Talen Energy (TLN) 10-Q 2016 Q3 Quarterly report

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.