EX-12.A 3 tln-2016930xexx12a.htm EXHIBIT 12.A Exhibit


Exhibit 12 (a)
TALEN ENERGY CORPORATION AND SUBSIDIARIES

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Millions of Dollars)

 
Nine Months
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ended
September 30, 2016
 
Years Ended December 31,
 
 
2015
 
2014
 
2013
 
2012
 
2011
Earnings, as defined:
 
 
 
 
 
 
 
 
 
 
 
    Income (Loss) from Continuing Operations
       Before Income Taxes (a)
$
393

 
$
(368
)
 
$
303

 
$
(420
)
 
$
665

 
$
1,061

    Adjustments to reflect earnings from equity
       method investments on a cash basis
—

 
—

 
—

 
—

 
—

 
1

 
393

 
(368
)
 
303

 
(420
)
 
665

 
1,062

 
 
 
 
 
 
 
 
 
 
 
 
Total fixed charges as below
197

 
236

 
161

 
226

 
238

 
259

    Less:
 
 
 
 
 
 
 
 
 
 
 
    Capitalized interest
13

 
20

 
22

 
35

 
37

 
38

    Interest expense and fixed charges related to
       discontinued operations
—

 
—

 
10

 
14

 
12

 
6

Total fixed charges included in Income (Loss) from
  Continuing Operations Before Income Taxes
184

 
216

 
129

 
177

 
189

 
215

 
 
 
 
 
 
 
 
 
 
 
 
    Total earnings
$
577

 
$
(152
)
 
$
432

 
$
(243
)
 
$
854

 
$
1,277

 
 
 
 
 
 
 
 
 
 
 
 
Fixed charges, as defined:
 
 
 
 
 
 
 
 
 
 
 
    Interest charges
$
192

 
$
231

 
$
156

 
$
207

 
$
214

 
$
223

    Estimated interest component of operating rentals
5

 
5

 
5

 
19

 
24

 
36

 
 
 
 
 
 
 
 
 
 
 
 
          Total fixed charges (b)
$
197

 
$
236

 
$
161

 
$
226

 
$
238

 
$
259

 
 
 
 
 
 
 
 
 
 
 
 
Ratio of earnings to fixed charges (a)
2.9

 
(0.6
)
 
2.7

 
(1.1
)
 
3.6

 
4.9

 
 
 
 
 
 
 
 
 
 
 
 

(a)
The nine months ended September 30, 2016 includes $563 million of net pre-tax gains related to the sale of certain generation facilities and $214 million in pre-tax impairment charges primarily related to the Bell Bend COLA. See Notes 8 and 13 to the Financial Statements for additional information.

In 2015, $657 million non-cash, pre-tax goodwill and other long-lived asset impairment charges were recorded. See Note 16 to the Financial Statements in Talen Energy's 2015 10-K for additional information. As a result of these non-cash charges, earnings were lower in 2015, which resulted in less than one-to-one coverage. The adjusted amount of the deficiency, or the amount of fixed charges in excess of earnings, was $388 million.

To facilitate the sale of its hydroelectric generating facilities in 2014, in December 2013, Talen Montana terminated a lease agreement which resulted in a $697 million charge. See Note 6 to the Financial Statements in Talen Energy's 2015 10-K for additional information. As a result of these transactions, earnings were lower in 2013, which resulted in less than one-to-one coverage. The adjusted amount of the deficiency, or the amount of fixed charges in excess of earnings, was $469 million.
    
(b)
Interest on unrecognized tax benefits is not included in fixed charges.