, and (in PJM) adjustments to the PJM Market Seller Offer Cap as determined by the PJM Independent Market Monitor. 33 Form 10-K Table of Contents PJM Capacity Auctions.
Capacity prices are affected by supply and demand fundamentals, such as generation facility additions and retirements, capacity imports from and exports to adjacent markets, generation facility retrofit costs, non-performance risk premium penalties, demand response products, power demand forecasts, reserve margin targets and, in PJM, adjustments to the PJM market seller offer cap as determined by the PJM independent market monitor.
Critical Accounting Policies and Estimates Financial statements prepared in conformity with GAAP require the application of appropriate accounting policies to form the basis of estimates utilizing methods, judgments, and (or) assumptions that materially affect: (i) the measurement and carrying values of assets and liabilities as of the date of the financial statements; (ii) the revenues recognized and expenses incurred during the presented reporting periods; and (iii) financial statement disclosures of commitments, contingencies, and other significant matters.
(e) Non-recurring severance and retention costs and strategic initiative costs. 41 Form 10-K Table of Contents Critical Accounting Estimates Financial statements prepared in conformity with GAAP require the application of appropriate accounting policies to form the basis of estimates utilizing methods, judgments, and (or) assumptions that materially affect: (i) the measurement and carrying values of assets and liabilities as of the date of the financial statements; (ii) the revenues recognized and expenses incurred during the presented reporting periods; and (iii) financial statement disclosures of commitments, contingencies, and other significant matters.
We incorporate the results of the study as well as our experience, knowledge, and professional judgment to the specific characteristics of Susquehanna’s decommissioning plan to update the carrying value of the ARO. AROs are recognized at fair value at the time of installation and as an increase to PP&E.
We use the results of the study along with our experience, knowledge, and professional judgment to update Susquehanna’s decommissioning plan and the related carrying value of the ARO. AROs are recognized at fair value at the time of installation of the related asset and as an increase to PP&E.
Risk Factors—Industry and Market Risks—Our business is subject to physical, market, economic, and regulatory risks relating to weather conditions and extreme weather events.” 34 Form 10-K Table of Contents Results of Operations The results of operations presented below should be reviewed in conjunction with the Annual Financial Statements and the related notes.
Risk Factors—Industry and Market Risks—Our business is subject to physical, market, economic, and regulatory risks relating to weather conditions and extreme weather events.” Results of Operations The results of operations presented below are prepared in accordance with GAAP and should be reviewed in conjunction with the Annual Financial Statements and the related notes in this Report.
The following table displays the cleared capacity prices for completed PJM BRAs for the markets and zones in which we primarily operate: 2025/2026 2024/2025 2023/2024 2022/2023 PJM Capacity Performance ($/MW-day) (a) MAAC $ 269.92 $ 49.49 $ 49.49 $ 95.79 PPL 269.92 49.49 49.49 95.79 __________________ (a) Displayed prices are from the applicable market publications.
The following table displays the cleared capacity prices for completed PJM BRAs for the markets and zones in which we primarily operate: 2027/2028 2026/2027 2025/2026 2024/2025 2023/2024 PJM Capacity Performance ($/MWd) (a) MAAC $ 333.44 $ 329.17 $ 269.92 $ 49.49 $ 49.49 PPL 333.44 329.17 269.92 49.49 49.49 __________________ (a) Displayed prices are from the applicable market publications.
The pattern of fluctuations in our operating results varies depending on the type and location of the facilities being serviced, the capacity markets served, the maintenance requirements of our facilities, and the terms of bilateral contracts to purchase or sell electricity. Our largest recurring maintenance project is the annual spring refueling outage at Susquehanna.
The pattern of fluctuations in our operating results varies depending on the type and location of the facilities being serviced, the capacity markets served, the maintenance requirements of our facilities, and the terms of bilateral contracts to purchase or sell electricity.
As of December 31, 2024 (Successor), the expected undiscounted payments are estimated to be: 2025 2026 2027 2028 2029 Thereafter Total Accrued environmental liabilities $ 4 $ 3 $ 3 $ 4 $ 4 $ 14 $ 32 Non-nuclear AROs (a) 52 62 47 40 49 282 532 __________________ (a) Certain obligations are: (i) partially supported by surety bonds, some of which have been collateralized with cash and (or) LCs; or (ii) partially prefunded under phased installment agreements.
As of December 31, 2025 (Successor), the expected undiscounted payments of non-nuclear AROs are estimated to be: 2026 2027 2028 2029 2030 Thereafter Total Accrued environmental costs $ 3 $ 3 $ 4 $ 4 $ 3 $ 13 $ 30 Non-nuclear AROs (a) 40 53 47 56 38 255 489 __________________ (a) Certain obligations are: (i) partially supported by surety bonds, some of which have been collateralized with cash and (or) LCs; or (ii) partially prefunded under phased installment agreements.
Projected ARO and Accrued Environmental Liability Cash Flows. Certain of our subsidiaries have legal obligations to perform significant decommissioning and remediation activities associated with current operations and (or) at former generation facility sites. Our projected undiscounted spending on AROs and environmental liabilities is presented in the table below.
Projected ARO and Accrued Environmental Liability Cash Flows. Certain of our subsidiaries have legal obligations to perform significant decommissioning and remediation activities associated with current operations and (or) at former generation facility sites.
Factors Affecting Our Financial Condition and Results of Operations Earnings in future periods are subject to various uncertainties and risks. See “Cautionary Note Regarding Forward-Looking Information,” “Item 1A. Risk Factors,” and Notes 5 and 12 to the Annual Financial Statements for additional information on our risks.
See Notes 10 and 17 to the Annual Financial Statements for additional information on the financing transactions and issuance of the Unsecured Notes, and the Freedom and Guernsey Acquisitions, respectively. Factors Affecting Our Financial Condition and Results of Operations Earnings in future periods are subject to various uncertainties and risks. See “Cautionary Note Regarding Forward-Looking Information,” “Item 1A.
Our results of operations as reported in the Annual Financial Statements are prepared in accordance with GAAP. 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.
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.
Adjusted EBITDA We use Adjusted EBITDA to: (i) assist in comparing operating performance and readily view operating trends on a consistent basis from period to period without certain items that may distort financial results; (ii) plan and forecast overall expectations and evaluate actual results against such expectations; (iii) communicate with our Board of Directors, shareholders, creditors, analysts, and the broader financial community concerning our financial performance; (iv) set performance metrics for our annual short-term incentive compensation; and (v) assess compliance with our indebtedness.
Non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analyzing our results as reported under GAAP. 40 Form 10-K Table of Contents Adjusted EBITDA We use Adjusted EBITDA to: (i) assist in comparing operating performance and readily view operating trends on a consistent basis from period to period without certain items that may distort financial results; (ii) plan and forecast overall expectations and evaluate actual results against such expectations; (iii) communicate with our Board of Directors, shareholders, creditors, analysts, and the broader financial community concerning our financial performance; (iv) set performance metrics for our annual short-term incentive compensation; and (v) assess compliance with our indebtedness.
Due to such inherent uncertainties, actual results may differ substantially from estimates and (or) estimates may change materially in periods where new information becomes known. Management develops these estimates based on best available information, historical experience, and subject matter experts.
Due to such inherent uncertainties, actual results may differ substantially from estimates and (or) estimates may change materially in periods where new information becomes known. Management develops these estimates based on best available information, historical experience, and subject matter experts. See Note 1 to the Annual Financial Statements for accounting policies related to each of the following topics.
Certain agreements may contingently require payments to a guaranteed or indemnified party. See Note 12 to the Annual Financial Statements for additional information on guarantees. Financial Performance Assurances. TES has provided financial performance assurances in the form of surety bonds to third parties on behalf of certain subsidiaries for obligations including but not limited to environmental obligations and AROs.
See Note 10 to the Annual Financial Statements for additional information on the RCF and LCF. Financial Performance Assurances TES has provided financial performance assurances in the form of surety bonds to third parties on behalf of certain subsidiaries for obligations including but not limited to environmental obligations and AROs.
We serve our fossil generation fleet through a combination of self-service and contracted maintenance activity (including long-term service agreements at certain facilities). See also “Item 1A.
We maintain our fossil generation fleet through a combination of self-service and contracted maintenance activity (including long-term service agreements at certain facilities). Our largest recurring maintenance project is the annual spring refueling outage at Susquehanna. See also “Item 1A.
Specifically, our hedging strategy prioritizes a first lien-based hedging program, in which hedging counterparties are granted a lien in the same collateral securing our first-lien debt obligations, while minimizing exchange-based hedging and the associated margin requirements.
Specifically, our hedging strategy prioritizes a first lien-based hedging program, in which hedging counterparties are granted a lien in the same collateral securing our first-lien debt obligations, while minimizing exchange-based hedging and the associated margin requirements. Additionally, the stability provided by contracted cash flows associated with long-term contracts lowers our overall hedging requirements.
Revisions to the estimated ARO are presented as “Other operating income (expense), net” on the Consolidated Statements of Operations. See Note 11 to the Annual Financial Statements for additional information on AROs.
Revisions to the estimated ARO are presented as “Other operating income (expense), net” on the Consolidated Statements of Operations.
The results of each PJM BRA impact our capacity revenues for the specific PJM Capacity Year. However, PJM has delayed its recent BRAs, which has resulted in less than 3 years between each auction and the start of the relevant PJM Capacity Year.
The results of each PJM BRA impact our capacity revenues expected to be earned for the specific PJM Capacity Year. Recently, PJM has delayed its auctions, which has resulted in less than 3 years between each auction and the start of the relevant PJM Capacity Year. The PJM BRA for the 2027/2028 PJM Capacity Year was held in December 2025.
Accordingly, the expected cash requirements for capital expenditures are subject to revision. 2025 2026 Nuclear fuel $ 105 $ 127 PJM nuclear generation facility 41 47 PJM fossil generation facilities 40 53 Other 11 6 Total (a) $ 199 $ 233 __________________ (a) Expected capitalized interest on capital expenditures is a non-material amount in 2025 and 2026.
Accordingly, the expected cash requirements for capital expenditures are subject to revision. 2026 2027 Nuclear fuel $ 122 $ 137 PJM nuclear generation facility 53 46 PJM fossil generation facilities 118 73 Other 25 12 Total (a) $ 318 $ 268 __________________ (a) Expected capitalized interest on capital expenditures is a non-material amount in 2026 and 2027.
Non-GAAP financial measures do not have definitions under GAAP and may be defined and calculated differently by, and not be comparable to, similarly titled measures used by other companies. Non-GAAP measures are not intended to replace the most comparable GAAP measures as indicators of performance.
Non-GAAP Financial Measure Adjusted EBITDA, which we use as a measure of our performance, is not a financial measure prepared under GAAP. Non-GAAP financial measures do not have definitions under GAAP and may be defined and calculated differently by, and not be comparable to, similarly titled measures used by other companies.
See Note 7 to the Annual Financial Statements for additional information on income taxes. Recent Accounting Pronouncements See Note 2 to the Annual Financial Statements for a description of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted.
See Note 4 to the Annual Financial Statements for additional information on income taxes. Recent Accounting Pronouncements See Note 1 to the Annual Financial Statements for a description of recently issued accounting pronouncements not yet adopted. There have been no recently adopted accounting pronouncements that had a material effect on the Company’s financials statements and (or) disclosures.
(b) Represents forward prices for 2024 as of December 31, 2023 (Successor). See weighted average settled prices table above for 2024 realized prices. Capacity Markets Our generation capacity is located primarily in markets with capacity products, which are intended to ensure long-term grid reliability for customers by securing sufficient power supply resources to meet predicted future demand.
Capacity Markets Our generation facilities are located primarily in markets with capacity products, which are intended to ensure long-term grid reliability for customers by securing sufficient power supply resources to meet predicted future demand.
The weighted average settled on-peak power prices and natural gas prices for the PJM market for the years ended December 31, 2024 (Successor), December 31, 2023 (Successor), and December 31, 2022 (Predecessor) were: December 31, 2024 December 31, 2023 December 31, 2022 PJM West Hub Day Ahead Peak - $/MWh $ 40.91 $ 39.22 $ 83.59 PJM PPL Zone Day Ahead Peak - $/MWh 31.51 29.59 76.06 Texas Eastern M-3 - $/MMBtu 2.07 1.90 6.80 As of December 31, 2024 (Successor), the weighted average forward market prices for the following years were: 2025 2026 PJM West Hub ATC - $/MWh $ 47.43 $ 51.16 Texas Eastern M-3 - $/MMBtu 3.45 3.73 PJM West Hub ATC Spark Spreads - $/MWh (a) 23.25 25.07 __________________ (a) Spark spreads are computed based on day-ahead West Hub ATC prices, TETCO M-3 natural gas prices, and a heat rate of 7 MMBtu/MWh.
TETCO M-3 natural gas prices settled higher in the period due to the effect of increased electric demand despite elevated storage levels that exceeded the five-year average. 34 Form 10-K Table of Contents The weighted average settled on-peak power prices and natural gas prices for the PJM market for the years ended December 31, were: 2025 2024 2023 PJM West Hub Day Ahead Peak - $/MWh $ 60.30 $ 40.91 $ 39.22 PJM PPL Zone Day Ahead Peak - $/MWh 47.40 31.51 29.59 TETCO M-3 - $/MMBtu 3.69 2.07 1.90 As of December 31, 2025 (Successor), the weighted average forward market prices for the following years were: 2026 2027 PJM West Hub ATC - $/MWh $ 55.60 $ 59.29 TETCO M-3 - $/MMBtu 3.69 4.04 PJM West Hub ATC Spark Spreads - $/MWh (a) 29.76 31.00 __________________ (a) Spark spreads are computed based on day-ahead PJM West Hub ATC prices, TETCO M-3 natural gas prices, and a heat rate of 7 MMBtu/MWh.
These adjustments can vary substantially from company to company and period to period depending upon accounting policies, book value of assets, capital structure, and the method by which assets were acquired. 42 Form 10-K Table of Contents The following table presents a reconciliation of the GAAP financial measure of “Net Income (Loss)” presented on the Consolidated Statements of Operations to the non-GAAP financial measure of Adjusted EBITDA: Successor Predecessor (Millions of Dollars) Year Ended December 31, 2024 May 18 through December 31, 2023 January 1 through May 17, 2023 Year Ended December 31, 2022 Net Income (Loss) $ 1,013 $ 143 $ 465 $ (1,293) Adjustments Interest expense and other finance charges 238 176 163 359 Income tax (benefit) expense 98 51 212 (35) Depreciation, amortization and accretion 298 165 200 520 Nuclear fuel amortization 123 108 33 94 Reorganization (gain) loss, net (a) — — (799) 812 Unrealized (gain) loss on commodity derivative contracts (62) (52) 63 (625) Nuclear decommissioning trust funds (gain) loss, net (178) (108) (57) 184 Stock-based compensation expense 33 19 — — Long-term incentive compensation expense 21 2 — — (Gain) loss on asset sales, net (b) (884) (7) (50) — Non-cash impairments (c) 1 3 381 — Legal settlements and litigation costs (d) (10) (84) 1 20 Unusual market events (d) (1) (19) 14 29 Net periodic defined benefit cost 14 2 (3) 12 Operational and other restructuring activities (e) (f) (g) 76 48 17 570 Development expenses 1 7 10 17 Non-cash inventory net realizable value, obsolescence, and other charges (h) 20 4 56 3 Consolidation of subsidiary (gain) loss, net — — — 170 Noncontrolling interest (21) (42) (14) 3 Other (10) 10 3 17 Total Adjusted EBITDA $ 770 $ 426 $ 695 $ 1,015 __________________ (a) See Note 4 to the Annual Financial Statements for additional information.
The following table presents a reconciliation of the GAAP financial measure of “Net Income (Loss)” presented on the Consolidated Statements of Operations to the non-GAAP financial measure of Adjusted EBITDA: Successor Predecessor (Millions of Dollars) Year Ended December 31, 2025 Year Ended December 31, 2024 May 18 through December 31, 2023 January 1 through May 17, 2023 Net Income (Loss) $ (219) $ 1,013 $ 143 $ 465 Adjustments Interest expense and other finance charges 302 238 176 163 Income tax (benefit) expense 53 98 51 212 Depreciation, amortization and accretion (a) 266 281 157 200 Nuclear fuel amortization (a) 97 123 108 33 Reorganization (income) expense, net (Note 20) (b) — — — (799) Unrealized (gain) loss on commodity derivative contracts 106 (62) (52) 63 Nuclear decommissioning trust funds (gain) loss, net (182) (178) (108) (57) Stock-based and other long-term incentive compensation expense (Note 13) (b) 535 54 21 — (Gain) loss on asset sales, net (Note 17) (b) (34) (884) (7) (50) Non-cash impairments and other charges (c) 11 24 15 438 Legal settlements and litigation costs 6 4 (84) 1 Acquisition and divestiture activities (d) 65 62 — — Operational and other restructuring activities (e) 21 9 30 19 Noncontrolling interest — (21) (42) (14) Other 8 9 18 21 Total Adjusted EBITDA $ 1,035 $ 770 $ 426 $ 695 __________________ (a) Includes the periodic amortization of fair value adjustments associated with acquired executory contracts and intangible assets.
Electricity produced and sold by Susquehanna to third parties from December 31, 2023 through December 31, 2032 will be eligible for the credit. See Notes 6 and 7 to the Annual Financial Statements for additional information on Nuclear PTC revenue recognized and the Inflation Reduction Act.
Electricity produced and sold by Susquehanna to third parties from December 31, 2023 through December 31, 2032 will be eligible for the credit. Susquehanna earned Nuclear PTC revenue during the year ended December 31, 2024 (Successor).
Management cautions readers not to place undue reliance on the following non-GAAP financial measure, but to also consider it along with its most directly comparable GAAP financial measure. Non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analyzing our results as reported under GAAP.
Management cautions readers not to place undue reliance on the following non-GAAP financial measure, but to also consider it along with its most directly comparable GAAP financial measure.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Annual Financial Statements and the accompanying notes. The discussion contains forward-looking statements as well as estimates regarding market and industry data, which involve risks, uncertainties, and assumptions.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the Annual Financial Statements and the accompanying notes included elsewhere in this Report.
See “Cautionary Note Regarding Forward-Looking Information” and “Market and Industry Data” for additional information. Dollars are in millions, unless otherwise noted. Recent Developments Common Stock Transactions Share Repurchases.
The discussion contains forward-looking statements as well as estimates regarding market and industry data, which involve risks, uncertainties, and assumptions. See “Cautionary Note Regarding Forward-Looking Information” and “Market and Industry Data” for additional information. Dollars are in millions, unless otherwise noted.
See Note 20 to the Annual Financial Statements for additional information. • Other Non-Operating Income (Expense), net totaled $61 million. This primarily consisted of interest income on cash deposits. • Income Tax Benefit (Expense) totaled $(98) million.
See Note 17 to the Annual Financial Statements for additional information. • Other non-operating income (expense), net. $(51) million unfavorable decrease. This primarily consisted of lower interest income on cash deposits in 2025 due to the release of restricted cash in 2024 after refinancing the TLC, combined with additional debt restructuring fees in 2025.
Indebtedness. See Note 13 to the Annual Financial Statements and “—Recent Developments—Financing Transactions” above for additional information on our indebtedness.
See Note 17 to the Annual Financial Statements for additional information on acquisitions and divestitures.
The Nuclear PTC program provides qualified nuclear power generation facilities with a transferable tax credit for electricity produced and sold to an unrelated party during each tax year.
For the 2027/2028 PJM Capacity Year, the Company cleared 8,745 MW at a price of $333.44/MWd. 35 Form 10-K Table of Contents Nuclear Production Tax Credit The Nuclear PTC program, established by the Inflation Reduction Act, provides qualified nuclear power generation facilities with a transferable tax credit for electricity produced and sold to an unrelated party during each tax year.
See Note 5 to the Annual Financial Statements for additional information on derivative instruments. Nuclear Decommissioning Asset Retirement Obligations We have significant legal obligations associated with Susquehanna’s decommissioning. Susquehanna’s Unit 1 and Unit 2 licenses, if not renewed, will expire in 2042 and 2044, respectively, at or before which time the units will shut down.
Susquehanna’s Unit 1 and Unit 2 licenses, if not renewed, will expire in 2042 and 2044, respectively, at or before which time the units will be shut down.
As of December 31, 2023 (Successor), the weighted average forward market prices for the following years were: 2024 (b) 2025 2026 PJM West Hub ATC - $/MWh $ 41.51 $ 46.38 $ 48.98 Texas Eastern M-3 - $/MMBtu 2.36 3.10 3.42 PJM West Hub ATC Spark Spreads - $/MWh (a) 24.97 24.68 25.02 __________________ (a) Spark spreads are computed based on day-ahead West Hub ATC prices, TETCO M-3 natural gas prices, and a heat rate of 7 MMBtu/MWh.
See weighted average settled prices table above for 2025 realized prices. (b) Spark spreads are computed based on day-ahead PJM West Hub ATC prices, TETCO M-3 natural gas prices, and a heat rate of 7 MMBtu/MWh.
The operating results for the Successor Periods are not comparable with the operating results for the Predecessor Periods due to the application of fresh start accounting after Emergence in May 2023. See Notes 2, 3, and 4 to the Annual Financial Statements for additional information regarding the Restructuring and related accounting.
The operating results for the period from May 18 through December 31, 2023 (Successor) and for the period from January 1 through May 17, 2023 (Predecessor) are not comparable with the operating results for the years presented in this MD&A due to the application of fresh start accounting after our Emergence from Restructuring in May 2023. See “Item 7.
This consisted of: (i) unrealized gains from the reversal of positions previously recognized as mark-to-market liabilities which settled during the period; and (ii) unrealized gains incurred as a result of decreases in forward power prices. • Nuclear Fuel Amortization totaled $(123) million.
This is primarily related to the combined effects of: (i) $(82) million lower volume of hedge positions executed in the current period and (ii) $(45) million decrease in net short positions resulting from higher forward power prices, coupled with (iii) $(42) million unrealized losses from the reversal of positions previously recognized as mark-to-market assets which settled during the period. ◦ Nuclear fuel amortization. $26 million favorable decrease.
(b) See Note 20 to the Annual Financial Statements for additional information. (c) See Note 10 to the Annual Financial Statements for additional information. (d) See Note 12 to the Annual Financial Statements for additional information.
See the reconciliation of the effective tax rate in Note 4 to the Annual Financial Statements for additional information.
Liquidity and Letter of Credit Capacity Successor December 31, 2024 December 31, 2023 Cash and cash equivalents, unrestricted $ 328 $ 400 Unutilized RCF capacity (a) 700 638 Total available liquidity $ 1,028 $ 1,038 Additional unutilized LC capacity (b) $ 526 $ 67 __________________ (a) As of December 31, 2024 (Successor), all RCF committed capacity can be used for direct cash borrowings and (or) LCs.
See the following Notes to the Annual Financial Statements for additional information on liquidity topics discussed below: Note 2 for derivatives and hedging, Note 8 for AROs and environmental obligations, Note 10 for long-term debt and credit facilities, and Note 16 for supplemental cash flow information. 38 Form 10-K Table of Contents Liquidity and Letter of Credit Capacity Successor December 31, 2025 December 31, 2024 Cash and cash equivalents, unrestricted $ 689 $ 328 Unutilized RCF capacity (a) 900 700 Total available liquidity $ 1,589 $ 1,028 Additional unutilized LC capacity (b) $ 652 $ 526 __________________ (a) RCF committed capacity can be used for direct cash borrowings and (or) LCs.
Cash provided by operating activities totaled $256 million. • Investing Cash Flows. Cash provided by investing activities totaled $1.2 billion. This primarily consisted of $635 million of proceeds from the AWS Data Campus Sale and $763 million of proceeds from the ERCOT Sale.
Investing activities A change of $(5.2) billion in net cash provided by (used in) investing activities was primarily due to: (i) $(3.8) billion used to finance the Freedom and Guernsey Acquisitions in 2025; (ii) a $(635) million decrease in proceeds from the AWS Data Campus Sale in 2024; and (iii) a $(763) million decrease in proceeds from the ERCOT Sale in 2024.
Surety bond providers generally have the right to request additional collateral to backstop surety bonds. Successor December 31, 2024 December 31, 2023 Outstanding surety bonds $ 234 $ 240 Forecasted Uses of Cash Capital Expenditures. Capital expenditure plans are revised periodically for changes in operational needs, market conditions, regulatory requirements, and cost projections.
Capital expenditure plans are revised periodically for changes in operational needs, market conditions, regulatory requirements, and cost projections.
This primarily consisted of interest expense incurred on the Secured Notes, TLB-1, and TLB-2. • Gain (Loss) on Sale of Assets, net totaled $884 million. This primarily consisted of the $564 million gain from the ERCOT Sale that closed in May 2024 and the $324 million gain from the AWS Data Campus Sale that closed in March 2024.
This primarily consisted of: (i) $564 million gain from the ERCOT Sale and (ii) $324 million gain from the AWS Data Campus Sale, both of which closed in 2024; and (iii) a $22 million gain from the sale of the Camden and Dartmouth in September 2025.
See Note 2 to the Annual Financial Statements for additional information. • Gain (loss) on Sale of Assets, net totaled $50 million. This primarily consisted of gains due to non-recurring sales during the period. See Note 20 to the Annual Financial Statements for additional information. • Income Tax Benefit (Expense) totaled $(212) million.
See Note 10 to the Annual Financial Statements for additional information on activity related to the above debt instruments. • Gain (loss) on sale of assets, net. $(850) million unfavorable decrease.
Projections are subject to revision based on changes in estimated inflation rates, changes in the estimated timing of settling AROs, and escalating retirement costs. Susquehanna’s AROs are expected to be settled with funds available from the NDT at the time of decommissioning. See Note 11 to the Annual Financial Statements for additional information.
No assurance can be provided as to the timing or amount of ARO and (or) accrued environmental cost settlements. Projections are subject to revision based on changes to the scope of work, estimated inflation rates, changes in the estimated timing of settling AROs, escalating retirement costs, and (or) other projections.
This consisted of depreciation of long-lived PP&E, intangibles, and ARO accretion. • Impairments totaled $(381) million. This consisted of the assessment of Brandon Shores asset group recoverability associated with a decision to deactivate Brandon Shores on June 1, 2025. See Note 10 to the Annual Financial Statements for additional information. • Other Operating Income (Expense), net totaled $(37) million.
This is primarily due to a decrease in amortization and depreciation because of the derecognition of Nautilus assets in June 2025. See Note 7 to the Annual Financial Statements for additional information. • Other operating income (expense), net. $(44) million unfavorable increase.
In PJM, periodic below average temperatures during the winter and above average temperatures during the summer contributed to increased load demand that resulted in higher annual settled on-peak power prices compared with the prior year.
Risk Factors,” and Notes 2 and 9 to the Annual Financial Statements for additional information on our risks. Commodity Markets During 2025, PJM experienced weather-related volatility, as extreme winter and summer temperatures over certain days contributed to increased load demand and higher settled on-peak power prices during the year.
As a result, we incurred final aggregate net Capacity Performance penalties of $29 million, which were remitted during the period from May 18 through December 31, 2023 (Successor) and the period from January 1 through May 17, 2023 (Predecessor). See Note 12 to the Annual Financial Statements for additional information.
(b) See the corresponding Note to the Annual Financial Statements for additional information. (c) Includes impairments, net realizable value adjustments and other write-offs. See Note 7 to the Annual Financial Statements for additional information associated with the Brandon Shores impairment group recognized during the period of January 1 through May 17, 2023 (Predecessor).
Additionally, we now have lower overall hedging needs given the cash-flow stability afforded by the Nuclear PTC (which provides a built-in hedging apparatus through the tax credit) and significantly reduced debt service requirements following the Restructuring and subsequent refinancing transactions. We are partially exposed to financial risks arising from natural business exposures including commodity price and interest rate volatility.
We are partially exposed to financial risks arising from natural business exposures including commodity price and interest rate volatility.
Removed
During the year ended December 31, 2024 (Successor), we repurchased and retired a total of 13,227,222 shares, or approximately 22%, of TEC’s outstanding common stock through a combination of the SRP and direct repurchases from affiliates of Rubric Capital Management LP (collectively, “Rubric”) .
Added
This MD&A discusses activity for the years ended December 31, 2025 (Successor) and December 31, 2024 (Successor).
Removed
A total of: (i) 7,307,300 shares were purchased from Rubric; (ii) 5,275,862 shares through a tender offer; and (iii) 644,060 shares in the open market. The aggregate purchase price after transaction fees and excise tax was approximately $2.0 billion at a weighted average price of $149.50 per share.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report on Form 10-K, filed with the SEC on February 28, 2025, for a discussion of the activities and results of operations for each of these periods.
Removed
As of December 31, 2024 (Successor), the remaining capacity under the SRP is approximately $1.1 billion through 2026. See Note 18 to the Annual Financial Statements for additional information on the SRP, other share repurchases, and other common stock transactions. Financing Transactions S ecured Notes Consent.
Added
Recent Developments Cornerstone Acquisition On January 15, 2026, we entered into the Cornerstone Merger Agreement to acquire from affiliates of Energy Capital Partners (“ECP”) the 875 MW Waterford Energy Center and 456 MW Darby Generating Station, both located in Ohio, and the 1,120 MW Lawrenceburg Power Plant located in Indiana, for an aggregate purchase price of $3.45 billion, consisting of $2.55 billion in cash, subject to working capital and other customary adjustments, and 2,400,000 shares of Talen common stock, valued at approximately $900 million at the time of the entry into the Cornerstone Merger Agreement.
Removed
In January 2025, we received consents from noteholders representing a majority in principal amount of the Secured Notes to adopt certain amendments to the Indenture to, among other things: (i) modify certain provisions, including certain covenants and related definitions, in order to substantially conform to the corresponding amendments to the Credit Agreement obtained in the December 2024 transactions discussed below; and (ii) waive TES’s right to optionally redeem up to 10% of the Secured Notes at a price of 103% of par prior to June 1, 2025.
Added
The Company expects the cash portion of the purchase price to be funded from the proceeds of new indebtedness.
Removed
In December 2024, we completed several financing transactions that resulted in the: (i) issuance of $380 million in net additional long-term indebtedness through full repayment of the TLC utilizing restricted cash collateralizing the TLC and issuance of the TLB-2 (at an initial rate of SOFR + 2.5%); (ii) issuance of the new $900 million LCF and termination of the TLC LCF and Bilateral LCF, which had the combined effect of increasing our LC capacity by $355 million; and (iii) favorable repricing and covenant improvements on the existing TLB-1 and RCF (repriced to initial rates of SOFR + 2.5% and SOFR + 2.0%, respectively) as well an extension of the RCF maturity.
Added
The stock consideration will be subject to lock-ups of 90 days on 50% of the stock consideration and 180 days on the remaining stock consideration. 33 Form 10-K Table of Contents The addition of these assets to Talen’s portfolio will increase generation capacity by approximately 2.5 GW of natural gas generation, substantially expanding Talen’s presence in the western PJM market and adding additional efficient baseload generation assets to its fleet.
Removed
The proceeds of the TLB-2 issuance were used, together with cash on hand, to repurchase shares of our outstanding common stock held by Rubric. See Note 13 to the Annual Financial Statements for additional information on long-term debt, other credit facilities, and recent financing activities. Power Transactions AWS PPA.
Added
In connection with the stock consideration, at the closing of the Cornerstone Acquisition, we intend to enter into the Cornerstone RRA with certain parties thereto substantially in the form attached to this Report as Exhibit 4.16.
Removed
In connection with the AWS Data Campus Sale in 2024, we and AWS entered into the AWS PPA, pursuant to which we agreed to supply long-term, carbon-free power from Susquehanna to the AWS Data Campus through fixed-price power commitments.
Added
Pursuant to the terms of the Cornerstone RRA, the Company will agree to use its commercially reasonable efforts to file a registration statement on Form S-3 under the Securities Act of 1933, as amended, to register the TEC common stock issued pursuant to the Cornerstone Merger Agreement with the SEC within three business days (and in any event within five business days) after issuance.
Removed
Under the AWS PPA, AWS has minimum contractual power commitments that increase in 120 MW increments annually (or earlier, at AWS’s option), with a one-time option to either cap commitments at 480 MW or otherwise purchase, in continuing annual steps, up to 960 MW.
Added
Risk Factors—Financial and Equity Risks—A number of factors could adversely affect the market price or trading volume of our common stock, even if our business is doing well, including but not limited to substantial sales of our common stock by existing shareholders, future issuances of equity or debt securities by us, and (or) research or reports published by financial analysts.” The proposed Cornerstone Acquisition is subject to regulatory approvals and the satisfaction of other customary closing conditions, and is expected to close early in the second half of 2026.
Removed
Each step up in capacity commitment has a fixed price for an initial 10-year term, after which AWS has the option to renew each step at a price that includes a fixed margin above then-applicable PJM energy and capacity prices. The initial term of the AWS PPA is 18 years, with two 10-year extensions at AWS’s option.
Added
See Note 17 to the Annual Financial Statements for additional information on the Cornerstone Acquisition and “Item 1A. Risk Factors—Risks Related to the Cornerstone Acquisition” of this Report for a discussion of the associated risks.
Removed
Under a separate agreement, we will receive additional revenue from AWS related to the sales of carbon-free energy to the grid. We expect to begin receiving initial revenues from power sales in 2025. See Note 20 to the Annual Financial Statements for additional information on the AWS Data Campus Sale. Susquehanna ISA Amendment.
Added
The foregoing description of the Cornerstone Merger Agreement and the transaction contemplated thereby is only a summary, does not purport to be complete, and is qualified in its entirety by reference to the full text of the Cornerstone Merger Agreement, a copy of which is incorporated by reference as Exhibit 2.1 to this Report.

… 124 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

43 edited+27 added−5 removed13 unchanged
Biggest changeTable of Contents TALEN ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Successor Predecessor (Millions of Dollars) Year Ended December 31, 2024 May 18 through December 31, 2023 January 1 through May 17, 2023 Year Ended December 31, 2022 Operating Activities Net income (loss) $ 1,013 $ 143 $ 465 $ (1,293) Non-cash reconciliation adjustments: (Gain) loss on AWS Data Campus Sale and ERCOT Sale (Note 20) (886) — — — Depreciation, amortization and accretion (Note 19) 285 157 208 549 NDT funds (gain) loss, net (excluding interest and fees) (Note 9) (130) (78) (43) 227 Nuclear fuel amortization (Note 10) 123 108 33 94 Unrealized (gains) losses on derivative instruments (Note 5) (69) (40) 65 (647) Deferred income taxes (46) 55 195 (48) Impairments (Note 10) 1 3 381 — (Gain) loss on sales of assets, net — (7) (50) — Reorganization (income) expense, net (Note 4) — — (933) 99 Operational restructuring — — — 488 Consolidation of subsidiary (gain) loss (Note 2) — — — 170 Other (Note 19) (26) 7 7 200 Changes in assets and liabilities: Inventory, net 67 (68) 10 (55) Accounts receivable 14 8 261 (298) Other assets (61) 147 98 (46) Accounts payable and accrued liabilities (69) (49) (69) 187 Accrued interest (15) 28 (124) 250 Other liabilities 55 (12) (42) 310 Net cash provided by (used in) operating activities 256 402 462 187 Investing Activities NDT funds investment purchases (Note 9) (2,295) (1,290) (959) (2,271) NDT funds investment sale proceeds (Note 9) 2,263 1,265 949 2,243 Proceeds from AWS Data Campus Sale and ERCOT Sale (Note 20) 1,398 — — — Nuclear fuel expenditures (Note 10) (104) (45) (49) (80) Property, plant and equipment expenditures (Note 10) (85) (116) (138) (232) Equity investments in affiliates (10) (5) (8) (162) Proceeds from the sale of assets 2 8 46 — Increase (decrease) in cash and restricted cash due to consolidation of subsidiaries — — — 123 Other investing activities 2 12 2 11 Net cash provided by (used in) investing activities 1,171 (171) (157) (368) 55 Item 8.
Biggest changeTable of Contents TALEN ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Successor Predecessor (Millions of Dollars) Year Ended December 31, 2025 Year Ended December 31, 2024 May 18 through December 31, 2023 January 1 through May 17, 2023 Operating Activities Net Income (Loss) $ (219) $ 1,013 $ 143 $ 465 Non-cash reconciliation adjustments: Stock-based compensation (Note 13) 526 33 19 — Depreciation, amortization and accretion (Note 16) 279 285 157 208 Nuclear decommissioning trust funds (gain) loss, net (excluding interest and fees) (Note 6) (132) (130) (78) (43) Unrealized (gains) losses on derivative instruments (Note 2) 121 (69) (40) 65 Deferred income taxes 120 (46) 55 195 Nuclear fuel amortization (Note 7) 97 123 108 33 (Gain) loss on sales of assets, net (Note 17) (36) — (7) (50) (Gain) loss on AWS Data Campus Sale and ERCOT Sale (Note 17) — (886) — — Reorganization (income) expense, net (Note 20) — — — (933) Impairments (Note 7) — 1 3 381 Other (Note 16) 51 (59) (12) 7 Changes in assets and liabilities: Accounts receivable (44) 14 8 261 Inventory, net 29 67 (68) 10 Other assets 182 (61) 147 98 Accounts payable and accrued liabilities (48) (69) (49) (69) Accrued interest 42 (15) 28 (124) Collateral received (posted), net (33) 46 26 (83) Other liabilities (231) 9 (38) 41 Net cash provided by (used in) operating activities 704 256 402 462 Investing Activities Freedom and Guernsey Acquisitions, net (Note 17) (3,793) — — — Nuclear decommissioning trust funds investment purchases (Note 6) (1,962) (2,295) (1,290) (959) Nuclear decommissioning trust funds investment sale proceeds (Note 6) 1,927 2,263 1,265 949 Nuclear fuel expenditures (Note 7) (108) (104) (45) (49) Property, plant and equipment expenditures (Note 7) (98) (85) (116) (138) Proceeds from AWS Data Campus Sale and ERCOT Sale (Note 17) — 1,398 — — Proceeds from the sale of assets 40 2 8 46 Other (9) (8) 7 (6) Net cash provided by (used in) investing activities (4,003) 1,171 (171) (157) 54 Item 8.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
Confirmation of the plan resulted in the discharge of all claims against the Company that arose before May 9, 2022 and substantially alters rights and interests of equity security holders as provided for in the plan. The plan was substantially consummated on May 17, 2023 and the Company emerged from bankruptcy.
Confirmation of the plan resulted in the discharge of all claims against the Company that arose before May 2022 and substantially alters rights and interests of equity security holders as provided for in the plan. The plan was substantially consummated on May 17, 2023 and the Company emerged from bankruptcy.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP Houston, Texas March 14, 2024 We have served as the Company’s auditor since 2017. 51 Item 8.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP Houston, Texas March 14, 2024 We have served as the Company’s auditor since 2017. 50 Item 8.
Additionally, a credit impairment is recognized on receivables when facts indicate a high probability that amounts owed to us will not be paid. Such allowances are presented as part of “Accounts receivable” on the Consolidated Balance Sheets. As of December 31, 2024 (Successor) and December 31, 2023 (Successor), there were no material credit impairments.
Additionally, a credit impairment is recognized on receivables when facts indicate a high probability that amounts owed to us will not be paid. Such allowances are presented as part of “Accounts receivable” on the Consolidated Balance Sheets. As of December 31, 2025 (Successor) and 2024 (Successor), there were no material credit impairments.
Within the parameters of our risk policy, we generally utilize conventional first lien, exchange-traded, and over-the-counter traded derivative instruments and, in certain instances, structured products, to economically hedge the commodity price risk of the forecasted future sales and purchases of commodities associated with our generation portfolio.
Within the parameters of our risk policy, we generally utilize conventional exchange-traded, and over-the-counter traded derivative instruments and, in certain instances, structured products, to economically hedge the commodity price risk of the forecasted future sales and purchases of commodities associated with our generation portfolio.
These concentrations may impact our overall exposure to credit risk, positively or negatively, as counterparties may be similarly affected by changes in economic, regulatory, or other conditions. See Note 5 in the Annual Financial Statements for additional information on credit risk.
These concentrations may impact our overall exposure to credit risk, positively or negatively, as counterparties may be similarly affected by changes in economic, regulatory, or other conditions. See Note 2 in the Annual Financial Statements for additional information on credit risk.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Investment Price Risk In accordance with certain NRC requirements, we maintain trust funds comprised of restricted assets that were established in order to fund our proportional share of Susquehanna's future decommissioning obligations.
Investment Price Risk In accordance with certain NRC requirements, we maintain trust funds comprised of restricted assets that were established in order to fund our proportionate share of Susquehanna's future decommissioning obligations.
As of December 31, 2024 (Successor), the NDT was invested primarily in domestic equity securities, fixed-rate, fixed-income securities, and short-term cash-equivalent securities and is presented as fair value on the Consolidated Balance Sheets. The mix of securities is intended to provide returns sufficient to fund our proportional share of Susquehanna's decommissioning and to compensate for inflationary increases in decommissioning costs.
As of December 31, 2025 (Successor), the NDT was invested primarily in domestic equity securities, fixed-rate, fixed-income securities, and short-term cash-equivalent securities and is presented as fair value on the Consolidated Balance Sheets. The mix of securities is intended to provide returns sufficient to fund our proportionate share of Susquehanna's decommissioning and to compensate for inflationary increases in decommissioning costs.
Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Managers and Members of Talen Energy Supply, LLC Opinion on the Financial Statements We have audited the consolidated statements of operations, comprehensive income (loss), equity and cash flows of Talen Energy Supply, LLC and its subsidiaries (Predecessor) (the “Company”) for the period from January 1, 2023 through May 17, 2023 and for the year then ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).
Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Managers and Members of Talen Energy Supply, LLC Opinion on the Financial Statements We have audited the consolidated statements of operations, comprehensive income (loss), equity and cash flows of Talen Energy Supply, LLC and its subsidiaries (Predecessor) (the “Company”) for the period from January 1, 2023 through May 17, 2023, including the related notes (collectively referred to as the “consolidated financial statements”).
The principal considerations for our determination that performing procedures relating to commodity derivative valuation is a critical audit matter are (i) the significant judgment by management when developing the valuation of commodity derivatives; (ii) a high degree of auditor judgment and effort in performing procedures and evaluating management’s significant assumptions related to the forward commodity prices and commodity price volatility; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. 49 Item 8.
The principal considerations for our determination that performing procedures relating to commodity derivatives valuation is a critical audit matter are (i) the significant judgment by management when developing the estimated fair value of commodity derivatives; (ii) a high degree of auditor judgment and effort in performing procedures and evaluating management’s significant assumptions related to the forward commodity prices and commodity price volatility; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Table of Contents TALEN ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Successor Predecessor (Millions of Dollars) Year Ended December 31, 2024 May 18 through December 31, 2023 January 1 through May 17, 2023 Year Ended December 31, 2022 Net Income (Loss) $ 1,013 $ 143 $ 465 $ (1,293) Other Comprehensive Income (Loss) Available-for-sale securities unrealized gain (loss), net (Note 9) (14) 2 6 (69) Postretirement benefit actuarial (gain) loss, net (Note 15) 5 (38) — (15) Postretirement benefit prior service (credits) costs, net (Note 15) 21 — — — Income tax benefit (expense) 5 8 (2) 31 Gains (losses) arising during the period, net of tax 17 (28) 4 (53) Available-for-sale securities unrealized (gain) loss, net (Note 9) 1 7 4 33 Qualifying derivatives unrealized (gain) loss, net — — (1) (2) Postretirement benefit prior service (credits) costs, net (Note 15) (1) — — 1 Postretirement benefit actuarial (gain) loss, net (Note 15) — — 2 27 Income tax (benefit) expense (6) (2) (3) (21) Reclassifications from AOCI, net of tax (6) 5 2 38 Total Other Comprehensive Income (Loss) 11 (23) 6 (15) Comprehensive Income (Loss) 1,024 120 471 (1,308) Less: Comprehensive income (loss) attributable to noncontrolling interest 15 9 (14) (4) Comprehensive Income (Loss) Attributable to Stockholders (Successor) / Member (Predecessor) $ 1,009 $ 111 $ 485 $ (1,304) The accompanying Notes to the Annual Financial Statements are an integral part of the financial statements. 53 Item 8.
Table of Contents TALEN ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Successor Predecessor (Millions of Dollars) Year Ended December 31, 2025 Year Ended December 31, 2024 May 18 through December 31, 2023 January 1 through May 17, 2023 Net Income (Loss) $ (219) $ 1,013 $ 143 $ 465 Other Comprehensive Income (Loss) Available-for-sale securities unrealized gain (loss), net (Note 6) 13 (14) 2 6 Postretirement benefit actuarial (gain) loss, net (Note 12) 7 5 (38) — Postretirement benefit prior service (credits) costs, net (Note 12) 1 21 — — Income tax benefit (expense) (7) 5 8 (2) Gains (losses) arising during the period, net of tax 14 17 (28) 4 Available-for-sale securities unrealized (gain) loss, net (Note 6) (4) 1 7 4 Qualifying derivatives unrealized (gain) loss, net — — — (1) Postretirement benefit prior service (credits) costs, net (Note 12) (4) (1) — — Postretirement benefit actuarial (gain) loss, net (Note 12) (1) — — 2 Income tax (benefit) expense 3 (6) (2) (3) Reclassifications from AOCI, net of tax (6) (6) 5 2 Total Other Comprehensive Income (Loss) 8 11 (23) 6 Comprehensive Income (Loss) (211) 1,024 120 471 Less: Comprehensive income (loss) attributable to noncontrolling interest — 15 9 (14) Comprehensive Income (Loss) Attributable to Stockholders (Successor) / Member (Predecessor) $ (211) $ 1,009 $ 111 $ 485 The accompanying Notes to the Annual Financial Statements are an integral part of the financial statements. 52 Item 8.
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the year ended December 31, 2024 and for the period from May 18, 2023 through December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years ended December 31, 2025 and 2024, and for the period from May 18, 2023 through December 31, 2023 in conformity with accounting principles generally accepted in the United States of America.
The accompanying Notes to the Annual Financial Statements are an integral part of the financial statements. 54 Item 8.
The accompanying Notes to the Annual Financial Statements are an integral part of the financial statements. 53 Item 8.
We maintain credit procedures with respect to counterparty credit (including requirements that counterparties maintain specified credit standards) and require other assurances in the form of credit support or collateral in certain circumstances in order to limit counterparty credit risk. However, we have concentrations of suppliers and customers among electric utilities, financial institutions, marketing and trading companies, and the U.S. government.
We maintain credit procedures with respect to counterparty credit (including requirements that counterparties maintain specified credit standards) and require other assurances in the form of credit support or collateral in certain circumstances in order to limit counterparty credit risk. However, we have concentrations of suppliers and customers among financial institutions, ISOs, and marketing and trading companies.
Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of forward commodity prices and commodity price volatility assumptions. /s/ PricewaterhouseCoopers LLP Houston, Texas February 27, 2025 We have served as the Company’s auditor since 2017. 50 Item 8.
Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of forward commodity prices and commodity price volatility assumptions. /s/ PricewaterhouseCoopers LLP Houston, Texas February 26, 2026 We have served as the Company’s auditor since 2017. 49 Item 8.
The accompanying Notes to the Annual Financial Statements are an integral part of the financial statements. 56
The accompanying Notes to the Annual Financial Statements are an integral part of the financial statements. 55
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
These procedures included, among others, (i) testing management’s process for developing the valuation of commodity derivatives; (ii) evaluating the appropriateness of management’s model; (iii) testing, on a sample basis, the completeness and accuracy of the underlying contract terms and the accounting treatment conclusions; and (iv) evaluating, on a sample basis, the reasonableness of the significant assumptions used by management related to forward commodity prices and commodity price volatility.
These procedures also included, among others (i) testing management’s process for developing the estimated fair value of commodity derivatives; (ii) evaluating the appropriateness of management’s market approach; (iii) testing, on a sample basis, the completeness and accuracy of the underlying contract terms and the accounting treatment conclusions; and (iv) evaluating, on a sample basis, the reasonableness of the significant assumptions used by management related to forward commodity prices and commodity price volatility.
In connection with its emergence from bankruptcy, the Company adopted fresh start accounting as of May 17, 2023. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.
In connection with its emergence from bankruptcy, the Company adopted fresh start accounting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.
Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the period from January 1, 2023 through May 17, 2023 and for the year then ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the period from January 1, 2023 through May 17, 2023 in accordance with accounting principles generally accepted in the United States of America.
Table of Contents TALEN ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Successor Predecessor (Millions of Dollars) Year Ended December 31, 2024 May 18 through December 31, 2023 January 1 through May 17, 2023 Year Ended December 31, 2022 Financing Activities Share repurchases (Note 18) (1,958) — — — TES debt issuance (Note 13) 849 — — — TES debt repayments (Note 13) (479) — — — Cumulus Digital TLF repayment (Note 13) (182) (15) — — Repurchase of noncontrolling interest (Note 18) (125) (19) — — Cash settlement of restricted stock units (32) — — — Exercise or repurchase of warrants (Note 18) (16) (40) — — Deferred financing costs (13) (7) (74) (59) LMBE-MC TLB payments — (294) (7) (52) TLB-1 proceeds, net — 288 — — Repayment of prepetition secured indebtedness (Note 4) — — (3,898) — Financing proceeds at Emergence, net of discount (Note 4) — — 2,219 — Contributions from member — — 1,393 — Payment of make-whole premiums on prepetition secured indebtedness — — (152) — Derivatives with financing elements — — (20) (104) Debtor-in-possession credit facilities proceeds, net — — — 987 Prepetition deferred capacity obligations repayments — — — (176) Prepetition inventory repurchase obligations, net increase (decrease) — — — (165) Prepetition senior secured revolving credit facility proceeds — — — 62 Prepetition senior secured revolving credit facility repayments — — — (62) Other (7) 3 — (5) Net cash provided by (used in) financing activities (1,963) (84) (539) 426 Net Increase (Decrease) in Cash and Cash Equivalents and Restricted Cash and Cash Equivalents (536) 147 (234) 245 Beginning of period cash and cash equivalents and restricted cash and cash equivalents 901 754 988 743 End of period cash and cash equivalents and restricted cash and cash equivalents $ 365 $ 901 $ 754 $ 988 See Note 19 for supplemental cash flow information.
Table of Contents TALEN ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Successor Predecessor (Millions of Dollars) Year Ended December 31, 2025 Year Ended December 31, 2024 May 18 through December 31, 2023 January 1 through May 17, 2023 Financing Activities Debt issuances (Note 10) 3,890 849 — — Share repurchases (Note 15) (103) (1,958) — — Deferred financing costs (89) (13) (7) (74) Revolving credit facility borrowings (Note 10) 75 — — — Revolving credit facility repayments (Note 10) (75) — — — Debt repayments (Note 10) (17) (479) — — Cumulus Digital TLF repayment — (182) (15) — Repurchase of noncontrolling interest — (125) (19) — Cash settlement of restricted stock units — (32) — — Exercise or repurchase of warrants — (16) (40) — LMBE-MC TLB payments — — (294) (7) TLB-1 proceeds, net — — 288 — Repayment of prepetition secured indebtedness — — — (3,898) Financing proceeds at Emergence, net of discount — — — 2,219 Contributions from member — — — 1,393 Payment of make-whole premiums on prepetition secured indebtedness — — — (152) Derivatives with financing elements — — — (20) Other 5 (7) 3 — Net cash provided by (used in) financing activities 3,686 (1,963) (84) (539) Net increase (decrease) in cash and cash equivalents and restricted cash and cash equivalents 387 (536) 147 (234) Beginning of period cash and cash equivalents and restricted cash and cash equivalents 365 901 754 988 End of period cash and cash equivalents and restricted cash and cash equivalents $ 752 $ 365 $ 901 $ 754 See Note 16 for supplemental cash flow information.
The base case for these sensitivities incorporates market prices, our economic hedge position, expected Nuclear PTC, and expected generation (including cost inputs and planned outages) as of December 31, 2024 (Successor): Sensitivity Range 2025 Margin Effect (a) 2026 Margin Effect (a) Low High Low $ High $ Low $ High $ Change in power price per $/MWh (b) $ (5) $ 5 $ 7 $ 42 $ (115) $ 119 __________________ (a) Margin price sensitivities hold constant certain microeconomic and macroeconomic factors that may impact our margin and the impact of changes in prices; value in millions and includes expected value of Nuclear PTC.
The base case for these sensitivities incorporates market prices, our economic hedge position, expected Nuclear PTC (to the extent applicable), and expected generation (including cost inputs and planned outages) as of December 31, 2025 (Successor): Sensitivity Range 2026 Margin Effect (a) 2027 Margin Effect (a) Low High Low $ High $ Low $ High $ Change in power price per $/MWh (b) $ (5) $ 5 $ (50) $ 55 $ (185) $ 185 __________________ (a) Margin price sensitivities hold constant certain microeconomic and macroeconomic factors that may impact our margin and the impact of changes in prices; value in millions, rounded to nearest $5 million, and includes expected value of Nuclear PTC.
Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Talen Energy Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Talen Energy Corporation and its subsidiaries (Successor) (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements of operations, comprehensive income (loss), equity and cash flows for the year then ended December 31, 2024 and for the period from May 18, 2023 through December 31, 2023, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the "consolidated financial statements").
Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Talen Energy Corporation Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of Talen Energy Corporation and its subsidiaries (Successor) (the "Company") as of December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive income (loss), of equity and of cash flows for the years ended December 31, 2025 and 2024, and for the period from May 18, 2023 through December 31, 2023, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the "consolidated financial statements").
TABLE OF CONTENTS Page Report of Independent Registered Public Audit Firm (PCAOB ID 238 ) 49 Consolidated Statements of Operations 52 Consolidated Statements of Comprehensive Income (Loss) 53 Consolidated Balance Sheets 54 Consolidated Statements of Cash Flows 55 Consolidated Statements of Equity 57 Notes to the Annual Financial Statements 58 1. Organization and Operations 58 2.
TABLE OF CONTENTS Page Report s of Independent Registered Public Audit Firm (PCAOB ID 238 ) 47 Consolidated Statements of Operations 51 Consolidated Statements of Comprehensive Income (Loss) 52 Consolidated Balance Sheets 53 Consolidated Statements of Cash Flows 54 Consolidated Statements of Equity 56 Notes to the Annual Financial Statements 57 1.
Table of Contents TALEN ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Successor Predecessor (Millions of Dollars, except share data) Year Ended December 31, 2024 May 18 through December 31, 2023 January 1 through May 17, 2023 Year Ended December 31, 2022 Capacity revenues $ 192 $ 133 $ 108 $ 377 Energy and other revenues 1,881 1,156 1,042 2,035 Unrealized gain (loss) on derivative instruments (Note 5) 42 55 60 677 Operating Revenues (Note 6) 2,115 1,344 1,210 3,089 Fuel and energy purchases (694) (424) (176) (938) Nuclear fuel amortization (123) (108) (33) (94) Unrealized gain (loss) on derivative instruments (Note 5) 20 (3) (123) (52) Energy Expenses (797) (535) (332) (1,084) Operating Expenses Operation, maintenance and development (592) (358) (285) (610) General and administrative (163) (93) (51) (106) Depreciation, amortization and accretion (Note 10) (298) (165) (200) (520) Impairments (Note 10) (1) (3) (381) — Operational restructuring — — — (488) Other operating income (expense), net (38) (30) (37) (40) Operating Income (Loss) 226 160 (76) 241 Nuclear decommissioning trust funds gain (loss), net (Note 9) 178 108 57 (184) Interest expense and other finance charges (Note 13) (238) (176) (163) (359) Reorganization income (expense), net (Note 4) — — 799 (812) Consolidation of subsidiary gain (loss) (Note 2) — — — (170) Gain (loss) on sale of assets, net (Note 20) 884 7 50 — Other non-operating income (expense), net 61 95 10 (44) Income (Loss) Before Income Taxes 1,111 194 677 (1,328) Income tax benefit (expense) (Note 7) (98) (51) (212) 35 Net Income (Loss) 1,013 143 465 (1,293) Less: Net income (loss) attributable to noncontrolling interest 15 9 (14) (4) Net Income (Loss) Attributable to Stockholders (Successor) / Member (Predecessor) $ 998 $ 134 $ 479 $ (1,289) Per Common Share (Successor) Net Income (Loss) Attributable to Stockholders - Basic $ 18.40 $ 2.27 N/A N/A Net Income (Loss) Attributable to Stockholders - Diluted $ 17.67 $ 2.26 N/A N/A Weighted-Average Number of Common Shares Outstanding - Basic (in thousands) 54,254 59,029 N/A N/A Weighted-Average Number of Common Shares Outstanding - Diluted (in thousands) 56,486 59,399 N/A N/A The accompanying Notes to the Annual Financial Statements are an integral part of the financial statements. 52 Item 8.
Table of Contents TALEN ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Successor Predecessor (Millions of Dollars, except share data) Year Ended December 31, 2025 Year Ended December 31, 2024 May 18 through December 31, 2023 January 1 through May 17, 2023 Energy and other revenues $ 2,141 $ 1,881 $ 1,156 $ 1,042 Capacity revenues 485 192 133 108 Unrealized gain (loss) on derivative instruments (Note 2) (45) 42 55 60 Operating Revenues (Note 3) 2,581 2,115 1,344 1,210 Fuel and energy purchases (908) (694) (424) (176) Nuclear fuel amortization (97) (123) (108) (33) Unrealized gain (loss) on derivative instruments (Note 2) (61) 20 (3) (123) Energy Expenses (1,066) (797) (535) (332) Operating Expenses Operation, maintenance and development (620) (592) (358) (285) General and administrative (Includes stock-based compensation of $(526), $(33), $(19), and $0) (Note 13) (624) (163) (93) (51) Depreciation, amortization and accretion (Note 7) (279) (298) (165) (200) Impairments (Note 7) — (1) (3) (381) Other operating income (expense), net (82) (38) (30) (37) Operating Income (Loss) (90) 226 160 (76) Nuclear decommissioning trust funds gain (loss), net (Note 6) 182 178 108 57 Interest expense and other finance charges (Note 10) (302) (238) (176) (163) Reorganization income (expense), net (Note 20) — — — 799 Gain (loss) on sale of assets, net (Note 17) 34 884 7 50 Other non-operating income (expense), net 10 61 95 10 Income (Loss) Before Income Taxes (166) 1,111 194 677 Income tax benefit (expense) (Note 4) (53) (98) (51) (212) Net Income (Loss) (219) 1,013 143 465 Less: Net income (loss) attributable to noncontrolling interest — 15 9 (14) Net Income (Loss) Attributable to Stockholders (Successor) / Member (Predecessor) $ (219) $ 998 $ 134 $ 479 Per Common Share Net Income (Loss) Attributable to Stockholders - Basic $ (4.79) $ 18.40 $ 2.27 N/A Net Income (Loss) Attributable to Stockholders - Diluted $ (4.79) $ 17.67 $ 2.26 N/A Weighted-Average Number of Common Shares Outstanding - Basic (in thousands) 45,692 54,254 59,029 N/A Weighted-Average Number of Common Shares Outstanding - Diluted (in thousands) 45,692 56,486 59,399 N/A The accompanying Notes to the Annual Financial Statements are an integral part of the financial statements. 51 Item 8.
Commodity derivative contracts are valued using inputs and assumptions such as contractual volumes, delivery location, forward commodity prices, commodity price volatility, discount rates, and credit worthiness of counterparties.
As disclosed by management, commodity derivative contracts are valued using a market approach which utilizes inputs and assumptions such as contractual volumes, delivery location, forward commodity prices, commodity price volatility, discount rates, and credit worthiness of counterparties.
As disclosed by management, the Company utilizes exchange-traded and over the-counter traded derivative instruments to economically hedge the commodity price risk of the forecasted future sales and purchases of commodities associated with their generation portfolio.
The Company utilizes exchange-traded and over the-counter traded derivative instruments, and in certain instances, structured products, to economically hedge the commodity price risk of the forecasted future sales and purchases of commodities associated with their generation portfolio.
We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Basis of Accounting As discussed in Note 3 to the consolidated financial statements, the United States Bankruptcy Court for Southern District of Texas confirmed the Company's Plan of Reorganization (the "plan") in December 2022.
Basis of Accounting As discussed in Note 19 to the consolidated financial statements, the bankruptcy court confirmed the Company's Plan of Reorganization (the "plan") in December 2022.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
Table of Contents TALEN ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Successor (Millions of Dollars, except share data) December 31, 2024 December 31, 2023 Assets Cash and cash equivalents $ 328 $ 400 Restricted cash and cash equivalents (Note 19) 37 501 Accounts receivable (Note 6) 123 137 Inventory, net (Note 8) 302 375 Derivative instruments (Notes 5 and 14) 66 89 Other current assets 184 52 Total current assets 1,040 1,554 Property, plant and equipment, net (Note 10) 3,154 3,839 Nuclear decommissioning trust funds (Notes 9 and 14) 1,724 1,575 Derivative instruments (Notes 5 and 14) 5 6 Other noncurrent assets 183 147 Total Assets $ 6,106 $ 7,121 Liabilities and Equity Long-term debt, due within one year (Notes 13 and 14) $ 17 $ 9 Accrued interest 18 32 Accounts payable and other accrued liabilities 266 344 Derivative instruments (Notes 5 and 14) — 32 Other current liabilities 154 69 Total current liabilities 455 486 Long-term debt (Notes 13 and 14) 2,987 2,811 Derivative instruments (Notes 5 and 14) 7 11 Postretirement benefit obligations (Note 15) 305 368 Asset retirement obligations and accrued environmental costs (Note 11) 468 469 Deferred income taxes (Note 7) 362 407 Other noncurrent liabilities 135 35 Total Liabilities $ 4,719 $ 4,587 Commitments and Contingencies (Note 12) Stockholders' Equity (Note 18) Common stock ($0.001 par value, 350,000,000 shares authorized) (a) $ — $ — Additional paid-in capital 1,725 2,346 Accumulated retained earnings (deficit) (326) 134 Accumulated other comprehensive income (loss) (12) (23) Total Stockholders' Equity 1,387 2,457 Noncontrolling interests — 77 Total Equity 1,387 2,534 Total Liabilities and Equity $ 6,106 $ 7,121 __________________ (a) 45,961,910 and 59,028,843 shares issued and outstanding as of December 31, 2024 (Successor) and December 31, 2023 (Successor), respectively.
Table of Contents TALEN ENERGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Successor (Millions of Dollars, except share data) December 31, 2025 December 31, 2024 Assets Cash and cash equivalents $ 689 $ 328 Restricted cash and cash equivalents (Note 16) 63 37 Accounts receivable (Note 3) 196 123 Inventory, net (Note 5) 278 302 Derivative instruments (Notes 2 and 11) 56 66 Other current assets 67 184 Total current assets 1,349 1,040 Property, plant and equipment, net (Note 7) 7,546 3,154 Nuclear decommissioning trust funds (Notes 6 and 11) 1,900 1,724 Derivative instruments (Notes 2 and 11) 4 5 Other noncurrent assets 106 183 Total Assets $ 10,905 $ 6,106 Liabilities and Equity Long-term debt, due within one year (Notes 10 and 11) $ 29 $ 17 Accrued interest 60 18 Accounts payable and other accrued liabilities 281 266 Derivative instruments (Notes 2 and 11) 101 — Stock-based compensation liabilities (Note 13) 501 — Other current liabilities 78 154 Total current liabilities 1,050 455 Long-term debt (Notes 10 and 11) 6,782 2,987 Derivative instruments (Notes 2 and 11) 67 7 Postretirement benefit obligations (Note 12) 229 305 Asset retirement obligations and accrued environmental costs (Note 8) 494 468 Deferred income taxes (Note 4) 486 362 Acquired fuel supply contract liabilities (Note 17) 662 — Other noncurrent liabilities 42 135 Total Liabilities $ 9,812 $ 4,719 Commitments and Contingencies (Note 9) Stockholders' Equity (Note 15) Common stock ($0.001 par value, 350,000,000 shares authorized) (a) $ — $ — Additional paid-in capital 1,709 1,725 Accumulated retained earnings (deficit) (612) (326) Accumulated other comprehensive income (loss) (4) (12) Total Stockholders' Equity $ 1,093 $ 1,387 Total Liabilities and Stockholders' Equity $ 10,905 $ 6,106 __________________ (a) 45,687,828 and 45,961,910 shares issued and outstanding as of December 31, 2025 (Successor) and December 31, 2024 (Successor), respectively.
The following table shows the impact of a hypothetical 10% increase in interest rates and a 10% decrease in equity values: Successor December 31, 2024 December 31, 2023 Estimated increase (decrease) in the fair value of NDT assets $ (104) $ (91) See Notes 9 and 14 to the Annual Financial Statements for additional information regarding the NDT. 47 Form 10-K Table of Contents ITEM 8.
As of December 31, 2025 (Successor), the net estimated effect of a hypothetical 10% increase in interest rates and a 10% decrease in equity values was: Estimated increase (decrease) in the fair value of NDT assets $ (117) See Notes 6 and 11 to the Annual Financial Statements for additional information regarding the NDT. 45 Form 10-K Table of Contents ITEM 8.
Commodity Derivatives Valuation As described in Notes 2, 5 and 14 to the consolidated financial statements, the Company had a fair value net derivative asset position of $71 million and a fair value net derivative liability position of $7 million, as of December 31, 2024.
Table of Contents Commodity Derivatives Valuation As described in Notes 1, 2, and 11 to the consolidated financial statements, the Company’s commodity derivatives had a fair value net derivative asset position of $60 million and a fair value net derivative liability position of $156 million as of December 31, 2025.
Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.
Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.
Basis of Accounting As discussed in Note 3 to the consolidated financial statements, the Company filed a petition on May 9, 2022 with the United States Bankruptcy Court for the Southern District of Texas for reorganization under the provisions of Chapter 11 of the Bankruptcy Code.
Basis of Accounting As discussed in Note 19 to the consolidated financial statements, the Company filed a petition in May 2022 with the bankruptcy court for reorganization under the provisions of Chapter 11 of the Bankruptcy Code. The Company’s Plan of Reorganization was substantially consummated on May 17, 2023 and the Company emerged from bankruptcy.
The estimated impact of a 10% adverse movement in interest rates were: Successor December 31, 2024 December 31, 2023 Increase in interest expense $ 6 $ 6 Fair value of debt 46 53 Credit Risk Credit risk is the risk of financial loss if a customer, counterparty, or financial institution is unable to perform or pay amounts due, causing a financial loss to us.
(b) Estimated decrease in the fair value of fixed rate long-term debt as of December 31, 2025 (Successor). Credit Risk Credit risk is the risk of financial loss if a customer, counterparty, or financial institution is unable to perform or pay amounts due, causing a financial loss to us.
Table of Contents Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the commodity derivatives valuation, including controls over the development of significant assumptions.
Basis of Presentation and Summary of Significant Accounting Policies 58 3 . Talen Emergence from Restructuring 65 4 . F resh Start Accounting 66 5 . Risk Management, Derivative Instruments and Hedging Activities 74 6 . Revenue 76 7 . Income Taxes 77 8 . Inventory 80 9 . Nuclear Decommissioning Trust Funds 81 10.
Business, Basis of Presentation, and Summary of Significant Accounting Policies 57 2. Risk Management, Derivative Instruments and Hedging Activities 66 3. Revenue 68 4. Income Taxes 69 5. Inventory 72 6. Nuclear Decommissioning Trust Funds 73 7. Property, Plant and Equipment 74 8. Asset Retirement Obligations and Accrued Environmental Costs 76 9. Commitments and Contingencies 77 10.
(b) Power price sensitivities hold market heat rate constant for each month; therefore, natural gas prices are adjusted accordingly. Interest Rate Risk We are exposed to interest rate risk from the possibility that changes in interest rates will affect future cash flows associated with existing floating rate debt issuances.
(b) Power price sensitivities hold market heat rate constant for each month; therefore, natural gas prices are adjusted accordingly. 44 Form 10-K Table of Contents Interest Rate Risk Interest rate risk represents the risk that changes in benchmark interest rates could adversely affect our financial condition, results of operations, and cash flows.
The Company’s Plan of Reorganization was substantially consummated on May 17, 2023 and the Company emerged from bankruptcy. In connection with its emergence from bankruptcy, the Company adopted fresh start accounting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management.
In connection with its emergence from bankruptcy, the Company adopted fresh start accounting as of May 17, 2023.
Removed
To reduce interest rate risk, derivative instruments are utilized to economically hedge the interest rates for a predetermined contractual notional amount, which results in a cash settlement between counterparties.
Added
We are exposed to interest rate risk as it relates to our long-term debt. Generally, as interest rates rise, periodic cash interest payments due on the Company’s variable rate long term debt increases while lower interest rates decrease such payments.
Removed
To the extent possible, first lien interest rate fixed-for-floating swaps are utilized to hedge this risk. 46 Form 10-K Table of Contents The following table displays the net fair value of interest rate swaps (including accrued interest, if applicable) outstanding at December 31, 2024 (Successor): Notional Exposure Asset (Liability) 10% Adverse Movement (a) Maturities Through Interest rate swaps $ 290 $ (2) $ 6 2026 __________________ (a) Effect of a 10% adverse interest rate movement decreases assets or increases liabilities, as applicable, which could result in an asset becoming a liability.
Added
Although the Company is provided with cash flow predictability because changes to benchmark interest rates do not affect the Company’s periodic cash fixed rate debt interest payments, this could result in the Company paying above prevailing market rates during periods of declining interest rates.
Removed
Additionally, we are exposed to a potential increase in interest expense and to changes in the fair value of debt.
Added
Accordingly, the fair value associated with the Company’s fixed rate debt generally increases as benchmark interest rates decline and decreases during periods of rising rates.
Removed
Property, Plant and Equipment 82 11 . Asset Retirement Obligations and Accrued Environmental Costs 84 1 2 . Commitments and Contingencies 86 1 3 . Long-Term Debt and Other Credit Facilities 91 1 4 . Fair Value 94 1 5 . Postretirement Benefit Obligations 95 1 6 . Stock-Based Com pensation 101 1 7 .
Added
Within the parameters of our risk policy, a portion of our variable rate long-term debt is hedged through the use of financial derivative instruments that is intended to mitigate the variability of cash flows associated with the changes in benchmark rates.
Removed
Earnings Per Share 103 1 8 . Stockholders' Equity 104 1 9 . Supplemental Cash Flow Information 106 2 0 . Acquisitions and Divestitures 107 2 1 . Segments 107 48 Item 8.
Added
Additionally, the Company proactively monitors market conditions which may result, at its election, accessing capital markets to refinance its long-term debt portfolio.
Added
As of December 31, 2025 (Successor), the Company’s long term debt portfolio included approximately: (i) $4.0 billion of fixed rate debt, (ii) $2.9 billion of variable rate debt, and (iii) $990 million of aggregate interest rate swap notional that hedges variable rate exposure through 2029.
Added
The following table displays the estimated effect of a hypothetical 10% increase in benchmark interest rates: Change to interest expense, net (a) $ 7 Change in fair value of long-term debt, net (b) (151) __________________ (a) Estimated increase of variable rate long-term debt interest expense over the next twelve months, net of interest rate swap settlement.
Added
Long-Term Debt and Other Credit Facilities 84 11. Fair Value 88 12. Postretirement Benefit Obligations 89 13. Stock-Based Compensation 94 14. Earnings Per Share 96 15. Stockholders' Equity 97 16. Supplemental Cash Flow Information 98 17. Acquisitions and Divestitures 99 18. Segments 101 19. Talen Emergence from Restructuring 103 20. Fresh Start Accounting 104 46 Item 8.
Added
We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Added
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Added
Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.
Added
Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances.
Added
We believe that our audits provide a reasonable basis for our opinions. As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded the Freedom and Guernsey entities from its assessment of internal control over financial reporting as of December 31, 2025, because they were acquired by the Company in a purchase business combination during 2025.
Added
We have also excluded the Freedom and Guernsey entities from our audit of internal control over financial reporting.
Added
The Freedom and Guernsey entities are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting collectively represent 20% and 6%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2025. 47 Item 8.
Added
Table of Contents Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Added
A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Added
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Added
Acquisition of Freedom and Guernsey - Valuation of Plant and Equipment and Fuel Supply Contract Liabilities As described in Note 17 to the consolidated financial statements, on November 25, 2025, the Company purchased all the ownership interests of Freedom and Guernsey for an aggregate purchase price of $3.8 billion in cash.
Added
Of the acquired assets and liabilities assumed, $4,509 million related to property, plant and equipment, a majority of which relates to plant and equipment, and $667 million of fuel supply contract liabilities were recorded.
Added
Fair value of plant and equipment was determined by management using the income approach and involved the use of significant assumptions including the forecasted prices for capacity, wholesale power, and natural gas, volumetric assumptions, and discount rates.
Added
The fair values of fuel supply contract liabilities were estimated by management using the income approach and involved the use of significant assumptions including forecasted prices for wholesale power and natural gas, volumetric assumptions, and discount rates.
Added
The principal considerations for our determination that performing procedures relating to the valuation of plant and equipment acquired and fuel supply contract liabilities assumed in the acquisition of Freedom and Guernsey is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the plant and equipment acquired and the fuel supply contract liabilities assumed; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to (a) forecasted prices for capacity, wholesale power, and natural gas, volumetric assumptions, and discount rates for plant and equipment acquired and (b) forecasted prices for wholesale power and natural gas, volumetric assumptions, and discount rates for fuel supply contract liabilities assumed; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.
Added
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the plant and equipment acquired and fuel supply contract liabilities assumed.
Added
These procedures also included, among others (i) reading the purchase agreements and the fuel supply agreements; (ii) testing management’s process for developing the fair value estimate of the plant and equipment acquired and the fuel supply contract liabilities assumed; (iii) evaluating the appropriateness of the income approach used by management; (iv) testing the completeness and accuracy of the underlying data used in the income approach; and (v) evaluating the reasonableness of the significant assumptions used by management related to (a) forecasted prices for capacity, wholesale power, and natural gas, volumetric assumptions, and discount rates for plant and equipment acquired and (b) forecasted prices for wholesale power and natural gas, volumetric assumptions, and discount rates for fuel supply contract liabilities assumed.
Added
Evaluating management’s assumptions related to (a) forecasted prices for capacity, wholesale power, and natural gas, and volumetric assumptions for plant and equipment and (b) forecasted prices for wholesale power and natural gas and volumetric assumptions for fuel supply contract liabilities involved considering (i) the current and past performance of Freedom and Guernsey; (ii) the consistency with external market and industry data; and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.
Added
Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the income approach and (ii) the reasonableness of the discount rates assumption for plant and equipment acquired and fuel supply contract liabilities assumed. 48 Item 8.