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Item 1A. Risk Factors

2025-11-13 compared with 2024-11-14 · 161 added, 186 removed, 324 unchanged (52% of the section changed)

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REGULATORY, LEGISLATIVE, AND LEGAL RISKS

TVA may become subject to additional environmental regulations or may be required to expend significant funds in the future to comply with current regulations.

Laws, regulations, orders, and their interpretation pose a threat of substantially increasing TVA's cost of operations, including through prompting the early retirement of generation facilities, requiring significant capital expenditures to reduce carbon emissions, or causing TVA to change its anticipated methodology for closing CCR facilities.

Possible areas of future laws or regulations include, but are not limited to, CCR, GHGs, ELGs, water quality, air quality, renewable energy portfolio standards, and natural gas production and transmission.

See Item 1, Business — Environmental Matters — Clean Air Act Programs and Regulations for a discussion of EPA's new greenhouse gas emission standards and guidelines and new Mercury and Air Toxics Standards, Item 1, Business — Environmental Matters — Water Quality Control Developments for a discussion of EPA's new effluent limitation guidelines, Item 1, Business — Environmental Matters — Cleanup of Solid and Hazardous Wastes — Coal Combustion Residuals for a discussion of recent revisions to EPA's CCR Rule, and Item 1, Business — Environmental Matters — Climate Change — Executive Actions for a discussion of recent executive actions regarding climate change.

Litigation may affect the timing and requirements of new regulatory proposals or may indirectly affect TVA, potentially even when TVA is not involved.

Failure to comply with environmental requirements can result in enforcement actions and litigation, which can lead to the imposition of significant civil liability, including fines and penalties, criminal sanctions, and/or temporary or permanent closure of non-compliant facilities.

New environmental laws, regulations, or orders may become applicable to TVA or the facilities it operates, and existing environmental laws or regulations may be revised, enforced, or reinterpreted in a way that adversely affects TVA.

EPA's recent regulations relating to closure of CCR facilities and EPA's revised interpretation of CCR regulations are pertinent examples.

These rules will likely require TVA to incur significant additional costs with implementing closure, subject to the completion of any required environmental investigations or studies and any required approval of appropriate state regulators.

TVA expects that these costs will substantially increase constraints related to TVA’s debt ceiling and increase risks related to, among other things, (1) maintaining TVA’s desired mix of generation assets, (2) meeting TVA’s carbon-reduction aspirations, and (3) operating TVA's assets or their supporting infrastructure in a manner TVA considers most efficient, each of which is discussed below in these Risk Factors.

TVA may become subject to new environmental laws, regulations, or orders or may be required to expend significant funds in the future to comply with current laws, regulations, or orders.

TVA is subject to significant environmental laws, regulations, and orders.

The cost of complying with these laws, regulations, and orders is substantial, and costs could be significantly more than TVA anticipates, particularly if TVA must retire generation facilities earlier than planned or change its anticipated methodology for closing CCR facilities.

In addition, new environmental laws, regulations, or orders may be applicable to TVA or the facilities it operates, and existing environmental laws or regulations may be revised, enforced, or reinterpreted in a way that adversely affects TVA.

Possible areas of new laws or regulations include CCR management, air or water pollution standards, or natural gas or transmission regulation.

Litigation may affect the timing and requirements of new laws or regulations, may create uncertainty about what laws will govern resources by the time they become operational, and may indirectly affect TVA even when TVA is not involved in the litigation.

Failure to comply with environmental requirements can result in TVA being subject to enforcement actions and litigation.

Such actions and litigation can lead to the imposition of significant civil liability, including fines and penalties, criminal sanctions, temporary or permanent closure of non-compliant facilities, and/or liability for the costs of environmental remediation of property TVA currently owns or previously owned, regardless of whether the liabilities arose before or after TVA owned or operated the facilities.

Complicating these matters further, over the last several decades, U.S.

Administrations have increasingly relied on regulations and executive orders to implement environmental policies and objectives in the absence of Congressional agreement regarding new legislation.

This condition, which creates instability and unpredictability of environmental regulations, seems likely to persist and could increase due to apparent polarization between the two main political parties.

As a result, TVA often must comply with and otherwise adapt to environmental regulations without assurance of their continued effect.

TVA often does not have the ability to anticipate, or prepare in advance for, changes in regulatory approaches that may be implemented following a change in Administration.

The Supreme Court’s recent decision in Loper Bright Enterprises v.

Raimondo overturned the Court’s longstanding deferral to the applicable agency’s interpretation of regulations.

TVA is unable to predict whether, or to what extent, this decision will alter the outcome of judicial reviews of current or future regulations.

TVA does not know whether risks related to current and future regulations affecting TVA will be significantly mitigated by the decision in Loper Bright .

New, existing, or amended laws, regulations, and administrative or executive orders, or congressional actions or inactions, create certain risks due to unique aspects of TVA’s structure and business.

TVA is subject to significant laws, regulations, and orders under federal law, including some that do not apply to private electric companies.

The cost of complying with these laws, regulations, and orders is substantial, and costs could be

significantly more than TVA anticipates, especially concerning environmental and nuclear compliance.

In addition, TVA is required to obtain numerous regulatory permits and approvals from governmental agencies, and a failure to timely obtain desired approvals or to comply with any law, regulation, or order may cause TVA to change how it operates certain assets or pay fines for continuing to operate the assets.

Moreover, since states are sometimes authorized to implement environmental programs so long as they implement the minimum federal standards in compliance, performance, and enforcement, TVA is often required to work with state agencies and officials in numerous jurisdictions to ensure compliance.

Amendments to existing laws or future additional laws, regulations, and administrative or executive orders present additional risks, the occurrence of which is likely increased due to the potential for stakeholder activism.

Further, federal administrative or executive orders could induce TVA to change the way it conducts its business.

See Item 1, Business — Environmental Matters — Climate Change — Executive Actions for a discussion of recent executive actions regarding climate change.

Furthermore, Congress could act or fail to act on various issues that may impact TVA, including but not limited to action or inaction related to the national debt ceiling or automatic spending cuts in government programs.

In addition, Congress may pass laws in the future specifically applicable to TVA.

These may include, but are not limited to, the following:

• A divestment or forced sale of TVA assets, which could trigger change of control provisions in certain material contracts, in addition to other costs and potential business disruptions;

Administrations have increasingly relied on regulations and executive orders to implement environmental policies and objectives.

This condition, which creates instability and unpredictability with respect to the applicable environmental law, seems likely to persist and could increase.

As a result, TVA often must comply with and otherwise modify its power supply plans or incur significant costs to adapt to environmental regulations without assurance of their continued effect.

TVA often does not have the ability to anticipate, or prepare in advance for, changes in regulatory or policy approaches that may be implemented following a change in Administration.

TVA may become subject to other laws, regulations, or orders or be negatively affected by congressional actions or inactions.

In addition to the environmental laws, regulations, and orders discussed above, TVA may become subject to other new or amended laws, regulations, or orders, including ones that are specifically targeted at TVA.

These may include the following:

• A divestment or forced sale of TVA assets, which could trigger change of control provisions in some material contracts, in addition to other costs and potential business disruptions, as well as the potential privatization of TVA;

• A revocation of the TVA Board’s sole authority to set electricity rates under the TVA Act, which could result in material adverse impacts on TVA’s ability to meet financial obligations;

• A restriction on TVA accessing or controlling its funds that are on deposit in its U.S.

• A restriction on TVA accessing, controlling, or disbursing its funds that are on deposit in its U.S.

Treasury account;

• A lowering of TVA’s debt ceiling from the $30.0 billion outstanding provided for in the TVA Act, which could inhibit TVA’s ability to raise capital necessary for essential business functions or for investing in carbon free technologies;

• A restriction on TVA’s authority to manage the Tennessee River system with power system operations, which could negatively impact TVA’s operations of certain electric generation facilities;

• A limitation on TVA’s ability to pay its CEO or other employees competitive wages, which could negatively impact TVA’s ability to hire and retain talent needed to effectively fulfill TVA’s mission.

Although it is difficult to predict new laws, regulations, or administrative or executive orders, or congressional action or inaction, or how such laws, regulations, orders, actions, or inactions may impact TVA, any resulting change could require TVA to make substantial additional capital expenditures or abandon certain projects, which could negatively affect TVA's cash flows, results of operations, and financial condition.

TVA's governmental status may interfere with its ability to quickly respond to the needs of its current or potential customers or to act solely in the interest of its ratepayers.

As a governmental entity, TVA has certain legal requirements that prevent it from responding as quickly to potential changes in the market or requests from current or potential customers as might be desired or in comparison to other utilities.

For example, TVA is required to comply with the National Environmental Policy Act ("NEPA"), which requires environmental reviews to be completed before TVA decides to pursue certain projects.

The delay in responding to requests could damage relationships with current customers, deter potential customers from moving into TVA's service territory, or damage TVA's reputation.

TVA's nature as a governmental entity imposes additional pressures that most companies do not face, including most significantly the requirements to support economic development, simultaneously manage a river system for commerce, recreation, flood control, and power generation, and promote recreational opportunities within its service territory.

TVA funds these operations almost entirely from the sale of electricity.

In addition, TVA must balance these obligations with the objective to provide power at the lowest feasible rates.

If TVA does not adequately communicate how it fulfills its various missions and the value it provides, its reputation may be harmed, which may result in political pressure to change its nature or operations as well as in the loss of public support.

• A lowering of TVA’s debt ceiling from the $30.0 billion outstanding provided for in the TVA Act, which could inhibit TVA’s ability to raise capital necessary for essential business functions;

• A restriction on TVA’s authority to manage the Tennessee River system with power system operations, which could negatively impact TVA’s operations of some electric generation facilities;

• A limitation on TVA’s ability to pay its Chief Executive Officer ("CEO"), key officers, or other employees competitive wages, which could negatively impact TVA’s ability to hire and retain talent needed to effectively fulfill TVA’s mission.

In addition, the federal government could act or fail to act on various issues that may impact TVA, including but not limited to action or inaction related to the national debt ceiling or automatic spending cuts in government programs.

TVA's governmental status may interfere with its ability to quickly respond to the needs of its current or prospective customers or to act solely in the interest of its ratepayers and may impose additional obligations on TVA.

As a governmental entity, TVA has legal obligations that prevent it from responding as quickly to potential changes in the market or requests from current or prospective customers as might be desired or in comparison to other utilities.

For example, TVA is required to comply with NEPA, which requires environmental reviews to be completed before TVA decides to pursue certain projects.

The delay in responding to requests could damage relationships with current customers, limit TVA's ability to take action to execute on its plans quickly, deter potential customers from moving into TVA's service territory, or damage TVA's reputation.

TVA is currently required under federal law to use its revenues to fulfill its mission under the TVA Act to provide for flood control and navigation of the Tennessee River system.

Maintenance, repairs, and updates to dams and multipurpose properties used to achieve this mission could result in significant unforeseen costs.

Failure to anticipate and timely take such measures could result in damage to TVA’s reputation, additional costs, or both.

TVA is involved in various legal and administrative proceedings, the outcomes of which may affect TVA's finances and operations.

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For a discussion of certain current material legal proceedings, see Note 23 — Commitments and Contingencies — Legal Proceedings .

The additional proceedings could involve, among other things, challenges to TVA’s CCR facilities, challenges to TVA's natural gas-fired plants and related pipelines, suits asserting nuisance claims under state law related to coal-fired plants, challenges to the anti-cherrypicking provision, challenges under NEPA, challenges under the Freedom of Information Act, and challenges to TVA’s authority to set rates and enter into contracts.

Although TVA cannot predict the outcome of the individual matters in which TVA is involved or will become involved, the resolution of

these matters could require TVA to make expenditures in excess of established reserves and in substantial amounts.

Similarly, resolution of any such proceedings may require TVA to change its business practices or procedures, incur additional capital or operational expense, change how it operates its fossil-fueled units, cease construction of new natural gas-fired plants, reduce emissions to a greater extent or at a faster pace than TVA had planned, close existing CCR facilities sooner than planned, close existing CCR facilities using a different methodology than planned, build new CCR facilities sooner than planned, build new CCR facilities that were not planned, cease operation of some coal-fired units, adjust its rates, or terminate or modify contracts.

The additional proceedings could involve, among other things, challenges to TVA’s CCR facilities, challenges to TVA's natural gas-fired plants and related pipelines, suits asserting nuisance claims under state law related to coal-fired plants, challenges under NEPA, challenges under the Freedom of Information Act, tort actions arising from accidents on TVA's property, challenges to TVA's immunity to certain actions, and challenges to TVA’s authority to set rates and enter into contracts.

Although TVA cannot predict the outcome of the individual matters in which TVA is involved or will become involved, the resolution of these matters could require TVA to make expenditures in excess of established reserves and in substantial amounts.

Similarly, resolution of any such proceedings may require TVA to change its business practices or procedures, incur additional capital or operational costs, change how it operates its fossil-fueled units, cease construction of new natural gas-fired plants, reduce emissions to a greater extent or at a faster pace than TVA had planned, comply with new or additional requirements related to CCR management, cease operation of some coal-fired units, adjust its rates, or terminate or modify contracts.

These events individually or in the aggregate could have a material adverse effect on TVA’s cash flows, results of operations, and financial condition.

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The anti-cherrypicking provision precludes FERC from ordering TVA to transmit power for others if that power would be consumed within the TVA service area.

State service territory laws limit unregulated third parties’ ability to sell electricity to consumers.

service territory laws limit unregulated third parties’ ability to sell electricity to consumers.

From time to time, there have been efforts to circumvent the protection of the anti-cherrypicking provision.

In addition, the protections afforded by the anti-cherrypicking provision conceivably could be affected by future federal legislation.

If FERC were to limit the application of the anti-cherrypicking provision or if federal legislation were to eliminate or limit the application of the anti-cherrypicking provision without corresponding legislative modifications to the territorial limitations imposed by the fence, TVA could face increased competition and may lose some of its customers.

If FERC were to limit the application of the anti-cherrypicking provision, or if federal legislation were to eliminate or limit its application, without corresponding legislative modifications to the territorial limitations imposed by the fence, TVA could face increased competition and lose some of its customers.

TVA may become subject to additional NERC requirements.

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TVA recognizes that reliability standards and expectations continue to become more complex and stringent for transmission systems.

If TVA fails to comply with the mandatory reliability standards, TVA could be subject to increased compliance obligations, sanctions or both.

Complying with these or additional requirements set forth by NERC may require significant capital expenditures and may negatively affect TVA's cash flows, results of operations, and financial condition.

If TVA fails to comply with the mandatory reliability standards, TVA could be subject to increased compliance obligations, sanctions for failure to comply with NERC requirements, or both.

Complying with NERC requirements may require significant capital expenditures and may negatively affect TVA's cash flows, results of operations, and financial condition.

OPERATIONAL RISKS

TVA's management and operation of CCR facilities expose it to additional costs and risks.

TVA operates coal-fired units that produce CCR as byproducts of the power production process.

TVA manages CCR in dedicated, protective facilities operated by TVA.

TVA manages its CCR in dedicated, protective facilities operated by TVA.

TVA has closed some of these facilities and is in the process of closing others.

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TVA has been ordered by TDEC to undertake investigations at all CCR facilities in Tennessee.

TVA has also been involved in litigation related to certain CCR facilities, and to resolve one such lawsuit, TVA agreed to remove or beneficially reuse significant amounts of CCR material at Gallatin Fossil Plant ("Gallatin").

TVA was previously involved in litigation related to some of its CCR facilities, and to resolve one such lawsuit, TVA agreed to remove or beneficially reuse significant amounts of CCR material at Gallatin.

TVA could be subject to similar litigation or orders in the future and could be required to restrict or stop the use of some or all CCR facilities that were not required to be closed by the CCR Rule or relocate CCR material to lined facilities.

Further, TVA has decided to move all CCR material at Allen Fossil Plant rather than closing the CCR facilities in place as originally planned, which subjects TVA to additional costs and transportation-related risks.

Moreover, EPA's new CCR rule will likely require TVA to incur significant additional costs with implementing closure, and EPA has recently interpreted its CCR rule in a way that could challenge TVA's predominant closure methodology for many units, thereby potentially creating significant additional costs with implementing closure.

Moreover, EPA's revised CCR rule may require TVA to incur significant additional costs with implementing closure, and EPA interpreted its CCR rule in a way that could challenge TVA's predominant closure methodology for many units, thereby potentially creating significant additional costs with implementing closure.

The ultimate resolution of matters relating to CCR obligations could have a material adverse effect on TVA's cash flows, results of operation, and financial condition.

TVA relies on certain assumptions about the future that may prove inaccurate, including when determining the appropriate mix of generation assets.

TVA uses certain assumptions that are presently justifiable to develop its future plans.

Such assumptions include economic forecasts, anticipated energy and commodity prices, cost estimates, construction schedules, power demand forecasts, potential regulatory environments, and the appropriate generation mix to meet demand.

Should these assumptions be inaccurate, or be superseded by subsequent events, TVA's plans may not be effective in achieving the intended results.

In determining TVA’s power generation assets should consist of a mix of nuclear, coal-fired, natural gas-fired, and renewable power sources, including hydroelectric, TVA considered various factors, including the anticipated availability of its nuclear units, the availability of non-nuclear facilities, the forecasted cost of natural gas and coal, the forecasted demand for electricity, its carbon reduction aspirations, and environmental compliance including the expense of adding air pollution controls to its coal-fired units.

If any of these assumptions materially change or are impacted by subsequent events, TVA's generation mix may not address its operational needs in the most efficient and cost-effective manner.

TVA relies on certain assumptions about the future that may prove inaccurate, including when determining the appropriate mix of generation assets and when and to what extent to update its transmission system.

To develop long-term plans, TVA uses certain planning models, including economic forecasts, anticipated energy and commodity prices, cost estimates, construction schedules, power demand forecasts, potential legal environments, and generation-mix modeling.

For example, in determining TVA’s power generation assets should consist of a mix of nuclear, coal-fired, natural gas-fired, and renewable power sources, including hydroelectric, TVA considered various factors, including the anticipated availability of its nuclear units, the availability of non-nuclear facilities, the forecasted cost of natural gas and coal, the forecasted demand for electricity, and environmental compliance requirements, including the expense of adding air pollution controls to its coal-fired units.

If any of these assumptions prove to be materially inaccurate or are impacted by subsequent events, TVA's generation mix may not address its operational needs in the most efficient and cost-effective manner.

Additionally, reallocating the mix of power generation assets from the planned mix may result in additional capital and operational expense.

Furthermore, achieving TVA's carbon reduction aspirations may require TVA to make significant capital investments, including investments in new technologies, and take a long time.

TVA may retire coal-fired and natural-gas fired generation facilities sooner than planned to meet carbon reduction aspirations, which also may require significant capital expenditures or additional power purchases, potentially causing an adverse

effect on TVA's cash flows, results of operations, and financial condition, as well as TVA's ability to meet electricity demand.

TVA may not be able to meet its carbon reduction aspirations, which may result in additional capital expenditures or higher operating expense.

The achievement of TVA's carbon reduction aspirations, and its ability to maintain system reliability during the transition to cleaner forms of energy, is subject to numerous risks beyond TVA's control that are difficult to predict and may prevent TVA from timely achieving such aspirations.

New federal laws could impose carbon reduction aspirations that are more aggressive and time-sensitive than TVA's plans.

Occurrences that may prevent TVA from achieving its carbon reduction aspirations in a timely manner include, but are not limited to, the following:

• Federal law or policy could restrict TVA's ability to use natural gas or nuclear power, which are each essential for TVA to reduce its carbon emissions.

• TVA may not receive timely approval from federal and state regulators for construction and operation of new natural gas assets and attendant infrastructure (e.g., pipelines).

• TVA may have difficulty obtaining resources or labor needed to complete projects on time and within budget.

• Legal challenges may slow or restrict TVA's ability to replace coal generation with cleaner forms of energy.

These challenges may, for instance, come in the form of direct legal challenges to TVA projects or through challenges to TVA's environmental reviews or the attempts of TVA or third parties to obtain necessary licenses and permits.

• Potential delays in projects, along with now-anticipated load growth, may force TVA to rely on coal-fired generation more heavily, or longer, than it had previously projected.

• As to TVA's longer term carbon reduction aspirations, the development of new technologies necessary to meet these aspirations may not occur as quickly, feasibly, or cost-effectively as necessary.

• TVA's unique federal least-cost planning obligations may prevent TVA from moving forward with carbon-free generation as quickly as utilities that do not have the same requirements.

TVA may experience delays and incur additional costs in its major projects or may be unable to obtain necessary regulatory approval for them.

Among other projects, TVA is building new natural gas-fired generation facilities, seeking to improve the reliability and resiliency of its transmission system, undertaking repairs at certain hydroelectric facilities and dams, and closing some coal-fired plants and their supporting infrastructure.

TVA’s business requires substantial expenditures for capital improvements, including construction of new generation, transmission, and distribution facilities.

Existing TVA facilities also require substantial ongoing expenditures, including those necessary to maintain or improve reliability and meet environmental goals and standards.

TVA intends to continue expanding, developing, and improving its electric transmission and distribution systems while also undertaking projects to maintain and improve the reliability of existing TVA facilities and comply with evolving environmental laws and regulations.

These activities involve risks of overruns in the cost of labor and materials, as well as potential delays, in beginning or completing these repairs, closures, or other projects.

Further, cancellation or delay of projects related to these activities may adversely affect TVA's cash flows, financial condition, and results of operations.

Such cancellation or delays may result from, among other things, changes in market conditions, changes in laws or regulations, unanticipatedly high environmental remediation costs, lack of productivity, human error, supply chain challenges, regional health emergencies, the failure to schedule activities properly, TVA's inability to obtain the necessary regulatory approvals or licenses, TVA's decision to cancel construction of a facility or cancel another type of project, including due to delays, cost overruns, changes in customer preferences, or changes in requirements applicable to how TVA conducts construction, repair, or closure activities.

Cost increases, cancellation, or delays may result from, among other things, changes in market conditions;

changes in laws or regulations that, among other things, may make it more expensive or difficult for TVA to build or operate natural gas-fired plants;

unanticipatedly high environmental remediation costs;

lack of productivity;

supply chain challenges;

regional health emergencies;

the failure to schedule activities properly;

inability to obtain the necessary regulatory approvals, permits, or licenses, including approval from federal and state regulators for construction and

operation of new natural gas assets and attendant infrastructure (e.g., pipelines or transmission facilities);

stakeholder opposition;

insolvency of TVA's suppliers or other counterparties;

changes in customer preferences;

changes in requirements applicable to how TVA conducts construction, repair, or closure activities;

and legal challenges which, among other things, may come in the form of direct legal challenges to TVA projects or through challenges to TVA's environmental reviews or the attempts of TVA or third parties to obtain necessary licenses and permits.

Further, if projects are not completed according to specifications, TVA may suffer, among other things, delays in receiving licenses, reduced plant efficiency, reduced transmission system integrity and reliability, and higher operating costs.

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Hazards exist with the use of radioactive material in energy production, including management, handling, storage, and disposal.

Further, a nuclear incident at one of TVA's facilities could have significant consequences including loss of life, damage to the environment, damage to or loss of the facility, and damage to non-TVA property.

Although TVA carries certain types of nuclear insurance, the amount that TVA is required to pay in connection with a nuclear incident could significantly exceed the amount of coverage provided by insurance.

The licensee of each nuclear reactor has a contingent obligation to pay a retrospective premium, equal to its proportionate share of the loss in excess of the primary level, regardless of proximity to the incident of fault, up to a maximum of approximately $166 million per reactor, per incident.

Although TVA carries some types of nuclear insurance, the amount that TVA is required to pay in connection with a nuclear incident in the United States could significantly exceed the amount of coverage provided by insurance.

The licensee of each U.S.

nuclear reactor has a contingent obligation to pay a retrospective premium, equal to its proportionate share of the loss in excess of the primary level, regardless of proximity to the incident of fault, up to a maximum of approximately $166 million per reactor, per incident.

With TVA's seven reactors, the maximum total contingent obligation per incident is $1.2 billion.

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In addition, following an incident TVA may have to pay retrospective insurance premiums, and may experience a reduction in the availability of nuclear insurance, an increase in the cost of nuclear insurance, an increase in the costs of operating nuclear units, or increased regulation or restrictions on the construction, operation, and decommissioning of nuclear facilities.

Moreover, federal legislation could impose revenue-raising measures on the nuclear industry to pay claims exceeding the limit for a single incident under the Price-Anderson Act.

Further, the availability or price of insurance may be impacted by TVA's acts or omissions, such as a failure to properly maintain a facility, or events outside of TVA's control, such

as an equipment manufacturer's inability to meet a guideline, specification, or requirement.

Moreover, federal legislation could impose revenue-raising measures on the U.S.

nuclear industry to pay claims exceeding the limit for a single incident under the Price-Anderson Act.

Further, the availability or price of insurance may be impacted by TVA's acts or omissions, such as a failure to properly maintain a facility, or events outside of TVA's control, such as an equipment manufacturer's inability to meet a guideline, specification, or requirement.

Decommissioning Costs .

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TVA has been storing the spent fuel in accordance with NRC regulations in anticipation that a final storage site for all such waste will be developed and put in operation by the U.S.

If no such site is forthcoming or if no alternative disposal or reuse plan is developed, TVA might be required to arrange for the safe and permanent disposal of the spent fuel itself.

If no such site is forthcoming or if no alternative disposal or reuse plan is developed, TVA might be required to arrange for the safe and permanent

disposal of the spent fuel itself.

Such a requirement would cause TVA to incur substantial expense, including substantial capital expenditures, and could cause TVA to change how it operates its nuclear plants.

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If TVA were unable to secure either the original components, intellectual property, or replacements approved for use by the NRC, TVA might have to change how it conducts its operations, which may result in substantial expense.

Further, limitations on global trade resulting from future and past pandemics and global conflicts, or other limitations on global shipping, such as international trade restrictions or sanctions, could materially decrease the availability or increase the cost of necessary or desired equipment.

Further, limitations on global trade resulting from pandemics, trade wars, tariffs, sanctions, military conflicts, or other limitations on global commerce could materially decrease the availability or increase the cost of necessary or desired equipment.

Cost of Nuclear Fuel.

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In either case, TVA's cash flows, results of operations, financial condition, and reputation may be negatively affected.

The inability to operate all of TVA's nuclear units may cause TVA to rely more on forms of generation that produce more carbon, thus making it more difficult for TVA to meet its carbon reduction aspirations or meet reliability goals.

The inability to operate all of TVA's nuclear units may make it more difficult for TVA to meet its reliability goals.

Physical attacks, threats, or other interference could damage or interfere with TVA's facilities and operations.

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TVA also operates flood control dams and supporting infrastructure.

Because of TVA's status as a government corporation and TVA's role as the primary power provider for its service territory, individuals, groups, or nation states may target TVA with physical attacks or threats of such attacks.

Because of TVA's status as a governmental entity and TVA's role as the primary power provider for its service territory, individuals, groups, or nation states may target TVA with physical attacks or threats of such attacks.

Events such as war, armed conflicts, terrorist attacks, or similar disruptive events may increase the risks of these attacks targeting critical physical infrastructure in the U.S.

Although TVA's operations are protected by automated monitoring systems, TVA Police and Emergency Management, TVA employees, local law enforcement, or a combination thereof, it may not be possible to effectively deter or prevent such attacks.

These attacks could pose health and safety risks, significantly disable or destroy TVA assets, interfere with TVA's operations, result in additional regulatory or security requirements or litigation, increase the costs of nuclear licensing or compliance, and otherwise negatively affect TVA's cash flows, results of operations, and financial condition.

In addition, following a physical attack or threat, TVA may incur increased costs for added security measures, including additional physical plant security and security personnel, increased capability, or other necessary measures.

These attacks could pose health and safety risks, significantly disable or destroy TVA assets, interfere with TVA's operations, result in additional regulatory or security requirements or litigation, increase the costs of nuclear licensing or compliance, and otherwise negatively affect TVA's reputation, cash flows, results of operations, and financial condition.

TVA's assets or their supporting infrastructure may not operate as planned.

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As such, they require regular maintenance, repair, and replacement in order to continue uninterrupted operation.

Additionally, certain of TVA's newer assets utilize advanced technology that could experience technical or operating issues.

Additionally, some of TVA's newer assets utilize advanced technology that could experience technical or operating issues.

The failure of TVA's assets or supporting infrastructure, including information technology systems, to perform as planned may cause health, safety, or environmental problems and may even result in events such as the failure of a dam, the inability to maintain a reservoir at the normal or expected level, or an incident at a coal-fired, gas-fired, or nuclear plant or a CCR facility.

If these assets or their supporting infrastructure were to fail to operate as planned, if necessary repairs or upgrades were delayed or could not be completed as quickly as anticipated, or if necessary spare parts were unavailable, TVA:

If these assets or their supporting infrastructure fail to operate as planned, if necessary repairs or upgrades are delayed or cannot be completed as quickly as anticipated, or if necessary spare parts are unavailable, TVA:

• May have to invest a significant amount of resources to repair or replace the assets or the supporting infrastructure;

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• May have to purchase replacement power on the open market at prices greater than its generation costs;

• May be required to invest substantially to meet more stringent reliability standards;

• May be required to invest substantially to achieve reliability standards;

• May be unable to maintain insurance on affected facilities, may be required to pay higher premiums for coverage, or may have to make certain repairs or upgrades to maintain insurance or to avoid higher premiums;

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In addition to the potential human cost of accidents, which could include injury to employees or members of the public, significant accidents could impact TVA's ability to carry out operations, cause it to shut down facilities, subject it to additional regulatory scrutiny, expose it to litigation, damage its reputation, interfere with its ability to attract or retain a skilled workforce, or harm its financial condition.

The aging of TVA's physical infrastructures and systems may increase the risk of accidents, especially if not properly maintained.

The aging of TVA's physical infrastructures and systems may increase the risk and consequences of accidents, especially if not properly maintained.

TVA's service reliability could be affected by problems at other utilities or at TVA facilities, or by the increase in intermittent sources of power.

TVA's transmission facilities are directly interconnected with the transmission facilities of neighboring utilities and are thus part of the larger interstate power transmission grid.

Certain of TVA's generation and transmission assets are critical to maintaining reliability of the transmission system.

TVA's transmission facilities are directly interconnected with the transmission facilities of neighboring utilities and are part of the larger interstate power transmission grid.

Some of TVA's generation and transmission assets are critical to maintaining reliability of the transmission system.

Additionally, TVA uses assets that belong to third parties to transmit power and maintain reliability.

Accordingly, problems at other utilities as well as at TVA's facilities, including disruptions or black-outs caused by an event such as a severe storm, generator or transmission facility outage on a neighboring system, or the actions of a neighboring utility, may cause interruptions in TVA's service to its customers,

increase congestion on the transmission grid, or reduce service reliability.

The increasing installation of intermittent sources of power, such as wind and solar, as well as the retirement of coal-fired plants, may place additional strain on TVA's and neighboring systems, and additional transmission upgrades may be required to maintain reliability.

Accordingly, problems at other utilities as well as at TVA's facilities, including disruptions or black-outs caused by an event such as a severe storm, wildfires, a generator or transmission facility outage on a neighboring system, or the actions of a neighboring utility, may cause interruptions in TVA's service to its customers, increase congestion on the transmission grid, or reduce service reliability.

The increasing installation of intermittent sources of power, such as wind and solar, as well as the retirement of dispatchable generation resources, such as coal-fired plants, may place additional strain on TVA's and neighboring systems, and additional transmission upgrades may be required to maintain reliability.

Upgrades may include enhancements to existing lines and substations or new installations as necessary to provide adequate power transmission capacity, maintain voltage support, and ensure generating plant and transmission system stability.

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TVA purchases coal, uranium, natural gas, fuel oil, and electricity from a number of suppliers.

TVA contracts for conversion of uranium into nuclear fuel and purchases other items, such as anhydrous ammonia, liquid oxygen, or replacement parts that are critical to the operation of certain generation assets.

TVA also purchases power from other power producers when the purchase of such power is appropriate due to economic opportunities or operational concerns.

TVA also purchases power from other power producers when the purchase of such power is appropriate due to economic opportunities or operational limitations.

TVA's reliance on purchased power may increase if the demand for power increases in TVA's service territory, and purchased power may become more costly, or perhaps be unavailable, if the demand for power also increases in surrounding service territories.

Examples of circumstances that may disrupt, or materially increase the cost of, the future delivery of fuel, purchased power, contracted services, or other critical supplies include but are not limited to cyber attacks;

war or physical attacks, including the wars in Ukraine and Israel;

Examples of circumstances that may disrupt, or materially increase the cost of, the future delivery of fuel, purchased power, contracted services, or critical supplies include cyber attacks;

war or physical attacks;

political developments, international trade restrictions or tariffs, or legal actions;

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transportation or delivery constraints;

the failure of suppliers to timely deliver the services or supplies to TVA at budgeted costs due to force majeure events, forced outages not caused by force majeure events, opportunistic non-performance or intentional defaults by suppliers;

the failure of suppliers to timely deliver the services or supplies to TVA at budgeted costs due to force majeure events, forced outages not caused by force majeure events, or opportunistic non-performance or intentional defaults by suppliers;

shortages of raw materials;

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or similar events.

If one of TVA's suppliers were to fail to perform under the terms of its contract with TVA, TVA might have to purchase replacement fuel, power, or other critical supplies, perhaps at a significantly higher price than TVA is entitled to pay under the contract.

If one of TVA's suppliers were to fail to perform under the terms of its contract with TVA, TVA might have to purchase replacement fuel, power, or critical supplies, perhaps at a higher price.

TVA may not be able to recover this difference from the original supplier.

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Moreover, if TVA were unable to acquire enough replacement fuel, power, or supplies, or were to have insufficient reserves to offset the loss, TVA may not be able to operate certain assets in the manner TVA determines is in its best interests or provide enough power to meet demand or provide power on a basis TVA considers most reliable.

As a result, power curtailments, brownouts, or even blackouts could occur.

As a result, power curtailments, brownouts, or even blackouts could occur that could negatively impact TVA's reputation.

Global conflicts, terrorist activities, or military actions could adversely affect TVA’s business.

Global conflicts and terrorism, as well as any retaliatory military action by the United States and its allies, may have an adverse effect on TVA through increased political, economic, and financial market instability and volatility in the prices for natural gas and oil.

Future acts of terrorism could be directed against companies operating in fuel and energy transportation and distribution, which may adversely affect TVA’s ability to do business.

TVA may experience increased costs to implement increased security, including additional plant security and security personnel.

This situation could extend not only to fuel and minor components but could materially increase costs or decrease availability of large components needed for TVA’s capital projects.

Global conflicts and terrorism, such as those in Ukraine and Israel, as well as any retaliatory military action by the United States and its allies, may have an adverse effect on TVA through increased political, economic, and financial market instability and volatility in the prices for natural gas and oil.

Future acts of terrorism could be directed against companies operating in fuel and energy transportation and distribution, which may adversely affect the operation of TVA’s business.

TVA may experience increased costs to implement enhanced security measures, including additional plant security and security personnel.

CYBERSECURITY AND INFORMATION TECHNOLOGY RISKS

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TVA’s operations are heavily computerized and include assets such as information technology and networking systems.

As with all industries, the reliance on computerization and networking makes TVA a target for cyber attacks, and the risk of such attacks may increase as individual devices and equipment become accessible via the internet.

TVA has been targeted by cyber attacks in the past and anticipates that it will be targeted in the future.

These attacks may have been carried out, or in the future could be carried out, by individuals, groups, or nation states.

TVA is regularly targeted in cyber attacks and anticipates that it will be consistently targeted in the future.

These attacks may be carried out by individuals, groups, or even nation states.

TVA employs extensive cyber safeguards and works with industry specialists and relevant governmental authorities to deter, stop, or mitigate cyber attacks.

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Cyber attacks may result in security breaches that may be detrimental to TVA's operations, including third parties' improperly accessing TVA's system and demanding ransom based on threats to expose sensitive data, including data from employees, customers, and financial parties, to gain operational control, or to expose security vulnerabilities specific to TVA’s facilities.

In such a case, a cyber attack could compromise sensitive data, significantly disrupt operations, require additional expenditures for

cybersecurity, negatively affect TVA’s cash flows, results of operations, financial condition, and reputation, and pose health and safety risks to TVA personnel and the customers and communities that TVA serves.

In such a case, a cyber attack could compromise sensitive data, significantly disrupt operations, require additional expenditures for cybersecurity, negatively affect TVA’s cash flows, results of operations, financial condition, and reputation, and pose health and safety risks to TVA personnel and the customers and communities that TVA serves.

Because the investigation of any cybersecurity breach is inherently unpredictable and would require substantial time to complete, TVA may not be able to quickly remediate the consequences of any breach, which may increase the costs and enhance the negative consequences associated with a breach.

Additionally, the theft, damage, or improper disclosure of sensitive data may subject TVA to penalties and claims from third parties or increased governmental oversight.

These claims could negatively affect TVA's cash flows, results of operations, financial condition, and reputation.

Cyber attacks on third parties or the failure of their technology infrastructure could interfere with or harm TVA.

Many third parties on which TVA relies for services, including for transferring funds to non-TVA entities or receiving delivery of products in the ordinary course of business, are heavily computerized and use assets such as information technology and networking systems.

TVA relies on many third parties for services, including for transferring funds to non-TVA entities or receiving delivery of products in the ordinary course of business, that are heavily computerized and use assets such as information technology and networking systems.

These providers' systems are susceptible to cybersecurity and data breaches and outages from fire, floods, power loss, telecommunications failures, physical attack, and similar events.

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Additionally, the theft, damage, or improper disclosure of sensitive data held by these third parties may subject TVA to further harm.

See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations — Key Initiatives and Challenges — Safeguarding Assets — Cybersecurity for a discussion of recent cyber attacks on third parties.

The failure of TVA’s information technology systems could have adverse consequences to TVA.

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The emergence of artificial intelligence technology could create challenges for TVA, and TVA may not be able to adopt the use of technology in step with private utilities.

TVA’s sensitive information may be subject to improper disclosure or fabrication by artificial intelligence (“AI”) and machine learning technologies on systems external to TVA, leading to compromises in cybersecurity.

TVA’s sensitive information may be subject to improper disclosure or harmful fabrication by artificial intelligence (“AI”) and machine learning technologies on systems external to TVA, leading to compromises in cybersecurity.

AI and machine learning technology may also be flawed, and data sets used in generative AI may be insufficient or contain biased, incorrect, or incomplete information.

Additionally, inconsistent application of AI regulations and guidance in the industry may make the intellectual property ownership and license rights to certain information unclear.

TVA could suffer reputational damage or face operational challenges because of any inconsistencies or flaws in the application of AI or machine learning technology.

TVA could suffer reputational damage or face operational challenges because of any inconsistencies or flaws in the application of AI or machine learning technology or from the improper use of AI by employees or contractors.

TVA could also face costs in complying with any new regulations concerning AI.

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Moreover, AI may be used to enhance malicious cyber attacks.

TVA could lose its competitive edge if it fails to keep up with the changes in technology.

TVA’s competitive position could be impacted if TVA is unable to deploy new technology in a cost-effective and competitive manner.

This process of enhancing or replacing TVA’s technology infrastructure involves significant development and implementation costs to keep pace with changing technologies and customer demand.

If TVA fails to successfully implement critical technology infrastructure, or if it does not provide the anticipated benefits or meet customer demands, such failure could negatively affect TVA’s business strategy as well as impact its results of operations, financial position, and cash flows.

Additionally, TVA may fail to fully capitalize on new technology, including AI, due to cybersecurity risk aversion or unique regulations applicable to TVA, leading to a loss in competitive edge or inability to efficiently solve future problems.

FINANCIAL, ECONOMIC, AND MARKET RISKS

Demand for electricity could be higher or lower in the future than TVA currently expects or is financially planning for.

TVA’s current asset strategy and capital financing approach are based on assumptions drawn from recent trends suggesting increased demand for TVA electricity over the next several decades.

TVA’s current asset strategy and capital financing approach and plans are based on assumptions drawn from recent trends suggesting increased demand for TVA electricity over the next several decades.

This demand has arisen from, and seems likely to continue to arise from, among other things, increasing population in TVA’s service territory, utilization of AI that uses significantly more power than traditional data processing, cryptocurrency mining, greater usage and adoption of electric vehicles, and economic development, including new or expanded data centers.

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extended or severe economic downturns or recessions, loss of customer demand due to higher-than-expected adoption of TVA flexibility options that allow customers to produce a certain percent of their own power needs, unexpectedly high utilization of DER, increased energy efficiency and conservation, and loss of customers, including through loss of TVA’s restricted service territory.

Because TVA is investing heavily in developing its energy portfolio to meet increasing loads, lower-than-anticipated demand could lead to a reduction in planned revenue streams, which may constrain TVA’s financial condition and results of operations.

If future demand were to be higher than TVA can address through execution of its current asset strategy, TVA may have to purchase additional generation or capacity at rates much higher than TVA can produce electricity itself.

Because TVA is investing heavily in developing its energy portfolio to meet increasing loads, lower-than-anticipated demand could result in stranded costs as well as a reduction in planned revenue streams, which may constrain TVA’s cash flows, financial condition and results of operations.

If future demand were to be higher than TVA can address through execution of its current asset strategy, TVA may have to purchase additional generation or capacity at costs higher than what it costs TVA to produce electricity itself.

The higher that demand is at such time nationally, the more expensive such additional generation or capacity is likely to be.

In addition, if capacity were not available elsewhere, TVA may have to take emergency measures to curtail load, including requiring rolling blackouts.

On the programmatic side, TVA may be forced to raise rates or waitlist prospective industrial or commercial customers.

In addition, if capacity were not available elsewhere, TVA may have to take emergency measures to curtail load, including requiring rolling blackouts that could negatively impact TVA's financial results and reputation.

On the programmatic side, TVA may be forced to raise rates or delay serving new industrial or commercial customers.

These outcomes would likely have a material adverse effect on TVA’s financial condition and results of operations, including through negative impacts to TVA’s reputation.

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The plan is mature with approximately 22,000 retirees and beneficiaries receiving benefits of approximately $800 million per year.

The costs of providing benefits depend upon a number of factors, including, but not limited to, provisions of the plan;

The costs of providing benefits depend upon a number of factors, including provisions of the plan;

changing experience and assumptions related to terminations, retirements, and mortality;

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The pension plan covers substantially all of TVA's full-time annual employees hired prior to July 1, 2014.

Although the plan has been frozen to new participants since July 1, 2014, TVA's payment obligation under the pension plan is substantial, and changes in any one or more of these factors could cause TVA's benefit expenditures under the plan to increase and significantly exceed TVA's planned contributions.

increase and significantly exceed TVA's planned contributions.

Unfavorable financial market conditions, including those arising from inflation and changes in interest rates, may cause lower-than-expected rates of return on plan assets, loss in value of the investments, and lower discount rates used in determining future benefit obligations.

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It is critical that TVA continue to have access to the debt markets to meet its cash requirements.

The importance of having access to the debt markets is enhanced by the fact that TVA, unlike most utilities, relies almost entirely on debt capital, since as a governmental instrumentality, TVA cannot issue equity securities.

The importance of having access to the debt markets is enhanced by the fact that TVA, unlike most utilities, relies almost entirely on debt capital, since as a governmental entity, TVA cannot issue equity securities.

TVA’s access to the debt markets could be negatively impacted by market disruptions, including disruptions that result from systemic risks to the banking system and the financial markets.

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Approaching or reaching the debt ceiling may negatively affect TVA's business by limiting TVA's ability to access capital markets and by increasing the amount of debt TVA must service without new debt capital.

This occurrence may restrict TVA's ability to raise debt capital to acquire new power program assets or maintain existing ones, to carry out upgrades or improvements to existing assets or build new ones, to purchase power under long-term PPAs, or to meet regulatory requirements.

A single generating facility could cost hundreds of millions of dollars or even billions depending on the fuel type, and TVA's ability to use new debt to fund strategic capital investments will decrease as TVA's debt increases and as the cost of projects increases.

In addition, approaching or reaching the debt ceiling may lead to increased legislative or regulatory oversight of TVA's activities and could lead to negative rating actions by credit rating agencies.

A single generating facility could cost hundreds of millions of dollars or even billions depending on its planned size and fuel type, and TVA's ability to use new debt to fund strategic capital investments will decrease as TVA's debt increases and as the cost of projects increases.

In addition, approaching or reaching TVA's debt ceiling may lead to increased legislative or regulatory oversight of TVA's activities and could lead to negative rating actions by credit rating agencies.

Operating at higher balances of Bonds subject to the $30.0 billion debt limit reduces TVA's financial flexibility for using financing to handle emergencies or other rapid cash funding needs and increases operational risks in management of the portfolio of Bonds subject to the debt limit.

TVA, together with owners of TVA securities, may be impacted by downgrades of TVA's credit ratings.

TVA’s current credit ratings are not based solely on its underlying business or financial condition but are based to a large extent on TVA's status as a wholly-owned government corporation and the legislation that defines TVA’s business structure.

Key characteristics of TVA’s business defined by legislation include (1) the TVA Board's ratemaking authority;

Key characteristics of TVA’s business established by statute include (1) the TVA Board's ratemaking authority;

(2) the current competitive environment, which is defined by the fence and the anti-cherrypicking provision;

and (3) TVA’s status as a corporate agency and instrumentality of the United States.

If Congress takes any action that

effectively alters any of these characteristics, TVA's credit ratings could be downgraded.

Although TVA Bonds are not obligations of the United States, TVA, as a corporate agency and instrumentality of the United States, may be impacted by a downgrade of the United States’ sovereign credit ratings.

If Congress takes any action that effectively alters any of these characteristics, TVA's credit ratings could be downgraded.

Although TVA Bonds are not obligations of or guaranteed by the United States, TVA, as a corporate agency and instrumentality of the United States, may be impacted by a downgrade of the United States’ sovereign credit ratings.

Such a downgrade has and could again in the future, among other things, lead to a downgrade of TVA’s credit rating.

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Further, a downgrade may lower the price of TVA securities in the secondary market, thereby negatively impacting investors who sell TVA securities after the downgrade and diminishing the attractiveness and marketability of TVA securities in the secondary market as well as new TVA debt securities.

Changes in technology could affect relationships with customers, require TVA to change how it conducts its operations, or impact TVA's financial condition.

TVA's primary business is to sell power it produces, for the most part, from large facilities such as nuclear power plants, hydroelectric facilities, natural gas-fired facilities, and coal-fired units.

TVA sells power to LPCs and directly served customers.

Research and development activities are ongoing to improve existing and alternative technologies to produce or store electricity, including large-scale energy storage, gas or wind turbines, fuel cells, microturbines, solar cells, and distributed energy or storage resources.

Advances in these or other alternative technologies could reduce the costs of such production methods to a level that will enable these technologies to compete effectively with traditional power plants such as those used by TVA.

These technologies could be more appealing to customers and could lead them to pressure TVA to modify power contracts to allow customers to generate some of their own power requirements or purchase power from other suppliers.

Other customers might also cease purchasing power from TVA altogether.

To the extent that sales to such customers are reduced or eliminated, TVA's cash flows, results of operations, and financial condition could be negatively affected.

TVA could also be required to modify how it operates its traditional plants or further modify its generation mix to reduce reliance on these facilities.

Additionally, demand could change in terms of amount or timing as more devices and equipment become connected to the internet, allowing for real-time adjustments in consumption of power.

Such increased control over power consumption could, among other things, affect how TVA operates its facilities or dispatches power, or require TVA to change its pricing structure or rates.

TVA could lose its competitive edge if it fails to keep up with changes in technology.

TVA’s competitive position could be impacted if TVA is unable to deploy new technology in a cost-effective and competitive manner.

This process of enhancing or replacing TVA’s technology infrastructure involves significant development and implementation costs to keep pace with changing technologies and customer demand.

TVA is subject to a variety of market risks that may negatively affect TVA's cash flows, results of operations, and financial condition.

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TVA's rates may increase if prices of commodities critical to operations, including coal, uranium, natural gas, fuel oil, crude oil, construction materials, or emission allowances, were to increase.

An increase in rates may reduce demand and negatively impact TVA's cash flows, results of operations, and financial condition.

An increase in these commodities may reduce demand and negatively impact TVA's cash flows, results of operations, and financial condition.

Investment Price Risk .

TVA is exposed to investment price risk in its NDT, Asset Retirement Trust ("ART"), pension plan, Supplemental Executive Retirement Plan ("SERP"), Deferred Compensation Plan ("DCP"), and Restoration Plan ("RP").

If the value of the investments held in the NDT or the pension fund were to either decrease or fail to increase in accordance with assumed rates of return, TVA may be required to make substantial contributions to these funds.

In addition, although TVA is not required to make contributions to the ART, it may choose to do so, particularly if TVA's estimates of its non-nuclear asset retirement obligation liabilities were to increase.

TVA is exposed to investment price risk in its NDT, Asset Retirement Trust ("ART"), pension plan assets, Supplemental Executive Retirement Plan ("SERP"), Deferred Compensation Plan ("DCP"), and Restoration Plan ("RP").

If the value of the investments held in the NDT or the pension plan assets were to either decrease or fail to increase in accordance with assumed rates of return, TVA may be required to make substantial contributions to these funds.

TVA may also choose to make contributions to the SERP, DCP, and RP from time to time.

Interest Rate Risk .

Changes in interest rates may, variably, increase the amount of interest that TVA pays on new Bonds that it issues, decrease the return that TVA receives on short-term investments, decrease the value of the investments in the NDT, ART, pension fund, SERP, DCP, and RP, increase the amount of collateral that TVA is required to post in connection with certain of its derivative transactions, increase the losses on the mark-to-market valuation of certain derivative transactions into which TVA has entered, or some combination of these.

Increased interest rates likely would increase the amount of interest that TVA pays on new Bonds that it issues and increase the amount of collateral that TVA is required to post in connection with some of its derivative transactions, and/or increase the losses on the mark-to-market valuation of certain derivative transactions into which TVA has entered.

Decreased interest rates would likely reduce the return that TVA receives on short-term investments, as well as decrease the value of the investments in the NDT, ART, pension plan assets, SERP, DCP, and RP.

Counterparty Credit and Performance Risk .

TVA is exposed to the risk that its counterparties will not be able to perform their contractual obligations.

TVA’s counterparties may fail to fulfill their contractual obligations to TVA, and such failure could result in loss of rights to purchase under power purchase agreements, inability to obtain necessary fuels, loss of revenues, or delays or disruption of maintenance on or construction of TVA power facilities.

If TVA's counterparties were to fail to perform their obligations, TVA's cash flows, results of operations, and financial condition may be adversely affected.

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A portion of this amount may be spent on contracts that are denominated in one or more foreign currencies.

TVA's two issues of Bonds denominated in British pounds sterling are hedged by currency swap agreements.

The value of the U.S.

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If not effectively managed, foreign currency exposure could negatively impact TVA's counterparty risk, cash flows, results of operations, and financial condition.

TVA may be subject to additional liability or be required to purchase additional liability insurance in the future to address losses of legal liability protections.

Global economic events, including cyber-attacks, natural disasters, and climate issues, have affected and may continue to disrupt insurance markets and the financial condition of some insurance companies.

As a result, the availability of insurance may decrease and insurance policies TVA is able to obtain may have higher deductibles and premiums and may have more restrictive terms.

In addition, the insurance TVA is able to obtain may not cover all of TVA’s potential exposure or the actual amount of loss TVA incurs, which may have a material adverse effect on TVA’s cash flows, results of operations, and financial condition.

The market for TVA Bonds might be limited.

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Future trading prices of Bonds will depend on many factors, including prevailing interest rates, the then-current ratings assigned to the Bonds, the amount of Bonds outstanding, the time remaining until the maturity of the Bonds, the redemption features of the Bonds, the market for similar securities, and the level, direction, and volatility of interest rates generally, as well as the liquidity of the markets for those securities.

When a particular series of Bonds is offered through underwriters, those underwriters may attempt to make a market in the Bonds.

When a particular series of Bonds is offered through underwriters, those underwriters may attempt to make a market in

Dealers other than underwriters may also make a market in TVA Bonds.

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TVA's use of fossil fuels, among other things, could lead such investors or underwriters to not purchase TVA Bonds or reduce the attractiveness of TVA Bonds as compared to other investments, thereby limiting the market for TVA Bonds.

Moreover, some investors may no longer be able to hold TVA securities after specified dates if TVA's performance on certain metrics fails to meet investor requirements on metrics such as the carbon intensity, carbon emissions, or operation of thermal coal-fired or natural gas-fired assets.

In addition, legal limitations may affect the ability of banks and others to invest in Bonds.

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Principal and interest on TVA securities are payable solely from TVA's net power proceeds.

Net power proceeds are the remainder of TVA's gross power revenues after deducting the costs of operating, maintaining, and administering its power properties and payments to states and counties in lieu of taxes, but before deducting depreciation accruals or other charges representing the amortization of capital expenditures, plus the net proceeds from the sale or other disposition of any

power facility or interest therein.

If TVA were to experience extreme financial difficulty and were unable to make payments of principal or interest on its Bonds, the federal government would not be legally obligated to prevent TVA from defaulting on its obligations.

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HUMAN CAPITAL AND MANAGEMENT RISKS

Failure to attract and retain an appropriately qualified, diverse, and inclusive workforce may negatively affect TVA's results of operations.

Failure to attract and retain an appropriately qualified workforce may negatively affect TVA's results of operations.

TVA's business depends on its ability to recruit and retain key executive officers as well as skilled professional and technical employees.

Labor is subject to external factors that are beyond TVA's control, including the highly competitive market for skilled workers and leaders, inflation, regional health emergencies, and workforce participation rates.

The inability to attract and retain an appropriately qualified, diverse, and inclusive workforce could adversely affect TVA's ability to, among other things, operate and maintain generation and transmission facilities, complete large construction projects, and successfully implement its continuous improvement initiatives.

In addition, the ability to attract and retain an appropriately qualified workforce may be negatively impacted by changes to TVA's compensation policies or practices that disincentivize superior performance or otherwise make such policies or practices less competitive.

The inability to attract and retain an appropriately qualified workforce could adversely affect TVA's ability to, among other things, operate and maintain generation and transmission facilities, complete large construction projects, and successfully implement its continuous improvement initiatives.

Changes in the membership of the TVA Board and TVA senior management could impact how TVA operates.

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One to two Board members' terms typically expire each year.

The President may remove TVA Board members and may replace them with Board members who will implement specific strategic changes to TVA.

In addition, there is always the possibility that one or more members of TVA's senior management may retire or otherwise leave TVA.

The individuals filling either the TVA Board or senior management positions may wish to change how TVA operates in whole or in part.

If the changes were not successful or TVA were unable to adapt properly to such changes, TVA's financial condition, results of operations, reputation, and relationship with customers could be negatively affected.

Loss of a quorum of the TVA Board could limit TVA's ability to adapt to changing business conditions.

If the changes are not successful or TVA is unable to adapt properly to such changes, TVA's cash flows, results of operation, financial condition, and reputation could be negatively affected.

A prolonged loss of a quorum of the TVA Board could limit TVA's ability to adapt to changing business conditions.

Under the TVA Act, a quorum of the TVA Board is five members.

On April 1, 2025, the TVA Board lost a quorum, and it currently has three members.

Without a quorum, the TVA Board may not have authority to direct TVA into new areas of activity, to embark on new programs, or to change TVA's existing direction.

As such, the loss of a quorum for an extended period of time may have a negative impact on TVA's ability to change the rates TVA charges for power, change long-term objectives, plans, and policies, and respond to significant changes in technology, the regulatory environment, or the industry overall and, in turn, negatively affect TVA's cash flows, results of operations, financial condition, and reputation.

Becoming a member of the TVA Board requires confirmation by the U.S.

Senate following appointment by the President.

Senate following

appointment by the President.

This process has been and could again in the future be subject to extended delays.

The President may remove TVA Board members, and the TVA Board members may resign or otherwise leave office before a successor is commissioned.

As a result, a delay in the appointment or confirmation of directors, or the removal of directors by the President, can threaten the TVA Board's quorum.

The TVA Board is responsible for, among other things, establishing the rates TVA charges for power as well as TVA's long-term objectives, policies, and plans.

Accordingly, the loss of a quorum for an extended period of time would impair TVA's ability to change rates and to modify these objectives, policies, and plans.

Such an impairment would likely have a negative impact on TVA's ability to respond to significant changes in technology, the regulatory environment, or the industry overall and, in turn, negatively affect TVA's cash flows, results of operations, financial condition, and reputation.

The TVA Board currently has eight members.

TVA cannot predict when the TVA Board will again have a quorum or whether any challenges will arise associated with its operations in the interim and any consequences as a result.

RISKS RELATED TO THE ENVIRONMENT AND CATASTROPHIC EVENTS

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• Periods of either high or low levels of rainfall may impede river traffic, impacting barge deliveries of critical items such as coal and equipment for power facilities.

• High river water temperatures in the summer may limit TVA's ability to use water from the Tennessee or Cumberland River systems for cooling at certain of TVA's generating facilities, thereby limiting its ability to operate these generating facilities.

• High river water temperatures in the summer may limit TVA's ability to use water from the Tennessee River system or Cumberland River system for cooling at certain of TVA's generating facilities, thereby limiting its ability to operate these generating facilities.

This situation would be aggravated during periods of reduced rainfall or drought.

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In response, TVA may be required to, among other things, change its generation mix or change how it conducts its operations.

• Extreme weather conditions or damage resulting from storms or other catastrophic events could stress TVA's transmission and distribution systems, communication systems, and technology, including information technology, resulting in increased restoration, maintenance, and capital costs and reduced reliability, and may

even result in events such as the failure of a dam or an incident at a coal-fired, gas-fired, or nuclear plant or a CCR facility.

Events that affect the supply or quality of water from the Tennessee River system and Cumberland River system, or elsewhere, may interfere with TVA's ability to generate power.

An inadequate supply of water in the Tennessee River system and Cumberland River system could negatively impact TVA's cash flows, results of operations, and financial condition, including potentially reducing generation at TVA's hydroelectric plants, which may require TVA to increase reliance on more expensive generation sources or purchase more energy in the market likely at higher costs;

Events that affect the supply or quality of water from the Tennessee River system or Cumberland River system, or elsewhere, may interfere with TVA's ability to generate power.

An inadequate supply of water in the Tennessee River system or Cumberland River system could negatively impact TVA's cash flows, results of operations, and financial condition, including potentially reducing generation at TVA's hydroelectric plants, which may require TVA to increase reliance on more expensive generation sources or purchase more energy in the market, likely at higher costs;

negatively affecting generation at coal-fired and nuclear plants, which depend on water from the river systems near which they are located for cooling and for use in boilers where water is converted into steam to drive turbines;

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Events at these bodies of water or their associated hydroelectric facilities may interfere with the flow of water and may result in TVA's having insufficient water quality to meet the needs of some of its generating plants.

Further, increased use of water by industry, agriculture, and the population at large within and outside of TVA's service territory, population growth, and the potential impacts of climate change and severe weather events could impact the availability of water and/or cause water use restrictions that affect TVA's operations.

If TVA were to have insufficient water supply of the quality necessary to meet the needs of its plants, TVA may be required to reduce generation at its affected facilities to levels compatible with the available supply of quality water, or take additional steps that change how TVA conducts its operations or that otherwise cause TVA to incur additional expense.

Catastrophic events are an ever-present risk of financial loss and disruption to TVA's business.

TVA's cash flows, results of operations, and financial condition may be adversely affected, either directly or indirectly, by catastrophic events such as fires, earthquakes, explosions, solar events, electromagnetic pulses, geomagnetic disturbances, droughts, floods, hurricanes, tornadoes, polar vortexes, icing events, pipeline explosions, or other casualty events, wars, national emergencies, terrorist activities, pandemics or epidemics, widespread public health crises, geopolitical conflicts, or other similar destructive or disruptive events.

crises, geopolitical conflicts, or other similar destructive or disruptive events.

These events, the frequency and severity of which are unpredictable, may, among other things, cause health, safety, or environmental problems;

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If public opposition to nuclear power were to make operating nuclear plants less feasible because of any of these events, TVA may be forced to shut down its nuclear plants.

This would make it substantially more difficult for TVA to obtain greater amounts of its power supply from low or zero carbon emitting resources and to replace its generation capacity when faced with retiring or idling certain coal-fired units.

This would make it substantially more difficult for TVA to replace its generation capacity when faced with retiring or idling certain coal-fired units.

ACCOUNTING AND FINANCIAL REPORTING RISKS

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The design of any system of financial controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

These risks may be magnified by the fact that TVA is in the process of implementing a new general ledger system.

TVA may be unable to use regulatory accounting for some or all costs.

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increased customer use of DER, such as solar panels and other technologies, as well as the use of energy storage technologies;

inability of TVA's LPCs and directly served customers to pay their power bills;

and macroeconomic factors impacting economic growth or contraction within TVA’s service territory, which could affect energy demand.

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TVA's cost reduction efforts may not be successful.

TVA is undertaking a cost optimization project to partially offset cost increases expected for the years 2024 through 2026, and achieving this goal may prove challenging, particularly if inflation rates remain high.

TVA is undertaking a cost optimization project to partially offset planned cost increases and achieving this goal may prove challenging, particularly if prices for goods and services exceed amounts budgeted at the time the project was

The failure to achieve or maintain cost reduction targets could adversely affect TVA's rates, reputation, cash flows, results of operations, and financial condition.

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TVA may have difficulty adapting its business model to changes in the utility industry and customer preferences.

The traditional business model for power production, selling power from centrally located plants, is facing pressure from a variety of sources, including the potential for self-generation by current or potential customers, new technologies such as energy storage, and increased energy efficiency.

The traditional business model for power production, selling power from centrally located plants requiring extensive transmission networks, is facing pressure from a variety of sources, including the potential for self-generation by current or potential customers, new technologies such as energy storage, and increased energy efficiency.

These pressures may reduce the demand for TVA power.

If TVA does not or cannot adapt to this pressure by adequately changing its business model, TVA's financial condition and results of operations could be negatively affected.

If TVA does not or cannot adapt to this pressure by adequately changing its business model, TVA's cash flows, financial condition, and results of operations could be negatively affected.

TVA's reputation may be negatively impacted.

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inability to meet its human capital management goals;

inability to meet its carbon reduction

inability to keep its electricity rates stable;

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or a significant dispute with one of TVA's customers.

Any deterioration in TVA's reputation may harm TVA's relationships with its customers and stakeholders, may increase its cost of doing business, may interfere with its ability to attract and retain a qualified, inclusive, and diverse workforce, may impact TVA's ability to raise debt capital, and may potentially lead to the enactment of new laws and regulations, or the modification of existing laws and regulations, that negatively affect the way TVA conducts its business.

Any deterioration in TVA's reputation may harm TVA's relationships with its customers and stakeholders, may increase its cost of doing business, may interfere with its ability to attract and retain a qualified workforce, may impact TVA's ability to raise debt capital, and may potentially lead to the enactment of new laws and regulations, or the modification of existing laws and regulations, that negatively affect the way TVA conducts its business.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors