Q4 2025 Talen Energy Corp Earnings Call

February 26, 2026

Speaker #1: Ladies and gentlemen , thank you for standing by Welcome to the Talen Energy Corporation , fourth quarter 2020 Earnings Call . At this time , all participants are in a listen only mode .

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Talen Energy Corporation Q4 2025 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. We ask that you limit to one question and one follow-up. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Sergio Castro, Vice President and Treasurer. Please go ahead.

Speaker #1: After the speaker's presentation , there will be a question and answer session . To ask question during the session , you would need to press star one one on your telephone .

Speaker #1: You would then hear an automated message advising your hand is raised . We ask that you limit to one question and one follow up , and to withdraw your question , please press star one one again .

Speaker #1: Please be advised that today's conference is being recorded . I would now like to turn the conference over to Sergio Castro Vice President and Treasurer .

Speaker #1: Please go ahead

Speaker #2: Thank you . Michelle , and welcome to Talen Energy fourth Quarter 2025 conference call Speaking today , our Chief Executive Officer , Mark McFarland president Terry Nutt and Chief Financial Officer Cole Muller They are joined by other talented senior executives to address questions during the second part of today's call .

Sergio Castro: Thank you, Michelle, and welcome to Talen Energy's Q4 2025 Conference Call. Speaking today are Chief Executive Officer, Mac McFarland, President, Terry Nutt, and Chief Financial Officer, Cole Muller. They are joined by other Talen senior executives to address questions during the second part of today's call, as necessary. We issued our earnings release this afternoon, along with a presentation, all of which can be found in the investor relations section of Talen's website, talenenergy.com. Today, we are making some forward-looking statements based on current expectations and assumptions. Actual results could differ due to risk factors and other considerations described in our financial disclosures and other SEC filings. Today's discussion also includes references to certain non-GAAP financial measures. We have provided information reconciling our non-GAAP measures to the most directly comparable GAAP measures in our earnings release and the appendix of our presentation.

Speaker #2: As necessary , we issued our earnings release this afternoon , along with the presentation , all of which can be found in the Investor Relations section of Talent website .

Speaker #2: Talen Energy . Com Today we are making some forward looking statements based on current expectations and assumptions . Actual results could differ due to risk factors and other considerations described in our financial disclosures and other SEC filings .

Speaker #2: Today's discussion also includes references to certain non-GAAP financial measures. We have provided information reconciling our non-GAAP measures to the most directly comparable GAAP measures in our earnings release and the appendix of our presentation.

Speaker #2: And with that , I will now turn the call over to Mac Great .

Sergio Castro: With that, I will now turn the call over to Mac.

Mac McFarland: Great. Thanks, Sergio. Welcome everyone to today's call. As always, we appreciate your ongoing interest in Talen and participation in our calls. We closed out the full year 2025 with strong results in Q4, adding the Freedom and Guernsey assets and operating well during the early winter in December. Twenty twenty-six is starting off the same with overall strong performance by the fleet and the commercial teams during the cold winter months. I'd mentioned that PJM and other operators also performed well, maintaining grid reliability during some of the highest day-after-day loads we have seen. We saw a fair amount of elevated prices and volatility. All in all, 2026 is off to a good start, and we are reaffirming our 2026 guidance range.

Speaker #3: Thanks , Sergio , and welcome everyone to today's call . As always , we appreciate your ongoing interest in Tallinn and participation in our calls We closed out the full year 2025 with strong results in Q4 , adding the Freedom and Guernsey assets and operating well during the early winter .

Speaker #3: In December . In 2026 , is starting off the same , with overall strong performance by the fleet and the commercial teams during the cold winter months And I'd mentioned that PJM , that PJM and other operators also performed well , maintaining grid reliability during some of the highest day after day loads .

Speaker #3: We have seen . We saw a fair amount of elevated prices and volatility , and all in all , 2026 is off to a good start and we are reaffirming our 2026 guidance range .

Speaker #3: Just recall that that range does not include the recently announced cornerstone acquisition that we anticipate closing this summer As I reflect back on 2025 , we said it was going to be an exciting year and it was across the IP space and at Talen , we accomplished a lot .

Mac McFarland: Just recall that that range does not include the recently announced Cornerstone acquisition that we anticipate closing this summer. As I reflect back on 2025, we said it was going to be an exciting year, and it was across the IPP space. At Talen, we accomplished a lot. We signed the reliability must-run agreements. We signed a revamped and doubled front-of-the-meter PPA with Amazon at Susquehanna. We signed and closed Freedom and Guernsey, and we delivered on the basics of being an IPP, which is safely, reliably, and profitably delivering megawatts to the grid. Thanks to all the Talen employees that make this possible. Looking forward to 2026, we are optimistic about the continued long arc of the powering AI thesis and Talen's position in it. As I've been saying, 2025 was a year of option development, and 2026 will be the year of rationalization.

Speaker #3: We signed the reliability must run agreements . We signed a revamped and doubled front of the meter PPA with Amazon at Susquehanna . We signed and closed Freedom in Guernsey and we delivered on the basics of being an IP , which is safely , reliably and profitably delivering megawatts to the grid .

Speaker #3: Thanks to all the talent employees that make this possible Looking forward to 2026 . We are optimistic about the continued long arc of the powering AI thesis and towns position .

Speaker #3: In it . As I've been saying , 2025 was a year of option development and 2026 will be the year of rationalization In 2025 , as everyone in the space was racing to develop options for data center development and the associated power of bow wave of expectations built across the industry for deals and more deals , whether they were virtual purchase power agreements or behind the meter developments .

Mac McFarland: In 2025, as everyone in the space was racing to develop options for data center development and the associated power, a bow wave of expectations built across the industry for deals and more deals, whether they were virtual purchase power agreements or behind the meter developments. Investors were anticipating the next big thing and the next big announcement. To some, 2025 fell short. For others that grasp this long arc, they believe things will rationalize themselves out. Some projects will simply not make it, and others will. Some will be delayed and will need to be rationalized in 2027. Overall, we believe the long arc remains unchanged.

Speaker #3: Investors were anticipating the next big thing , the next big announcement . To some 2025 fell short . For others , that grasped this long arc , they believe things will rationalize themselves out .

Speaker #3: Some projects will simply not make it , and others will . Some will be delayed and will need to be rationalized . In 2027 , but overall , we believe the long arc remains unchanged As the CEO of anthropic wrote in his recent essay and I quote every few months , public sentiment either becomes convinced that AI is hitting a wall or becomes excited about some new breakthrough that will fundamentally change the game .

Mac McFarland: As the CEO of Anthropic wrote in his recent essay, and I quote, "Every few months, public sentiment either becomes convinced that AI is hitting a wall or becomes excited about some new breakthrough that will fundamentally change the game. The truth is that behind the volatility and public speculation, there has been a smooth, unyielding increase in AI's cognitive capabilities." Again, that's a quote from the CEO of Anthropic. From my perspective, you could replace AI in that quote with IPPs or replace AI with Talen itself, the quote would keep its same meaning. It is what I mean when I say the long arc. Our capabilities to power data centers and AI have had a smooth, unyielding increase. That said, there has been a lot of near-term noise that can be conflated with the rational long arc view.

Speaker #3: But the truth is that, behind the volatility in public speculation, there has been a smooth, unyielding increase in eyes, cognitive capabilities.

Speaker #3: Again , that's a quote from the CEO of Anthropic From my perspective , you could replace AI in that quote with IPS or replace AI with talent itself .

Speaker #3: And the quote would keep its same meaning and is what what I mean when I say the long arc , our capabilities to power data centers and AI a smooth , unyielding increase That said , there has been a lot of near-term noise that can be conflated with the rational long arc view Reliability .

Mac McFarland: Reliability Backstop Auction, overbuild, resource adequacy, regulated new build, behind the meter, front-of-the-meter, local zoning. They are each relevant in their own sense, interrelated in some sense, and when taken all together, culminate in a vastness of noise. Noise that can be misunderstood, or worse yet, turned into something that it is not. When taken in reality, they don't change the long arc, and we remain committed to our Talen Flywheel strategy. For investors, please know that we manage to this long arc and seek to maximize long-term value creation and not do short-term events. We do not over-rotate. Nothing has changed our fundamental view that data centers are coming at a rapid pace. We have the ability to contract with these entities across our fleet.

Speaker #3: Backstop auction Overbuild resource adequacy . Regulated new build behind the meter . Front of the meter . Local zoning . They are each relevant in their own sense .

Speaker #3: Interrelated in some sense , and when taken all together , culminate in a vastness of noise . Noise that can be misunderstood or worse yet , turned into something that it is not .

Speaker #3: But when taken in reality , they don't change the long arc and we remain committed to our talent . Flywheel strategy for investors .

Speaker #3: Please know that we managed to this long arc and seek to maximize long term value creation and not to short term events . We do not overrotate .

Speaker #3: Nothing has changed our fundamental view that data centers are coming , coming at a rapid pace . We have the ability to contract with these entities across our fleet .

Speaker #3: We are building a further diversified fleet to support those contracts , and we are building capabilities to contribute to the addition of new build with respect to Montour .

Mac McFarland: We are building a further diversified fleet to support those contracts, and we are building capabilities to contribute to the addition of new build. With respect to Montour, what is our plan B? That is and remains the question asked by many. I see this situation analogous to the ISA denial and the questions after the first decision about our initial plans at Susquehanna. What did we do? We stayed flexible, we retooled, and ultimately pivoted to a better commercial solution. We remain confident that we can do the same in this instance too. Short-term hurdles do not define long-term success. How you respond to them does. Therefore, we press on. Of course, Montour is just one opportunity we have in our pipeline, albeit the most well-known, and that is likely my fault for talking about it too much.

Speaker #3: What is our plan B? That is and remains the question asked by many. I see this situation as analogous to the ISA denial and the questions after the first decision about our initial plans at Susquehanna.

Speaker #3: But what did we do ? We stayed flexible . We retooled and ultimately pivoted to a better commercial solution . We remain confident that we can do the same in this instance .

Speaker #3: To short term hurdles . Do not define long term success . How you respond to them does . And so therefore we press on Of course , Montour is just one opportunity we have in our pipeline , albeit the most well known .

Speaker #3: And that is likely my fault for talking about it too much . We have numerous other organic and inorganic sites . We are developing across the PJM footprint to further implement the talent flywheel .

Mac McFarland: We have numerous other organic and inorganic sites we are developing across the PJM footprint to further implement the Talen Flywheel. This includes both powered land opportunities as well as new build opportunities. I know many of you will want to dig into this pipeline of opportunities, but before you ask about them, let me say this: We will not discuss them at any level of detail, and we no longer plan to discuss development in the public forum and repeat the frenzied speculation that ensued around one decision by Montour County commissioners. You can be rest assured knowing that we are working the pipeline every day and have options at our disposal.

Speaker #3: This includes both powered land opportunities as well as new build opportunities . And I know many of you will want to dig into this pipeline of opportunities .

Speaker #3: But before you ask about them, let me say this. We will not discuss them at any level of detail, and we no longer plan to discuss development in the public forum and repeat the frenzied speculation that ensued around one decision by Montour County commissioners.

Speaker #3: But you can be rest assured , knowing that we are working the pipeline every day and have options at our disposal on the regulatory front , we are engaging with policymakers at both the state , federal and toe level to bring about the reliability backstop procurement .

Mac McFarland: On the regulatory front, we are engaging with policymakers at both the state, federal, and RTO level to bring about the reliability backstop procurement or RBP, formerly the RBA, in PJM that provides for a one-time solution to resource adequacy, which will minimize the cost on the system and allows time for real capacity market reform. That is what our broad-based coalition of generators, hyperscalers, and utilities recently proposed at a PJM workshop. We look forward to continuing the dialogue on this critical policy development, and in the meantime, we support the extension of the current floor and cap of the Base Residual Auction in order to provide time to make these longer-term reforms. Before I turn the call over to Terry, let me conclude with this. Our strategy, and therefore our investment thesis, is based on real assets on the ground today that can support data center build-out.

Speaker #3: Our formerly the RBA in PJM that provides for a one time solution to resource adequacy , which will minimize the costs on the system and allows time for real capacity market reform And that is what our broad based coalition of generators , hyperscalers and utilities recently proposed at PJM workshop .

Speaker #3: We look forward to continuing the dialogue on this critical policy development . And in the meantime , we support the extension of the current floor and cap of the base residual auction in order to provide time to make these longer term reforms Before I turn the call over to Terry , let me conclude with this .

Speaker #3: Our strategy, and therefore our investment thesis, is based on real assets on the ground today that can support data center buildout. In doing so, we are creating infrastructure assets out of what were previously merchant generation assets subject to commodity prices.

Mac McFarland: In doing so, we are creating infrastructure as-assets out of what were previously merchant generation assets subject to commodity prices. That in turn is driving lower capital costs and higher returns for our investors. While we have room to run on this current portfolio, we are also set up for the future. In the future, we can augment our current assets with contracted new build and future inorganic powered land sites. Something that we started last year, by the way, creating a pipeline of opportunities as I previously described. We have dedicated part of our management team to go after this opportunity with the recent management changes announced last December. This is a durable and tangible model built on today's reality, but with an eye towards future growth. We look forward to your questions, and with that, I'll turn the call over to Terry.

Speaker #3: And that in turn , is driving lower capital costs and higher returns for our investors . While we have room to run on this current performance portfolio , we are also set up for the future .

Speaker #3: In the future , we can augment our current assets with contracted new build and future inorganic powered land sites , something that we started last year .

Speaker #3: By the way , creating a pipeline of opportunities . As I previously described , and we have dedicated part of our management team to go after this opportunity .

Speaker #3: With the recent management changes announced last December . This is a durable , intangible model built on today's reality , but with an eye towards future growth .

Speaker #3: We look forward to your questions . And with that , I'll turn the call over to Terry . Thank you , Matt .

Terry Nutt: Thank you, Mac, and good afternoon, everyone. Moving to slide three for a quick review of our strategic activity in 2025. During the year, we introduced the Talen Flywheel, a repeatable value creation strategy that leverages our reliable, scalable generation assets and commercial capabilities to deliver durable free cash flow per share growth for our shareholders. As part of this strategy, we executed on the contracting component of the flywheel through the Amazon 2.0 PPA that was executed in June, which moved the transaction to a front-of-the-meter arrangement and upsized the volumes to 1.9GW in total. Transactions such as this will provide cash flows to support other parts of our overall strategy.

Speaker #2: And .

Speaker #4: Good afternoon , everyone Moving to slide three for a quick review of our strategic activity in 2025 . During the year , we introduced the Talen Flywheel , a repeatable value creation strategy that leverages our reliable , scalable generation assets and commercial capabilities to deliver durable free cash flow per share growth for our shareholders As part of this strategy , we executed on the contracting component of the flywheel through the Amazon 2.0 PPA that was executed in June , which moved the transaction to a front arrangement and upsized the volumes to 1.9GW in total .

Speaker #4: Transactions such as this will provide cash flows to support other parts of our overall strategy In July , we executed on the acquisition component of our strategy by announcing the purchase of the Freedom and Guernsey plants , adding approximately 2.8GW of efficient ccgt , including a significant foundational position in Ohio and subsequently brought those assets into the portfolio in late November Throughout the year , we focused on continuing our balance sheet discipline with the ability to reduce our net leverage to below three and a half times .

Terry Nutt: In July, we execute on the acquisition component of our strategy by announcing the purchase of the Freedom and Guernsey plants, adding approximately 2.8 GW of efficient CCGTs, including a significant foundational position in Ohio, and subsequently brought those assets into the portfolio in late November. Throughout the year, we focused on continuing our balance sheet discipline with the ability to reduce our net leverage to below 3.5x by the end of 2026, while also maintaining a clear focus on our shareholders by increasing our share repurchase program to $2 billion through 2028.

Speaker #4: By the end of 2026 . While also maintaining a clear focus on our shareholders by increasing our share repurchase program to $2 billion through 2028 .

Speaker #4: In 2026 , we will continue this path of maximizing value with a focus on creating the most adjusted free cash flow per share .

Terry Nutt: In 2026, we will continue this path of maximizing value with a focus on creating the most Adjusted Free Cash Flow per share while selectively exploring inorganic and organic opportunities that support the Talen Flywheel. Turning to slide 4, let's talk about how we are continuing to grow the Talen fleet through acquisitions. As previously mentioned, we expanded our presence in Pennsylvania through the acquisition of Freedom, and expanded our footprint into Western PJM with the acquisition of Guernsey. Shortly after closing those transactions, we entered into an agreement to acquire the 3 Cornerstone generation assets located in Ohio and Indiana. Western PJM has significant data center tailwinds and accessibility to reliable, low-cost natural gas from the Marcellus and Utica shales. Ohio is an active data center hub that continues to grow.

Speaker #4: While selectively exploring inorganic and organic opportunities that support the flywheel Turning to slide four . Let's talk about how we are continuing to grow the talent fleet through acquisitions .

Speaker #4: As previously mentioned, we expanded our presence in Pennsylvania through the acquisition of Freedom and expanded our footprint into Western PJM with the acquisition of Guernsey. Shortly after closing those transactions, we entered into an agreement to acquire the three Cornerstone generation assets located in Ohio and Indiana.

Speaker #4: Western PJM has significant data center tailwinds and accessibility to reliable , low cost , natural gas from the Marcellus and Utica shells in Ohio is an active data center hub that continues to grow Additionally , these acquisitions diversify talent generation portfolio by adding high capacity factor assets that have high free cash flow conversion rates .

Terry Nutt: Additionally, these acquisitions diversify Talen's generation portfolio by adding high capacity factor assets that have high free cash flow conversion rates. The assets will also enhance Talen's large load contracting opportunities. As a reminder, we underwrite acquisitions on a merchant basis using current forward market energy and capacity prices, combined with more normalized views in the out-years. Executing offtake agreements on these assets creates additional upside potential. Turning to slide 5. The driving factors behind large load growth, and overall power demand fundamentals continue to remain constructive. One of the largest driving forces is the significant amount of capital that is being deployed by the most well-capitalized technology firms in the world. Recent CapEx forecasts from the largest hyperscalers show significant increases in spending in 2026 and beyond, including over $650 billion of estimated spend in this year alone.

Speaker #4: The assets will also enhance Tallon's large load contracting opportunities . As a reminder , we underwrite acquisitions on a merchant basis using current forward market energy and capacity prices , combined with more normalized views in the outyears executing offtake agreements on these assets creates additional upside potential Turning to slide five , the driving factors behind large load growth and overall power demand fundamentals continue to remain constructive .

Speaker #4: One of the largest driving forces is the significant amount of capital that is being deployed by the most well-capitalized technology firms in the world Recent CapEx forecasts from the largest hyperscalers show significant increases in spending in 2026 and beyond , including over $650 billion of estimated spend in this year alone .

Speaker #4: We see the resulting growth of data center capacity from that spend showing up in several states where we have, or plan to have, solid generation positions, including Pennsylvania, Ohio, and Indiana.

Terry Nutt: We see the resulting growth of data center capacity from that spend showing up in several states where we have or plan to have solid generation positions, including Pennsylvania, Ohio, and Indiana. A deeper dive into the fundamentals to the most recent PJM peak load forecast for the primary regions that we operate in provides a view of the expected load growth over the next several years. This forecast, even after the recent modifications to put more rigor around proposed large loads, shows PPL's zone increasing peak load by over 70% in the next 5 years, while AEP's zone increases by over 30% in the same period. Earlier this month, AEP reported contracted load growth of 4 gigawatts in PJM in 2026, largely driven by load growth in Ohio.

Speaker #4: A deeper dive into the fundamentals through the most recent PJM peak load forecast for the primary regions that we operate in , provides a view of the expected load growth over the next several years This forecast , even after the recent modifications to put more rigor around proposed large loads , shows Pale Zone increasing peak load by over 70% in the next five years , while AEP zone increases by over 30% in the same period Earlier this month , AEP reported contracted load growth of four gigawatts in PJM .

Speaker #4: In 2026 , largely largely driven by load growth in Ohio . Approximately 90% of APS reported 15GW of incremental load growth through 2030 is supported by executed take or pay electric service agreements Meanwhile , RPL also reported significant growth in its territory and expects to have ten gigawatts of signed agreements by the end of the first quarter of 2026 .

Terry Nutt: Approximately 90% of AEP's reported 15 GW of incremental load growth through 2030 is supported by executed take-or-pay electric service agreements. Meanwhile, PPL also reported significant growth in its territory and expects to have 10 GW of signed agreements by the end of Q1 2026. What does this all mean for Talen? Two primary results. First, demand growth means higher runtimes for our existing generation fleet, especially our intermediate dispatch and peaking units. Second, increased demand will drive more attractive economics for spark spreads and potential offtake agreements. Moving to slide six and to follow up on what Mac mentioned earlier. Nothing has changed in the outlook for basic market fundamentals. Talen's underlying value proposition remains the same and still points up and to the right.

Speaker #4: So what does this all mean for Talen Two primary results . First , demand growth means higher runtimes for our existing generation fleet , especially our intermediate dispatch and peaking units Second , increased demand will drive more attractive economics for spark spreads and potential offtake agreements Moving to slide six and to follow up on what Matt mentioned earlier , nothing has changed in the outlook for basic market fundamentals .

Speaker #4: Talons underlying value proposition remains the same . And still points up and to the right The PJM capacity markets have been reflective of these tightening fundamentals as well , with the last two base residual capacity auctions .

Terry Nutt: The PJM capacity markets have been reflective of these tightened fundamentals as well, with the last two Base Residual Auctions clearing at the price gap. This trend is expected to continue, PJM, with the support of the governors and other stakeholders, has indicated it intends to seek an extension of the price collar for two additional Base Residual Auctions. In relation to energy and spark spreads, we have seen appreciation in the forward curves for 2026 to 2028 from the end of July to the end of the year, with growth in spark spreads in PJM increasing over 15% during that period. Turning to slide 7, I'd like to provide a brief update on our hedging activity this past quarter. As a reminder, we have a pragmatic, not programmatic hedging strategy.

Speaker #4: Clearing at the price cap . This trend is expected to continue . And PJM , with the support of the governors and other stakeholders , has indicated an intends to seek an extension of the price collar for two additional base residual auctions in relation to energy and spark spreads .

Speaker #4: We have seen appreciation in the forward curves for 2026 to 2028, from the end of July to the end of the year, with growth in spark spreads in PJM increasing over 15% during that period. Turning to slide seven.

Speaker #4: I'd like to provide a brief update on our hedging activity this past quarter. As a reminder, we have a pragmatic, not programmatic, hedging strategy.

Speaker #4: Our strategy is focused on maintaining appropriate risk tolerances and financial discipline to support cash flow stability , while also leaving room to capture upside when opportunities arise This gives our team the flexibility to add hedges during higher pricing periods .

Terry Nutt: Our strategy is focused on maintaining appropriate risk tolerances and financial discipline to support cash flow stability, while also leaving room to capture upside when opportunities arise. This gives our team the flexibility to add hedges during higher pricing periods as detailed on the right-hand side. As you can see from the graph and the table on the slide, spark spreads for the PJM market for 2026 to 2028 experienced upward movements during the Q4, which allowed our commercial team to layer in additional hedges for 2026 and 2027 as the opportunities presented themselves. I'll now turn the call over to Cole to discuss our financial and operating performance.

Speaker #4: As detailed on the right hand side As you can see from the graph in the table on the slide , spark spreads for the PJM market for 2026 to 2028 .

Speaker #4: Experience upward movements during the fourth quarter , which allowed our commercial team to layer in additional hedges for 2026 and 2027 . As the opportunities present themselves I'll now turn the call over to Cole to discuss our financial and operating performance Thanks , Terry , and good afternoon , everyone .

Cole Muller: Thanks, Terry, good afternoon, everyone. As Mac mentioned earlier, for the year ended 2025, we are reporting $1.035 billion of Adjusted EBITDA and $524 million of Adjusted Free Cash Flow. These results exceed the high end of our revised guidance ranges issued last quarter, primarily due to the closing of Freedom and Guernsey acquisitions in November 2025. We have more than $2 billion of liquidity available, including $1.2 billion of cash and full availability of our $900 million revolving credit facility. Given that our net debt includes Freedom and Guernsey financing, but only 5 weeks of EBITDA contribution, our net leverage ratio using actual 2025 EBITDA is like comparing apples and oranges, therefore is not a meaningful metric for 2025. Turning to our operational metrics.

Speaker #4: As Matt mentioned earlier for the year ended 2025 , we reporting $1.35 billion of adjusted EBITDA and $524 million of adjusted free cash flow These results exceed the high end of our revised guidance ranges issued last quarter , primarily due to the closing of Freedom and Guernsey acquisitions in November 2025 .

Speaker #4: We have more than $2 billion of liquidity available , including $1.2 billion of cash and full availability of our $900 million revolving credit facility Given that our net debt includes Freedom and Guernsey financing , but only five weeks of EBITDA contribution , our net leverage ratio using actual 2025 EBITDA is like comparing apples and oranges and therefore is not a meaningful metric for 2025 .

Speaker #4: Turning to our operational metrics. Safety remains our top priority across the fleet, and our team worked safely during a busy year.

Cole Muller: Safety remains our top priority across the fleet and our teamwork safely during a busy year. Our recordable incident rate was 0.55, which continues to be below the industry average. Our fleet ran well with a 4.7% equivalent forced outage factor, and we generated approximately 40 terawatt hours, about 10% more than in 2024. This was driven by a significant increase in dispatch opportunities across our fossil fleet, driving higher generation and energy margin. Turning to slide 9. Our full year 2025 financial results were significantly higher than 2024 due to a number of factors. Higher capacity prices and RMR revenues that began in June 2025, the continued ramp of AWS revenues as the campus continues to progress, 5 weeks of Freedom and Guernsey operations, as well as higher power prices net of hedges.

Speaker #4: Our recordable incident rate was 0.55 , which continues to be below the industry average . Our fleet ran well with a 4.7% equivalent forced outage factor , and we generated approximately 40 terawatt hours .

Speaker #4: About 10% more than in 2020 . For . This was driven by a significant increase in dispatch opportunities across our fossil fleet , driving higher generation and energy margin .

Speaker #4: Turning to slide nine . Our full year 2020 financial results were significantly higher than 2024 due to a number of factors . Higher capacity prices and RMR revenues that began in June 2025 .

Speaker #4: The continued ramp of AWS revenues as the campus continues to progress, five weeks of freedom in Guernsey operations, as well as higher power prices, net of hedges.

Speaker #4: Our results were partially offset by the impact from the Susquehanna Unit two extended outage last spring and Susquehanna also not receiving the PTC in 2025 .

Cole Muller: Our results were partially offset by the impacts from the Susquehanna Unit Two extended outage last spring and Susquehanna also not receiving the PTC in 2025. During the Q4, we generated Adjusted EBITDA of $382 million and Adjusted Free Cash Flow of $292 million. Note that our Adjusted Free Cash Flow in Q4 2025 alone was higher than all of 2024, demonstrating the free cash flow growth of the business, growth that we expect will continue as we move forward into 2026 and beyond. Speaking of 2026, on slide 10, we are reaffirming the previously announced 2026 guidance ranges.

Speaker #4: During the fourth quarter , we generated adjusted EBITDA of $382 million and adjusted free cash flow of $292 million . Note that our adjusted free cash flow in Q4 2025 alone was higher than all of 2024 , demonstrating the free cash flow growth of the business growth that we we expect will continue as we move forward into 2026 and beyond Speaking of 2026 , on slide ten , we are reaffirming the previously announced 2026 guidance ranges .

Speaker #4: Our adjusted EBITDA range is $1.75 billion to $2.05 billion, and our adjusted free cash flow range is $980 million to $1.18 billion.

Cole Muller: Our Adjusted EBITDA range is $1.75 to 2.05 billion, and our Adjusted Free Cash Flow range is $980 million to 1.18 billion. All of this remains consistent with our Investor Day guidance and does not include any contribution from the pending Cornerstone acquisition. As Mac mentioned earlier, while our fleet ran well during the recent winter weather, it's still early in the year. It's not our practice to make any adjustments halfway through the Q1. Slide 11 may look familiar to those who listened last month when we announced the Cornerstone transaction. We project continued free cash flow per share growth with our 2026 forecast more than double our 2025 actual results.

Speaker #4: All of this remains consistent with our Investor Day guidance and does not include any contribution from the pending acquisition . As Matt mentioned earlier , while our fleet ran well during the recent winter weather , it's still early in the year and it's not our practice to make any adjustments .

Speaker #4: Halfway through the first quarter Slide 11th May look familiar to those who listened last month when we announced the cornerstone transaction , we project continued free cash flow per share growth with our 2026 forecast more than double our 2025 actual results Further , we anticipate the cornerstone acquisition to create more than $4 in incremental annual impact on adjusted free cash flow per share upon closing .

Cole Muller: Further, we anticipate the Cornerstone acquisition to create more than $4 in incremental annual impact on Adjusted Free Cash Flow per share upon closing. While we illustrate this impact beginning in 2027, there's room for upside in 2026 as we anticipate closing the transaction as soon as this summer. Our base free cash flow per share continues to move higher, supported by increasingly contracted cash flows from our long-term AWS PPA ramp. We continue to see additional upside through the four growth levers we outlined at our Investor Day last September, with the uplift potential to further build on our increasing free cash flow per share. We illustrate this impact on the slide, noting that we are already executing on these levers, as demonstrated through the Cornerstone acquisition.

Speaker #4: While we illustrate this impact beginning in 2027 , there's room for upside in 2026 as we anticipate closing the transaction as soon as this summer , and our base free cash flow per share continues to move higher , supported by increasingly contracted cash flows from our long term AWS , PPA ramp .

Speaker #4: We continue to see additional upside through the four growth levers we outlined at our Investor Day last September , with the uplift potential to further build on our increasing free cash flow per share We illustrate this impact on the slide , noting that we already .

Speaker #4: We are already executing on these levers, as demonstrated through the Cornerstone acquisition. We are focused on building our track record of delivering on opportunities to create additional growth in the coming quarters and years. We remain committed to returning capital to our shareholders through our previously announced $2 billion share repurchase program and further data center contracting opportunities, including support for the AWS ramp and potential acceleration opportunities established in the existing PPA.

Cole Muller: We are focused on building our track record of delivering on opportunities to create additional growth in the coming quarters and years. We remain committed to returning capital to our shareholders through our previously announced $2 billion Share Repurchase Program and further data center contracting opportunities, including support for the AWS ramp and potential acceleration opportunities established in the existing PPA. We're always evaluating accretive M&A opportunities. We will continue to maintain capital discipline and focus on the most accretive levers that meaningfully increase free cash flow per share available to investors while seeking compelling growth opportunities through the Talen Flywheel. Now to slide 12. Our balance sheet strength is a strategic asset that gives us the flexibility to execute the Flywheel and grow our free cash flow per share.

Speaker #4: And we're always evaluating accretive M&A opportunities. We will continue to maintain capital discipline and focus on the most accretive levers that meaningfully increase free cash flow per share available to investors.

Speaker #4: While seeking compelling growth opportunities through the flywheel Now to slide 12 . Our balance sheet strength is a strategic asset that gives us the flexibility to execute the flywheel and grow our free cash flow per share .

Speaker #4: We remain committed to maintaining sufficient liquidity and keeping our long term net leverage ratio below our stated target of 3.5 times . As of February 20th , our net leverage ratio using our current net debt level in 2026 , EBITDA guidance midpoint is 3.0 times .

Cole Muller: We remain committed to maintaining sufficient liquidity and keeping our long-term net leverage ratio below our stated target of 3.5x. As of 20 February, our net leverage ratio using our current net debt level and 2026 EBITDA guidance midpoint is 3.0x. Upon closing the Cornerstone transaction, we expect to maintain the ability to achieve below 3.5x net leverage on a go-forward basis by year-end 2026. I'll turn it back to Mac.

Speaker #4: Upon closing the cornerstone transaction , we expect to maintain the ability to achieve below 3.5 times net leverage on a go forward . Go forward basis by year end 2026 .

Speaker #4: I'll turn it back to Matt.

Speaker #3: All right. Thanks, Cole. With that, Michelle, why don't we open the line for questions.

Mac McFarland: All right. Thanks, Cole. With that, Michelle, why don't we open the line for questions?

Operator: Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Again, we ask that you please limit to one question and one follow-up. Our first question will come from David Arcaro with Morgan Stanley. Your line's open.

Speaker #1: You . As a reminder to ask a question , please press star one on your telephone and wait for your name to be announced .

Speaker #1: And to withdraw your question , please press star one . One again . And again , we ask that you please limit to one question and one follow up And our first question will come from David Arcaro with Morgan Stanley .

Speaker #1: Your line is open .

Speaker #5: Hi . Thanks so much for taking my question . Maybe if I could ask for a little bit more color on how you're thinking about the backstop auction And just generally with some of the policy uncertainty in PJM , is it still or how are your contract negotiations and discussions progressing ?

David Arcaro: Oh, hi. Thanks so much for taking my question. Maybe, if I could ask for a little bit more color around how you're thinking about the backstop auction, and just generally with some of the policy uncertainty in PJM, how are your contract negotiations and discussions progressing? You know, is there still interest, and is it still possible to successfully reach contracts while some of this uncertainty is going on in PJM?

Speaker #5: You know, is there still interest, and is it still possible to successfully reach contracts while some of this uncertainty is going on at PJM?

Speaker #3: Yeah . Hey , David , it's Mike . I'll start . And then anybody else can jump in . Look , I first of all , with respect to the RBA , which is now being couched as the RVP is a procurement more than an auction , at least in our view , because we think it should be done as pay as bid .

Mac McFarland: Yeah. Hey, David, it's Mac. I'll start, and then anybody else can jump in. Look, First of all, with respect to the RBA, which is now being couched as the RBP, as a procurement more than an auction, at least in our view, because we think it should be done as pay-as-bid, and that's the distinction that's being made there. I think that that's how it's starting to be referred to even at PJM. Look, I think that when you implement the concept of the backstop was to come in and use the existing tariff by which to procure and to fill a resource adequacy need for the out years, which would therefore relieve some of the tightness, if you will, in the market.

Speaker #3: And that's the distinction that's being made there . And I think that that's how it's starting to be referred to , even at PJM .

Speaker #3: But but look , I think that when you implement the concept of the backstop is to come in and use the existing tariff by which to procure and to fill a resource adequacy need for the out years , which would therefore relieve some of the tightness .

Speaker #3: If you will , in the market . But again , it's still if it's done at the same levels of whatever the load projections are , it wouldn't change the outcome .

Mac McFarland: Again, it still if it's done at the same levels of whatever the load projections are, it wouldn't change the outcome. That's our view on that. It's, it's there to provide the supply to maintain the reserve margin. 'Cause you know the last auction would have cleared over $500 if it had not been for the $330 cap that was imposed on that. That backstop procurement, in our mind, actually provides a relief valve and therefore allows for contracts to continue to go forward. It's one of the things, it was one of the tenets of the NEDC's statement that came out, the National Energy Dominance Council.

Speaker #3: That's our view on that . So it's there to provide the supply , to maintain the reserve margin Because , you know , the last auction would have cleared over $500 if it had not been for the 330 cap .

Speaker #3: That was that was imposed on that . But that backstop procurement in our mind actually provides a relief valve and therefore allows for contracts to continue to go forward .

Speaker #3: And it's one of the things it was one of the tenets of the NDCs statement that came out . The National energy Dominance Council and that group , when they put that forth , said that it you know , in addition to it being one time and limited and then there should be longer term capacity reforms and then return to the , the , the the outcome .

Mac McFarland: That group, when they put that forth, said that it, you know, in addition to it being one time and limited, then there should be longer-term capacity reforms and then return to the outcome. It should allow for continuation of existing contracts. I think that by gaining more certainty as we work our way through the process, that obviously continues to support that. That is, as a practical matter, we view that as a relief valve to doing existing contracts. As far as existing contracts and the discussions that are ongoing there, across the fleet and across our pipeline of opportunities, those have not slowed down.

Speaker #3: But it should allow for continuation of existing contracts . And I think that by gaining more certainty as we work our way through the process , that obviously continues to support that .

Speaker #3: And so that is , as a practical matter , we view that as a relief valve to doing existing contracts . And as far as existing contracts in the discussions that are on going there across the fleet and across our pipeline of opportunities , those have not slowed down .

Mac McFarland: I, you know, I think that the regulatory uncertainty, who pays for this and how it gets paid for and how it gets allocated and how it gets procured and all of that will work its way through. Data centers are coming, and they're not slowing down. Any time you talk to or hear any of the analyst calls, whether it be from the chip manufacturers to the hyperscalers themselves, they continue to talk about the race for creating data centers on the ground, powering them today, powering them in 28, and then soon 29 will become the new 28. I think that as we progress through that, it just further aids in the ability to continue those discussions.

Speaker #3: You know , I think that the regulatory uncertainty , who pays for this and how it gets paid for and how it gets allocated and how it gets procured , and all of that will work its way through .

Speaker #3: But data centers are coming , and they're not slowing down . And anytime you talk to or hear any of the analyst calls , whether it be from the chip manufacturers to the hyperscalers themselves , they continue to talk about the race for creating data centers on the ground , powering them .

Speaker #3: Today , powering them in 28 , and then soon 29 will become the new 28 . And so I think that as we progress through that , it just further aids in the ability to continue those discussions .

Speaker #3: So we don't see any slowdown to it . And we think that the RVP will ultimately provide for will increase the level of those discussions

Mac McFarland: We don't see any slowdown to it, and we think that the RVP will ultimately provide for, will increase the level of those discussions.

Speaker #6: Got it. Yeah, thanks.

David Arcaro: Got it. Yeah, thanks. No, I appreciate that color. Maybe when it comes to the procurement, do you have uprates or new builds that you think might be opportunities to bid in to the procurement?

Speaker #5: I appreciate that color . And then maybe when it comes to the procurement , do you have updates or new build that you think might be opportunities to to bid in to the procurement

Speaker #3: We we are working on a set of opportunities in the new build front . We do think that Uprate should count . If you're asking that , if you're asking specifically if we have updates , most of the updates that we had at Susquehanna were put in about ten years ago .

Mac McFarland: We are working on a set of opportunities in the new build front. We do think that uprates should count if you're asking that. If you're asking specifically if we have uprates. Most of the uprates that we had at Susquehanna were put in about 10 years ago, so there's not a lot that goes there that you may hear from other producers. There are opportunities. We've been working on thinking across the spectrum of the form of generation, whether it be batteries, CTs or CCGTs, and developing those opportunities. Look, with a 15-year contract at the right price, you can make the math work there. Obviously we're gearing that up. Once the rules are more defined, we would look to see how we can participate.

Speaker #3: So there's not a lot that goes there that you may hear from other producers , but there are opportunities . We've been working on thinking across across the spectrum of the form of generation , whether it be batteries , CTS or Ccgt , and developing those opportunities .

Speaker #3: And look , with a 15 year contract at the right price , you can make the math work there . So obviously we're gearing that up .

Speaker #3: And once the rules are more defined , we would we would look to see how we can participate

Speaker #6: Okay . Perfect . Thank you

David Arcaro: Okay, perfect. Thank you.

Speaker #1: Thank you. And our next question will come from Angie Storozynski with Seaport. Your line is open.

Cole Muller: Thank you. Our next question will come from Angie Storozynski with Seaport. Your line's open.

Operator: Thank you. Our next question will come from Angie Storozynski with Seaport. Your line's open.

Speaker #6: Angie .

Mac McFarland: Hey, Angie.

Speaker #7: How are you ? So I'm just trying to link the the comments that we're hearing from . And A.P. to , to your generation contracting .

Operator: Thank you. How are you? I'm just trying to link the comments that we're hearing from PPL and AEP to your generation contracting. For example, the comment that you quoted yourself, right, in the slides, that PPL expects 10 gigs of load under ESAs by the end of Q1, which sounds like 1 more month. How does that relate to, you know, you being the largest generation company in the PPL zone and signing, you know, generation contracts to back this 10 gigs of load?

Angie Storozynski: Thank you. How are you? I'm just trying to link the comments that we're hearing from PPL and AEP to your generation contracting. For example, the comment that you quoted yourself, right, in the slides, that PPL expects 10 gigs of load under ESAs by the end of Q1, which sounds like 1 more month. How does that relate to, you know, you being the largest generation company in the PPL zone and signing, you know, generation contracts to back this 10 gigs of load?

Speaker #7: So , for example , the the comment that you quoted yourself right in the slides that people expect ten gigs of load on ESAs by the end of the first quarter , which sounds like one more month .

Speaker #7: How does that relate to , you know , you being the largest generation company in the in the pole zone and , and signing generation contracts to back this ten gigs of load

Speaker #3: Well , I mean first we don't have that list just to be specific . I mean , PPL does . So what's in that list specifically ?

Mac McFarland: Well, I mean, first, we don't have that list, just to be specific. I mean, PPL does. What's in that list specifically, you'd have to talk to them. I do think that is a very supporting point to the question that was just asked that this is not slowing down, and that if PPL is signing up the ESAs. Now, signing up ESAs, you don't necessarily need to procure your energy and capacity or, what you're doing is making a commitment to pay for the network upgrades and the rest of it. That to me, is just a, you know, that's a highly positive sign that this, to that supports that nothing is slowing down. Now, we don't have what the list is, obviously, you know, we're working a pipeline of opportunities ourselves and hope to participate on that front going forward.

Speaker #3: You'd have to talk to them . But I do think that is a very supporting point to the question . That was just asked that this is not slowing down and that if BPL is signing up , the ESAs now , signing up , PSA , you don't necessarily need to procure your energy and capacity or .

Speaker #3: But what you're doing is making a commitment to pay for the network upgrades and the rest of it . That to me is just a , you know , that's a highly positive sign that this that supports that nothing is slowing down .

Speaker #3: Now , we don't have what the list is , but obviously , you know , we're working a pipeline of opportunities ourselves . And the participate on that front going forward .

Speaker #3: So you

Cole Muller: Yeah.

Mac McFarland: You-

Cole Muller: Look, Angie, the ESA point, that's the first step. I mean, without an ESA, data centers aren't gonna contract for under a PPA, right? I think that's just a good kind of leading indicator of PPAs coming. Just to be really clear, we obviously have announced 2 gigawatts, roughly, of tangible PPA in that zone. I mean, again, leave it to PPL to break down their count. You know, that's 2 of the 10 right there.

Speaker #4: Look at the ESA point , that's the first step . I mean , without an ESA , data centers aren't going to contract for under a PPA , right ?

Speaker #4: So I think that's just a good kind of leading indicator of PPAs coming . And just to be really clear , we obviously have announced two gigawatts , roughly of of tangible PPA in that zone .

Speaker #4: So, I mean, again, leave it to people to break down their count. But, you know, that's two of the ten right there.

Speaker #7: Okay , okay . I mean , we're waiting as you as you are aware So maybe now about .

Operator: Okay. Okay, I mean, we're waiting as you are aware.

Angie Storozynski: Okay. Okay, I mean, we're waiting as you are aware.

Speaker #3: Hey , Angie , I just I would just further add that , you know , we have a model that we're doing it with hyperscalers , but there's other people that develop that are just I'll call them Co locators , which are your typical data center people , which is build and connect data centers .

Mac McFarland: Hey, Angie, I just-

Operator: Yeah.

Angie Storozynski: Yeah.

Mac McFarland: I would just further add that, you know, we have a model that we're doing it with hyperscalers, but there's other people that develop that are just, I'll call them co-locators, which are your typical data center people, which is build and connect data centers and then lease those out. That is where energy and capacity typically can be or in the old paradigm was a pass-through. Okay, so to Cole's point, you get the ESA first, even in our model, and then get the energy and capacity. In some models, it just takes from the grid, as energy is a pass-through. It takes the lease, the person that is signing the lease, signing up for the lease to decide to, you know, to contract for energy and capacity there.

Speaker #3: And then lease those out . And that is where energy and capacity typically can be just or in the old paradigm was a pass through .

Speaker #3: Okay . So to Cole's point you get the ESA first . Even in our model and then get the energy and capacity . But in some models it just takes from the grid .

Speaker #3: And as energy is a pass through . So and so it takes the the lease , the person that is signing the lease , signing up for the lease to decide to , you know , to contract for energy and capacity .

Speaker #3: There . But again , hyperscalers and and the like and the development model we have is powered land get the ESA get the energy capacity .

Mac McFarland: Again, hyperscalers and the life and the development model we have is powered land, get the ESA, get the energy capacity, and then you put all that together, and you have what we did at Susquehanna.

Speaker #3: And then you put all that together and you have what we did at Susquehanna .

Speaker #7: Okay . So so the my other question is about slide 11 . And I know it's the same slide that you had in your MLS day presentation .

Operator: Okay. My other question is about slide 11, and I know it's the same slide that you had in your Analyst Day presentation. Two things. One is, it is the upside potential to the free cash flow per share you're showing for 2028. Is it that there is no potential upside to, say, 2027? That's number one. Number two is as you show us the new 1 gig of data center PPAs and then accelerated Susquehanna contract by 480. Is it just that metric 480 here and 1 gig there? Is it just, you know, for, you know, like, a measurement, or is it that this is basically what you would expect to happen as potential upside?

Angie Storozynski: Okay. My other question is about slide 11, and I know it's the same slide that you had in your Analyst Day presentation. Two things. One is, it is the upside potential to the free cash flow per share you're showing for 2028. Is it that there is no potential upside to, say, 2027? That's number one. Number two is as you show us the new 1 gig of data center PPAs and then accelerated Susquehanna contract by 480. Is it just that metric 480 here and 1 gig there? Is it just, you know, for, you know, like, a measurement, or is it that this is basically what you would expect to happen as potential upside?

Speaker #7: So, two things. One is, it's the upside potential to the free cash flow per share you're showing for 2028. So, is it that there is no potential upside to, say, '27?

Speaker #7: So that's number one . And number two is as you show us the the new one gig of data PPAs . And then accelerated Susquehanna contract by 480 .

Speaker #7: Is it just that metric for 80 here . And one gig there . Is it just you know for you know like a measurement or is it that this is basically what you would expect to happen as potential upside ?

Speaker #7: So is it basically the cap of , again , additional data center PPA and additional ramp under the Susquehanna contract by 28 ?

Operator: Is it basically the cap, of, again, additional data center PPAs and additional ramp under the Susquehanna contract by 2028?

Angie Storozynski: Is it basically the cap, of, again, additional data center PPAs and additional ramp under the Susquehanna contract by 2028?

Speaker #3: Yeah . Let me just provide some context on the slide . Overall , Angie , to answer your question , then coal is going to take the 480 .

Mac McFarland: Yeah. Let me just provide some context on the slide overall, Angie, to answer your question. Cole's gonna take the 480. When we did this slide in Investor Day, we ended with the 2028 outlook, we were showing levers that could pull that would further increase free cash flow per share out there. Now the timing of them, they were all done off of a 2028. Now the timing of them, if you look, we pulled Cornerstone forward into 2027 and probably can pull some of it into 2026 with the expected close here. We're even. There's more upside there to this guidance.

Speaker #3: But when we did this slide in Investor Day , we ended with the 2028 outlook . And so we were showing levers that could pull that would further increase free cash flow per share out there .

Speaker #3: Now the timing of them , they were all done off of a 28 . Now the timing of them , if you look , we pulled cornerstone forward into 2027 and probably can pull some of it into 2026 with the expected close here .

Speaker #3: So we're even . There's more upside there to this guidance . But we were just showing it . Like if you look at 28 as the terminal year that we were showing , we wanted to show that there's more levers to pull to create more value .

Mac McFarland: We were just showing it, like, if you looked at 2028 as the terminal year that we were showing, we wanted to show that there's more levers to pull to create more value as we see the implementation of the flywheel. One of those was the. This is all without any repurchase built into it. Well, that's why we put the pluses at the top of this. It didn't, you know, where it says $4 plus or $31.10 plus, $31.40 plus up at the top of the bars. None of this is with share repurchases, right? So we outlined that. We put the accretive M&A. We pulled that forward. Why don't we talk about the $4.80, and then maybe I can hit the last one on the chart?

Speaker #3: As we see the implementation of the flywheel, one of those was the— and this is all without any repurchase built into it.

Speaker #3: And well , that's why we put the pluses at the top of this . But it didn't . You know where it says $4 plus or 31 , ten plus 3140 plus up at the top of the bars .

Speaker #3: But none of this is with share repurchases , right ? And so we outlined that we put the accretive M&A . We pulled that forward .

Speaker #3: Why don't we talk about the 480 and then maybe I can hit the last one on the chart .

Speaker #4: Yeah . The 480 and the one gigawatt . Those were just to be representative . So folks can make their own assumptions and scale .

Cole Muller: Yeah. Look, the 480 and the 1 gigawatt, those were just to be representative so folks can make their own assumptions and scale, right? By 2028, the contract, as we've disclosed before, gets only up to the first 480 megawatts. We just put out what it would take to get to the 960. We could have gone out to all the way to 1,920. We didn't think that was necessarily helpful. We wanted to show the impact of every 480. Then on the, the data center, the new data center PPA, we just did a standard 1 gigawatt. Is it more? Potentially, and you could scale from there.

Speaker #4: Right . So by 2028 , the contract , as we've disclosed before , gets only up to the first 480MW . So we just put out what it would take to get to the 960 .

Speaker #4: We could have gone out to all the way to 1920 . We didn't think that was necessarily helpful . We wanted to show the impact of every 480 .

Speaker #4: And then on the data center , the new data center , PPA , we just did a standard one gigawatt . Is it more could scale from there .

Speaker #3: But I think it's also an important point as to why that was the new one . Gigawatt data center . If you think of if you think about it , Angie , and you think about the ramp that's going on at Susquehanna as coal , just described any new data center And this maybe is going to feed into perhaps a little bit more of a discussion .

Mac McFarland: I think it's also an important point as to why that was the new 1 gigawatt data center. If you think about it, Angie, and you think about the ramp that's going on at Susquehanna, as Cole just described, any new data center PPA, this maybe is gonna feed into perhaps a little bit more of a discussion. I said we won't discuss Montour, but maybe we'll unpack it a little bit for you. The 1 gigawatt data center PPA is really more than likely a post 2028. When you think about when you've got to build data centers like's going on at Susquehanna, there'd be a ramp rate, that's why we show that out there on 2028. That one's probably the least likely to be pulled forward early.

Speaker #3: I said , we won't discuss Montour , but maybe we'll unpack it a little bit for you . And but the , the , the one gigawatt data center PPA is really more than likely a post 2028 , because when you think about when you've got to build data centers , like going on at Sesqui Hannah , there'd be a ramp rate .

Speaker #3: And so that's why we show that out there on 28 . That one's probably the least likely to be pulled forward early , because even if there was a sign contract today on the so-called Montour Deal or some other virtual PPA on on across our pipelines of opportunity , the delivery of those megawatts is not going to be 2028 .

Mac McFarland: Even if there was a signed contract today on the so-called Montour deal or some other virtual PPA across our pipelines of opportunity, the delivery of those megawatts is not gonna be 2028. This is something that I find very interesting going back to the Montour. Whether Montour happens today or happens 6 months from now, it really is irrelevant to when the megawatts would flow under that type of arrangement, because they're not going to be delivered until 2028, and they're gonna ramp up from there more than likely. This is why I said there was a lot of sort of short-term discussion and sort of frenzied outcome around the county commission vote. When you look at it in the delivery of the megawatts, we're still on that long arc as I described.

Speaker #3: And this is something that I find very interesting going back to the Montour , whether Montour happens today or happens six months from now , it really is irrelevant to when the megawatts would flow under that type of arrangement , because they're not going to be delivered until 28 , and they're going to ramp up from there more than likely .

Speaker #3: So it this is why I said there was a lot of sort of short term discussion and sort of frenzied outcome around the county commission vote .

Speaker #3: But when you look at it in the delivery of megawatts, we're still on that long arc. As I described, the long arc hasn't changed.

Mac McFarland: The long arc hasn't changed. It's a short-term hurdle. Now, would we have rather the commission vote the other way? Absolutely. No doubt. But we are commercial, and we're gonna figure that out, and we have a number of other opportunities in the pipeline that avail themselves to do the same thing. That's what we're looking at, is adding another 1 gigawatt data center contract, but the delivery won't start until 2028, and it's almost irrelevant of when it's signed in 2026.

Speaker #3: It was it's a short term hurdle . Now , would we rather the commission vote the other way ? Absolutely . No doubt .

Speaker #3: But we are commercial and we're going to figure that out . And we have a number of other opportunities in the pipeline that avail themselves to do the thing .

Speaker #3: And so that's what we're doing, is adding another gigawatt data center contract. But the delivery won't start until '28. And it's almost irrelevant when it's signed in 2026.

Speaker #7: Can I ask just one follow up on that one ? Because why is it at all linked to that Montour site ? Because , you know , let's again , let's just assuming that it is potentially with AWS .

Operator: Can I ask just one follow-up on that one?

Angie Storozynski: Can I ask just one follow-up on that one?

Mac McFarland: Sure.

Operator: Why is it at all linked to that Montour site? You know, let's, again, just assuming that it is potentially with AWS. I mean, AWS has other sites in the PPL zone, and you have, as you said, existing assets in the PPL zone. Your Susquehanna 2.0 contract supplies those other sites that are already data center sites that are being developed. Why couldn't I have a PPA that serves some of those other sites that are being developed, and as such, the impact on the 2028 EBITDA would actually be likely?

Angie Storozynski: Why is it at all linked to that Montour site? You know, let's, again, just assuming that it is potentially with AWS. I mean, AWS has other sites in the PPL zone, and you have, as you said, existing assets in the PPL zone. Your Susquehanna 2.0 contract supplies those other sites that are already data center sites that are being developed. Why couldn't I have a PPA that serves some of those other sites that are being developed, and as such, the impact on the 2028 EBITDA would actually be likely?

Speaker #7: I mean , AWS has other sites in the Plzen and you have , as you said , existing assets in the PTO zone .

Speaker #7: Your Susquehanna 2.0 contract supplies those other sites that are already data center sites that are being developed . So why couldn't I have a PPA that serves some of those other sites that are being developed ?

Speaker #7: And as such , the impact on the 2828 EBITDA would actually be likely .

Speaker #3: Excellent point . And you're making our point for us , which is , is that it is a virtual PPA . And I'm going to come back and answer your question specifically .

Mac McFarland: Excellent point. You're making our point for us, which is that it is a virtual PPAs. I'm gonna come back and answer your question specifically. If you go to the Susquehanna, when we moved it to the front of the meter, remember we said one of the attributes of that transaction was that we're obligated to deliver anywhere in Pennsylvania. That goes back to this 480 acceleration. If there's other data centers, you know, they can take under that contract early, but then they're gonna have... If they build more than the 1,920, they're gonna have to add more megawatts in the back. That's Amazon. That's just Amazon. There's others out there other than just Amazon. With respect to your question about does it need to be linked to Montour?

Speaker #3: But if you go to the Susquehanna , when we moved it to the front of the meter , remember we said one of one of the attributes of that transaction was , is that we're obligated to deliver anywhere in Pennsylvania .

Speaker #3: So that goes back to this 480 acceleration . If there's other data centers , you know , they can be they can take under that contract early , but then they're going to have if they build more than the 1920 , they're going to have to add more megawatts in the back end .

Speaker #3: That's Amazon . That's just Amazon . There's others out there other than just Amazon . But with respect to to your question about does it need to be linked to Montour not necessarily .

Mac McFarland: Not necessarily. Okay? Does a 1,200 or a 1,000 megawatt or 1,200 megawatt or 960 megawatt, whatever the right number is, here we just do 1 gig. Does that contract need to tie specifically to a site? Not necessarily. Because again, it's, it's about the delivery point. It is when you think about if you're a data center developer, whether it's Amazon, whether it's anybody else, you need to have sites with line of sight to be able to construct the data center by which to direct the megawatts to. Okay? While they are somewhat interrelated, they're not necessarily discretely intertwined. They can be, but they don't have to be.

Speaker #3: Okay . Does a 1200 or 1000 megawatt or 1200 megawatt or 960 megawatt , whatever the right number is here we just do one gig .

Speaker #3: Does that contract need to tie specifically to a site ? Not necessarily , because again , the delivery point , but it is when you think about if you're a data center developer , whether it's Amazon , whether it's anybody else , you need to have sites with a line of sight to be able to construct the data center by which to direct the megawatts to .

Speaker #3: Okay . So while they are somewhat interrelated , they're not necessarily discretely intertwined . They can be , but they don't have to be

Speaker #7: Okay . Understood . Thank you .

Terry Nutt: Okay. Understood. Thank you.

Angie Storozynski: Okay. Understood. Thank you.

Speaker #1: Thank you . And our next question will come from Michael Sullivan with Wolfe . Your line is open

Operator: Thank you. Our next question will come from Michael Sullivan with Wolfe Research. Your line is open.

Speaker #8: Hey. Hey, guys. How are you?

Michael Sullivan: Hey. Hey, guys. How are you?

Speaker #3: Good . How are you ?

Mac McFarland: Good. How are you, Michael?

Speaker #8: Yeah . Doing well . Thanks . I wanted to maybe just unpack a little more . Some of the crosscurrents within Pennsylvania , I guess in light of latest commentary from from Governor Shapiro .

Michael Sullivan: Yeah, doing well. Thanks. wanted to maybe just unpack a little more of some of the crosscurrents within Pennsylvania, I guess, in light of latest commentary from Governor Shapiro and then with all this PPL load coming to the fore here. I guess, where does existing generation versus new generation fit in? Can it all be served with the excess transmission capacity? When do we need to start thinking about new build and how that ties to the political kind of rhetoric?

Speaker #8: And then with all this PPA load coming to coming to the fore here , I guess , where . Where does existing generation versus new generation fit in ?

Speaker #8: Can can it all be served with the excess transmission capacity ? And when do we need to start thinking about new build and how that ties to the political kind of rhetoric ?

Speaker #3: Yeah , I think the , you know , the political rhetoric is focused on affordability and focused on resource adequacy . And again , we think the RVP is the way to solve that .

Mac McFarland: Yeah. I think the, you know, the political rhetoric is focused on affordability, focused on resource adequacy. Again, we think the RBP is the way to solve that, and it does provide a relief valve. I think that in any of the proposals, it contemplates that there is a carve-out for existing contracts with respect to cost allocation. That's one of the things that's been talked about. Like, when you go procure and the NEDC use $15 billion as a number, how do you allocate that? It would not be allocated to new loads if they had an existing contract. That's somewhat standard across the different coalitions. Our coalition, other coalitions, there's an exemption for existing contracts. Again, it allows those to continue.

Speaker #3: And it does provide a relief valve . I think that in any of the proposals , it contemplates that there is a carve out for existing contracts with respect to cost allocation .

Speaker #3: That's one of the things that's been talked about , like when you go procure and the Nedc use $15 billion as the number , how do you allocate that ?

Speaker #3: But it would not be allocated to new loads if they had an existing contract . That's somewhat standard across the different coalitions . Our coalition , other coalitions .

Speaker #3: There's an exemption for existing contracts . So again , it allows us to continue . It'll it's yet to be seen how that allocation and the rest of that RVP will pan out .

Mac McFarland: It, it's yet to be seen how that allocation and the rest of that RBP will pan out. In the meantime, again, I go back to nothing stopping. People are in the process of lining things up and trying to figure out where they go from here, with respect to the RBP. Let me turn it over to Cole, see if he's got anything to add here.

Speaker #3: But in the meantime again I go back to nothing stopping . And so people are in the process of lining things up and trying to figure out where they go from here .

Speaker #3: With respect to the BP . But let me turn it over to Cole and see if he's got anything to add here . Yeah .

Cole Muller: All I'd say, Michael, is I think everyone would agree that data centers are coming and that the loads are gonna continue to increase and ramp up in 2027, 2028, and 2029 and continue from there. I don't know of too much new gen that can actually serve that load. You know, we are, you know, continue to focus on conversations around existing gen. Obviously, at some point, new generation needs to come online. Those decisions need to be made soon. Obviously, the RBP is one angle. Bilateral contracts are another angle.

Speaker #4: All I would say , Michael , is I think everyone would agree that data centers are coming and that the loads are going to continue to increase and ramp up in 2027 , 2028 and 2029 .

Speaker #4: And continue from there . I don't know of too many , too much new gen that can actually serve that load . So , you know , we are , you know , continuing to focus on conversations around existing gen , obviously at some point , new generation needs to come online .

Speaker #4: Those decisions need to be made soon . Obviously the RVP is one angle . Bilateral contracts are another angle , and I think we've said fairly consistently that we think over time we'll start to shift to kind of hybrid models where there's existing gen powering the first 3 to 5 year build out of the data centers across Pennsylvania , Ohio , Indiana .

Cole Muller: As I think we've said, you know, fairly consistently that we think, over time, we'll start to shift to kind of hybrid models where there's existing gen powering the first 3 to 5-year build-out of these data centers across Pennsylvania, Ohio, Indiana, and so forth. Eventually, backed by a second either upscaling of a PPA or a second PPA that, you know, enables new generation to kind of fill the gap from there.

Speaker #4: And so forth, and then eventually backed by a second, either upscaling of a PPA or a second PPA that enables new generation to kind of fill the gap from there.

Speaker #3: New generation . That's either bring your own power or new generation that's procured through the RVP . So that's why this is all still going on .

Mac McFarland: New generation that's either bring your own power or new generation that's procured through the RBP. That's why this is all still going on. It's sort of you wane off of the existing, and you come onto the new. It's whether it comes through the RBP or whether people bring their own power, that's yet to be determined. I think to Cole's point, that's where you're gonna see things head.

Speaker #3: But it's it's sort of you , you wane off of the existing and you come onto the new and it's whether it comes through the RVP or whether people bring their own power .

Speaker #3: That's yet to be determined . But I think to Cole's point , that's where you're going to see things head .

Speaker #4: And Michael .

Terry Nutt: Michael, maybe to add to those comments, obviously in the PJM discussions that are taking place around the RBP, specifically to Governor Shapiro, his team is engaged in that. They're involved in the discussions. They've heard the proposals from the different coalition groups. They're an active participant. I think generally, you know, obviously, the concept is gonna get additional gen procured if it moves forward. So, I think they're supportive of that. So, you know, they remain active and remain engaged and they're right in the mix just with all the other stakeholders.

Cole Muller: Michael, maybe to add to those comments, obviously in the PJM discussions that are taking place around the RBP, specifically to Governor Shapiro, his team is engaged in that. They're involved in the discussions. They've heard the proposals from the different coalition groups. They're an active participant. I think generally, you know, obviously, the concept is gonna get additional gen procured if it moves forward. So, I think they're supportive of that. So, you know, they remain active and remain engaged and they're right in the mix just with all the other stakeholders.

Speaker #3: Maybe to add to .

Speaker #9: Add to those comments , obviously , in the PJM discussions that are taking place around the RVP , specifically to Governor Shapiro , his team is engaged in that .

Speaker #9: They're involved in the discussions . They've heard the proposals from the different coalition groups . They're an active participant . I think generally , you know , obviously the concept is going to get additional gen procured if it moves forward .

Speaker #9: And so I think they're supportive of that . And so , you know , they remain active and remain engaged . And they're they're right .

Speaker #9: There right in the mix just with all the other stakeholders .

Speaker #8: Okay .

Michael Sullivan: Okay. Great. I just wanted to ask. You mentioned, I know you don't want to get into individual opportunities, but just within your pipeline, the organic opportunities, the inorganic powered land, maybe just more color on how you weigh those economics speed? Presumably, you have a lot of land already, but maybe just the value prop of the inorganic power land angle.

Speaker #6: Great .

Speaker #8: And then I just wanted to ask on you mentioned I know you don't want to get into individual opportunities , but just within your pipeline , the organic opportunities .

Speaker #8: The inorganic powered land , maybe just more color on how you weigh those economics speed . Presumably you have a lot of land already , but maybe just the value prop of of the inorganic power land angle

Speaker #3: Yeah . Look , it Michael , it's a great question . And it's something that , you know , in a perfect world for just talking to investors .

Mac McFarland: Yeah. Look, Michael, it's a great question, and it's something that, you know, in a perfect world, for just talking to investors, it's something we've. You know, we'd be excited to talk about. Every time we do, we're running a commercial trade in our face, or we're creating an expectation about a certain outcome. That's why I made those opening remarks. It's not because there's not a frenzy level of activity going on here at Talen. There is. It's around our existing sites, and it's around sites that aren't existing, that other people have that wanna work with us to do things. We're not gonna get into the specifics of those and how we're doing it, because one, it's commercially sensitive, and two, it creates these expectations.

Speaker #3: It's something we we , you know , we'd be excited to talk about . But every time we do , we're running a commercial trade in our face or we're creating an expectation about a certain outcome .

Speaker #3: And so that's why I made those opening remarks . It's not because there's not a frenzy level of activity going on here at Talen .

Speaker #3: There is . And it's around our existing sites and it's around sites that aren't existing that other people have that want to work with us to do things , but we're not going to get into the specifics of those and how we're doing it , because one , it's commercially sensitive and two , it creates these expectations .

Speaker #3: And so , look , we created those expectations around Montour . Our fault , no doubt about it . And but we'll figure that out .

Mac McFarland: Look, we created those expectations around Montour, our fault, no doubt about it. We'll figure that out. There's plan Bs, but there's other opportunities in our pipeline that give us more of this. I mean, if Montour had gone, let's just kind of provide the hypothetical. If Montour had gone and there had been a deal announced on that, everybody would say, What's your next deal? Well, it's not as though we're getting 1 deal done and then focusing on the next deal. We're working on multiple fronts all the time, okay?

Speaker #3: There's there's Plan B's but there's other opportunities in our pipeline that give us more of this . I mean , if we had done if Montour had gone , let's just kind of provide the hypothetical .

Speaker #3: If Montour had gone and there had been a deal announced on that , everybody would say , what's your next deal ? Well , it's not as though we're getting one deal done .

Speaker #3: And then focusing on the next deal . We're working on multiple fronts . All the time . Okay . And what we realized is that there was just this sort of concentration on one outcome there , which really isn't going to define that long arc that I was trying to describe , that long arc that is constantly growing , that long arc that's constantly growing with AI capabilities and also our commercial abilities to get these things done .

Mac McFarland: What we realized is that there was just this sort of concentration on one outcome there, which really isn't going to define that long arc that I was trying to describe, that long arc that is constantly growing, that long arc that's constantly growing with AI capabilities. Also our commercial abilities to get these things done, our commercial abilities to build new build, our commercial abilities to contract new build, our commercial abilities to contract existing, as Cole just mentioned, or a hybrid of the two. So we're working on sort of all of the above. We're working on getting prepared for fitting into the RVP, if we can find the right pricing mechanisms and if the world works out the way that we think it should with respect to the RVP. We're gonna contribute to all of that.

Speaker #3: Our commercial abilities to build new , build our commercial abilities to contract new , build our commercial abilities to contract existing is Kolja Smith or a hybrid of the two .

Speaker #3: And so we're working on sort of all of the above . We're working on getting prepared for bidding into the RVP . If we can find the right pricing mechanisms , and if the the world works out the way that we think it should with respect to the ARB , we're going to contribute to all of that .

Speaker #3: And it just becomes , you know , where do we allocate things ? But we did get ourselves , quite frankly , caught in a little bit of a of a , you know , this binary view that Montour was going to define what Talen is going to be .

Mac McFarland: It just becomes, you know, where do we allocate things? We did get ourselves, quite frankly, caught in a little bit of a, you know, this binary view that Montour was gonna define what Talen's going to be. We're just steering away from that going forward. Probably doesn't satisfy your question, but unfortunately, that's the path we're going down.

Speaker #3: And we're just not going to get down that because of that one issue , but because also it it impedes our ability to develop other things .

Speaker #3: And we're just we're just from that going forward . So probably doesn't satisfy your question . And but unfortunately that's the path we're going down

Speaker #8: Okay . No , I appreciate it . Thank you very much

Michael Sullivan: Okay. I appreciate it. Thank you very much.

Speaker #1: Thank you . And our next question is going to come from Jeremy Tonet with J.P. Morgan Securities . Your line is open .

Operator: Thank you. Our next question is going to come from Jeremy Tonet with JPMorgan Securities LLC. Your line's open.

Speaker #10: Hi . Good afternoon .

Jeremy Tonet: Hi, good afternoon.

Speaker #3: Hi there .

Mac McFarland: Hi there.

Cole Muller: Jeremy. Hey, Jeremy.

Speaker #4: Hey , Jeremy .

Speaker #10: Just wanted to build , I guess , on some of your comments right here . And , you know , as the hyperscalers head to DC next week , just wondering , you know , what do you see ?

Jeremy Tonet: Just wanted to build, I guess, on some of your comments right here. You know, as the hyperscalers head to DC next week, just wondering, you know, what do you see, I guess, could be possible, you know, coming out of this? You know, when there's discussions of bringing their own generation. What does this mean in Talen's view, and how do you think this could impact market architecture?

Speaker #10: I guess could be possible , you know , coming out of this , you know , when there's discussions of bringing their own generation , what does this mean in tailwinds view in how do you think this could impact the market architecture .

Speaker #3: Yeah . Hey , Jeremy Mack I'll go first here . We don't know what they're going to commit to . There's been speculation as to what they're going to commit to .

Mac McFarland: Yeah. Hey, Jeremy. Mac, I'll go first here. We, we don't know what they're gonna commit to. There's been speculation as to what they're gonna commit to. I think what you've seen is a commitment publicly by all of them to pay their fair share. The definition of what is fair share is interesting. you know, from my perspective or... we've said this in many a forum, PJM is an RTO that is based off of not this concept that the next incremental megawatt pays for the next of load pays for the next incremental megawatt of generation. It's never been that case. You have states that are deficit in generation that have paid for transmission and are using it. They have LSEs that are incredibly short.

Speaker #3: I think what you've seen is a commitment publicly by all of them to pay their fair share . The definition of what is fair share is interesting .

Speaker #3: You know , from my perspective or , and we've said this in many a forum , you don't . PJM is an RTO that is based off of not this concept that the next incremental megawatt pays for the next of load pays for the next incremental megawatt of generation .

Speaker #3: It's never been that case . You have states that are are deficit in generation that have paid for transmission and are using it .

Speaker #3: They have losses that are incredibly short . We happen to be in an LLC that's long and Pennsylvania and PBL and long transmission that has the ability to absorb these things .

Mac McFarland: We happen to be in an LSE that's long, in Pennsylvania and PPL and long transmission that has the ability to absorb these things. It, it's all gonna get around to the definition of what are they committing to in terms of what is fair share or pay for it. That definition, I don't know what they're gonna commit to, Jeremy.

Speaker #3: So it's all going to get around to the definition of what are they committing to in terms of what is fair share, or pay for it.

Speaker #3: And that definition , I don't know what they're going to commit to . Jeremy

Speaker #10: Got it . Fair enough . There . We'll see what happens . And , you know , just wondering if we could , you know , pivot the conversation more towards , I guess , you know , contracting as it relates to gas contracting .

Jeremy Tonet: Got it. Fair enough there. We'll see what happens. You know, just wondering if we could, you know, pivot the conversation more towards, I guess, you know, contracting as it relates to gas contracting, maybe the evolution of those discussions over time, and any comments you might be able to provide around hyperscaler appetite around, you know, absorbing the gas risk, or, could there be, you know, fixed capacity plus heat rate type of, arrangements, just wondering, you know, how those conversations have evolved over time, where you see them going?

Speaker #10: Maybe the evolution of those discussions over time and any comments you might be able to provide around Hyperscaler appetite around , you know , absorbing the gas risk or could there be , you know , fixed capacity plus heat rate , type of arrangements , just wondering what you might , you know , how those conversations have evolved over time , where you see them going .

Speaker #4: Hey , Jeremy , it's coal . Look , I think we've talked about this . You know , a few times , I think the not to be flippant , but the answer depends on the counterparty .

Cole Muller: Hey, Jeremy, it's Cole. Look, I think we've talked about this, you know, a few times. Not to be flippant, the answer depends on the counterparty, right? Some hyperscalers may have more appetite to take on the cost variability of gas and some less. You mentioned a couple of different variations of contracting. I think it's suffice to say we've explored a lot of different structures internally and with counterparties. Think there's, you know, a number of different avenues to ultimately contract and protect ourselves in any structure here. We've got a commercial desk that Chris leads that can, you know, also manage that position.

Speaker #4: Right . So some hyperscalers may have more appetite to take on the cost variability of gas . And some less so you mentioned a couple of different variations of contracting .

Speaker #4: I think it's suffice to say we've explored a lot of different structures internally and with counterparties . And I think there's , you know , a number of different avenues to ultimately contract and , and protect ourselves in , in any structure here .

Speaker #4: And we've got a commercial desk that Chris leads that can also manage that position . And if we did , if we contracted in that manner , we would obviously have a different premium structure in the PPA to kind of accommodate that .

Cole Muller: If we contract it in that manner, we would obviously have a different premium structure in the PPA to kind of accommodate that, you know, that aspect. So

Speaker #4: You know , that aspect . So , you know , I think there's there's a variety of different structures and , you know , obviously when we have a deal announce , we'll probably talk about that a little bit more .

[Company Representative] (Talen Energy): You know, I think, there's a variety of different structures and, you know, obviously when we have a deal to announce, we'll probably talk about that a little bit more.

Cole Muller: You know, I think, there's a variety of different structures and, you know, obviously when we have a deal to announce, we'll probably talk about that a little bit more.

Speaker #3: I would just add on to Cole's . Exactly right . It's going to be dependent upon what somebody wants . But if I was advising somebody who was buying this , I would say that you want somebody who manages the commodity risk to take the commodity risk and to pay for somebody to do that , unless you're going to warehouse that risk yourself .

Mac McFarland: I would just add on to. Cole's exactly right. It's gonna be dependent upon what somebody wants. If I was advising somebody who is buying this, I would say that you want somebody who manages the commodity risk to take the commodity risk and to pay for somebody to do that, unless you're going to warehouse that risk yourself. We are set up to do that. That's what we've talked about, being able to provide credit support to be able to do that, to be able to manage the gas risk, to be able to manage the physical gas delivery to our plants and the rest of it, even if it's just financial, manage that financial risk associated with the gas. That's the service that we're trying to provide that full suite.

Speaker #3: And we are set up to do that . And that's what we've talked about , being able to provide credit support to be able to do that , to be able to manage the gas risk , be able to manage the physical gas delivery to our plants and the rest of it , even if it's just financial manage that financial risk associated with the gas .

Speaker #3: And so that's the service that we're trying we're trying to provide that full suite . Now if someone to Cole's point , people can pick and choose across that .

Mac McFarland: Now, if someone, to Cole's point, people can pick and choose across that, but that would be what we would advise.

Speaker #3: But that would be what we would advise .

Speaker #10: Got it . That makes sense . Thank you .

Terry Nutt: Got it. That makes sense. Thank you.

Jeremy Tonet: Got it. That makes sense. Thank you.

Speaker #1: Thank you . And our next question is going to come from Nicholas Campanella with Barclays . Your line is open

Operator: Thank you.

Mac McFarland: Thanks, sir.

Operator: Our next question is gonna come from Nicholas Campanella with Barclays. Your line's open.

Speaker #11: Hey . Good afternoon . Thanks for taking my questions . Hope you can hear me I just a lot of good answers in the commentary .

Nicholas Campanella: Hey, good afternoon. Thanks for taking my questions. Hope you can hear me.

Mac McFarland: Hey.

Nicholas Campanella: Lot of good answers in the commentary. Hey, how are you? A lot of good answers in the commentary. I just wanted to follow up on, you know, how you guys are really trying to frame what's going on around RBA, ratepayer protection pledge, some of the comments that you responded to Michael. Just, you know, do you still feel that you have the ability to sign gas with incumbent generation in a front-of-meter framework? Just trying to understand if you're really just trying to say that this would only now come with additionality and a new build commitment. Maybe you can just kinda clarify just very clearly the expectations there.

Speaker #11: Hey , how are you ? A lot of good answers in the commentary , but just I just wanted to follow up on , you know , how you guys are really trying to frame what's going on around RBA ratepayer protection pledge .

Speaker #11: Some of the comments that you responded to to Michael , just You know , do you still feel that you have the ability to sign gas with incumbent generation in front of meter framework and just trying to understand if really just trying to say that this would only now come with additionality and a new build commitment .

Speaker #11: Maybe you can just kind of clarify, just very clearly, the expectations there.

Speaker #3: Let me be very clear . Yes We think you can continue to contract with existing assets . I it's yes . Do we think that there will be some form that may be new build in the future ?

Mac McFarland: Let me be very clear. Yes. We think you can continue to contract with existing assets.

Nicholas Campanella: Understood.

Mac McFarland: I... It's yes. Do we think that there will be some form that-?

Nicholas Campanella: Okay. Okay. No, thank you very much.

Mac McFarland: ... may include new build in the future? Yes. I mean, I'm not trying to be flippant about it. It's just that the answer is yes. We believe that there's the capacity to do so. We believe that there's a desire and appetite to do so. We're working on it.

Speaker #3: Yes . I mean , I'm not trying to be flippant about it . It's just that the answer is yes . We believe that there's the capacity to do so .

Speaker #3: We believe that there a desire and appetite to do so . And we're working on it

Speaker #11: And then just , you know , I know that I know that in hearing specifically , it was brought up by Amazon that this would not be kind of an additionality deal .

Nicholas Campanella: You know, I know that, I know that in, you know, Montour hearing specifically, it was brought up by Amazon that this would not be kind of an addition-additionality deal and that, you know, they talked about the current state of the supply chain. I'm cognizant that some of your peers on their calls have been kind of talking about that they may have new build gas and utilizing turbines or bridge power that others have procured or don't have a spot for. Maybe could you just kind of talk to what your existing kind of EPC relationships would be or your ability to maybe do something either internal via a partnership or inorganic to secure the supply chain further to kind of be able to deliver on that?

Speaker #11: And that , you know , they talked about the current state of the supply chain . And I'm cognizant that some of your peers on their calls have been kind of talking about that they may have new build gas and utilizing turbines or bridge power that others have procured or don't have a spot for .

Speaker #11: So maybe could you just kind of talk to what your existing kind of EPC relationships would be, or your ability to maybe do something either internal via a partnership or inorganic to secure the supply chain further, to kind of be able to deliver on that?

Speaker #3: Sure . Happy to do so . And Just so you understand , I was just trying to be clear that we think that there's the ability to do so .

Mac McFarland: Sure. Happy to do so. Just so you understand, I was just trying to be clear that we think that there's the ability to do so. I wasn't trying to be sharp-edged there. With respect to turbines and EPC relationships and the rest of it, our view, and the reason why we've built up and invested in its existing assets is very much to the point which we think that there's still the capability to use existing assets to contract. There's a lot of data centers that are out there right now that are looking at whether they contract for a longer period of time. Existing ones, right? You saw that in a recent PPA announcement with existing data center load.

Speaker #3: I wasn't trying to be sharp edge there , but with respect to turbines and EPC relationships and the rest of it , our view and the reason why we've built up an invested in his existing assets is very much to the point which we think that there's still the capability to use existing assets to contract .

Speaker #3: There's a lot of data centers that are out there right now that are looking at whether they contract for a longer period of time , existing ones .

Speaker #3: Right . You saw that in a recent PPA announcement with the existing data center load . I think that when it comes to new build and there's a fair amount of discussion around new build , we view new build very simply , new going to require either winning in the RVP and having a 15 year contract that allows for a taking the merchant risk of the capacity off , thereby allowing financing or new builds going to require a contract .

Mac McFarland: I think that when it comes to new build, there's a fair amount of discussion around new build, we view new build very simply. New build is going to require either winning in the RBP and having a 15-year contract that allows for a taking the merchant risk of the capacity off, thereby allowing financing, or new build is going to require a contract. If you have either one of those, okay, and a slight difference with the RBP versus, you know, sort of bring your own power or new build generation as Cole described in the hybrid, you're gonna need the offtake agreement. It is the offtake agreement that defines this, in our opinion, not necessarily the turbine orders or the EPC.

Speaker #3: And so if you have either one of those , okay , and a slight difference with the RVP versus , you know , sort of bring your own power or new build generation as Cole described in the hybrid , you're going to need the off take agreement .

Speaker #3: It is the offtake agreement that defines this in our opinion , not necessarily the turbine orders or the EPC and the first group that has an off take agreement will find all sorts of people that want to invest in it , all sorts of turbines that want to be part of it , and all sorts of EPC providers that will want to be part of it , because it is a live project .

Mac McFarland: The first group that has an offtake agreement will find all sorts of people that wanna invest in it, all sorts of turbines that wanna be part of it, and all sorts of EPC providers that will want to be part of it because it is a live project once you have either that contract or the RBP award. Hopefully that answers the question. I think that. I hear your point. We have relationships with those. We put Dale in the spot in the Chief Asset Development Officer role specifically to focus on technology, costing, EPC work, et cetera. That's very important, but it is the offtake that is most important.

Speaker #3: Once you have . Either that contract or the RVP award . So hopefully that answers the question . I think that I hear your point .

Speaker #3: We have relationships with those . We put Dale in the spot in the chief asset development officer role , specifically to focus on technology costing , EPC work , etc.

Speaker #3: that's very important , but it is the off that is most important

Nicholas Campanella: Thank you for those thoughts. I really appreciate it. Thank you.

Speaker #11: Thank you for those thoughts. I really appreciate it. Thank you.

Speaker #3: Yeah . Thank you . Thanks .

Mac McFarland: Yeah, thank you.

[Company Representative] (Talen Energy): Thanks, Nick.

Cole Muller: Thanks, Nick.

Speaker #4: Nick .

Speaker #1: Thank you . And our next question will come from Nick Amicucci with Evercore . Your line is open .

Operator: Thank you. Our next question will come from Nick Amicucci with Evercore. Your line is open.

Speaker #12: Hey guys . Mac , I'm not going to ask you if you think that you could sign contracts currently , but I did want to ask on just as we kind of think about the hedge book , kind of looking through 2027 , still a lot of upside optionality .

Nick Amicucci: Hey, guys. Mac, I'm not gonna ask you if you think that you could sign contracts currently. I did wanna ask on, just as we kind of think about the hedge book...

Craig Shere: kind of looking through 2027, still a lot of upside optionality there. How should we expect that to continue to creep up over time? Can we, Are we comfortable kind of leaving that open just to, just given that the forward curves still aren't fully reflective of kind of the tightness?

Nick Amicucci: kind of looking through 2027, still a lot of upside optionality there. How should we expect that to continue to creep up over time? Can we, Are we comfortable kind of leaving that open just to, just given that the forward curves still aren't fully reflective of kind of the tightness?

Speaker #12: There . How should we expect that to continue to creep up over time ? Or can we . Are we going to are we comfortable kind of leaving that open just to just given that the forward curve still aren't fully reflective of of kind of the tightness ?

Mac McFarland: Hey, thanks, Craig. I'm gonna get our Chief Commercial Officer to jump in here. Look, we I think in macro, and then Chris fill in the spots. Like, we saw an opportunity in December of last year, as Terry walked through in his opening remarks, when prices went up, to take some 2027 off the table or to lock it in through the hedges. Okay? We, we do that not necessarily as we said, it's a pragmatic, you know, not a-

Speaker #3: Hey , thanks , Craig . I might get our chief commercial officer to jump in here , but look , I think in macro and then Chris fill in the spots .

Speaker #3: But like we saw an opportunity in December of last year as Terry walked through in his opening remarks when prices went up to take some 27 off the table or to lock it in through the hedges .

Speaker #3: Okay , we do that not necessarily . As we said , it's a pragmatic , you know , not a programmatic programmatic . We don't like set limits like by this date , we got to be this hedged .

Chris: Programmatic.

Cole Muller: Programmatic.

Mac McFarland: Programmatic. We don't, like, set limits, like, by this date we gotta be this hedged. When we look at it, we've been saying this for quarters, that we haven't seen necessarily the forward market responding. We saw the forward market responded, and we legged into that some. Now I can't tell you know, you know, we see this and we're sitting here today, and the sparks have moved up since our Investor Day presentation. They moved up dramatically versus at some point and they came back down. They're moving all over the place. The good news is the general direction is up and to the right, and we believe that that's consistent with our fundamental view, but we don't feel the need necessarily to go out and hedge.

Speaker #3: And so when we look at it we've we've been saying this for quarters that we haven't seen necessarily the forward market responding . But we saw the forward market responded and we lagged into that .

Speaker #3: So now I can't tell you you know , we see this and we're sitting here today and sparks have moved up since our Investor Day presentation .

Speaker #3: They moved up dramatically versus it at some point, and then came back down. They're moving all over the place. The good news is the general direction is up and to the right.

Speaker #3: And we believe that that's consistent with our fundamental view . But we don't feel the need necessarily to go out and hedge . So it's hard to answer your question specifically , but when we throw that over to Chris .

Mac McFarland: It's hard to answer your question specifically, but let me throw that over to Chris.

Speaker #3: Yeah ,

Chris: Yeah. You said it. I think we've been leaning in previous quarters on our intentional length in some of the outer periods, waiting for these instances of volatility, seemingly happening with more frequency. As happened with this winter, as we expect it continue to happen through the year, the tightening supply and demand will provide real-time opportunities for us to continue to lay off hedges. We have stated targets. We have ranges. We've been on the lower end of those, intentionally so, and we will continue to add to those as the market presents us with compelling opportunities.

Chris Morice: Yeah. You said it. I think we've been leaning in previous quarters on our intentional length in some of the outer periods, waiting for these instances of volatility, seemingly happening with more frequency. As happened with this winter, as we expect it continue to happen through the year, the tightening supply and demand will provide real-time opportunities for us to continue to lay off hedges. We have stated targets. We have ranges. We've been on the lower end of those, intentionally so, and we will continue to add to those as the market presents us with compelling opportunities.

Speaker #13: You said it , I think we've been leaning in previous quarters on our intentional length in some of the outer periods , waiting for these instances of volatility Seemingly happening with more frequency .

Speaker #13: And so, as happened with this winter, and as we expect to continue to happen through the year, the tightening supply and demand will provide real-time opportunities for us to continue to lay off hedges.

Speaker #13: So we have stated targets . We have ranges . We've been on the lower end of those intentionally . So , and we will continue to add to those as the market presents us with compelling opportunities .

Speaker #3: Yeah , I think that's an important part , which is , you know , when we came out of it's kind of a trip down memory lane here .

Mac McFarland: Yeah. I think that's an important part, which is, you know, when we came out of... It's kind of a trip down memory lane here, when we came out of BK, people were saying, Well, how are you gonna hedge this in? Things of that nature. We put out stated targets of 60 to 80 and 40 to 60 prompts and then prompt plus one. Those are guidelines. Chris manages the position. We have discussions. Terry, the risk management, Cole, Chris get together. We talk about this. When you're managing a big book, you can't just, like, eventually get to 27 long 10,000MW. You know, that's what we're starting to become with the addition of Cornerstone, with the addition of Freedom and Guarantee.

Speaker #3: But when we came out of BCC , people were saying , well , how are you going to hedge this in and things of that nature ?

Speaker #3: And we put out stated targets of 60 to 80 and 40 to 60 prompts and prompt plus one . And those are guidelines .

Speaker #3: And so but Chris manages the position . We have discussions . Terry . The risk management Cole . Chris , get together . We talk about this .

Speaker #3: But when you're managing a big book , you can't just like eventually get to 27 long 10,000MW . And you know , that's what we're starting to become with the addition of cornerstone , with the addition of freedom and Guernsey .

Speaker #3: So you have to take some of these leg But it's not like a forced take , take it off . We can decide how we want to tilt the book based off of our fundamental view .

Mac McFarland: You have to take some of these opportunities to leg in some. It's not like a forced take it off. We can decide how we want to tilt the book based off of our fundamental view.

Speaker #9: Yeah . And Nick , maybe to add to that too , as we get more , as we get more and more contracted margin , the overall portfolio , right .

Terry Nutt: Yeah. Nick, maybe to add to that too. As we get more and more contracted margin in the overall portfolio, right? When we think about just the support to the cash flows that we need, you know, you have less and less need to sort of lock those in. Once again, when we take a look at our hedging program, we're taking a look at both what's our contracted margin or contracted cash flows to support the business, be able to make our P&I payments, be able to make sure that we take care of sort of the basic needs. As we get more and more of the contracted margin from the AWS deal, hedging is becomes a little bit more opportunistic.

Speaker #9: When we think about just the the support to the cash flows that we need , you know , you have less and less , you have less and less need to sort of lock those in .

Speaker #9: And so once again , when we take a look at our hedging program , we're taking a look at both what's our what's our contracted margin or contracted cash flows to support the business .

Speaker #9: Be able to make our payments , be able to make sure that we take care of sort of the basic needs . But as we get more and more of the contracted margin from the AWS deal , hedging is becomes a little bit more opportunistic .

Speaker #9: So we'll continue to to have that view as we move forward . And I think that's a benefit that we really like having .

Terry Nutt: We'll continue to have that view as we move forward. I think that's a benefit that we really like having.

Speaker #12: Yep . No , it makes sense . Thanks guys . And Cole , just really quickly just on a kind of a cleanup question , I guess just with regards to the cornerstone .

Craig Shere: Yep. No, makes sense. Thanks, guys. Cole, just really quickly, just on a kind of a cleanup question, I guess, just with regards to Cornerstone. Obviously, it's gonna depend on the timing, but of the closing of the acquisition. Is it fair to kind of take that $500 million in EBITDA and just kind of allocate that over the, you know, from the closing date across 2026? Or is there some growth embedded in there in 2027?

Nick Amicucci: Yep. No, makes sense. Thanks, guys. Cole, just really quickly, just on a kind of a cleanup question, I guess, just with regards to Cornerstone. Obviously, it's gonna depend on the timing, but of the closing of the acquisition. Is it fair to kind of take that $500 million in EBITDA and just kind of allocate that over the, you know, from the closing date across 2026? Or is there some growth embedded in there in 2027?

Speaker #12: Now obviously it's going to depend on the timing , but of the of the closing of the acquisition . But is it fair to kind of take that 500 million in EBITDA and just kind of allocate that over the , you know , from the from the closing date across 2026 , or is there some growth embedded in there in 2027 .

Speaker #4: And look , I think that's a good run rate number . So what . Pick your assumption on on a closed date . And I think you know 12 months forward from there .

Chris: Look, I think that that's a good run rate number. Pick your assumption on a close date, and I think, you know, 12 months forward from there, it's a good round number.

Cole Muller: Look, I think that that's a good run rate number. Pick your assumption on a close date, and I think, you know, 12 months forward from there, it's a good round number.

Speaker #4: It's a good round number .

Speaker #12: Perfect . Thanks guys .

Craig Shere: Perfect. Thanks, guys.

Nick Amicucci: Perfect. Thanks, guys.

Speaker #3: And if you wanted to get just a tad more precise , you got to think about , you know , there's a more value in July , August December , winter time frame to cross that .

Mac McFarland: If you wanted to get just a tad more precise, you gotta think about, you know, there's a more value in July, August, December, and winter timeframe too across that, but it's a good round number. Yeah.

Speaker #3: But it's a good round number . Yeah .

Speaker #12: Well , you guys know I'm not that precise . So . Fine .

Craig Shere: Well, you guys know I'm not that precise, so it's fine.

Nick Amicucci: Well, you guys know I'm not that precise, so it's fine.

Speaker #9: Thanks , Nick .

Terry Nutt: Thanks, Nick.

Speaker #1: Thank you . And the next question is going to come from Craig Scheer with Tui Brothers . Your line is open .

Operator: Thank you. The next question is gonna come from Craig Shere with Tuohy Brothers. Your line is open.

Speaker #12: Good afternoon and thanks for . squeezing me in You know , a year ago , if we talked about new build , I think that was not really a part of the discussion at Talen .

[Analyst] (Tuohy Brothers Investment Research): Good afternoon, and thanks for squeezing me in. You know, a year ago, if we talked about new build, I think that was not really a part of the discussion at Talon. Now it sounds like this is at least something, you know, quite plausible that we might have something by year-end, especially through the auction. I'm wondering how you're thinking about, you know, capital and balance sheet management decisions, you know, over the next two, three quarters, given the fact you might have some. You know, obviously you would only do it if you're incentivized, but you might be incentivized towards some chunky new build. How do you think about maybe would you be less aggressive with the balance sheet?

Craig Shere: Good afternoon, and thanks for squeezing me in. You know, a year ago, if we talked about new build, I think that was not really a part of the discussion at Talon. Now it sounds like this is at least something, you know, quite plausible that we might have something by year-end, especially through the auction. I'm wondering how you're thinking about, you know, capital and balance sheet management decisions, you know, over the next two, three quarters, given the fact you might have some. You know, obviously you would only do it if you're incentivized, but you might be incentivized towards some chunky new build. How do you think about maybe would you be less aggressive with the balance sheet?

Speaker #12: And now it sounds like this is at least something you know , quite plausible that we might have something by year end , especially through the auction .

Speaker #12: And I'm wondering how you're thinking about , you know , capital and balance sheet management decisions , you know , over the next 2 or 3 quarters , given the fact you might have some , you know , obviously you would only do it if you're incentivized , but you might be incentivized towards some chunky new build .

Speaker #12: How do you think about maybe being would you would you be less aggressive with the balance sheet ? Or if opportunities arise with the shares down or an acquisition , you're not going to change what you've done the last year or year and a half .

[Analyst] (Tuohy Brothers Investment Research): If opportunities arise with the shares down or an acquisition, you're not gonna change what you've done the last year or year and a half?

Craig Shere: If opportunities arise with the shares down or an acquisition, you're not gonna change what you've done the last year or year and a half?

Speaker #9: Hey Craig , it's Terry , maybe one little sort of nuance to your comment . We've always said , and this and this really dovetails with Max comment a few minutes ago .

Terry Nutt: Hey, Craig, it's Terry. maybe one little sort of nuance to your comment. We've always said, and this, and this really dovetails with Mac's comment a few minutes ago. We've always said if we've got the right certainty, whether it's through an offtake agreement or a very clear sort of underwriting case with an offtaker, we would be more than happy to do it, to do new build, right? I think we've, you know, we've always had that as one of the talking points we've talked about. you know, that being said, I think the RBA is, you know, potentially gives you that clarity, right?

Speaker #9: We've always said , if we've got the right certainty , whether it's through an offtake agreement or a very clear sort of underwriting case with a with an off taker , we would we would be more than happy to do it , to do new build .

Speaker #9: Right ? I think we've you know , we've always had that as one of the talking points . We've talked about . You know , that being said , I think the the RBA gives , you know , potentially gives you that clarity , right .

Speaker #9: If , if we end up in a procurement process where you can get a 15 year commitment , that's very , you know , that's that's what you need to underwrite and effectively finance .

Terry Nutt: If we end up in a procurement process where you can get a 15-year commitment, that's very, you know, what you need to underwrite and effectively finance, you know, the new build of an asset. That's a challenge that this market has had for the past several years. It's not the question of whether or not you can build something, it's whether or not you can finance it.

Speaker #9: You know , the new build of an asset that's a challenge at this market has had for the past several years . It's not the question of whether or not you can build something , it's whether or not you can finance it .

Speaker #9: Right . And PJM in particular , right now , back to your your second part of that question . We are always we are always balancing and looking for the highest and best use of our capital , whether that's buying the shares back , whether that's doing M&A , whether that's doing new build .

Mac McFarland: Right.

Terry Nutt: In PJM in particular. Right? Now back to your second part of that question. We are always balancing and looking for the highest and best use of our capital, whether that's buying the shares back, whether that's doing M&A, whether that's doing new build. We're always looking at high teens returns, right? I mean, you know, we wanna make sure that we stay disciplined in doing that. That's why you've seen us toggle through. I mean, even for the last several years, we've toggled through a number of those different strategies, and each time we're looking at returns that are significantly high. I mean, just to give you two or three of those examples, we've done a significant amount of share repurchase over the last two and a half years.

Speaker #9: And we're always looking looking at high , high teens returns . Right ? I mean , you know , we want to make sure that we stay disciplined in doing that .

Speaker #9: And so that's why you've seen us toggle through I mean , even for the last several years , we've toggled through a number of those different strategies .

Speaker #9: And each time we're looking at returns that are significantly high , I mean , just to give you 2 or 3 of those examples , we've done a significant amount of share repurchase over the last two and a half years .

Speaker #9: I mean, we've bought back over $2 billion worth of stock, close to 24% of the total float of the business, at an average price of $149 a share.

Terry Nutt: I mean, we've bought back over $2 billion worth of stock, close to like 24% of the total float of the business at an average price of $149 a share. Those were really good strategic moves and a great use of our balance sheet and our capital. Take a look at the Freedom and Guernsey transaction, greater than 40% accretive free cash flow per share growth from those acquisitions, right? We're always gonna direct the capital and the use of our balance sheet to whatever the highest returns are. We talk about it all the time. We sit around the table and as we think about what is the best use for that marginal dollar, we're going through all that entire list.

Speaker #9: And those were really good strategic moves and a great use of our balance sheet and our capital. Take a look at the Freedom and Guernsey transaction.

Speaker #9: Greater than 40% accretive free cash flow per share growth from those acquisitions, right. So they're always going to direct the capital and the use of our balance sheet to whatever the highest returns are.

Speaker #9: And we talk about it all the time . We we sit around the table and , and as we think about what is the best use for that marginal dollar , we're going through all that entire list .

Speaker #9: I mean , very similar to the list that's on slide 11 of how we think about , you know , growing , growing the business and growing the free cash flow

Terry Nutt: I mean, very similar to the list that's on slide 11 of how we think about, you know, growing the business and growing the free cash flow.

Speaker #3: I just

Mac McFarland: I just got, Craig,

Speaker #12: Go ahead .

[Analyst] (Tuohy Brothers Investment Research): Go ahead.

Craig Shere: Go ahead.

Speaker #6: Yeah . Go ahead , go ahead . No . Go ahead Greg I .

Mac McFarland: You go ahead.

[Analyst] (Tuohy Brothers Investment Research): Go ahead.

Craig Shere: Go ahead.

Mac McFarland: No, go ahead, Craig.

Speaker #12: Was just going to throw another twist in there because you got the buybacks . You got the acquisitions and you've got kind of the new build organic growth which which it seems like maybe there's more clarity potential clarity where that could be more real and incentivized by the end of this year than , than previously .

[Analyst] (Tuohy Brothers Investment Research): I was just gonna throw another twist in there, 'cause you got the buybacks, you got the acquisitions, and you've got kind of the new build organic growth, which it seems like maybe there's more clarity, potential clarity where that could be more real and incentivized by the end of this year than previously. You've got this whole discussion that's been brought up in this call about managing fuel/commodity risks on long-term gas-fired PPAs, and that requires balance sheet, you know, capacity as well. You know, especially if you're cash flowing really hard, it doesn't matter what you do to your balance sheet, in 2, 3 years, you're gonna be dry, right?

Craig Shere: I was just gonna throw another twist in there, 'cause you got the buybacks, you got the acquisitions, and you've got kind of the new build organic growth, which it seems like maybe there's more clarity, potential clarity where that could be more real and incentivized by the end of this year than previously. You've got this whole discussion that's been brought up in this call about managing fuel/commodity risks on long-term gas-fired PPAs, and that requires balance sheet, you know, capacity as well. You know, especially if you're cash flowing really hard, it doesn't matter what you do to your balance sheet, in 2, 3 years, you're gonna be dry, right?

Speaker #12: But then you've got this whole discussion that's been brought up in this call about managing fuel slash commodity risks on long term gas fired PPAs and that requires balance sheet , you know , capacity as well .

Speaker #12: You know , especially if you're , you know , it's look , if you're cash flowing really hard , it doesn't matter what you do to your balance sheet in 2 or 3 years , you're going to be dry , right ?

Speaker #12: But if you sign a PPA where you're delivering next year , maybe you need that capacity . And I'm just thinking that between the new build , between managing , you know , the fuel risk , maybe there's more to think about with the balance sheet today than there was a year ago .

[Analyst] (Tuohy Brothers Investment Research): If you sign a PPA where you're delivering next year, maybe you need that capacity. I'm just thinking that between the new build, between managing, you know, the fuel risk, maybe there's more to think about with the balance sheet today than there was a year ago.

Craig Shere: If you sign a PPA where you're delivering next year, maybe you need that capacity. I'm just thinking that between the new build, between managing, you know, the fuel risk, maybe there's more to think about with the balance sheet today than there was a year ago.

Speaker #3: Look , Craig , I think it's a it's a good question . And let me just when you frame this question , you said a year ago you weren't thinking about new build .

Mac McFarland: Look, Craig, I think it's a good question and, let me just. When you framed this question, you said a year ago you weren't thinking about new build. I think a year ago, we said we would consider new build. We were thinking about it, but it's like a 2030, 2032 timeframe issue. Well, we're another year down and, you know, 2029 is the new 2028 when it comes to data center power and, you know, and that we're a year closer to that, and then the RBP has put this in further light. I think that it really is dependent upon what structure you go after, because depending upon what the PPAs look like, with respect to the RBP, for example, you own the energy and it just goes into the book like Chris.

Speaker #3: I think a year ago we said we would consider new build . We were thinking about it , but it's like a 20 , 30 , 32 time frame issue .

Speaker #3: Well , we're another year down and , you know , 29 is the new 28 when it comes to data center power . And you know , and that we're a year closer to that end than the RVP has put this in further late .

Speaker #3: I think that it really is dependent upon what structure you go after , because depending upon what the PPAs look like with respect to the RVP , for example , you own the energy and it just goes into the book , like Chris , it's really you're receiving a capacity payment is how you think about bidding in there , which covers your cost .

Mac McFarland: It's really you're receiving a capacity payment is how you think about bidding in there, which covers your cost and that allows for the financing. That could be actually in a project finance structure, which we haven't done. It may require less balance sheet than you actually think in that system. If we're doing PPAs that are longer term and it requires credit support, we work through that. We think about is there the ability to post an LC, do things first lien, et cetera. There's not an easy answer to your question. I get it, but I think what we've always said is that we, this is why we toggle things. We have the SRP, we have the net leverage of three and a half times. We've shown the ability to toggle back and forth between those.

Speaker #3: And that allows for financing . That could be actually in a project finance structure , which we haven't done . So it may require less balance sheet than you actually think .

Speaker #3: And that system , if we're doing PPAs that are longer term and it requires credit support , we work through that . We think about is there the ability to post an LC , do things first , lean , etc.

Speaker #3: . So there's not an easy answer to your question , I get it , but I think what we've always said is that we this is why we toggle things .

Speaker #3: We have the SRP , we have the net leverage of three and a half times . We've shown the ability to toggle back and forth between those .

Speaker #3: As Terry said, we do share repurchase when we need to push up the balance sheet, with a clear view to bring it back down within space in order to do M&A.

Mac McFarland: As Terry said, do share repurchase when we need to, push up the balance sheet with a clear view to bring it back down within space in order to do M&A. It really depends on when we get there and what the opportunity looks like. I think we would just view that as how do we toggle the different aspects that we have in order to make things work if the right returns are there with the right contract. I think we're about out of time. Do we have?

Speaker #3: And so it really depends on when we get there and what the opportunity looks like . But I think we would just view that as how do we toggle the different aspects that we have in order to to make things work .

Speaker #3: If the right returns are there with the right contract. So I think we're about out of time. Do we have...

Speaker #6: Thank you . Two more .

[Analyst] (Tuohy Brothers Investment Research): Thank you.

Craig Shere: Thank you.

Mac McFarland: Two more? What do you say?

Speaker #3: What do you say ? Okay .

Terry Nutt: Yeah.

Mac McFarland: Okay.

Speaker #9: Yeah . We're past time

Terry Nutt: Yeah, we're past time.

Speaker #3: So I think we're going to end there . I apologize , I know there's a couple people in the queue that we didn't get to , and we're happy to take follow up questions .

Mac McFarland: I think we're gonna end there. I apologize. I know there's a couple people in the queue that we didn't get to, and happy to take follow-up questions, Sergio and the rest of us here. Appreciate everybody's interest in Talen Energy, and have a good evening.

Speaker #3: Sergio and the rest of us here appreciate everybody's interest and talent, and have a good evening.

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.

Q4 2025 Talen Energy Corp Earnings Call

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