What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-11-13 compared with 2024-11-14 · 487 added, 390 removed, 2149 unchanged (29% of the section changed)

92 unchanged sentences

Other comprehensive income (loss)

Net unrealized gain (loss) on cash flow hedges 25 99 ( 157 )

Net unrealized (gain) loss reclassified to earnings from cash flow hedges ( 48 ) ( 42 ) 93

Net unrealized gain on cash flow hedges 1 25 99

Net unrealized (gain) reclassified to earnings from cash flow hedges ( 3 ) ( 48 ) ( 42 )

Total other comprehensive income (loss) ( 2 ) ( 23 ) 57

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Issues of power bonds 3,967 991 992

Proceeds from variable interest entities 800 — —

Redemptions and repurchases of power bonds ( 1,022 ) ( 1,022 ) ( 29 )

Payments on debt of variable interest entities ( 35 ) ( 39 ) ( 43 )

Redemptions of debt of variable interest entities ( 41 ) ( 35 ) ( 39 )

Short-term debt issues (redemptions), net ( 1,166 ) 734 ( 740 )

2 unchanged sentences

Other, net ( 15 ) 3 ( 1 )

Net cash provided by (used in) financing activities 590 123 ( 283 )

Net cash provided by financing activities 2,411 590 123

Net change in cash, cash equivalents, and restricted cash 1,074 2 1

12 unchanged sentences

Net income (loss) — 508 ( 8 ) — 500

Total other comprehensive income (loss) — — — ( 64 ) ( 64 )

Total other comprehensive income — — — 57 57

Return on power program appropriation investment — ( 6 ) — — ( 6 )

2 unchanged sentences

Net income (loss) — 1,142 ( 7 ) — 1,135

Total other comprehensive income — — — 57 57

Total other comprehensive (loss)

— — — ( 23 ) ( 23 )

Return on power program appropriation investment — ( 7 ) — — ( 7 )

2 unchanged sentences

Net income (loss) — 1,368 ( 8 ) — 1,360

Total other comprehensive income (loss) — — — ( 23 ) ( 23 )

Total other comprehensive (loss)

— — — ( 2 ) ( 2 )

Return on power program appropriation investment — ( 8 ) — — ( 8 )

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2 Impact of New Accounting Standards and Interpretations 95

3 Restructuring 96

4 Accounts Receivable, Net 97

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24 Related Parties 148

24 Subsequent Events 159

25 Segment Reporting 149

Summary of Significant Accounting Policies

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Treasury") as a return on the government's appropriation investment in TVA's power facilities (the "Power Program Appropriation Investment").

In the 1998 Energy and Water Development Appropriations Act, Congress directed TVA to fund essential stewardship activities related to its

management of the Tennessee River system and nonpower or stewardship properties with power revenues in the event that there were insufficient appropriations or other available funds to pay for such activities in any fiscal year.

Energy and Water Development Appropriations Act, Congress directed TVA to fund essential stewardship activities related to its management of the Tennessee River system and nonpower or stewardship properties with power revenues in the event that there were insufficient appropriations or other available funds to pay for such activities in any fiscal year.

Congress has not provided any appropriations to TVA to fund such activities since 1999.

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All highly liquid investments with original maturities of three months or less are considered cash equivalents.

Cash and cash equivalents that are restricted, as to withdrawal or use under the terms of certain contractual agreements, are recorded in Other long-term assets on the Consolidated Balance Sheets.

Restricted cash and cash equivalents include cash held in trusts that are currently restricted for

TVA economic development loans and for certain TVA environmental programs in accordance with agreements related to compliance with certain environmental regulations.

Cash and cash equivalents that are restricted, as to withdrawal or use under the terms of certain contractual agreements, are recorded in Other long-term assets on the

Consolidated Balance Sheets.

Restricted cash and cash equivalents include cash held in trusts that are currently restricted for TVA economic development loans and for certain TVA environmental programs in accordance with agreements related to compliance with certain environmental regulations.

See Note 23 — Commitments and Contingencies — Legal Proceedings — Environmental Agreements .

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Total cash, cash equivalents, and restricted cash $ 1,597 $ 523

TVA's balance of Cash and cash equivalents increased at September 30, 2025 due to the issuance of long-term bonds in the fourth quarter in anticipation of cash needed to pay bond maturities in November 2025.

Allowance for Uncollectible Accounts

TVA recognizes an allowance that reflects the current estimate for credit losses expected to be incurred over the life of the financial assets based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts.

TVA recognizes an allowance that reflects the current estimate for credit losses expected to be incurred over the life of the financial assets based on historical experience, current conditions, and/or reasonable and supportable forecasts that affect the collectability of the reported amounts.

The appropriateness of the allowance is evaluated at the end of each reporting period.

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In addition, TVA reviews other reasonable and supportable forecasts to determine if the allowance for uncollectible amounts should be further adjusted in accordance with the accounting guidance for Current Expected Credit Losses.

As of September 30, 2025, TVA adopted the practical expedient in accordance with the accounting guidance for Current Expected Credit Losses, to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast as part of estimating expected credit losses for trade receivables based on TVA's corporate credit department assessment of the financial condition of customers and the credit quality of the receivables.

To determine the allowance for loans receivables, TVA aggregates loans into the appropriate pools based on the existence of similar risk characteristics such as collateral types and internal assessed credit risks.

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For periods beyond the reasonable and supportable forecast period, TVA uses the current calculated long-term average historical loss rate for the remaining life of the loan portfolio.

The allowance for uncollectible accounts was less than $ 1 million at both September 30, 2024 and 2023, for trade accounts receivable.

The allowance for uncollectible accounts was $ 14 million and less than $ 1 million at September 30, 2025, and 2024, respectively, for trade accounts receivable.

At September 30, 2025, the allowance for uncollectible accounts included $ 14 million related to one local power company customer ("LPC").

Additionally, loans receivable of $ 86 million and $ 105 million at September 30, 2025 and 2024, respectively, are included in Accounts receivable, net and Other long-term assets for the current and long-term portions, respectively.

Loans receivables are reported net of allowances for uncollectible accounts of $ 2 million a n d $ 3 million at September 30, 2024 and 2023, respectively.

Loans receivable are reported net of allowances for uncollectible accounts of $ 2 million at both September 30, 2025 and 2024.

TVA recognizes revenue from contracts with customers to depict the transfer of goods or services to customers in an amount to which the entity expects to be entitled in exchange for those goods or services.

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Native load refers to the customers on whose behalf a company, by statute, franchise, regulatory requirement, or contract, has undertaken an obligation to serve.

TVA engages in other arrangements in addition to power sales.

engages in other arrangements in addition to power sales.

Certain other revenue from activities related to TVA's overall mission is recorded in Other revenue.

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TVA estimates revenues earned during pre-commercial operations at the fair value of the energy delivered based on TVA's hourly incremental dispatch cost.

Pre-commercial plant operations began on Paradise CT Units 5-7 in the first quarter of 2024, and the units became operational on December 29, 2023.

Pre-commercial plant operations began on Paradise Combustion Turbine ("CT") Units 5-7 in the first quarter of 2024, and the units became operational on December 29, 2023.

Estimated revenue of $ 3 million related to this project was capitalized to offset project costs for the year ended September 30, 2024.

TVA also capitalized related fuel costs for this project of $ 3 million for the year ended September 30, 2024, all of which was recognized in the three months ended December 31, 2023.

TVA also capitalized related fuel costs for this project of $ 3 million for the year ended September 30, 2024.

Pre-commercial plant operations began on Johnsonville Aeroderivative CT Units 21-30 during 2025.

Units 21-25 and 27-30 became operational on May 6, 2025, and Unit 26 became operational on August 20, 2025.

Estimated revenue of $ 4 million related to this project was capitalized to offset project costs for the year ended September 30, 2025.

TVA also capitalized related fuel costs for this project of $ 7 million for the year ended September 30, 2025.

Property, Plant, and Equipment, and Depreciation

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Amortization of nuclear fuel in a reactor is calculated on a units-of-production basis and is included in fuel expense.

TVA, the U.S.

Department of Energy ("DOE"), and certain nuclear fuel contractors have entered into agreements, referred to as the Down-blend Offering for Tritium ("DBOT"), that provide for the production, processing, and storage of low-enriched uranium that is to be made using surplus DOE highly enriched uranium and other uranium.

Low-enriched uranium can b e fabricated into fuel for use in a nuclear power plant.

Production of the low-enriched uranium began in 2019 and is contracted to continue through September 2027.

Contract activity after that date will consist of storage and flag management.

Flag management ensures that the uranium is unencumbered by policy restrictions, so that it can be used in connection with the production of tritium.

Under the terms of the interagency agreement between the DOE and TVA, the DOE will reimburse TVA for a portion of the costs of converting the highly enriched uranium to low-enriched uranium.

TVA and the Department of Energy ("DOE") are parties to an interagency agreement (referred to as the Down-blend Offering for Tritium), under which surplus DOE highly enriched uranium and other uranium is processed by third-party contractors into low-enriched uranium, which is then fabricated into nuclear fuel for use in TVA's nuclear power plants.

Production of the low-enriched uranium began in 2019 and will continue through the end of the interagency agreement term in September 2027.

After that date, any remaining uranium in storage will be managed to ensure that the uranium is unencumbered by policy restrictions, so that it can be used in connection with the production of tritium.

Under the terms of the interagency agreement, the DOE will reimburse TVA for a portion of the costs of converting the highly enriched uranium to low-enriched uranium.

Since 2019, TVA has received $ 334 million in reimbursements from the DOE, which is recorded as a reduction in nuclear fuel inventory costs.

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Depreciation is generally computed on a straight-line basis over the estimated service lives of the various classes of assets.

The estimation of asset useful lives requires management judgment, supported by external depreciation studies of historical asset retirement experience.

The estimation of asset useful lives requires management judgment, supported by external depreciation studies of

historical asset retirement experience.

Depreciation rates are determined based on external depreciation studies that are updated approximately every five years, with the latest study implemented in 2022.

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Reacquired Rights .

TVA previously entered into leasing transactions to obtain third-party financing for 24 peaking CTs as well as certain qualified technological equipment and software (“QTE”).

All of the lease proceeds were accounted for as financing obligations due to TVA’s continuing involvement with the combustion turbine facilities and the QTE during the leaseback term.

TVA previously entered into leasing transactions to obtain third-party financing for 24 peaking CTs as well as certain qualified technological equipment and software.

All of the lease proceeds were accounted for as financing obligations due to TVA’s continuing involvement with the combustion turbine facilities and the qualified technological equipment and software during the leaseback term.

These financial obligations were paid off, and TVA acquired the residual leasehold interests for all of this equipment and recorded the cash consideration as reacquired rights, which is an intangible asset included in property, plant, and equipment on the Consolidated Balance Sheet.

As of September 30, 2024 and 2023, property, plant, and equipment includes intangible reacquired rights, net of amortization, of $ 312 million and $ 324 million, respectively.

At September 30, 2025 and 2024, property, plant, and equipment includes intangible reacquired rights, net of amortization, of $ 301 million and $ 312 million, respectively.

Reacquired rights are amortized over the estimated useful lives of the underlying CTs which range from 30 to 35 years.

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While not specifically structured as leases, certain power purchase agreements ("PPAs") are deemed to contain a lease of the underlying generating units when the terms convey the right to control the use of the assets.

Amounts recorded for these leases are generally based on the amount of the scheduled capacity payments due over the remaining terms of the PPAs, the terms of which vary.

Amounts recorded for these leases are generally based on the amount of the scheduled capacity payments due over the remaining terms of the PPAs, the

terms of which vary.

The total lease obligations included in Accounts payable and accrued liabilities, Other long-term liabilities, and Finance lease liabilities related to these agreements were $ 509 million and $ 75 million for finance and operating leases, respectively, at September 30, 2025.

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Research and development costs are expensed when incurred.

TVA's research programs include those related to power delivery technologies, emerging technologies (clean energy, renewables, distributed resources, and energy efficiency), technologies related to generation (fossil fuel, nuclear, and hydroelectric), and environmental technologies.

TVA's research programs include those related to power delivery technologies, emerging technologies, technologies related to generation (fossil fuel, nuclear, and hydroelectric), and environmental technologies.

Tax Equivalents

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The total amount of these payments is five percent of gross revenues from sales of power during the preceding year, excluding sales or deliveries to other federal agencies and off-system sales with other utilities, with a provision for minimum payments under certain circumstances.

TVA calculates tax equivalent expense by subtracting the prior year fuel cost-related tax equivalent

regulatory asset or liability from the payments made to the states and counties during the current year and adding back the current year fuel cost-related tax equivalent regulatory asset or liability.

TVA calculates tax equivalent expense by subtracting the prior year fuel cost-related tax equivalent regulatory asset or liability from the payments made to the states and counties during the current year and adding back the current year fuel cost-related tax equivalent regulatory asset or liability.

Fuel cost-related tax equivalent expense is recognized in the same accounting period in which the fuel cost-related revenue is recognized.

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Impact of New Accounting Standards and Interpretations

The following are accounting standard updates issued by the Financial Accounting Standards Board that TVA adopted during 2024:

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

Description This guidance requires an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with revenue with customers.

It is expected that an acquirer will generally recognize and measure acquired contract assets and contract liabilities in a manner consistent with how the acquiree recognized and measured contract assets and contract liabilities in the acquiree’s financial statements.

The entity should apply the standard prospectively to business combinations occurring on or after the effective date of the standard.

Effective Date for TVA TVA adopted the standard on October 1, 2023, on a prospective basis.

Effect on the Financial Statements or Other Significant Matters Adoption of this standard did not have a material impact on TVA's financial condition, results of operations, or cash flows.

Troubled Debt Restructurings and Vintage Disclosures

Description This guidance eliminates the recognition and measurement guidance on troubled debt restructuring for creditors that have adopted Financial Instruments-Credit Losses and requires enhanced disclosures about loan modifications for borrowers experiencing financial difficulty.

Additionally, the guidance requires public business entities to present current-period gross write-offs by year of origination in their vintage disclosures.

The entity should apply the standard prospectively except for the transition method related to the recognition and measurement of troubled debt restructuring.

For the transition method, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption.

Effective Date for TVA TVA adopted the standard on October 1, 2023, on a prospective basis.

Effect on the Financial Statements or Other Significant Matters Adoption of this standard did not have a material impact on TVA's financial condition, results of operations, or cash flows.

The following accounting standards or rules have been issued but as of September 30, 2024, were not effective and had not been adopted by TVA:

The following are accounting standard updates issued by the Financial Accounting Standards Board ("FASB") that TVA adopted during 2025:

Improvements to Reportable Segment Disclosures

Description This guidance improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendment requires a public entity to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit and loss.

It also requires a public entity that has a single reportable segment to provide all of the disclosures required by the amendment and all existing segment disclosures.

The amendment is effective for public entities for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024.

The amendments require a public entity to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the Chief Operating Decision Maker ("CODM") and included within each reported measure of segment profit and loss.

It also requires a public entity that has a single reportable segment to provide all of the disclosures required by the amendments and all existing segment disclosures.

The amendments are effective for public entities for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024.

Upon adoption, a public entity should apply the amendments retrospectively to all prior periods presented in the financial statements.

Effective Date for TVA Fiscal years beginning October 1, 2024 and interim periods beginning October 1, 2025.

Effect on the Financial Statements or Other Significant Matters The adoption of this standard will result in TVA including the additional required disclosures and will have no impact on TVA's financial condition, results of operations, or cash flows.

Effective Date for TVA TVA adopted the guidance on September 30, 2025, and applied it retrospectively.

Effect on the Financial Statements or Other Significant Matters The adoption of this standard resulted in expanded disclosures of significant segment expenses and enhanced qualitative information about the CODM's title and the use of net income as the segment profit measure.

See Note 25 — Segment Reporting for further details.

Measurement of Credit Losses for Accounts Receivable and Contract Assets

Description The amended guidance simplifies the estimation of credit losses on current accounts receivable and current contract assets arising from transactions accounted for under the accounting guidance for Revenue from Contracts with Customers.

The amendments allow all entities to elect a practical expedient to assume that the current conditions as of the balance sheet date will remain unchanged for the remaining life of the asset when developing a reasonable and supportable forecast as part of estimating expected credit losses on these assets.

Effective Date for TVA This new standard is effective for TVA’s interim and annual reporting periods beginning October 1, 2026.

Early adoption is permitted, and TVA adopted this standard on September 30, 2025, on a prospective basis.

Effect on the Financial Statements or Other Significant Matters Adoption of this standard did not have a material impact on TVA’s financial condition, results of operations, or cash flows.

The following accounting standards or rules have been issued but as of September 30, 2025, were not effective and had not been adopted by TVA:

Enhancement and Standardization of Climate-Related Disclosures for Investors

Description In March 2024, the SEC adopted its climate-related final rule (SEC Release No.

34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors), and in April 2024, the SEC voluntarily stayed the new rule as a result of pending legal challenges.

Description In March 2024, the Securities and Exchange Commission ("SEC") adopted its climate-related final rule (SEC Release No.

34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors).

In April 2024, the SEC voluntarily stayed the new rule as a result of pending legal challenges, in March 2025, the SEC withdrew its legal defense of the rule, and in April 2025, the United States Court of Appeals for the Eighth Circuit suspended the litigation over the validity of the rule.

The new rule, if implemented as adopted, will require registrants to provide certain climate-related information in their annual reports and registration statements and will also require the dollar impact of severe weather events and other natural conditions, as well as amounts related to carbon offsets and renewable energy credits or certificates, to be disclosed in the audited financial statements in certain circumstances.

The disclosure requirements are currently expected to begin phasing in for fiscal years beginning on or after January 1, 2027 for non-accelerated filers.

If the new rule is implemented as adopted, the disclosure requirements will begin phasing in for fiscal years beginning on or after January 1, 2027 for non-accelerated filers.

Effective Date for TVA Fiscal year beginning October 1, 2027.

Effect on the Financial Statements or Other Significant Matters TVA is currently evaluating the impact of the rule on its disclosures.

Disaggregation of Income Statement Expenses

Description This guidance improves the disclosures about a public entity's expenses in the notes to the financial statements and requires disclosure of specified information about certain costs and expenses.

The amendments require a public entity to disclose, on an annual and interim basis, purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion for each income statement line item that contains those expenses.

Specified expenses, gains, or losses that are already disclosed under existing U.S.

GAAP are required to be included in the disaggregated income statement expense line item disclosures, and any relevant remaining amounts need to be described qualitatively.

Separate disclosures of total selling expenses and an entity’s definition of those expenses are also required.

The amendments are effective for public entities for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Upon adoption, a public entity can apply the amendments prospectively or apply them retrospectively to all prior periods presented in the financial statements.

Effective Date for TVA Fiscal year beginning October 1, 2027, and interim periods beginning October 1, 2028.

Effect on the Financial Statements or Other Significant Matters The adoption of this standard will result in TVA including the additional required disclosures, and TVA does not expect an impact on its financial condition, results of operations, or cash flows.

Accounting and Disclosure of Costs Related to Internally Developed Software

Description This guidance amends the accounting for and disclosure of costs related to internally developed software, eliminating project stages, clarifying significant development uncertainty by requiring costs to be recognized only when uncertainty is resolved, and aligning capitalization rules with those for externally sold software.

Key changes include the elimination of distinct project stages for development, a redefined meaning of probable as likely, and requirements to assess significant development uncertainty for all software projects to determine when to capitalize costs.

In addition, the guidance specifies that the property, plant, and equipment disclosure requirements shall be applied to all capitalized software costs.

The amendments are effective for all public entities for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years.

Upon adoption, a public entity may apply the guidance using a prospective, retrospective, or modified transition approach.

Effective Date for TVA The new standard is effective for TVA's interim and annual reporting periods beginning October 1, 2028.

Effect on the Financial Statements or Other Significant Matters The adoption of this standard is not expected to have a material impact on TVA’s financial condition, results of operations, cash flows, or disclosures.

Restructuring

TVA’s demand continues to grow, driving the need for significant future capital investment.

TVA must continue to drive efficiencies and cost savings across the enterprise to provide affordable, reliable electricity, while funding the capital investment needed to meet growing demand.

This effort has evolved into an Enterprise Transformation Program ("ETP") focused on improving financial health, enhancing asset performance, automating processes, optimizing third-party spend through supply chain, and making the workforce more efficient.

As part of these efforts, certain employees are eligible for severance payments.

These amounts are recognized in Operating and maintenance expense on TVA's Consolidated Statements of Operations in the period incurred.

Severance costs that have been incurred but not paid are included in Accounts payable and accrued liabilities on TVA's Consolidated Balance Sheets.

The organizational design efforts associated with the ETP were complete as of September 30, 2025;

however, the ETP is ongoing as TVA executes the focus areas described above.

The table below summarizes the activity related to severance costs:

Severance Cost Liability Activity

(in millions)

Severance cost liability at September 30, 2024 $ —

Liabilities incurred during the period 40

Actual costs paid during the period ( 29 )

Severance cost liability at September 30, 2025

Accounts Receivable, Net

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Other receivables 225 118

Allowance for uncollectible accounts (1) (2)

Accounts receivable, net $ 2,119 $ 1,801

$ 1,801 $ 1,745

(1) Allowance for uncollectible accounts was less than $ 1 million at both September 30, 2024 and 2023, and therefore is not represented in the table above.

(1) To determine the allowance for trade receivables, TVA considers historical experience and other currently available information, including events such as customer bankruptcy and/or a customer failing to fulfill payment arrangements by the due date, among other considerations.

See Note 1 — Summary of Significant Accounting Policies — Allowance for Uncollectible Accounts .

At September 30, 2025, the allowance for uncollectible accounts included $ 14 million related to one LPC customer.

(2) The allowance for uncollectible accounts was less than $ 1 million at September 30, 2024.

In addition, the Inflation Reduction Act of 2022 ("IRA") makes credits available to certain tax-exempt entities, including TVA.

Obtaining this funding requires TVA to meet certain requirements, to submit informational returns to the Internal Revenue Service ("IRS"), and to retain adequate books and records to support its filings.

TVA records the credit when there is reasonable assurance that the credit will be received, and TVA complies with all conditions attached to the eligibility of the credit.

The credit is recognized as a reduction of the asset and/or expense based on what the credits are intended to reimburse.

At September 30, 2025, TVA recorded $ 72 million in Accounts receivable, net, which is classified as Other receivables above, related to these tax credits;

$ 51 million was recorded as a reduction of Net completed plant;

$ 19 million was recorded to reduce Operating and maintenance expense;

and $ 2 million related to interest was recorded to Other income, net.

There were no tax credits recorded in 2024.

TVA received $ 26 million in October 2025 related to these credits.

Inventories, Net

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Prepaid insurance 16 19

Prepaid cloud assets 13 7

Current portion of prepaid long-term service agreements 16 7

Commodity contract derivative assets 14 5

Prepaid dues & fees 7 6

Cloud assets 3 13

Other current assets $ 162 $ 120

(1) At September 30, 2023, $ 7 million previously classified as Other (a component of Other current assets) has been reclassified to Prepaid cloud assets (a component of Other current assets) to conform to current year presentation.

(1) At September 30, 2024, $ 6 million previously classified as Other (a component of Other current assets) has been reclassified to Prepaid dues & fees (a component of Other current assets) to conform to current year presentation.

Commodity Contract Derivative Assets.

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Commodity contract derivative assets classified as current include deliveries or settlements that will occur within 12 months or less.

See Note 15 — Risk Management Activities and Derivative Transactions — Derivatives Not Receiving Hedge Accounting Treatment — Commodity Derivatives and — Commodity Derivatives under the FHP for a discussion of TVA's commodity contract derivatives.

See Note 16 — Risk Management Activities and Derivative Transactions — Derivatives Not Receiving Hedge Accounting Treatment — Commodity Contract Derivatives and — Commodity Derivatives under the FHP for a discussion of TVA's commodity contract derivatives.

Net Completed Plant

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19,029 15,760 3,269 20,177 16,635 3,542

Gas and oil-fired 7,051 2,112 4,939 6,663 2,057 4,606

Gas, oil-fired, and other production 7,746 2,274 5,472 7,051 2,112 4,939

Transmission 10,323 3,542 6,781 9,964 3,450 6,514

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Plant Closures

TVA must continuously evaluate all generating assets to ensure an optimal energy portfolio that provides safe, clean, and reliable power while maintaining flexibility and fiscal responsibility to the people of the Tennessee Valley.

Based on results of assessments presented to the TVA Board in 2019, the retirement of Bull Run Fossil Plant ("Bull Run") by December 2023 was approved, and as of September 30, 2023, the facility was retired.

TVA must continuously evaluate all generating assets to ensure an optimal energy portfolio that provides safe and reliable power while maintaining flexibility and fiscal responsibility to the people of the Tennessee Valley.

In January 2023, TVA issued its Record of Decision to retire two coal-fired units at Cumberland Fossil Plant ("Cumberland") by the end of CY 2026 and CY 2028.

In April 2024, TVA issued its Record of Decision to retire the nine coal-fired units at Kingston Fossil Plant ("Kingston") by CY 2027.

In addition, TVA is evaluating the impact of retiring the balance of the coal-fired fleet by 2035, and that evaluation includes environmental reviews, public input, and TVA Board approval.

TVA is evaluating the impact of retiring the balance of the coal-fired fleet by 2035, and that evaluation includes

environmental reviews and TVA Board approval.

TVA is also reviewing how recent executive orders, the evolving regulatory environment, and overall system performance are impacting the operation of its coal-fired fleet.

An evaluation of the continued operation of coal-fired units is being conducted and will consider material condition, plant performance, system flexibility needs, environmental requirements, grid support, and other factors.

Financial Impact

TVA's policy is to adjust depreciation rates to reflect the most current assumptions, ensuring units will be fully depreciated by the applicable retirement dates.

As a result of TVA's decision to accelerate the retirement of Bull Run, TVA has recognized a cumulative $ 659 million of accelerated depreciation since the second quarter of 2019 through September 30, 2023.

Of this amount, $ 177 million and $ 140 million were recognized for the years ended September 30, 2023, and 2022, respectively.

TVA's decision to retire the two units at Cumberland is estimated to result in approximately $ 16 million of additional depreciation quarterly, which does not include any potential impact from additions or retirements to net completed plant.

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The cumulative impact approximates $ 54 million of additional depreciation since April 2024 related to this decision.

TVA also recognized $ 15 million , $ 14 million , and $ 22 million in Operating and maintenance expense related to additional inventory reserves and project write-offs for the coal-fired fleet, including Kingston, Cumberland, and Bull Run, for the years ended September 30, 2024, 2023, and 2022, respectively.

TVA also recognized $ 15 million , $ 15 million , and $ 14 million in Operating and maintenance expense related to additional inventory reserves for the coal-fired fleet, including Kingston, Cumberland, and Bull Run Fossil Plant, for the years ended September 30, 2025, 2024, and 2023, respectively.

The following table provides information regarding the presentation of leases on the Consolidated Balance Sheets:

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(5) Variable lease costs include costs related to variable payments that are based on energy production levels, which are allocated to expense based on the determination of lease and non-lease components associated with the underlying agreements.

TVA's variable lease costs are primarily related to renewable energy purchase agreements that require TVA to purchase all output from the underlying facility.

TVA's variable lease costs are primarily related to energy payments that are based on energy production levels.

Payments under those agreements are solely based on the actual output over the lease term.

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Finance present value of net minimum lease payments $ 726

TVA has entered into four PPAs with renewable resource providers for solar generation and rights to charge and discharge battery energy storage systems.

TVA has entered into three PPAs with renewable resource providers for solar generation and rights to charge and discharge battery energy storage systems.

The systems are considered a lease component in these agreements.

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(in millions)

2024 2023 (1)

Loans and other long-term receivables, net $ 84 $ 97

Prepaid long-term service agreements 62 64

EnergyRight ® receivables, net

Cloud assets $ 114 $ 35

Prepaid long-term service agreements 89 62

Loans and other long-term receivables, net 83 84

Prepaid capital assets 81 29

EnergyRight ® receivables, net

Commodity contract derivative assets 10 2

Total other long-term assets $ 506 $ 344

(1) At September 30, 2023, $ 15 million previously classified as Other (a component of Other long-term assets) has been reclassified to Cloud assets (a component of Other long-term assets) to conform to current year presentation.

Cloud Assets.

TVA has capitalized the implementation costs of hosting arrangements that are considered service contracts as cloud assets.

The cloud assets are amortized over the non-cancellable terms of the hosting arrangement, including renewal periods that are reasonably certain to be exercised.

The current and long-term portions of the cloud assets are reported in Other current assets and Other long-term assets, respectively, on TVA’s Consolidated Balance Sheets.

Amortization of the cloud asset is recognized in Operating and maintenance expense, consistent with the classification of the related hosting fees.

At September 30, 2025, and September 30, 2024, the carrying amount of the cloud assets reported in Other current assets was $ 3 million and $ 13 million, respectively.

For the years ended September 30, 2025, 2024, and 2023, TVA amortized $ 14 million, $ 15 million, and $ 7 million, respectively, as Operating and maintenance expense.

Prepaid Long-Term Service Agreements.

TVA has entered into various long-term service agreements for major

maintenance activities at certain of its combined cycle plants.

TVA uses the direct expense method of accounting for these

arrangements.

TVA accrues for parts when it takes ownership and for contractor services when they are rendered.

certain of these agreements, payments made exceed the value of parts received and services rendered.

The current and long-term portions of the resulting prepayments are reported in Other current assets and Other long-term assets, respectively, on

TVA's Consolidated Balance Sheets.

At September 30, 2025 and 2024, prepayments of $ 16 million and $ 7 million, respectively, were recorded in Other current assets.

Loans and Other Long-Term Receivables .

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At September 30, 2025 and 2024, the carrying amount of the loans receivable, net of discount, reported in Accounts receivable, net was $ 3 million and $ 21 million, respectively.

EnergyRight ® Receivables .

In association with the EnergyRight ® program, TVA's local power company customers ("LPCs") offer financing to end-use customers for the purchase of energy-efficient equipment.

Depending on the nature of the energy-efficiency project, loans may have a maximum term of five years or 10 years.

TVA purchases the resulting loans receivable from its LPCs.

The loans receivable are then transferred to a third-party bank with which TVA has agreed to repay in full any loans receivable that have been in default for 180 days or more or that TVA has determined are uncollectible.

Given this continuing involvement, TVA accounts for the transfer of the loans receivable as secured borrowings.

The current and long-term portions of the loans receivable are reported in Accounts receivable, net and Other long-term assets, respectively, on TVA's Consolidated Balance Sheets.

At both September 30, 2024 and 2023, the carrying amount of the loans receivable, net of discount, reported in Accounts receivable, was $ 12 million.

See Note 12 — Other Long-Term Liabilities for information regarding the associated financing obligation.

Allowance for Loan Losses.

The allowance for loan losses is an estimate of expected credit losses, measured over the estimated life of the loan receivables, that considers reasonable and supportable forecasts of future economic conditions in addition to information about historical experience and current conditions.

Loans receivables are reported net of allowances for uncollectible accounts.

See Note 1 — Summary of Significant Accounting Policies — Allowance for Uncollectible Accounts ..

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EnergyRight ® loan reserve

Economic development loan collective reserve — 1

Economic development loan specific loan reserve 1 1

Total allowance for loan losses $ 2 $ 2

Prepaid Long-Term Service Agreements.

TVA has entered into various long-term service agreements for major

maintenance activities at certain of its combined cycle plants.

TVA uses the direct expense method of accounting for these

arrangements.

TVA accrues for parts when it takes ownership and for contractor services when they are rendered.

certain of these agreements, payments made exceed the value of parts received and services rendered.

The current and long-term portions of the resulting prepayments are reported in Other current assets and Other long-term assets, respectively, on

TVA's Consolidated Balance Sheets.

At September 30, 2024 and 2023, prepayments of $ 7 million and $ 25 million, respectively, were recorded in Other current assets.

Cloud Assets.

TVA has capitalized the implementation costs of hosting arrangements that are considered service contracts as cloud assets.

The cloud assets are amortized over the term of the associated hosting arrangements.

The current and long-term portions of the cloud assets are reported in Other current assets and Other long-term assets, respectively, on TVA’s Consolidated Balance Sheets.

At September 30, 2024, and September 30, 2023, the carrying amount of the cloud assets reported in Other current assets was $ 13 million and $ 7 million, respectively.

Prepaid Capital Assets.

TVA makes prepayments to acquire capital assets.

TVA classifies these prepayments as prepaid capital if the funds are refundable, and TVA can receive a credit.

EnergyRight ® Receivables .

In association with the EnergyRight ® program, TVA's LPCs offer financing to end-use customers for the purchase of energy-efficient equipment.

Depending on the nature of the energy-efficiency project, loans may have a maximum term of five years or 10 years.

TVA purchases the resulting loans receivable from its LPCs.

receivable are then transferred to a third-party bank with which TVA has agreed to repay in full any loans receivable that have been in default for 180 days or more or that TVA has determined are uncollectible.

Given this continuing involvement, TVA accounts for the transfer of the loans receivable as secured borrowings.

The current and long-term portions of the loans receivable are reported in Accounts receivable, net and Other long-term assets, respectively, on TVA's Consolidated Balance Sheets.

At both September 30, 2025 and 2024, the carrying amount of the loans receivable, net of discount, reported in Accounts receivable, net was $ 12 million.

See Note 13 — Other Long-Term Liabilities for information regarding the associated financing obligation.

Commodity Contract Derivative Assets.

TVA enters into certain derivative contracts for natural gas that require physical delivery of the contracted quantity of the commodity as well as certain financial derivative contracts to hedge exposure to the price of natural gas.

Regulatory Assets and Liabilities

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Current regulatory assets

Unrealized losses on commodity derivatives $ 102 $ 136

Unrealized losses on commodity contract derivatives $ 59 $ 102

Unrealized losses on interest rate derivatives 57 54

Fuel cost adjustment receivable — 35

Other current regulatory assets 11 —

Total current regulatory assets 127 191

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Unrealized losses on interest rate derivatives 316 447

Nuclear decommissioning costs 362 728

Environmental compliance and remediation costs 308 215

Unrealized losses on commodity derivatives 64 52

Nuclear decommissioning costs 149 362

Unrealized losses on commodity contract derivatives 12 64

Other non-current regulatory assets 168 154

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Fuel cost adjustment tax equivalents $ 203 $ 169

Unrealized gains on commodity derivatives 5 21

Unrealized gains on commodity contract derivatives 14 5

Fuel cost adjustment payable 11 —

Total current regulatory liabilities 228 174

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Retirement benefit plans deferred credits 131 81

Unrealized gains on commodity derivatives 2 12

Unrealized gains on commodity contract derivatives 10 2

Total non-current regulatory liabilities 141 83

Total regulatory liabilities $ 369 $ 257

Unrealized Gains (Losses) on Commodity Contract Derivatives.

TVA enters into certain commodity contract derivatives for natural gas that require the physical delivery of the contracted quantity.

Unrealized gains (losses) on natural gas purchase contracts, included as part of unrealized gains (losses) on commodity contract derivatives, relate to the mark-to-market ("MtM") valuation of natural gas purchase contracts.

The natural gas purchase contracts qualify as commodity contract derivatives but do not qualify for cash flow hedge accounting treatment.

As a result, TVA recognizes the changes in the market value of these commodity contract derivatives as a regulatory liability or asset.

This treatment reflects TVA's ability and intent to recover the cost of these commodity contract derivatives on a settlement basis for ratemaking purposes through the fuel cost adjustment.

TVA recognizes the actual cost of fuel received under these contracts in fuel and purchased power expense at the time the fuel is used to generate electricity.

These contracts expire at various times through October 2035.

Unrealized gains and losses on

contracts with a maturity of less than one year are included as a current regulatory asset or liability on TVA's Consolidated Balance Sheets.

See Note 16 — Risk Management Activities and Derivative Transactions .

Currently, TVA is hedging exposure to the price of natural gas under the Financial Hedging Program ("FHP").

Deferred gains and losses relating to TVA's FHP are included as part of unrealized gains and losses on commodity contract derivatives.

TVA defers all MtM unrealized gains or losses as regulatory liabilities or assets, respectively, and records the realized gains or losses in fuel and purchased power expense as the contracts settle to match the delivery period of the underlying commodity.

These contracts expire at various times through December 2029.

This accounting treatment reflects TVA's ability and intent to include the realized gains or losses of these commodity contract derivatives in future periods through the fuel cost adjustment.

Net unrealized gains and losses for any settlements that occur within 12 months or less are classified as a current regulatory liability or asset on TVA's Consolidated Balance Sheets.

See Note 16 — Risk Management Activities and Derivative Transactions.

Unrealized Losses on Interest Rate Derivatives .

TVA uses regulatory accounting treatment to defer the unrealized gains and losses on certain interest rate derivative contracts.

When amounts in these contracts are realized, the resulting gains or losses are included in the ratemaking formula.

The unrealized losses on these interest rate derivatives are recorded on TVA's Consolidated Balance Sheets as current and non-current regulatory assets, and the related realized gains or losses, if any, are recorded on TVA's Consolidated Statements of Operations when the contracts settle.

A portion of certain unrealized gains and losses will be amortized into earnings over the remaining lives of the contracts.

Gains and losses on interest rate derivatives that are expected to be realized within the next year are included as a current regulatory asset or liability on TVA's Consolidated Balance Sheets.

TVA does not recognize unrealized gains and losses from the investment portfolios and derivative instruments within earnings but rather defers all such gains and losses within a regulatory liability or asset in accordance with its accounting policy.

See Note 16 — Risk Management Activities and Derivative Transactions and Note 17 — Fair Value Measurements.

Fuel Cost Adjustment.

The fuel cost adjustment provides a mechanism to alter rates monthly to reflect changing fuel and purchased power costs.

There is typically a lag between the occurrence of a change in fuel and purchased power costs and the reflection of the change in fuel rates.

Balances in the fuel cost adjustment regulatory accounts represent over-collected or under-collected revenues that offset fuel and purchased power costs, and the fuel rate is designed to recover or refund the balance in less than one year.

Non-Nuclear Decommissioning Costs.

Non-nuclear decommissioning costs include (1) certain deferred charges related to the future closure and decommissioning of TVA's non-nuclear long-lived assets, (2) recognition of changes in the liability, (3) recognition of changes in the value of TVA's ART, and (4) certain other deferred charges under the accounting rules for asset retirement obligations ("AROs").

TVA has established the ART to more effectively segregate, manage, and invest funds to help meet future non-nuclear AROs.

The funds from the ART may be used, among other things, to pay the costs related to the future closure and retirement of non-nuclear long-lived assets under various legal requirements.

These future costs can be funded through a combination of investment funds set aside in the ART, future earnings on those investment funds, and future cash contributions to the ART.

TVA recovers in rates an amount determined by the average life of debt financed for non-nuclear decommissioning expenditures, assuming a 20-year debt service period, and contributions to the ART.

Deferred charges will be recovered in rates based on an analysis of the expected expenditures, contributions, and investment earnings required to recover the decommissioning costs.

Recovery of future decommissioning costs is dependent upon the future earnings of the ART, timing of decommissioning activities, and changes in decommissioning estimates.

The regulatory asset is classified as long-term as amounts recovered are used to service debt or to contribute to the ART, which is restricted for future decommissioning costs.

Retirement Benefit Plans Deferred Costs (Credits) .

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Therefore, amounts that otherwise would be charged to AOCI for these costs are recorded as a regulatory asset or liability since TVA has historically recovered pension and OPEB expense in rates.

Through historical and

current year expense included in ratemaking, the TVA Board has demonstrated the ability and intent to include pension and OPEB costs in allowable costs and in rates for ratemaking purposes.

Through historical and current year expense included in ratemaking, the TVA Board has demonstrated the ability and intent to include pension and OPEB costs in allowable costs and in rates for ratemaking purposes.

As a result, it is probable that future revenue will result from inclusion of the pension and OPEB regulatory assets or regulatory liability in allowable costs for ratemaking purposes.

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Accordingly, TVA discontinued this regulatory accounting practice as all such deferred costs were recovered as of September 30, 2023.

Non-Nuclear Decommissioning Costs.

TVA has established the ART to more effectively segregate, manage, and invest funds to help meet future non-nuclear AROs.

The funds from the ART may be used, among other things, to pay the costs related to the future closure and retirement of non-nuclear long-lived assets under various legal requirements.

These future costs can be funded through a combination of investment funds set aside in the ART, future earnings on those investment funds, and future cash contributions to the ART.

In 2024 and 2023, TVA recovered in rates an amount determined by the average life of debt financed for non-nuclear decommissioning expenditures, assuming a 20-year debt service period, and contributions to the ART.

Deferred charges will be recovered in rates based on an analysis of the expected expenditures, contributions, and investment earnings required to recover the decommissioning costs.

Recovery of future decommissioning costs is dependent upon the future earnings of the ART, timing of decommissioning activities, and changes in decommissioning estimates.

The regulatory asset is classified as long-term as amounts recovered are used to service debt or to contribute to the ART, which is restricted for future decommissioning costs.

During 2024, TVA recorded additional estimated AROs of $ 3.1 billion as a result of the Environmental Protection Agency's ("EPA's") final legacy coal combustion residual ("CCR") rule ("Legacy CCR Rule") and recorded a corresponding regulatory asset of $ 3.1 billion due to these AROs being associated with closed sites and asset retirement costs having been fully depreciated.

See Note 13 — Asset Retirement Obligations.

Environmental Compliance and Remediation Costs.

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See Note 23 — Contingencies and Legal Proceedings — Contingencies — Environmental Matters.

Unrealized Losses on Interest Rate Derivatives .

TVA uses regulatory accounting treatment to defer the unrealized gains and losses on certain interest rate derivative contracts.

When amounts in these contracts are realized, the resulting gains or losses are included in the ratemaking formula.

A portion of certain unrealized gains and losses will be amortized into earnings over the remaining lives of the contracts.

Gains and losses on interest rate derivatives that are expected to be realized within the next year are included as a current regulatory asset or liability on TVA's Consolidated Balance Sheets.

See Note 15 — Risk Management Activities and Derivative Transactions and Note 16 — Fair Value Measurements.

Nuclear Decommissioning Costs.

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Recovery of future decommissioning costs is dependent upon the future earnings of the NDT and ART, timing of decommissioning activities, and changes in decommissioning estimates.

The regulatory asset is classified as long-term as amounts recovered are

contributed to the NDT or the ART, which are restricted for future decommissioning costs.

The regulatory asset is classified as long-term as amounts recovered are contributed to the NDT or the ART, which are restricted for future decommissioning costs.

See Note 14 — Asset Retirement Obligations and Note 17 — Fair Value Measurements.

Unrealized Gains (Losses) on Commodity Derivatives.

TVA enters into certain derivative contracts for natural gas that require the physical delivery of the contracted quantity of the commodity.

Unrealized gains (losses) on natural gas purchase contracts, included as part of unrealized gains (losses) on commodity derivatives, relate to the mark-to-market ("MtM") valuation of natural gas purchase contracts.

The natural gas purchase contracts qualify as derivative contracts but do not qualify for cash flow hedge accounting treatment.

As a result, TVA recognizes the changes in the market value of these derivative contracts as a regulatory liability or asset.

This treatment reflects TVA's ability and intent to recover the cost of these commodity contracts on a settlement basis for ratemaking purposes through the fuel cost adjustment.

TVA recognizes the actual cost of fuel received under these contracts in fuel and purchased power expense at the time the fuel is used to generate electricity.

These contracts expire at various times through December 2028.

Unrealized gains and losses on contracts with a maturity of less than one year are included as a current regulatory asset or liability on TVA's Consolidated Balance Sheets.

See Note 15 — Risk Management Activities and Derivative Transactions .

Currently, TVA is hedging exposure to the price of natural gas under the Financial Hedging Program ("FHP").

Deferred gains and losses relating to TVA's FHP are included as part of unrealized gains and losses on commodity derivatives.

These contracts expire at various times through March 2028.

This accounting treatment reflects TVA's ability and intent to include the realized gains or losses of these commodity contracts in future periods through the fuel cost adjustment.

Net unrealized gains and losses for any settlements that occur within 12 months or less are classified as a current regulatory liability or asset on TVA's Consolidated Balance Sheets.

See Note 15 — Risk Management Activities and Derivative Transactions.

Fuel Cost Adjustment Receivable.

The fuel cost adjustment provides a mechanism to alter rates monthly to reflect changing fuel and purchased power costs.

There is typically a lag between the occurrence of a change in fuel and purchased power costs and the reflection of the change in fuel rates.

Other Non-Current Regulatory Assets.

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When TVA determines that it has a variable interest in a VIE, a qualitative evaluation is performed to assess which interest holders have the power to direct the activities that most significantly impact the economic performance of the entity and have the obligation to absorb losses or receive benefits that could be significant to the entity.

The evaluation considers the purpose and design of the business, the risks that the business was designed to create and pass along to other entities, the activities of the business that can be directed and which party can direct them, and the expected relative impact of those activities on the economic performance of the business through its life.

TVA has the power to direct the activities of an entity when it has the

ability to make key operating and financing decisions, including, but not limited to, capital investment and the issuance of debt.

economic performance of the business through its life.

TVA has the power to direct the activities of an entity when it has the ability to make key operating and financing decisions, including, but not limited to, capital investment and the issuance of debt.

Based on the evaluation of these criteria, TVA has determined it is the primary beneficiary of certain entities and as such is required to account for the VIEs on a consolidated basis.

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Based on its analysis, TVA has determined that it is the primary beneficiary of SCCG and, as such, is required to account for the VIE on a consolidated basis.

Johnsonville VIE

In October 2024, TVA entered into an $ 800 million construction management agreement and lease financing arrangement with Johnsonville Aeroderivative Combustion Turbine Generation LLC ("JACTG") for the completion and lease by TVA of the Johnsonville Aeroderivative Combustion Turbine Facility ("Johnsonville Facility").

JACTG is a special single-purpose limited liability company formed in September 2024 to finance the Johnsonville Facility through a $ 720 million secured note issuance (the "JACTG notes") and the issuance of $ 80 million of membership interests subject to mandatory redemption.

The membership interests were purchased by Johnsonville Holdco LLC ("JHLLC").

JHLLC is a special single-purpose entity, also formed in September 2024, established to acquire and hold the membership interests in JACTG.

A non-controlling interest in JHLLC is held by a third-party through nominal membership interests, to which none of the income, expenses, and cash flows are allocated.

The membership interests held by JHLLC in JACTG were purchased with proceeds from the issuance of $ 80 million of secured notes (the "JHLLC notes") and are subject to mandatory redemption pursuant to a schedule of amortizing, semi-annual payments due each April 1 and October 1, with a final payment due in October 2054.

The payment dates for the mandatorily redeemable membership interests are the same as those of the JHLLC notes.

The sale of the JACTG notes, the membership interests in JACTG, and the JHLLC notes closed in October 2024.

The JACTG notes are secured by TVA's lease payments, and the JHLLC notes are secured by JHLLC's investment in, and amounts receivable from, JACTG.

TVA's lease payments to JACTG are equal to and payable on the same dates as JACTG's and JHLLC's semi-annual debt service payments.

In addition to the lease payments, TVA pays administrative and miscellaneous expenses incurred by JACTG and JHLLC.

Certain agreements related to this transaction contain default and acceleration provisions.

Due to its participation in the design, business activity, and credit and financial support of JACTG and JHLLC, TVA has determined that it has a variable interest in both of these entities.

Based on its analysis, TVA has concluded that it is the primary beneficiary of JACTG and JHLLC and, as such, is required to account for the VIEs on a consolidated basis.

JHLLC's membership interests in JACTG are eliminated in consolidation.

Impact on Consolidated Financial Statements

The financial statement items attributable to carrying amounts and classifications of JSCCG, Holdco, and SCCG as of September 30, 2024 and 2023, as reflected on the Consolidated Balance Sheets, are as follows:

The financial statement items attributable to carrying amounts and classifications of JSCCG, Holdco, SCCG, JACTG, and JHLLC as of September 30, 2025 and 2024, as reflected on the Consolidated Balance Sheets, are as follows:

Summary of Impact of VIEs on Consolidated Balance Sheets

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Interest expense of $ 86 million, $ 46 million, and $ 48 million related to debt of VIEs and membership interests of variable interest entity subject to mandatory redemption is included on the Consolidated Statements of Operations for the years ended September 30, 2025, 2024, and 2023, respectively.

At September 30, 2024, TVA had outstanding debt of VIEs of $ 934 million and outstanding membership interests subject to mandatory redemption (including current portion) of $ 17 million issued by one of its VIEs of which it is the primary beneficiary.

At September 30, 2025, TVA had outstanding debt of VIEs of $ 1.7 billion and outstanding membership interests subject to mandatory redemption (including current portion) of $ 16 million issued by one of its VIEs of which it is the primary beneficiary.

The following table sets forth TVA's future payments at September 30, 2025:

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Other Long-Term Liabilities

Other long-term liabilities consist primarily of liabilities related to certain derivative agreements as well as liabilities related to operating leases.

Other long-term liabilities consist primarily of liabilities related to certain derivative agreements as well as liabilities related to environmental compliance and remediation and long-term project cost accruals.

The table below summarizes the types and amounts of Other long-term liabilities:

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Operating lease liabilities 63 88

Commodity contract derivative liabilities 64 52

Advances for construction 61 55

EnergyRight ® financing obligation

Long-term deferred compensation 54 50

EnergyRight ® financing obligation

Long-term deferred revenue 39 48

Other 102 101

Accrued long-term service agreements 25 7

Commodity contract derivative liabilities 12 64

Total other long-term liabilities $ 1,606 $ 1,712

(1) At September 30, 2023, $ 10 million previously classified as Other (a component of Other long-term liabilities) has been reclassified to Long-term project cost accruals (a component of Other long-term liabilities) to conform with current year presentation.

(1) At September 30, 2024, $ 21 million previously classified as Other (a component of Other long-term liabilities) has been reclassified to Environmental compliance and remediation costs ($ 14 million) and Accrued long-term service agreements ($ 7 million).

Interest Rate Swap Liabilities .

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See Note 16 — Risk Management Activities and Derivative Transactions — Overview of Accounting Treatment and Derivatives Not Receiving Hedge Accounting Treatment — Interest Rate Derivative s for information regarding the interest rate swap liabilities.

Operating Lease Liabilities .

TVA's operating leases consist primarily of railcars, equipment, real estate/land, and power generating facilities.

At September 30, 2024 and 2023, the current portion of TVA's operating leases reported in Accounts payable and accrued liabilities was $ 63 million and $ 71 million , respectively.

See Note 8 — Leases for more information regarding leases.

Environmental Compliance and Remediation Costs .

Environmental compliance and remediation costs represent certain costs associated with environmental remediation activities, including but not limited to those involving environmental cleanup activities and groundwater activities.

The current and long-term portions of environmental compliance and remediation costs are reported in Accounts payable and accrued liabilities and Other long-term liabilities, respectively, on TVA's Consolidated Balance Sheets.

At September 30, 2025 and 2024, the current amount of the environmental compliance and remediation costs reported in Accounts payable and accrued liabilities was $ 52 million and $ 3 million, respectively.

Long-Term Project Cost Accruals .

Long-term project cost accruals represent the unpaid liability associated with major construction projects and other project expenditures.

TVA accrues these costs based on level of completion of the vendor's performance obligation, and the long-term portion represents amounts that will not be paid within the next 12 months.

The current and long-term portions of Long-term project cost accruals are reported in Accounts payable and accrued liabilities and Other long-term liabilities, respectively, on TVA's Consolidated Balance Sheets.

At September 30, 2025 and 2024, the current amount of the long-term project cost accruals reported in Accounts payable and accrued liabilities was $ 256 million and $ 124 million, respectively.

Currency Swap Liabilities .

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See Note 16 — Risk Management Activities and Derivative Transactions — Overview of Accounting Treatment and Cash Flow Hedging Strategy for Currency Swaps for more information regarding the currency swap liabilities.

Commodity Contract Derivative Liabilities.

EnergyRight ® Financing Obligation .

TVA purchases certain loans receivable from its LPCs in association with the EnergyRight ® program.

The current and long-term portions of the resulting financing obligation are reported in Accounts payable and accrued liabilities and Other long-term liabilities, respectively, on TVA's Consolidated Balance Sheets.

At September 30, 2024 and 2023, the carrying amount of the financing obligation reported in Accounts payable and accrued liabilities was $ 13 million and $ 14 million respectively.

See Note 9 — Other Long-Term Assets for information regarding the associated loans receivable.

Long-Term Deferred Compensation .

TVA provides compensation arrangements to engage and retain certain employees, both executive and non-executive, which are designed to provide participants with the ability to defer compensation to future periods.

The current and long-term portions are recorded in Accounts payable and accrued liabilities and Other long-term liabilities, respectively, on TVA’s Consolidated Balance Sheets.

At September 30, 2024 and 2023, the current amount of deferred compensation recorded in Accounts payable and accrued liabilities was $ 74 million and $ 65 million, respectively.

Operating Lease Liabilities .

TVA's operating leases consist primarily of railcars, equipment, real estate/land, and power generating facilities.

At September 30, 2025 and 2024, the current portion of TVA's operating leases reported in Accounts payable and accrued liabilities was $ 46 million and $ 63 million, respectively.

See Note 9 — Leases for more information regarding leases.

Advances for Construction.

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At September 30, 2025 and 2024, the current amount of advances for construction recorded in Accounts payable and accrued liabilities was $ 155 million and $ 60 million, respectively.

Long-Term Deferred Compensation .

The current and long-term portions are recorded in Accounts payable and accrued liabilities and Other long-term liabilities, respectively, on TVA’s Consolidated Balance Sheets.

At September 30, 2025 and 2024, the current amount of deferred compensation recorded in Accounts payable and accrued liabilities was $ 70 million and $ 74 million, respectively.

EnergyRight ® Financing Obligation .

TVA purchases certain loans receivable from its LPCs in association with the EnergyRight ® program.

At both September 30, 2025 and 2024, the carrying amount of the financing obligation reported in Accounts payable and accrued liabilities was $ 13 million.

See Note 10 — Other Long-Term Assets for information regarding the associated loans receivable.

Long-Term Deferred Revenue .

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At September 30, 2025 and 2024, the current amount of deferred revenue recorded in Accounts payable and accrued liabilities was $ 25 million and $ 28 million, respectively.

Environmental Compliance and Remediation Costs .

At September 30, 2024, the current amount of the environmental compliance and remediation costs reported in Accounts payable and accrued liabilities was $ 3 million.

There were no current amounts at September 30, 2023.

Long-Term Project Cost Accruals .

Long-term project cost accruals represent the unpaid liability associated with major construction projects and other project expenditures.

TVA accrues these costs based on level of completion of the vendor's performance obligation, and the long-term portion represents amounts that will not be paid within the next 12 months.

At September 30, 2024 and September 30, 2023, the current amount of the long-term project cost accruals reported in Accounts payable and accrued liabilities was $ 124 million and $ 14 million, respectively.

Accrued Long-Term Service Agreements.

TVA has entered into various long-term service agreements for major maintenance activities at certain of its combined cycle plants.

TVA uses the direct expense method of accounting for these arrangements.

TVA accrues for parts when it takes ownership and for contractor services when they are rendered.

Under certain of these agreements, parts received and services rendered exceed payments made.

The current and long-term portions of the resulting obligation are recorded in Accounts payable and accrued liabilities and Other long-term liabilities, respectively, on TVA's Consolidated Balance Sheets.

At September 30, 2025 and 2024, the current amount of accrued long-term service agreements recorded in Accounts payable and accrued liabilities was $ 17 million and $ 16 million, respectively.

Commodity Contract Derivative Liabilities.

Asset Retirement Obligations

During the year ended September 30, 2024, TVA's total ARO liability increased $ 3.3 billion.

During the year ended September 30, 2025, TVA's total ARO liability decreased $ 392 million.

To estimate its decommissioning obligation related to its nuclear generating stations, TVA uses a probability-weighted, discounted cash flow model which, on a unit-by-unit basis, considers multiple outcome scenarios that include significant estimations and assumptions.

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The DECON method requires radioactive contamination to be removed from a site and safely disposed of or decontaminated to a level that permits the site to be released for unrestricted use shortly after it ceases operation.

The SAFSTOR method allows nuclear facilities to be placed and maintained in a condition that allows the facilities to be safely stored and subsequently decontaminated to levels that permit release for unrestricted use.

The SAFSTOR method allows nuclear facilities to be placed

and maintained in a condition that allows the facilities to be safely stored and subsequently decontaminated to levels that permit release for unrestricted use.

TVA also has decommissioning obligations related to its non-nuclear generating sites, ash impoundments, transmission substation and distribution assets, and certain general facilities.

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TVA bases its decommissioning estimates for each asset on its identified preferred closure method.

On May 8, 2024, EPA published its Legacy CCR Rule, which expands the scope of the existing regulatory requirements of EPA's 2015 CCR rule, as revised ("2015 CCR Rule"), to include two additional classes of CCR units:

On May 8, 2024, the Environmental Protection Agency ("EPA") published its Legacy CCR Rule, which expanded the scope of the regulatory requirements of EPA's 2015 CCR rule, as revised ("2015 CCR Rule"), to include two additional classes of coal combustion residual ("CCR") units:

legacy CCR surface impoundments ("Legacy SIs") and CCR management units ("CCRMUs").

Legacy SIs include inactive surface impoundments at retired generating facilities that were exempt from the 2015 CCR Rule.

CCRMUs are a newly defined category that includes previously unregulated areas at CCR facilities where CCR was beneficially reused in an unencapsulated manner, disposed, placed, or managed on land outside of CCR units regulated by the 2015 CCR Rule.

CCRMUs are a newly defined category that includes previously unregulated areas at CCR facilities where CCR may have been beneficially reused in an unencapsulated manner, disposed of, placed, or managed on land outside of CCR units regulated by the 2015 CCR Rule.

TVA records the fair value of a liability for an ARO in the period in which it is incurred if a reasonable estimate of fair value can be made.

As a result of the enactment of the final rule, during 2024, TVA recorded additional estimated AROs of $ 3.1 billion and recorded a corresponding regulatory asset of $ 3.1 billion due to these AROs being associated with closed sites and asset retirement costs having been fully depreciated.

Key assumptions used to determine this estimate include the preliminary identification of Legacy SIs and CCRMUs at TVA facilities

impacted by the rule, the anticipated number of acres per newly regulated CCR unit, the expected closure method, a cost benchmark per acre based on sites currently being remediated, the potential duration of closure activities, and the escalation and discount factors.

Key assumptions used to determine this estimate include the preliminary identification of Legacy SIs and CCRMUs at TVA facilities impacted by the rule, the anticipated number of acres per newly regulated CCR unit, the expected closure method, a cost benchmark per acre based on sites currently being remediated, the potential duration of closure activities, and the escalation and discount factors.

There are legal challenges to the Legacy CCR Rule that may impact the number and scope of newly regulated units and the determinations on final closure requirements and performance standards.

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See also Note 23 — Commitments and Contingencies — Environmental Matters .

Revisions in non-nuclear estimates decreased the liability balance by $ 563 million for the year ended September 30, 2025.

The decrease was primarily attributable to a change in closure liabilities related to the final Legacy CCR Rule for updated cost estimates and a decrease related to CCR units that have received approval for closure from state regulators which resulted in a change in closure liabilities due to updated cost estimates based on the approved closure plans.

In addition, closure liabilities at Paradise Fossil Plant decreased by $ 34 million based on scope changes, new vendor bids, and updated cost estimates for activities associated with final closure and $ 27 million due to identified changes in the projected timing of certain asset retirement activities.

TVA completed a study of its non-nuclear plant decommissioning obligations in September 2025, resulting in a decrease of $ 27 million.

Revisions in non-nuclear estimates increased the liability balance by $ 292 million for the year ended September 30, 2024.

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operating life of 80 years.

For the year ended September 30, 2023, the revisions in non-nuclear estimates increased the liability balance by $ 362 million.

During the year, CCR closure liabilities at Bull Run, Johnsonville, and Cumberland increased $ 458 million due to revised cost estimates for final closure activities based on TVA's current approved closure strategies at these sites.

Partially offsetting these increases, expected reductions in CCR post-closure costs for long-term monitoring at Gallatin resulted in a decrease of $ 60 million.

In addition, CCR closure liabilities at Cumberland decreased $ 15 million due to identified changes in the projected timing of certain asset retirement activities, and CCR closure liabilities at Paradise decreased $ 9 million based on refined project cost estimates.

Additionally, during the years ended September 30, 2025 and 2024, both the nuclear and non-nuclear liabilities were increased by periodic accretion, partially offset by settlements related to retirement projects that were conducted during the respective periods.

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Revisions in estimate (non-cash) ( 160 ) 292 132

Additional obligations (non-cash) — 3,136 3,136

Accretion (recorded as regulatory asset) 170 136 306

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Revisions in estimate (non-cash) 2 ( 563 ) ( 561 )

Additional obligations (non-cash) — 3,136 3,136

Accretion (recorded as regulatory asset) 175 264 439

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Power bonds and discount notes rank on parity and have first priority of payment from net power proceeds, which are defined as the remainder of TVA's gross power revenues after deducting the costs of operating, maintaining, and administering its power properties and tax equivalent payments, 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.

TVA considers its scheduled payments under its lease financing arrangements involving John Sevier CCF and Southaven CCF as costs of operating, maintaining, and administering its power properties.

TVA considers its scheduled payments under its lease financing arrangements involving John Sevier CCF, Southaven CCF, and Johnsonville Facility as costs of operating, maintaining, and administering its power properties.

Costs of operating, maintaining, and administering TVA's power properties have priority over TVA's payments on the Bonds.

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Secured Debt of VIEs

On August 9, 2013, SCCG issued secured notes totaling $ 360 million that bear interest at a rate of 3.846 percent.

In October 2024, JACTG issued secured notes totaling $ 720 million that bear interest at a rate of 5.078 percent.

Also in October 2024, JHLLC issued secured notes totaling $ 80 million that bear interest at a rate of 5.74 percent.

The JACTG notes and the JHLLC notes require amortizing semi-annual payments on each April 1, and October 1, and mature on October 1, 2054.

See Note 12 — Variable Interest Entities — Johnsonville VIEs .

TVA used the proceeds from the transaction primarily to fund the construction of the Johnsonville Facility.

In August 2013, SCCG issued secured notes totaling $ 360 million that bear interest at a rate of 3.846 percent.

The SCCG notes require amortizing semi-annual payments on each February 15 and August 15, and mature on August 15, 2033.

Also on August 9, 2013, SCCG issued $ 40 million of membership interests subject to mandatory redemption.

Also in August 2013, SCCG issued $ 40 million of membership interests subject to mandatory redemption.

The proceeds from the secured notes issuance and the issuance of the membership interests were paid to TVA in accordance with the terms of the Southaven head lease.

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TVA used the proceeds from the transaction primarily to fund the acquisition of the Southaven CCF from SSSL.

On January 17, 2012, JSCCG issued secured notes totaling $ 900 million in aggregate principal amount that bear interest at a rate of 4.626 percent.

Also on January 17, 2012, Holdco issued secured notes totaling $ 100 million that bear interest at a rate of 7.1 percent.

In January 2012, JSCCG issued secured notes totaling $ 900 million in aggregate principal amount that bear interest at a rate of 4.626 percent.

Also in January 2012, Holdco issued secured notes totaling $ 100 million that bear interest at a rate of 7.1 percent.

The JSCCG notes and the Holdco notes require amortizing semi-annual payments on each January 15 and July 15, and mature on January 15, 2042.

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TVA used the proceeds from the transaction to meet its requirements under the TVA Act.

Secured debt of VIEs, including current maturities, outstanding at September 30, 2024 and 2023 totaled $ 934 million and $ 968 million, respectively.

Secured debt of VIEs, including current maturities, outstanding at September 30, 2025 and 2024 totaled $ 1.7 billion and $ 934 million, respectively.

Short-Term Debt

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(in millions)

3967 2025 2024

Variable interest entities $ 800 $ —

2024 Series A (1)

2025 Series A (2)

2025 Series B (3)

2025 Series C (4)

Discount on debt issues ( 33 ) ( 9 )

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2014 Series A — 1,000

2020 Series A 1,000 —

Total redemptions/maturities of power bonds 1,022 1,022

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(2) The 2025 Series A Bonds were issued at 98.517 percent of par.

(3) The 2025 Series B Bonds were issued at 99.360 percent of par.

(4) The 2025 Series C Bonds were issued at 99.593 percent of par.

(5) All redemptions were at 100 percent of par.

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Short-term debt, net of discounts $ — $ 1,167

Current maturities of long-term debt of VIEs issued at par 37 35

Current maturities of long-term debt of variable interest entities 49 37

Current maturities of power bonds issued at par

880591ER9 9/15/2024 2.875 % — 1,000

880591EF5 12/15/2024 3.770 % 1 1

880591EW8 5/15/2025 0.750 % — 1,000

880591CJ9 (1)

11/1/2025 6.750 % 1,350 —

880591EF5 12/15/2025 3.770 % — 1

880591EF5 6/15/2026 3.770 % 20 21

Total current maturities of power bonds issued at par 1,370 1,022

Total current debt outstanding, net $ 1,419 $ 2,226

(1) On November 1, 2025, TVA redeemed a $ 1.4 billion power bond due to maturity.

TVA's next significant power bond maturity is $ 1.0 billion in February 2027.

Long-Term Debt

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Rate 2025 Par 2024 Par Stock Exchange Listings

880591EW8 5/15/2025 0.750 % $ — $ 1,000 New York

880591CJ9 11/1/2025 6.750 % $ — $ 1,350 New York, Hong Kong, Luxembourg, Singapore

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880591DM1 5/1/2030 7.125 % 1,000 1,000 New York, Luxembourg

880591FE7 8/1/2030 3.875 % 1,250 — New York

880591EX6 9/15/2031 1.500 % 500 500 New York

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880591FB3 8/1/2034 4.375 % 1,000 1,000 New York

880591FD9 5/15/2035 4.875 % 1,500 — New York

880591DX7 6/15/2035 4.650 % 436 436 New York

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880591EY4 9/15/2052 4.250 % 500 500 New York

880591FC1 2/1/2055 5.250 % 1,250 — New York

880591DZ2 4/1/2056 5.375 % 1,000 1,000 New York

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$ 1,370 $ 1,020 $ 1,272 $ 220 $ 2,262 $ 15,913 $ 22,057

Short-term debt net of discounts 1,167 — — — — — 1,167

(1) Long-term power bonds do not include non-cash items of foreign currency exchange gain of $ 59 million, unamortized debt issue costs of $ 54 million, or net discount on sale of Bonds of $ 113 million.

Credit Facility Agreements

TVA has funding available under four long-term revolving credit facilities totaling $ 2.7 billion.

TVA has funding available under four revolving credit facilities totaling $ 2.7 billion.

See the table below for additional information on the four long-term revolving credit facilities.

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TVA may also post collateral for TVA's currency swaps, for commodity derivatives under the FHP, or for certain transactions with third parties that require TVA to post letters of credit.

The following table provides additional information regarding TVA's funding available under the four long-term revolving credit facilities:

Summary of Long-Term Credit Facilities

The following table provides additional information regarding TVA's funding available under the four revolving credit facilities:

Summary of Credit Facilities

At September 30, 2025

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March 2026 $ 150 $ 38 $ — $ 112

September 2026 1,000 134 — 866

March 2027 1,000 135 — 865

February 2028 500 215 — 285

September 2030 1,000 110 — 890

Total $ 2,650 $ 498 $ — $ 2,152

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Other long-term liabilities $( 485 )

$ ( 499 ) Other current assets $ 1 ;

Accrued interest $( 27 );

$ ( 622 ) Accounts payable and accrued liabilities $( 10 ), Accrued interest $( 26 );

Other long-term liabilities

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Other long-term liabilities $( 158 )

( 159 ) Other current assets $3;

Accrued interest $( 8 );

( 218 ) Accounts payable and accrued liabilities $( 3 ), Accrued interest $( 9 );

Other long-term liabilities

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Other long-term liabilities $( 2 )

Commodity derivatives under the FHP ( 161 ) Accounts payable and accrued liabilities $( 99 );

Commodity derivatives under the FHP ( 57 ) Other long-term assets $ 8 ;

Accounts payable and accrued liabilities $( 57 );

Other long-term liabilities $( 8 )

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The net deferred unrealized gains and losses are classified as regulatory liabilities or assets on TVA's Consolidated Balance Sheets and are included in the ratemaking formula when gains or losses are realized.

The values of these derivatives are included in Other current assets, Accounts payable and accrued liabilities, Accrued interest, and Other long-term liabilities on the Consolidated Balance Sheets, and realized gains and losses, if any, are included on TVA's Consolidated Statements of Operations.

For the years ended September 30, 2024 and 2023, the changes in fair market value of the interest rate swaps resulted in the increase in unrealized losses of $ 182 million and the reduction in unrealized losses of $ 240 million, respectively.

The values of these derivatives are included in Other

current assets, Accounts payable and accrued liabilities, Accrued interest, and Other long-term liabilities on the Consolidated Balance Sheets, and realized gains and losses, if any, are included on TVA's Consolidated Statements of Operations.

For the years ended September 30, 2025 and 2024, the changes in fair market value of the interest rate swaps resulted in the reduction in unrealized losses of $ 145 million and the increase in unrealized losses of $ 182 million, respectively.

TVA may hold short-term debt balances lower than the notional amount of the interest rate swaps from time to time due to changes in business conditions and other factors.

While actual balances vary, TVA generally plans to maintain average balances of short-term debt equal to or in excess of the combined notional amount of the interest rate swaps.

Commodity Derivatives .

TVA enters into certain derivative contracts for natural gas that require physical delivery of the contracted quantity of the commodity.

TVA may also enter into short-term PPAs with a term of less than one year that provide an option to financially settle contracted power deliveries.

This option creates an embedded derivative in the hosting power purchase agreement.

Commodity Contract Derivatives .

TVA enters into certain commodity contract derivatives for natural gas that require physical delivery of the contracted quantity.

TVA may also enter into PPAs that provide an option to financially settle contracted power deliveries.

This option creates an embedded derivative in the hosting PPA.

TVA marks to market these contracts and defers the unrealized gains (losses) as regulatory liabilities (assets).

At September 30, 2024, TVA's natural gas contract derivatives had terms of up to four years.

At September 30, 2025, TVA's natural gas commodity contract derivatives had terms of up to 10 years.

Commodity Contract Derivatives

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(in millions)

Interest rate swaps $ — $ 4

Commodity contract derivatives 16 7

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At September 30, 2025 and 2024, the NDT held investments in forward contracts to purchase debt securities.

The fair values of these derivatives were in net asset positions totaling $ 11 million at both September 30, 2024 and 2023.

The fair values of these derivatives were in net asset positions totaling $ 16 million and $ 11 million at September 30, 2025 and 2024, respectively.

TVA's interest rate swaps, currency swaps, and commodity derivatives under the FHP contain contract provisions that require a party to post collateral (in a form such as cash or a letter of credit) when the party's liability balance under the agreement exceeds a certain threshold.

At September 30, 2024, the aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a liability position was $ 1.1 billion.

At September 30, 2025, the aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a liability position was $ 884 million.

TVA's collateral obligations at September 30, 2025, under these arrangements were $ 456 million, for which TVA had posted $ 442 million in letters of credit.

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TVA assesses potential supplier performance risks, including procurement of fuel, purchased power, parts, and services.

If suppliers are unable to perform under TVA's existing contracts or if TVA is unable to obtain similar services or supplies from other vendors, TVA could experience delays, disruptions, additional costs, or other operational outcomes that may impact generation, maintenance, and capital programs.

If suppliers are unable or unwilling to perform under TVA's existing contracts, if TVA is unable to obtain similar services or supplies from other vendors, or if there are significant changes to tariffs impacting suppliers, TVA could experience delays, disruptions, additional costs, or other operational outcomes that may impact generation, maintenance, and capital programs.

If certain fuel or purchased power suppliers fail to perform under the terms of their contract with TVA, TVA might lose the money that it paid to the supplier under the contract and have to purchase replacement fuel or power on the spot market, perhaps at a significantly higher price than TVA was entitled to pay under the contract.

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TVA continues evaluating potential supplier performance risks and supplier impact but cannot determine or predict the duration of such risks/impacts or the extent to which such risks/impacts could affect TVA's business, operations, and financial results or cause potential business disruptions.

TVA continues to experience impacts due to inflation, supply chain material challenges, and labor availability.

This has led to project delays, limited availability, and/or price increases for supplies and labor.

TVA has been able to manage these challenges with limited business disruptions at this time;

however, should pressures continue long term, TVA could experience more significant disruptions and pressure to further increase power rates.

TVA continues to experience supply chain pressures resulting from inflation, tariffs and other trade restrictions, material constraints, and labor availability.

These factors have contributed to project delays, limited availability of critical materials, and increased costs for both materials and labor.

Although these challenges have been managed with limited disruption to business operations thus far, continued or escalating pressures could result in more substantial operational impacts and increased pressure on power rates.

Natural Gas and Fuel Oil .

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In the event a supplier experiences an incident that limits its ability to fulfill its firm contractual obligations to supply TVA with natural gas, TVA intends to leverage its storage and balancing services and/or replace the volume with a third party to ensure reliability of generation.

To help ensure a reliable supply of coal, TVA had coal contracts with multiple suppliers at September 30, 2024.

The contracted supply of coal is sourced from several geographic regions of the U.S.

and is delivered via barge and rail.

As a result of emerging technologies, environmental regulations, industry trends, and natural gas market volatility over the past few years, coal suppliers are facing increased financial pressure, which has led to relatively poor credit ratings and bankruptcies, restructuring, mine closures, or other scenarios.

A long-term continued decline in demand for coal could result in more consolidations, additional bankruptcies, restructuring, mine closures, or other scenarios.

To help support a reliable coal supply, TVA maintained contracts with multiple suppliers at September 30, 2025.

These contracts source coal from several diverse geographic regions across the U.S., with deliveries made via both barge and rail.

Coal suppliers have faced mounting financial pressures driven by emerging technologies, evolving regulatory frameworks, and shifting market dynamics.

These challenges have strained the balance between coal demand and available supply.

TVA is actively evaluating recent regulatory developments that may impact its coal procurement strategy and long-term generation planning.

Nuclear Fuel .

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Purchased Power .

TVA acquires power from a variety of power producers through long-term and short-term PPAs as well as through spot market purchases.

Because of the reliability risk of purchased power, TVA requires that the PPAs contain certain counterparty performance assurance requirements to help insure counterparty performance during the term of the agreements.

TVA acquires power from a variety of power producers through long-term and shorter-term PPAs as well as through spot market purchases.

Because of the reliability risk of purchased power, TVA generally requires that the PPAs contain certain counterparty performance assurance requirements to help insure counterparty performance during the term of the agreements.

Other Suppliers .

Mounting solar supply chain constraints, commodity price increases, and the trade policy investigation into solar panel imports have created challenges for the U.S.

solar industry.

TVA's existing solar PPA portfolio is not immune from these challenges.

Similar to the experience of the rest of the industry, the majority of TVA's contracted PPAs from previous requests for proposals ("RFPs") that are not yet online have been impacted by project delays and price increases.

Solar supply chain constraints, commodity price increases, legislative changes, trade policy issues, and investigations into and affecting solar panel imports have created challenges for the U.S.

solar industry including TVA's solar portfolio.

Derivative Counterparties .

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The DCP is designed to provide participants with the ability to defer compensation to future periods.

The RP is a non-qualified excess 401(k) plan designed to allow certain eligible employees whose contributions to the 401(k) plan are limited by Internal Revenue Service ("IRS") rules to save additional amounts for retirement and receive non-elective and matching employer contributions.

The RP is a non-qualified excess 401(k) plan designed to allow certain eligible employees whose contributions to the 401(k) plan are limited by IRS rules to save additional amounts for retirement and receive non-elective and matching employer contributions.

The NDT, ART, SERP, DCP, and RP funds are invested in portfolios of securities generally designed to achieve a return in line with overall equity and debt market performance.

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and international equities, U.S.

Treasury inflation-protected securities ("TIPS"), and real estate investment trust securities, and certain derivative instruments are measured based on quoted exchange prices in active markets and are classified as Level 1 valuations.

Treasury inflation-protected securities ("TIPS"), and

real estate investment trust securities and certain derivative instruments are measured based on quoted exchange prices in active markets and are classified as Level 1 valuations.

Fixed-income investments, high-yield fixed-income investments, currencies, and most derivative instruments are non-exchange traded and are classified as Level 2 valuations.

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ART Regulatory assets (3)

SERP Other income (expense) 14 6

DCP Other income (expense) 2 1

(1) The unrealized losses for the RP were less than $ 1 million for both the years ended September 30, 2024 and 2023 and therefore were not represented in the table above.

(2) Includes $ 93 million of unrealized gains and $ 27 million of unrealized gains related to NDT equity securities (excluding commingled funds) for the years ended September 30, 2024 and 2023, respectively.

(3) Includes $ 36 million of unrealized gains and $ 13 million of unrealized gains related to ART equity securities (excluding commingled funds) for the years ended September 30, 2024 and 2023, respectively.

SERP Other income, net 3 14

DCP Other income, net 1 2

(1) The unrealized gains for the RP were less than $ 1 million for both the years ended September 30, 2025 and 2024 and therefore were not represented in the table above.

(2) Includes $ 10 million and $ 93 million of unrealized gains related to NDT equity securities (excluding commingled funds) for the years ended September 30, 2025 and 2024, respectively.

(3) Includes $ 7 million and $ 36 million of unrealized gains related to ART equity securities (excluding commingled funds) for the years ended September 30, 2025 and 2024, respectively.

Currency and Interest Rate Swap Derivatives

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These contracts are classified as Level 2 valuations.

See Note 15 — Risk Management Activities and Derivative Transactions — Derivatives Not Receiving Hedge Accounting Treatment — Commodity Derivatives and — Commodity Derivatives under the FHP .

Nonperformance Risk

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Cash equivalents and other short-term investments (2)(4)

111 163 — 274

Private equity funds measured at net asset value (5)

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Total investments 1,745 680 — 5,573

Interest rate swaps — — — —

Commodity contract derivatives — 16 — 16

Commodity derivatives under the FHP — 8 — 8

Total $ 1,745 $ 704 $ — $ 5,597

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Treasury securities within Level 1 of the fair value hierarchy.

(3) Includes $78 million net payables (interest receivable, dividends receivable, receivables for investments sold, and payables for investments purchased), and $174 million of repurchase agreements in Level 2 Cash equivalents and other short-term investments.

(3) Includes both U.S.

and foreign debt.

(4) Includes $ 60 million net payables (interest receivable, dividends receivable, receivables for investments sold, and payables for investments purchased), and $ 124 million of repurchase agreements in Level 2 Cash equivalents and other short-term investments.

(5) Certain investments that are measured at fair value using the NAV or its equivalent (alternative investments) have not been categorized in the fair value hierarchy.

The inputs to these fair value measurements include underlying NAVs, discounted cash flow valuations, comparable market valuations, estimated benchmark yields, and adjustments for currency, credit, liquidity, and other risks.

The inputs to these fair value measurements include underlying NAVs, discounted cash flow valuations, comparable market valuations, and adjustments for currency, credit, liquidity, and other risks.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on the Consolidated Balance Sheets.

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Cash equivalents and other short-term investments (2)(4)

104 166 — 270

Private equity funds measured at net asset value (5)

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Total investments 1,607 672 — 4,968

Interest rate swaps — 4 — 4

Commodity contract derivatives — 7 — 7

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Treasury securities within Level 1 of the fair value hierarchy.

(3) Includes $73 million net payables (interest receivable, dividends receivable, receivables for investments sold, and payables for investments purchased).

(3) Includes both U.S.

and foreign debt.

(4) Includes $ 78 million net payables (interest receivable, dividends receivable, receivables for investments sold, and payables for investments purchased), and $ 174 million of repurchase agreements in Level 2 Cash equivalents and other short-term investments.

(5) Certain investments that are measured at fair value using the NAV or its equivalent (alternative investments) have not been categorized in the fair value hierarchy.

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Level 2 66 74 66 74

Unfunded loan commitments Level 2 — — — 1

Membership interests of VIEs subject to mandatory redemption (including current portion) Level 2 16 18 17 19

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In addition, TVA sells electricity to directly served industrial companies, federal agencies, and others.

LPC sales Approximately 92 percent of TVA's Revenue from sales of electricity for both the years ended September 30, 2024 and 2023, was from LPCs, which then distribute the power to their customers using their own distribution systems.

LPC sales Approximately 91 percent of TVA's Revenue from sales of electricity for the year ended September 30, 2025, and approximately 92 percent of TVA's Revenue from sales of electricity for both the years ended September 30, 2024 and 2023, was from LPCs, which then distribute the power to their customers using their own distribution systems.

Power is delivered to each LPC at delivery points within the LPC's service territory.

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Total operating revenues $ 13,672 $ 12,314 $ 12,054

(1) Represents revenue capitalized during pre-commercial operations at Paradise CTs 5-7 in 2024 and Colbert CTs 9-11 in 2023.

(1) Represents revenue capitalized during pre-commercial operations at Johnsonville Aeroderivative CT Units 21-30 in 2025 and Paradise CT Units 5-7 in 2024.

TVA's operating revenues by customer type for each of the last three years are detailed in the table below:

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Total operating revenues $ 13,672 $ 12,314 $ 12,054

(1) Represents revenue capitalized during pre-commercial operations at Paradise CTs 5-7 in 2024 and Colbert CTs 9-11 in 2023.

(1) Represents revenue capitalized during pre-commercial operations at Johnsonville Aeroderivative CT Units 21-30 in 2025 and Paradise CT Units 5-7 in 2024.

TVA and LPCs continue to work together to meet the changing needs of consumers around the Tennessee Valley.

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As of September 30, 2025, 148 LPCs had signed the Partnership Agreement with TVA, and 109 LPCs had signed a Power Supply Flexibility Agreement.

In previous years, the TVA Board approved pandemic credits, which were effective in both 2022 and 2023.

In previous years, the TVA Board approved pandemic credits, which were effective in 2023.

These credits provided an annual 2.5 percent monthly base rate credit and applied to service provided to TVA's LPCs, their large commercial and industrial customers, and TVA directly served customers.

For the years ended September 30, 2023 and 2022, pandemic credits totaled $ 225 million, and $ 228 million, respectively.

For the year ended September 30, 2023, pandemic credits totaled $ 225 million.

The pandemic credits ended September 30, 2023.

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Supplemental Cash Flow Information

Interest paid was $ 1.1 billion for each of 2024, 2023, and 2022.

Interest paid was $ 1.1 billion in each of 2025, 2024, and 2023.

These amounts differ from interest expense in certain years due to the timing of payments.

There was no interest capitalized in 2025, 2024, or 2023.

Construction in progress and nuclear fuel expenditures included in Accounts payable and accrued liabilities at September 30, 2024, 2023, and 2022 were $ 898 million, $ 559 million, and $ 510 million, respectively, and are excluded from the Consolidated Statements of Cash Flows for the years ended September 30, 2024, 2023, and 2022 as non-cash investing activities.

Construction in progress and nuclear fuel expenditures included in Accounts payable and accrued liabilities at September 30, 2025, 2024, and 2023 were $ 1.2 billion, $ 898 million, and $ 559 million, respectively, and are excluded from the Consolidated Statements of Cash Flows for the years ended September 30, 2025, 2024, and 2023 as non-cash investing activities.

ARO project accruals included in Accounts payable and accrued liabilities at September 30, 2025, 2024, and 2023 were $ 57 million, $ 45 million, and $ 71 million, respectively, and are excluded from the Consolidated Statements of Cash Flows for the years ended September 30, 2025, 2024, and 2023 as non-cash operating activities.

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Benefit Plans

TVA sponsors a pension plan that covers most of its full-time employees hired prior to July 1, 2014, a qualified defined contribution plan ("401(k) plan") that covers most of its full-time employees, two unfunded post-retirement health care plans that provide for non-vested contributions toward the cost of eligible retirees' medical coverage, other post-employment benefits such as workers' compensation, the Restoration Plan, and the SERP.

TVA sponsors a pension plan that covers most of its full-time employees hired before July 1, 2014, a qualified defined contribution plan ("401(k) plan") that covers most of its full-time employees, two unfunded post-retirement health care plans that provide for non-vested contributions toward the cost of eligible retirees' medical coverage, other post-employment benefits, such as workers' compensation, the SERP, and the RP.

The pension plan and the 401(k) plan are administered by a separate legal entity, the TVA Retirement System ("TVARS"), which is governed by its own board of directors (the "TVARS Board").

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TVA recognized 401(k) contribution costs of $ 124 million, $ 116 million, and $ 105 million during 2025, 2024, and 2023, respectively.

Restoration Plan .

TVA established the Restoration Plan, a nonqualified excess 401(k) plan, to allow certain eligible employees whose contributions to the 401(k) plan are limited by IRS rules to save additional amounts for retirement and receive non-elective and matching employer contributions.

TVA recognized Restoration Plan benefit costs of $ 1 million in 2024 and less than $ 1 million in 2023.

Supplemental Executive Retirement Plan.

TVA has established a SERP for certain executives in critical positions to provide supplemental pension benefits tied to compensation that exceeds limits imposed by IRS rules applicable to the qualified defined benefit pension plan.

The SERP was established for certain executives in critical positions to

provide supplemental pension benefits tied to compensation that exceeds limits imposed by IRS rules applicable to the qualified

defined benefit pension plan.

In July 2025, the SERP was amended so that participants will cease accruing new benefits on September 30, 2025.

Participants will continue to be entitled to receive their accrued benefits as calculated on September 30, 2025.

Restoration Plan .

TVA established the RP, a nonqualified excess 401(k) plan, to allow certain eligible employees whose contributions to the 401(k) plan are limited by IRS rules to save additional amounts for retirement and receive non-elective and matching employer contributions.

Additionally, the RP, which previously prohibited participation by any TVA executive who was a participant in the SERP, was amended to authorize participation for all executives otherwise entitled to participate, effective October 1, 2025.

TVA recognized RP benefit costs of $ 2 million in 2025, $ 1 million in 2024, and less than $ 1 million in 2023.

What changed 10-K

Item 8. Financial Statements and Supplementary Data