3. Revenue
The components of operating revenues for the periods were:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Successor | | | Predecessor |
| | | | | | Year Ended December 31, 2025 | | Year Ended December 31, 2024 | | May 18 through December 31, 2023 | | | January 1 through May 17, 2023 |
| Electricity sales and ancillary services, ISO/RTO | | | | | | $ | 1,940 | | | $ | 1,144 | | | $ | 880 | | | | $ | 281 | |
| Capacity revenues | | | | | | 485 | | | 192 | | | 133 | | | | 108 | |
| Physical electricity sales, bilateral contracts, other | | | | | | 93 | | | 147 | | | 71 | | | | 62 | |
| Other revenue from customers | | | | | | — | | | 91 | | | 81 | | | | 27 | |
| Total revenue from contracts with customers | | | | | | 2,518 | | | 1,574 | | | 1,165 | | | | 478 | |
| Realized and unrealized gain (loss) on derivative instruments | | | | | | 56 | | | 307 | | | 179 | | | | 732 | |
| Nuclear PTC | | | | | | — | | | 220 | | | — | | | | — | |
| Other revenue | | | | | | 7 | | | 14 | | | — | | | | — | |
| Operating revenues | | | | | | $ | 2,581 | | | $ | 2,115 | | | $ | 1,344 | | | | $ | 1,210 | |
Accounts Receivable
“Accounts receivable” presented on the Consolidated Balance Sheets were:
| | | | | | | | | | | | | | |
| | Successor |
| | December 31,
2025 | | December 31,
2024 |
| Customer accounts receivable | | $ | 160 | | | $ | 66 | |
| Other accounts receivable | | 36 | | | 57 | |
| Accounts receivable | | $ | 196 | | | $ | 123 | |
During the years ended December 31, 2025 (Successor), and 2024 (Successor), there were no significant changes in accounts receivable other than normal receivable recognition and collection transactions. See Note 2 for additional information on Talen’s credit risk on the carrying value of its receivables.
Future Performance Obligations
Talen’s estimated future fixed fee performance obligations primarily include capacity volumes awarded, net of capacity repurchases by the Company, through PJM BRAs and incremental PJM capacity auctions. See Note 9 for additional information on the PJM BRAs.
As of December 31, 2025 (Successor), future performance obligations that were unsatisfied or partially unsatisfied were: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2026 | | 2027 | | 2028 (a) | | 2029 (a) | | 2030 (a) |
| Future performance obligations | | $ | 963 | | | $ | 1,053 | | | $ | 443 | | | $ | — | | | $ | — | |
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(a)As PJM BRAs have not yet occurred for periods after the 2027/2028 PJM Capacity Year, there are no future performance obligations after May 31, 2028.
Brandon Shores and H.A. Wagner RMR Agreements
In May 2025, the FERC approved each of the Brandon Shores and H.A. Wagner RMR agreements, under which: (i) Talen will operate the generation facilities in accordance with such arrangements from June 1, 2025 through May 31, 2029, or until such time as the necessary third-party transmission upgrades are placed into service; (ii) Brandon Shores will earn annual fixed-cost payments of $145 million ($312/MWd), inclusive of a $5 million per year unit performance “hold back;” (iii) H.A. Wagner will earn annual fixed-cost payments of $35 million ($137/MWd), inclusive of a $2.5 million per year unit performance “hold back;” and (iv) each facility will receive separate reimbursement for variable costs and approved project investments. In August 2025, the Maryland Office of People’s Counsel filed an appeal of the FERC’s order approving the Brandon Shores and H.A. Wagner RMR agreements. Talen has intervened in that proceeding and plans to participate.
Additionally, H.A. Wagner Unit 4 is subject to certain emission restrictions associated with its air permits that limit the Unit’s annual runtime. In October 2025, the DOE granted PJM’s request, pursuant to Section 202(c) of the Federal Power Act, to renew the DOE’s July order, which allowed Unit 4 to exceed its air permit emission limits for the remainder of the calendar year when Unit 4 was needed to maintain grid reliability. Such order is subject to extension at the request of PJM and at the discretion of the DOE.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.